oakland 1992 scda bonds

8/2/2019 Oakland 1992 SCDA Bonds

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NEW ISSUE BOOK-ENTRYONLY

In tneOpinion of Ballard SpahrAndrews & Ingersoll, SpeCIal TaxCounsel, based on eXlstmg statutes, regulattons, rulmgs and ludlclal aeasonsand assummg comphence with certam covenants described herem and with the reqUirements of the Internal Revenue Code of 1986, as

amended, mtereston the Bonds ISexcluded from the gross mcome of the owners of the Bonds for federal income tax purposes SpeCialTaxCounsel IS further of the oplnton that mtereston the Bonds will not be treated as an Itemof tax preferencem calculating altemahvemuumum taxable income of indIViduals and corporattons, however, such Interest on Bonds held by certam corporatIons may besutnec: to an alternative minimum tax and enVironmental tax because of Its mcluslon m the earnmgs and profits of the corporate

holder MOrrison & Foerster, Bond Counsel, IS of the opinion that Interest on /he Bonds IS exempt from present State ofCalifornia personal Income taxes See "TAX EXEMPTION" herem.

$149,825,000CALIFORNIA STATEWIDE COMMUNITIES

DEVELOPMENT AUTHORITY1992 LEASE REVENUE BONDS

(City of Oakland Convention Centers Project)

Dated: November 1, 1992 Due: October 1, as shown herein

The Bonds are bemg ISSUed In accordance With an Indenture of Trust, dated as of November 1, 1992, by and between the CalifornIaStatewide Communities Development Authonty (the "Authonty") and Amentrust Texas NalJOnal Associanon, as trustee (the "Trustee") Theproceeds of the Bonds Willbe used to pay Oalder ASSOCiates Limited Partnership and Oakbay ASSOCiates lImrted Partnership the acqUISitionprice In connection With the purchase of the Henry J. Kaiser Convention Center ("Kaiser ConventIOn Center") and the Oakland Convention

Center--<3eorge P Scotian Memonal ("Scotian Convention Center"), respectively, by the Authonty, to fund a reserve account created under theIndenture, and to pay costs Incurred In eonnecnon Withthe execution and delivery of the Bonds

Interest on the Bonds ISpayable semiannually on Apnl 1 and October 1 of each year commencing Apnl 1, 1993, as descnbed herein TheBonds will be Issued as fully regIstered Bonds In the minimum denominationof $5,000 or any Integral multiple thereof In book-entry form, wrthou1coupons, and, when delivered, will be Inrtlallyregistered In the name of Cede & Co , as nominee of The DePOSitoryTrust Company, New York,New York("DTC"), DTC Willactasseeunnes deposrtory of the Bonds IndIVidualpurchasersof Interests Inthe Bonds will be made In book-entryform only Purchasers of such InterestsWIll not receive Bonds PrinCIpal,premium, If any, and Interest are payable by the Trustee directly to DTCwhich Will remit such payments to the DTC Parneipants for subsequent disbursements to the BenefICIalOwners of the Bonds, as descnbedherem

The Bonds are subject to redemplJOn pnor to matunty as more fully descnbed herem See "THE BONDS"

The Bonds are special limited obligations of the Authonty and are payable solely from, and Willbe secured by, Lease Payments made bythe City of Oakland, California (the "City"), to the Authonty as rental for the Kaiser Convention Center and SCotian Convention Center

Payment of the pnnopai of and Interest on the Bonds when due WIll be guaranteed by a mUniCipal bond Insurance policy to be ISSUed

Simultaneously wrth the delivery of the Bonds by AMBAC Indemnity Corporation

THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY AND DO NOT CONSTITUTE INDEBTEDNESS OR ACHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY THE BONDS ARE NOT A DEBT OF THE STATE OF CALIFORNIA ORANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER THE STATEOF CALIFORNIA NOR ANY OF ITS POLITICAL SUBDIVISIONS ISLIABLETHEREFOR THE PRINCIPAL OF AND INTERESTON THE BONDS ARE PAYABLE FROM AND SECURED BY A PLEDGEOF THELEASE PAYMENTS FROM THE CITYTOTHE AUTHORITY THE BONDS DONOT CONSTITUTE INDEBTEDNESSWITHIN THE MEANINGOF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION

MATURITY SCHEDULE

(see inside front cover)

This cover page contains certain Information for general reference only It ISnot Intended to be a summary of the s e c u ~ or terms of theBonds Investors are advised to read the entire OffICialStatement to obtain Information essential to the making of an InfOrmed InvestmentdeciSion

The Bonds are offered when, as and If Issued, by the Au/horlty and receIved by the Underwnters subJBctto the approval of the legality /hereofby Mornson & Foerster, San FranCISCo, California, Band Counseland BallardSpahrAndrews & Ingersoll, SpeCIal TaxCounsel, Washmgton,oC Certam legal matters are sublect to the approval of Wendel, Rosen, Black, Dean & Levitan, Oakland, CalifornIa, counsel to /he

Underwnters, and Ornck, Hernngton & Sutcliffe, Los Angeles, Callfomla, Counsel to /he Authonty. Certam legal matters Will bepassed upon for the City by Jayne W. Williams, CIty Attorney of the City of Oakland It IS antIcIpated that the Bonds WIll be

available for delIvery through DTe m New York, New Yorkon or about December 8, 1992

Goldman, Sachs & Co.

Pryor, McClendon & Counts & Co. Inc. Artemis Capital Group, Inc.

Henderson Capital Partners, Inc.

Dated November 13, 1992



MATURITY SCHEDULE

$65,295,000 serial Bonds

Maturity Pnnclpal Interest Pncel Matunty Pnnclpal Interest Pnce

October 1 Amount Rate Yield October 1 Amount Rate Yiel

1995 $1,310,000 415% 100% 2002 $5,135,000 570% 575

1996 1,870,000 460 100 2003 5,430,000 580 590

1997 2,450,000 485 100 2004 7,845,000 60 0 1001998 2,570,000 510 100 2005 8,320,000 60 0 610

1999 2,705,000 520 53 0 2006 8,815,000 6Ve 620

2000 4,620,000 540 545 2007 9,355,000 620 625

2001 4,870,000 550 560

$31,900,000 6.00% Term Bonds Due October 1, 2010 to Yield 6.30°0

$52,630,000 5.50% Term Bonds Due October 1,2014 @ 90.50%

(Plus Accrued Interest)



CALIFORNIA STATEWIDE COMMUNITIFS DEVEWPMENT AUTHORITY

DON BENNINGHOVEN, Chairman

DANIEL HARRISON, Vice Chairman

STEVE SWENDIMAN, Secretary

PAUL HAHN

NORMA LAMMERSSTEVEKEIL

JACK CRIST

THE CITY OF OAKLAND, CALIFORNIA

THE CITY COUNCIL

ELIHU M. HARRIS, MayorLEO BAZILE, ViceMayor

FRANK H. OGAWA

ALETA CANNON

MARGE GIBSON-HASKELL

RICHARD SPEES

NATHAN MILEY

MARY MOORE

IGNACIO DE LA FUENTE

CITY ADMINISTRATIVE OFFICERS

HENRY L. GARDNER, City Manager

ARRECE JAMESON, City Clerk

GARYBREAUX, Director of Finance

JAYNE W. WILLIAMS, City Attorney

BOND COUNSEL

Morrison & Foerster

San Francisco, California

SPECIAL TAX COUNSEL

SPECIAL SERVICES

SPECIAL AUTHORITY COUNSEL

Orrick, Herrington & Sutcliffe

Los Angeles, California

COUNSEL TO THE UNDERWRITERS

Ballard Spahr Andrews & Ingersoll

Washington, D.C.

TRUSTEE

Ameritrust Texas National Association

Houston, Texas

Wendel, Rosen, Black, Dean & Levitan

Oakland, California

FINANCIAL ADVISOR

Public Financial Management, Inc.

San Francisco, California



(TIllS PAGE INTENTIONALLY LEFf BLANK)



No dealer, broker, salesperson or other person has been authorized by the Authority, theCity or the Underwriters to give any information or to make any representations, other than

those contained herein, and, if given or made, such other information or representations must

not be relied upon as having been authorized by any of the foregoing. This Official Statement

does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be anysale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make

such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers of the

Bonds. Statements contained in this Official Statement that involve estimates, forecasts or

matters of opinion, whether or not expressly sodescribed herein, are intended solely as such andare not to be construed as representations of fact.

The information set forth herein has been obtained from official sources which arebelieved to be reliable, but it IS not guaranteed as to accuracy or completeness, and is not to be

construed as a representation by the Underwriters. The information and expressions of opinions

herein are subject to change without notice, and neither delivery of this Official Statement nor

any sale made hereunder shall, under any circumstances, create any implication that there hasbeen no change in the affairs of the City or the Authority since the date hereof. All summariescontained herein of the Indenture, the Lease Agreement or other documents are made subject

to the provisions of such documents, respectively, and do not purport to be complete statements

of any or all of such provisions.

This OfficialStatement is submitted in connection with the sale of the Bonds referred toherein and may not be reproduced or used, in whole or in part, for any other purpose.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOTOREFFECTTRANSACTIONSWHICHSTABILIZEORMAINTAINTHEMARKET

PRICE OF THEBONDS AT A LEVEL ABOVETHAT WHICH MIGHT OTHERWISE PRE-VAIL IN THE OPENMARKET, AND SUCHSTABILIZING, IF COMMENCED, MAYBE

DISCONTINUED AT ANY TIME.

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 . . . . . ...

9ESTIMATED SOURCES AND USES OF

PROCEEDS OF THE BONDS . . . . . . . . 9

SECURITY AND SOURCES OF PAYMENT

FOR THE BONDS . . . . . . . . . . . . . . . 9

General 9

Lease Payments . . . . . . . . . . . . . . . . . 10

Reserve Account .. 10

Municipal Bond Insurance . . . . . . . . . . . 11

Obliganon of the Autbonty . . . . . . . . . . 13

RISK FACTORS 13

THE GROUND LEASE . . . . . . . . . . . . .. 16

i i

THE LEASE AGREEMENT . . . . . . . . . . . 17

THE CITY AND THE AUTHORITY 23

The City of Oakland . . .. .. . . . . . 23

The Authority 24

LlTlGATION . . . . . . . . . .•.. . . . . . . . 24

TAX EXEMPTION 25

RATINGS 25

APPROVAL OF LEGAL PROCEEDINGS . . 26

UNDERWRITING 26

FINANCIAL ADVISOR . . . . . .. 26

MISCELLANEOUS 27

APPENDIX A - DESCRIPTION OF THE

CITY OF OAKLAND . . . . .. ..... A-I

APPENDIX B - THE CITY OF OAKLAND

AUDITEDFINANCIAL

STATEMENTSFOR THE FISCAL YEAR ENDED

JUNE 30, 1991 . . B-1

APPENDIX C - SUMMARY OF CERTAIN

PROVISIONS OF LEGAL DOCUMENTS c-i

APPENDIX D - FORM OF OPINION OF

BOND COUNSEL D-l

APPENDIX E - FORM OF OPINION OF

SPECIAL TAX COUNSEL . . . . . . . . . E-1

APPENDIX F - FORM OF MUNICIPAL

BOND INSURANCE POLICY F-1



OFFICIAL STATEMENT

$149,825,000California Statewide Communities Development Authority

1992 Lease Revenue Bonds(City of Oakland Convention Centers Project)

INTRODUCTION

The purpose of this Official Statement, which includes the cover page, table of contentsand Appendices hereto (collectively, the "Official Statement") is to provide certain informationconcerning the California Statewide Communities Development Authority (the"Authority"), theCity of Oaldand (the "City") and the proposed issuance of $149,825,000 aggregate principal

amount ofCaliforniaStatewideCommunities DevelopmentAuthority 1992Lease Revenue Bonds(City of Oakland Convention Centers Project) (the "Bonds") to be issued by the Authority. TheBonds are being issued in accordance with the Marks-Roes Local Bond Pooling Act of 1985,constituting Article 4, Chapter 5, Division 7, Title 1of the Government Code (commencing with

Section 6584), and pursuant to a resolution adopted by the Authority on October 19, 1992, andan Indenture of Trust, dated as of November 1, 1992 (the "Indenture"), by and between theAuthority and Ameritrust Texas National Association, as trustee (the "Trustee"). The Bonds arespecial limited obligations of the Authority payable solely from and secured by a pledge of theLease Payments by the City to the Authority under an Amended and Restated Lease andSublease Agreement dated as of November 1, 1992 (the "Lease Agreement") between the Cityand the Authority.

Pursuant to a Contract of Sale, dated as of September 21, 1992 (the "Kaiser Contract ofSale"), by and between the Authority, as assignee of the City, and Oakter Associates LimitedPartnership ("Oakter"), as seller, and a Contract of Sale, dated as of September 21, 1992 (the

"Scotlan Contract of Sale") between the Authority, as assignee of the City, and OakbayAssociates Limited Partnership ("Oakbay"), as seller (the Kaiser Contract of Sale and theScotian Contract of Sale sometimes being hereinafter referred to collectively as the "Contractsof Sale"), the Authority has agreed to purchase and acquire title to the Henry J. KaiserConvention Center (the "Kaiser Convention Center") and the Convention Center - George P.

Scotian Memorial (the "Scotian Convention Center"). (The Kaiser Convention Center and theScotian Convention Center are together called the "Convention Centers.") The Authority willlease the Convention Centers to the City pursuant to the Lease Agreement.

The proceeds of the Bonds will be used to (a) pay Oakter and Oakbay, respectively, theacquisition costs of the Kaiser Convention Center and Scotian Convention Center; (b) to fund

a Reserve Account to be created under the Indenture; and (c) to pay the costs incurred inconnection with the execution and delivery of the Bonds.

A portion of such acquisition costs will be used to (i) defease the $38,000,000 Certificates of Participation (Oakland Convention Center - George P. ScotianMemorial) Series 1983of the Redevelopment Agency of the City of Oakland (the"Agency"), dated December 1, 1983



(the "Scotlan Certificates") and (ii) redeem the Agency's $43,500,000 Certificates of

Participation (Henry J. Kaiser Convention Center), dated September 1, 1982 (the "KaiserCertificates").

The Bonds are limited obligations of the Authority entitled, ratably and equally, to the

benefits of the Indenture, and are payable from and secured by an assignment and pledge of the

Authority's interest in the Lease Payments. The Lease Payments required to be made by the Cityunder the Lease Agreement are subject to the availability of the Convention Centers for use bythe City and will be in amounts sufficient to enable the Authority to make the payments of

principal of, premium, if any, and interest on the Bonds. The Authority will not be obligatedto make any payments on the Bonds except from the Lease Payments by or on behalf of the Citypursuant to the Lease Agreement.

Payment of the principal of and interest on the Bonds will beinsured by a municipal bond

insurance policy (the "Bond Insurance") to be issued by AMBAC Indemnity Corporation (the

"Insurer" or "AMBAC Indemnity") simultaneously with the issuance of the Bonds. Neither the

City nor the Authority has made any investigation and makes no representatior.s with respect to

the Insurer and the Bond Insurance, and reference should be made to "SECURITY ANDSOURCES OF PAYMENT FOR THE BONDS - Municipal Bond Insurance" and AppendixF hereto for a description of the Insurer and its specimen insurance policy, respectively. Theinformation herein with respect to the Insurer and Appendix F has been furnished by the Insurer.

There follows in this Official Statement descriptions of the Bonds, the Lease Agreement,the Indenture, the Bond Insurance, the Insurer, the Authority and the City. The descriptions andsummaries of documents herein do not purport to be comprehensive or definitive, and reference

is made to each such document for the complete details of all terms and conditions. All

statements herein are qualified in their entirety by reference to each such document and, with

respect to certain rights and remedies, to laws and principles of equity relating to or affecting

creditors' rights generally. Terms not defined herein shall have the meanings set forth in theIndenture and the Lease Agreement. Copies of the Indenture and the Lease Agreement are

available for inspection during business hours at the offices of the City.

THE BONDS

Authority for Issuance

The Bonds are being issued in accordance with the provisions of the Marks-Roos Local

Bond Pooling Act of 1985, constituting Article 4, Chapter 5, Division 7, Title 1 of the

Government Code of the State of California (commencing with Section 6584). The Bonds were

authorized to be issued pursuant to a resolution adopted by the Authority on October 19, 1992.

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, andinterest on the Bonds, and the Lease Payments constitute the sole source of payments for theprincipal of and interest on the Bonds.This pledge constitutes a first lien on and security interest

in the Lease Payments. The Indenture and the Lease Agreement provide the Trustee with thepower to enforce, either jointly with the Authority or separately, all of the rights of theAuthority to the Lease Payments.

Description of the Bonds

The Bonds will be dated and will bear interest at the rates per annum and will mature,subject to prior redemption, on the dates and in the principal amounts, all as set forth on thecover page hereof. Interest on the Bondswill be payable on April 1 and October 1 of each year,commencing April 1, 1993 (the "Payment Dates"). The Bondswill be issued in fully registeredform without coupons in denominations of $5,000 or any integral multiple thereof.

Interest on the Bonds will he computed on the basis of a 360-day year consisting of

twelve 3Q-day months. Each Bondshall bear interest from the Payment Date next preceding thedate of authentication thereof unless (i) it is authenticated on or prior to an Payment Date andafter the close of business on the fifteenth day of the month preceding such Payment Date, inwhich event it shall bear interest from such Payment Date, or (ii) it is authenticatedon or priorto March 15, 1993, in which event it shall bear interest from November 1, 1992; provided,however, that if at the time of authenticationof a Bond, interest is in default thereon, suchBondshall bear interest from the Payment Date to which interest has previously been paid or madeavailable for payment thereon.

Principal of the Bonds is payable upon presentation and surrender thereof, at maturityor prior redemption thereof, at the principal corporate trust office of the Trustee in Houston,Texas. Interest will be paid by the Trustee by check of draft mailed by frrst-elass mail, postageprepaid, on the Payment Date to the registered owners thereof as of the fifteenth day of themonth immediately preceding the Payment Date as such owners' names and addresses appearon the registration books kept by the Trustee as of such fifteenth day or, upon request of anowner of at least $1,000,000 in aggregate principal amount of Bonds by wire transfer to anaccount within the continental United States designated by such owner prior to such fifteenthday.

Transfer and Exchange

TheBonds may be transferred or exchanged at the principal corporate trust office of theTrustee inHouston, Texas, provided that the Trustee shall not be required to register the transferor exchange of any Bond selected for redemption pursuant to the Indenture.

3



Optional Redemption

The serial Bonds maturing on or after October 1, 2002, and the term Bondsmaturing onOctober 1,2010, are subject to optional redemption, in such order of maturity as the City shalldirect and by lot within a maturity on any Payment Date, commencing October 1, 2002, at aredemption price equal to the principal amount of the Bonds to be redeemed together with the

premium set forth below (expressed as a percentage of the principal amount to be redeemed)plus accrued interest to the date fixed for redemption.

Redemption Dates (Dates Inclusive)

October 1, 2002 to September 30, 2003October 1, 2003 to September 30, 2004October 1, 2004 and thereafter

Redemption PremiUm

102%

101%

100%

The termBonds maturing onOctober 1, 2014, are subject to optional redemption, in suchorder of matunty as the City shall direct and by lot within a maturity on any Payment Date,

commencing October 1, 2002, at a redemption price equal to the principal amountof the Bondsto be redeemed, plus accrued interest to the date fixed for redemption.

Mandatory Sinking Fund Redemption

The Bonds maturing on October 1, 2010, and October 1, 2014, will be subject tomandatory redemption, or in part by lot, on October 1 in each year commencing October 1,2008, and October 1, 2011, respectively, at a redemption price equal to the principal amountthereof to be redeemed, without premium, in the aggregate respective principal amounts and inthe respective years as set forth in the following table; provided, however, that if some but notall of the Bonds maturing on October 1, 2010, and October 1, 2014, have been optionally

redeemed as described above or by special redemption as described below, the total amount ofall future sinking fund payments shall be reduced by the aggregate principal amount of Bondsso redeemed, to be allocated among such sinking fund payments on a pro rata basis in integralmultiples of $5,000 and that in lieu of mandatory sinking fund redemption such Bonds may bepurchased by the Authority on the open market.

Bonds Maturing October 1, 2010

Sinking AccountRedemption Date

(October 1)

20082009

2010·

'Maturity

Principal Amountto Be Redeemedor Purchased

$ 9,935,00010,530,00011,435,000

4



Sinking AccountRedemption Date

(October 1)

2011

2012

20132014·

"Maturity

Bonds Maturing October 1, 2014

Principal Amountto Be Redeemed

or Purchased

$12,120,00012,785,000

13,495,00014,230,000

Special Redemption from Net Proceeds of Insurance or Condemnation

The Bonds are subject to mandatory redemption in whole on any date or in part on anyPayment Date (but not in a total redemption amount of less than $5,000 at anyone time), ininverse order of maturity and by lot within a maturity, without premium, at the principal

amount, together with accrued interest to the Payment Date fixed for redemption, from the NetProceeds of insurance or condemnation in an amount of $5,000 or more deposited with theTrustee pursuant to the provisions of the Lease Agreement concerning (i) proceeds of anyinsurance relating to an accident to or destruction of any part of the Convention Center Sites orthe Convention Centers, (ii) proceeds received under the title insurance provided for by the

Lease Agreement or (iii) proceeds in any condemnation proceeding undertaken by any governmental agency relating to the Convention Center Sites or the Convention Centers.

General Redemption Provisions

For purposes of selecting Bonds for redemption, the Bonds will be deemed to be

composed of $5,000 portions, and any such portions may be separately redeemed. I f less thanall the Bonds of any maturity are called for redemption at anyone time, and so long as the

Bonds are in book-entry form with DTC as the owner, DTC and the DTC Participants will select

the ownership interests of the Beneficial Owners to be redeemed by lot in any manner whichDTC and the DTC Participants deem fair. In the case of a partial redemption as describedabove, the Trustee will select certificated Bonds by lot in any manner which the Trustee deems

fair.

Notice of Redemption

Notice of redemption will be mailed no less than thirty (30) nor more than sixty (60) daysprior to the redemption date (i) to DTC or (ii) in the event the book-entry-only system isdiscontinued, to the respective registered owners of the Bonds designated for redemption at theiraddresses appearing on the bond registration books, and to certain securities depositaries and

information services. Neither failure to receive such notice nor any defect in the notice so mailed

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 Trus t Company, New York, New York

("DTC"). So long as DTC, or its nominee, Cede & Co., is the registered owner of all Bonds,

all payments on the Bonds will be made directly to DTC, and disbursement of such payments,

to the hereinafter described DTC Participants will be the responsibility of DTC, and disburse

ment of such payments to the persons for whom a DTC Participant acquires an interest in the

Bonds (individually, a "Beneficial Owner") will be the responsibility of the DTC Participants

as more fully described herein.

DTC is a limited-purpose trust company organized under the laws of the State of New

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

of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the

provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC was

created to hold securities of its participants (the "DTC Participants") and to facilitate the clear

ance and settlement of securities transactions among DTC Participants in such securities through

electronic book-entry changes in accounts of the DTC Participants, thereby eliminating the need

of physical movement of securities certificates. DTC Participants include securities brokers and

6



dealers, banks, trust companies, clearing corporations and certain other organizations, some ofwhom (or their representatives) own DTC. Access to theDTC system is also available to others

such as banks, brokers, dealers and trust companies that clear through or maintaina custodialrelationship with a DTC Participant, either directly or indirectly.

Ownership interests in the Bonds may be purchased by or through DTC Participants.

Such DTC Participants and the Beneficial Owners will not receive Bonds, but each DTC

Participant will receive a credit balance in the records of DTC in the amount of such DTC

Participant's interest in Bonds, which will be confirmed in accordance with DTC's standardprocedures. Each BeneficialOwner may desire to makearrangements with suchDTCParticipant

to receive a credit balance in the records of such DTC Participant, and may desire to make

arrangements with such DTC Participant to have all notices of redemption or other communi-

cations toDTC, which may affect such persons, forwarded in writing by such DTC Participantand to have notification made of all interest payments. NEITHER THE AUTHORITY, THE

CITYNORTHE TRUSTEEWILLHAVE ANY RESPONSmILITY OROBUGATIONWITH

RESPECT TO THE PAYMENTS TO OR THE PROVIDING OF NOTICE FOR SUCH DTC

PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITHRESPECT TO THE BONDS NOR ANY OBUGATION TO MAINTAIN DTC'S BOOK

ENTRY SYSTEM. DTCWILL NOTBE DEEMED ANAGENT OF THEAUTHORITY, THE

CITY ORTHE TRUSTEE FOR ANY PURPOSE, AND NEITHER THE AUTHORITY, THE

CITY NOR THE TRUSTEE WILL BE RESPONSIBLE FOR THE ACTIONS OF DTC.

With respect to Bonds registered in the name of DTC or its nominee, Cede & Co.,

neither the Authority, the City nor the Trustee will have any responsibility or obligation to anyDTC Participant or to any person on behalf of whomsuch a DTC Participant holds an interest

in Bonds. Without limiting the scope of the immediately preceding sentence, the Authority, the

City, the Paying Agent and the Trustee will have no responsibility or obligation with respect to

(i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any

ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person,

other than a Bond Owner as shown in the registration books kept by the Trustee, of any notice

with respect to the Bonds, including any notice of redemption, (iii) the selection by DTC of the

beneficial interests in the Bonds to be redeemed, if any, (iv) the payment to any DTC Participantor any other person, other than a Bond Owner as shown in the registration books kept by theTrustee, of any amount with respect to the Bonds or (v) any consent given or otheraction taken

by DTC or Cede & Co. as Owner of the Bonds. The Authority, the City and the Trustee may

treat and consider each Bond Owner as shown in the registration books kept by the Trustee as

the holder and absolute owner of Bonds registered in such person's name for the purpose of

payment of principal of and interest on such Bonds, for the purpose of giving notice of

redemption and other matters with respect to such Bonds, for the purpose of registering transfers

with respect to such Bonds, and for all other purposes whatsoever. The Trustee will pay allprincipal of and interest on and purchase price of the Bonds only to the Bond Owners, as shown

in the registration books kept by the Trustee, and all such payments will be valid and effective

to fully sansfy and discharge the Authority's obligations with respect to payment of principal of

and interest on the Bonds to the extent of the sum or sums so paid.

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 byDTC.

