NEW ISSUE BOOK-ENTRYONLY

In tneOpinion of Ballard Spahr Andrews &Ingersoll, SpeCIal TaxCounsel, based on eXlstmg statutes, regulattons, rulmgs andludlclal aeasons
and assummg comphence with certam covenants described herem and with the reqUirements of the Internal Revenue Code of 1986, as
amended, mterest on the Bonds ISexcluded from the gross mcome of the owners of the Bonds for federal income tax purposes SpeCial
TaxCounsel ISfurther of the oplnton that mterest on the Bonds will not be treated as an Itemof tax preference mcalculating altemahve
muumum taxable income of indIViduals and corporattons, however, such Interest on Bonds held by certam corporatIons may be
sutnec: to an alternative minimum tax and enVironmental tax because of Its mcluslon mthe 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 of
California personal Income taxes See "TAX EXEMPTION" herem.
$149,825,000
CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY
1992 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 CalifornIa
Statewide Communities Development Authonty (the "Authonty") and Amentrust Texas NalJOnal Associanon, as trustee (the "Trustee") The
proceeds of the Bonds Will be used to pay Oalder ASSOCiates Limited Partnership and Oakbay ASSOCiates lImrted Partnership the acqUISition
price 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 the
Indenture, and to pay costs Incurred In eonnecnon With the 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 The
Bonds will be Issued as fully regIstered Bonds In the minimum denomination of $5,000 or any Integral multiple thereof In book-entry form, wrthou1
coupons, and, when delivered, will be Inrtlally registered In the name of Cede & Co , as nominee of The DePOSitoryTrust Company, New York,
New York ("DTC"), DTC Will act asseeunnes deposrtory of the Bonds IndIVidualpurchasers of Interests In the Bonds will be made In book-entry
form only Purchasers of such Interests WIll not receive Bonds PrinCIpal, premium, If any, and Interest are payable by the Trustee directly to DTC
which Will remit such payments to the DTC Parneipants for subsequent disbursements to the BenefICIal Owners of the Bonds, as descnbed
herem
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 Will be secured by, Lease Payments made by
the 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 A
CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY THE BONDS ARE NOT A DEBT OF THE STATE OF CALIFORNIA OR
ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER THE STATE OF CALIFORNIA NOR ANY OF ITS POLITICAL SUBDIVISIONS IS
LIABLE THEREFOR THE PRINCIPAL OF AND INTEREST ON THE BONDS ARE 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
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 the
Bonds Investors are advised to read the entire OffICial Statement to obtain Information essential to the making of an InfOrmed Investment
deciSion
The Bonds are offered when, as and If Issued, by the Au/horlty and receIved by the Underwnters subJBct to the approval of the legality /hereof
by Mornson & Foerster, San FranCISCo, California, Band Counsel and Ballard Spahr Andrews & 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 be
passed 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 York on 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
MATURITY SCHEDULE
$65,295,000 serial Bonds
Maturity Pnnclpal Interest Pncel Matunty Pnnclpal Interest Pncel
October 1 Amount Rate Yield October 1 Amount Rate Yield
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 7,845,000 600 100
1998 2,570,000 510 100 2005 8,320,000 600 610
1999 2,705,000 520 530 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)
CALIFORNIA STATEWIDE COMMUNITIFS DEVEWPMENT AUTHORITY
DON BENNINGHOVEN, Chairman
DANIEL HARRISON, Vice Chairman
STEVE SWENDIMAN, Secretary
PAUL HAHN
NORMA LAMMERS
STEVEKEIL
JACK CRIST
THE CITY OF OAKLAND, CALIFORNIA
THE CITY COUNCIL
ELIHU M. HARRIS, Mayor
LEO BAZILE, Vice Mayor
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
GARY BREAUX, 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
(TIllS PAGE INTENTIONALLY LEFf BLANK)
No dealer, broker, salesperson or other person has been authorized by the Authority, the
City 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 any
sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make
such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of the
Bonds. Statements contained in this Official Statement that involve estimates, forecasts or
matters of opinion, whether or not expressly so described herein, are intended solely as such and
are not to be construed as representations of fact.
The information set forth herein has been obtained from official sources which are
believed to be reliable, but it IS not guaranteed as to accuracy or completeness, and is not to be
construed as a representation by the 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 has
been no change in the affairs of the City or the Authority since the date hereof. All summaries
contained 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 Official Statement is submitted in connection with the sale of the Bonds referred to
herein 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-
ALLOT OR EFFECT TRANSACTIONS WHICHSTABILIZE ORMAINTAINTHE MARKET
PRICE OF THE BONDS AT A LEVEL ABOVETHAT WHICH MIGHT OTHERWISE PRE-
VAIL IN THE OPEN MARKET, AND SUCH STABILIZING, IF COMMENCED, MAYBE
DISCONTINUED AT ANY TIME.
i
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 . . . . . . .. 9
ESTIMATED 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
ii
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
AUDITED FINANCIAL STATEMENTS
FOR 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
OFFICIAL STATEMENT
$149,825,000
California 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 contents
and Appendices hereto (collectively, the "Official Statement") is to provide certain information
concerning the California Statewide Communities Development Authority (the"Authority"), the
City of Oaldand (the "City") and the proposed issuance of $149,825,000 aggregate principal
amount of California Statewide Communities Development Authority 1992Lease Revenue Bonds
(City of Oakland Convention Centers Project) (the "Bonds") to be issued by the Authority. The
Bonds 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, and
an Indenture of Trust, dated as of November 1, 1992 (the "Indenture"), by and between the
Authority and Ameritrust Texas National Association, as trustee (the "Trustee"). The Bonds are
special limited obligations of the Authority payable solely from and secured by a pledge of the
Lease Payments by the City to the Authority under an Amended and Restated Lease and
Sublease Agreement dated as of November 1, 1992 (the "Lease Agreement") between the City
and the Authority.
Pursuant to a Contract of Sale, dated as of September 21, 1992 (the "Kaiser Contract of
Sale"), by and between the Authority, as assignee of the City, and Oakter Associates Limited
Partnership ("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 Oakbay
Associates Limited Partnership ("Oakbay"), as seller (the Kaiser Contract of Sale and the
Scotian Contract of Sale sometimes being hereinafter referred to collectively as the "Contracts
of Sale"), the Authority has agreed to purchase and acquire title to the Henry J. Kaiser
Convention Center (the "Kaiser Convention Center") and the Convention Center - George P.
Scotian Memorial (the "Scotian Convention Center"). (The Kaiser Convention Center and the
Scotian Convention Center are together called the "Convention Centers.") The Authority will
lease 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, the
acquisition 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 in
connection with the execution and delivery of the Bonds.
A portion of such acquisition costs will be used to (i) defease the $38,000,000 Certifi-
cates of Participation (Oakland Convention Center - George P. Scotian Memorial) Series 1983
of the Redevelopment Agency of the City of Oakland (the"Agency"), dated December 1, 1983
(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 "Kaiser
Certificates").
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 City
under the Lease Agreement are subject to the availability of the Convention Centers for use by
the 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 obligated
to make any payments on the Bonds except from the Lease Payments by or on behalf of the City
pursuant 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 AND
SOURCES OF PAYMENT FOR THE BONDS - Municipal Bond Insurance" and Appendix
F hereto for a description of the Insurer and its specimen insurance policy, respectively. The
information 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 and
summaries 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 the
Indenture 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.
2
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, and
interest on the Bonds, and the Lease Payments constitute the sole source of payments for the
principal 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 the
power to enforce, either jointly with the Authority or separately, all of the rights of the
Authority 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 the
cover page hereof. Interest on the Bonds will be payable on April 1 and October 1 of each year,
commencing April 1, 1993 (the "Payment Dates"). The Bonds will be issued in fully registered
form 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 Bond shall bear interest from the Payment Date next preceding the
date of authentication thereof unless (i) it is authenticated on or prior to an Payment Date and
after the close of business on the fifteenth day of the month preceding such Payment Date, in
which event it shall bear interest from such Payment Date, or (ii) it is authenticated on or prior
to 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, such Bond
shall bear interest from the Payment Date to which interest has previously been paid or made
available for payment thereon.
Principal of the Bonds is payable upon presentation and surrender thereof, at maturity
or 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, postage
prepaid, on the Payment Date to the registered owners thereof as of the fifteenth day of the
month immediately preceding the Payment Date as such owners' names and addresses appear
on the registration books kept by the Trustee as of such fifteenth day or, upon request of an
owner of at least $1,000,000 in aggregate principal amount of Bonds by wire transfer to an
account within the continental United States designated by such owner prior to such fifteenth
day.
Transfer and Exchange
The Bonds may be transferred or exchanged at the principal corporate trust office of the
Trustee in Houston, Texas, provided that the Trustee shall not be required to register the transfer
or exchange of any Bond selected for redemption pursuant to the Indenture.
3
Optional Redemption
The serial Bonds maturing on or after October 1, 2002, and the term Bonds maturing on
October 1,2010, are subject to optional redemption, in such order of maturity 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 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, 2003
October 1, 2003 to September 30, 2004
October 1, 2004 and thereafter
Redemption PremiUm
102%
101%
100%
The termBonds maturing on October 1, 2014, are subject to optional redemption, in such
order 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 amount of the Bonds
to 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 to
mandatory 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 amount
thereof to be redeemed, without premium, in the aggregate respective principal amounts and in
the respective years as set forth in the following table; provided, however, that if some but not
all 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 of
all future sinking fund payments shall be reduced by the aggregate principal amount of Bonds
so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral
multiples of $5,000 and that in lieu of mandatory sinking fund redemption such Bonds may be
purchased by the Authority on the open market.
Bonds Maturing October 1, 2010
Sinking Account
Redemption Date
(October 1)
2008
2009
2010
'Maturity
Principal Amount
to Be Redeemed
or Purchased
$ 9,935,000
10,530,000
11,435,000
4
Sinking Account
Redemption Date
(October 1)
2011
2012
2013
2014
"Maturity
Bonds Maturing October 1, 2014
Principal Amount
to Be Redeemed
or Purchased
$12,120,000
12,785,000
13,495,000
14,230,000
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 any
Payment Date (but not in a total redemption amount of less than $5,000 at anyone time), in
inverse 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 Net
Proceeds of insurance or condemnation in an amount of $5,000 or more deposited with the
Trustee pursuant to the provisions of the Lease Agreement concerning (i) proceeds of any
insurance relating to an accident to or destruction of any part of the Convention Center Sites or
the 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 govern-
mental 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. If less than
all 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 which
DTC and the DTC Participants deem fair. In the case of a partial redemption as described
above, 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) days
prior to the redemption date (i) to DTC or (ii) in the event the book-entry-only system is
discontinued, to the respective registered owners of the Bonds designated for redemption at their
addresses 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
5
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 Trust 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
6
dealers, banks, trust companies, clearing corporations and certain other organizations, some of
whom (or their representatives) own DTC. Access to the DTC system is also available to others
such as banks, brokers, dealers and trust companies that clear through or maintain a custodial
relationship 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 standard
procedures. Each Beneficial Owner may desire to makearrangements with such DTCParticipant
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 to DTC, which may affect such persons, forwarded in writing by such DTC Participant
and to have notification made of all interest payments. NEITHER THE AUTHORITY, THE
CITY NORTHE TRUSTEE WILL HAVE ANY RESPONSmILITY OR OBUGATION WITH
RESPECT TO THE PAYMENTS TO OR THE PROVIDING OF NOTICE FOR SUCH DTC
PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH
RESPECT TO THE BONDS NOR ANY OBUGATION TO MAINTAIN DTC'S BOOK
ENTRY SYSTEM. DTC WILL NOTBE DEEMED AN AGENT OF THE AUTHORITY, 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 any
DTC Participant or to any person on behalf of whom such 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 Participant
or any other person, other than a Bond Owner as shown in the registration books kept by the
Trustee, of any amount with respect to the Bonds or (v) any consent given or other action 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 all
principal 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.
7
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 by
DTC.
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 of DTC, the Trustee, the City or the Authority, subject to any statutory
and 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
Beneficial Owners, 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, upon
registration of Bonds held in their name, will become the Owners of such Bonds.
8
The Authority may in its sole discretion determine to discontinue the system of book-
entry transfers through DTC (or a successor securities depository). In such event, the Bonds will
be made available in physical form.
PLAN OF FINANCING
The Bonds will finance a transaction in which the Authority will purchase two convention
facilities: the Kaiser Convention Center from Oakter Associates Limited Partnership, a
Connecticut limited partnership to which the City sold (via an intermediary corporation,
Resources Property Development Corp., a Delaware corporation) the Kaiser Convention Center
in a sale-leaseback transaction in 1982 and from which the City presently leases the Kaiser
Convention Center; and the Scotian Convention Center from Oakbay Associates Limited
Partnership, a Connecticut limited partnership, to which the City sold (via an intermediary
corporation, Occen Corp., a Delaware corporation) the Scotian Convention Center in a sale-
leaseback transaction in 1983 and from which the City presently leases the Scotian Convention
Center. The Authority will lease the Convention Centers to the City pursuant to an Amended
and 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, not
including accrued interest:
Sources
Bond Proceeds
TOTAL
Uses
Acquisition Costs
Cost of Kaiser Convention Center Acquisition
Cost of Scotian Convention Center Acquisition
Debt Service Reserve Fund
Costs of Issuance
Original Issue Discount
TOTAL
$149.825.000.00
$149.825.000.00
$62,854,604.80
63,427,639.41
12,928,115.23
4,285,955.96
6.328,684.60
$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 Authority
under 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
9
Reserve Account, and from any other moneys held by the Trustee under the Indenture for the
payment of the Bonds. Lease Payments required to be made by the City under the Lease
Agreement 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 debt
of the State of California or any of its political subdivisions, and neither the State of California
nor any of its political subdivisions is liable therefor. The principal of and interest on the Bonds
are 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 the
15th 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 the Lease Payment
Account on each Lease Payment Date will be credited towards the Lease Payments coming due
and payable on such Lease Payment Date.
In addition, In the event of damage to or destruction of the Convention Centers, if the
City elects to repair, reconstruct or replace the Convention Centers, 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, commencing on
the next 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.
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 been
included in the final budget within twenty days after the printing of the final budget. The Lease
Agreement 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 City
to carry out and perform the covenants in the Lease Agreement.
Reserve Account
In satisfaction of the Reserve Requirement under the Indenture, the Authority shall cause
to be deposited $12,928,115.23 in the Reserve Account to be used as a reserve for the payment
of 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 from
the Reserve Account, such Lease Payment shall be deposited in the Reserve Account to the
10
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. If 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 further Lease 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 Trust
Company 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. If 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 behalf of the
Issuer has been deemed a preferential transfer and theretofore recovered from its registered
owner 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 than mandatory
sinking 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 any
Trustee or Paying Agent, if any.
If it becomes necessary to call upon the Municipal Bond Insurance Policy, payment of
principal requires surrender of Bonds to the Insurance Trustee together with an appropriate
instrument of assignment so as to permit ownership of such Bonds to be registered in the name
of AMBAC Indemnity to the extent of the payment under the Municipal Bond Insurance 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's
right to payment to AMBAC Indemnity.
Upon payment of the insurance benefits, AMBAC Indemnity will become the owner of
the Bond, appurtenant coupon, if any, or right to payment of principal or interest on such Bond
and 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 shall
disburse principal and interest to a Bondholder only upon evidence satisfactory to the Insurance
Trustee and AMBAC Indemnity that the ownership interest of the Bondholder in the right to
payment 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 all
of 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 claims arising under
the 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 insurance
corporation regulated by the Office of the Commissioner of Insurance of the State of Wisconsin
and licensed to do business in 50 states, the District of Columbia, and the Commonwealth of
Puerto Rico, with admitted assets of approximately $1,490,000,000 (unaudited) and statutory
capital of approximately $839,000,000 (unaudited) as of June 30, 1992. Statutory capital consists
of AMBAC Indemnity's policyholders' surplus and statutory contingency reserve. AMBAC
Indemnity 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 triple-
A claims-paying ability rating to AMBAC Indemnity.
12
Copies of AMBACIndemnity's financial statements prepared in accordance with statutory
accounting standards are available from AMBAC 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 programs
of AMBAC Indemnity has been and will be assumed by a number of foreign and domestic
unaffiliated reinsurers.
AMBAC Indemnity has obtained a 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 is made by AMBAC Indemnity regarding the federal income tax treatment
of payments that are made by AMBAC Indemnity under the terms of the Policy due to
nonappropriation 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 the
preparation 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 TOMAKE PAYMENTS ONTHE BONDS
UNDERTHE INDENTURE IS ASPECIALLIMITED OBLIGATION OF THE AUTHORITY,
PAYABLE SOLELY FROM LEASE PAYMENTS MADE BYTHE CITY TO THE AUTHOR-
ITY UNDER THE LEASE AGREEMENT. THE AUTHORITY SHALL NOT 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 BONDS DO NOT CONSTITUTE A DEBT OF THE AUTHORITY OR OF THE
STATE OF CALIFORNIA, OR ANYPOLmCAL SUBDIVISIONTHEREOF, WITHIN THE
MEANING OF ANY CONSTITUTIONAL OR STATUTORY 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.
13
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 not 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 ability
to 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 for
redemption 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.
14
Eminent Domain. Ifthe 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 the
Convention 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 possession
of the Convention Centers, such provisions may besuperseded 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 not involve the Lease
Agreement.) The Richmond 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 of participation, and the leaseback of such administration
building 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 not 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 of Exhibit 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
15
binding obligation of the City and does not constitute a debt of the City within the meaning of
any constitutional debt limitation.
State Budget. The State of California has recently reduced the moneys it provides to cities
in California, including the City of Oakland. No guarantee can be made as to the future level
of funding to the City by the State. See Appendix A, "FINANCIAL INFORMATION - State
Budget Matters. "
THE GROUND LEASE
The City is the owner of the land on which the Convention Centers are located. Pursuant
to the Kaiser Contract of Sale, the Authority will obtain an assignment of Oakter's interest as
assignee of and lessee under that certain Ground Lease, dated as of September 1, 1982, between
the City and Bank of America NT&SA with respect to the site on which the Kaiser Convention
Center is located (the "Kaiser Site") and an assignment of Oakter's interest as sublessor of the
Kaiser Site to the City pursuant to that certain Lease and Sublease Agreement, dated as of
September 1, 1982, between the City and Oakter, as assignee thereof.
Pursuant to the Scotian Contract of Sale, the Authority will obtain an assignment of
Oakbay's interest as assignee of and lessee under that certain Ground Lease, dated as of
December 1, 1983, between the City and Bank of America NT&SA with respect to the site on
which the Scotian Convention Center is located (the "Scotian Site") and an assignment of the
interests of Oakbay and Oakmar Leasing Corp. as sublessors of the Scotian Site to the City
pursuant to that certain Sublease Agreement, dated as of December 1, 1983 (as amended by
Amendment No.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 an
Amended and Restated Ground Lease, dated November 1, 1992, between the City as Lessor and
the Authority as Lessee (the "Ground Lease").
The term of the Ground Lease commenced as of November 1, 1992, and shall end on
the earlier of (i) October 1, 2019, or (ii) the date upon which Lease Payments are 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. If 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 or
provision therefor has been made, except that in no event shall the term of the Ground Lease
be extended beyond October 1, 2032.
As base rent for the Convention Center Sites for the term of the Ground Lease, the
Authority has agreed to pay the City the sum of One Dollar ($1.00), payable on the Closing
Date.
16
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 the
Convention 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 the
earlier of (i) OCtober 1, 2014, or (ii) the date upon which Lease Payments are 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. If 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 provision
therefor 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 the
Convention Centers, provided that there shall be applied as a credit against the Lease Payments
payable 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 credit
shall 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 amount of 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 Account
shall 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
City elects to repair, reconstruct or replace the Convention Centers, 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 by
the 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.
17
Should any Lease Payment be made later than the Lease Payment Date to which such
Lease 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 to
the 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 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 appropriations therefor. The Lease
Agreement 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 City
to carry out and perform the covenants in the LeaseAgreement. The City covenants to provide
the 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 shall
remain vested in the Authonty and fee title to the Convention Center Sites shall remain vested
in the City, subject to Permitted Encumbrances. Permitted Encumbrances are defined to include
liens for taxes and assessments not then due and payable; easements, rights of way and other
rights, covenants, conditions or restrictions which do not impair or impede construction or use
of the Convention Centers; and the lien of the Lease Agreement. Upon the expiration of the term
of the Lease Agreement, the City may exercise an option granted pursuant to the Lease
Agreement 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 Centers
and repair and replacement of the Convention Centers and for ordinary wear and tear. The
Authority 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 deductible
not to exceed $500,000 or such greater amount as may be authorized by the City's liability
insurance program.
18
(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 than
the 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 for
anyone 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 of Net 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:
If 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 such
repair, 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
19
Payment Account as a prepayment of Lease 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 Sites
and 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 provided
that 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 ofthe 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 to
be 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
20
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
periodcommencing 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 Lease
Agreement or in any condemnation proceeding undertaken by 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) If 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 Lease Agreement or if such Net 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 to
make 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) If 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 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
21
certificate of an Authorized Officer, to treat such Net Proceeds as the prepayment of Lease
Payments in full.
Assignment; Subleases. The City may not assign its interests under the Lease Agreement
without the written consent of the Trustee and the Insurer. The City may sublease without the
consent of the Authority or the Trustee the Convention Centers in whole or in part under the
conditions contained in the Lease Agreement, including the conditions that the obligation of the
City to make Lease Payments under the Lease Agreement shall not be adversely affected and
that such sublease shall not adversely affect the exclusion from gross income for federal income
tax purposes of the interest component of the Lease Payments.
Events of Default. The following constitute. "events of default" under the Lease
Agreement:
(1) Failure by the City to make any Lease Payments under the Lease Agreement,
which failure continues to the Business Day prior to the Lease Payment Date to which such
Lease Payment pertains;
(2) Failure by the City to pay any Additional Payment under the Lease
Agreement, and the continuation of such failure for a period of ten (10) days;
(3) Failure by the City to observe and perform any covenant, condition or
agreement on its part to be observed or performed in the Lease Agreement or the Indenture,
other than as referred to in (1) above, for a period of sixty (60) days after written notice
specifying such failure and requesting that it be remedied has been given to the City by the
Authority, the Trustee or the Owners of not less that five percent (5%) in aggregate principal
amount of Bonds then Outstanding, unless the Authority, the Trustee or such Bond Owners shall
agree in writing to an extension of such time prior to its expiration, such extension of time not
to be unreasonably withheld by the Authority, the Trustee or such Bond Owners if the failure
specified in the notice cannot be corrected within the applicable time and corrective action is
instituted by the City within the applicable period and diligently pursued until the default is
corrected;
(4) A court having jurisdiction shall enter a decree or order for relief in respect
of the City in an involuntary case under any applicable bankruptcy, insolvency or other similar
law in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of the City or for any substantial part of its property, or ordering the winding
up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for
a period of sixty (60) days; or
(5) The City shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law in effect, or shall consent to the entry of an order for relief in
an involuntary case under any such law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or similar official)
22
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 any
corporate 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 pursuant
to 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 for
the 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 may
appear 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 written
notice to the Authority and the Trustee delivered at least sixty (60) days prior to the Lease
Payment 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 the
unpaid 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 Lease
Payment 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 Authonty
under 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 such
prepayment.
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's
leasehold 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 or
otherwise in material default under the Lease Agreement.
THE CITY AND THE AUTHORITY
The City of Oakland
The City of Oakland is located on the east side of San Francisco 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
23
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 improvements
for 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 the
obligation 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.
24
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 the
financial position or results of operations of the City.
A number of lawsuits have been filed in connection with the Oakland Hills Fire. For
further information, see Appendix A, "FINANCIAL INFORMATION - Oakland Hills Fire."
TAX EXEMPTION
In the opinion of Ballard Spahr Andrews & Ingersoll, Washington, D.C., Special Tax
Counsel, 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 income of the Owners of the Bonds for purposes of federal
income 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 for
federal 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, real
estate 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 consequences
to 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 indebtedness
to 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
25
concerning the significance of the rating given by Moody's may be obtained from Moody's at
99 Church Street, New York, New York 10007, (212) 553-0470. An explanation of the ratings
given 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 City
were furnished to Moody's and S&P by the Authority and the City. If in the judgment of either
of 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 effect
on the resale price of the Bonds.
APPROVAL OF LEGAL PROCEEDINGS
Certain legal matters incident to the issuance of the Bonds have been or will be approved
by Morrison & Foerster, San Francisco, California, as Bond Counsel, and Ballard Spahr
Andrews & 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 the
Underwriters 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 be
passed upon by Orrick, Herrington & Sutcliffe, Los Angeles, California, Counsel to the
Authority.
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 accrued
mterest. The Underwriters will purchase all of the Bonds if any are purchased, the obligation
to 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 prices
lower 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, as
financial 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 assume
responsibility for the accuracy, completeness, or fairness of the information contained in this
Official Statement. The Financial Advisor IS an independent advisory firm and is not engaged
in the business of underwriting, trading, or distributing municipal securities or other public
26
securities. The Financial Advisor is a wholly-owned subsidiary of Marine 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 such
documents 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 the
Authority 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: - -:---:---------
27
(THIS PAGE INTENTIONAU..YLEFT BLANK)
APPENDIX A
DESCRIPfION OF THE CITY OF OAKLAND
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-I
A-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-13
Labor 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
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 Bay
in 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 of major 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 city
in 1889. Oakland is governed by a nine-member City Council, seven of whom are elected by
district and two of whom, 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 of City 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 City Manager 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 the
City'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
A-I
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 subsequently
equalized in August, and is payable in two installments of taxes due November 1 and
February 1, respectively. Taxes become delinquent on December 10 and April 10 for each
respective installment. Taxes on unsecured property (personal property and leasehold) are due
on 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 reimburses
local agencies for the value of the exemptions.
Assessed Valuations
All property is assessed using full cash value as defined by Article XIllA of the State
Constitution. State law provides exemptions from ad valorem property taxation for certain
classes of property such as churches, colleges, nonprofit hospitals, and charitable institutions.
Future assessed valuation growth allowed under Article XIllA (new construction, certain
changes 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 and
schools will share the growth of "base" revenues from the tax rate area. Each year's growth
allocation becomes part of each agency's allocation in the following year. The availability of
revenue from growth in tax bases to such entities may be affected by the establishment of
redevelopment 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 the
taxes. Unsecured property comprises all property not attached to land such as personal property
or 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 operating
nonunitary 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 State-
mandated local program by requiring the assignment of the assessment value of all unitary and
operating nonunitary property in each county of each State assessee other than a regulated
railway company. The legislation established formulas for the computation of applicable
countywide tax rates for such property and for the allocation of property tax revenues
attributable to such property among taxing jurisdictions in the county beginning in fiscal year
A-2
1988/89. This legislation requires each county to issue each State assessee, other than a regulated
railway 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 OAKLAND
ASSESSED 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 54,229,801
2
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 AB 454
Source: Alameda County Auditor-Controller
Tax Levies, Collections and Delinquencies
Taxes are levied for each fiscal year on taxable real and personal property which is
situated in the City as of the preceding March 1. A supplemental roll is developed when property
changes hands which produces additional revenue.
A ten percent penalty attaches to any delinquent payment for secured roll taxes. In
addition, property on the secured roll with respect to which taxes are delinquent becomes tax-
defaulted. Such property may thereafter be redeemed by payment of the delinquent taxes and the
delinquency penalty, plus a redemption penalty to the time of redemption. If taxes are unpaid
for a period of five years or more, the property is subject to auction sale by the County Tax
Collector.
In the case of unsecured property taxes, a 10% penalty attaches to delinquent taxes on
property on the unsecured roll, and an additional penalty of 1.5% per month begins to accrue
beginning November 1st of the fiscal year, and a lien is recorded against the assessee. The
taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action
against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain
facts in order to obtain a judgment lien on specific property of the taxpayer; (3) filing a
certificate 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, improvements
or possessory interests belonging or assessed to the assessee.
Each County levies (except for levies to support prior voter-approved indebtedness) and
collects all property taxes for property falling within that county's taxing boundaries. The
secured tax levy and year-end delinquencies for the City for the most recent fiscal years are
shown in the table below:
CITY OF OAKLAND
SECURED TAX LEVY ANDDELINQUENCIES
Apportioned
Amount 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, Office of Finance
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Tax Rates
The City is divided into 33 Tax Rate Areas. This figure includes one special Tax Rate
Area comprised of aircraft taxable within the City. The largest Tax Rate Area within the City
is Tax Rate Area 17-001 which has a total assessed valuation 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 Article
XllIA 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 1991/92
assessed 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 PIau
9. 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. Sparkmght
15. 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
79,899,484
77,910,351
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 guidelines
for 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 City Manager and heads of each department
to 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 financial
resources 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 the
financing 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 are
financed 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 primarily
though 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 the
fiscal years 1987/88 through 1991/92, listing actual revenues, expenditures and fund
balances:
CITY OF OAKLAND
GENERAL FUND
REVENUES, EXPENDITURES AND OPERATING RESULTS
1987/88 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
REVENUES
Taxes and Franchise Fees $155,403 $174,712 $170,084 $177,768 $182,637
Permits 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 and rental income 10,017 16,582 12,852 12,015 10,048
Revenue from CU1'1'llI1t services
Grant revenue 15,105 16,987 17,619 22,105 21,438
Other revenue 2,619 1,057 10,395 6,230 6,274
TOTAL REVENUES
---ID.
3,472 6,629 7,802 8,465
$193,149 $224,179 $230,214 $239.500 $240,320
EXPENDITURES
General government $ 18,092 $ 21,696 $ 26,993 $ 27,893 33,178
Public safety 88,122 103,163 130,420 143,287 150,411
Office 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 and Cultural 23,818 26,515 18,616 16,579 23,628
Economic, Commumty and
Social Programs 3,514 3,858 6,485 6,579 6,358
Nondepartmental
'
16,701 7,445 11,216 15,243 6,161
Debt Service
~ -.ill:
__0 __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 s54,881
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 the Certificates of PartiClpatlon related to the Oakland Museum (1987/88). These
financings liquidated and trlIDSferred vanous restncted investments from the General Fund Group to
other Fund Groups.
Source: City of Oakkmd Audited Finanaal SIatemefllS,
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The following table reflects the City's revenues, expenditures and operating surpluses for
the general purpose fund for fiscal years 1988/89 through 1992/93:
CITY OF OAKLAND
GENERAL PURPOSE FUND
REVENUES, EXPENDITURES AND OPERATING SURPLUSES
1988/89 THROUGH 1990/91 ACTUAL
1992/93 ADOPI'ED BUDGET
(OOO's)
Actual
Actual Actual Actual (unaudited) Adopted
Total Revenues and Expenditures 1988/89 1989/90 1990191 1991/92 1992/93
REVENUES
Taxes $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 20,636
3
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
Office of public works 17,256 20,598 27,026 25,080 38,660
Office of general services 6,196 5,890 17,432
3
4,730 4,470
Parks, Recreation and Cultural 26,515 18,616 16,579 22,550 26,300
Economic, Community and SOCial
Programs 3,858 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 of Oakland 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). Shown
below are the short-term borrowings for the most recent fiscal years. The City has never
defaulted 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% (priced
to yield 2.60%). According to the terms of issuance, the City has pledged to set aside certain
receipts from taxes, revenues and other moneys which are received by the City for the City'S
general fund sufficient to pay principal and interest on the notes. Such receipts are to be from
moneys received during fiscal year 1992/93 and will be set aside on certain dates all prior to
June 30, 1993.
CITY OF OAKLAND
SHORT-TERM BORROWING
YISCllI Year
1983/84
1984/85
1985/86
1986/87
1987/88
1988/89
1989/90
1990/91
1991/92
1992/93
Source: CIty of Oakland, Office ofFinance.
Amount
$26,000,000
29,800,000
35,700,000
39,000,000
26,000,000
30,000,000
22,500,000
27,500,000
35,000,000
50,000,000
Lease Obligations. Since 1982, the City has entered into four separate sale-leaseback
arrangements involving City property. Certificates of participation were issued by the Civic
Improvement Corporation to finance the acquisition and construction of capital improvements
to twenty-three City properties, and by the Oakland Redevelopment Agency for the acquisition
and improvements to the Henry J. Kaiser Convention Center, the George F. ScotIan Memorial
Convention Center, and the Oakland Museum. Because the certificates in each case are
ultimately 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 amount
of $209,835,000 which mature from 1993 to 2021. Such bonds are payable solely from the
proceeds of guaranteed annuity contracts held in trust with PFRS (as defined below at
A-ll
"Retirement Programs") in the Pension Annuity Expendable Trust fund. Because of the nature
of the financing structure, such bonds are recorded as direct obligations of the City.
In addition, the Oakland Redevelopment Agency has issued three series of Tax Allocation
Bonds for two redevelopment project districts. In each case, the Tax Allocation Bonds are
limited 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 Hill
Parking 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, the
City, in the absence of any other bidder, is obligated to purchase at delinquent assessment sales
and 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 Redevelopment
Agency purchased and leased back City Hall West to the City. In 1988, the Agency issued 1988
City Hall West Lease Revenue and Refunding Bonds. The bonds are payable from and secured
by a pledge of annual lease rentals to be received from the City.
Enterprise Funds Long-Term Obligations. Numerous revenue bonds and certificates of
indebtedness 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 service
for 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 of
June 30, 1992. Such obligations are secured by a pledge of FHA insured mortgage loans issued
from the related bond proceeds to developers in the Acorn Redevelopment Project Area.
Oakland-Alameda County Coliseum. Oakland-Alameda County Coliseum, Inc. is a non-
profit corporation managed by a self-appointed Board of Directors. 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 and
County 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 making
combined lease payments from its general fund as shown below:
CITY OF OAKLAND
GENERAL FUND LEASE OBLIGATIONS
Henry J. G.F. Scotian
Kaiser Memorial Civic
Convention Convention Improvement Oakland
Fiscal Year
~ Center Corporation Musewn Total
1992/93 $4,339,313 $3,895,000 $6,909,000 $1,902,713 $17,046,026
1993/94 4,339,313 3,895,000 6,894,000 3,072,648 18,200,961
1994/95 4,704,312 4,200,000 6,867,000 3,192,828 18,964,140
1995/96 5,069,313 4,502,238 6,735,000 3,192,240 19,498,791
1996/97 5,065,506 4,505,754 4,980,000 3,191,490 17,742,750
Balance 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 of Oakland, Officeof Finance.
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 debt of the City is
shown below. Self-supporting revenue bonds, tax allocation bonds and nonbonded capital lease
obligations are excluded from the debt statement.
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CITY OF OAKLAND
STATEMENT OF DIRECTAND 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. 22.467
Oakland-Alameda County Coliseum 60.188
Alameda 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 Unhty District, 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 School Distnct 99.996
Oakland Unified School Distnct Cert, of Part. 99.996
San Leandro Unified School District Cert. of Part. 14.492
Castro Valley Unified School District and Cert. of Part. 0.008-0.120
City of Oakland 100
City of Oakland Buildmg Authonties 100
City of Oakland 1915 Act Bonds 100
Debt 5/1192
s24,803,056
6,284,020
8,191,587
1,591,366
50,016,763
9,511,308
16,571,971
6,821,032
4,192
1,933,074
16,109,356
49,468,021
315,926
192
12,000,000
381,185,000'
3,990,000
$588,796,864
2
9,511,308
16,571,971
8,191,687
$554,521,998
TOTAL GROSS DIRECT AND OVERLAPPING BONDED DEBT
Less: 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 Bonds
Lease 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 the
table below, the largest one being Service Employees United Public Employees (Local 790)
which represents approximately 49 percent of all City employees. Approximately 72 percent of
all City employees are covered by negotiated agreements.
CITY OF OAKLAND
LABOR RELATIONS
Employee Organization Nwnber of Employees
Oakland Police Officers Association 743
Umted Public Employees (Local 790) 2,690
Intemational Brotherhood of Electncal Workers 26
International Associationof Firefighters 477
(Local #557)
Western Council of Engineers 95
Source: City of Oakland, Office of Personnel 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 by
a Board of Trustees 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 of
all PFRS participants and the amortization of unfunded benefits accumulated as of that date over
a forty year period. OnJune 7, 1988, voters approved a City measure to extend the amortization
period 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 by
the City to help fund the accumulated unfunded benefits. For fiscal year 1991, the City levied
a tax of .1575 % for this purpose. The present value of vested benefits (benefits to which
participants are entitled regardless of future service) was an amount that exceeded related plan
assets at June 30, 1990 by approximately $702.6 million. Effective July 1, 1985, the City's
contributions 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 pension
liability for public safety employees under both PFRS and the Public Employees Retirement
System (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
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and 2000 of PFRS and PERS, respectively. Contributions to PERS are deducted and the
difference 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 actuarially
determined contribution requirements. Employer and employee contributions equaled 105%and
19%, respectively, of current year covered payroll for plan participants. 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.
Oakland Municipal Employees' Retirement System (OMERS) is administered by the City
and covers three nonuniformed employees hired prior to September 1, 1970 who have not
elected 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 not
make 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 all
uniformed employees hired after June 30, 1976. As of June 30, 1991, the unfunded pension
benefit obligation under PERS was $13.1 million.
For accounting purposes, employees covered under PERS are classified as either
miscellaneous employees or safety employees. City miscellaneous employees and City safety
employees 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% for
each group, respectively. The City pays the entire amount of the miscellaneous employees'
annual contribution (7%) to PERS. 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 expected
to be earned in the future as well as those already accrued. PERS also uses the level percentage
of payroll method to amortize any unfunded actuarial liabilities. The amortization period of the
unfunded 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 the
City's favor by an estimated $750,000, which is the City's share of a "disaster pool" shared by
all cities which have had federally-declared disasters since October 1, 1989. Although the City's
property 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 1992/93
represents less than 2% of the City's total budget.
SB 844 allows the City of Oakland, among other cities with port facilities, to require the
Port 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 existing
contracts 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 were
destroyed 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 rebuilding
substantially 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 assistance
to the City and the City fully expects 100% of this cost to be reimbursed by the Federal
Emergency 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 is
legislation 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 have
been issued, 52 homes completed, and 842 applications for permits have been received.
Litigation. On October 20, 1992, seven lawsuits on behalf of approximately 350 persons
were 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 causes
of 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 the
San Francisco Bay in northern California. It is the seat of government of Alameda County, one
of 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
A-I7
entities are headquartered in Oakland, including the Bay Area Rapid Transit District (BART),
East Bay Municipal Utility District, Association of Bay Area Governments (ABAG), Alameda
County Transportation Authority, and the University of California Board of Regents. The
California Department of Transportation (Caltrans) will be completing its headquarters building
In 1992 and the U.S. General Services Administration will complete its twin towers in 1993.
Oakland's population exceeds 376,700, making it the sixth largest city in California and
the third largest Bay Area city. The 1990 census figures demonstrate that Oakland is one of the
most ethnically diverse city in the country, with 81 different languages and dialects spoken. The
City's workforce is both sizable and multi-skilled. More than half of its residents are between
the ages of25 and 49, while almost 35 percent live in households with income levels of $35,000
or more.
The East Bay economy (Alameda and Contra Costa Counties), which accounted for 39
percent of all new job growth in the Bay Area in the 1980s and 30.2 percent in 1990, will
continue to be the primary engine of growth for the Bay Area of the 199Os. Sales and Marketing
Management Magazine estimates that the value of goods and services will increase by 66 percent
by the year 2000. With $38.3 billion in buying power and nearly $16.2 billion in retail sales in
1990, the two-county area is one of the highest spending markets in the nation. Projections made
by ABAGindicate that Oakland's employment growth between the years 1985 to 1995 will be
12.5 percent or over 23,000 jobs.
HIstorically, the City's economic base has been largely industrial, and the City retains
a strong manufacturing sector. Over 700 manufacturing firms are located in the City with an
increasing commercial and service sector presence. According to the Oakland Chamber of
Commerce there is approximately 12 million square feet of office space within the City, and
about 50% of that is in Class A office buildings. Oakland's vacancy rate for office space was
14.5% at the end of the first quarter of 1992, while its Class A office vacancy rate was 13.7%.
Two major office buildings and one parking garage are under construction. An increasing
number of major retailers have opened locations in Oakland and there are several
commercial/shopping distncts emerging in the City.