Upon receipt of moneys, DTC's current practice is immediately to credit the amounts of

the DTC Participants in accordance with their respective holdings shown on the records ofDTC.

Payments by DTC Participants to Beneficial Owners will be governed by standing instructions

and customary practices, as is now the case with municipal securities held for the accounts of

customers in bearer form or registered in "street name," and will be the responsibility of such

DTC Participant and not ofDTC, the Trustee, the City or the Authority, subject to any statutoryand regulatory requirements as may be in effect from time to time.

When reference is made to any action which is required or permitted to be taken by the

BeneficialOwners, such reference shall only relate to action by such Beneficial Owners or those

permitted to act (by statute, regulation or otherwise) on behalf of such Beneficial Owners for

such purposes. When notices are required or deemed appropriate to be given, they will be sent

by the Trustee to DTC only and not to the Beneficial Owners. DTC will forward (or cause to

be forwarded) the notices to the DTC Participants so that DTC Participants may forward (or

cause to be forwarded) the notices to the Beneficial Owners.

Beneficial Owners will receive a written confirmation of their purchase, detailing the

terms of the Bonds acquired. Transfers of ownership interests in the Bonds will be accomplished

by book entries made by DTC and by the DTC Participants who act on behalf of the Beneficial

Owners. Beneficial Owners will not receive Bonds in physical form.

For every transfer and exchange of interest in the Bonds, the Beneficial Owners thereof

may be charged a sum sufficient to cover any tax, fee or other governmental charge that may

be imposed in relation thereto.

DTC may determine to discontinue providing its services with respect to the Bonds at any

time by giving notice to the Authority and the City and discharging its responsibilities with

respect thereto under applicable law. Under such circumstances, unless another securities deposi

tory is selected, Bonds will be made available in physical form. The Beneficial Owners, uponregistration of Bonds held in their name, will become the Owners of such Bonds.

8



The Authority may in its sole discretion determine to discontinue the system of bookentry transfers throughDTC (or a successor securities depository). In such event, the Bondswillbe made available in physical form.

PLAN OF FINANCING

The Bonds will finance a transaction in which the Authority will purchase two conventionfacilities: the Kaiser Convention Center from Oakter Associates Limited Partnership, aConnecticut limited partnership to which the City sold (via an intermediary corporation,Resources Property Development Corp., a Delaware corporation) the Kaiser Convention Centerin a sale-leaseback transaction in 1982 and from which the City presently leases the KaiserConvention Center; and the Scotian Convention Center from Oakbay Associates LimitedPartnership, a Connecticut limited partnership, to which the City sold (via an intermediarycorporation, Occen Corp., a Delaware corporation) the Scotian Convention Center in a saleleaseback transaction in 1983 and from which the City presently leases the Scotian ConventionCenter. The Authority will lease the Convention Centers to the City pursuant to an Amendedand Restated Lease Agreement, dated as of November 1, 1992 (the "Lease Agreement").

ESTIMATED SOURCES AND USES OF PROCEEDS OF THE BONDS

The following table presents the estimated sources and uses of funds of the Bonds, notincluding accrued interest:

Sources

Bond ProceedsTOTAL

Uses

Acquisition CostsCost of Kaiser Convention Center AcquisitionCost of Scotian Convention Center AcquisitionDebt Service Reserve Fund

Costs of IssuanceOriginal Issue Discount

TOTAL

$149.825.000.00$149.825.000.00

$62,854,604.8063,427,639.4112,928,115.234,285,955.966.328,684.60

$149.825,000.00

SECURITY AND SOURCES OF PAYMENT FOR TIlE BONDS

General

The Bonds are payable solely from Lease Payments made by the City to the Authorityunder the Lease Agreement and pledged to the payment of the principal of, premium, if any,

and interest on the Bonds pursuant to the Indenture, from moneys held by the Trustee in the

9



Reserve Account, and from any other moneys held by the Trustee under the Indenture for thepayment of the Bonds. Lease Payments required to be made by the City under the LeaseAgreement are subject to the availability of the Convention Centers for use by the City.

The Bonds are special limited obligations of the Authority and do not constitute

indebtedness or a charge against the general credit of the Authority. The Bonds are not a debtof the State of California or any of its political subdivisions, and neither the State of Californianor any of its political subdivisions is liable therefor. The principal of and interest on the Bondsare payable from and secured by a pledge of the Lease Payments from the City to the Authority.The Bonds do not constitute indebtedness within the meaning of any constitutional or statutory

debt limitation or restriction.

Lease Payments

The City has agreed to pay the Lease Payments to the Authority semi-annually on the15th day of March and September (each a "Lease Payment Date"), as rental for the right to

possession and use of the Convention Centers. Any amounts on deposit in theLease

PaymentAccount on each Lease Payment Date will be credited towards the Lease Payments coming dueand payable on such Lease Payment Date.

In addition, In the event of damage to or destruction of the Convention Centers, if theCity elects to repair, reconstruct or replace the Convention Centers, the City shall pay additionalLease Payments in an aggregate amount necessary to replenish any deficiencies in the ReserveAccount by reason of such damage or destruction of the Convention Centers, commencing onthe next Lease Payment Date following restoration and repair of the Convention Centers, for thelesser of five years or the remaining term of the Lease Agreement, until such additional Lease

Payments are paid in full.

In the Lease Agreement, the City covenants to include and maintain all Lease Payments

and other payments due under the terms of the Lease Agreement during any fiscal year in its

budget for such year, and further covenants to make the necessary appropriation therefor. The

City covenants to provide the Trustee with a certificate stating that Lease Payments have beenincluded in the final budget within twenty days after the printing of the final budget. The LeaseAgreement provides that the several actions required by such covenants shall be construed to beministerial duties imposed by law and it shall be the ministerial duty of the officials of the Cityto carry out and perform the covenants in the Lease Agreement.

Reserve Account

In satisfaction of the Reserve Requirement under the Indenture, the Authority shall causeto be deposited $12,928,115.23 in the Reserve Account to be used as a reserve for the paymentof the Bonds in the event amounts in the Lease Payment Account are insufficient therefor. Upon

receipt of any delinquent Lease Payment with respect to which moneys have been advanced fromthe Reserve Account, such Lease Payment shall be deposited in the Reserve Account to the

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. I f moneys in the Reserve Account are applied

to pay amounts due on the Bonds prior to restoration of the Convention Centers and the City

does not thereafter take possession of the Convention Centers, the City will not be obligated to

make furtherLease

Payments or to replenish the Reserve Account.

Municipal Bond Insurance

The following information has been furnished by AMBAC Indemnity Corporation (the

"Insurer" or "AMBAC Indemnity") for use in this Official Statement. Reference is made to

Appendix F for a specimen of the Insurer's policy.

Payment Pursuant to Municipal Bond Insurance Policy. AMBAC Indemnity has made

a commitment to issue a municipal bond insurance policy (the "Municipal Bond Insurance

Policy") relating to the Bonds effective as of the date of issuance of the Bonds. Under the terms

of the Municipal Bond Insurance Policy, AMBAC Indemnity will pay to the United States TrustCompany of New York, in New York, New York or any successor thereto (the "Insurance

Trustee") that portion of the principal of and interest on the Bonds which shall become Due for

Payment but shall be unpaid by reason of Nonpayment by the Issuer (as such terms are defined

in the Municipal Bond Insurance Policy). AMBAC Indemnity will make such payments to the

Insurance Trustee on the later of the date on which such principal and interest becomes Due for

Payment or within one business day following the date on which AMBAC Indemnity shall have

received notice of Nonpayment from the Trustee. The insurance will extend for the term of the

Bonds and, once issued, cannot be canceled by AMBAC Indemnity.

The Municipal Bond Insurance Policy will insure payment only on stated maturity dates

and on mandatory sinking fund installment dates, in the case of principal, and on stated dates

for payment, in the case of interest. I f the Bonds become subject to mandatory redemption and

insufficient funds are available for redemption of all outstanding Bonds, AMBAC Indemnity will

rernam obligated to pay principal of and mterest on outstanding Bonds on the originally

scheduled interest and principal payment dates including mandatory sinking fund redemption

dates. In the event of any acceleration of the principal of the Bonds, the insured payments will

be made at such times and 10 such amounts as would have been made had there not been an

acceleration.

In the event the Trustee has notice that any payment of principal of or interest on a Bond

which has become Due for Payment and which is made to a Bondholder by or on behalfof the

Issuer has been deemed a preferential transfer and theretofore recovered from its registeredowner pursuant to the United States Bankruptcy Code in accordance WIth a final, nonappealable

order of a court of competent jurisdiction, such registered owner will be entitled to payment

from AMBAC Indemnity to the extent of such recovery if sufficient funds are not otherwise

available.

11



The Municipal Bond Insurance Policy does not insure any risk other than Nonpayment,as defined in the Policy. Specifically, the Municipal Bond Insurance Policy does not cover:

1. payment on acceleration, as a result of a call for redemption (other thanmandatorysinking fund redemption) or as a result of any other advancement of maturity;

2. payment of any redemption, prepayment or acceleration premium; and

3. nonpayment of principal or interest caused by the insolvency or negligence of anyTrustee or Paying Agent, if any.

If it becomes necessary to call upon the Municipal Bond Insurance Policy, payment ofprincipal requires surrender of Bonds to the Insurance Trustee together with an appropriateinstrument of assignment so as to permit ownership of such Bonds to be registered in the nameof AMBAC Indemnity to the extent of the payment under the Municipal BondInsurance Policy.Payment of interest pursuant to the Municipal Bond Insurance Policy requires proof of

Bondholder entitlement to interest payments and an appropriate assignment of the Bondholder'sright to payment to AMBAC Indemnity.

Upon payment of the insurance benefits, AMBAC Indemnity will become the owner ofthe Bond, appurtenant coupon, if any, or right to payment of principal or interest on such Bondand will be fully subrogated to the surrendering Bondholder's rights to payment.

In cases where the Bonds are issuable in book entry form, the Insurance Trustee shalldisburse principal and interest to a Bondholder only upon evidence satisfactory to the InsuranceTrustee and AMBAC Indemnity that the ownership interest of the Bondholder in the right topayment of such principal and interest has been effectively transferred to AMBAC Indemnity

on the books maintained for such purpose. AMBAC Indemnity shall be fully subrogated to allof the Bondholders' rights to payment to the extent of the insurance disbursements so made.

In the event that AMBAC Indemnity were to become insolvent, any claimsarising underthe Policy would be excluded from coverage by the California Insurance Guaranty Association,established pursuant to the laws of the State of California.

The Insurer. AMBAC Indemnity Corporation is a Wisconsin domiciled stock insurancecorporation regulated by the Office of the Commissioner of Insurance of the State ofWisconsinand licensed to do business in 50 states, the District of Columbia, and the Commonwealth ofPuerto Rico, with admitted assets of approximately $1,490,000,000 (unaudited) and statutory

capital of approximately $839,000,000 (unaudited)as ofJune 30, 1992. Statutory capital consistsof AMBAC Indemnity's policyholders' surplus and statutory contingency reserve. AMBACIndemnity is a wholly owned subsidiary of AMBAC Inc., a 100% publicly-held company.Moody's Investors Service, Inc. and Standard & Poor's Corporation have both assigned a tripleA claims-paying ability rating to AMBAC Indemnity.

12



Copies ofAMBAC Indemnity's financial statementsprepared in accordance with statutory

accounting standards are available fromAMBAC Indemnity. The address of AMBAC Indemni

ty's administrative offices and its telephonenumber are One State Street Plaza, 17th Floor, New

York, New York 10004 and (212) 668-0340.

AMBAC Indemnity has entered into pro rata reinsurance agreements under which a

percentage of the insurance underwritten pursuant to certain municipal bond insurance programsof AMBAC Indemnity has been and will be assumed by a number of foreign and domestic

unaffiliated reinsurers.

AMBAC Indemnity has obtaineda ruling from the Internal Revenue Service to the effect

that the insuring of an obligation by AMBAC Indemnity will not affect the treatment for federal

income tax purposes of interest on such obligation and that insurance proceeds representing

maturing interest paid by AMBAC Indemnity under policy provisions substantially identical to

those contained in its municipal bond insurance policy shall be treated for federal income tax

purposes in the same manner as if such payments were made by the issuer of the Bonds. No

representation ismade by AMBAC Indemnity regarding the federal income tax treatment

of payments that are made by AMBAC Indemnity under the terms of the Policy due tononappropriation of funds by the Lessee.

AMBAC Indemnity makes no representation regarding the Bonds or the advisability of

investing in the Bonds and makes no representation regarding, nor has it participated in thepreparation of, the Official Statement other than the information supplied by AMBAC Indemnity

and presented under the heading "SECURITY AND SOURCES OF PAYMENT FOR THE

BONDS - Municipal Bond Insurance. "

Obligation of the Authority

THE OBLIGATIONOF THE AUTHORITY TOMAKEPAYMENTS ONTHE BONDSUNDERTHE INDENTURE IS A SPECIALLIMITED OBLIGATIONOF THE AUTHORITY,

PAYABLE SOLELYFROM LEASE PAYMENTS MADE BYTHE CITY TOTHE AUTHOR

ITY UNDER THE LEASE AGREEMENT. THE AUTHORITY SHALLNOT BEDIRECTLY

OR INDIRECTLY OR CONTINGENTLY OR MORALLY OBLIGATED TO USE ANY

OTHER MONEYS OR ASSETS OF THE AUTHORITY FOR THE PAYMENT OF THE

BONDS. THE BONDSDONOT CONSTITUTEA DEBTOFTHE AUTHORITY OR OF THE

STATE OF CALIFORNIA, OR ANYPOLmCAL SUBDIVISIONTHEREOF, WITHINTHE

MEANING OFANY CONSTITUTIONAL ORSTATUTORY LIMITATION. THE AUTHOR

ITY HAS NO TAXING POWER.

RISK FACTORS

The following factors, along with all other information in this Official Statement, should

be considered by potential investors in evaluating the risks inherent in the purchase of the Bonds.

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 no t constitute an obligation of the City for which the City is obligated to

levy or pledge any form of taxation or for which the City has levied or pledged any form of

taxation. The obligation of the City to pay Lease Payments does not constitute a debt or

indebtedness of the City, the State of California or any of its political subdivisions, within the

meaning of any constitutional or statutory debt limitation or restriction.

Although the Lease Agreement does not create a pledge, lien or encumbrance upon the

funds of the City, the City is obligated under the Lease Agreement to pay Lease Payments from

any source of legally available funds (subject to certain exceptions) and the City has covenanted

In the Lease Agreement that, as long as the Convention Centers are available for its use, it will

make the necessary annual appropriations within the relevant budget of the City for each year's

Lease Payments. The City is currently liable on other obligations payable from general revenues

and has the capability to enter into additional obligations which may also constitute charges

against its revenues. To the extent that additional obligations are incurred by the City, the funds

available to make Lease Payments may be decreased. The limitation on expenditures imposed

by Article XIII B of the Constitution of the State of California may also affect the City's abilityto make Lease Payments should the City's expenditures reach such limits.

The Lease Payments due under the Lease Agreement will be abated during any period

in which by reason of damage, destruction, condemnation, or otherwise there is substantial

interference with the use and possession of the Convention Centers by the City; however,

abatement shall not result to the extent certain moneys held by the Trustee and certain insurance

proceeds and unabated Lease Payments are sufficient to make Lease Payments when and as due.

Such abatement will end with the substantial completion of work, repair or reconstruction of the

portion of the Convention Centers so damaged or destroyed. Under the Lease Agreement and

the Indenture, the City shall replace or repair the Convention Centers or any portion thereof so

damaged or destroyed unless the City is required or elects, pursuant to the Lease Agreement,to prepay all or less than all of the Lease Payments, thereby causing the redemption of the

Outstanding Bonds at the pnncipal amount thereof, together with accrued interest with respect

thereto.

Insurance Proceeds. There can be no assurance that (i) if the Convention Centers are

destroyed in whole, there will be sufficient net insurance proceeds to redeem all of the

Outstanding Bonds at the principal amount thereof, plus accrued interest, or (ii) if the

Convention Centers are damaged or destroyed in whole or in part, there will be sufficient net

insurance proceeds to rebuild or reconstruct the Convention Centers so that the fair rental value

thereof exceeds the annual Lease Payments and any additional Lease Payments to be made under

the Lease Agreement. Notwithstanding the foregoing, if insufficient funds are available forredemption of all outstanding Bonds, AMBAC Indemnity will remain obligated to pay principal

of and interest on outstanding Bonds on the originally scheduled interest and principal payment

dates including mandatory sinking fund redemption dates.

14



EminentDomain. I f the Convention Centers are taken in part pursuant to eminent domain

proceedings and the remaining portion of the Convention Centers are still useful for the purposes

originally intended, the condemnation proceeds from. such proceedings will be used to redeem

Bonds in an amount equal to such condemnation proceeds. In such event, there can be no

assurance that the amount of such proceeds will be sufficient to redeem enough Bonds so that

the amount of Lease Payments which have not been abated will be sufficient to make all

principal and interest payments on the remaining Outstanding Bonds. In the event that theConvention Centers have been taken in whole pursuant to such eminent domain proceedings or

has been taken in part to such extent that theremaining portion of the Convention Centers are

no longer useful for the purposes originally intended, all condemnation proceeds, together with

funds available under the Indenture, will be applied to the redemption of the Bonds, and under

the Lease Agreement, remaining Lease Payment obligations will be abated in full and the Lease

Agreement terminated. In such event, there can be no assurance made that the amount of

eminent domain proceeds and other available moneys will be sufficient to redeem all of the

Outstanding Bonds at par, plus accrued interest.

Notwithstanding the foregoing provisions of the Lease Agreement and the Indenture

specifying the extent of abatement in the event of the City's failure to have use and possessionof the Convention Centers, such provisions may be superseded by operation of law, and, in such

event, the resulting Lease Payments of the City may not be sufficient to pay all of that portion

of the principal and interest represented by the remaining Outstanding Bonds.

United States Trust Company ofNew York v. Richmond Unified School District. In April

1992, a complaint was filed in Superior Court 10 Contra Costa County, California, seeking to

enforce payments by the Richmond Unified School District (the "District") under a leaseback

arrangement. (This action is not against the City or the Authority and does no t involve the Lease

Agreement.) TheRichmond case involves the lease of an existing District administration building

and seven warehouses to a corporation, which paid $9.8 million in pre-paid rent with funds

obtained through the sale of certificates ofparticipation, and the leaseback of such administrationbuilding and warehouses to the District by the corporation. In May 1992, in an answer to the

complaint, the District, through its State-appointed trustee and administrator, and the State

Superintendent of Public Instruction, another defendant in the action, contended, among other

things, that the District lease is unenforceable in that it constituted long-term debt of the District

which did no t receive voter approval as required by the State Constitution. On October 9, 1992,

the court denied plaintiffs motion for the issuance of a writ of mandate which would have

compelled the District to budget and appropriate funds to satisfy payments on the certificates as

required by a covenant in the lease agreement. No view is expressed herein or by Bond Counsel

as to the outcome of the above-mentioned litigation or any appeals thereof, or the effect, if any,

on the Bonds if decided adversely.

Bond Counsel is delivering its approving opinion, in the form ofExhibit D to the Official

Statement, incident to the closing of this transaction. That opinion provides, in part, that, subject

to the conditions and qualifications contained in the opinion, the Lease Agreement is a valid and

15



binding obligation o f the City and does not constitute a debt o f the City within the meaning o f

any constitutional debt limitation.

State Budget. The State o f California has recently reduced the moneys it provides to cities

in California, including the City o f Oakland. No guarantee can be made as to the future levelo f funding to the City by the State. See Appendix A, "FINANCIAL INFORMATION - State

Budget Matters. "

TH E GROUND LEASE

Th e City is the owner o f the land on which the Convention Centers ar e located. Pursuant

to the Kaiser Contract of Sale, the Authority will obtain an assignment o f Oakter 's interest as

assignee o f and lessee under that certain Ground Lease, dated as o f September 1, 1982, between

the City and Bank o f America NT&SA with respect to the site on which the Kaiser Convention

Center is located (the "Kaiser Site") and an assignment o f Oakter's interest as sublessor o f the

Kaiser Site to the City pursuant to that certain Lease and Sublease Agreement, dated as of

September 1, 1982, between th e City and Oakter, as assignee thereof.

Pursuant to the Scotian Contract o f Sale, the Authority will obtain an assignment o f

Oakbay's interest as assignee o f and lessee under that certain Ground Lease, dated as of

December 1, 1983, between th e City and Bank o f America NT&SA with respect to the site on

which th e Scotian Convention Center is located (the "Scotian Site") and an assignment o f the

interests o f Oakbay and Oakmar Leasing Corp. as sublessors of the Scotian Site to the City

pursuant to that certain Sublease Agreement, dated as o f December 1, 1983 (as amended byAmendment N o . 1 to Sublease Agreement dated August 2, 1984), between the City and Oakbay,

as assignee thereof.

In connection with its acquisition of the Convention Centers, the City will lease the

Kaiser Site and Scotian Site (the "Convention Center Sites") to the Authority pursuant to anAmended and Restated Ground Lease, dated November 1, 1992, between the City as Lessor and

the Authority as Lessee (the "Ground Lease").

Th e term o f the Ground Lease commenced as of November 1, 1992, and shall end onthe earlier o f (i) October 1, 2019, or (ii) the date upon which Lease Payments ar e paid in full

or provision for the payment thereof In full shall have been made, unless extended or terminated

earlier in accordance with the provisions thereof. I f on October 1, 2019, the Lease Payments

shall not have been paid or provision for the payment thereof has not been made, then the term

of the Ground Lease shall be extended until ten (10) days after all the Bonds have been paid orprovision therefor has been made, except that in no event shall the term o f th e Ground Lease

be extended beyond October 1, 2032.

As base rent for the Convention Center Sites for the term o f the Ground Lease, the

Authority has agreed to pay th e City the sum o f On e Dollar ($1.00), payable on the Closing

Date.

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 theConvention Centers will be amended, restated and consolidated as the Lease Agreement.

The term of the Lease Agreement commences as of November 1, and shall end on theearlier of (i) OCtober 1, 2014, or (ii) the date upon which Lease Payments are paid in full orprovision for the payment thereof in full shall have been made, unless extended or terminated

earlier in accordance with the provisions thereof. I f on OCtober 1, 2014, the Bonds have not

been paid or provision for the payment thereof has not been made, then the term of the Lease

Agreement shall be extended until ten (10) days after all the Bonds have been paid or provisiontherefor has been made, except that in no event shall the term of the Lease Agreement be

extended beyond October 1, 2032.

Lease Payments. The City has agreed to pay the Lease Payments to the Authority semi

annually on the Lease Payment Date as rental for the right to possession and use of theConvention Centers, provided that there shall be applied as a credit against the Lease Paymentspayable on each such date an amount equal to the sum of (i) the amount of interest or income,

if any, theretofore earned on the Lease Payment Account and Redemption Fund since the date

of the previous report made by the Trustee in accordance with the provisions of the Indenture,

plus (ii) the amount, if any, then on deposit in the Lease Payment Account, which total creditshall have been reported on the preceding March 1 or September 1 by the Trustee to the City

pursuant to the Indenture. In the event that the total amountof credit exceeds the Lease Payment

due on the Lease Payment Date following said report, the amount of said excess shall be applied

as a credit against subsequent Lease Payments. In addition, the amount in the Reserve Accountshall be applied as a credit against the last Lease Payments due prior to the expiration of the

term of this Lease Agreement.

In addition, in the event of damage to or destruction of the Convention Centers, if the

Cityelects to repair, reconstruct or replace the ConventionCenters, the City shall pay additional

Lease Payments in an aggregate amount necessary to replenish any deficiencies in the Reserve

Account by reason of such damage or destruction of the Convention Centers, payable in equal

semi-annual payments commencing on the next ()C(urring Lease Payment Date following

restoration and repair of the Convention Centers, for the lesser of five years or the remaining

term of the Lease Agreement, until such additional Lease Payments are paid in full.

Lease Payments for each semi-annual payment period during the term of the Lease

Agreement shall constitute the total amount due for said payment period, and shall be paid bythe City for and in consideration of the right of possession of, and the continued quiet use and

enjoyment of, the Convention Centers (including, in the case of additional Lease Payments as

described in the preceding sentence, the restored Convention Centers) during each such payment

period.

17



Should any Lease Payment be made later than the Lease Payment Date to which suchLease Payment pertains, such Lease Payment shall bear interest at the same rate as the rate

represented by the interest component of said Lease Payment from such Lease Payment Date tothe date of actual payment.

The Authority has directed the City to make the Lease Payments directly to the Trustee

for deposit in the Lease Payment Account.

City's Budget. The City covenants to include and maintain all Lease Payments and otherpayments due under the terms of the Lease Agreement during any fiscal year in its budget forsuch year, and further covenants to make the necessary appropriations therefor. The LeaseAgreement provides that the several actions required by such covenants shall be construed to be

ministerial duties imposed by law and it shall be the ministerial duty of the officials of the Cityto carry out and perform the covenants in the LeaseAgreement. The City covenants to providethe Trustee with a certificate, within twenty days after each final budget of the City is printed,stating that Lease Payments have been included in the final budget.

Title. Throughout the term of the Lease Agreement, title to the Convention Centers shallremain vested in the Authonty and fee title to the Convention Center Sites shall remain vestedin the City, subject to Permitted Encumbrances. Permitted Encumbrances are defined to includeliens for taxes and assessments not then due and payable; easements, rights of way and otherrights, covenants, conditions or restrictions which do not impair or impede construction or useof the Convention Centers; and the lien of the Lease Agreement. Upon the expiration of the termof the Lease Agreement, the City may exercise an option granted pursuant to the LeaseAgreement to purchase the Convention Centers for a purchase price of One Dollar ($1).

Maintenance, Utilities, Taxes and Modifications. The City, at its own expense, has

agreed, pursuant to the Lease Agreement, to maintainthe Convention Centers in good repair and

working order and to pay the costs of necessary utilities, operation of the Convention Centersand repair and replacement of the Convention Centers and for ordinary wear and tear. TheAuthority has no responsibility for such repair. The City must payor cause to be paid all taxes,

other governmental charges and assessments with respect to the Convention Centers.

Insurance. The Lease Agreement requires the City to maintain or cause to be maintained

throughout the term of the Lease Agreement the following insurance against risk of physical

damage to Convention Centers structures and other risks for the protection of the Bond Owners,

the Authority and the Trustee:

(1) Public Liability and Property Damage. Coverages shall be maintained in

amounts authorized by the City's liability insurance program, and may be subject to a deductiblenot to exceed $500,000 or such greater amount as may be authorized by the City's liability

insurance program.

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 thanthe maximum total Lease Payments payable by the City in any four consecutive payments, to

insure against loss of Lease Payments caused by perils covered by the fire and extended

coverage insurance (including rental interruption insurance) described above.

(4) Worker's Compensation Insurance. Coverage of all persons employed in

connection WIth the Convention Centers who are not otherwise covered by worker's com-

pensation insurance shall be as required by the Labor Code of the State of California.

(5) Earthquake Insurance. The City shall maintain earthquake insurance on the

same terms as the insurance described in (2) above (except that earthquake insurance may

provide for a deductible charge of not to exceed ten percent (10%) of the replacement cost foranyone loss), but only if, in the opinion of the City, such earthquake insurance is available at

reasonable cost on the open market from reputable insurance companies.

Any insurance described above may be provided in the form of an alternate method of

insurance approved by AMBAC Indemnity.

Application ofNet Proceeds of Insurance. Any Net Proceeds of any insurance relating

to an accident to or destruction of any part of the Convention Centers which is collected by the

City in consequence of any such accident or destruction will be deposited by the City in the Net

Proceeds Account to be held in trust by the Trustee as assignee of Authority and will be applied

and disbursed as set forth below:

I f the City determines that such Net Proceeds are to be utilized for the repair,

reconstruction or replacement of the damaged or destroyed portion of the Convention Centers

and that such repair, reconstruction or replacement can be completed within two years from the

date of damage or destruction as evidenced by a certificate executed by an Authorized Officer

of the City and filed with the Trustee, then the City will cause such portion of the Convention

Centers to be repaired, reconstructed or replaced to at least the same good order, repair and

condition as it existed prior to the damage or destruction, insofar as the same may be

accomplished by the use of said Net Proceeds, and will direct the Trustee to withdraw said Net

Proceeds from the Net Proceeds Account from time to time to pay such Net Proceeds to the City

for the purpose of such repair, reconstruction or replacement. The City covenants that suchrepair, reconstruction or replacement will be completed and the Convention Centers made usable

within two years from the date of damage to or destruction of the Convention Centers. The City

will direct the Trustee to deposit any balance of said Net Proceeds remaining in the Net

Proceeds Account and not required for such repair, reconstruction or replacement into the Lease

19



Payment Account as a prepayment ofLease Payments. Subject to the provisions of the following

two paragraphs, the City will be obligated to continue to make Lease Payments required by the

Lease Agreement notwithstanding accident to or destruction of all or a portion of the Convention

Centers; provided, however, that in the event that accident or damage to any portion of the

Convention Centers is such as to cause such portion not to be usable, then such Lease Payment

will be abated, in proportion to the portions of the Convention Center Sites and the Convention

Centers damaged or destroyed based upon the fair market value of the Convention Center Sitesand the Convention Centers on November 1, 1992, or the date of such abatement, whichever

is greater, or to the maximum extent permitted under law, except that there will be no abatement

so long as moneys then on deposit in the Lease Payment Account or Reserve Account or Net

Proceeds of rental interruption insurance are sufficient for the making of Lease Payments when

and as due.

In lieu of repair, reconstruction or replacement of the damaged or destroyed portion of

the Convention Centers, the City may (and, if the City shall determine that such repair,

reconstruction or replacement will not be completed within two years, the City shall) by a

certificate executed by an Authorized Officer of the City and filed with the Trustee, direct the

Trustee to apply the Net Proceeds of insurance to the prepayment of Lease Payments providedthat in the case where the City determines that such repair, reconstruction or replacement may

be completed within two years of such damage or destruction the remaining Lease Payments will

be sufficient to pay all of that portion of principal and interest on remaining Outstanding Bonds.

Any Net Proceeds of rental interruption insurance required by the Lease Agreement will

be used to pay Lease Payments during any period in which abatement of Lease Payments would

otherwise have occurred except for the availability of such Net Proceeds of rental interruption

insurance. Such Net Proceeds will be paid by the City to the Trustee, as assignee of the

Authority, for deposit in the Lease Payment Account and applied to the payment of any Lease

Payments then due and, thereafter, will be applied as a credit against the next subsequent Lease

Payments.

Abatement ofRental in the Event ofFailure to Have Use and Possession of the Site and

the Facilities. The Lease Payments shall be abated in whole or in part during any period during

which by reason of damage or destruction (other than by condemnation which is described

below) there is substantial interference with the use and possession of the Convention Center

Sites and the Convention Centers by the Lessee. The extent of such abatement shall be in

proportion to the portions of the Convention Center Sites and the Convention Centers damaged

or destroyed based upon the fair market value of the Convention Center Sites and the Convention

Centers on November 1, 1992, or the date of such abatement, whichever is greater or to the

maximum extent permitted by law; provided, however, that in the event such damage or

destruction results in redemption of Bonds, the remaining Lease Payments (including credits tobe applied thereto as provided in the Indenture) will be sufficient to pay all of that portion of

principal and interest on remaining Outstanding Bonds equal in amount to the then outstanding

principal amounts of the Lease Payments under the Lease Agreement. Such abatement shall not

result to the extent moneys held by the Trustee under the Indenture which are to be credited

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

period commencing with such damage or destruction and ending with the substantial completion

of the work or repair or reconstruction, if any. In the event of any such damage or destruction,

this Lease Agreement shall continue in full force and effect and the Lessee waives any right to

terminate this Lease Agreement by virtue of any such damage or destruction.

Title Insurance and Condemnation. The City will provide, or cause to be provided, at

its own expense, an American Land Title Association title insurance policy with endorsement

so as to be payable to the Trustee.

All Net Proceeds received under the title insurance policy provided for by the LeaseAgreement or in any condemnation proceeding undertakenby any governmental agency relating

to all or a portion of the Convention Center Sites or the Convention Centers will be paid to the

Trustee pursuant to the Indenture and will be applied and disbursed as set forth below:

(1) I f the City determines that such title defect or condemnation has not

materially affected the operation of the Convention Centers or the ability of the City or its

assignee to meet any of the obligations under the LeaseAgreement or if suchNet Proceeds are

insufficient to enable the City to prepay Lease Payments in full, as set forth in a certificate

executed by an Authorized Officer of the City and filed with the Trustee, the City shall direct

the Trustee by said certificate of an Authorized Officer to hold such Net Proceeds in the Lease

Payment Account and apply such Net Proceeds as a prepayment in part of Lease Payments.

Subject to the provisions of the following paragraph, the City will be obligated to continue tomake Lease Payments required by the Lease Agreement notwithstanding condemnation of or a

title defect relating to a portion of the Convention Center Sites or the Convention Centers;

provided, however, that in the event that such condemnation or defect is to such extent as to

cause such portion not to be usable, then such Lease Payments shall be abated, in the proportion

to which the unusable portion of the Convention Center Sites and the Convention Centers

damaged or destroyed bears to the entire Convention Center Sites and the Convention Centers,

except that abatement will not result so long as moneys then on deposit in the Lease Payment

Account or Net Proceeds of title insurance or condemnation are sufficient for the making of

Lease Payments.

(2) I f the City determines that such title defect or condemnation has materially

affected the operation of the Convention Centers or the ability of the City to meet any of its

obligations under the Lease Agreement, as set forth in a certificate executed by an Authorized

Officer of the City and filed with the Trustee, or if such Net Proceeds are sufficient to enable

the City to prepay LeasePayments in full as set forth in a certificate executed by an Authorized

Officer of the City and filed with the Trustee, the City shall direct the Trustee, by said

21



of the City for any substantial part of its property, or shall make any general assignment for the

benefit of creditors, or shall fail generally to pay its debts as they become due or shall take anycorporate action in furtherance of any of the foregoing.

Upon the occurrence and continuance of any event of default described in (1) or (2)above, the Trustee, may proceed to (a) re-enter and take possession of the Convention Centers

holding the City liable for the Lease Payments and other amounts payable by the City pursuantto the Lease Agreement; (b) re-enter and take possession of the Convention Centers and re-let

the Convention Centers to a third party for the account of the City, holding the City liable forthe difference between the amount received under such lease and the Lease Payments payable

by the City under the Lease Agreement; or (c) take whatever action at law or in equity mayappear necessary or desirable to enforce the rights of the Authority. Under no circumstances

may the Authority or the Trustee declare the Lease Payments not then in default to be

immediately due and payable.

Option to Prepay. Under the Lease Agreement, the Authority grants to the City the

option to prepay the principal component of certain Lease Payments in whole or in part on or

after October 1, 2002. The City may exercise its option to make such prepayments on writtennotice to the Authority and the Trustee delivered at least sixty (60) days prior to the LeasePayment Date and by depositing, on the date of such prepayment, the prepayment price therefor.

Such prepayment price shall be equal to the amount necessary to prepay in whole or In part theunpaid principal component of Lease Payments attributable to Bonds maturing on or after

October 1, 2002, in accordance with the Indenture, plus accrued interest, plus any LeasePayment then due but unpaid, plus premium, if any, plus if the Lease Payments are being paid

in full, the City's share, if any of the fees and expenses payable to the Trustee and the Authontyunder the Indenture to the date of prepayment.

In the event of such prepayment in part, the amount of Lease Payments to be paid by the

City over the remaining term of the Lease Agreement shall be adjusted to reflect suchprepayment.

Upon the expiration of the Lease Agreement, the City may exercise an option granted

pursuant to the Lease Agreement to purchase the Convention Centers and the Authority'sleasehold interest in the Convention Center Sites for a purchase price of One Dollar ($1)

provided the City is not in default of any monetary obligation under the Lease Agreement orotherwise in material default under the Lease Agreement.

THE CITY AND THE AUTHORITY

The City of Oakland

The City ofOakland is located on the east side of SanFrancisco Bay approximately seven

miles from San Francisco via the San Francisco-Oakland Bay Bridge. An area of diverse

character, the City ranges from industrialized lands bordering the Bay to suburban foothills in

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 improvementsfor local agencies within the State of California pursuant to the Marks-Roos Local Bond Pooling

Act of 1985, constituting Article 4 (commencing with Section 6584) of Chapter 5 of Division

7 of Title 1 of the Government Code of the State of California.

The Authority has sold and delivered its obligations, other than the Bonds, which other

obligations are and will be secured by instruments separate and apart from the Indenture and the

Lease Agreement. The holders of such obligations of the Authority have no claim on the security

of the Bonds and the Owners of the Bonds will have no claim on the security of such other

obligations ISSUed by the Authority.

LITIGATION

There is no litigation now pending or threatened (i) to restrain or enjoin the issuance or

sale of the Bonds; (ii) questioning or affecting the validity of the Lease Agreement or theobligation of the City to make Lease Payments; or (iii) questioning or affecting the validity of

any of the proceedings for the authorization, sale, execution or delivery of the Bonds.

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 thefinancial position or results of operations of the City.

A number of lawsuits have been filed in connection with the Oakland Hills Fire. Forfurther information, see Appendix A, "FINANCIAL INFORMATION - Oakland Hills Fire."

TAX EXEMPTION

In the opinion of Ballard Spahr Andrews & Ingersoll, Washington, D.C., Special TaxCounsel, based on existing statutes, regulations, rulings and judicial decisions and assuming the

accuracy of and continuing compliance by the Authority and the City with certain covenants in

the documents and requirements of the Internal Revenue Code of 1986, as amended, interest on

the Bonds is excluded from the gross incomeof the Owners of the Bonds for purposes of federalincome taxation. Failure by the Authority or the City to comply with such covenants and

requirements may, however, cause interest on the Bonds to be included in gross income forfederal income tax purposes retroactively to the date of delivery of the Bonds.

Interest on the Bonds will not be treated as an item of tax preference in calculating the

alternative minimum taxable income of individuals or corporations; however, such interest on

Bonds held by a corporation (other than an S corporation, regulated investment company, realestate investment trust or real estate mortgage investment conduit) may be indirectly subject to

federal alternative minimum tax and environmental tax because of its inclusion in the earnings

and profits of a corporate holder. Interest on Bonds held by certain foreign corporations may

be subject to the branch profits tax imposed by the Code.

Ownership of tax-exempt obligations may result in collateral income tax consequencesto certain taxpayers, including, without limitation, financial institutions, property, and casualty

insurance companies, certain S corporations with excess passive income, individual recipients

of Social Security or Railroad Retirement benefits, and taxpayers with outstanding indebtednessto purchase or carry tax exempt obligations. Special Tax Counsel expresses no opinion as to any

such collateral federal income tax consequences.

Morrison & Foerster, Bond Counsel, is of the opinion that interest on the Bonds is

exempt from personal income tax imposed by the State of California.

RATINGS

Moody's Investors Service ("Moody's") and Standard & Poor's Corporation ("S&P")

have assigned their municipal bond ratings of "Aaa" and "AAA", respectively, to the Bonds

with the understanding that upon delivery of the Bonds, a policy insuring the payment when due

of the principal of and interest on the Bonds will be issued by the Insurer. An explanation

25



concerning the significance of the rating given by Moody's may be obtained from Moody's at99 Church Street, New York, New York 10007, (212) 553-0470. An explanation of the ratingsgiven by S&P may be obtained from S&P at 25 Broadway, New York, New York 10004, (212)208-8000. Certain information and materials concerning the Bonds, the Authority and the Citywere furnished to Moody's and S&P by the Authority and the City. If in the judgment of eitherof the rating services, circumstances so warrant, either rating service may raise, lower or

withdraw its rating. If a downward change or withdrawal occurs, it could have an adverse effecton the resale price of the Bonds.

APPROVAL OF LEGAL PROCEEDINGS

Certain legal matters incident to the issuanceof the Bonds have been or will be approvedby Morrison & Foerster, San Francisco, California, as Bond Counsel, and Ballard SpahrAndrews & Ingersoll, Washington, D.C., as Special Tax Counsel, with respect to the Bonds.Certain legal matters relating to the issuance of the Bonds will be passed upon for theUnderwriters by their counsel, Wendel, Rosen, Black, Dean & Levitan, Oakland, California;certain legal matters incident to the issuance of the Bonds will be passed upon for the City by

Jayne W. Williams, City Attorney of the City of Oakland; and certain legal matters will bepassed upon by Orrick, Herrington & Sutcliffe, Los Angeles, California, Counsel to theAuthority.

UNDERWRITING

The Underwriters have agreed to purchase the Bonds at a price of $141,820,033.15(which represents the $149,825,000 principal amount of the Bonds less an Underwriters'discount of $1,676,282.25 less an Original Issue Discount of $6,328,684.60) plus accruedmterest. The Underwriters will purchase all of the Bonds if any are purchased, the obligationto make such purchase being subject to certain terms and conditions contained in a Bond

Purchase Agreement and the approval of certain legal matters by counsel.

The Underwriters may offer and sell the Bonds to certain dealers and others at priceslower than the respective public offering prices stated herein. After the initial public offering,the respective offering prices may be changed from time to time by the Underwriters.

FINANCIAL ADVISOR

The City has retained Public Financial Management, Inc., San Francisco, California, asfinancial advisor (the "Financial Advisor") in connection with the preparation of this Official

Statement and with respect to the issuance of the Bonds. The Financial Advisor is not obligated

to undertake, and has not undertaken to make, an independent verification or to assumeresponsibility for the accuracy, completeness, or fairness of the information contained in thisOfficial Statement. The Financial Advisor IS an independent advisory firm and is not engagedin the business of underwriting, trading, or distributing municipal securities or other public

26



securities. The Financial Advisor is a wholly-owned subsidiary ofMarine Midland Bank, N.A.,

New York, New York.

MISCELLANEOUS

All the summaries contained herein of the Indenture, the Lease Agreement, applicable

legislation, agreements and other documents are made subject to the provisions of suchdocuments respectively and do not purport to be complete statements of any or all of such

provisions. Reference is hereby made to such documents on file with the City for further

information in connection therewith.

Insofar as any statements made in this Official Statement involve matters of opinion or

of estimates, whether or not expressly stated, they are set forth as such and not as representa

tions of fact. No representation is made that any of such statements made will be realized.Neither this Official Statement nor any statement that may have been made orally or in writing

is to be construed as a contract with the Owners of the Bonds.

The execution and delivery of this Official Statement has been duly authorized by theAuthority and the City.

CALIFORNIA STATEWIDE COMMUNITIES

DEVELOPMENT AUTHORITY

By: _

Norma Lammers

Member of the Commission

THE CITY OF OAKLAND

Henry L. Gardner

City Manager

By: - - :--- :---------

27



(THIS PAGE INTENTIONAU..Y LEFT 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-IA-I

A-I

A-I

A-I

A-2

A-3

A-S

A-6

A-6

A-7

A-9

A-ll

Statement of Direct and Overlapping Debt A-13Labor Relations .. . . . . . . . . . . . .. A-IS

Retirement Programs . • . . . . . . . . .. A-IS

State Budget Matters . . . . . . . . . . .. A-I6

Oakland Hills Fire A-I7

ECONOMIC PROFIT.E A-I7

Introduction . . . . . . . . .•.. . . . . . A-I7

Population A-I9

E m p w ~ t A-20

Largest Employers A-22

Commercial Activity . . . . . . . . . . . . A-23

Construction Activity. . . . . . . . . . . . A-24

Median Household Income A-24



GENERAL

Introduction

The City of Oakland (the "City") is located in the County of Alameda (the "County")

on the east side of San Francisco Bay, approximately seven miles from San Francisco via the

San Francisco-Oakland Bay Bridge. Oakland ranges from industrialized lands bordering the Bayin the west to suburban foothills in the east. Historically the industrial heart of the Bay Area,

Oakland has developed into a financial, commercial and governmental center. The City is the

hub of an extensive transportation network which includes a freeway system and the western

terminals ofmajor railroads and trucking firms, as well as one of the largest container-ship ports

in the United States. Oakland supports an expanding international airport and rapid-transit lines

which connect it with most of the Bay Area. Oakland is the seat of government for Alameda

County and is the sixth most populous city in the State.

City Government

The City was incorporated as a town in 1852, as a city in 1854 and became a charter cityin 1889. Oakland is governed by a nine-member City Council, seven of whom are elected by

district and two ofwhom, including the Mayor, are elected on a city-wide basis. The Mayor and

Council members serve four-year terms. The Council appoints a City Manager who is

responsible for daily administration ofCity affairs and preparation and submission of the annual

budget under the direction of the Mayor and City Council for the Mayor's submission to the City

Council.

Subject to civil service regulations, the CityManager appoints City employees except the

City Attorney, City Clerk and City Auditor. The City Council appoints the City Manager and

the City Attorney, and the City Clerk is appointed by the City Manager subject to City Council

approval. The Director of Finance is also appointed by the City Manager and serves as theCity's Treasurer. The City Auditor is elected at the same time as the Mayor.

The City provides a full range of services contemplated by statute or charter, including

those functions delegated to cities under State law. These services include public safety (police

and fire), sanitation and environmental health enforcement, recreational and cultural activities,

public improvements, planning, zoning and general administrative services.

FINANCIAL INFORMATION

Ad Valorem Property Taxation

City property taxes are assessed and collected by the County at the same time and on the

same rolls as are County, school and special district property taxes. Under California's 1991/92

adopted budget, the County was permitted to pass on costs for certain services provided to local

government agencies including the collection of property taxes. The County has imposed a fee

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 subsequentlyequalized in August, and is payable in two installments of taxes due November 1 andFebruary 1, respectively. Taxes become delinquent on December 10 and April 10 for each

respective installment. Taxes on unsecured property (personal property and leasehold) are dueon August 31 of each year based on the preceding fiscal year's secured tax rate.

State law exempts $7,000 of the full cash value of an owner-occupied dwelling, but this

exemption does not result in any loss of revenue to local agencies, since the State reimburseslocal agencies for the value of the exemptions.

Assessed Valuations

All property is assessed using full cash value as defined by Article XIllA of the StateConstitution. State law provides exemptions from ad valorem property taxation for certainclasses of property such as churches, colleges, nonprofit hospitals, and charitable institutions.

Future assessed valuation growth allowed under Article XIllA (new construction, certainchanges of ownership, 2% inflation) will be allocated on the basis of "situs" among the

jurisdictions that serve the tax rate area within which the growth occurs. Local agencies andschools will share the growth of "base" revenues from the tax rate area. Each year's growthallocation becomes part of each agency's allocation in the following year. The availability ofrevenue from growth in tax bases to such entities may be affected by the establishment ofredevelopment agencies which, under certain circumstances, may be entitled to revenues

resulting from the increase in certain property values.

For assessment and collection purposes, property is classified as either "secured" or

"unsecured" and is listed accordingly on separate parts of the assessment roll. The "secured

roll" is that part of the assessment roll containing State-assessed property and real property

having a tax lien which is sufficient, in the opinion of the assessor, to secure payment of thetaxes. Unsecured property comprises all property not attached to land such as personal propertyor business property. Boats and airplanes are examples of unsecured property. Unsecured

property is assessed on the "unsecured roll. "

The passage of AB 454 in 1987 changed the manner in which unitary and operatingnonunitary property is assessed by the State Board of Equalization. The legislation deleted the

formula for the allocation of assessed value attributed to such property and imposed a Statemandated local program by requiring the assignment of the assessment value of all unitary andoperating nonunitary property in each county of each State assessee other than a regulatedrailway company. The legislation established formulas for the computation of applicablecountywide tax rates for such property and for the allocation of property tax revenuesattributable to such property among taxing jurisdictions in the county beginning in fiscal year

A-2



1988/89. This legislation requires eachcounty to issue each State assessee, other than a regulatedrailway company, a single tax bill for all unitary and operating nonunitary property.

The following table represents a six-year history of assessed valuations in the City:

CITY OF OAKLANDASSESSED VALUATIONS·

FIscal

Year Local Secured Utihty Unsecured Total

1987/88 $9,574,894,509 $953,123,290 $1,487,663,988 $12,015,681,787

1988/89 10,134,786,232 54,229,8012 1,516,573,931 11,705,589,964

1989/90 11,153,589,360 56,118,189 1,582,277,848 12,791,985,393

1990/91 12,211,539,476 51,665,85@ 1,557,854,483 13,821,059,815

1991/92 13,045,041,452 56,668,15!r 1,193,649,163 14,295,378,774

1992/93 13,095,938,157 38,475,148 1,761,686,799 14,896,100,104

1 Before redevelopment tax allocation mcrement deduction

2 Reflects implementation of AB454

Source: Alameda County Auditor-Controller

Tax Levies, Collections and Delinquencies

Taxes are levied for each fiscal year on taxable real and personal property which issituated in the Cityas of the precedingMarch 1. A supplemental roll is developed whenproperty

changes hands which produces additional revenue.

A ten percent penalty attaches to any delinquent payment for secured roll taxes. Inaddition, property on the secured roll with respect to which taxes are delinquent becomes taxdefaulted. Suchproperty may thereafter be redeemed by payment of the delinquent taxes and thedelinquency penalty, plus a redemption penalty to the time of redemption. If taxes are unpaidfor a period of five years or more, the property is subject to auction sale by the County Tax

Collector.

In the case of unsecured property taxes, a 10% penalty attaches to delinquent taxes onproperty on the unsecured roll, and an additional penalty of 1.5% per month begins to accrue

beginning November 1st of the fiscal year, and a lien is recorded against the assessee. Thetaxing authority has four ways of collecting unsecured personal property taxes: (1) a civil actionagainst the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certainfacts in order to obtain a judgment lien on specific property of the taxpayer; (3) filing acertificate of delinquency for record in the County Recorder's office in order to obtain a lien on

A-3



specified property of the taxpayer; and (4) seizure and sale of personal property, improvementsor possessory interests belonging or assessed to the assessee.

Each County levies (except for levies to support prior voter-approved indebtedness) andcollects all property taxes for property falling within that county's taxing boundaries. Thesecured tax levy and year-end delinquencies for the City for the most recent fiscal years are

shown in the table below:

CITY OF OAKLANDSECURED TAX LEVY ANDDELINQUENCIES

ApportionedAmount Delinquent as % Del. Secured Tax

Year Secured Tax Levy! of June 30 June 30 Collection'

1986/87 $119,856,503 $7,338,604 6.12% $30,082,473

1987/88 127,733,624 7,118,021 5.57 31,701,308

1988/89 126,097,763 7,008,343 5.56 34,108,364

1989/90 135,197,368 8,462,045 6.26 36,751,879

1990/91 146,349,421 9,920,924 6.78 39,751,879

1991192 156,037.784 10,426,030 6.68 40,803,034

1 All taxes collected by the County within the City.

2 Does not mclude tax mcrements paid to the Redevelopment Agency of the City of Oakland.

Source: CIty of Oakland, OfficeofFinance

A-4



Tax Rates

The City is divided into 33 Tax Rate Areas. This figure includes one special Tax RateArea comprised of aircraft taxable within the City. The largest Tax Rate Area within the Cityis Tax Rate Area 17-001 which has a total assessedvaluation of $10,408,557,955 or 70.9% of

the City's total assessed valuation. A five-year history of the tax components within this Tax

Rate Area is shown below:

CITY OF OAKLAND

TAX RATE AREA 17-001

SUMMARY OF TAX RATES

(Percent of Property Assessed Value)

Tax Agency 1987/88 1988/89 1989/90 1990191 1991192

Countywide Tax' 1.0000% 1.0000% 1.0000% 1.0000% 1.0000%

Oakland Umfied 0.0236 0.0216 0.0184 0.0166 0.0166

School District

Peralta Commumty 0.0131 0.0126 0.0111 0.0109 0.0109

College Distnct

Oakland Umfied 0.0120 0.0114 0.0108 0.0109 0.0109

School Distncr'

Bay Area Rapid 0.0372 0.0319 0.0250 0.0251 0.0251

TllII1S1t District

East Bay Regional 0.0000 0.0047 0.0032 0.0028 0.0028

Park District

City of Oakland' 0.1575 0.1575 0.1575 Q:1lli 0.1713

Combined Tax Rates 1.2434% 1.2397% 1.2260% 1.2376% 1.2376%

1 Maximum rate for purposes other than paymg debt service m accordance with ArticleXllIA of the State of Constitution.

2 Represents tax levied under Education Code Section 16090.3 Represents tax levied to correct underfunded obligations m the Police and Fire

Retirement System.Source: Alameda CounJy Auditor-Controller.