Much of the City's economic strength is attributable to its extensive transportation
system. The Port of Oakland is one of the busiest container facilities in the nation and Oakland
International Airport offers service to more than 150 cities. Nine major U.S. and California
highways converge in Oakland, providing convenient travel throughout the Bay Area and direct
access to other regions of the country. High speed rail transportation to San Francisco and
throughout the East Bay is offered by the Bay Area Rapid Transit District (BART) and local bus
service is provided by AC Transit. Additionally, ferry service is available to San Francisco.
Services and other important resources are extensive and locally provided. Eight major
hospitals with over 1,700 beds are located in the City and serve City residents. There are more
than 170 public and private schools which provide educational opportunities to the City's young
people on the elementary and secondary levels. Utility services are provided by East Bay
A-18
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, operated
by the Port of Oakland, has developed into a major regional center of air passenger and cargo
jet operations. Last year it was one of the fastest-growing airports in the nation in number of
passengers 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 the
zone 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 growing
skilled 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 robust
neighborhood 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 public
facilities, 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 of museums, 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
A-19
growth since 1960, and it is estimated that population 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 COUNTY
POPULATION
~
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 for 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 County will continue to experience moderate job growth
with 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 is
completed. At this time, the various military bases in the County are not slated for closure.
A-20
The following table represents the labor patterns in the County for 1987 through 1990
and 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
Jnne
1987 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/A
Nonagriculture 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
A-21
Largest Employers
The following tables represent the largest public and private employers in the City of
Oakland:
CITY OF OAKLAND
LARGEST PUBLIC EMPLOYERS
Public Entity Product/Service
AC Transu DIstrict
Alameda County
Bay Area Rapid Transit District
East Bay Municipal Utility District
Highland Hospital Oakland
CIty of Oakland
Naval Hospital Oakland
Oakland Pubhc Schools
Oakland Army Base
Peralta Community College
US Navy Supply Center
US Post Office
Source: Oakland Chamber of Commerce
A-22
Pubhc Transportation
Governmental Operations
Pubhc Transportation
Unlity/Water
County Medical Center
Governmental Operations
Hospital-Medical Center
Education
Military Traffic Management/Cargo Control
Education
Government Installation
Postal Services
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-Dlmois
Pacific 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 Containers
Public 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 OAKLAND
TAXABLE 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 of Equalization, Department ofResearch and
Statisttcs.
A-23
Construction Activity
A six-year history of building permits and valuation appears in the following table:
CITY OF OAKLAND
BUll.DING PERMITS AND VALUATIONS 1986-1991
Year
1986
1987
1988
1989
1990
1991
Residential
Pennits
820
650
612
505
336
762
Residential Valuation
an Thousands)
$144,902
101,383
106,892
73,941
71,399
113,323
Nonresidential Valuation
!In Thomands)
104,596
82,709
92,260
57,776
49,284
89,982
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 shown
in the table below.
CITY OF OAKLAND AND ALAMEDA COUNTY
MEDIAN HOUSEHOLD EFFECTIVE BUYING INCOME
1985-1990 Median EBI
Year City of Oakland Alameda County California United States
1985 $20,712 $28,037 $26,557 $23,680
1986 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.
A-24
APPENDIXB
GENERAL PURPOSE
FINANCIAL STATEMENTS
CITY OF OAKLAND
(TInS PAGE INTENTIONALLY LEFT BLANK)
Deloitte&
Touche
2101 Webster Street Facsimile (510) 835-4888
Oakland, California 94612-3027
Telephone (510) 287-2700
INDEPENDENT AUDITORS' REPORT
Honorable Mayor and Members of the City Council
of the City of Oakland, California
We have audited the accompanying general purpose financial statements of the City of
Oakland, 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. Our
responsibility is to express an opinion on these general purpose financial statements based on
our audit. We did not audit the financial statements of the Oakland Convention Center
Management, Inc., the Oakland Municipal Employees' Retirement System, the Oakland
Redevelopment Agency and the Police and Fire Retirement System, whose statements reflect
total assets and total revenues constituting 23 % and 2%of the combined totals of the Special
Revenue 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 totals
of 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 Account
Group. Those statements were audited by other auditors whose reports have been furnished to
us, and our opinion, insofar as it relates to the amounts included for such entities 10 the Special
Revenue, 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 other
auditors.
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 audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the
general purpose financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall 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 at
June 30, 1991, and the results of its operations and the cash flows of its proprietary fund types
for the year then ended in conformity with generally accepted accounting pnncrples.
November 15, 1991
..,. CITY OF OAKLAND
ALL FUNDTYPES AND ACCOUNT GROUPS
COMBINED BALANCE SHEET
June 30, 1991
(In Thousands)
Governmental Fund Types
Special Debt Capital
General Revenue Service Projects
ASSETS AND OTHER DEBITS
Assets
Cash and investments $ 53,646 $32,333 $ 2,846 s 66,359
Receivables (net of allowance for
uncollectibles):
Accrued interest 1,412 887 827 4,838
Property taxes 2,394 197
Accounts 15,066 81 62 2,900
Grants 1,666 7,846 871
Due from other governments 293
Special assessments 3,949
Due from other funds 29,144 1,260 102 2,770
Advances to other funds 27,207 730
Notes and loans receivable (net of
allowance for uncollectibles) 9,504 34,947 16,167 22,468
Restricted cash and investments with
fiscal agents:
Designated for deferred
compensation plan
Other 2,491 81,660 228,339
Inventories
Property and equipment (net, where
applicable of accumulated
depreciation)
Land held for resale 9,251
Other 12
Other Debits
Amount available in debt service funds
Amount to be provided for long-term
obligations
TOTAL ASSETS AND OlHER DEBITS $140,039 $80,784 $105,613 $338,089
B-2
GENERAL PURPOSE FINANCIAL STATEMENTS
Proprietary
Fund Types
Enterprise
Internal
Service
Fiduciary
Fund Types
Trust
and
Agency
Account Groups
Total
(Memorandum
Only)
$ 44,522 $14,456 $278,690 $ $ $ 492,852
303 4,732 12,999
2,591
15,326 101 89 33,625
1,628 12,011
293
3,949
140 1,018 3,171 37,605
27,937
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 1,069,003
9,251
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)
B-3
"" CITY OF OAKLAND
ALL FUNDTYPES AND ACCOUNT GROUPS
COMBINED BALANCE SHEET, continued
June 30, 1991
(In Thousands)
Governmental Fund Types
Special Debt Capital
General Revenue Service Projects
LIABILITIES, EQUITY AND
OTHER CREDITS
Liabilities
Accounts payable and
s 34.334 accrued liabilities s 3.937 $ 6,428 $ 3,415
Due to other funds . 6.067 3.164 1.042 20,415
Advances fromother funds 458
Due to other governments 135
Deferred revenue 9.842 35,283 3.949 12.992
Tax and revenue anticipation
notes payable 27.500
Tax exempt commercial paper
Matured bonds and interest payable 4,618
Long-term obligations
Obligations under deferred
compensation plans
Other
258 54 6 488
Total liabilities
78,136 42.438 16,043 37,768
Equity and Other Credits
Investment in general fixed assets
Contributed capital
Retained earnings
Fund balances:
Reserved
29,448 25.054 89,570 300.321
Unreserved:
Designated 19,689 9,250
Undesignated
12,766 4,042
Total equity and other credits 61.903 38.346 89,570 300 321
TOTAL UABllJTIES, EQUITY
AND OTHER CREDITS
$140,039 $80,784 $105,613 $338,089
The notes to the financial statements are an integra! part of this statement,
8-4
GENERAL PURPOSE FINANCIAL STATEMENTS
Proprietary
Fund Types
Enterprise
Internal
Service
Fiduciary
FundTypes
Trust
and
Agency
Account Groups
General General
Fixed Long-Term
Assets Obligations
Total
(Memorandum
Only)
$ 26,863 s 2,392 s 12,424 $ s s 89,793
5,795 13 1,109 37,605
26,549 200 730 27,937
135
18,754 129 80,949
27,500
29,300 29,300
9,905 14,523
327,613 3,960 3,950 612,468 947,991
9,743 33,631 43,374
12,268" 1 13,075
466790 6,694 51.845 612,468 1.312,182
460,910 460,910
50,185 17,382 67,567
214,372 16,046 230,418
482,792 927,185
1,538 30,477
1.929 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)
8-5
'"CITY OF OAKLAND
ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
Year ended lune 30, 1991
(In Thousands)
Governmental Fund Types
Special Debt Capital
General Revenue Service Projects
REVENUES
Taxes:
Property $ 70,345 $12,755 $ 1,173 $25,126
State 45,175 8,754
Local 62,248
Licenses and permits 6,160 1
Fines and penalties 7,420 2,434
Interest and rental 12,015 2,248 4,274 27,387
Charges for services 22,105 374
Federal and state grants and subventions 6,230 33,510 2,766
Pension annuity distributions
Other
7,802 6,111 1,934
TOTAL REVENUES 239.500 66,187 5,447 57,213
EXPENDITURES
Current:
General government 27,893 628 11,758
Public safety 143,287 920 1,793
Public works 27,026 14,172 1,210
General services 5,006 3,088 156
Parks, recreation and cultural
development 16,579 10,083 210
Community and economic
development 6,579 23,812 827
Other 11,172 1,019 31 2,523
Capital outlay 4,071 9,501 38,475
Debt service:
Principal retirement 3,695
Interest charges 41,630
Bond issuance costs 116
TOTAL EXPENDITURES 241.613 63,223 45,472 56,952
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES,
CARRIED FORWARD $ (2.113) $ 2,964 $ (40 025) $ 261
B-6
Fiduciary
Fund Type
Expendable
Trust
$
2,245
30
1,785
11,898
10,120
26,078
Total
(Memorandum
Only)
$109,399
53,929
62,248
6,161
9,854
48,169
22,509
44,291
11,898
25,967
324.425
GENERAL PURPOSE FINANCIAL STATEMENTS
3,321 43,600
1,332 147,332
114 42,522
1 8,251
350 27,222
2,896 34,114
1,904 16,649
52,047
3,695
41,630
116
9,918 417,178
$16,160 $ (22,753)
(continued)
B-7
CITY OF OAKLAND
ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUNDBALANCES, continued
Year Ended June 30, 1991
(In Thousands)
Governmental Fund Types
Special Debt Capital
General Revenue Service Projects
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES,
BROUGHT FORWARD
$ (2,113) $ 2,964 $(40,025) $ 261
OTHER FINANCING
SOURCES (USES)
Property sale proceeds 56 17 1,468
Proceeds from issuance of bonds 77 12,000
Operating transfers in 1,204 1,268 49,681 12,479
Operating transfers out
(l0,841) (l,283) (3,731) (29,903)
TOTAL OTHER FINANCING
SOURCES (USES) (9.581) 2 46,027 (3,956)
EXCESS (DEFICIENCY) OF REVENUES
AND OTIIER FINANCING SOURCES
OVER (UNDER) EXPENDITURES
AND OTI:IER FINANCING USES (11,694) 2,966 6,002 (3,695)
Fund balances at beginning of
year, as restated (Note 21) 119,868 36,778 40,619 298,957
Residual equity transfers in 339 42,949 5,059
Residual equity transfers out
(46,610) (1.398)
FUND BALANCES AT END OF YEAR $ 61,903 $ 38,346 $ 89.570 $300,321
Thenotesto thefinancial statements are an~ t e g r a 1 panof thisstatement.
B-8
Fiduciary
Fund Type
Expendable
Trust
$ 16,160
127
07.532)
07,405)
(1,245)
221,187
(339)
$219,603
Total
(Memorandum
Only)
$ (22,753)
1,541
12,077
64,759
(63,290)
15,087
(7,666)
717,409
48,347
(48.347)
$709,743
(concluded)
GENERAL PURPOSE FINANCIAL STATEMENTS
8-9
'"CITY OF OAKLAND
GENERAL FUND AND ANNUALLY BUDGETED SPECIAL REVENUE
AND DEBT SERVICE FUNDS
COMBINED SCHEDULE OF REVENUES, EXPENDITURES
AND ENCUMBRANCES BUDGET ANDACTUAL
ON A BUDGETARY BASIS
Year endedJune 3D, 1991
(In Thousands)
General Fund
Actual on a Variance
Revised Budgetary Favorable
Budget Basis (Unfavorable)
REVENUES
Taxes:
Property $ 72,115 $ 70,345 $ 0,770)
State 43,990 45,175 1,185
Local 64,672 62,248 (2,424)
Licenses and permits 8,955 6,160 (2,795)
Fines and penalties 6,606 7,420 814
Interest and rental 7,374 10,146 2,772
Charges 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 9,349
Public safety 140,945 143,139 (2,194)
Public works 31,700 26,945 4,755
General services 5,513 4,983 530
Parks, recreation and cultural
development 17,052 16,569 483
Community and economic
development 7,633 6,602 1,031
Other 17,519 21,430 (3,911)
Capital outlay 19,226 3,217 16,009
Debt service
TOTAL EXPENDITURES AND
ENCUMBRANCES 276717 250,665 26,052
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
AND ENCUMBRANCES $ (20,992) $ ( 9 7 ~ $20,017
11Ie notes10 the financial statements are an integral part of thisstatement
B-10
GENERAL PURPOSE FINANCIAL STATEMENTS
Annually Budgeted Annually Budgeted
Special Revenue Funds Debt Service Funds
Actual on a vartance- Actual ona Variance .
Revised Budgetary Favorable Revised Budgetary Favorable
Budget Basis (Unfavorable) Budget Basis (Unfavorable)
$ $ $ $ $ 501 $ 501
4,774 8,754 3,980
1,219 1,219
286 286 541 541
1 1
6,889 1,364 (5,525)
88 88 16,121 15.429 (692)
11.663 11.712 49 16,121 16.471 350
9,359
147
7,902
124
1,457
23
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
8-11
$ CITY OF OAKLAND
ALL PROPRIETARY FUND TYPES AND PENSIONTRUST FUNDS
COMBINED STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN RETAINED EARNINGS/FUND BALANCES
Year Ended June 30, 1991
(In Thousands)
Proprietary Fiduciary
Fund Types FundTypes Total
Intemal Pension (Memorandum
Enterprise Service Trust Only)
OPERATING REVENUES
Interestandrental $100,004 s s 24,716 s 124,720
Charges fOl services 14,839 26,143 40,982
Conlributions 28,929 28,929
Other 4773 52 4825
TOTAL OPERATING REVENUES 119.616 26195 53645 199456
OPERATING EXPENSES
Personnel 33,686 9,906 43,592
Supplies 2,502 5,654 8,156
Depreciation andamortization 21,979 3,180 25,159
Conttaetua! servicesand supplies 16,422 146 16,568
Repairs andmaintenance 4,512 923 5,435
General and administrative 15,242 4,211 19,453
Rental 633 682 1,315
Benefit payments 44,586 44,586
Intereston bonds 885 315 1,200
WriUH>ff of other assets 10,427 10,427
Other 2014 333
865 3212
TOTALOPERATING EXPENSES 108302 25035 45766 179.103
OPERATING INCOME 11 314 1 160 7879 20353
NONOPERATING REVENUES (EXPENSES)
Federalandstategrants 1,330 1,330
Interest, 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
NETINCOME (LOSS) (12,714) 5,998 7,879 1,163
Depreciation of fixed assets acquired
withcontributed capital 1,931 1,931
Retainedearmngs/fund balancesat beginnmg
of year, as restated (Note 21) 225.155 1O.Q48 258;W 493980
RETAINED EARNINGS/FUND
BALANCES ATENDOF YEAR s214,372 s 16,046 s 266,656 S 497,074
The notes to the fmancial statementsare an integra! part of thisstatement.
8-12
GENERAL PURPOSE FINANCIAL STATEMENTS
ALL PROPRIETARY FUNDTYPES
COMBINED STATEMENT OFCASH FLOWS
Year ended June 30, 1991
(In Thousands)
Enterprise
Total
Internal (Memorandum
Service Only)
(4,688) (78) (4,766)
(1,326) (143) (1,469)
(50) (150)
$ (6,164) $ (221) $ (6.385)
(continued)
CASH FLOWS FROM OPERATING
ACI1VITIES:
Operating Income
Adjustments to reconcile operating income to
net cash provided by operating activities
Depreciation and amortization
Retirement of property and equipment
Writedown of other assets
Changes in assets and liabilities:
Accounts receivable
Notes and loans receivable
Other assets
Accounts payable and accrued liabilities
Deferred revenue
Obligations under deferred
compensation plans
Other
NET CASH PROVIDED BY
OPERATING AcnVITIES
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:
Inter-fund borrowings - net
Operating transfers to other funds
Repayment of long-term debt principal
NET CASH USED FOR NON-CAPITAL
FINANCING ACI1VITIES
$11,314
21,979
8,894
10,427
1,451
134
(984)
(6,739)
2,621
5,744
(41)
54,700
$ 1,160
3,180
(19)
(19)
1,360
5,662
$12,474
25,159
8,894
10,427
1,432
134
(1,003)
(5,379)
2,621
5,744
(141)
60.362
B-13
'"CITY OF OAKLAND
ALL PROPRIETARY FUND TYPES
COMBINED STATEMENT OF CASH FLOWS, continued
Year ended June 30,1991
(In Thousands)
Enterprise
Total
Internal (Memorandum
Service 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 AND
RELATED FINANCING ACTIVITIES:
Issuance of commercial paper - net
Long-term debt:
New borrowings
Repayments
Proceeds from sale of fixed assets
Acquisition and construction of capital assets
Grants from governmental agencies
Repayment of long-term debt interest
Extraordinary gain (loss) on earthquake
Repayment of inter-fund borrowings
Other
NET CASH USED FOR CAPITAL AND
RELATED FINANCING ACTIVITIES
CASH FLOWS PROVIDED BY
INVESTING ACTIVITIES:
Decrease (increase) in restricted cash - net
Purchase of investments - net
Purchase ofOPA partnership interest
Deferred charges and other assets
NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES
NET INCREASE (DECREASE) IN
CASH AND EQUIVALENTS
CASH AND EQUIVALENTS AT
BEGINNING OF YEAR
CASH AND EQUIVALENTS
AT 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.
8-14
(concluded)
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
June 30, 1991
(1) ORGANIZATION AND DEFINITION OF REPORTING ENTITY
The City of Oakland (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 consisting 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 Police 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 Peralta
Community 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
8-15
'"CITY OF OAKLAND
City as to fiscal accountability and financial affairs. The 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
The 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 set of self-balancing accounts that comprise its assets, liabilities, fund equity,
revenues, and expenditures or expenses, as appropriate. The various funds and 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
The 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 and 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 in
trust, 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
Enterprise Funds 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.
B-16
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 results of 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 liabilities
associated with the operations of these funds are included on the balance sheet. Proprietary
fund type operating statements present increases (revenues) and decreases (expenses) in net
total assets. Reponed fund equity (net total assets) is segregated into contributed capital and
retained earnings components.
Modified Accrual Basis of Accounting
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
8-17
CITY OF OAKLAND
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 expendable
available 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 if 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 calendar
year, 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 behalf of the City
are also recognized as revenue.
8-18
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.
Accrual Basis of Accounting
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 and
expenses are recognized when incurred
DeferredRevenues
Deferred revenues are those revenues for which asset recognition criteria have been met, but
for which revenue recognition criteria have not been met. The City typically records deferred
revenues related to: uncollected property taxes; estimated special assessments not yet
payable; intergovernmental revenues (primarily grants and subventions) received but not
earned (qualifying expenditures not yet incurred); long-term contracts; and notes or loans
receivable arisingfrom loan subsidy programs which are charged to operations upon funding.
Budgetary Data
Original Budget
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 for
which 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 Annually
Budgeted 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-year rather than annual basis.
If 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
8-19
'"CITY OF OAKLAND
of the City Manager. 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 carried
forward from the prior year are included in the revised budgetary data. Historically,
appropriations carried forward have ultimately 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 such
appropriations during the fiscal year. Additional budget appropriations in the General
Fund were $1,500,000 in construction loans to California Hotel, $594,000 for funding
to various overspent grant programs, $500,000 for Lighting and Landscape
Assessment District exemptions, and $791,000 for other minor projects and activities.
Transfers of appropriations between departments and projects within the same fund
must be approved by the City Manager. Revised budget amounts reported in the
accompanymg General Purpose Financial Statements reflect both the appropriation
changes approved by the City Council and the transfers approved by the City
Manager.
Encumbrances
Encumbrance accounting, under which purchase orders, contracts, and other commitments for
expenditure of funds are recorded to reserve that portion of the applicable appropriation, is
employed 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 be
honored during the subsequent year. Encumbrances are combined with expenditures for
budgetary comparison purposes.