A-5



Property Owner

Principal Taxpayers

The following table lists the major taxpayers in the City in terms of their 1991/92assessed valuation:

CITY OF OAKLAND

20 LARGEST LOCALLY SECURED TAXPAYERS FOR 1991192

1991192 Assessed

Valuation

1. Eleven Eleven Associates

2. State of Califorma Pubhc Employees Retuement System

3. Kaiser Foundation Health Plan, Inc.

4. Clorox Company

5. Samuel Memtt Hospital [Sunumt Hospital]

6. Ordway Associates

7. Ahmanson Commercial Development Company

8. Lake Memtt PIau9. Bramelea Lmnted and City Square One

10. Kaiser Center, Incorporated

11. Owens Illinois Glass Container Incorporated

12. Webster Street Partners Limited

13. CF Oakland Associates Limited

14. Sparkmght15. FT International Incorporated and Toyomura Fumi

16. Safeway Stores, Incorporated

17. Feischmann's Yeast Incorporated

18. Springwood Investment

19. Argonaut Financial Services Incorporated

20. Silberblatt S.S. Incorporated and Oakland Associates

Total-Top Twenty

Percent of Total City-Wide Assessment: 9.81%

Source: California Municipal Statistics, Inc.

Budget Process

The City's budget is developed on a cash basis.

$127,949,526

101,225,400

95,527,525

93,915,380

87,460,445

85,527,148

83,034,523

79,899,48477,910,351

76,269,775

63,761,774

59,206,558

43,026,154

33,498,132

32,687,861

30,106,112

28,337,627

27,625,451

26,763,117

26,245,364

51,279,977,687

The budget process begins in the fall of each year with staff developing broad guidelinesfor the subsequent year's budget preparation. These are presented to and discussed with the city

Council and finalized.

Internal budget hearings are held between the CityManager and headsof each departmentto discuss resources and funding for the following year; concurrently, City Council members

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meet with departments and review their requests. Formal public hearings are held for each

departmental budget during May and June.

At least 30 days prior to the beginning of the fiscal year, the Mayor submits the proposed

budget to the City Council and the time is then set by the City Council for public hearings.

Upon conclusion of the public hearings, the City Council may make necessary revisions.

The operating budget is adopted by the City Council on or before June 30 of each year.

It contains appropriations for all funds and all first year appropriations for capital improvements.

The City Manager employs an independent certified public accountant who, upon request,

but at least annually, examines books, records, inventories and reports of all offices and

employees who receive, control, handle or disburse public funds, and those of any other officers,

employees or departments as the City Manager directs.

Within a reasonable period following the fiscal year-end, the accountant submits the final

audit to the City Council. The City then publishes the financial statements as of the close of the

fiscal year.

Fmancial and Accounting Information

The accounts of the City are organized on the basis of funds and account groups, each

of which is considered a separate accounting entity. The operations of each fund are accounted

for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity,

revenues, and expenditures, or expenses, as appropriate. Government resources are allocated to

and accounted for in individual funds based on the purposes for which they are to be spent and

the means by which spending activities are controlled. The various funds are grouped into eight

generic fund types and three broad fund categories as follows:

Government Funds:

General Fund. The general fund is the general operating fund of the City. It is

used to account for all financial resources except those required to be accounted for in

another fund.

Special Revenue Funds. Special revenue funds are used to account for the

proceeds of specific revenue sources (other than special assessments, expendable trusts,

or major capital projects) that are legally restricted to expenditures for specified

purposes.

Debt Service Funds. Debt service funds are used to account for the accumulation

of resources for, and the payment of, the principal of and interest on general obligation

long-term debt, and related costs.

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Capital Projects Funds. Capital projects funds are used to account for financialresources to be used for the acquisition or construction of major capital facilities (other

than those financed by proprietary funds, special assessment funds and trust funds).

Special Assessment Funds. Special assessment funds are used to account for thefinancing of public improvements or services deemed to benefit the properties against

which special assessments are levied.

Proprietary Funds:

Enterprise Funds. Enterprise funds are used to account for operations (a) that arefinanced and operated in a manner similar to private enterprises where the intent of the

governing body is that the costs (expenses, including depreciation) of providing goods

or services to the general public on a continuing basis be financed or recovered primarilythough user charges; or (b) where the governing body has decided that periodic

determination of revenues earned, expenses incurred and/or net income is appropriate for

capital maintenance, public policy, management control, accountability, or other

purposes.

Internal Service Funds. Internal service funds are used to account for the financing

of goods or services provided by one department or agency to other departments or

agencies of the City, or to other governments, on a cost-reimbursement basis.

Fiduciary Funds:

Trust and Agency Funds. Trust and agency funds are used to account for assets

held by the City in a trustee capacity or as an agent for individuals, private organizations,

other governments and/or other funds.

All government funds are accounted for using the modified accrual basis of accounting.

Their revenues are recognized when they become measurable and available as net current assets.

Taxpayer-assessed income, gross receipts and other taxes are considered "measurable" when in

the hands of intermediary collecting governments and are recognized as revenue at that time.

Anticipated refunds of such taxes are recorded as liabilities and reductions of revenue when they

are measurable and their validity seems certain.

Expenditures are generally recognized under the modified accrual basis of accounting

when the related fund liability is incurred. Exceptions to this general rule include:

(1) accumulated unpaid vacation, sick pay, and other employee amounts which are not accrued;

and (2) principal and interest on general long-term debt which is recognized when due.

All proprietary funds are accounted for using the accrual baSIS of accounting. Their

revenues are recognized when they are incurred.

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Comparative Financial Statements

The following table reflects the City's general fund audited financial statements for thefiscal years 1987/88 through 1991/92, listing actual revenues, expenditures and fundbalances:

CITY OF OAKLANDGENERAL FUND

REVENUES, EXPENDITURES AND OPERATING RESULTS1987/88 THROUGH 1991/92

(IlOO's)

Actual

Total R.evenues aDd Actual Actual Actual Actual (unaudited)

Expenditures 1987/88 1988/89 1982/90 1290191 1991/92

REVENUESTaxes and Franchise Fees $155,403 $174,712 $170,084 $177,768 $182,637Permits and Licenses 4,775 4,946 5,518 6,160 5,300

Fines and peaalnes 4,787 6,423 7,117 7,420 6,158

Interest andrental

income 10,017 16,582 12,852 12,015 10,048Revenue from CU1'1'llI1t services

Grant revenue 15,105 16,987 17,619 22,105 21,438Other revenue 2,619 1,057 10,395 6,230 6,274TOTAL REVENUES ---ID. 3,472 6,629 7,802 8,465

$193,149 $224,179 $230,214 $239.500 $240,320EXPENDITURES

General government $ 18,092 $ 21,696 $ 26,993 $ 27,893 33,178

Public safety 88,122 103,163 130,420 143,287 150,411Office of Public Works 13,456 17,256 20,598 27,026 28,488

Office of General Services 4,519 6,196 5,890 5,006 4,558

Parks, Recreation andCultural 23,818 26,515 18,616 16,579 23,628Economic, Commumty and

Social Programs 3,514 3,858 6,485 6,579 6,358Nondepartmental' 16,701 7,445 11,216 15,243 6,161

Debt Service -.il l:__0 __0 __

TOTAL EXPENDITURES $168.347 $186,254 $220,218 $241,613 $252,782

Excess (deficiency) of Revenues

over Expenditures 24,802 37,925 9,996 (2,113) (12,462)

Operating Transfers (16,839r (SO,517)3 24,857 (9,581) 5,440

Combined Adjustmenti 13,461 365 26,185 (46,271)

Ending Balance $ 60,357 $ 58,830 $119,868 $ 61,903 s 54,881

1 Does not include rent payable on lease obligations.

2 Includes audlt reclassificab.ODS and net residual equity transfers,

3 Operating transfers related to the refunding of City and Various Properb.es Certl1icates of Participanon(1988/89) and theCertificates of PartiClpatlon related to theOakland Museum (1987/88). These

financings liquidated and trlIDSferred vanous restncted investments from the General Fund Group to

other Fund Groups.Source: City of OakkmdAudited Finanaal SIatemefllS,

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The following table reflects the City's revenues, expenditures and operating surpluses forthe general purpose fund for fiscal years 1988/89 through 1992/93:

CITY OF OAKLANDGENERAL PURPOSE FUND

REVENUES, EXPENDITURES AND OPERATING SURPLUSES1988/89 THROUGH 1990/91 ACTUAL1992/93 ADOPI'ED BUDGET

(OOO's)

ActualActual Actual Actual (unaudited) Adopted

Total Revenues and Expenditures 1988/89 1989/90 1990191 1991/92 1992/93

REVENUESTaxes $174,712 $170,084 $77,763 $182,750 $187,780

Penmts and LIcenses 4,946 5,518 6,160 7,100 7,190

Traffic fines and vanous penalties 6,423 7,117 7,420 6,160 7,400

Interest and rental income 16,582 12,852 12,015 7,070 6,010

Revenue from current services 16,987 17,619 22,105 16,480 27,300

Grant revenue 1,057 10,395' 6,230 10,390 5,880

Other revenue 3.472 6,629 20,6363 10,880 14,190

TOTAL REVENUES $224,179 $230,214 $252.334 $240,830 $255,750

EXPENDITURES

General government $ 21,696 s 26,993 s 27,893 $ 30,130 $32,400

Public safety 103,163 130,420 143,287 141,290 147,240

Officeof public works 17,256 20,598 27,026 25,080 38,660

Officeof general services 6,196 5,890 17,4323 4,730 4,470

Parks, Recreation and Cultural 26,515 18,616 16,579 22,550 26,300

Economic, Community and SOCial

Programs3,858 6,485 6,579 5,860 5,150

Nondepartmental 7,445 9,510 11,172 18,710 25,170

Capital Improvement 0 1,706 4,071 0 2,030

Interdepartmental Transfers 50.517 <24,857) 9.581 (1.540) (14,160)

TOTAL EXPENDITURES $236,646 $195,361 $263,620 $246,810 $267,260

Excess (deficiency) of Revenues

over Expenditures $(12,467) $ 34,853 $(11,750) $(5,980) $(11,510)

Increase reflects anticipated reimbursement from the Federal Emergency Management Assistance

program for earthquake related expenses,2 Operating transfers related to the refunding of City and Vanous Properties Certificates of

Parncipanon (1988/89) and the Certificates of Partrcipation related to the Oakland Museum(1987/88),

3 Includes amounts from Landscape & Lightmg Assessment District (LLAD).

Source: City ofOakland 1992/93 Adopted Policy Budget. CITy of Oakland Financial STatements.

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Financial Obligations

Short-Term. The City of Oakland implemented a short-term financing program in 1981

to finance general fund cash flow deficits during the fiscal year (July 1 through June 30). Shownbelow are the short-term borrowings for the most recent fiscal years. The City has neverdefaulted on the payment of any of these notes.

The 1992/93 notes were issued in the principal amount of $50,000,000 on October 14,1992. The notes will become due October 15, 1993, and bear interest at a rate of 3.50% (pricedto yield 2.60%). According to the terms of issuance, the City has pledged to set aside certainreceipts from taxes, revenues and other moneys which are received by the City for the City'Sgeneral fund sufficient to pay principal and interest on the notes. Such receipts are to be frommoneys received during fiscal year 1992/93 and will be set aside on certain dates all prior toJune 30, 1993.

CITY OF OAKLAND

SHORT-TERM BORROWING

YISCllI Year

1983/84

1984/851985/86

1986/871987/88

1988/891989/90

1990/91

1991/92

1992/93

Source: CIty ofOakland, OfficeofFinance.

Amount

$26,000,000

29,800,000

35,700,00039,000,000

26,000,00030,000,00022,500,000

27,500,000

35,000,000

50,000,000

Lease Obligations. Since 1982, the City has entered into four separate sale-leasebackarrangements involving City property. Certificates of participation were issued by the CivicImprovement Corporation to finance the acquisition and construction of capital improvementsto twenty-three City properties, and by the OaklandRedevelopment Agency for the acquisitionand improvements to the Henry J. Kaiser ConventionCenter, the George F. ScotIan MemorialConvention Center, and the Oakland Museum. Because the certificates in each case areultimately secured by lease payments from the City to various nonprofit corporations, the

certificates are recorded as direct obligations of the City.

Long-Term Borrowings. In 1988, the City issued revenue refunding bonds in the amountof $209,835,000 which mature from 1993 to 2021. Such bonds are payable solely from theproceeds of guaranteed annuity contracts held in trust with PFRS (as defined below at

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"Retirement Programs") in the Pension Annuity Expendable Trust fund. Because of the natureof the financing structure, such bonds are recorded as direct obligations of the City.

In addition, the Oakland Redevelopment Agency has issued three series ofTax AllocationBonds for two redevelopment project districts. In each case, the Tax Allocation Bonds arelimited obligations of the Agency and are solely payable from and secured by a pledge of an

incremental portion of tax revenues assessed on property within each respective project district.For fiscal year 1990/91, the redevelopment tax increment within the City is valued at$1,696,107,000.

Special Assessment Debt. In April 1989, the City issued $4,365,000 of Medical HillParking District Refunding Improvement Bonds. Such bonds are payable from additional

property tax assessments levied against property owners in the Medical Hill Parking District.In the event of continuing delinquencies in the payment of the property owners' installments, theCity, in the absence of any other bidder, is obligated to purchase at delinquent assessment salesand pay future delinquent installments of assessments and interest thereon until the land is resold

or redeemed.

Internal Service Fund Long-Term Obligations. In 1980, the Oakland RedevelopmentAgency purchased and leased back City Hall West to the City. In 1988, the Agency issued 1988City Hall West Lease Revenue and Refunding Bonds. The bonds are payable from and securedby a pledge of annual lease rentals to be received from the City.

Enterprise Funds Long-Term Obligations. Numerous revenue bonds and certificates ofindebtedness have been issued by the Port of Oakland and the Acorn Mortgage Program. In the

case of the Port of Oakland, the outstanding balance for such obligations was determined to be$320,526,000 as of June 30, 1992. The Port operates on an enterprise basis in that debt servicefor Port bonds is not payable from general City revenues. In the case of the Acorn Mortgage

Program, the outstanding balance for such obligations was determined to be $3,375,000 as ofJune 30, 1992. Such obligations are secured by a pledge of FHA insured mortgage loans issuedfrom the related bond proceeds to developers in the Acorn Redevelopment Project Area.

Oakland-Alameda County Coliseum. Oakland-Alameda County Coliseum, Inc. is a nonprofit corporation managed by a self-appointed BoardofDirectors. The Board manages the fiscal

affairs and policies of the corporation at its own discretion. The corporation has issued bonds

which are payable from the operating revenues of the Corporation. Currently, the City andCounty lease the Coliseum Complex from the Corporation. The lease obligates the City and the

County to make annual rent payments of $750,000 each. The lease terminates in 2006.

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In the fiscal years 1992/93 through 1996/97, the City of Oakland will be makingcombined lease payments from its general fund as shown below:

CITY OF OAKLANDGENERAL FUND LEASE OBLIGATIONS

Henry J. G.F. ScotianKaiser Memorial Civic

Convention Convent ion Improvement Oakland

Fiscal Year Center Corporation Musewn Total

1992/93 $4,339,313 $3,895,000 $6,909,000 $1,902,713 $17,046,0261993/94 4,339,313 3,895,000 6,894,000 3,072,648 18,200,9611994/95 4,704,312 4,200,000 6,867,000 3,192,828 18,964,1401995/96 5,069,313 4,502,238 6,735,000 3,192,240 19,498,7911996/97 5,065,506 4,505,754 4,980,000 3,191,490 17,742,750Balance Due' $43,500,000 $38,000,000 $51,500,000 $39,408,025 $173,208,000

1 Pnncipal balance as of July 1, 1992.Source: City ofOakland, OfficeofFinance.

The City has never defaulted on the payment of principal or interest on any of its

indebtedness or lease obligations.

Statement of Direct and Overlapping Debt

Contained within the City are numerous overlapping local agencies providing public

services. These local agencies have outstanding bonds issued in the form of general obligation,

lease revenue and special assessment bonds. The direct and overlapping debtof

the City isshown below. Self-supporting revenue bonds, tax allocation bonds and nonbonded capital lease

obligations are excluded from the debt statement.

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CITYOF OAKLANDSTATEMENT OFDIRECTAND OVERLAPPING DEBT

1991/91 Assessed Valuation: $13,648,141,114(after deducting$1,011,098,876 redevelopment incremental valuation)

Direct and Overlapping Bonded Debt % Applicable

San Francisco Bay Area Rapid Transit District 7.864%

Alameda-Contra Costa Transit Distnct Cert. of Part. 22.467Oakland-Alameda County Coliseum 60.188Alameda County Board of Educallon Pubhc Facilities Corp. 20.376

Alameda County Authonty and Cert. of Part. 20.376

East Bay Municipal Utrhty Distnct 21.290

East Bay Municipal UnhtyDistrict, Special Distnct #1 53.954

East Bay Regional Park Distnct 11.722

Bay Area Pollunon Control Authonty 3.645

Peralta Community College District 56.194

Oakland Umfied SchoolDistnct 99.996

Oakland Unified School Distnct Cert, of Part. 99.996San Leandro Unified SchoolDistrict Cert. of Part. 14.492

Castro Valley Unified School District and Cert. of Part. 0.008-0.120

City of Oakland 100City of Oakland Buildmg Authonties 100

City of Oakland 1915 Act Bonds 100

Debt 5/1192

s24,803,0566,284,0208,191,587

1,591,366

50,016,763

9,511,308

16,571,9716,821,032

4,1921,933,074

16,109,356

49,468,021

315,926

192

12,000,000381,185,000'

3,990,000

$588,796,8642

9,511,308

16,571,971

8,191,687

$554,521,998

TOTAL GROSS DIRECT AND OVERLAPPING BONDED DEBTLess: East Bay Municipal Utihty Distnct (100% self-supportmg)

East Bay M.U.D., Special District #1 (100% self-supportmg

Oakland-Alameda County Coliseum (100% self-supporting)

TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT

1 Excludes refunding Certificates of Participation 1992 Senes A.

2 Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and

nonbonded capital lease obhgations.

RATIOS TO ASSESSED VALUATION:

Gross Direct Debt ($399,990,000)

Net Direct Debt ($393,185,000)

Total Gross Debt

Total Net Debt

3.08%'

3.03%4.54%

4.27%

1 General Obligation BondsLease Revenue Bonds and Cert. of Part.

Share of Oakland Alameda County Cohseum

Lease-Revenue Bonds$10,722,154

$ 12,000,000

381,185,000

6,805.000

$399,990,000

STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/91:Source: California MUniCIpaL Staiisncs, Inc.

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Labor Relations

City employees are represented by five labor unions and associations, described in thetable below, the largest one being Service Employees United Public Employees (Local 790)which represents approximately 49 percent of all City employees. Approximately 72 percent ofall City employees are covered by negotiated agreements.

CITY OF OAKLANDLABOR RELATIONS

Employee Organization Nwnber of Employees

Oakland Police Officers Association 743

Umted Public Employees (Local 790) 2,690

Intemational Brotherhood of Electncal Workers 26

InternationalAssociationof Firefighters 477

(Local #557)

Western Council of Engineers 95

Source: City ofOakland, Office ofPersonnel Resources Management

Retirement Programs

Contract Expiration Date

June 3D, 1995

June 3D, 1994

June 3D, 1994

In arbitration

June 30, 1994

The Police and Fire Retirement System (PFRS) is a defined benefit plan administered bya Board ofTrustees and covers uniformed employees hired prior to July 1, 1976. As of June 30,1991, PFRS covered 457 current employees and 1,525 retired employees. EffectiveJuly 1, 1976,

the City began providing for and funding an amount equal to the annual normal service cost ofall PFRS participants and the amortization of unfunded benefits accumulated as of that date overa forty year period. On June 7, 1988, voters approved a City measure to extend the amortizationperiod of the unfunded benefits to fifty years. In accordance with these voter approved measures,the City annually levies an ad valorem tax on all property within the City subject to taxation bythe City to help fund the accumulated unfunded benefits. For fiscal year 1991, the City levieda tax of .1575% for this purpose. The present value of vested benefits (benefits to whichparticipants are entitled regardless of future service) was an amount that exceeded related planassets at June 30, 1990 by approximately $702.6 million. Effective July 1, 1985, the City'scontributions to PFRS have been at the rate of 76 percent of all uniformed employees'compensation subject to retirement contribution.

The City's annual contribution to PFRS is determined by calculating the total pensionliability for public safety employees under both PFRS and the Public Employees RetirementSystem (PERS). The amount to be contributed to both plans is allocated between years such thata level percentage of payroll (61.04% in 1991) will amortize the unfunded liabilities by 2026

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and 2000 of PFRS and PERS, respectively. Contributions to PERS are deducted and thedifference is contributed to PFRS.

For the fiscal year ended June 30, 1991, contributions to PFRS totaling $31.4 million($28.9 million employer and $2.5 million employee) were made in accordance with actuariallydetermined contribution requirements. Employer and employee contributions equaled 105%and

19%, respectively, of current year covered payroll for plan participants. The City's actuariesdo not make an allocation of the contribution amount between normal cost and the unfundedactuarial liability because the plan is closed.

Oakland MunicipalEmployees' RetirementSystem (OMERS) is administered by the Cityand covers three nonuniformed employees hired prior to September 1, 1970 who have notelected to transfer to the PERS as well as 416 retired employees. For the year ended June 30,1991, the City, in accordance with actuarially determined contribution requirements, did notmake contributions to OMERS as the plan is fully funded.

PERS is a defined benefit plan administered by the State of California and covers all

nonuniformed employees except those who have not elected to transfer from OMERS and alluniformed employees hired after June 30, 1976. As of June 30, 1991, the unfunded pensionbenefit obligation under PERS was $13.1 million.

For accounting purposes, employees covered under PERS are classified as eithermiscellaneous employees or safety employees. City miscellaneous employees and City safetyemployees are required to contribute 7% and 9%, respectively, of their annual salary to PERS.The City's contribution rates for the fiscal year ended June 30, 1991, were 7.9% and 7.3% foreach group, respectively. The City pays the entire amount of the miscellaneous employees'annual contribution (7%) toPERS. The remainingportion of the required employee contribution,if any, is paid by the City.

PERS uses an actuarial method which takes into account those benefits that are expectedto be earned in the future as well as those already accrued. PERS also uses the level percentageof payroll method to amortize any unfunded actuarial liabilities. The amortization period of theunfunded actuarial liability ended June 30, 1990.

State Budget Matters

After well-publicized difficulties, the State adopted its budget on September 1, 1992.

After a decrease to the City's allocation for fiscal year 1992/93 as specified in AB8, the

City's property tax reduction was $4.25 million. However, this amount will be adjusted in theCity's favor by an estimated $750,000, which is the City's share of a "disaster pool" shared byall cities which have had federally-declared disasters since October 1, 1989. Although the City'sproperty tax base is permanently reduced by AB 8, the disaster allowance will continue until

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fiscal year 1996/97. The expected reduction of about $3.5 million for fiscal year 1992/93represents less than 2% of the City's total budget.

SB 844 allows the City of Oakland, among other cities with port facilities, to require thePort of Oakland to transfer to the City $4 million or 25% of the Port's discretionary reserves,whichever is greater. This amount, however, cannot exceed the amount of the City's property

tax loss, which is expected to be about $3.5 million for fiscal year 1992/93. Any existingcontracts or payments for services between the City and the Port of Oakland are not affected,and any city charter provisions to the contrary are overridden by SB 844.

Oakland Hills Fire

On October 20, 1991, a fire damaged the Oakland Hills. An estimated 1,990 acres of

forest and residential property were damaged. 2,354 homes and 456 apartment units weredestroyed in the fire, most of which were in Oakland. An additional 87 homes were damaged.Property destroyed in the fire has been subject to lower assessed valuations. After rebuildingsubstantially the same as the previous home, the value assigned to the new home will be the

same as the value of the home on the Assessor 's file prior to the fire.

The City has spent $35 million responding to the fire. The State has approved assistanceto the City and the City fully expects 100% of this cost to be reimbursed by the FederalEmergency Management Agency (FEMA). Additionally, the fire represents a $1.1 million loss

from property taxes or approximately 1% of the City 's total property tax. However, there islegislation to reimburse the City for lost property taxes as a result of the fire.

The City has completed its debris clean up and erosion control measures. Home

reconstruction is proceed at a steady pace. As of November I, 1992, 717 building permits havebeen issued, 52 homes completed, and 842 applications for permits have been received.

Litigation. On October 20, 1992, seven lawsuits on behalfof approximately 350 personswere filed in state superior court seeking monetary compensation for damages allegedly sustained

in the Oakland Hills Fire. With an earlier suit filed in September, 1992, the total number of fire-

related lawsuits is eight. The City believes that state law immunizes it from many of the causesof action filed against it in these lawsuits, but that protracted litigation will be necessary to

resolve those issues to which immunities may not be applicable.

ECONOMIC PROFILE

Introduction

Founded in 1852, Oakland occupies 53.8 square miles, with 19 miles of coastline on theSan Francisco Bay in northern California. It is the seat of government of Alameda County, oneof nine counties comprising the San Francisco Bay region, and the center of commerce for the

Bay Area. The Bay Area has a population of over 6,000,000 people. A large number of public

A-I7



Municipal Utility District, Pacific Gas and Electric, and Pacific Bell. In addition to other Bay

Area media, the City has its own regional newspaper, radio stations, and a television station.

Having begun its development as a commercial and transportation center with the Gold

Rush in 1849, Oaldand is today recognized as the center of commerce for the entire Bay Area.

It is also one of the main sea terminals for cargo moving between the Western United States and

the Pacific Rim, Latin America and Europe. Since 1960, Oakland International Airport, operatedby the Port of Oakland, has developed into a major regional center of ai r passenger and cargo

je t operations. Last year it was one of the fastest-growing airports in the nation in number ofpassengers served. It currently provides 56 percent of the Bay Area's cargo flights. The City's

foreign trade zone is the largest in the Bay Area with the number of goods flowing through thezone having doubled in 1990, and revenues in excess of $25 million.

Over the last 25 years, there have been significant gains in diversifying the City's

economic base. While manufacturing jobs have decreased, the economy now offers a balanced

mixture of trade, government, financial and service-oriented occupations, and has a growingskilled crafts sector. The City's abandoned warehouses, foundries, and long silent cigar,

macaroni and tent factories are being rapidly converted into live/work studios for crafts people.

Less obvious to people passing through Oakland are the City's increasingly robustneighborhood retail areas such as Glenview, Lakeshore and Grand Avenue, Piedmont Avenue,

Fruitvale, Montclair Village, Rockridge and Chinatown. In fact it was because of the activity

in these commercial/shopping districts that the City did not suffer a significant decline in sales

tax revenue despite temporary closure of several major retail stores after the 1989 Loma Prieta

earthquake.

Development of Oakland's downtown has long been a primary thrust of city plannmg.

Over the past two decades, the central business district (extending to Lake Merritt) has

undergone a dramatic physical renaissance. New office and retail buildings, refurbished publicfacilities, renovated historical buildings, a new convention center, transportation improvements,parking facilities, luxury hotels, park enhancements and outdoor art have created a cosmopolitan

environmental enhancing the City's status as the hub of the Bay Area.

The quality of life in the City is enhanced by abundant opportunities for recreation,entertainment and culture. The City has a moderate climate and has 64 parks within its borders

including Lake Merritt winch is located downtown. The Oakland-Alameda County Coliseum

hosts concerts and other special events, and is the home to Oakland A's baseball and Golden

State Warriors basketball. A variety ofmuseums, music, dance and theater groups, both amateur

and professional, perform regularly in the City.

Population

The City is the sixth largest in the State of California. Between 1980 and 1991, the City's

population increased by a total of 11%or 37,412. The County has experienced steady population

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growth since 1960, and it is estimated thatpopulation has grown by 187,621 or 17% since 1980.

The fastest growing cities are located in the southern and eastern portions of the County. The

County is the second most populous in the Bay Area and the sixth most populous in the State.

CITY OF OAKLAND AND ALAMEDA COUNTYPOPULATION

City of Oakland Alameda County

1960 367,548 908,209

1970 358,486 1,064,049

1980 339,288 1,105,379

1990 372,242 1,279,182

1991 376,700 1,293,000

Source: Stalistics fo r 1991 are Stale Department ofFinance estimates as ofJanuary 1. The 1960,

1970, 1980 and 1990 totals are U.S. Censusfigures.

Employment

During the past seven years of economic expansion, Alameda County's labor force has

grown steadily. It is expected that the Countywill continue to experience moderate job growthwith approximately 82,000 more jobs in the County by 1996 than in 1989. This represents an

increase of 13.8 percent or an average of2.0 percent per year. Re:O.ecting the national recession

in 1990 and 1991, local job growth was slower at that time than during the preceding several

years. As the overall economy recovers, job growth in the County will also accelerate. Federal

government employment will increase in 1993 when the new Oakland federal building iscompleted. At this time, the various military bases in the County are not slated for closure.

A-20



The following table represents the labor patterns in the County for 1987 through 1990and for June 1991 and June 1992 and civilian labor force figures for the City for the same

period:

CIVll..IAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT

ANNUAL AVERAGES

(OOO's)

ALAMEDA COUNTY

Jnne1987 1988 1989 1990 1991 1992

Civilian Labor Force 639.9 667.6 685.6 675.7 679.1 698.3

Employment 607.3 636.9 656.5 647.6 643.2 646.3

Unemployment 32.6 30.7 29.1 28.1 35.9 42.1

Unemployment Rate 5.1% 4.6% 4.2% 4.2% 5.3% 6.1%

Wage and Salary Employme

Total All Industries 552.2 573.3 598.7 608.6 600.2 N/A

Agncu1ture 1.8 1.9 1.859 1.5 1.4 N/ANonagriculture 550.4 571.4 6.9 607.1 598.8 N/A

MinIng & Construcnon 28.8 30.5 31.7 31.4 27.4 N/A

Manufacturing 74.7 80.4 83.3 81.9 81.7 N/A

Transportation & Public Utilities 35.7 36.5 38.8 40.5 39.3 N/A

Wholesale Trade 36.3 37.6 40.9 40.8 43.4 N/A

Retail Trade 100.1 102.9 106.1 108.3 100.2 N/A

Finance, Insurance & Real Estate 29.2 29.6 30.4 30.8 29.4 N/A

Services 127.4 134.1 143.3 149.6 153.2 N/A

Government 118.2 119.8 122.4 123.8 124.2 N/A

CIvilian Labor Force' 181.1 187.3 195.2 190.5 192.3 199.2

Employment 168.3 175.3 183.7 179.5 178.3 180.0

Unemployment 12.8 12.0 11.4 11.0 14.0 19.2

Unemployment Rate 7.0% 6.4% 5.9% 5.8% 7.3% 9.6%

1 Based on place of work.

2 Based on place of residence.

Source: California Employment Development Department

A-21



Largest Employers

The following tables represent the largest public and private employers in the City ofOakland:

CITY OF OAKLAND

LARGEST PUBLIC EMPLOYERS

Public Entity Product/Service

AC Transu DIstrict

Alameda County

Bay Area Rapid Transit District

EastBay Municipal Utility District

Highland Hospital Oakland

CIty o f Oakland

Naval Hospital Oakland

Oakland Pubhc Schools

Oakland Army BasePeralta Community College

US Navy Supply Center

US Post Office

Source: Oakland Chamber ofCommerce

A-22

Pubhc Transportation

Governmental Operations

Pubhc Transportation

Unlity/Water

County Medical Center

Governmental Operations

Hospital-Medical Center

Education

Military Traffic Management/Cargo ControlEducation

Government Installation

Postal Services



Company

CITY OF OAKLAND

LARGESI' PRIVATE EMPLOYERS

Product/Service

American President Companies, Inc.

American Protective Services

AT&T

Blue Cross

Children's Hospital

C,tICOrpSavings

Clorox Company

Emporium

Granny Goose

ICF-KaJ.ser Engineers

Kaiser Foundation Health Plan

Kilpatricks Bakery

Mother's Cake & Cookie Co.

Oakland Scavenger

Owens-DlmoisPacific Bell

Pacific Gas & Electnc

Safeway Stores, Inc.

San Francisco French Bread Co.

Scott Co

Southern Pacific Transportation

Summit Medical Center

Sunshine Biscuits

The Tnbune

World Savmgs and Loan

Source: Oakland Chamber of Commerce.

Commercial Activity

Ocean Slnppmg

Security

Communications

Health Care Insurer

Hospital Service

Banking

Household Products

Department Store

Food Products

Aluminum ProductslEngineenng

Hospital Services

Bakery Products

Bakery Products

Garbage Collection

Glass ContainersPublic Utility

Public Utility

Grocery Stores

Bakery Products

MechanIcal

TransportatIon

Hospital Services

Bakery Products

Newspaper

Bankmg

A six-year history of retail sales for the City IS shown in the following table:

CITY OF OAKLANDTAXABLE TRANSACTIONS 1986-1991

Retail Sales

1986

1987

1988

1989

1990

1991

$2,366,556,000

2,352,164,000

2,472,515,000

2,530,690,000

2,447,917,000

2,406,366,000

Source: State Board ofEqualization, Department ofResearch and

Statisttcs.

A-23



Construction Activity

A six-year history of building permits and valuation appears in the following table:

CITY OF OAKLANDBUll.DING PERMITS AND VALUATIONS 1986-1991

Year

19861987

198819891990

1991

ResidentialPennits

820650

612505336762

Residential Valuationan Thousands)

$144,902101,383106,892

73,94171,399

113,323

Nonresidential Valuation!In Thomands)

104,59682,709

92,26057,77649,28489,982

Source: 1986: "California Construction Trends, • Security Pacific Bank. 1987 through 1991:

"California Building Permit Activity, • Economic Sciences Corporation.

Median Household Ineome

Effective Buyer Income (EBI) is defined as personal income less personal income tax and

nontax payments, such as fines, fees or penalties. Median household EBI for the City is shownin the table below.

CITY OF OAKLAND AND ALAMEDA COUNTYMEDIAN HOUSEHOLD EFFECTIVE BUYING INCOME

1985-1990 Median EBI

Year City of Oakland Alameda County California United States

1985 $20,712 $28,037 $26,557 $23,6801986 21,960 29,756 28,227 24,632

1987 23,028 31,220 30,537 25,888

1988 22,927 30,984 30,088 24,488

1989 23,257 31,440 30,713 25,976

1990 25,306 34,211 33,342 27,912

Note: Beginning In 1988, methodology used to calculate Median EB1 differs from that in previous

years.

Source: "Survey of Buying Power, • Sales and Marketing Management Magazine.

A-24



APPENDIXB

GENERAL PURPOSE

FINANCIAL STATEMENTS

CITY OF OAKLAND



(TInS PAGE INTENTIONALLY LEFT BLANK)



Deloitte&Touche

2101 Webster Street Facsimile (510) 835-4888Oakland, California 94612-3027Telephone (510) 287-2700

INDEPENDENT AUDITORS' REPORT

Honorable Mayor and Members of the City Councilof the City of Oakland, California

We have audited the accompanying general purpose financial statements of the City ofOakland, California (the City) as of June 30, 1991, and for the year then ended. These

general purpose financial statements are the responsibility of the management of the City. Ourresponsibility is to express an opinion on these general purpose financial statements based onour audit. We did not audit the financial statements of the Oakland Convention Center

Management, Inc., the Oakland Municipal Employees' Retirement System, the OaklandRedevelopment Agency and the Police and Fire Retirement System, whose statements reflecttotal assets and total revenues constituting 23% and 2% of the combined totals of the SpecialRevenue Funds; 35% and 61% of the combined totals of the Debt Service Funds; 50% and

71% of the combined totals of the Capital Projects Funds; 2% and 5% of the combined totalsof the Enterprise Funds; 53% and 76% of the combined totals of the Fiduciary Fund Types;and 50% of the combined total liabilities of the General Long-Term Obligations AccountGroup. Those statements were audited by other auditors whose reports have been furnished tous, and our opinion, insofar as it relates to the amounts included for such entities 10 the SpecialRevenue, Debt Service, Capital Projects, and Enterprise Funds, Fiduciary Fund Types, and

the General Long-Term Obligations Account Group, is based solely on the reports of the otherauditors.

We conducted our audit in accordance with generally accepted auditing standards. Those

standards require that we plan and perform the audit to obtain reasonable assurance about

whether the general purpose financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in thegeneral purpose financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating theoverall general purpose financial statement presentation. We believe that our audit and the

reports of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audit and the reports of other auditors, such general purpose

financial statements present fairly, in all material respects, the financial position of the City atJune 30, 1991, and the results of its operations and the cash flows of its proprietary fund typesfor the year then ended in conformity with generally accepted accounting pnncrples.

November 15, 1991



..,. CITY OF OAKLAND

ALL FUND TYPES AND ACCOUNT GROUPSCOMBINED BALANCE SHEET

June 30, 1991

(In Thousands)

Governmental Fund Types

Special Debt CapitalGeneral Revenue Service Projects

ASSETS AND OTHER DEBITS

Assets

Cash and investments $ 53,646 $32,333 $ 2,846 s 66,359Receivables (net of allowance for

uncollectibles):Accrued interest 1,412 887 827 4,838Property taxes 2,394 197Accounts 15,066 81 62 2,900Grants 1,666 7,846 871Due from other governments 293Special assessments 3,949

Due from other funds 29,144 1,260 102 2,770Advances to other funds 27,207 730Notes and loans receivable (net of

allowance for uncollectibles) 9,504 34,947 16,167 22,468Restricted cash and investments with

fiscal agents:Designated for deferredcompensation plan

Other 2,491 81,660 228,339InventoriesProperty and equipment (net, where

applicable of accumulateddepreciation)

Land held for resale 9,251Other 12

Other Debits

Amount available in debt service funds

Amount to be provided for long-termobligations

TOTAL ASSETS AND OlHER DEBITS $140,039 $80,784 $105,613 $338,089

B-2



GENERAL PURPOSE FINANCIAL STATEMENTS

ProprietaryFund Types

EnterpriseInternalService

FiduciaryFund Types

Trustand

Agency

Account GroupsTotal

(MemorandumOnly)

$ 44,522 $14,456 $278,690 $ $ $ 492,852

303 4,732 12,9992,591

15,326 101 89 33,6251,628 12,011

2933,949

140 1,018 3,171 37,60527,937

8,463 91,549

9,743 33,631 43,374

29,034 9,233 217,791 568,548

668 668

595,075 13,018 460,910 1,069,0039,251

28,741 28,753

89,570 89,570

522,898 522,898

$731,347 $40,122 $538,104 $460,910 $612,468 $3,047,476

(conunued)

B-3



"" CITY OF OAKLAND

ALL FUND TYPES ANDACCOUNT GROUPSCOMBINED BALANCE SHEET, continued

June 30, 1991

(In Thousands)


Special Debt CapitalGeneral Revenue Service Projects

LIABILITIES, EQUITY ANDOTHER CREDITS

Liabilities

Accounts payable and

s 34.334ccrued liabilities s 3.937 $ 6,428 $ 3,415Due to other funds . 6.067 3.164 1.042 20,415Advances fromother funds 458Due to other governments 135Deferred revenue 9.842 35,283 3.949 12.992Tax and revenue anticipation

notes payable 27.500Tax exempt commercial paperMatured bonds and interest payable 4,618Long-term obligationsObligations under deferred

compensation plansOther 258 54 6 488

Total liabilities 78,136 42.438 16,043 37,768

Equity and Other Credits

Investment in general fixed assetsContributed capitalRetained earningsFund balances:

Reserved 29,448 25.054 89,570 300.321Unreserved:

Designated 19,689 9,250Undesignated 12,766 4,042

Total equity and other credits 61.903 38.346 89,570 300 321TOTAL UABllJTIES, EQUITYAND OTHER CREDITS $140,039 $80,784 $105,613 $338,089

The notes to the financial statements are an integra!part of this statement,

8-4




ProprietaryFund Types

EnterpriseInternalService

FiduciaryFundTypes

Trustand

Agency

Account GroupsGeneral GeneralFixed Long-TermAssets Obligations

Total(Memorandum

Only)

$ 26,863 s 2,392 s 12,424 $ s s 89,7935,795 13 1,109 37,605

26,549 200 730 27,937135

18,754 129 80,949

27,50029,300 29,3009,905 14,523

327,613 3,960 3,950 612,468 947,991

9,743 33,631 43,37412,268" 1 13,075

466790 6,694 51.845 612,468 1.312,182

460,910 460,91050,185 17,382 67,567

214,372 16,046 230,418

482,792 927,185

1,538 30,4771.929 18,737

264,557 33,428 486,259 460,910 1.735,294

$731,347 $40,122 $538,104 $460,910 $612,468 $3,047,476

(concluded)

8-5



'" CITY OF OAKLAND

ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDSCOMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

Year ended lune 30, 1991(In Thousands)

Governmental Fund TypesSpecial Debt Capital

General Revenue Service ProjectsREVENUES

Taxes:Property $ 70,345 $12,755 $ 1,173 $25,126State 45,175 8,754Local 62,248

Licenses and permits 6,160 1Fines and penalties 7,420 2,434Interest and rental 12,015 2,248 4,274 27,387Charges for services 22,105 374Federal and state grants and subventions 6,230 33,510 2,766Pension annuity distributionsOther 7,802 6,111 1,934

TOTAL REVENUES 239.500 66,187 5,447 57,213

EXPENDITURES

Current:General government 27,893 628 11,758Public safety 143,287 920 1,793Public works 27,026 14,172 1,210General services 5,006 3,088 156Parks, recreation and cultural

development 16,579 10,083 210Community and economic

development 6,579 23,812 827Other 11,172 1,019 31 2,523

Capital outlay 4,071 9,501 38,475Debt service:

Principal retirement 3,695Interest charges 41,630Bond issuance costs 116

TOTAL EXPENDITURES 241.613 63,223 45,472 56,952

EXCESS (DEFICIENCY) OF REVENUESOVER (UNDER) EXPENDITURES,CARRIED FORWARD $ (2.113) $ 2,964 $ (40 025) $ 261

B-6



• CITY OF OAKLAND

ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDSCOMBINED STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUNDBALANCES, continued

YearEnded June 30, 1991

(In Thousands)

Governmental Fund TypesSpecial Debt Capital

General Revenue Service Projects

EXCESS (DEFICIENCY) OF REVENUESOVER (UNDER) EXPENDITURES,BROUGHT FORWARD $ (2,113) $ 2,964 $(40,025) $ 261

OTHER FINANCINGSOURCES (USES)

Property sale proceeds 56 17 1,468Proceeds from issuance of bonds 77 12,000Operating transfers in 1,204 1,268 49,681 12,479Operating transfers ou t (l0,841) (l,283) (3,731) (29,903)

TOTAL OTHER FINANCINGSOURCES (USES) (9.581) 2 46,027 (3,956)

EXCESS (DEFICIENCY) OF REVENUESANDOTIIER FINANCING SOURCESOVER (UNDER) EXPENDITURESAND OTI:IER FINANCING USES (11,694) 2,966 6,002 (3,695)

Fund balances at beginning ofyear, as restated (Note 21) 119,868 36,778 40,619 298,957

Residual equity transfers in 339 42,949 5,059Residual equity transfers ou t (46,610) (1.398)

FUND BALANCES AT END OF YEAR $ 61,903 $ 38,346 $ 89.570 $300,321

Thenotes to thefinancial statements are an ~ t e g r a 1 panof thisstatement.

B-8



FiduciaryFund TypeExpendable

Trust

$ 16,160

12707.532)

07,405)

(1,245)

221,187

(339)

$219,603

Total(Memorandum

Only)

$ (22,753)

1,54112,07764,759(63,290)

15,087

(7,666)

717,40948,347(48.347)

$709,743

(concluded)


8-9



'" CITY OF OAKLAND

GENERAL FUND AND ANNUALLY BUDGETED SPECIAL REVENUE

AND DEBT SERVICE FUNDSCOMBINED SCHEDULE OF REVENUES, EXPENDITURES

AND ENCUMBRANCES· BUDGET ANDACTUAL

ON A BUDGETARY BASIS

Year endedJune 3D, 1991(In Thousands)

General FundActual on a Variance·

Revised Budgetary FavorableBudget Basis (Unfavorable)

REVENUES

Taxes:Property $ 72,115 $ 70,345 $ 0,770)State 43,990 45,175 1,185Local 64,672 62,248 (2,424)

Licenses and permits 8,955 6,160 (2,795)Fines and penalties 6,606 7,420 814Interest and rental 7,374 10,146 2,772Charges for services 25,554 22,105 (3,449)Federal and state grants and subventions 13,209 12,083 (1,126)Other 13,250 14.008 758

TOTAL REVENUES 255,725 249,690 (6,035)

EXPENDITURES AND ENCUMBRANCES

Current:General government 37,129 27,780 9,349Public safety 140,945 143,139 (2,194)Public works 31,700 26,945 4,755General services 5,513 4,983 530Parks, recreation and cultural

development 17,052 16,569 483Community and economic

development 7,633 6,602 1,031Other 17,519 21,430 (3,911)

Capital outlay 19,226 3,217 16,009

Debt serviceTOTAL EXPENDITURES ANDENCUMBRANCES 276717 250,665 26,052

EXCESS (DEFICIENCY) OF REVENUESOVER (UNDER) EXPENDITURESAND ENCUMBRANCES $ (20,992) $ ( 9 7 ~ $20,017

11Ie notes10 the financial statements are an integral part of thisstatement

B-10




Annually Budgeted Annually BudgetedSpecial Revenue Funds Debt Service Funds

Actual on a vartance- Actual ona Variance .

Revised Budgetary Favorable Revised Budgetary FavorableBudget Basis (Unfavorable) Budget Basis (Unfavorable)

$ $ $ $ $ 501 $ 5014,774 8,754 3,980

1,219 1,219286 286 541 541

1 16,889 1,364 (5,525)

88 88 16,121 15.429 (692)

11.663 11.712 49 16,121 16.471 350

9,359147

7,902124

1,45723

2 2

279 231 48

6,656 4,438 2,218 16 (16)16,119 15,924 195

16,441 12,695 3,746 16,121 15,940 181

$ (4,77ID $ (983) $ 3,795 $ $ 531 $ 531

8-11



$ CITY OF OAKLAND

ALL PROPRIETARY FUND TYPES AND PENSIONTRUST FUNDSCOMBINED STATEMENT OF REVENUES, EXPENSES AND

CHANGES IN RETAINED EARNINGS/FUND BALANCES

Year Ended June 30, 1991

(In Thousands)

Proprietary FiduciaryFundTypes FundTypes Total

Intemal Pension (MemorandumEnterprise Service Trust Only)

OPERATING REVENUESInterestandrental $100,004 s s 24,716 s 124,720Charges fOl services 14,839 26,143 40,982Conlributions 28,929 28,929Other 4773 52 4825

TOTAL OPERATING REVENUES 119.616 26195 53645 199456

OPERATING EXPENSESPersonnel 33,686 9,906 43,592Supplies 2,502 5,654 8,156Depreciation andamortization 21,979 3,180 25,159Conttaetua! servicesand supplies 16,422 146 16,568Repairs andmaintenance 4,512 923 5,435General and administrative 15,242 4,211 19,453Rental 633 682 1,315Benefit payments 44,586 44,586Intereston bonds 885 315 1,200WriUH>ffofotherassets 10,427 10,427Other 2014 333 865 3212

TOTALOPERATING EXPENSES 108302 25035 45766 179.103

OPERATING INCOME11314

1 1607879 20353

NON·OPERATING REVENUES (EXPENSES)Federalandstategrants 1,330 1,330Interest, net (18,954) 223 (18,731)Other,net (3052) 128 (2924)

TOTALNON-DPERATING REVENUES (EXPENSES) (22 0Q6) 1681 (20325)

INCOME (LOSS) BEFOREOPERATING TRANSFERS (10,692) 2,841 7,879 28

Operatmg transfers out (J 183) (43) Cl 326>

INCOME (LOSS) BEFOREEXTRAORDINARY ITEMS (11,875) 2,698 7,879 (1,298)

EXTRAORDINARY GAIN (LOSS)FROMEARTHQUAKE (NOTE24) (839) 3300 2461

NET INCOME (LOSS) (12,714) 5,998 7,879 1,163

Depreciation of fixed assetsacquiredwithcontributedcapital 1,931 1,931

Retainedearmngs/fund balancesat beginnmgof year,as restated (Note21) 225.155 1O.Q48 258;W 493980

RETAINED EARNINGS/FUNDBALANCES ATENDOF YEAR s214,372 s 16,046 s 266,656 S 497,074

The notes to the fmancial statementsare an integra! partof thisstatement.

8-12




ALL PROPRIETARY FUND TYPES

COMBINED STATEMENT OFCASH FLOWS

Year ended June30, 1991

(In Thousands)

Enterprise

TotalInternal (MemorandumService Only)

(4,688) (78) (4,766)(1,326) (143) (1,469)(50) (150)

$ (6,164) $ (221) $ (6.385)

(continued)

CASH FLOWS FROM OPERATINGACI1VITIES:

Operating Income

Adjustments to reconcile operating income tonet cash provided by operating activities

Depreciation and amortization

Retirement of property and equipmentWritedown of other assetsChanges in assets and liabilities:

Accounts receivableNotes and loans receivableOther assetsAccounts payable and accrued liabilitiesDeferred revenueObligations under deferred

compensation plansOther

NET CASH PROVIDED BY

OPERATING AcnVITIES

CASH FLOWS FROM NON·CAPITALFINANCING ACTIVITIES:

Inter-fund borrowings - ne tOperating transfers to other fundsRepayment of long-term debt principal

NET CASH USED FOR NON-CAPITAL

FINANCING ACI1VITIES

$11,314

21,979

8,89410,427

1,451134(984)

(6,739)2,621

5,744(41)

54,700

$ 1,160

3,180

(19)

(19)1,360

5,662

$12,474

25,159

8,89410,427

1,432134

(1,003)(5,379)2,621

5,744(141)

60.362

B-13



'" CITY OF OAKLAND

ALL PROPRIETARY FUND TYPES

COMBINED STATEMENT OF CASH FLOWS, continued

Year ended June 30,1991

(In Thousands)

Enterprise

TotalInternal (MemorandumService Only)

$25,000 $ $25,000

14 14(6,148) (6,148)

128 128(70,527) (4,272) (74,799)6,856 757 7,613

(20,587) (275) (20,862)(839) 3,300 2,461

(4,946) (4,946)(4,908) (4,908)

(76,085) (362) (76,447)

CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:

Issuance of commercial paper - netLong-term debt:New borrowingsRepayments

Proceeds from sale of fixed assetsAcquisition and construction of capital assets

Grants from governmental agenciesRepayment of long-term debt interestExtraordinary gain (loss) on earthquakeRepayment of inter-fund borrowingsOther

NET CASH USED FOR CAPITAL ANDRELATED FINANCING ACTIVITIES

CASH FLOWS PROVIDED BYINVESTING ACTIVITIES:

Decrease (increase) in restricted cash - netPurchase of investments - net

Purchase ofOPA partnership interestDeferred charges and other assets

NET CASH PROVIDED (USED)BY INVESTING ACTIVITIES

NET INCREASE (DECREASE) INCASH AND EQUIVALENTS

CASH AND EQUIVALENTS ATBEGINNING OF YEAR

CASH AND EQUIVALENTSAT END OF YEAR

28,434(3,631)

(2,550)(4.312)

17,941

(9,608)

54.130

$44,522

(2,802)(468)

(3,270)

1,809

12,647

$14,456

25,632(4,099)

(2,550)(4.312)

14,671

(7,799)

66,777

$58,978

Thenotes to the financial statements are an mtegral part of this statement.

8-14

(concluded)



NOTES TO FINANCIAL STATEMENTS


June 30, 1991

(1) ORGANIZATION AND DEFINITION OF REPORTING ENTITY

The City ofOakland (the City) was chanered on May 4, 1852, by the State of California and

is organized and exists under and pursuant to the provisions of State law. The Charter

established a Council-Manager form of government consist ing of nine elected

Councilmembers, including the Mayor, and a Council-appointed City Manager.

The City has defined its reporting entity in accordance with generally accepted accounting

principles (GAAP), which provide guidance for determining which governmental activities,

organizations, and functions should be included in the reporting entity. The basic criterion

used by management for including a potential component unit within the reporting entity is

the governing body's ability to exercise oversight responsibility. Oversight responsibility is

derived from the governmental unit's power and includes, but is not lirmted to: (a) financial

interdependency; (b) selection of governing authority; (c) designation of management; (d)

ability to significantly influence operations; and (e) accountability for fiscal matters. The

most significant manifestation of oversight is financial interdependency. Manifestations of

financial interdependency include responsibility for financing deficits, entitlements to

surpluses and guarantees of, or "moral responsibility" for, debt.