Budget-Basis of Accounting
The City adopts budgets each fiscal year on a basis of accounting which is different from
generally accepted accounting principles (GAAP). The major areas of difference are as
follows:
For budgetary purposes, outstanding commitments related to construction contracts
and other purchases of goods and services are recorded as expenditures at the time
contracts or purchase agreements are entered into. Under the GAAP basis, these
obligations are only recognized when goods are actually received or services are
actually rendered.
8-20
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 projects
and 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 and
leaseback 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 formof 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 other
activity between funds, are recorded as revenues and expenditures under the
budgetary basis. Under the GAAP basis, these items are reclassified and recognized as
other financing sources, other financing uses, residual equity transfers, and reductions
of long-term advances.
8-21
$ 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 for
assets 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 be
cash 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 to other 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, consisting of 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.
8-22
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 the General Fixed Assets Account Group, with the exception of
certain assets acquired prior to July 1, 1984, which have been recorded at estimated historical
cost. 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 Account
Group. 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 cranes
Furniture, machinery and other equipment
5-50 years
25 years
5-10 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 is
offset 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 offsetting 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.
B-23
$ CITY OF OAKLAND
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.
Reti rement 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 liability 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.
8-24
NOTESTO FINANCIAL STATEMENTS
Contributed Capital
Contributed capital in the proprietary fund types represents the accumulation of contributions
in the form of cash or other assets which generally do not have to be returned to the
contributor. Such contributions are recorded directly to contributed capital and, accordingly,
are not recognized as revenue. The following transactions are recorded as contributions in the
proprietary fund types:
Cash and other asset transfers of equity from other funds.
Receipts of federal and state grants and subventions externally restricted for
acquisition of 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 available
for 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 fund
equity for which the City has tentative plans for financial resource utilization in a future
period. These amounts may not result In actual expenditures.
Reclassifications
Certain 1990 amounts have been reclassified to conform to the financial statement
presentation for 1991.
Total Columns on Combined 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, or
cash flows of the City in conformity with GAAP. Such data is not comparable to a
consolidation.
8-25
'"CITY OF OAKLAND
(3) CASH AND INVESTMENTS AND RESTRICTED CASH AND
INVESTMENTS WITH FISCAL AGENTS
The City maintains a cash and investment pool consisting of City funds and cash received
and 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 of
the policy are legality, safety, liquidity, diversity, and yield. The policy addresses soundness
of financial institutions in which the City can deposit funds, types of investment instruments
permitted by the California Government Code, duration of the investments, and the
percentage of the portfolio which may be invested in certain instruments. Pooled investments
permitted 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 and
Poor's Corporation or Moody's Investor Service Inc., negotiable certificates of deposit, time
certificates of deposit, repurchase agreements, and reverse repurchase agreements. The City'S
investment policy stipulates that the collateral to back up the repurchase agreement bepriced
at market value and be held in safekeeping by the City's principal banking institution.
Additionally, the City Council has adopted certain requirements prohibiting investments in
companies 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 compliance with the above investing requirements.
Other deposits and investments are invested pursuant to the governing bond covenants or
Retirement Systems' investment policies. Under the investment policies, the investment
counsel is given the full authority to accomplish the objectives of the bond covenants or
Retirement Systems subject to the discretionary limits set forth in the policies.
Total City deposits and investments are (in thousands):
Deposits
Investments
TOTAL
$ 2,826
1.101.948
$1,104,774
These are classified on the Combined Balance Sheet as (in thousands):
Cash and investments
Restricted cash and investments with fiscal agents
TOTAL
Deposits
$ 492,852
611.922
$1,104,774
At June 30,1991, the carrying amount of the City's deposits was $2,826,000 and the bank
balance was $12,805,000. Deposits include substantially all checking accounts, interest
earning 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
8-26
NOTES TO FI NANCIAL STATEMENTS
held by the City's agent in the City's name and $11,071,000 was collateralized with securities
held by the pledging financial institution's trust department or agent in the City's name, in
accordance with Section 53652 of the California Government 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 federal
deposit insurance. The collateral must be held at the pledging bank's trust department or
another 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 by
the City at year-end. Category 1 includes investments that are insured or registered, or
securities 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 or
agent 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'S
name.
At June 3D, 1991, investments included the following (in thousands):
Category Carrying Market
Typeof 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 78,554
Corporatestocks 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
Lifeinsurance annuityconrracts 187,021 187,021
Local Agency InvestmentFund 10
000
10000
TOTAL INVESTMENTS $1,101,948 $1,141,828
8-27
.. 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 Funds
Federal and State Grants 791
Traffic Safety and Control
104
State Gas Tax
99
Other Special Revenue 349 2,231
Oakland Redevelopment Agency 120 730
1.260 3,164
Debt Service Funds
Medical Hill Parking District 72
Civic Improvement Corporation 30 1,041
Pension Annuity
1
102 1.042
Capital Projects Funds
Municipal Improvement Capital 1,984 18,583
Oakland Redevelopment Agency 786 1.832
2,770 20,415
Enterprise Funds
Parks and Recreation
94
Sewer Service
150
Port of Oakland 5,200
Oakland Convention Management, Inc,
140 351
140 5,795
Internal Service Funds
Equipment 822
Radio 13
Facilities 71
Reproduction 11
Central Stores 114
1.018 13
Fiduciary Fund Types
Pension Trust - PFRS 1,966
Expendable Trust:
Oakland Redevelopment Agency Projects 1,205 1,047
Parks, Recreation and Cultural Trust 60
Other Expendable Trust 2
3,171 1.109
TOTAL $37,605 $37,605
B-28
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 Revenue Fund
Oakland Redevelopment Agency 730
Capital Projects Fund
Oakland Redevelopment Agency
458
Enterprise Fund
Port of Oakland 26,549
Internal Service Fund
Central Stores
200
Expendable Trust Fund
Oakland Redevelopment Agency 730
TOTAL $27,937 $27.937
(6) MEMORANDUMS OF UNDERSTANDING
The City and the Port have Memorandums of Understanding (MOUs) relating to various
administrative, personnel, data processing, and financial services ("Special Services"), and
police, fire, public street cleaning and maintenance, 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 amounts
representing an interest factor claimed by the City to be due as a result of debt service
payments made by the City on 1909, 1925 and 1955 series general obligation bonds which
benefited the Port. Payments of $4,946,000 were made by the Port to the City in fiscal year
1990-91.
Pursuant to the Sixth Supplemental Agreement to the MOUs, effective June 4, 1991, the City
and 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 Port
was $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 by
the Board of the Port Commissioners. As of June 30, 1991, $26,549,000 has been recorded as
advances to other funds in the City's General Fund and advances from other funds in the Port
of Oakland Enterprise Fund; the remaining balance of $5,200,000, representing the current
portion of the advance, has been recorded as due to/from other funds. Future annual
8-29
.. CITY OF OAKLAND
payments are required, but are payable only to the extent the Port determines that surplus
monies are available in the Port's Revenue Fund.
Payments for Special Services are treated as a cost of Port operations and have priority over
certain other expenditures of Port 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 fiscal
year 1990-91. The Port's legal counsel advised the Port that payments for General Services to
the 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 in
fiscal year 1989-90, the Port did not declare that surplus monies were available and therefore
no payments have been made for General Services for fiscal year 1990-91. The City
maintains 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 been
reflected 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 due
December 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 of
America reference rate, principal and interest payable in
monthly payments until August 28, 1994
Preservation Venture, bearing interest at 3%, principal and interest
due August 31, 1993
$15,000
30,780
8,463
1,100
6,019
2,879
3,854
NOTES TO FI NANCIAL STATEMENTS
Preservation Venture, bearing interest at 3%, principal and interest
due 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 of
America 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
8-31
CITY OF OAKLAND
(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 retail
facilities and public areas was completed in fiscal year 1989-90. A major portion of this
project 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 partnership
Interest was owned by Portside Properties. The Waterfront Association. effectively owned
50% by the Port and 50% by OPA, maintains the common area of the Jack London
Waterfront properties.
On August 17, 1990, the Port purchased the 24% general partnership interest in OPA from
Portside Properties for $2,550,000. Additionally, the 1% limited partnership interest in OPA
was transferred from Portside Properties to Port of Oakland Public Benefit Corporation (Port-
PBC), a nonprofit benefit corporation. These transactions increased the Port's effective
ownership in OPA to 100%.
Accordingly, effective fiscal year 1990-91, the Port changed its consolidation policy to
include OPA, Port-PBC and the Waterfront Association on a 100% consolidated basis. Prior
to such acquisition, the Port's 75% investment in OPA was accounted for on the equity
method. The change in consolidation policy had no effect on net income (loss) for the years
ended June 30, 1991, or 1990.
Writedown of OPA Assets
Based on current and projected operating revenues and expenses, the Port determined that it
would not recover its full investment in the Jack London Waterfront properties. In fiscal year
1990-91, 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 capitalized
costs 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 secured
a $40,000,000 construction loan with Bankers Trust Company in 1988 to cover the estimated
construction 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 for
a period of two years if certain conditions specified in the loan agreement are met. The loan
bears interest at Bankers Trust Eurodollars plus 1.75% or prime plus .5%. The interest rate on
the loan was 8.5% at June 30, 1991. The loan is secured by a first deed of trust and
assignment of rent and fixtures on OPA's property and by a $5,000,000 guarantee from the
Port.
8-32
NOTES TO FINANCIAL STATEMENTS
Provisions of the loan allow OPA to fund interest payments through additional principal
draws on the loan. The loan agreement contains certain restrictive provisions as to OPA and
requires that OPA maintain certain financial ratios. Due to the change in partnership structure
in August 1990, Bankers Trust notified OPA that it was in default of the loan agreement and
would 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 that
the default is not cured, Bankers Trust has the option to seek remedies against OPA. This is
limited 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 was
forecast 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 Balance
July 1, June 30,
Changes in General Fixed Assets 1990 Additions Deletions 1991
Land $ 46,729 $ 3,842 $- $ 50,571
Facilities and improvements 370,396 4,100 374,496
Furniture, machinery and
equipment 17,185 4,340 45 21,480
Construction in progress
4,450 9.913 14.363
TOTAL
$438,760 s22,195 $45 $460,910
B-33
CITY OF OAKLAND
310
7
28,968
s
29,285
(16,267)
$13,018
(162,227)
$595,075
Enterprise
Funds
s 64,070
627,556
21,274
44,402
757,302
Proprietary Fund Types
Land
Facilities and improvements
Furniture, machinery and equipment
Construction in progress
Less accumulated depreciation
and amortization
TOTAL
A summary of property and equipment at June 30, 1991, is as follows (in thousands):
Internal
Service
funds
Facilities and improvements in the Enterprise Funds consist primarily 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 notes
payable 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 up
to $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.
8-34
NOTES TO FINANCIAL STATEMENTS
(12) LEASES
A major portion of the Port's property and equipment is held for lease. Leased assets include
marine terminal facilities, airport facilities, a golf course, office and commercial space, and
land. All leases have been classified as operating leases.
Certain maritime facilities are leased under agreements which provide the tenants with
preferential, 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 annual
usage 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 (in
thousands):
Minimum noncancelable rentals,
including preferential assignments
Contingent rentals in excess of minimums
Secondary use of facilities leased
under preferential assignments
Total revenues from long-term leases
$ 32,150
7,138
4.683
$ 43,971
As of June 30, 1991, minimum future rental revenues for fiscal years ending June 30 under
noncancelable operating leases having an initial term in excess of one year are as follows (in
thousands):
1992
1993
1994
1995
1996
Thereafter
Total minimum future rental revenues
$ 29,475
26,515
25,897
24,894
21,569
177.Ql3
$305,363
835
CITY OF OAKLAND
(13) LONG-TERM OBLIGATIONS
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,

Retirements Balance
1990 an Net and Net at June 30,
Increases Decreases 1991
Bonds payable $393,059 $12,000 $ 3,515 $401,544
Certificates of participation 169,110 169,110
Special assessment debt with
governmental commitment 4,365 180 4,185
Accrued vacation and sick leave 13,370 499 13,869
Self-insurance liability for
workers' 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
B-36
NOTES TO FINANCIAL STATEMENTS
General long-term obligations at June 30, 1991 consisted of the following (in thousands):
Interest Balance at
Maturity Rates June 30, 1991
BondsPayable
General ObligatlOl1 Bonds, Series1991A(a) 1993-2015 5.5%-8.5% s 12,000
Special Revenue RefundingBonds(b) 1993-2021 6.5%-7.6% 209,835
OaklandRedevelopment Agency
Tax AllocationBonds (c)
Central District, Senes 1989A
Serial bonds 19932000 5.75%-6.55% 26,900
Capital apprecianonbonds 2001-2009 6.6%-6.65% 11,899
Tenn bonds 2010-2019 7.125% 51,600
Tax AllocationRefundingBonds (d)
Central District, Series 1986
Serial bonds 1991-2000 5.25%-7.5% 19,560
Tenn bonds 2001-2014 7.5% 66,375
AcornRedevelopment Project, 1988
Serial bonds 1993-2000 6.30%-7.00% 1,300
Tenn bonds 2007 7.40% 2.075
401544
Certificates of Participation
Civic Improvement Corporation (e) 1992-2016 Yanable 52,300
OaklandRedevelopment Agency
HJ. Kaiser ConventionCenter (f) 2002 9.875% 8,550
HJ. Kaiser Convenuon Center (f) 2014 10.00% 34,950
ScotianMemorial Convention Center (g) 2014 10.25% 38,000
OaklandMuseum 1987SeriesA (h) 1992-2002 6.20%-7.85% 9,850
OaklandMuseum 1987SeriesA (h) 2007 8.10% 10,115
OaklandMuseum 1987SeriesA (h) 2012 8.125% 15345
169 110
SpecialAssessment Debt with
Govemmental Commitment
Medical Hill Parking District Bonds 1989 (i)
Other Long-Tenn Liabilities
Accruedvacationand sick leave '
Self-insurance liability for workers' compensation
Estimated claims payable
TOTALGENERALLONG-TERM OBLIGAnONS
2004 6.70%-7.50% 4185
13,869
15,907
7853
37 629
$ 612,468
8-37
'"CITY OF OAKLAND
Bonds Payable
(a) General Obligation Bonds, Series 1991A
On February 19, 1991, the City issued $12 million of Series 1991A General
Obligation Bonds. The City received authorization to issue $60 million of general
obligation 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 series
are 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 of
rate 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 Trust
Fund. The Revenue Refunding Bonds maturing in 2021 are subject to mandatory
redemption prior to their stated maturities in direct order of their maturities from
sinking fund payments commencing on August 1,2004.
(c) Tax Allocation Bonds
On August I, 1989, the Central District Redevelopment Project Tax Allocation
Bonds, 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 and
related 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 additional
indebtedness payable from subordinated tax revenues on a parity with the Tax
Allocation Bond when set subordinated tax revenues received by the Agency in the
prior year equals or exceeds 120% of maximum 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 interest
payment 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.
8-38
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 District
Redevelopment Project Tax Allocation Bonds, Series A and B.
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 are
payable from and secured by a pledge of incremental property taxes resulting from the
increase in assessed valuations within the Central District Redevelopment Project
subsequent to the adoption of the related redevelopment plan. The Agency must set
aside from incremental tax revenue received from the Central District an amount
equal 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 beginning
February 1,2001.
The Acorn Redevelopment Project 1988 Tax Allocation Refunding Bonds were used
to advance refund $2,895,000 of outstanding Acorn Redevelopment Project Tax
Allocation 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 prior
bonds 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 Agency
resulting from the increase in assessed valuation of properties within the Acorn
Redevelopment Project.
Bonds maturing in 2007 are subject to mandatory sinking fund requirements
commencing May 1,2001, and are subject to prior redemption.
Certificates of Participation
The Certificates of Participation have been recorded in the City's General Long-Term
Obligations 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 will
repay principal and interest on the Certificates.
(e) Civic Improvement Corporation
On December I, 1985, the City entered into various simultaneous agreements to
finance the acquisition and construction of capital improvements on City property,
such as traffic control devices, street resurfacing, parking lots, garages and the
8-39
.-,. CITY OF OAKLAND
rehabilitation of various City buildings. The following is a summary of the
agreements that have been entered into.
Certificates of Participation - The Civic Improvement Corporation (the
Corporation), a non-profit corporation, issued $52,300,000 variable rate
demand Certificates of Participation evidencing the proportionate interests of
the owners thereof 10 lease payments to be made by the City for certain
property pursuant to a master lease agreement with the Corporation.
Master Lease Agreement - The City entered into a lease agreement with the
Corporation whereby the Corporation agreed to provide financing for certain
proposed capital improvements. Under the terms of the agreement, the City
agreed to supervise and provide for the construction and improvement of
certain City properties. The improvements are paid for by the Corporation
from the proceeds of the Certificates that are held by the Trustee Once the
improvements are completed, the Corporation has agreed to lease the projects
to the City. The lease payments to be received by the Corporation will be
equal to the related principal and interest payments on the Certificates of
Participation.
Letter of Credit - The Letter of Credit (Letter) is an irrevocable direct-pay
obligation of National Westminster Bank PLC (the Bank). This letter is due to
expire on September 24, 1995, but will automatically extend unless the Bank
gives notice two years prior to the termination date that it will not extend the
Letter. In aggregate, the City has available $53,400,499 as of June 30, 1991, of
which $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 for
payment 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 year
ended 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 Certificates of Participation in the amount of $43,500,000
to finance the acquisition and renovation of the Henry J. Kaiser Convention Center.
The Certificates of Participation which are subject to prior redemption have
mandatory 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 sixty
semi-annual principal and interest installments 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
8-40
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 secured
by 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 and
leaseback transaction. The lease provides the City with the option to purchase 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 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 not
reflected 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 (the
Convention Center). The Certificates of Participation have mandatory sinking fund
requirements commencing April I, 1995, and are subject to prior redemption.
The Agency simultaneously 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 interest
rate 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 leaseback
transaction has been recorded directly as an issuance of debt to finance the
improvement of the related City structures. Accordingly, the Certificates of
Participanon are recorded in the General Long-Term Obligations Account Group. The
note receivable referred to above and the capital lease obligation owed to Oakmar are
not reflected in the City'S General Purpose Financial Statements.
8-41
..CITY OF OAKLAND
(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 the
City 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 Municipal
Improvement 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 in
the 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 deposited
with 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.
8-42
NOTES TO FINANCIAL STATEMENTS
Internal Service Fund Long-Term Debt
The internal service fund debt at June 30, 1991, was as follows:
City Hall West Lease Revenue
Refunding Bonds
Interest
Maturity rates
1991-2010 5.20%-7.375%
Balance at
June 30,
1991
$3,960,000
In 1980 the Agency purchased and leased back City Hall West to the City. In 1988 the
Agency issued 1988 City Hall West Lease Revenue and Refunding Bonds. The bonds are
payable from and secured by a pledge of annual lease rentals to be received from the City
under the City Hall West Lease Agreement.
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 (and subsequent refunding) to
finance the improvements of the City Hall West. Accordingly, the City Hall West building
and the debt outstanding are recorded in the City'S Facilities Internal Service Fund; the
Agency's direct financing lease receivable and the City'S capital lease obligation are not
reflected in the City'SGeneral Purpose Financial Statements.
8-43
..,. CITY OF OAKLAND
Enterprise Funds Long-Term Debt
The enterprise fund debt at June 30, 1991, was as follows (in thousands):
Port of Oakland
Revenue Bonds:
1957 Series (a)
1966Airport Development
1966HarborDevelopment
1977 Small Craft Harbor
1981 Small Craft Harbor
1982 Small Craft Harbor
1983 Small Craft Harbor
1989 Revenue Bonds (b):
SenesA
Series B
SeriesC
1990 Revenue Bonds Series D (c)
Ceruficates of Indebtedness:
1971, Seatrain facilIty (d)
Mitsubishi Note
Liability to U.S. Government
Consttucnon Loan, Oakland Portside
Associates (See Note 8)
Oakland Redevelopment Agency
AcornMortgage Program
Revenue Bonds:
1980
1981
TOTAL EN1ERPRISE FUNDS
LONG-TERM DEBT
Port of Oakland
Priority of Payment and Security
Maturity
1991-1999
2004-2006
2006
2009
2010
2019
2020
1992-2019
1992-2019
2003-2019
1992-2003
2001
2000
1992
1993
2011
2001
Interest
Rates
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 at
June 30,
1991
s 49,925
3,813
2,530
2,998
1,697
1,055
367
72,745
84,420
23,310
30360
273,220
10,890
2,013
58
32,537
6,220
2675
$ 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 area
including the entire Oakland Intemanonal Airport) and of the gross revenues of all "Existing
Facilities" (which include all facilities of the Port existing on January 21, 1957, and all later
extensions or improvements to these facilities). All income and revenues of Pan operations
pledged to the 1957 Bonds are deposited in the City treasury in the Port Revenue Fund.
8-44
NOTES TO FI NANCIAL 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 Development
Revenue Bonds (1966 Bonds) are secured by liens on Surplus Revenues. The Small Craft
Harbor Revenue Bonds are payable from general revenues of the Port. The 1957 Bonds, 1966
Bonds, 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 a
second lien on Surplus Revenues (to a maximum of $918,000 per year) on a parity with the
1966 Bonds.
The 1989 Revenue Bonds, the 1990 Revenue Bonds, and the tax exempt commercial paper
notes 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 and
other 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 Lien
Bonds and 1971 Certificates, and certain other excluded amounts. In addition, payment of
bond principal and interest when due is guaranteed by municipal bond insurance policies
issued by Bond Investors Guaranty Insurance Company for the 1989Bonds and by Municipal
Bond Investors Assurance Corporation for the 1990 Bonds.
(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 sum of the required bond interest and
principal maturities for the ensuing year. For the year ended June 30, 1991, such
revenues 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 three
series during April and May 1989. Proceeds of the 1989 Revenue Bonds were used to
redeem certain outstanding indebtedness. The Current Interest Serial and Term Bonds
pay interest semiannually. Interest accrues on the Capital Appreciation Serial and
Term Bonds and is compounded semiannually but is not paid until their maturity or
earlier redemption. Maturity dates for Current Interest Term Bonds reflect mandatory
sinking fund redemption.
(c) 1990Revenue Bonds, Series D
The Port issued the 1990 Revenue Bonds during May 1990 pursuant to the 1989
Indenture and the Fifth Supplemental Trust Indenture. The 1990 Bonds were issued to
advance refund $32,900,000 of 1957 Series Q Revenue Bonds.
8-45
CITY OF OAKLAND
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
Revenues were 157%of debt service.
The Port has also covenanted in the 1989 Indenture not to issue any additional
obligations payable from or secured by Pledged Revenues which would rank superior
to 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 Paper
have been ISSUed at parity with the 1989 Revenue 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 1971 Certificates were 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 by American President Lines. The annual
rentals are equal to the annual debt service requirements (interest expense and
principal payments).
8-46
NOTESTO FINANCIAL STATEMENTS
Acorn Mortgage Program Revenue Bonds
The Acorn Mortgage Revenue Bonds are payable from and secured by a pledge of FHA
insured mortgage loans issued from the related bond proceeds to owners in the Acorn
Redevelopment Project Area.
Trust and Agency Funds Long-Term Debt
Trust and agency funds debt at June 30, 1991, was as follows (in thousands):
Oakland Municipal Employees'
Retirement System Revenue Bonds
1974
1976
TOTAL TRUST AND
AGENCY FUNDS DEBT
Bond Indentures
Maturity
1992
2002
Interest
Rates
5.75%
6.50%
Balance at
June 30,
1991
$ 2,000
1.950
$ 3,950
There are a number of limitations and restrictions contained in the various bond' indentures.
The City believes it is in compliance with all significant limitations and restrictions.
Defeased Bonds
The following is a schedule of outstanding bonds that are defeased. Cash and investments in
U.S. government securities were placed in irrevocable trust to provide for all future debt
service on the old bonds. Accordingly, these assets and the corresponding liabilities are not
reflected in the accompanying General Purpose Financial Statements.
Name of Issue
Certificates of Participation, Oakland Redevelopment Agency
1985 Issue
Central District Redevelopment Tax Allocation Bonds, Series A and B
1982 Municipal Improvement Revenue Bonds, Series A
Port of Oakland 1957 Series QRevenue Bonds
1982 Acorn Redevelopment Project Tax Allocation Refunding Bonds
Medical Hill Special Assessment Bonds
TOTAL
Outstanding
at June 30, 1991
(in thousands)
$193,490
63,915
22,240
32,600
2,745
4.385
$319,375
B-47
.,. CITY OF OAKLAND
Repayment Schedule
The annual requirements to amortize all long-term debt as of June 30, 1991, are as follows (in
thousands):
General Long-Term Debt
$ 30,976 $ 18,215
s 499
32,327 18,480 491
38,465 18,371 492
37,929 19,024 492
37,369 19,666 491
705,816 353,143 4.355
882,882 446,899 6,820
Years Ending
June 30,
1992
1993
1994
1995
1996
Thereafter
Less amounts
representing
interest and
discounts
Principal debt
at June 30, 1991
Bonds
Payable
(481.338)
$401,544
Certificates of
Participation
(277,789)
$169,110
Special
Assessment
Debt with
Govt'l
Commitment
(2,635)
$ 4,185
Interest rates related to the Civic Improvement Corporation Certificates of Participation (the
Certificates) are adjustable. Estimates of future debt service payments included in the
schedule 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 service
payments for the Variable Bonds were determined by utilizing the maximum rate allowable
in accordance with the terms of the Variable Bond agreements.
8-48
NOTES TOFINANCIAL STATEMENTS
Trust and
Enterprise Internal Service Agency Funds
Fund Debt Funds Debt Debt Total
$ 27,363 $ 319 $ 2,285 $ 79,657
60,669 380 162 112,509
25,628 379 159 83,494
25,612 377 156 83,590
25,613 380 154 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
8-49
CITY OFOAKLAND
Other Liabilities
The following long-term debt has been issued by the City on behalf of named agents of the
City. The bonds do not constitute an indebtedness of the City. The bonds are payable solely
from 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 City
officials, these bonds are not payable from any revenues or assets of the City, and neither the
full faith and credit nor the taxing authority of the City, State or any political subdivision
thereof is obligated for the payment of the principal or interest on the bonds. Accordingly, no
liability has been recorded in the General Long-Term Obligations Account Group. The debt
issued and outstanding at June 30, 1991, was as follows (in thousands):
HousingMortgage Programs
HousingRevenueBonds, Series A, 1979
HousingRevenueBonds,Series B, 1982
HousingRevenueBonds, Series C, 1985
Loanto Lender, 1980
SkylineVariableRate, 1985
Authorized Outstandingat
and Issued Maturity June 30, 1991
$112,890 1/1/11 $ 52,155
67,JJ 12/15/13 10,565
.23,175 5/1/17 3,660
8,130 12/1196 1,710
23,000
111/rB 23,000
8-50
City of Oakland InsuredHospital RevenueBonds
(Children's Hospital MedicalCenter of
NorthernCalifornia), 1979Series A
City lOlf OaklandHealthFacilityRevenueNote
(The BloodBankof the Alameda-Contra
Costa Med1caI Association), Series 1979
City of OaklandBconormc Development
CertificateS of Deposit RevenueBonds
(Leamington Hotel Project), 1982Senes A
City of OaklandIndusttial Development
RevenueBonds(Days Inn Hotel Project),
Series 1982
Countyof A1amedaICity of OaklandVanable
Rate Demand RevenueBonds(The Old
Oakland Company Project), December 1984
Cityof Oakland Vanable Rate DemandRevenue
Bonds(TheDelger BlockIRoss House
Company Project), December1984
Countyof AIameda/City of OaklandVariable Rate
DemandRevenue Bond (TheWilcox/Leimert
CompanyProject), December1984
City of OaklandEconomicDevelopment
RevenueBonds(East BayOutpanent
SurgeryCenter Project), Series 1984
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
3,000
NOTES TO FINANCIAL STATEMENTS
City of Oakland LiquidityFacilityRevenue
Bonds (Associanon of BayArea
Governments), Series 1984
City of Oakland HealthFacilityRevenue Bonds
(Children's Hospital Medical Center of
NorthernCalifornia), 1987Series A
City of OaklandRefundingRevenueBonds
(oaIdand YMCAProject), Series 1990
TOTAL
(14) RESIDUAL EQUITY TRANSFERS
Authorized
and Issued
s 3,300
30,000
8,700
Maturity
1211109
7/1/08
6/1/10
Outstanding at
June 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 O
1,398
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 Certificates 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 the
loan proceeds for debt service on the Civic Improvement Corporation COPs and for loans
to the City Center Garage II Joint Venture.
8-51
..,. CITY OF OAKLAND
During fiscal year 1990-91, the City transferred $3,587,000 of cash and investments from
the General Fund to the Municipal Improvement Capital Fund. The cash and investments
are 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 to
the cash and investments would be more appropriately accounted for in the Municipal
Improvement Capital Fund, since the assets are yield and use restricted by the bond
indenture.
During fiscal year 1990-91, the City transferred $74,000 from the General Fund to the
Municipal Improvement Capital Fund. The amount transferred consisted of contributions
from the City for public arts capital improvement projects.
During fiscal year 1990-91, the City closed certain activity within the Other Special
Revenue 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 Expendable
Trusts Fund to the General Fund. The funds are related to the Drug Forfeiture Program
and 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):
Internal
Enterprise Service
Funds 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 equipment
acquired with contributed capital 0.931) 0.931)
BALANCE AT JUNE 30,1991 $50,185 $17,382 $67,567
B-52
CITY OF OAKLAND
.. CITY OF OAKLAND
(16) RESERVATIONS AND DESIGNATIONS OF FUND BALANCES
Following are the components of the City's reserved and unreserved-designated fund
balances at June 30, 1991 (in thousands).
Special Debt Capital
General Revenue Service Projects
Fund Funds Funds Funds
RESERVED
Assets not available for
appropriation:
Long-term receivables/
advances $28,249
s 730 $ s
Restricted cash and
investments
Capital projects 16,868 280,980
Employees' retirement system
Debt service 89,570
Land held for resale 9,251
Encumbrances 1.199 7.456
10.090
TOTAL RESERVED FUND
BALANCES $29,448 $25,054 $89,570 $300,321
UNRESERVEDDESIGNATED
Capital improvement projects $12,585 $ 9,250 $ $
Emergency management program 110
Multi-purpose reserve 2,214
Employee benefits 2,215
Mandatory garbage collection 1,914
Telecommumcations
franchise regulation 649
Street lighting underground
district connection 2
TOTAL UNRESERVED-
DESIGNATED FUND
BALANCES $19,689
s
9,250 $ $
8-54
Pension
Trust
Funds Total
NOTES TO FINANCIAL STATEMENTS
$ $ 28,979
215,885 215,885
297,848
266,656 266,656
89,570
9,251
251
18,996
$482,792 $927,185
$ 1,538
$ 1,538
$ 23,373
110
2,214
2,215
1,914
649
2
$ 30,477
8-55
.-,. 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 interest
income. Segment information for the year ended June 30,1991, follows (in thousands):
8-56
Operating revenues
Operating income
Operating grants, entitlements and
shared revenues
Depreciation and amortization
Current operating transfers out
Interest and other non-operating
revenues (expenses)
Extraordinary loss
Net income (loss)
Current capital contributions
Property and equipment:
Additions
Deletions
Net working capital
Total assets
Contributed capital
Total equity
Long-term obligations and advances:
Payable from operating revenues
Payable from other sources
Sewer
Service
$14,365
5,655
(369)
555
5,286
3,887
555
19,965
42,148
41,833
Oakland
Port of Redevelopment
Oakland Agency
$98,038 $ 897
4,367 3
21,172
(21,701)
(839)
(18,173)
3
4,063
66,309
35,142
(27,289)
676,273 9,348
50,185
219,797 308
345,267 8,895
9,743
Other Total
Enterprise Enterprise
Funds Funds
$ 6,316 $119,616
1,289 11,314
(369)
252 21,979
1,183 1,183
64 (21,637)
(839)
170 (12,714)
4,063
331 70,527
1,088 36,785
1,076 (6,248)
3,578 731,347
50,185
2,619 264,557
354,162
9,743
NOTES TO FINANCIAL STATEMENTS
8-57
"" CITY OF OAKLAND
Sewer Service
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 user charges 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 a
component 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 Waterfront
Association. The Port is under the control of a seven-member appointed Board of Port
Commissioners and is administered by an Executive 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 revenues
of the Mortgage Program.
Other
The Oakland Convention Management, Inc. Fund and the Parks and Recreation Funds
represent the other enterprise funds.
8-58
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):
Type of plan
Reporting enuty
Lastcompleteactuarial study
Police and Fire
Retirement
System
(PFRS)
Singleemployer
City
June 30,1990
Oakland Municipal
Employees'
Retirement System
(OMERS)
Smgleemployer
City
June30, 1990
Califomia Public
Employees'
Retirement System
(PERS)
Agent multi-employer
State
June30. 1990
Actuarial Present Value of Credited Projected Benefits
PFRS OMERS PERS Total
$ 658.3 $14.9 $ 158.9
Retirees and beneficiaries
currently receiving benefits
and terminated employees not
yet receiving benefits
Current employees:
Accumulated employee
contributions including
allocated investment
earnings
Employer-financed
Vested
Nonvested
Total pension
benefit obligation (PBO)(a)
Net assets available for
benefits, at cost
UNFUNDED PENSION
BENEFIT OBLIGAnON
Net assets available for
benefits, 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
117.8 370.7
6.7 6.7
374.0 1,337.1
(360 9) (619.4)
$ 13.1 $ 717.7
$ 409.2 $ 676.8
8-59
..,. 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 each
pension 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.
Contri butions
PFRS OMERS PERS Total
Total City payroll covered by
the system $ 27.4 $108.7 $ 136.1
1991 contributions:
City'S share
Employees share:
Paid by Employee
Paid by City
Aetuarially determined contribution rates:
Employee
Employer
28.9 11.1 40.0
2.5 2.5
9.8 9.8
7-11% 7-9% N/A
7.9-15.1% N/A
Significant actuarial assumptions (b)
General wage increase
Inflation
Merit or seniority
Investment return
6.5%
8.5%
3.0%
6.5%
8.0%
5.0%
2.0%
8.5%
N/A
N/A
N/A
(b) Significant actuarial assumptions used to compute the contribution requirements are
the same as those used to compute the standardized measure of the pension obligation.
8-60
Employees covered as of June 30, 1990
Retirees and beneficiaries
currently receiving
benefits and terminated
employees entitled to
benefits but not currently
receiving them
Current employees-a-vested
1,525
457
366
2
N/A
N/A
N/A
N/A
NOTES TO FINANCIAL STATEMENTS
Trend Information
Trend information gives an indication of the progress made in accumulating assets to pay
benefits when due. Ten-year historical trend information on revenues by source and expenses
by type is not available.
PFRS OMERS PERS Total
Net assets available at cost - June 30:
1991 $ 257.4 $11.9 $N/A $ N/A
1990 245.0 13.5 360.9 619.4
1989 233.2 14.9 321.0 569.1
1988 218.0 16.0 283.3 517.3
1987 199.0 17.4 251.4 467.8
PBO - June 30:
1991 $ N/A $ N/A $N/A $ N/A
1990 947.6 15.5 374.0 1,337.1
1989 876.0 16.2 331.2 1,223.4
1988 874.4 18.5 301.1 1,194.0
1987 N/A 20.1 276.4 N/A
Pen::entageof net assets availablelPBO - June 30:
1991 N/A N/A N/A N/A
1990 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 13.1 717.7
1989 642.8 1.3 10.2 654.3
1988 678.0 2.5 17.8 698.3
1987 656.4 2.7 25.0 684.1
Annual covered payroll - June 30:
1991 s
24.1 108.7 132.8
1990 24.6 114.4 139.0
1989 26.2 101.7 127.9
1988 25.7 100.5 126.2
1987 N/A 96.4 N/A
Percentage of unfunded PBO/annual
covered payroll:
1991 N/A N/A
1990 2856% 11% 516%
1989 2453% 10% 512%
1988 2638% 18% 553%
1987 N/A 26% N/A
8-61
'"CITY OF OAKLAND
City's actuarially determined
contributions (employer portion)/
annual covered payroll:
1991
1990
1989
1988
1987
Police and Fire Retirement 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 the
average 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 calculating 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.
8-62
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 retirement
benefits. The retirement allowance is calculated on a basis which takes into account final
average compensation, age and the number of years of service. Benefit provisions and all
other requirements are established by the Charter.
Employee contributions to OMERS totaling $5,513 were made in accordance with actuarially
determined 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 with
actuarially determined contribution requirements, was not required to make contributions to
OMERS.
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 to
participate 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. The
amount 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 year
of service is determined by the employee's age at retirement) and final compensation (the
employee's monthly pay rate for the last consecutive 36 months). The System also provides
for 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% 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% for miscellaneous employees and safety
employees, respectively. The City pays the entire amount of its employees' contribution rate
for miscellaneous and safety employees, including the annual contribution of 7% to PERS.
PERS uses the Entry Age Normal Actuarial Cost Method, which is a projected benefit cost
method. That is, it takes into account those benefits that are expected to be earned in the
future as well as those already accrued. PERS also uses the level percentage of payroll
method to amortize any unfunded actuarial liabilities. The amortization period of the
unfunded actuarial liability ends June 30, 2000.
8-63
$ CITY OF OAKLAND
The City's contributions for employees for the year ended June 30, 1991, consisted of the
following amounts (dollars in millions):
Components of contribution
toPERS
Nonnalcost
Amortization of unfunded
aetuanal accruedlIability
TOTAL
Employer and employee portions
of contribution to PERS
Employer
Employee
Paid by City
Pald by employees
TOTAL
Miscellaneous
$ 14.4
s 8.5
7.3
Percent of
Current
Covered
Payroll
13.5%
~
14.9%
=
7.9%
7.0
Safety
$ 6.6
$ 2.6
2.5
Percent of
Current
Covered
Payroll
24.1%
a,8)
16.3%
7.3%
9,0
16.3%
Total
Combined
Contribution
$ 21.0
--U)
s 20.9
=
s 11.1
9.8
The credit for amortization of unfunded actuarial accrued liability for safety employees arose
because the City had surplus assets as a result of actuarial gains in excess of actuarial
estimates for safety employees.
Deferred Compensation Plans
The City and the Port offer their employees deferred compensation plans created in
accordance with Internal Revenue Code Section 457. Separate plans are maintained for City
and Port of Oakland employees. The plans, available to all employees, permit them to defer a
portion of their salary until future years. The deferred compensation is not available to
employees until termination, retirement, death, or unforeseeable emergency.
All amounts of compensation deferred under the plans, all property and rights purchased with
those amounts, and all income attributable to those amounts, property or rights are (until paid
or made available to the employee or other beneficiary) solely the property and rights of the
City 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 to
those of general creditors of the City and the Port in an amount equal to the fair market value
of the deferred account for each participant.
Deferred compensation plan assets of the City of $33,631,000 as of June 30, 1991, are
included at fair market value in the Deferred Employee Compensation Agency Fund.
8-64
NOTES TO FINANCIAL STATEMENTS
Deferred compensation plan assets of the Port are included at fair market value in the Port of
Oakland 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 corporation
organized under the laws of the State of California to operate and manage the Coliseum
Complex (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 the
agreements with the Coliseum. The Coliseum is governed by a ten-member Board of
Directors. The Mayor of the City and the President of the Alameda County Board of
Supervisors recommend one member each for the Coliseum Board. A vacancy or vacancies
on the Board of Directors is filled by the vote of a majority of theremaining directors.
In October 1963, the Coliseum executed a ground lease with the City and the County for a
term of forty years, subject to an agreement to construct the Complex. Concurrently
therewith, the Coliseumsublet to the City and the County the complete facilities for a term to
expire ten days prior to expiration of the term of the ground lease. Rental provisions of the
sublease require the City and the County to pay annual rent of $750,000 each, payable in
monthly installments.
Under the agreements, the City and the County hold title to the Complex. The agreements
specifically state that no indebtedness or liability on the part of the City or the County shall
be created, except such indebtedness that may be repaid from the operating revenues of the
Complex.
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 are
subject to an indenture placing properties and bond proceeds In trust for the benefit of the
bondholders. Semi-annual payments of principal and interest are made to the sinking fund on
the first day of April and October annually. Principal payments for April 1, 1991, and
October 1, 1991, were$375,000 and $390,000, respectively. Debt Service payments are made
fromlease revenues received from the City of Oakland and the County of Alameda under the
sublease 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 one
year's operating budget.