The General Purpose Financial Statements present information on the activities of the City

for which the Mayor and City Council have oversight responsibility, and include the Oakland

Municipal Employees' Retirement System (OMERS), the Oakland Pol ice and Fire

Retirement System (PFRS), the Redevelopment Agency of the City of Oakland (the Agency),

the Port of Oakland (the Port), the Oakland Convention Management, Inc., and the Civic

Improvement Corporation (the Corporation). The entities included in the General Purpose

Financial Statements utilize principles of governmental accounting similar to the City.

The City'S General Purpose Financial Statements do not reflect the operations of the Oakland

Housing Authority (Housing Authority), the Oakland Unified School District, the PeraltaCommunity College District and the Oakland-Alameda County Coliseum (a public benefit

corporation jointly owned by the City and the County of Alameda). While the Housing

Authority Board of Commissioners is approved by the City Council, the Housing Authority is

not included as a component unit because it is not WIthin the oversight responsibility of the

City and is not subject to the financial controls of the City Manager or the budgetary controls

of the Mayor and the City Council . The School and Community College Districts are not

included because they have their own elected governing boards and are independent of the

8-15



'" CITY OF OAKLAND

City as to fiscal accountability an d financial affairs. Th e Coliseum has a self-appointed Board

of Directors and is not subject to the financial controls of the City Manager or the budgetary

controls of the Mayor and the City Council. Therefore, it is excluded due to minimal financial

interdependency and the City's lack of oversight responsibility.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentaiion - Fund Accounting

Th e accounts of the City are organized on the basis of funds or account groups, each of which

is considered a separate accounting entity. The operations of each fund are accounted for with

a separate se t of self-balancing accounts that comprise its assets, liabilities, fund equity,

revenues, and expenditures or expenses, as appropriate. The various funds an d account

groups are summarized by type in the General Purpose Financial Statements. Fund types and

account groups used by the City are described below.


Th e General Fund is the primary operating fund of the City. It accounts for normal

recurring activities traditionally associated with governments which are not required

to be accounted for in another fund These activities are funded principally by

property taxes, sales and use taxes, business an d utility taxes, interest and rental

income, and Federal and State grants.

Special Revenue Funds account for certain revenue sources that are legally restricted

to be spent for specified purposes. Other restricted resources are accounted for intrust, debt service, and capital projects funds.

Debt Service Funds account for the accumulation of resources to be used for the

payment of general long-term debt principal and mterest as well as related costs.

Capital Projects Funds account for financial resources to be used for the acquisition,

construction or improvement of major capital facilities (other than those financed

through the proprietary fund types).

Proprietary Fund Types

En te rp r ise F u nd s account for operations that are financed and operated in a manner

similar to private business enterprises, where the intent of the City Council is that the

costs (expenses, including depreciation) of providing goods or services to the general

public on a continuing basis be financed or recovered primarily through user charges.

B-16




Internal Service Funds account for the financing of goods and services provided by

the Office of General Services to other City departments on a cost-reimbursement

basis.

Fiduciary Fund Types

Trust and Agency Funds account for assets held by the City in a trustee capacity or

as an agent for individuals, private organizations, other governmental units and/or

other funds. These include the pension trust, expendable trust, and agency funds.

Operations of the pension trust funds are accounted for and reponed in the same

manner as the proprietary fund types. Operations of expendable trust funds are

accounted for in essentially the same manner as governmental fund types. Agency

funds are custodial in nature and do not involve measurement of resultsof operations.

Account Groups

The General Fixed Assets Account Group accounts for recorded fixed assets of the

City, other than those accounted for in the proprietary fund types.

The General Long-Term Obligations Account Group accounts for all long-term

obligations, including claim liabilities and vested compensation and sick leave of the

City, except for those obligations accounted for in the proprietary fund types.

Basis of Accounting

Measurement Focus

The accounting and reporting treatment applied to a fund is determined by Its measurement

focus. All governmental fund types and expendable trust funds are accounted for using a

current financial resources measurement focus. Only current assets and current liabilities are

generally included on their balance sheets. Operating statements for these funds present

increases (revenues and other financing sources) and decreases (expenditures and other

financing uses) in net current assets.

All proprietary fund types and pension trust funds are accounted for on a flow of economic

resources measurement focus. With this measurement focus, all assets and liabilitiesassociated with the operations of these funds are included on the balance sheet. Proprietary

fund type operating statements present increases (revenues) and decreases (expenses) in nettotal assets. Reponed fund equity (net total assets) is segregated into contributed capital and

retained earnings components.

Modified Accrual BasisofAccounting

The modified accrual basis of accounting is followed in the governmental fund types and

expendable trust and agency funds. Under the modified accrual basis of accounting, revenues

8-17



• CITY OFOAKLAND

are recorded when susceptible to accrual, that is, when both measurable and available.

"Measurable" means the amount of the transaction can be determined and "available" means

collectible within the current period or soon enough thereafter to be used to pay liabilities of

the current period. Expenditures, other than principal and interest on general long-term

obligations, are recorded when the fund liability is expected to be liquidated with expendableavailable resources. The exception to the general modified accrual expenditure recognition

criteria is that principal and interest on general long-term obligations are recorded when due

or when amounts have been accumulated in the debt service fund for payments to be made

early in the following year.

Intergovernmental revenues which are primarily grants and subventions received as

reimbursement for specific purposes or projects are recognized based upon the expenditures

recorded. Intergovernmental revenues which are virtually unrestricted as to purpose of

expenditure and revocable only for failure to meet prescribed compliance requirements are

reflected as revenues at the time of receipt or earlier i f they meet the availability criterion.

Property taxes receivable within the governmental fund types which have been collected

within sixty days following year-end are considered measurable and available and are

recognized as revenues 10 the funds. All other property taxes receivable (net of a reserve for

delinquencies of approximately 8%) for the governmental fund types are offset by deferred

revenues and, accordingly, have not been recorded as revenue.

The County of Alameda is responsible for assessing, collecting and distributing property

taxes in accordance with enabling state law, and for remitting such amounts to the City.

Property taxes are assessed and levied as of March 1 on all taxable property located in the

City, and result in a lien on real property. Property taxes are then due in two equal

installments, the first on November 1 and the second on March 1 of the following calendaryear, and are delinquent after December 10 and April 10, respectively. Since the passage of

California's Proposioon 13, beginning with fiscal year 1978-79, general property taxes are

limited to a flat I% rate applied to the 1975-76 full value of the property, or 1% of the sales

price of the property or of the construction value added after the 1975-76 valuation. Assessed

values on properties (exclusive of increases related to sales and construction) can rise at a

maximum of 2% per year depending on increases in the consumer price index. Taxes were

levied at the maximum 1% rate during the year ended June 30, 1991.

Special assessments are recorded as revenues to the extent installments are considered

current. The estimated installments receivable not considered current are recorded and offset

by deferred revenue.

Other major revenues are susceptible to accrual when they are collected within 60 days of

fiscal year end. These include interest, utility consumption taxes, business license taxes,

franchise fees, transient occupancy taxes, and certain rentals. Real estate transfer taxes on

assessed properties transferred prior to the fiscal year-end and held by Alameda County, and

sales taxes and motor vehicle in lieu taxes held by the State at year-end on behalfof the City

are also recognized as revenue.

8-18




Major revenues that are determined not to be susceptible to accrual because they are either

not available soon enough to pay liabilities of the current period or are not objectively

measurable include delinquent property taxes, licenses (other than business licenses), permits,

fines and forfeitures.

AccrualBasis ofAccounting

The accrual basis of accounting is utilized in all proprietary fund types and pension trust

funds. Under the accrual basis of accounting, revenues are recognized when earned andexpenses are recognized when incurred

DeferredRevenues

Deferred revenues are those revenues for which asset recognition criteria have been met, but

for which revenue recognition criteria havenot been met. The City typically records deferredrevenues related to: uncollected property taxes; estimated special assessments not yet

payable; intergovernmental revenues (primarily grants and subventions) received but notearned (qualifying expenditures not yet incurred); long-term contracts; and notes or loans

receivable arising from loan subsidy programswhich are charged tooperations upon funding.

Budgetary Data

OriginalBudget

In accordance with the provisions of the City Charter, the City prepares and adopts a budget

on or before June 30 for each fiscal year. The City Charter prohibits expending funds forwhich there is no legal appropriation. Therefore, the City is required to adopt budgets for all

City funds.

Prior to July I, the original adopted budget is finalized through the passage of a resolution by

the City Council. The level of legal budgetary control by the City Council is established at

the fund level. For management purposes, the resolution passed by the City Council adopts

the budget at the departmental level of expenditure within funds.

Revised Budget

The revised budgetary data presented in the accompanying "General Fund and AnnuallyBudgeted Special Revenue Funds and Debt Service Funds-Combined Statement of

Revenues, Expenditures and Encumbrances-Budget and Actual on a Budgetary Basis,"reflect the following changes to the onginal budget:

Certainprojects or programs are appropriated on a multi-yearrather than annual basis.

I f such projects or programs are not completed at the end of the fiscal year,

unexpendedappropriations are carried forward to the following year with the approval

8-19



'" CITY OF OAKLAND

of the CityManager. Annually appropriated funds, (not related to multi-year projects

or programs) lapse at the end of the fiscal year, unless such funds were encumbered or

otherwise approved for carryforward by the City Manager. Appropriations carriedforward from the prior year are included in the revised budgetary data. Historically,

appropriations carried forward haveultimately resulted in expenditures.

Transfers of appropriations between funds must be approved by the City Council.Required supplemental appropriations financed by unanticipated revenues or

beginning available fund balances must also be approved by the City Council.Approximately $3,385,000 was added to the General Fund budget for suchappropriations during the fiscal year. Additional budget appropriations in the GeneralFund were $1,500,000 in construction loans to California Hotel, $594,000 for fundingto various overspent grant programs, $500,000 for Lighting and LandscapeAssessment District exemptions, and$791,000 for other minor projects and activities.

Transfers of appropriations between departments and projects within the same fundmust be approved by the City Manager. Revised budget amounts reported in theaccompanymg General Purpose Financial Statements reflect both the appropriationchanges approved by the City Council and the transfers approved by the CityManager.

Encumbrances

Encumbrance accounting, under which purchase orders, contracts, and other commitments forexpenditure of funds are recorded to reserve that portion of the applicable appropriation, isemployed as an extension of formal budgetary control in the governmental fund types.

Encumbrances outstanding at year-end are reported as reservations of fund balances.Encumbrances do not constitute expenditures or liabilities because the commitments will behonored during the subsequent year. Encumbrances are combined with expenditures for

budgetary comparison purposes.

Budget-Basis ofAccounting

The City adopts budgets each fiscal year on a basis of accounting which is different fromgenerally accepted accounting principles (GAAP). The major areas of difference are as

follows:

For budgetary purposes, outstanding commitments related to construction contractsand other purchases of goods and services are recorded as expenditures at the timecontracts or purchase agreements are entered into. Under the GAAP basis, theseobligations are only recognized when goods are actually received or services are

actually rendered.

8-20




Certain reimbursements from the Port and other governmental agencies are budgeted

on a cash basis, whereas such items have been accrued as receivables or advances to

other funds for GAAP purposes.

Certain funds of the City contain capital projects, grant projects, loan programs or

other programs that are budgeted on a multi-year basis. The amounts of the projectsand programs budgeted on a multi-year basis are significant compared to the items

budgeted on an annual basis, therefore a comparison of budget to actual for the fund

would not be meaningful. As a result, the following funds are excluded from

budgetary reporting:

Special Revenue Funds

Federal and State Grants

Other Special Revenue

Oakland Redevelopment Agency

Debt Service Funds


Parks and Recreation

Capital Projects Funds

Convention Center Financing


The City-Agency Sale-Leaseback Financings and Civic Improvement Corporation

Debt Service Funds are not budgeted by the City because the funds are reported for

financial statement purposes only, and are the result of the collapse of certain sale andleaseback financings between the City and the Agency and between the City and the

Civic Improvement Corporation. Any financial activity related to these financings is

budgeted on a basis consistent with the form of the transactions, whereas for reporting

purposes the financial activity is recorded in a manner consistent with the substance

of the transaction.

The Parks and Recreation Debt Service Fund was not budgeted because the fund was

created subsequent to the adoption of the 1990-91 Budget and activity in that fund has

been restricted by bond indenture.

Certain transactions, such as lease payments, debt service transfers, and certain otheractivity between funds, are recorded as revenues and expenditures under the

budgetary basis. Under the GAAP basis, these items are reclassified and recognized asother financing sources, other financing uses, residual equity transfers, and reductions

of long-term advances.

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 forassets of deferred compensation plans which are reported at market value and primarily

consist of investments with maturities greater than one year.

Income earned or losses arising from the investment of pooled cash are allocated on a

monthly basis to the participating funds and component units based on their proportionate

share of the average daily cash balance.

For purposes of the statement of cash flows, the City considers all highly liquid investments

(excluding restricted assets) with a maturity of three months or less when purchased to becash equivalents.

Interfund Receivables/Payables

During the course of operations, numerous transactions occur between individual funds for

goods provided or services rendered. These receivables and payables are classified as "due

from other funds" or "due toother funds."

Advances

Long-term interfund loan receivables are reported as advances and are offset equally by a

fund balance reservation which indicates that they do not constitute expendable available

resources and, therefore, are not available for appropriation.

Restricted Cash and Investments with Fiscal Agent

Proceeds from debt and other cash and investments held by fiscal agents by agreement are

classified as restricted assets.

Bond Discounts and Issuance Costs

Bond discounts and issuance costs for proprietary fund type debt are generally deferred and

amortized over the term of the bonds under the interest method. Bond discounts and issuance

costs for governmental fund type debt are expended when incurred.

Inventories

Inventories, consistingof materials and supplies held for consumption, are stated at cost Cost

is generally calculated using the first-in, first-out method. Inventory items are considered

expenditures when used.

8-22




General Fixed Assets

General fixed assets are those acquired for general governmental purposes. Such assets

currently purchased or constructed are recorded as expenditures in the governmental funds

and are capitalized at cost in theGeneral Fixed Assets Account Group, with the exception of

certain assets acquired prior to July 1, 1984, which have been recorded at estimated historicalcost. Donated fixed assets are recorded at estimated fair market value at the time of receipt.

Public domain infrastructure (general fixed assets consisting of certain improvements other

than buildings) is not capitalized and is not included in the General Fixed Assets AccountGroup. These assets include roads, bridges, curbs and gutters, streets and sidewalks, drainage

systems, lighting systems, and similar assets. Such assets normally are immovable and of

value only to the City; therefore, stewardship for capital expenditures is satisfied without

recording such assets.

No depreciation is provided on general fixed assets.

Fixed Assets - Proprietary Fund Types

Fixed assets in the proprietary fund types are generally stated at cost, with the exception of

certain assets acquired prior to July I, 1984, which have been recorded at estimated historical

cost. Depreciation is provided using the straight-line method based on the estimated useful

life of the asset as follows:

Facilities and improvements

Container cranesFurniture, machinery andother equipment

5-50 years

25 years5-10 years

Interest costs applicable to qualifying assets are capitalized as part of the cost of the assets.

Interest earned on temporary investments of the proceeds from qualifying tax-exempt debt isoffset against the capitalized interest costs.

Tenant improvements which revert to the Port at the end of the lease term are recorded in an

appropriate asset account, with an offsett ing credit to deferred revenue. The asset is

depreciated over its useful life, not less than the term of the lease, and the deferred revenue is

amortized over the term of the lease, including renewal options.

Land Held for Resale

The Agency charges capital outlay expenditures for the full cost of developing and

administering its projects. Land held for resale is recorded as an asset at the lower of cost or

estimated net realizable value, with an equal amount recorded as a reservation of fund

balance.

B-23



$ CITY OFOAKLAND

Vacation and Sick Leave Pay

Vacation pay may be accumulated and is payable upon retirement or termination of an

employee. Sick leave vests to an employee upon being employed for at least ten years with

the City. Upon termination, a vested employee is entitled to one-third of the sick leave

accumulated to the date of termination.

Vested vacation, sick leave and compensatory time are accrued, as appropriate, for all funds.

With respect to obligations of the governmental fund types, amounts expected to be paid

monetarily or by way of compensatory time off are accrued in the appropriate fund if due

currently. The remainder is recorded in the General Long-Term Obligations Account Group.

Retirement Plans

The City has three defined benefit retirement plans: Oakland Police and Fire Retirement

System (PFRS), Oakland Municipal Employees' Retirement System (OMERS), and Public

Employees' Retirement System (PERS). Refer to Note 18 for additional information.

Claims and Judgments

The costs of claims and judgments estimated to be paid with current expendable resources are

accrued as current liabilities of the General Fund when the liabili ty is incurred and the

amount can be reasonably estimated. The remaining estimated costs are recorded in the

General Long-Term Obligations Account Group.

Interfund Transfers

Interfund transfers are generally recorded as operating transfers except for the following

types of transactions:

Charges for services are recorded as revenues of the performing fund and

expenditures of the requesting fund.

Reimbursements for services performed are recorded as a reduction of an expenditure

in the performing fund and as an expenditure of the requesting fund..

Residual equity transfers, which represent nonrecurring or non-routine transfers of

equity between funds, are reponed as decreases or increases in fund balance for

governmental fund types.

8-24



NOTESTO FINANCIAL STATEMENTS

Contributed Capital

Contributed capital in the proprietary fund types represents the accumulation of contributionsin the form of cash or other assets which generally do not have to be returned to thecontributor. Such contributions are recorded directly to contributed capital and, accordingly,

are not recognized as revenue. The following transactions are recorded as contributions in theproprietary fund types:

Cash and other asset transfers of equity from other funds.

Receipts of federal and state grants and subventions externally restricted foracquisitionof fixed assets.

Fixed assets contributed from other funds or the General Fixed Assets Account

Group.

Fund Equity

Reservations of fund balances indicate those portions of fund equity which are not availablefor appropriation or expenditure or which have been legally restricted to a specific use.

Portions of unreserved fund balances have been designated to indicate that portion of fundequity for which the City has tentative plans for financial resource utilization in a futureperiod. These amountsmay not result In actualexpenditures.

Reclassifications

Certain 1990 amounts have been reclassified to conform to the financial statementpresentation for 1991.

Total Columns onCombined Financial Statements

Total columns on the accompanying General Purpose Financial Statements are captioned

"Memorandum Only" to indicate that they are presented only to facilitate financial analysis.Data in these columns do not purport to present financial position, results of operations, orcash flows of the City in conformity with GAAP. Such data is not comparable to a

consolidation.

8-25



'" CITY OF OAKLAND

(3) CASH AND INVESTMENTS AND RESTRICTED CASH ANDINVESTMENTS WITH FISCAL AGENTS

The City maintains a cash and investment pool consisting of City funds and cash receivedand held for OMERS, PFRS and the Port. The City's funds are invested by the Director of

Finance according to the investment policy adopted by the City Council. The objectives ofthe policy are legality, safety, liquidity, diversity, and yield. The policy addresses soundnessof financial institutions in which the City can deposit funds, types of investment instrumentspermitted by the California Government Code, duration of the investments, and thepercentage of the portfolio which may be invested in certain instruments. Pooled investmentspermitted by the policy are United States Treasury bills and notes, federal agency issues,bankers' acceptances, commercial paper with ratings of Alar PI by either Standard andPoor's Corporation or Moody's Investor Service Inc., negotiable certificates of deposit, timecertificates of deposit, repurchase agreements, and reverse repurchase agreements. The City'Sinvestment policy stipulates that the collateral to back up the repurchase agreement bepricedat market value and be held in safekeeping by the City's principal banking institution.

Additionally, the City Council has adopted certain requirements prohibiting investments incompanies doing business in or with South Africa, and restricting investments in U.S.Treasury bills and notes due to their use in funding nuclear weapons research and production.As of June 30, 1991, the City was in compliancewith the above investing requirements.

Other deposits and investments are invested pursuant to the governing bond covenants orRetirement Systems' investment policies. Under the investment policies, the investmentcounsel is given the full authority to accomplish the objectives of the bond covenants orRetirement Systems subject to the discretionary limits set forth in the policies.

Total City deposits and investments are (in thousands):

DepositsInvestments

TOTAL

$ 2,8261.101.948

$1,104,774

These are classified on the Combined BalanceSheet as (in thousands):

Cash and investmentsRestricted cash and investments with fiscal agents

TOTAL

Deposits

$ 492,852611.922

$1,104,774

At June 30,1991, the carrying amount of the City's deposits was $2,826,000 and the bankbalance was $12,805,000. Deposits include substantially all checking accounts, interestearning savings accounts, money market funds, and non-negotiable certificates of deposit Of

the bank balance, $1,734,000 was covered by federal depository insurance or by collateral

8-26




held by the City's agent in the City's name and $11,071,000 was collateralized with securitiesheld by the pledging financial institution's trust department or agent in the City's name, in

accordance with Section 53652 of the CaliforniaGovernment Code.

The California Government Code requires governmental securities as collateral for demand

deposits and certificates of deposit at 110 percent of all deposits not covered by federaldeposit insurance. The collateral must be held at the pledging bank's trust department oranother bank, acting as the pledging bank's agent, in the City's name.

Investments

The City's investments are categorized to give an indication of the level of risk assumed bythe City at year-end. Category 1 includes investments that are insured or registered, orsecurities held by the City or its agent in the City's name. Category 2 includes uninsured and

unregistered investments, with the securities held by the counterparty's trust department oragent in the City'S name. Category 3 includes uninsured and unregistered investments, with

the securities held by the counterparty, or by its trust department or agent but not in the City'Sname.

At June 3D, 1991, investments included the following (in thousands):

Category Carrying MarketTypeof Investments 1 2 3 Amount Value

U.S.Treasury securities s 53,n3 $152,280 $- s 206,053 $ 220,915

Federal agencyissues 182,500 182,500 185,488

Repurchase agreements 14,750 14,750 14,750

CommeICial paper 63,524 63,524 63,726

Bankers'acceptances 78,801 78,801 78,554Corporatestocks and bonds 49,496 122,567 172,063 193,314

Real estatedeeds 14,493 14,493 15,316

Investment agreements 13059 13,059 13.059

$103,269 $641.974 $-

Mutual funds 159,684 159,685

Life insurance annuityconrracts 187,021 187,021

Local Agency InvestmentFund 10 000 10000

TOTAL INVESTMENTS $1,101,948 $1,141,828

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 FundsFederal and State Grants 791Traffic Safety and Control 104State Gas Tax 99Other Special Revenue 349 2,231Oakland Redevelopment Agency 120 730

1.260 3,164Debt Service Funds

MedicalHill

Parking District 72Civic Improvement Corporation 30 1,041Pension Annuity 1

102 1.042Capital Projects Funds

Municipal Improvement Capital 1,984 18,583Oakland Redevelopment Agency 786 1.832

2,770 20,415Enterprise Funds

Parks and Recreation 94Sewer Service 150

Portof

Oakland 5,200Oakland ConventionManagement, Inc, 140 351140 5,795

Internal Service Funds

Equipment 822Radio 13Facilities 71Reproduction 11Central Stores 114

1.018 13Fiduciary Fund Types

Pension Trust - PFRS 1,966Expendable Trust:Oakland Redevelopment Agency Projects 1,205 1,047Parks, Recreation and Cultural Trust 60Other Expendable Trust 2

3,171 1.109

TOTAL $37,605 $37,605

B-28




(5) ADVANCES

The balances ofinterfund advances at June 30,1991, are as follows (in thousands):

Advances Advances

to from

General Fund $27,207 $

Special RevenueFundOakland Redevelopment Agency 730

Capital Projects FundOakland Redevelopment Agency 458

Enterprise FundPort ofOakland 26,549

Internal Service Fund

Central Stores 200

Expendable TrustFundOaklandRedevelopment Agency 730

TOTAL $27,937 $27.937

(6) MEMORANDUMS OF UNDERSTANDING

The City and the Port have Memorandums of Understanding (MOUs) relating to variousadministrative, personnel, data processing, and financial services ("Special Services"), and

police, fire, public street cleaning andmaintenance, and similar services ("General Services'')provided by the City to the Port.

Commencing in fiscal year 1986-87, the Port agreed to reimburse the City for amountsrepresenting an interest factor claimed by the City to be due as a result of debt servicepayments made by the City on 1909, 1925 and 1955 series general obligation bonds whichbenefited the Port. Payments of $4,946,000 were made by the Port to the City in fiscal year1990-91.

Pursuant to the Sixth Supplemental Agreement to the MOUs, effective June 4, 1991, the Cityand the Port agreed that the total remainmg obligation of the Port to the City arising out of or

related to any and all general obligation bonds issued by the City for the benefit of the Portwas $31,749,000. This amount is a fixed sum on which no interest shall accrue. Payments of$5,200,000 are to be paid in fiscal year 1991-92 from fiscal year 1990-91 surplus declared bythe Board of the Port Commissioners. As of June 30, 1991, $26,549,000 has been recorded asadvances to other funds in the City's General Fund and advances from other funds in the Portof Oakland Enterprise Fund; the remaining balance of $5,200,000, representing the currentportion of the advance, has been recorded as due to/from other funds. Future annual

8-29



.. CITY OF OAKLAND

payments are required, but are payable only to the extent the Port determines that surplusmonies are available in the Port's Revenue Fund.

Payments for Special Services are treated as a cost of Port operations and have priority overcertain other expenditures ofPort revenues. Payments for Special Services to the City totaled

$956,000 in fiscal year 1990-91.

The City has requested payments for General Services of $1,194,000 from the Port for fiscalyear 1990-91. The Port's legal counsel advised the Port that payments for General Services tothe City are payable only to the extent the Port determines annually that surplus monies are

available. While payments for General Services were made in the amount of $989,000 infiscal year 1989-90, the Port did not declare that surplus monies were available and thereforeno payments have been made for General Services for fiscal year 1990-91. The Citymaintains that a surplus does exist and the payment is due to the City. City and Port officials

and legal counsel are currently meeting to resolve this issue. The revenue has not beenreflected in the General Purpose Financial Statements.