The City received no distributions 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 the
County.
8-65
'"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
Liabilities
Equity
TOTAL UABlllTIES AND EQUITY
Revenues
Expenditures
DEFICIENCY OF REVENUES UNDER EXPENDITURES
$63,723
$19,687
44,036
$63,723
$12,483
03.948)
$ ( 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 of
Revenues, Expenditures and Changes in Fund Balances" has been prepared on the modified
accrual basis of accounting in accordance with GAAP. The "General Fund and Annually
Budgeted Special Revenue Funds and Debt Service Funds Combined Statement of Revenues,
Expenditures and Encumbrances - Budget and Actual on a Budgetary Basis" has been
prepared 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):
Annually
Budgeted
Special
General Revenue
Fund Funds
Annually
Budgeted
Debt
Service
Funds
B-66
Excess (deficiency) of revenues over expenditures
and encwnbrances- budgetarybasis
Net changes in encwnbrances
FEMA and Pan bond reimbursements
budgetedona cashbasis
Net lransactions budgetedon a
multi-yearproject or program basis
EXCESS (DEFICIENCY) OFREVENUES
AND OTHERFINANCING SOURCES
OVER (UNDER)EXPENDITIJRES AND
OTHER FINANCING USES- GAAP BASIS
s (975)
(411)
(11,292)
984
$(11,694)
$ (983)
(20)
$ 531
5.471
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 transferred
employee were sent to PERS, as required by law; however, no assets related to employer
contributions were transferred in 1976 or 1981 because of concerns about losses that would
have been incurred upon the sale of assets.
A liability to PERS for the non-transferred assets of $4,352,000 and the related accrued
interest ($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's
assets.
The liability to PERS will be paid in conjunction with the City of Oakland's actuarially
determined contributions to PERS over the next several years.
(22) FUND EXPENDITURES EXCEEDING BUDGETARY APPROPRIATIONS
The expenditures of the Pension Annuity Debt Service Fund exceeded budgetary
appropriations by $16,000. City management did not consider it necessary to pass a legal
appropriation 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 certain
classes of retirees from City employment.
The City pays part of the health insurance premiums for all retirees from City employment
receiving a pension annuity earned through City service and participating in a City-sponsored
PERS 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 1,500
retirees under this program in fiscal year 1990-91.
A City Council Resolution, dated November 12, 1985, and a related City Administrative
Instruction, dated May 1, 1991, established a quarterly payment of $150 to qualifying retirees
from City employment who were active, full-time or permanent part-time, unrepresented City
employees at the time of retirement on or after July 1, 1985. Such payments commenced the
last quarter of fiscal year 1990-91 and constituted approximately 20% of the premium
payment required for retirees. Fifty-one employees received this benefit in the fiscal year
1990-91. An expendable trust fund was set up to finance these benefits and the City has made
B-67
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 of Understanding with
Local 790 of the United Public Employees that established a trust to contribute toward the
cost 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 initiated payments of $150 per quarter to eligible 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 of
June 30, 1991. Sixty-five employees received benefit payments in the last quarter of fiscal
year 1990-91.
The Port contributes monthly to a benefit account for certain qualifying retirees participating
in 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 of
replacement and repair expenditures have been made. Additionally, 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 or
emergency (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 representative
accompanies 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 estimate of the cost of the
recommended work.
8-68
NOTES TOFINANCIAL STATEMENTS
A summary of the earthquake related transactions through June 30, 1991, is as follows (in
thousands):
ExpenditureslExpenses
Recoveries
1991
s 6,482
15,525
City
1990
$15,556
1,806
1991
s2,563
1,724
Port
1990
s4,691
3,190
All essential repairs for general government service delivery have been completed. Estimates
have been made for the remaining property damage. Assuming all property damage will be
repaired, 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 employees
and the repairs to City Hall and City Hall West 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 of
California's Office of Emergency Services. City management believes that the ultimate
resolution of the earthquake costs will not have a material adverse effect on the City's
financial position or the Port's financial position or results of operations.
City Hall
City Hall sufferedextensive damage rendering it unusable. As a result, the City wrote off the
total carrying cost of $43,572,000 from the General Fixed Assets Account Group during
fiscal year 1989-90.
The City was self-insured for the total loss on the building, and is currently proceeding with
the 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 State
advanced the City $18,118,000, which includes the State's share of the DSR plus an
additional $7,000,000 (the difference between the DSR amount and the total amount
estimated to complete the building).
City Hall West
The City Hall West building also suffered extensive damage rendering It unusable. As a
result, 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 Service
Fund.
As required by the Agency, the City had combined insurance policies covering losses on the
building, its contents, and loss of rents. The City has settled with its insurance carriers and
has received $10,500,000 in insurance proceeds ($5.0 million in fiscal year 1989-90, $3.3
million in fiscal year 1990-91, and $2.2 million in fiscal year 1991-92).
8-69
'"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 reconstruct
City 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 Agency
can 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 of
the 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.
8-70
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 container
cranes, and channel dredging to accommodate larger vessels. As of June 30, 1991, the Port
had entered into commitments totaling approximately $21,886,000 for the acquisition and
construction of such assets.
Individual Fund Deficits
As of June 30, 1991, the Oakland Redevelopment Agency Projects Expendable Trust Fund
had a deficit of $671,000. This deficit is expected to be funded through increased overhead
and 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 of Oaldand
In July 1987, the California Department of Health Services (the Department) issued a
Remedial Action Order determining that the Port and a former tenant of the Port are
responsible for the costs of cleaning up hazardous substances on a site leased by several
former tenants. If a Remedial Investigation Report submitted by the Port in May 1989 is
approved, the Department will issue a Final Remedial Action Plan which will include an
apportionment of liability for the costs of hazardous substance removal and remedial actions.
During 1991, the Port submitted a feasibility study to the Department and anticipates
receiving a Remedial Action Plan during fiscal year 1991-92. During fiscal year 1989-90, the
Port recorded a liability of $900,000 for its expected 50% share of the total estimated
investigation and monitoring costs related to this site. In October 1990, the Port and the
former tenant agreed to shareequally in the remediationcosts. The ultimate remediation costs
have not been determined.
The Port has certain legal obligations to modify or remove various underground storage
tanks. 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 designated
Port-owned underground storage tanks. During fiscal year 1990-91, the Port began soil
remediation and tank removal. It is the opinion of the Port's counsel that the Port has no
liability to tenant-owned tanks.
As of June 30, 1991, the Port accrued approximately $.3,000,000 for various environmental
remediation programs in addition to those noted above. The Port's management believes that
8-71
'"CITY OF OAKLAND
it has identified all significant hazardous waste sites, and the estimated probable costs are
included in this environmental accrual.
In prior years the Port provided $1,600,000 to restore the presidential yacht "Potomac" to its
original condition. This was done pursuant to an agreement with the Association for the
Preservation of the Presidential Yacht Potomac ("Potomac Association"). This amount was
capitalized 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 $1,600,000
in costs were written off and recorded in other expenses.
Oakland Redevelopment Agency
In connection with the sale of land for a Central District project, the Agency entered into an
agreement to place $1,000,000 of the sales proceeds in escrow pending removal of hazardous
substances 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 has
paid $184,439 in fiscal year 1990-91. On October 1, 1991, the Agency agreed to pay an
additional $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 and
moderate income housing projects. The repayment guarantees and letters of credit were
issued 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 eligible
for disaster assistance by both the federal and state governments.
Vanous City revenues are dependent upon income from the residential properties located in
the fire area. including property taxes, utility consumption taxes, sewer charges, business
license taxes, landscaping and lighting assessment district fees as well as interest earnings on
those revenues. The loss of City revenues in fiscal year 1991-92 is estimated at $2,350,000.
B-72
NOTES TO FI NANCIAl 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 and
equipment 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 and
erosion control costs are expected to be $5,000,000. The total expenditure impact for fiscal
year 1991-92 is estimated at $17,600,000.
It is expected that most of the costs for fighting the Oakland Hills Fire and the subsequent
cleanup 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 financial
position 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.
B-73
(THIS PAGE INTENTIONALLY LEFT BLANK)
APPENDIXC
SUMMARY OF CERTAIN PROVISIONS OF LEGAL DOCUMENTS
(THIS PAGE INTENTIONALLY LEFI' BLANK)
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 ENTIRETIES
BY REFERENCE TO THE FULL TERMS OF THE DOCUMENTS.
DEFINITIONS
ACquisition Account. The term "Acquisition
Account" means the account by that name established under,
and held by the Trustee pursuant to, the Indenture.
ACquisition Costs. The term "Acquisition Costs"
means all costs of acquisition of the interests in the
Facilities, the Sites, and other property pursuant to the
Contracts of Sale, in the amounts described in the
Indenture.
Additional Payments.
Payments" means those payments
the Lease Agreement.
The term "Additional
specified in Section 411 of
Agency. The term "Agency" means the Redevelopment
Agency of the City of Oakland.
Amended and Restated Ground Lease. The term
"Amended and Restated Ground Lease" means the Amended and
Restated Ground Lease, dated as of November 1, 1992, between
the City, as lessor of the Sites, and the Authority, as
lessee thereof.
Authority. The term "Authority" means the
California Statewide Communities Development Authority, as
issuer of the Bonds and lessor and sublessor under the Lease
Agreement.
Authorized Representative. The term "Authorized
Representative" means: (a) with respect to the Authority,
its Chairman, Vice Chairman, Secretary or any Member of the
Commission of the Authority, or any other Person designated
as an Authorized Representative of the Authority by a
Written Certificate of the Authority signed by its Chairman
and filed with the Authority and the Trustee; (b) with
respect to the City, the City Manager or the City Manager's
deputies or assistants or any other officer or employee of
the City who is designated by the City Manager as an
Authorized Representative for purposes of the Indenture; and
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(c) with respect to the Trustee, any Senior Vice President,
any Vice President, any Assistant Vice President or any
Trust Officer of the Trustee and, when used with reference
to any act or document, also means any other Person
authorized to perform such act or sign any document by or
pursuant to a resolution of the Board of Directors of the
Trustee or the by-laws of the Trustee.
Bond Register. The term "Bond Register" means the
books for registration maintained by the Trustee pursuant to
the Indenture.
Bonds. The term "Bonds" means the Bonds issued by
the Authority pursuant to the Indenture.
Certificates of participation. The term
"Certificates of Participation" means, collectively,
$43,500,000 Certificates of Participation (Henry J. Kaiser
Convention Center), executed and delivered pursuant to a
Trust Agreement, dated as of September I, 1982, between the
Agency and Bank of America National Trust and Savings
Association, and $38,000,000 Certificates of participation
(Oakland Convention Center - George P. ScotIan Memorial)
Series 1983 executed and delivered pursuant to a Trust
Agreement, dated as of December I, 1983, between the Agency
and Bank of America National Trust and Savings Association.
City.
California, as
Agreement.
The term "City" means the City of Oakland,
lessee and sublessee under the Lease
Closing Date. The term "Closing Date" means the
date of initial delivery of the Bonds.
Delivery Costs. The term "Delivery Costs" means
all costs incurred in connection with the preparation,
review, execution and delivery of the Indenture, the Amended
and Restated Ground Lease, the Lease Agreement and the
Escrow Agreement and in connection with the issuance, sale
and delivery of the Bonds, including, but not limited to,
costs paid or incurred by the City, the Authority or the
Trustee for filing costs, printing costs, reproduction and
binding costs, fees and charges of the Trustee, financing
discounts, legal fees and charges and reimbursements,
financial and other professional consultant fees and charges
and reimbursements, auditors' fees and charges and
reimbursements, costs of rating agencies for credit ratings,
fees for execution, registration, transportation and
safekeeping of the Bonds, municipal bond insurance premiums,
if any, and other charges and fees in connection with the
foregoing.
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Delivery Costs Account. The term "Delivery Costs
Account" means the account by that name established under
and held by the Trustee pursuant to the Indenture.
Event of Default. The term "Event of Default"
means an event of default under the Lease Agreement.
Facilities. The term "Facilities" means,
collectively, the Kaiser Center and the Scotlan Center.
Federal Securities. The term "Federal Securities"
means United States Treasury notes, bonds, bills or
certificates of indebtedness or obligations for which the
full faith and credit of the United States are pledged for
the payment of principal and interest, including United
states Treasury (book entry) certificates, notes and bonds,
state and local government series.
Indenture. The term "Indenture" means the
Indenture of Trust, dated as of November 1, 1992, between
the Trustee and the Authority and relating to the issuance
of the Authority's 1992 Lease Revenue Bonds (City of Oakland
Convention Centers Project).
Insurer. The term "Insurer" means AMBAC Indemnity
Corporation, a Wisconsin-domiciled stock insurance
corporation.
Kaiser Center. The tenn "Kaiser Center" means the
Henry J. Kaiser Convention Center and related facilities and
improvements located on the Kaiser Site.
Kaiser Site. The tenn "Kaiser Site" means the real
property parcel on which the Kaiser Center is located, more
particularly described in Exhibit A to the Lease Agreement.
Lease Agreement. The tenn "Lease Agreement" means
that certain Amended and Restated Lease and Sublease
Agreement Relating to the Henry J. Kaiser Convention Center
and the Convention Center-George P. Scotlan Memorial, dated
as of November 1, 1992, between the Authority, as lessor and
sublessor, and the City, as lessee and sublessee, as now or
hereafter amended, providing for the lease of the Facilities
and the sublease of the Sites.
Lease Payment Account. The tenn "Lease Payment
Account" means the account by that name established under,
and held by the Trustee pursuant to, the Indenture.
Lease Payments. The tenn "Lease Payments" means
the lease payments payable by the City for the use of the
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Facilities and the Sites pursuant to the Lease Agreement and
as set forth in Exhibit B attached thereto.
Municipal Bond Insurance Policy. The term
"Municipal Bond Insurance Policy" means the municipal bond
insurance policy issued by the Insurer insuring the payment
when due of the principal of and interest on the Bonds as
provided therein.
Municipal Obligations. Any bonds or other
obligations of any state of the United States of America or
of any agency, instrumentality or local governmental unit of
any such state which are not callable at the option of the
obligor prior to maturity or as to which irrevocable
instructions have been given by the obligor to calIon the
date specified in the notice and which are rated, based on
an irrevocable escrow account or fund, in the highest rating
category of Standard & Poor's CorporatioIl and Moody's
Investors Service or any successors thereto.
Net Proceeds. The term "Net Proceeds", when used
with respect to any insurance or condemnation award, means
the proceeds from the insurance or condemnation award with
respect to which that term is used remaining after payment
of all expenses incurred in the collection of such proceeds.
Net Proceeds Account. The term "Net Proceeds
Account" means the account by that name established under,
and held by the Trustee pursuant to, the Indenture.
Outstanding. The term "Outstanding" when used with
reference to the Bonds and as of any particular date means
all Bonds theretofore issued except: (a) any Bond cancelled
by the Trustee at or before said date, (b) any Bond in lieu
of or in substitution for which another Bond shall have been
issued pursuant to the Indenture, and (c) any Bond which is
deemed to be defeased pursuant to the terms and conditions
of the Indenture.
Owner. The term "Owner" or "Bond Owner" or "Owner
of Bonds" or any similar tem when used with respect to the
Bonds, means any person who shall be the registered Owner of
any Outstanding Bond; provided, however, that the Insurer
shall be deemed to be the Owner of Bonds insured by the
Insurer (il at all times for the purpose of giving consent
pursuant to the Indenture or initiating any action which may
be taken by the trustee thereunder at the request or with
the consent of the Owners of a majority in aggregate
principal amount of Bonds Outstanding and (ii) following an
Event of Default for all other purposes.
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Payment Date. The term "Payment Date" means
October 1 and April 1 of each year, commencing April 1,
1993.
Permitted Investments. The term "Permitted
Investments" means:
(i) Federal Securities;
(ii) Obligations of the Export - Import Bank,
Government National Mortgage Association, the Farmers Home
Administration, the General Services Administration, the
U.S. Maritime Administration, the Small Business
Administration, the U.S. Department of Housing & Urban
Development or the Federal Housing Administration, or a
combination thereof, payable in cash, for which the full
faith and credit of the United States are pledged for the
payment of principal and interest;
(iii) Bonds, notes or other evidences of
indebtedness rated "AAA" by Standard & Poor's Corporation
and "Aaa" by Moody's Investors Service issued by the Federal
National Mortgage Association or the Federal Home Loan
Mortgage Corporation with remaining maturities not exceeding
three years;
(iv) U.S dollar denominated deposit accounts,
federal funds and banker's acceptances with domestic
commercial banks which have a rating on their short term
certificates of deposit on the date of purchase of "A-1" or
"A-1+" by Standard & Poor's Corporation and "P-I" by Moody's
Investors Service and maturing no more than 360 days after
the date of purchase;
(v) Commercial paper which is rated at the
time of purchase in the single highest classification, "A-
1+" by Standard & Poor's Corporation and "P-l" by Moody's
Investors Service and which matures not more than 270 days
after the date of purchase;
(vi)
"AAAm" or "AAAm-G"
Corporation;
Investments in money market funds rated
or better by Standard & Poor's
(vii) Investment agreements approved in writing
by the Insurer with notice to Standard & Poor's Corporation;
(viii) Pre-refunded Municipal Obligations; and
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(ix) Other forms of investments approved in
writing by the Insurer with notice to Standard & Poor's
Corporation.
Person. The term IIPersonll means an individual,
corporation, firm, association, partnership, trust or other
legal entity or entities, including a governmental entity or
any agency or political subdivision thereof.
Principal Office. The term "Principal Office
ll
means the principal corporate trust office of the Trustee in
Houston, Texas.
Redemption Fund. The term "Redemption Fund
ll
means
the fund by that name established under, and held by the
Trustee pursuant to, the Indenture.
Reserve Account. The term IIReserve Account" means
the account by that name established under, and held by the
Trustee pursuant to, the Indenture.
Reserve Requirement. The term "Reserve
Requirement" means an amount equal to the average annual
Lease Payments.
ScotIan Center. The term "Scotian Center" means
the Convention Center-George P. ScotIan Memorial and related
facilities and improvements located on the Scotian Site.
Scotian Site. The term "ScotIan Site
ll
means the
real property parcel on which the Scotian Center is located,
more particularly described in Exhibit A to the Lease
Agreement.
Sites. The term "Sites" means, collectively, the
Kaiser Site and the ScotIan Site.
Trustee. The term "Trustee" means Ameritrust Texas
National Association, a national banking association, or its
successors in interest acting as Trustee under the
Indenture.
Usable.
to any portion of
available for use
the Facilities.
The term IIUsable," when used with respect
the Facilities, means tenantable and
in the normal operation of such portion of
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INDENTURE OF TRUST
AUTHORIZATION
Pursuant to the Indenture, the Trustee is
authorized and directed to authenticate and deliver to the
Underwriters the Bonds, which Bonds constitute special
limited obligations of the Authority payable solely from
Lease Payments made by the City.
PLEDGE OF LEASE PAYMENTS
Pursuant to the Indenture, the Lease Payments are
irrevocably pledged to, and shall be used for, the punctual
payment of the principal of, premium, if any, and interest
on the Bonds, and the Lease Payments shall not be used for
any other purpose while any of the Bonds remain Outstanding.
This pledge constitutes a first and exclusive lien on the
Lease Payments for the payment of the Bonds in accordance
with the terms thereof.
BONDS
Each Bond shall be dated as of November 1, 1992.
The principal of, premium, if any, and interest on the Bonds
shall be payable solely from the Lease Payments paid by the
City to the Authority for the lease of the Facilities and
the sublease of the Sites, as set forth on Exhibit B to the
Lease Agreement. The principal of the Bonds shall be
payable on October 1 in each of the years and in the amounts
set-forth in the Indenture. Interest on the Bonds shall be
payable on October 1 and April 1 of each year, commencing on
April 1, 1993, to and including the date of principal
payment or redemption, whichever is earlier. Interest on
the Bonds shall be payable from the Payment Date immediately
preceding the date of authentication thereof, unless:
(i) it is authenticated on a Payment Date, in which event
interest shall be payable from such Payment Date; or (ii) it
is authenticated after the fifteenth day of the month
preceding a Payment Date, in which event interest shall be
payable from such Payment Date; or (iii) it is authenticated
on or before March 15, 1993, in which event interest shall
be payable from November 1, 1992; provided, however, that
if, as of the date of authentication of any Bond, interest
on such Bond is in default such interest shall be payable
from the Payment Date to which interest has previously been
paid or made available for payment.
The Bonds shall be delivered in the form of fully
registered Bonds without coupons in the denomination of
$5,000 or any integral multiple thereof. The Bonds shall be
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payable in lawful money of the United States of America
which at the time of payment is legal tender for the payment
of public and private debts.
The registration of any Bond may, in accordance
with its terms, be transferred or exchanged upon the Bond
Register maintained by the Trustee as provided in the
Indenture.
The principal of the Bonds shall be payable at the
Principal Office of the Trustee. Interest on the Bonds
shall be payable by check or draft of the Trustee mailed to
the Owners thereof as shown on the Bond Register on the
fifteenth day of the month preceding the Payment Date;
provided, however, that at the written direction filed with
the Trustee prior to any Payment Date by the Owner of Bonds
in an aggregate principal amount of $1,000,000 or more,
interest on such Bonds shall be payable to the Owner thereof
by federal wire transfer initiated by the Trustee on each
succeeding Payment Date to the account number designated in
such written direction.
The Bonds when executed, authenticated and
delivered will be registered in the name of Cede & Co., as
"Bond Owner" and nominee of the The Depositary Trust
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
disbursements of such payments to DTC Participants will be
the responsibility of DTC, and disbursement of such payments
to the person for whom a DTC Participant acquires an
interest in the Bonds will be the responsibility of the DTC
Participants.
FUNDS AND ACCOUNTS
Pursuant to the Indenture, the Trustee shall
establish the Convention Centers Trust Fund. Within the
Convention Centers Trust Fund, the Trustee shall establish
the Acquisition Account, the Delivery Costs Account, the
Lease Payment Account, the Reserve Account and the Net
Proceeds Account. As provided by the Indenture, the Trustee
shall also establish a "Redemption Fund" and a "Rebate
Fund". All amounts on deposit with the Trustee, including,
without limitation, in the foregoing funds and accounts
(except for the Rebate Fund) are irrevocably pledged to the
Owners of the Bonds for the punctual payment of the
principal of, premium, if any, and interest on the Bonds.
This pledge constitutes a first and exclusive lien on the
foregoing funds and accounts (except for the Rebate Fund)
for the payment of the Bonds in accordance with the terms
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thereof.
ACOUISITION ACCOUNT
The Trustee shall deposit in the Acquisition
Account proceeds of the Bonds to be disbursed for payment of
Acquisition Costs as provided in the Indenture.
DELIVERY COSTS ACCOUNT
The Trustee shall deposit in the Delivery Costs
Account proceeds of the Bonds to be disbursed for paymenL or
reimbursement of Delivery Costs. Amounts remaining in said
account shall be transferred to the Lease Payment Account.
LEASE PAYMENTS; LEASE PAYMENT ACCOUNT
All Lease Payments and such other amounts to which
the Authority may at any time be entitled under the Lease
Agreement, including moneys received for the purpose of
effecting a partial or complete prepayment of Lease
Payments, shall be paid directly to the Trustee as assignee
of the Authority under the Lease Agreement, and all of the
Lease Payments and such amounts collected or received by the
Authority shall be deemed to be held and to have been
collected or received by the Authority as the agent of the
Trustee, and if received by the Authority at any time shall
be deposited by the Authority with the Trustee, and all such
Lease Payments and such other amounts shall be forthwith
deposited by the Trustee upon the receipt thereof in the
Lease Payment Account. All amounts received by the Trustee
under the Indenture shall be held in trust by the Trustee
for the benefit of the Bond Owners.
On each Payment Date, the Trustee shall withdraw
from the Lease Payment Account an amount sufficient to pay
any principal of, premium, if any, and interest on the Bonds
due on such Payment Date.
Any amounts received by the Trustee from the City
for the purpose of partial or complete prepayment of Lease
Payments shall be applied to such prepayment. The City
shall thereafter prepare and submit to the Authority and the
Trustee a revised Lease Payment schedule reflecting such
prepayments.
NET PROCEEDS ACCOUNT
The Trustee shall establish a special account
within the Convention Centers Trust Fund designated as the
"Net Proceeds Account." The Trustee shall disburse Net
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Proceeds deposited by the City pursuant to the terms of the
Lease Agreement for the repair, reconstruction or
replacement of the Sites or the Facilities or for the
prepayment of Lease Payments.
RESERVE ACCOUNT
There shall be deposited in the Reserve Account
proceeds of the Bonds in an amount equal to the Reserve
Requirement. All moneys at any time on deposit in the
Reserve Account shall be applied as provided in the
Indenture to make up any deficiencies in the Lease Payment
Account and as a credit against the last remaining Lease
Payments. If on any Payment Date, the amounts on deposit in
the Lease Payment Account are less than the principal and
interest then due on the Bonds, the Trustee shall transfer
an amount sufficient to make up such deficiency from the
Reserve Account to the Lease Payment Account. Upon receipt
of any delinquent Lease Payment or portion thereof with
respect to which moneys have been advanced from the Reserve
Account, such lease Payment or portion thereof shall be
deposited in the Reserve Account.
INVESTMENT OF FUNDS
All moneys in any of the funds and accounts
established pursuant the Indenture shall be invested by the
Trustee as directed by the City solely in Permitted
Investments. In the absence of timely direction by the
City, as provided in the Indenture, such investments shall
be made in Permitted Investments selected by the Trustee in
its sole discretion. All interest and other income received
by the Trustee on investment of the Lease Payment Account or
Redemption Fund shall be retained in the Lease Payment
Account or Redemption Fund and be applied as set forth in
the Indenture, provided, however, that in the event that
amounts on deposit in the Reserve Account are less than the
Reserve Requirement, said interest or income shall be
deposited in the Reserve Account until there is on deposit
in the Reserve Account an amount equal to the Reserve
Requirement. All interest and other income received by the
Trustee on investment of the Reserve Account shall be
retained in the Reserve Account in the event that amounts on
deposit in the Reserve Account are less than the Reserve
Requirement. In the event that amounts then on deposit in
the Reserve Account equal or exceed the Reserve Requirement,
such excess shall be transferred to the Lease Payment
Account. Any interest or other income received by the
Trustee on the investment of the Acquisition Account and the
Delivery Costs Account shall be deposited, respectively, in
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the Acquisition Account and the Delivery Costs Account until
said accounts are closed pursuant to the Indenture.
For the purpose of determining the amount in any
account held by the Trustee under the Indenture, all
Permitted Investments credited to such account shall be
valued as provided in the Indenture.
Investments in any funds and accounts may be
commingled in a separate fund or funds for purposes of
making, holding or disposing of investments, notwithstanding
provisions in the Indenture for transfer to or holding in or
the credit of particular funds and accounts of amounts
received or held by the Trustee thereunder, provided that
the Trustee shall at all items account for such investments
strictly in accordance with the funds and accounts to which
they are credited and otherwise as provided in the
Indenture.
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
Pursuant to the Lease Agreement, the Authority has
transferred, assigned and set over to the Trustee all of the
Authority's rights in and to the Lease Agreement (excepting
as to certain of the Authority's rights therein), including
without limitation all of the Authority's rights to exercise
such rights and remedies conferred on the Authority pursuant
to the Lease Agreement as may be necessary or convenient
(i) to enforce payment of the Lease Payments and any other
amounts required to be paid under the Lease Agreement, and
(ii) otherwise to exercise the Authority's rights and take
any action to protect the interests of the Bond Owners in
the case of an Event of Default.
If an Event of Default occurs of which the Trustee
has, or is deemed to have, notice as provided in the
Indenture, the Trustee shall promptly give notice to the
Insurer and the Owner of each Bond. Upon the occurrence of
an Event of Default, and in each and every such case during
the continuance of the Event of Default, the Trustee may,
and upon the written direction of the Owners of a majority
in aggregate principal amount of Bonds then Outstanding and
upon receipt of indemnity to its reasonable satisfaction,
the Trustee shall, upon notice in writing to the Authority
and the Insurer, exercise the remedies provided in the Lease
Agreement to the extent permitted by law. Anything in the
Indenture to the contrary notwithstanding, upon the
occurrence and continuance of an Event of Default, the
Insurer shall be entitled to control and direct the
enforcement of all rights and remedies granted to the Bond
Owners or the Trustee for the benefit of the Owners of the
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Bonds under the Indenture and the Insurer shall be entitled
to approve all waivers of Events of Default.
Notwithstanding anything in the Indenture or the
Lease Agreement to the contrary, there shall be no right
under any circumstances to accelerate the maturities of the
Bonds or otherwise to declare any Lease Payment not then in
default to be immediately due and payable.
AMENDMENT OF INDENTURE
The Indenture and the rights and obligations of the
Owners of the Bonds may be modified or amended at any time
by agreement among all of the parties and the Trustee, which
shall become effective upon the written consent of the
Owners of a majority in aggregate principal amount of the
Bonds then Outstanding. No such modification or amendment
shall impair the right of any Owner to receive the principal
of, premium, if any, and interest on his Bond.
The Indenture and the rights and obligations of the
Owners of the Bonds may be modified or amended at any time,
without the consent of any such Owners but only (1) to cure,
correct or supplement any ambiguous or defective provision
contained in the Indenture, or (2) in regard to questions
arising under the Indenture, as the City may deem necessary
or desirable, and which shall not adversely affect the
interests of the Owners of the Bonds or the exclusion from
income for Federal income tax purposes of the interest on
the Bonds. Notwithstanding the foregoing, any provision of
the Indenture expressly recognizing or granting rights in or
to the Insurer may not be amended in any manner which
affects the rights of the Insurer without the prior written
consent of the Insurer.
CONSENT OF THE INSURER
Except as expressly provided in the Indenture, the
Insurer's consent shall be required in addition to the
consent of Bond Owners, when required, for the following
purposes: (i) execution and delivery of any supplemental
Indenture or any amendment, supplement or change to or
modification of the Indenture; (ii) removal of the Trustee
and selection and appointment of any successor Trustee; and
(iii) initiation or approval of any other action requiring
the consent of the Bond Owners.
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DEFEASANCE
The Bonds may be paid and discharged in anyone or
more of the following ways:
(a) by well and truly paying or causing to be paid
the principal of and interest on all Bonds, as and when
the same become due and payable;
(b) by depositing with the Trustee, in trust, at
or before maturity, moneys in an amount which, together
with the amounts then on deposit in the Lease Payment
Account and the Reserve Account, are fully sufficient to
pay all Bonds then outstanding;
(c) by depositing with the Trustee, in trust, cash
and/or direct obligations of the United States of
America in such amount as will, together with the
interest to be received thereon and moneys then on
deposit in the Lease Payment Account and the Reserve
Account, together with the interest to be received
thereon, be fully sufficient to pay and discharge all
Bonds at or before their respective maturities; or
(d) by depositing with the Trustee, under an
escrow deposit and trust agreement, security for the
payment of all Lease Payments as provided in the Lease
Agreement.
Notwithstanding that any Bonds shall not have been
surrendered for payment, upon the payment and discharge of
the Bonds as provided above, all obligations of the
Authority, the Trustee and the City under the Indenture
shall cease and terminate except only the obligation of the
Trustee to payor cause to be paid, from Lease Payments paid
by or on behalf of the City from deposits pursuant to
paragraphs (b) through (d) above, to the Owners of the Bonds
not so surrendered and paid all sums due with respect
thereto; provided, however, that notwithstanding anything in
the Indenture to the contrary, in the event that the
principal of or interest on the Bonds shall have been paid
by the Insurer pursuant to the Municipal Bond Insurance
Policy, the Bonds shall remain Outstanding for all purposes,
not be defeased or otherwise satisfied and not considered
paid by the Authority, and the assignment and pledge of the
Lease Payments and other amounts under the Indenture to the
Trustee for the benefit of the Bond Owners shall continue to
exist and shall run to the benefit of the Insurer, and the
Insurer shall be subrogated to the rights of the Owners of
the Bonds.
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COVENANTS
The Authority covenants and agrees with the Owners
of the Bonds to perform all obligations and duties imposed
on it under the Leas8.
LIMITATION OF LIABILITY
Except as provided in the Indenture, neither the
Authority nor the Trustee shall have any obligation or
liability to the Owners of the Bonds with respect to the
payment of the Lease Payments by the City when due or with
respect to the performance by the City of any other
covenants made by it in the Lease Agreement.
AMENDED AND RESTATED GROUND LEASE
AGREEMENT TO LEASE; TERM OF LEASE LEASE PAYMENT
The City agrees to lease the Sites to the
Authority, and the Authority agrees to lease the Sites from
the City, upon the terms and conditions set forth in the
Amended and Restated Ground Lease.
The term of the Amended and Restated Ground Lease
shall commence as of November 1, 1992 and shall end on the
earlier of October 1, 2019 or the date on which the Lease
Payments shall have been paid in full unless extended or
terminated earlier in accordance with the provisions
thereof. If on October 1, 2019, the Lease Payments shall
not have been paid, then the term of the Amended and
Restated Ground Lease shall be extended until ten (10) days
after all the Bonds have been paid. The term of the Amended
and Restated Ground Lease shall in no event extend beyond
October 1, 2032.
The Authority agrees to pay to the City, as rental
for the use and occupancy of the Sites during the term of
the Amended and Restated Ground Lease, payments as set forth
in the Amended and Restated Ground Lease. No further
amounts shall be due and payable by the Authority to the
City under the Amended and Restated Ground Lease.
Upon termination of the Amended and Restated Ground
Lease, all right, title and interest of the Authority in and
to the Sites shall revert to the City.
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CONDEMNATION; DAMAGE OR DESTRUCTION
In the event of damage or destruction to the Sites
or any part thereof or in the event a proceeding in eminent
domain or condemnation is instituted against the Sites or
any part thereof, the Lease Agreement will either continue
or terminate pursuant to its terms. If the Lease Agreement
terminates (the City, as sublessee of the Sites and lessee
of the Facilities, has the option, at its sale discretion,
to exercise or not exercise any rights contained in the
Lease Agreement), the Amended and Restated Ground Lease
shall also terminate and all Net Proceeds shall be allocated
in accordance with the provisions of the Lease Agreement.
If the Lease Agreement does not terminate, the provisions of
the Lease Agreement with respect to repairs or restoration
and the allocation of Net Proceeds shall govern.
Notwithstanding the foregoing, in the event that for any
reason the Lease Agreement has been terminated and the
Amended and Restated Ground Lease continues, the Authority
shall not be entitled to the Net Proceeds of any insurance
or condemnation award or any portion thereof, and all of the
same shall be the property of the City to the extent set
forth in the Lease Agreement.
MISCELLANEOUS
The Authority shall not, directly or indirectly,
create, assume or suffer to exist any mortgage, pledge,
lien, charge, encumbrance or claim on or with respect to the
Sites, other than the respective rights of the Authority and
the City as provided in the Amended and Restated Ground
Lease.
LEASE AGREEMENT
AGREEMENT TO LEASE
In consideration of the payment by the City to the
Authority or its assignee of the Lease Payments, the
Authority subleases the Sites and leases the Facilities to
the City pursuant to, and on the terms and conditions set
forth in, the Lease Agreement.
TERM OF LEASE AGREEMENT
The term of the Lease Agreement shall commence as
of November 1, 1992 and shall end on the earlier of
(i) October 1, 2014, or (ii) the date upon which Lease
Payments are paid in full, unless extended or terminated
earlier in accordance with the provisions hereof. If on
October 1, 2014, the Bonds have not been paid or provision
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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 provision therefor has
been made, except that in no event shall the term hereof be
extended beyond October 1, 2032.
LEASE PAYMENTS
The City agrees to pay to the Authority, its
successors and assigns, as rental for the use and occupancy
of the Sites and the Facilities, the Lease Payments. Each
Lease Payment shall be for the right to possess the Sites
and the Facilities for the semiannual period commencing the
second day of October or April of each calendar year and
ending on the first day of the following October or April.
For each semiannual rental period, the City shall make Lease
Payments during said semiannual period as more particularly
set forth in Exhibit B to the Lease Agreement, as Exhibit B
may from time to time be modified, following prepayment of
Lease Payments. In addition, in the event of damage to or
destruction of the Facilities, if the City elects to repair,
reconstruct or replace the Facilities and the Facilities are
not restored and made Usable within two years (or such
shorter period of time as Net Proceeds of rental
interruption insurance and moneys in the Reserve Account are
available for the payment of Lease Payments), the City will
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
Facilities. Such additional Lease Payments will be made in
consideration of the City'S right to possession and use of
the restored Facilities and shall be payable in equal
semiannual payments, commencing on the date for the payment
of Lease Payments hereunder next occurring following
restoration and repair of the Facilities, 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 semiannual payment period
during the term of the Lease Agreement shall constitute the
total amount due for said payment period and shall be paid
by the City for and in consideration of the right of
possession of, and the continued quiet use and enjoyment of
the Sites and the Facilities (including, in the case of
additional Lease Payments, the restored Facilities) during
such payment period.
An amount equal to the Lease Payment attributable
to each semiannual payment period shall be due on the 15th
day of September and March in each year as specified in
Exhibit B to the Lease Agreement; provided that there shall
C-16
be applied as a credit against the Lease Payment payable on
such date an amount equal to the sum of (il 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
credit shall have been reported on the preceding
September 15 or March 15 by the Trustee to the City pursuant
to the Indenture. In the event that the total amount of
credit exceeds the Lease Payment due on the 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 Account shall be applied
as a credit against the last Lease Payments due prior to the
expiration of the term of the Lease Agreement.
Should any Lease Payment be made later than the
Payment Date to which such Lease 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 Payment Date to the date of actual
payment.
Pursuant to the Lease Agreement, the Authority
directs that the City make the Lease Payments directly to
the Trustee for deposit in the Lease Payment Account.
PREPAYMENT OF LEASE PAYMENTS
The Lease Payments are subject to mandatory and
optional prepayment as provided in the Lease Agreement and
corresponding to the mandatory and optional redemption of
the Bonds.
DEFEASANCE
The City may on any date secure the payment of all
or a portion of the Lease Payments by a deposit with the
Trustee, as escrow holder under an escrow deposit and trust
agreement as referenced in the Indenture, of either (i) an
amount, if any, which, together with amounts on deposit in
the Lease Payment Account and the Reserve Account, is, in
the opinion of an independent certified public accountant,
fully sufficient to pay all unpaid Lease Payments, including
the principal and interest components thereof, and
prepayment penalty, if any, thereon, in accordance with the
Lease Payments schedule set forth in Exhibit B of the Lease
Agreement, or (iil direct obligations of the United States
of America, together with cash, if required, in such amounts
as will, together with interest to accrue thereon and, if
C-17
required, all or a portion of moneys or Federal Securities
then on deposit in the Lease Payment Account and the Reserve
Account, be fully sufficient to pay all unpaid Lease
Payments and prepayment penalty, if any. In the event of
such a deposit, all obligations of the City under the Lease
Agreement, and all security provided by this Lease Agreement
for said obligations, shall cease and terminate, excepting
only the obligation of the City to pay, or cause to be paid,
Additional Payments, any other amounts due under the Lease
Agreement and Lease Payments from the deposit made by the
City; provided, however, that notwithstanding anything in
the Lease Agreement to the contrary, in the event that the
principal of or interest on the Bonds shall have been paid
by the Insurer pursuant to the Municipal Bond Insurance
Policy, the Bonds shall remain Outstanding for all purposes,
not be defeased or otherwise satisfied and not considered
paid by the Authority, and the assignment and pledge of the
Lease Payments and other amounts under the Indenture to the
Trustee for the benefit of the Bond Owners shall continue to
exist and shall run to the benefit of the Insurer.
COVENANT TO BUDGET AND APPROPRIATE
The City covenants to take such action as may be
necessary to include all Lease Payments (other than the
amount of any Lease Payment which is subject to a credit
from funds deposited with the Trustee) and other payments
required to be made pursuant to the Lease Agreement in its
annual budget and annually to appropriate an amount
necessary to make such Lease Payments and other payments.
During the term of the Lease Agreement, the City will
furnish to the Trustee and the Authority a certificate
stating that the final budget for such fiscal year contains
an appropriation of amounts sufficient to make the Lease
Payments and such other payments payable during such fiscal
year within twenty (20) days after each final budget of the
City is printed.