(7) NOTES AND LOANS RECEIVABLE

Notes and loans receivable at June 30, 1991, consist of the following (in thousands):

B-30

Oakland Athletics, bearing interest at 7.5%, principal and interest

paid September 30,1991

Grant-in-aid loans at various interest rates and due dates

Acorn Project Mortgage Loan, bearing interest of 10.125%,monthly installments of $83,256, balance due October 1, 2010

Cahon, Inc., bearing interest at 9%, principal and interest dueDecember 1, 1991, or earlier under certain provisions of the

note

Oakland Hotel Associates, Ltd., bearing interest at 7.67%,principal and interest due July 1,2013, or earlier under certain

provisions of the note

Oakland Hotel Associates, Ltd., bearing interest at Bank ofAmerica reference rate, principal and interest payable in

monthly payments until August 28, 1994

Preservation Venture, bearing interest at 3%, principal and interestdue August 31, 1993

$15,000

30,780

8,463

1,100

6,019

2,879

3,854



NOTES TO FI NANCIAL STATEMENTS

Preservation Venture, bearing interest at 3%, principal and interestdue August 31, 1998

Foothill Plaza Partnership, bearing interest at 3%, principal and

interest payable in equal monthly installments through July 20,

2018.

City Center Garage West Associates, bearing variable rate interest,principal and interest due May 8, 2016, or earlier under certain

provisions of the note

Preservation Venture, bearing interest at 1/2% over the Bank ofAmerica reference rate, principal and interest due August 31,

1993

Mar Associates, bearing interest at 9%, principal and interest due

January 10, 1991 (due date in process of being extended)

Touraine Partners, bearing interest at 6%, principal and interest due

September 22,1991

Pacific Renaissance Associates II, bearing interest at 10%,principal and interest due July 30, 2015

Other notes and loans receivable

Allowance for uncollectibles

TOTAL

1,582

1,433

1,167

4,578

5,071

1,334

7,000

4,195

(2,906)

$91,549

8-31



• CITY OFOAKLAND

(8) PORT OF OAKLAND

Oakland Portside Associates

In prior years, the Port authorized a public/private expansion project on property owned by

the Port in the Jack London Waterfront area. Construction of various office and retailfacilities and public areas was completed in fiscal year 1989-90. A major portion of thisproject was developed by Oakland Portside Associates (OPA), in which the Port had a 75%general and limited partnership interest. The remaining 25% general and limited partnershipInterest was owned by Portside Properties. The Waterfront Association. effectively owned50% by the Port and 50% by OPA, maintains the common area of the Jack LondonWaterfront properties.

On August 17, 1990, the Port purchased the 24% general partnership interest in OPA fromPortside Properties for $2,550,000. Additionally, the 1% limited partnership interest in OPAwas transferred from Portside Properties to Portof Oakland Public Benefit Corporation (Port

PBC), a nonprofit benefit corporation. These transactions increased the Port's effectiveownership in OPA to 100%.

Accordingly, effective fiscal year 1990-91, the Port changed its consolidation policy toinclude OPA, Port-PBC and the Waterfront Association on a 100% consolidated basis. Priorto such acquisition, the Port's 75% investment in OPA was accounted for on the equitymethod. The change in consolidation policy had no effect on net income (loss) for the yearsended June 30, 1991, or 1990.

Writedown of OPA Assets

Based on current and projected operating revenues and expenses, the Port determined that itwould not recover its full investment in the Jack London Waterfront properties. In fiscal year1990-91, the Port recognized a writedown on the OPA real estate project of $6,844,000,reducing its carrying value to $28,000,000. Additionally, $1,256,000 in previously capitalizedcosts related to lease options and buyouts were expensed in fiscal year 1990-91.

Construction Loan

In connection with the development of the Jack London Waterfront properties, OPA secureda $40,000,000 construction loan with Bankers Trust Company in 1988 to cover the estimatedconstruction costs, less capital contributions, of the project's five buildings. Pnncipal and

interest are due and payable on June 30, 1993, although the maturity date can be extended fora period of two years if certain conditions specified in the loan agreement are met. The loanbears interest at Bankers Trust Eurodollars plus 1.75% or prime plus .5%.The interest rate onthe loan was 8.5% at June 30, 1991. The loan is secured by a first deed of trust andassignment of rent and fixtures on OPA's property and by a $5,000,000 guarantee from the

Port.

8-32




Provisions of the loan allow OPA to fund interest payments through additional principaldraws on the loan. The loan agreement contains certain restrictive provisions as to OPA andrequires thatOPA maintain certain financial ratios. Due to the change in partnership structurein August 1990, Bankers Trust notified OPA that it was in default of the loan agreement andwould not allow OPA any pnncipal draws on the loan.

On December 20, 1990, OPA signed a letter of understanding with Bankers Trust Company

regarding the proposed modification of the construction loan and have negotiated additional

loan modification terms. The Port anticipates signing modified loan documents by December

31, 1991.

In the opinion of management of the Port, this matter will be resolved in a manner which

does not have a material adverse effect on the financial position of the Port. In the event thatthe default is not cured, Bankers Trust has the option to seek remedies against OPA. This islimited to acceleration of principal repayments, foreclosure and payment from the Port.

Write-off of Sierra Tunnels

The Port entered into agreements with Union Pacific Railroad and American President Lines("APL") in the mid-1980s to modify railway passages through the Sierra Nevada mountains

to accommodate double-stacked high cube containers. The Port's $5,000,000 share of the

project was capitalized and included in Deferred Charges and Other Assets. Such

capitalization was based upon the expected recovery of the $5,000,000 by the Port from a

surcharge on certain container/rail shipments (other than from APL) originating at the Port

and using the Sierra Tunnels.

During fiscal year 1990-91, the Port determined that it was unlikely that it would recover any

of its costs by such surcharges. No incremental revenue had been received and none wasforecast for the foreseeable future. As a result, the Port wrote off its remaining $3,583,000 of

Sierra Tunnels' costs.

(9) FIXED ASSETS

A summary of changes in general fixed assets for the year ended June 30, 1991, is as follows

(in thousands):

Balance BalanceJuly 1, June 30,

Changes in General FixedAssets 1990 Additions Deletions 1991

Land $ 46,729 $ 3,842 $- $ 50,571Facilities and improvements 370,396 4,100 374,496Furniture, machinery and

equipment 17,185 4,340 45 21,480Construction in progress 4,450 9.913 14.363

TOTAL $438,760 s22,195 $45 $460,910

B-33



• CITY OF OAKLAND

310

728,968

s

29,285

(16,267)

$13,018

(162,227)

$595,075

EnterpriseFunds

s 64,070627,55621,27444,402

757,302

Proprietary Fund Types

LandFacilities and improvementsFurniture, machinery and equipmentConstruction in progress

Less accumulated depreciationand amortization

TOTAL

A summary of property and equipment at June 30, 1991, is as follows (in thousands):

InternalServicefunds

Facilities and improvements in the Enterprise Funds consist primar ily of the Port of

Oakland's buildings and structures.

(10) TAX AND REVENUE ANTICIPATION NOTES PAYABLE

During the fiscal year ended June 30, 1991, the City issued tax and revenue anticipation notespayable of $27,500,000. The notes were issued to satisfy current General Fund obligations

and are to be repaid from current tax revenues. The notes bear an effective interest rate of

approximately 5.35%. Principal and interest payable were due and paid November 14, 1991.Funds have been segregated in a restricted account for the repayment of the notes.

(11) TAX-EXEMPT COMMERCIAL PAPER

During September 1989, pursuant to a Trust Indenture dated April 1, 1989, and the Third

supplemental Trust Indenture dated September 1,1989, the Port authorized the issuance of upto $75,000,000 of Commercial Paper Notes, Series A and B ("Notes"), of which $29,300,000

of Series A was outstanding as of June 30, 1991.

Proceeds of the Notes are used to provide monies for certain costs of acquisition,construction, reconstruction, improvement or expansion of Port facilities, and to pay issuance

costs and principal of maturing Notes. The Notes, the 1989 Revenue Bonds and the 1990

Revenue Bonds were all issued pursuant to the 1989 Indenture.

8-34




(12) LEASES

A major portion of the Port's property and equipment is held for lease. Leased assets includemarine terminal facilities, airport facilities, a golf course, office and commercial space, andland. All leases have been classified as operating leases.

Certain maritime facilit ies are leased under agreements which provide the tenants withpreferential, but nonexclusive, use of the facilities. Certain leases provide for rentals based on

gross revenues of the leased premises or, in the case of marine terminal facilities, on annualusage of the facilities. Such leases generally provide for minimum rentals, and certain

preferential assignments provide for both minimum and maximum rentals. A summary of

revenues from long-term leases for the fiscal year ended June 30, 1991, is as follows (inthousands):

Minimum noncancelable rentals,

including preferential assignmentsContingent rentals in excess of minimums

Secondary use of facilities leasedunder preferential assignments

Total revenues from long-term leases

$ 32,1507,138

4.683

$ 43,971

As of June 30, 1991, minimum future rental revenues for fiscal years ending June 30 undernoncancelable operating leases having an initial term in excess of one year are as follows (in

thousands):

199219931994

1995

1996Thereafter

Total minimum future rental revenues

$ 29,47526,515

25,89724,894

21,569177.Ql3

$305,363

8·35



• CITY OFOAKLAND

(13) LONG-TERMOBLIGATIONS

General Long-Term Obligations

The following is a summary of changes in general long-term obligations for the year ended

June 30, 1991 (in thousands):

Balance at Additional Maturities,July 1, O b l i ~ t i o n s Retirements Balance1990 an Net and Net at June 30,

Increases Decreases 1991

Bonds payable $393,059 $12,000 $ 3,515 $401,544Certificates of participation 169,110 169,110Special assessment debt with

governmental commitment 4,365 180 4,185Accrued vacation and sick leave 13,370 499 13,869

Self-insurance liability forworkers' compensation 12,734 3,173 15,907

Estimated claims payable 14,243 6.390 7,853

TOTAL $606,881 $15,672 $10,085 $612,468

B-36




General long-term obligations at June 30, 1991 consisted of the following (in thousands):

Interest Balance atMaturity Rates June 30, 1991

BondsPayableGeneralObligatlOl1 Bonds,Series1991A(a) 1993-2015 5.5%-8.5% s 12,000SpecialRevenueRefundingBonds(b) 1993-2021 6.5%-7.6% 209,835OaklandRedevelopmentAgency

Tax AllocationBonds (c)CentralDistrict,Senes 1989A

Serial bonds 1993·2000 5.75%-6.55% 26,900Capital apprecianonbonds 2001-2009 6.6%-6.65% 11,899Tenn bonds 2010-2019 7.125% 51,600

TaxAllocationRefundingBonds(d)Central District,Series 1986

Serial bonds 1991-2000 5.25%-7.5% 19,560Tenn bonds 2001-2014 7.5% 66,375

AcornRedevelopmentProject,1988Serial bonds 1993-2000 6.30%-7.00% 1,300Tenn bonds 2007 7.40% 2.075

401544

Certificates of Participation

Civic ImprovementCorporation (e) 1992-2016 Yanable 52,300OaklandRedevelopmentAgency

HJ. KaiserConventionCenter(f) 2002 9.875% 8,550HJ. KaiserConvenuonCenter(f) 2014 10.00% 34,950ScotianMemorial Convention Center (g) 2014 10.25% 38,000OaklandMuseum 1987SeriesA (h) 1992-2002 6.20%-7.85% 9,850OaklandMuseum 1987SeriesA (h) 2007 8.10% 10,115

OaklandMuseum 1987SeriesA (h) 2012 8.125% 15345169 110

SpecialAssessment DebtwithGovemmentalCommitment

MedicalHill Parking DistrictBonds1989(i)

Other Long-Tenn Liabilities

Accruedvacation and sick leave 'Self-insurance liability forworkers' compensationEstimated claims payable

TOTALGENERALLONG-TERM OBLIGAnONS

2004 6.70%-7.50% 4185

13,86915,9077853

37 629$ 612,468

8-37



'" CITY OF OAKLAND

Bonds Payable

(a ) General Obligation Bonds, Series 1991A

On February 19, 1991, the City i ssued $12 mil lion of Series 1991A GeneralObligation Bonds. The City received authorization to issue $60 million of generalobligation bonds by a two-thirds vote of the electorate on the November 6, 1990,general election. The proceeds from the bonds are to be used for the purpose of

financing the acquisition of land and to expand and develop park and recreation

facilities. The Series 1991A issue represents the first of five issues. Additional seriesare to be issued in 1994, 1997, 2000 and 2003. The City is obligated to levy ad

valorem taxes upon all property subject to taxation by the City without limitation ofrate or amount, for the payment of the principal and interest on the bonds.

(b ) Special Revenue Refunding Bonds

The Revenue Refunding Bonds are payable solely from the proceeds of life insurance

annuity contracts held in trust with PFRS in the Pension Annuity Expendable TrustFund. The Revenue Refunding Bonds maturing in 2021 are subject to mandatoryredemption prior to their stated maturities in direct order of their maturities fromsinking fund payments commencing on August 1,2004.

(c) Tax Allocation Bonds

On August I, 1989, the Central District Redevelopment Project Tax AllocationBonds, Series 1989A (''Tax Allocation Bonds"), were issued by the Agency. The net

proceeds of the Tax Allocation Bonds are used by the Agency to finance projects andrelated improvements in the Central District Redevelopment Project Area. The Tax

Allocation Bonds are a limited obligation of the Agency and are payable from and

secured by a pledge of a portion of tax revenues assessed on property within the

Central District Redevelopment Project Area, allocable to the Agency pursuant to

Redevelopment Law.

The lien created by the pledge of the tax revenues is subordinate to a lien on tax

revenues in favor of the Agency's Central District Redevelopment Project Tax

Allocation Refunding Bonds, Series 1986. The Agency may only incur additionalindebtedness payable from subordinated tax revenues on a parity with the Tax

Allocation Bond when set subordinated tax revenues received by the Agency in theprior year equals or exceeds 120% ofmaximum annual debt service, excluding debt

service on Series 1986 bonds.

The term bonds are subject to optional redemption in whole or in part on any interestpayment date, in such amounts as directed by the Agency. The Term Bonds are, also,subject to mandatory sinking fund redemption in whole, or in part by lot, on

September 1 in each year commencing September I, 2010.

8-38




(d ) Tax Allocation Refunding Bonds

In fiscal year 1986-87, the Central District Redevelopment Project Tax Allocation

Refunding Bonds, Series 1986, were used to defease the Central DistrictRedevelopment Project Tax Allocation Bonds, Series A andB.The outstanding balance at June 3.0, 1991, of the defeased bonds was $63,915,000.The Central District Redevelopment Project Tax Allocation Refunding Bonds arepayable from and secured by a pledge of incremental property taxes resulting from theincrease in assessed valuations within the Central District Redevelopment Projectsubsequent to the adoption of the related redevelopment plan. The Agency must setaside from incremental tax revenue received from the Central District an amountequal to 125% of the annual debt service requirement for the ensuing fiscal year.These funds are held by the fiscal agent.

The term bonds are subject to mandatory redemption requirements beginningFebruary 1,2001.

The Acorn Redevelopment Project 1988 Tax Allocation Refunding Bonds were usedto advance refund $2,895,000 of outstanding Acorn Redevelopment Project TaxAllocation Refunding Bonds (prior bonds) with an average coupon rate of 11.84%.As a result, the prior bonds are considered to be defeased and the liability of the priorbonds has been removed from the General Long-Term Obligations Account Group.

The Acorn Redevelopment Project 1988 Tax Allocation Refunding Bonds are payable

from and secured by a pledge of incremental property taxes allocated to the Agencyresulting from the increase in assessed valuation of properties within the AcornRedevelopment Project.

Bonds maturing in 2007 are subject to mandatory sinking fund requirementscommencing May 1,2001, and are subject to prior redemption.

Certificates ofParticipation

The Certificates of Participation have been recorded in the City's General Long-TermObligations Account Group because in substance, the Certificates were issued on the faith

and security of the City, and ultimately the City's lease payments to the Corporation willrepay principal and interest on the Certificates.

(e) Civic Improvement Corporation

On December I, 1985, the City entered into various simultaneous agreements tofinance the acquisition and construction of capital improvements on City property,such as traffic control devices, street resurfacing, parking lots, garages and the

8-39



.-,. CITY OF OAKLAND

rehabilitation of various City buildings. The following is a summary of theagreements that have been entered into.

Certificates of Participation - The Civic Improvement Corporation (the

Corporation), a non-profit corporation, issued $52,300,000 variable ratedemand Certificates of Participation evidencing the proportionate interests of

the owners thereof 10 lease payments to be made by the City for certainproperty pursuant to a master lease agreement with the Corporation.

Master Lease Agreement - The City entered into a lease agreement with theCorporation whereby the Corporation agreed to provide financing for certainproposed capital improvements. Under the terms of the agreement, the Cityagreed to supervise and provide for the construction and improvement ofcertain City properties. The improvements are paid for by the Corporationfrom the proceeds of the Certificates that are held by the Trustee Once the

improvements are completed, the Corporation has agreed to lease the projectsto the City. The lease payments to be received by the Corporation will be

equal to the related principal and interest payments on the Certificates ofParticipation.

Letter of Credit - The Letter of Credit (Letter) is an irrevocable direct-payobligation of National Westminster Bank PLC (the Bank). This letter is due toexpire on September 24, 1995, but will automatically extend unless the Bankgives notice two years prior to the termination date that it will not extend theLetter. In aggregate, the City has available $53,400,499 as of June 30, 1991, ofwhich $52,300,000 may be drawn for the payment of the unpaid principal

amount of the Certificates. The balance of $1,100,499 may be drawn forpayment of interest accrued on the Certificates. In order to obtain the Letter,

the City is obligated to pay commission fees of three-eighths of one percent

per annum on the available amount outstanding on the Letter. For the yearended June 30, 1991, the City paid a total letter of credit fee of approximately

$204,000.

(0 Henry J. Kaiser Convention Center

In 1982 the Agency issued Certificatesof Participation in the amount of $43,500,000to finance the acquisition and renovation of the Henry J. Kaiser Convention Center.

The Certificates of Participation which are subject to prior redemption havemandatory sinking fund requirements commencing April 1, 1995.

Concurrently, the Agency sold the property to Oakter Associates Limited Partnership

(Oakter), an unrelated third party, for cash and a note receivable due in sixtysemi-annual principal and interest ins ta llments ranging from $2,170,000 to$2,535,000. The interest installments commenced April 1, 1985. Interest not covered

by the semi-annual payment has been deferred and added to the Agency's outstanding

8-40




note receivable balance. Principal reductions are scheduled to begin on April I, 1995.The note receivable has an effective interest rate of 9.97% per annum and is securedby a deed of trust and Oakter's rights in its lease agreement with the City.

Oakter subsequently leased the building and improvements to the City in a sale andleaseback transaction. The lease provides the City with the option to purchase thebuildings and improvements at the end of the lease term.

Due to the substance of the financing transaction, the effect of the sale and leaseback

transaction has been recorded directly as an issuance of debt to finance the

improvement of the related City structures. Accordingly, the Certificates of

Participation are recorded in the General Long-Term Obligations Account Group. The

note receivable referred to above and capital lease obligation owed to Oakter are notreflected in the City's General Purpose Financial Statements.

(g) George F. Scotian Memorial ConventionCenter

In 1983 the Agency issued Certificates of Participation in the amount of $38,000,000

to finance the acquisition of the George F. Scotlan Memorial Convention Center (theConvention Center). The Certificates of Participation have mandatory sinking fund

requirements commencing April I, 1995, and are subject to prior redemption.

The Agency s imultaneously sold the property to OCCEN Corporation Limited

Partnership (OCCEN), an unrelated third party for cash and a note receivable payable

in sixty-one semi-annual installments ranging from $1,948,000 to $2,253,000. The

interest installments commenced September 1, 1984. Principal reductions are

scheduled to begin on March 1, 1995. The note receivable has an effective interestrate of 10.25% per annum and is secured by a deed of trust and OCCEN's rights in its

lease agreement with the City.

Subsequently, OCCEN sold the buildings and improvements to Oakmar Leasing

Corporation (Oakmar) which leased the buildings and improvements back to the City

in a sale and leaseback transaction. The City has the option of purchasing the

buildings and improvements at the end of the lease term.

Due to the substance of the financing transaction, the effect of the sale and leasebacktransaction has been recorded directly as an issuance of debt to finance the

improvement of the related City structures. Accordingly, the Certificates ofParticipanon are recorded in the General Long-Term Obligations Account Group. Thenote receivable referred to above and the capital lease obligation owed to Oakmar are

not reflected in the City'S General Purpose Financial Statements.

8-41



.. CITY OFOAKLAND

(h) Oakland Museum 1987 Series A

In October 1987, the Agency purchased the Oakland Museum (the Museum) from

Oakart Associates Limited Partnership (Oakart), to whom the City had sold the

Museum in 1982. The Museum was purchased for $6,700,000 and assumption of a

purchase money note from Oakart payable to the City in the amount of $23,000,000.

The Agency also assumed all rights of Oakart in the master lease agreement between

Oakart and the City.

Concurrent with the purchase, the Agency issued Certificates of Participation in the

amount of $35,310,000. The proceeds of the Certificates of Participation were used to

buy back the Museum and to advance refund the 1982 Municipal Improvement

Revenue Bonds, Series A. The Certificates of Participation are special limited

obligations of the Agency payable solely from payments made to the Agency by theCity under the terms of the master lease agreement between the Agency and the City.

The term Certificates of Participation mature in 2007 and 2012. These Certificates,

which are subject to prior redemption, have mandatory sinking fund requirements

commencing April 1, 2003.

Due to the substance of the financing transaction, the effect of the issuance of the

Certificates of Participation has been recorded directly as an issuance of debt to

finance the reacquisition of the Museum, and to advance refund the 1982 MunicipalImprovement Revenue Bonds, Series A. Accordingly, the Certificates of Participation

are recorded in the General Long-Term Obligations Account Group. The Agency's

direct financing lease receivable and City's capital lease obligation are not reflected inthe City'S General Purpose Financial Statements. •

Special Assessment Debt with Governmental Commitment

(i) Medical Hill Parking District Bonds

In April 1989, the City issued $4.365,000 of Medical Hill District Refunding

Improvement Bonds 1989 (Refunding Bonds) with an average coupon rate of 7.15%.

The net proceeds of $4,136,000 plus an additional prior bond reserve were depositedwith an escrow agent to provide for all future debt service payments on the refunded

bonds. The Refunding Bonds are payable from additional property tax assessments

levied against property owners in the Medical Hill District. In the event of continuing

delinquencies in the payment of the property owners' installments, the City, in the

absence of any other bidder, is obligated to purchase the delinquent property owner's

property at a delinquent assessment sale and pay delinquent and future installments of

assessments and interest thereon until the land is resold or redeemed.

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 WestLease RevenueRefunding Bonds

InterestMaturity rates

1991-2010 5.20%-7.375%

Balance atJune 30,1991

$3,960,000

In 1980 the Agency purchased and leased back City Hall West to the City. In 1988 theAgency issued 1988 City Hall West Lease Revenue and Refunding Bonds. The bonds arepayable from and secured by a pledge of annual lease rentals to be received from the Cityunder the CityHallWest Lease Agreement.

Due to the substance of the financing transaction, the effect of the sale and leasebacktransaction has been recorded directly as an issuance of debt (and subsequent refunding) tofinance the improvements of the City Hall West. Accordingly, the City Hall West buildingand the debt outstanding are recorded in the City'S Facilities Internal Service Fund; theAgency's direct financing lease receivable and the City'S capital lease obligation are notreflected in the City'SGeneral Purpose Financial Statements.

8-43




Enterprise Funds Long-Term Debt

The enterprise fund debt at June 30, 1991,was as follows (in thousands):

Port ofOakland

Revenue Bonds:1957 Series (a)1966Airport Development1966HarborDevelopment1977 Small CraftHarbor1981 Small CraftHarbor1982 Small CraftHarbor1983 Small CraftHarbor1989 Revenue Bonds (b):

SenesASeries BSeriesC

1990 Revenue Bonds Series D (c)

Ceruficates of Indebtedness:1971, Seatrain facilIty (d)

Mitsubishi Note

Liability to U.S. Government

Consttucnon Loan, Oakland PortsideAssociates (See Note 8)

Oakland RedevelopmentAgency

AcornMortgage Program

Revenue Bonds:19801981

TOTAL EN1ERPRISE FUNDSLONG-TERM DEBT

Port ofOakland

Priority of Payment and Security

Maturity

1991-19992004-2006

2006

2009

201020192020

1992-20191992-20192003-20191992-2003

2001

2000

1992

1993

20112001

InterestRates

3.75%-7.00%4.125%-9.56%

3.75%4.50%6.00%6.00%6.10%

7.00%-7.70%6.75%-7.45%7.10%-7.25%6.125%-8.00%

6.00%-8.00%

9.00%

4.00%

8.50%

8.875%11.80%

Balance atJune 30,1991

s 49,9253,8132,5302,9981,6971,055367

72,74584,42023,31030360

273,220

10,890

2,013

58

32,537

6,2202675

$ 327,613

The 1957 Revenue Bonds (1957 Bonds) are secured by a pledge of gross revenues of all"Project Facilities" (consisting of certain revenue producing facilities in the Port areaincluding the entire Oakland Intemanonal Airport) and of the gross revenues of all "ExistingFacilities" (which include all facilities of the Port existing on January 21, 1957, and all laterextensions or improvements to these facilities). All income and revenues of Pan operationspledged to the 1957 Bonds are deposited in the City treasury in the Port Revenue Fund.

8-44



NOTES TO FINANCIAL 5TATEMENTS

Revenues remaining in the Port Revenue Fund after required debt service payments on the

1957 Bonds are termed "Surplus Revenues." The 1966 Airport and Harbor DevelopmentRevenue Bonds (1966 Bonds) are secured by liens on Surplus Revenues. The Small Craft

Harbor Revenue Bonds are payable from general revenuesof

the Port. The 1957 Bonds, 1966Bonds, and Small Craft Harbor Revenue Bonds are considered "Senior Lien Bonds."

The 1971 Certificates of Indebtedness (1971 Certificates) are secured by rental payments

from the lease of the facilities financed by the 1971 Certificates and are also secured by asecond lien on Surplus Revenues (to a maximum of $918,000 per year) on a parity with the1966 Bonds.