OPTION TO PURCHASE
Upon expiration of the term of the Lease Agreement
and on the terms and conditions set forth therein, the City
has the option to purchase the Facilities for a cash
purchase price of one dollar ($1.00). Assuming the exercise
of such option to purchase by the City, upon expiration of
the Lease Agreement, all right, title and interest of the
Authority in and to the Sites and Facilities shall revert
and be transferred, respectively, to the City.
C-18
MAINTENANCE; UTILITIES AND TAXES
Throughout the term of the Lease Agreement, as part
of the consideration for the rental of the Sites and the
Facilities, all improvement, repair and maintenance of the
Sites and the Facilities shall be the responsibility of the
City, and the City shall pay for or otherwise arrange for
the payment of all utility services supplied to the
Facilities and all costs of operation of the Facilities and
all costs of the repair and replacement of the Facilities
resulting from ordinary wear and tear or want of care on the
part of the City.
The City shall also payor cause to be paid all
taxes and assessments of any type or nature, if any, charged
to the Authority or the City and related to the Sites or the
Facilities or the interests or estates therein.
MODIFICATION OF THE SITES OR THE FACILITIES
The City shall, at its own expense, have the right
to remodel the Facilities or to make additions,
modifications and improvements to the Sites and Facilities.
All additions, modifications and improvements shall
thereafter comprise part of the Sites and Facilities and be
subject to the provisions of the Lease Agreement. Such
additions, modifications and improvements shall not in any
way damage the Sites or Facilities or cause them to be used
for purposes other than those authorized under the
provisions of state and federal law; and the Sites and
Facilities, upon completion of any additions, modifications
and improvements made thereto pursuant to the Lease, shall
be of a value which is not substantially less than the value
of the Sites and Facilities immediately prior to the making
of such additions, modifications and improvements.
INSURANCE
The City shall maintain or cause to be maintained,
throughout the term of the Lease Agreement, a comprehensive
general public liability insurance policy or policies
against direct or contingent loss or liability for damages
for personal injury, death or property damage occasioned by
reason of the operation of the Sites and the Facilities.
Said policy or policies for comprehensive general public
liability insurance shall provide a total coverage in
amounts authorized by the City's liability insurance
program, and may be subject to a deductible amount in an
amount not to exceed $500,000, or such greater amount as may
be authorized by the City'S liability insurance program.
C-19
The City shall procure and maintain, or cause to be
procured and maintained, throughout the term of the Lease
Agreement, insurance against loss or damage to the Sites and
any structures constituting any part of the Facilities by
fire and lightning, with extended coverage and vandalism and
malicious mischief insurance, and earthquake insurance (but
as to earthquake insurance only if, in the opinion of the
City, such insurance is available at reasonable cost on the
open market from reputable insurance companies). Said
extended coverage insurance shall, as nearly as practicable,
cover loss or damage by explosion, windstorm, riot,
aircraft, vehicle damage, smoke and such other hazards as
are normally covered by such insurance. Such insurance
shall be in an amount equal to 100% of the replacement cost
of the Sites and the Facilities. Such insurance may be
subject to deductible amounts as may be authorized by the
City's liability insurance program, except that the
earthquake insurance may be subject to a deductible clause
of not to exceed ten percent (10%) of said replacement cost
for anyone loss.
The City shall maintain or cause to be maintained
throughout the term of the Lease Agreement rental
interruption or use and occupancy insurance, in an amount
not less than the maximum total Lease Payments payable by
the City on any four consecutive dates for payment of
semiannual Lease Payments hereunder, to insure against loss
of Lease Payments to the Authority or its assignee caused by
any of the perils covered by the fire and extended coverage
insurance described above.
The City shall maintain or cause to be maintained
throughout the term of the Lease Agreement, Workers'
Compensation Insurance cover all persons employed in
connection with the Facilities who are not otherwise covered
as required by the Labor Code of the State of California.
Each policy of fire and extended coverage and
rental interruption insurance required by the Lease
Agreement shall provide that all proceeds thereunder shall
be payable to the Trustee as and to the extent required
under the Lease Agreement.
APPLICATION OF NET PROCEEDS OF INSURANCE
Any Net Proceeds of any insurance relating to an
accident to or destruction of any part of the Sites or the
Facilities which is collected by the City in consequence of
any such accident or destruction shall be deposited by the
City in the Net Proceeds Account to be held in trust by the
Trustee as assignee of the Authority pursuant to the
C-20
Indenture and shall be applied and disbursed as set forth
below.
If 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 Sites or the
Facilities 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 shall cause such portion of the
Sites or the Facilities 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 shall direct the Trustee to withdraw said
Net Proceeds from the Net Proceeds Account from time to time
and to pay such Net Proceeds to the City for the purpose of
such repair, reconstruction or replacement. The City
covenants that such repair, reconstruction or replacement
shall be completed and the Sites or the Facilities made
Usable within two years from the date of damage to or
destruction of the Facilities. The City shall 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
Payment Account as a prepayment of Lease Payments. Subject
to the provisions of the following two paragraphs, the City
shall 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 Sites or the
Facilities; provided, however, that in the event that
accident or damage to any portion of the Sites or the
Facilities is such 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 Sites and
the Facilities bears to the entire Sites and Facilities
based upon the fair market value of the Sites and the
Facilities on November 1, 1992 or the date of such
abatement, whichever is greater, or to the maximum extent
permitted by law, until repair of such damaged portion is
completed to such an extent as to enable use thereof.
Notwithstanding the foregoing, there shall 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 they become due and payable.
In lieu of repair, reconstruction or replacement of
the damaged or destroyed portion of the Sites or the
Facilities, the City may (and, if the City shall determine
C-21
that such repair, reconstruction or replacement shall 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, provided that, 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 the
remaining Outstanding Bonds.
Any Net Proceeds of rental interruption insurance
required by the Lease Agreement shall 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 shall 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, shall be applied as
a credit against the next subsequent Lease Payments.
TITLE INSURANCE AND CONDEMNATION
The City shall provide, or cause to be provided, at
its own expense, an American Land Title Association title
inSurance policy with.such endorsement so as to be payable
to the Trustee (as assignee of the Authority). Such policy
shall insure the City's fee title and the Authority's
leasehold title to the Sites, the Authority's title to the
Facilities and the City's subleasehold title to the Sites
and leasehold title to the Facilities. Said title insurance
policy shall be in a principal amount equal to the aggregate
principal component of Lease Payments set forth in Exhibit B
to the Lease Agreement.
All Net ~ r o c e e d s received under the title insurance
policy provided for by the Lease Agreement or in any
condemnation proceeding undertaken by any governmental
agency relating to all or a portion of the Sites or the
Facilities shall be paid to the Trustee and deposited in the
Net Proceeds Account and shall be applied and disbursed as
set forth below.
If the City determines that such title defect or
condemnation has not materially affected the operation of
the Sites or the Facilities or the ability of the City or
its assignee to meet any of the obligations under the Lease
Agreement, or if such Net Proceeds are insufficient to
enable the City to prepay Lease Payments in full, as set
C-22
forth in a certificate executed by an Authorized
Representative of the City and filed with the Trustee, the
City shall direct the Trustee by said certificate of an
Authorized Representative 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 shall be
obligated to continue to make Lease Payments required by the
Lease Agreement notwithstanding condemnation of or a title
defect relating to a portion of the of the Sites or the
Facilities; 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 Sites and the Facilities bears to the entire Sites and
the Facilities based upon the fair market value of the Sites
and the Facilities on November 1, 1992 or the date of such
abatement, whichever is greater, or to the maximum extent
permitted by law, except that abatement shall not result so
long as moneys then on deposit in the Lease Payment Account
or Reserve Account or Net Proceeds of title insurance or
condemnation are sufficient for the making of Lease
Payments.
If the City determines that such title defect or
condemnation has materially affected the operation of the
Sites or the Facilities 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
Representative of the City and filed with the Trustee, or if
such Net Proceeds are sufficient to enable the City to
prepay Lease Payments in full as set forth in the Lease
Agreement as set forth in a certificate executed by an
Authorized Representative of the City and filed with the
Trustee, the City shall direct the Trustee, by said
certificate of an Authorized Representative, to treat such
Net Proceeds as the prepayment of Lease Payments in full.
In the event of condemnation of the Sites and the
Facilities, the City will use all efforts to assure that any
award made as a result of said condemnation is sufficient to
pay the stipulated value (as set forth in Exhibit B of the
Lease Agreement) of the City's interest in the Sites and the
Facilities.
C-23
EVENTS OF DEFAULT AND REMEDIES
The following are "Events of Default" under the
Lease Agreement:
(i) Failure by the City to pay any Lease Payment
when due and payable under the Lease Agreement, and the
continuation of such failure to the Business Day prior
to the Payment Date to which such Lease Payment
pertains;
(ii) Failure by the City to pay any Additional
Payment when due and payable under the Lease Agreement
and the continuation of such failure for a period of ten
(10) days;
(iii) Failure by the City to observe and perform any
covenant, condition or agreement on its part to be
observed or performed, other than as referred to in
clause (i) above, for a period of sixty (60) days after
written notice specifying such failure and requesting
that it be remedied has been given to the City by the
Authority, the Trustee or Owners of not less than five
percent (5%) in aggregate Principal Amount of Bonds then
Outstanding, unless the Authority, Trustee and such Bond
Owners agree in writing to an extension of such time
prior to its expiration; provided, however, if the
failure stated in the notice can be corrected, but not
within the applicable period, the Authority, the
Trustee, or such Bond Owners shall not unreasonably
withhold their consent to an extension of such time if
corrective action is instituted by the City within the
applicable period and diligently pursued until the
default is corrected;
(iv) A court having jurisdiction shall enter a
decree or order for relief in respect of the City in an
involuntary case under applicable bankruptcy, insolvency
or other similar laws in effect or appointing a
receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official of the City or for any
substantial part of its property, or ordering the
winding up or liquidation of its affairs, and such
decree or order remains unstayed and in effect for sixty
(60) days;
(v) The City shall commence a voluntary case under
any applicable bankruptcy, insolvency or other similar
law in effect or shall consent to the entry of an order
for relief in an involuntary case under any such law, or
shall consent to the appointment of or taking possession
C-24
by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official 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 and
shall take any corporate action in furtherance of any of
the foregoing.
Upon the occurrence and continuance of any Event of
Default described in (il or (iil above, the Trustee, may
proceed to (al re-enter and take possession of the
Facilities holding the City liable for the Lease Payments
and other amounts payable by the City pursuant to the Lease
Agreement; (bl re-enter and take possession of the
Facilities and re-let the Facilities to a third party for
the account of the City, holding the City liable for the
difference between the amount received under such lease and
the Lease Payments payable by the City under the Lease
Agreement; or (cl take whatever action at law or in equity
may appear 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.
C-25
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APPENDIXD
FORMOF OPINION OF BOND COUNSEL
(TInS PAGE INTENTIONALLY LEFT BLANK)
APPENDIX D
Form of opinion of Bond Counsel
December __ , 1992
California Statewide Communities
Development Authority
7901 stoneridge Drive, suite 225
Pleasanton, California 94588
Re: California Statewide Communities
Development Authority 1992 Lease
Revenue Bonds (City of Oakland
Convention Centers Project)
Final Opinion
Ladies and Gentlemen:
We have acted as Bond Counsel in connection with
the authorization, issuance and delivery by the California
statewide Communities Development Authority (the
"Authority") of its 1992 Lease Revenue Bonds (City of
Oakland Convention Centers Project), dated December ,1992
(the "Bonds"). In that connection, we have examinedcertain
proceedings of the Authority and the City of Oakland,
California (the "City"), including but not limited to
Authority Resolution No. , adopted
October 19, 1992, and City Ordinance No. C.M.S.,
adopted October _, 1992 (the "Resolution" and "Ordinance",
respectively) and executed counterparts of the Indenture of
Trust, dated as of November 1, 1992 (the "Indenture"), by
and between Ameritrust Texas National Association, as
trustee (the "Trustee"), and the Authority, the Amended and
Restated Lease and Sublease Agreement, dated as of
November 1, 1992 (the "Lease Agreement"), by and between the
Authority and the City, and such opinions and certificates
as to certain factual matters, and such other documents and
matters as we deemed necessary or appropriate to render this
opinion. Any capitalized term not defined herein shall have
the meaning given to such term in the Indenture.
The opinions hereinafter expressed (1) are based on
an examination of existing statutes, regulations, rUlings
California statewide Communities
Development Authority
December __ , 1992
Page Two
and jUdicial decisions and cover certain matters not
directly addressed by such authorities; (2) may be affected
by events or actions occurring after the date hereof; and
(3) are sUbject to the effect of bankruptcy, insolvency,
reorganization, moratorium or similar laws generally
affecting creditors' rights and to the application of
general principles of equity, including but not limited to
the right to specific performance, whereby a court might not
enforce certain covenants if it concludes that such
enforcement would be unreasonable or not undertaken in good
faith under the then existing circumstances, and the
limitations on remedies available against pUblic entities.
Based on and sUbject to the foregoing, and in
reliance thereon, as of the date hereof, we are of the
following opinion:
1 .
organized and
California.
The Authority is a joint powers authority dUly
operating under the laws of the State of
2. The City is a municipal corporation and
charter city, dUly organized and validly existing under the
Constitution and laws of the state of California and duly
existing under its Charter.
3. The Authority has full power and authority
under the laws of the State of California to issue the
Bonds, and the Bonds constitute the legal, valid and binding
limited obligations of the Authority.
4. The Authority has full power and authority
under the laws of the State of California to acquire title
to the Facilities and to lease the Sites from the City, and
to lease and sublease to the City the Facilities and the
sites, respectively, to enter into the Amended and Restated
Ground Lease and the Lease Agreement, and to perform its
obligations thereunder.
5. The Indenture has been duly and validly
authorized, executed and delivered and constitutes the
legal, valid and binding obligation of the Authority. The
Indenture creates a valid pledge, to secure the payment of
the principal of, premium, if any, and interest on the
Bonds, of the Lease Payments and any other amounts
(including proceeds of the sale of the Bonds) held in any
fund or account, other than the Rebate Fund, established
pursuant to the Indenture SUbject to the provisions of the
California statewide Communities
Development Authority
December __ , 1992
Page Three
Indenture permitting the application thereof for the
purposes and on the terms and conditions set forth in the
Indenture. The Indenture also creates a valid assignment to
the Trustee, for the benefit of the holders of the Bonds, of
the right, title and interest of the Authority in the Lease
Agreement (to the extent and as more particularly described
therein).
6. The Lease Agreement, the Amended and Restated
Ground Lease and the Indenture have been dUly authorized,
executed and delivered by the Authority and constitute the
legal, valid and binding obligations of the Authority
enforceable against the Authority in accordance with their
respective terms.
7. The Lease Agreement and the Amended and
Restated Ground Lease have been duly authorized, executed
and delivered by the City and are the legal, valid and
binding obligations of the City enforceable against the City
in accordance with their respective terms, and the
obligation of the city to make the Lease Payments under the
Lease Agreement does not constitute a debt of the City, the
state of California or any political subdivision thereof
within the meaning of any constitutional or statutory debt
limit or restriction.
8. The Bonds are limited obligations of the
Authority and are not a lien or charge upon the funds or
property of the Authority except to the extent of the
aforementioned pledge and assignment. The faith and credit
of the Authority is not pledged to the payment of principal
of or premium or interest on the Bonds. The Bonds are not a
debt of the state of California or any political subdivision
or agency thereof, other than the Authority to the extent of
the aforementioned pledge and assignment, and neither the
state nor any such political subdivision or agency is liable
for the payment thereof.
9. Interest on the Bonds is exempt from state of
California personal income taxes.
Respectfully submitted,
(THIS PAGE INTENTIONALLY LEFr BLANK)
APPENDIXE
FORM OF OPINION OF SPECIAL TAX COUNSEL
(THIS PAGE INTENTlONALLY LEFr BLANK)
APPENDIX E
FORM OF OPINION OF SPECIAL TAX COUNSEL
California Statewide Communities
Development 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..'sDevelopment Authority (theAuthority) 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 reserve
account created under the Indenture; and (c) to pay COsts incurred In connection with the execution
and 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 and
interest 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
Californl8 8mt8w1de Community
Development Authority
Page 2
of the Authority dated .. of the date hereof. We ha"e alao examined and relied upon the legal
opinion of Morrison. Foerster, bond counsel, dated .. of the date hereof, related to the legal status
of, due authorization, execution and delivery by, and the binding effect upon and enforceability
against, the Authority of the Bonds.
Based on the foregoing, it is our opinion that the interest on the Bonds is excluded from gross
income for federal income tax purposes under the Internal Revenue Code of 1986, as amended lthe
-Code-), under existing laws as enacted and construed on the date of initial delivery of the Bonds,
assuming the accuracy of and continuing compliance with the certifications of the Authority and the
City with certain covenants in the documents and requirements of the Code. 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 for federal income tax purposes retroactively to the date of
delivery of the Bonds. Interest on the Bonds will not be an item of tax preference for purposes of
either individual or corporate federal afternative minimum tax, but interest on the 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
tax and environmental tax because of its inclusion in the earnings and profits of a corporate holder.
Interest on the Bonds held by a foreign corparation may be subject to the branch profits tax imposed
by the Code.
Ownership of the Bonds may result in collateral federal income tax consequences to certain
taxpayers, including, without limitation, financial institutions, property and casualty insurance
companies, certain S corporations, individual recipients of Social Security or Railroad Retirement
benefits, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase
or carry the Bonds. We exprasa no opinion as to such collateral tax consequences.
We have not been engaged to review, nor ha"e we undertaken to review, the 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,
APPENDIXF
FORM OF MUNICIPAL BOND INSURANCE POLICY
(THIS PAGE INTENTIONALLY LEFT BLANK)
IIIBAC
Municipal Bond Insurance Policy
A\1BA( lndernmtv ( orporJIHl'l
c-o ("I COrpOfJlIOn ...
-H Fa... t vlrfflm .... t ..on \\ r-con... in
Adrniru-tranv v Ofbc c
One: 'llJ((.. vtrcet Pla?.J '\C\\ '\ or}... '\ Y IOOO-t
Issuer Polley Number
Bonds Prerniurn
Secretary
Authonzed Representatlve
Effective Date
AMBACIndemnity Corporation (A"ffiAC) AWbcon.>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 United
Scates Trust 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 for
Payment 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 Interest which IS then Due for Pavment b a U nt, AMBAC shall become
the owner of the surrendered Bonds and coupons and shall ers 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 authorized
representanve. so as to permit owners p su B arne of AMBAC or Its nornmee In cases
where the Bonds are Issuable on Iv r wh Ie egistered Bondholders or their assigns the
Insurance Trustee shall disburse 1 ere to a nihupon preseruauon to the Insurance Trustee of
proof that the claimarn IS en t he rest on the Bond and dell very to the Insura.nce Trustee
of an rnsrrumenr of ass I 0 sa ate[ urance Trustee dulv executed bv the claimant Bondholder or
such Bondholder s 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 to
pavrnenr 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 Or 0 to a Bond 'Due for Pav mem': 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 to
Interest 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 are Due for Payment
ThIS Pohcv IS noncancelable The premium on thrs Pollcv IS not refundable for any reason, including pavment of the Bonds
pnor to maturirv ThIS Polley does 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 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 OF NEW'tORI<acknowledgesthat It
has agreed 10 perform the dulles of Insurance Trustee under tlusPolley
Form" S66-00(H (V901
tu-, ':7
AuthorIZed Olficer
MIBAC.
Endorsement
Pohc v issued to
AMBAC Indemruty Corporanon
c/o CT Corporation Systems
44 East MIfflInStreet
MadISOn. WlSConsm53703
Adrmrustranve Office
One State Street Plaza
New York. NY 10004
Attached [0 and forming part of
Effective Date of Endorsement
secretary
provide that AMBAC will make payments of the (of and interest on the Bonds
which shall become Due for paid by reason Nonpavment by the Issuer wrthm
on, (I) day followon, nor payment /
Nothing herein contained shall be held to varv,alter. waive or extend am of the terms, condiuons. provisions, agreements or
hrnuanons of the above mentioned Pohcv other than as above stated
"'
In Witness Whereof, the Cornpanv has caused us Corporate Seal to be hereto affixed and these presents 10 be signed by lIS
duly authorized officers In facssrrule 10 become effecnve as Its onginal seal and signatures and binding on the Company bv
virtue of countersignature by duly authonzed agent
AMBAC Indemnity Corporation
Authorized Representative
form _ 28-0006(6191)