The 1989 Revenue Bonds, the 1990 Revenue Bonds, and the tax exempt commercial papernotes are payable solely from and secured by a pledge of "Pledged Revenues." The 1989

Indenture and the Fifth Supplemental Trust Indenture, dated April 15, 1990, (Fifth

Supplemental Trust Indenture) define Pledged Revenues as substantially all revenues andother cash receipts of the Port, including amounts held in the Port Revenue Fund but

excluding amounts required for debt service and reserve fund deposits for the Senior LienBonds and 1971 Certificates, and certain other excluded amounts. In addition, payment ofbond principal and interest when due is guaranteed by municipal bond insurance policies

issued byBond Investors Guaranty Insurance Company for the 1989Bonds and by MunicipalBond Investors Assurance Corporation for the 1990Bonds.

(a) Revenue Bonds, 1957Series

Under the terms of the 1957 bond indentures, the Port is required to maintain

revenues, as defined,of

at least 150%of

the sumof

the required bond interest andprincipal maturities for the ensuing year. For the year ended June 30, 1991, suchrevenues were 498% of debt service.

(b) 1989Revenue Bonds, Series A,Band C

Pursuant to the 1989 Indenture, the Port issued the 1989 Revenue Bonds in threeseries during April and May 1989. Proceeds of the 1989 Revenue Bonds were used toredeem certain outstanding indebtedness. The Current Interest Serial and Term Bonds

pay interest semiannually. Interest accrues on the Capital Appreciation Serial andTerm Bonds and is compounded semiannually but is not paid until their maturity or

earlier redemption. Maturity dates for Current Interest Term Bonds reflect mandatorysinking fund redemption.

(c) 1990Revenue Bonds, Series D

The Port issued the 1990 Revenue Bonds during May 1990 pursuant to the 1989Indenture and the Fifth Supplemental Trust Indenture. The 1990 Bonds were issued toadvance refund $32,900,000 of 1957Series Q Revenue Bonds.

8-45



• CITY OFOAKLAND

The Current Interest Serial and Term Bonds pay interest semiannually. Maturity dates

for Current Interest Term Bonds shown in the table reflect mandatory sinking fund

redemptions. The 1990 Bonds are not subject to optional redemption prior to their

respective maturity dates.

In the 1989Indenture, the Port covenanted to achieve in each fiscal year:

(1) Pledged Revenues, as defined, sufficient to pay the sum of the following:principal of and interest on the outstanding 1989 Revenue Bonds, 1990

Revenue Bonds and Senior Lien Bonds due in each year; amounts required to

be paid with respect to the 1971 Certificates of Indebtedness; all other

payments required under the 1989 Indenture including reserve fund deposits;all other payments necessary to meet ongoing legal obligations of the Port

payable from Pledged Revenues; and all current Operation and Maintenance

Expenses (as defined); and

(2) Net Revenues, as defined, of at least 125% of the actual debt service becoming

due in such year on the outstanding 1989 Revenue Bonds, 1990 Revenue

Bonds and Senior Lien Bonds less debt service paid in such year, from the

proceeds of other borrowings. For the year ended June 30, 1991, Net

Revenueswere 157%of debt service.

The Port has also covenanted in the 1989 Indenture not to issue any additionalobligations payable from or secured by Pledged Revenues which would rank superiorto the 1989 Revenue Bonds or any additional Bonds, as defined, issued under the

1989 Indenture. The 1990 Series D Bonds and the Tax-Exempt Commercial Paperhave been ISSUed at parity with the 1989Revenue Bonds. Additional Bonds may be

issued on a parity with the 1989 Series D Bonds, subject to certain debt service

coverage ratios and other requirements.

(d) 1971 Certificates of Indebtedness

The proceeds from the sale of the 1971Certificateswere used to acquire and improve

the Middle Harbor Terminal, then occupied by Seatrain Lines, Inc. In September

1982, Seatrain' s interest in the terminal was terminated, and the lease and preferential

assignment agreement were assumed in full byAmerican President Lines. The annual

rentals are equal to the annual debt service requirements (interest expense andprincipal payments).

8-46



. , . CITY OFOAKLAND

Repayment Schedule

The annual requirements to amortize all long-term debt as of June 30, 1991, are as follows (inthousands):

General Long-Term Debt

$ 30,976 $ 18,215 s 49932,327 18,480 49138,465 18,371 49237,929 19,024 492

37,369 19,666 491705,816 353,143 4.355

882,882 446,899 6,820

Years EndingJune 30,

1992199319941995

1996Thereafter

Less amountsrepresentinginterest anddiscounts

Principal debtat June 30, 1991

BondsPayable

(481.338)

$401,544

Certificates ofParticipation

(277,789)

$169,110

SpecialAssessmentDebt withGovt'l

Commitment

(2,635)

$ 4,185

Interest rates related to the Civic Improvement Corporation Certificates of Participation (theCertificates) are adjustable. Estimates of future debt service payments included in theschedule above were determined by utilizing the maximum rate of twelve percent which is

allowable in accordance with the terms of the Certificates.

Interest rates related to the Port of Oakland bonds, except for the 1966 Harbor Development

Revenue Bonds and the 1977-1983 Small Craft Harbor Revenue Bonds (the Variable Bonds),are variable, This debt is recorded in the Enterprise Fund. Estimates of future debt servicepayments for the Variable Bonds were determined by utilizing the maximum rate allowablein accordance with the terms of the Variable Bond agreements.

8-48




Trust andEnterprise Internal Service Agency FundsFund Debt Funds Debt Debt Total

$ 27,363 $ 319 $ 2,285 $ 79,65760,669 380 162 112,50925,628 379 159 83,49425,612 377 156 83,59025,613 380 154 83,673

572,755 5,639 2,076 1.643,784

737,640 7,474 4,992 2,086,707

(410,027)

$327,613

(3,514)

$ 3,960

(1.042)

$ 3,950

(1.176.345)

$ 910,362

8-49



• CITY OFOAKLAND

Other Liabilities

The following long-term debt has been issued by the City on behalf of named agents of theCity. The bonds do not constitute an indebtedness of the City. The bonds are payable solelyfrom revenue sources defined in the individual bond documents, and from other monies held

for the benefit of the bondholders pursuant to the bond indentures. In the opinion of Cityofficials, these bonds are not payable fromany revenues or assets of the City, and neither thefull faith and credit nor the taxing authority of the City, State or any political subdivisionthereof is obligated for the payment of theprincipal or interest on the bonds. Accordingly, noliability has been recorded in the General Long-Term Obligations Account Group. The debtissued and outstanding at June 30, 1991, was as follows (in thousands):

HousingMortgage ProgramsHousingRevenueBonds,SeriesA, 1979

HousingRevenueBonds,Series B, 1982HousingRevenueBonds,SeriesC, 1985Loanto Lender, 1980SkylineVariableRate, 1985

Authorized Outstandingatand Issued Maturity June 30, 1991

$112,890 1/1/11 $ 52,155

67,«JJ 12/15/13 10,565.23,175 5/1/17 3,6608,130 12/1196 1,71023,000 111/rB 23,000

8-50

Cityof Oakland InsuredHospitalRevenueBonds(Children's HospitalMedicalCenterofNorthernCalifornia), 1979Series A

City lOlfOaklandHealth FacilityRevenueNote(The BloodBankof theAlameda-ContraCostaMed1caI Association), Series 1979

Cityof OaklandBconormc Development

CertificateS of DepositRevenueBonds(Leamington HotelProject),1982SenesA

City ofOaklandIndusttialDevelopmentRevenueBonds(Days InnHotelProject),Series 1982

Countyof A1amedaICity of OaklandVanableRateDemand RevenueBonds(TheOldOakland Company Project), December 1984

Cityof Oakland VanableRate DemandRevenueBonds(TheDelgerBlockIRossHouseCompany Project), December1984

Countyof AIameda/City of OaklandVariable RateDemandRevenue Bond (TheWilcox/LeimertCompanyProject),December1984

City of OaklandEconomicDevelopmentRevenueBonds(EastBayOutpanentSurgeryCenterProject), Series1984

23,000

2,500

9,000

5,200

9,900

9,500

9,500

3,000

5/1/rB

11/1/99

11/1,97

12/1ft)2

12{7/99

12/7/99

12/7/99

12/1,u4

19,875

1,125

8,755

4,335

9,900

9,500

9,500

3,000




City ofOakland LiquidityFacilityRevenueBonds (Associanon ofBayArea

Governments), Series 1984

City of Oakland HealthFacilityRevenueBonds(Children's HospitalMedical Center ofNorthernCalifornia),1987SeriesA

City of OaklandRefundingRevenueBonds(oaIdand YMCAProject), Series 1990

TOTAL

(14) RESIDUAL EQUITY TRANSFERS

Authorizedand Issued

s 3,300

30,000

8,700

Maturity

1211109

7/1/08

6/1/10

Outstanding atJune 30, 199.1

s 2,675

27,100

8600

$ 195,455

Residual equity transfers during the fiscal year ended June 30, 1991, were as follows (in

thousands):

General Fund

Other Special Revenue Fund

Municipal Improvement Capital Fund

Civic Improvement Corporation

Debt Service Fund

Other Expendable Trusts Fund

TOTAL

The amounts above are detailed as follows:

Transfers Out

$ 4 6 , ~ 1 O1,398

339

$48,347

Transfers In$ 339

5,059

42,949

$48,347

During fiscal year 1990-91, the City transferred $27,949,000 of restricted cash and

investments from the General Fund to the Civic Improvement Corporation Debt Service

Fund. The cash and investments were related to the $52,300,000 Certif icates of

Participation (COPs) issued on December I, 1985, and were required as collateral for a

letter of credit issued by Mitsubishi Bank, Ltd. They became unrestricted subsequent to

the City attaining a new letter of credit from the National Westminster Bank PLC. The

City amended the related bond indentures and approved the transfer which will allow the

cash and investments to be used for purposes stated in the amended bond indentures.

During fiscal year 1990-91, the City transferred the Oakland Athletics Notes Receivable

of $15,000,000, due October I, 1991, from the General Fund to the Civic Improvement

Corporation Debt Service Fund. The City passed a resolution authorizing the use of theloan proceeds for debt service on the Civic Improvement Corporation COPs and for loans

to the City Center Garage II Joint Venture.

8-51




During fiscal year 1990-91, the City transferred $3,587,000 of cash and investments fromthe General Fund to the Municipal Improvement Capital Fund. The cash and investmentsare related to the Local Government Finance Authority 1989 Refunding Revenue Bonds.Although the cash and investments were received by the City in the form of a General

Fund revenue fee collected from the Agency, the City determined that activities related tothe cash and investments would be more appropriately accounted for in the MunicipalImprovement Capital Fund, since the assets are yield and use restricted by the bondindenture.

During fiscal year 1990-91, the City transferred $74,000 from the General Fund to theMunicipal Improvement Capital Fund. The amount transferred consisted of contributionsfrom the City for public arts capital improvement projects.

During fiscal year 1990-91, the City closed certain activity within the Other SpecialRevenue Fund and approved the transfer of $1,398,000 to the Municipal Improvement

Capital Fund.

During fiscal year 1990-91, the City transferred $339,000 from the Other ExpendableTrusts Fund to the General Fund. The funds are related to the Drug Forfeiture Programand were awarded to the City based upon [mal determination by the courts.

(15) CONTRIB.UTED CAPITAL

A summary of changes in contributed capital for the year ended June 30, 1991, is as follows(in thousands):

InternalEnterprise ServiceFunds Funds Total

BALANCE AT JUNE 30,1990 $46,122 $17,382 $63,504

Grants from governmental agencies 5,994 5,994

Depreciation of property and equipmentacquired with contributed capital 0.931) 0.931)

BALANCE AT JUNE 30,1991 $50,185 $17,382 $67,567

B-52



CITY OF OAKLAND



.. CITY OFOAKLAND

(16) RESERVATIONS AND DESIGNATIONS OFFUND BALANCES

Following are the components of the City's reserved and unreserved-designated fund

balances at June 30, 1991 (in thousands).

Special Debt CapitalGeneral Revenue Service ProjectsFund Funds Funds Funds

RESERVED

Assets not available forappropriation:

Long-term receivables/advances $28,249 s 730 $ s

Restricted cash andinvestments

Capital projects 16,868 280,980Employees' retirement systemDebt service 89,570Land held for resale 9,251Encumbrances 1.199 7.456 10.090

TOTAL RESERVED FUND

BALANCES $29,448 $25,054 $89,570 $300,321

UNRESERVED·DESIGNATED

Capital improvement projects $12,585 $ 9,250 $ $Emergency management program 110Multi-purpose reserve 2,214Employee benefits 2,215

Mandatory garbage collection 1,914Telecommumcationsfranchise regulation 649

Street lighting undergrounddistrict connection 2

TOTAL UNRESERVED-DESIGNATED FUNDBALANCES $19,689 s 9,250 $ $

8-54



Pension

Trust

Funds Total


$ $ 28,979

215,885 215,885297,848

266,656 266,65689,5709,251

251 18,996

$482,792 $927,185

$ 1,538

$ 1,538

$ 23,373110

2,214

2,2151,914

649

2

$ 30,477

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 interestincome. Segment information for the year ended June 30,1991, follows (in thousands):

8-56

Operating revenuesOperating incomeOperating grants, entitlements and

shared revenuesDepreciation and amortization

Current operating transfers outInterest and other non-operatingrevenues (expenses)

Extraordinary lossNet income (loss)Current capital contributionsProperty and equipment:

AdditionsDeletions

Net working capitalTotal assetsContributed capitalTotal equity

Long-term obligations and advances:Payable from operating revenuesPayable from other sources

SewerService

$14,3655,655

(369)555

5,286

3,887555

19,96542,148

41,833

OaklandPort of RedevelopmentOakland Agency

$98,038 $ 8974,367 3

21,172

(21,701)(839)

(18,173) 34,063

66,30935,142(27,289)676,273 9,34850,185219,797 308

345,267 8,8959,743



Other Total

Enterprise EnterpriseFunds Funds

$ 6,316 $119,6161,289 11,314

(369)252 21,979

1,183 1,183

64 (21,637)(839)

170 (12,714)4,063

331 70,5271,088 36,7851,076 (6,248)3,578 731,347

50,1852,619 264,557

354,1629,743


8-57



"" CITY OF OAKLAND

SewerService

The City maintains sewer service facilities between the private property hookups and the

main collection system operated by the East Bay Municipal Utility District. The City's policy

is to fund operations through usercharges and/or operating transfers from the General Fund.

Port of Oakland

The Port of Oakland is a public enterprise fund established by the City of Oakland and is acomponent unit of the City. Operations include the Oakland International Airport, the Port of

Oakland marine terminal facilities, and commercial real estate, which includes Oakland

Portside Associates, Port of Oakland Public Benefit Corporation, and the WaterfrontAssociation. The Port is under the control of a seven-member appointed Board of Port

Commissioners and is administeredby anExecutive Director.


The operations of the Acorn Mortgage Revenue Bond Program within the Agency are

accounted for as an enterprise fund. The program provides loans to qualified individuals to

finance the purchase and rehabilitation of housing within the Acorn Redevelopment area. The

bonds are payable from principal and interest on loans or from specified assets and revenuesof the MortgageProgram.

Other

The Oakland Convention Management, Inc. Fund and the Parks and Recreation Funds

represent theother enterprise funds.

8-58




(18) PENSION PLANS AND DEFERRED COMPENSATION PLANS

The City has three defined benefit retirement plans: Police and Fire Retirement System

(pFRS), Oakland Municipal Employees' Retirement System (OMERS) and California Public

Employees' Retirement System (PERS). PFRS and OMERS are closed plans which cover

employees hired prior to July 1976 and September 1970, respectively. These two plans are

considered part of the City's reporting entity and are included in the City'S General Purpose

Financial Statements as pension trust funds. City employees hired subsequent to the plans'

closure dates are covered by PERS, which is administered by the State of California. The

details of each plan are presented below. The City's total payroll for fiscal year 1990-91 was$157,900,000. The information for the City'S three plans is presented below (in millions):

TypeofplanReporting enutyLastcompleteactuarial study

Police and FireRetirementSystem(PFRS)

SingleemployerCity

June 30,1990

Oakland MunicipalEmployees'

Retirement System(OMERS)

SmgleemployerCity

June30, 1990

Califomia PublicEmployees'

Retirement System(PERS)

Agent multi-employerState

June30. 1990

Actuarial Present Value of Credited Projected Benefits

PFRS OMERS PERS Total

$ 658.3 $14.9 $ 158.9

Retirees and beneficiariescurrently receiving benefits

and terminated employees not

yet receiving benefits

Current employees:

Accumulated employee

contributions including

allocated investmentearnings

Employer-financed

Vested

Nonvested

Total pensionbenefit obligation (PBO)(a)

Net assets available for

benefits, at cost

UNFUNDED PENSIONBENEFIT OBLIGAnON

Net assets available forbenefits, at market

36.9 0.1

252.4 0.5

947.6 15.5

(245.0) .£l.lj)

$ 702.6

$ 255.0

$ 832.1

90.6 127.6

117.8 370.76.7 6.7

374.0 1,337.1

(360 9) (619.4)

$ 13.1 $ 717.7

$ 409.2 $ 676.8

8-59




(a) A pension benefit obligation (PBO) is presented to provide a standardized disclosure

measure of the present value of pension benefits, adjusted for the effects of projected

salary increases, estimated to be payable in the future as a result of employee service

to date. The measure is the actuarial present value of credited projected benefits and is

independent of the actuarial funding method used to determine contributions to eachpension plan. It will help users assess the funding status of each plan on a going

concern basis, assess progress made in collecting enough assets to pay benefits when

due, and make comparisons among employers.

Contributions


Total City payroll covered by

the system $ 27.4 $108.7 $ 136.1

1991 contributions:

City'S shareEmployees share:

Paid by Employee

Paid by City

Aetuarially determined contribution rates:

Employee

Employer

28.9 11.1 40.0

2.5 2.59.8 9.8

7-11% 7-9% N/A

7.9-15.1% N/A

Significant actuarial assumptions (b)

General wage increase

InflationMerit or seniority

Investment return

6.5%

8.5%

3.0%6.5%

8.0%

5.0%2.0%

8.5%

N/AN/A

N/A

(b) Significant actuarial assumptions used to compute the contribution requirements are

the same as those used to compute the standardizedmeasure of the pension obligation.

8-60

Employees covered as of June 30, 1990

Retirees and beneficiaries

currently receiving

benefits and terminated

employees entitled tobenefits but not currently

receiving themCurrent employees-a-vested

1,525

457366

2N/A

N/A

N/A

N/A




Trend Information

Trend information gives an indication of the progress made in accumulating assets to paybenefits when due. Ten-year historical trend information on revenues by source and expensesby type is not available.


Net assets available at cost - June 30:1991 $ 257.4 $11.9 $N/A $ N/A1990 245.0 13.5 360.9 619.41989 233.2 14.9 321.0 569.11988 218.0 16.0 283.3 517.31987 199.0 17.4 251.4 467.8

PBO - June 30:

1991 $ N/A $ N/A $N/A $ N/A1990 947.6 15.5 374.0 1,337.1

1989 876.0 16.2 331.2 1,223.41988 874.4 18.5 301.1 1,194.01987 N/A 20.1 276.4 N/A

Pen::entageof net assets availablelPBO - June 30:

1991 N/A N/A N/A N/A1990 26% 87% 96% 46%1989 27% 92% 97% 47%1988 25% 87% 94% 43%1987 N/A 87% 91% N/A

Unfunded PBO - June 30:1991 s N/A $ N/A $ N/A $ N/A

1990 702.6 2.0 13.1 717.71989 642.8 1.3 10.2 654.31988 678.0 2.5 17.8 698.31987 656.4 2.7 25.0 684.1

Annual covered payroll - June 30:

1991 s 24.1 108.7 132.81990 24.6 114.4 139.01989 26.2 101.7 127.91988 25.7 100.5 126.21987 N/A 96.4 N/A

Percentage of unfunded PBO/annualcovered payroll:

1991 N/A N/A1990 2856% 11% 516%1989 2453% 10% 512%1988 2638% 18% 553%1987 N/A 26% N/A

8-61



'" CITY OF OAKLAND

City's actuarially determined

contributions (employer portion)/

annual covered payroll:

19911990

1989

1988

1987

Police and FireRetirement System

PFRS OMERS

105%107%

100%

119%

N/A

PERS

10%9%

10%

14%

17%

Total

29%26%

28%

35%

N/A

PFRS provides death, disability and service retirement benefits to uniformed employees and

their beneficiaries. Members who complete at least 25 years of service, or 20 years of service

and have reached the age of 55, or have reached the age of 65· are eligible for retirement

benefits. The basic retirement allowance equals 50% of the compensation attached to theaverage rank held during the three years immediately preceding retirement, plus an additional

allowance of 1-213%of such compensation for each year of service (up to ten) subsequent to:

a) qualifying for retirement, and b) July 1, 1951. Early retirees will receive reduced benefits

based on the number of years of service. Benefit provisions and all other requirements are

established by the City Charter (the Charter).

In accordance with the Charter, active members of PFRS contribute a percentage of earned

salaries based upon entry age as determined by the City's consulting actuary. By statute,

employee contributions are limited to 13% of earned salaries. Employee contributions are

refundable with interest at 4% per annum if an employee elects to withdraw from the Plan

upon termination of employment with the City.

The City's annual contribution to PFRS is determined by calculat ing the total pension

liability for public safety employees under both PFRS and PERS. The amount to be

contributed to both plans is allocated between years such that a level percentage of payroll

(61.04% in 1991) will amortize the unfunded liabilities by 2026 and 2000 of PFRS and

PERS, respectively. Contributions to PERS are deducted and the difference is contributed to

PFRS.

For the year ended June 30, 1991, contributions to PFRS totaling $31,406,000 ($28,921,000

employer and $2,485,000 employee) were made in accordance with actuarially determined

contribution requirements. Employer and employee contributions equaled 105% and 9%,respectively, of current year covered payroll for plan panicipants.

The City's actuaries do not make an allocation of the contribution amount between normal

cost and the unfunded actuarial liability because the plan is closed.

8-62




Oakland Municipal Employees' Retirement System

OMERS provides death, disability and service retirement benefits to participants of the plan.Members who complete at least 20 years of service and have reached the age of 52, or who

complete at least 5 years of service and reach the age of 60, are eligible for retirementbenefits. The retirement allowance is calculated on a basis which takes into account finalaverage compensation, age and the number of years of service. Benefit provisions and allother requirements are established by the Charter.

Employee contributions to OMERS totaling $5,513 were made in accordance with actuariallydetermined contribution requirements. Employee contributions are refundable with interest at

4-1/2% per annum if an employee elects to withdraw from the plan upon termination of

employment with the City. For the year ended June 30, 1991, the City, in accordance withactuarially determined contribution requirements, was not required to make contributions toOMERS.

California Public Employees' Retirement System

The City contributes to the California Public Employees' Retirement System (PERS), an

agent multiple-employer public employee retirement system that acts as a common

investment and administrative agent for participating public entities within the State of

California.

All full-time City employees who have served for six mo-nths or more are eligible toparticipate in PERS. Benefits vest after five years of service. To be eligible for service

retirement, the employee must be at least age 50 and have five years of PERS-credited

service. City employees who retire receive monthly retirement allowances for life. Theamount of the retirement allowance is dependent upon the number of years of PERS-credited

service, the benefit factor (the percent of pay to which each employee is entitled for each yearof service is determined by the employee's age at retirement) and final compensation (theemployee's monthly pay rate for the last consecutive 36 months). The System also providesfor a death benefit. These benefit provisions and all other requirements are established by

State statute.

City miscellaneous employees and City safety employees are required to contribute 7% and9%, respectively, of their annual salary to PERS. The City's contribution rates for the fiscalyear ended June 30, 1991, were 7.9% and 7.3% for miscellaneous employees and safety

employees, respectively. The City pays the entire amount of its employees' contribution ratefor miscellaneous and safety employees, including the annual contribution of 7% toPERS.

PERS uses the Entry Age Normal Actuarial Cost Method, which is a projected benefit costmethod. That is, it takes into account those benefits that are expected to be earned in thefuture as well as those already accrued. PERS also uses the level percentage of payrollmethod to amortize any unfunded actuarial liabilities. The amortization period of the

unfunded actuarial liability ends June 30, 2000.

8-63



$ CITY OF OAKLAND

The City's contributions for employees for the year ended June 30, 1991, consisted of thefollowing amounts (dollars in millions):

Components ofcontribution

toPERSNonnalcostAmortization of unfunded

aetuanal accruedlIability

TOTAL

Employer andemployee portions

of contribution to PERSEmployerEmployee

Paid byCityPald by employees

TOTAL

Miscellaneous

$ 14.4

s 8.5

7.3

Percent of

CurrentCoveredPayroll

13.5%

14.9%=

7.9%

7.0

Safety

$ 6.6

$ 2.6

2.5

Percent ofCurrentCoveredPayroll

24.1%

a,8)

16.3%

7.3%

9,0

16.3%

TotalCombinedContribution

$ 21.0

--U)

s 20.9=

s 11.1

9.8

The credit for amortization of unfundedactuarial accrued liability for safety employees arosebecause the City had surplus assets as a result of actuarial gains in excess of actuarialestimates for safety employees.

Deferred Compensation Plans

The City and the Port offer their employees deferred compensation plans created inaccordance with Internal Revenue CodeSection 457. Separate plans are maintained for Cityand Port of Oakland employees. The plans, available to all employees, permit them to defer aportion of their salary until future years. The deferred compensation is not available toemployees until termination, retirement,death, or unforeseeable emergency.

All amounts of compensation deferred under the plans, all property and rights purchased withthose amounts, and all income attributable to those amounts, property or rights are (until paidor made available to the employee or other beneficiary) solely the property and rights of theCity and the Port (without being restricted to the provisions of benefits under the plan),

subject only to the claims of general creditors. Participants' rights under the plan are equal tothose of general creditors of the City and the Port in an amount equal to the fair market valueof the deferred account for each participant.

Deferred compensation plan assets of the City of $33,631,000 as of June 30, 1991, areincluded at fair market value in the Deferred Employee Compensation Agency Fund.

8-64




Deferred compensation plan assets of the Port are included at fair market value in the Port ofOakland Enterprise Fund and amounted to approximately $9,743,000 as of June 30, 1991.

(19)OAKLAND-ALAMEDA COUNTY COLISEUM

Oakland - Alameda County Coliseum, Inc. (the Coliseum) is a non-profit corporationorganized under the laws of the State of California to operate and manage the ColiseumComplex (the Complex) under an agreement between the City and the County of Alameda(the County) dated October 1963. The City and the County each have a 50% share in theagreements with the Coliseum. The Coliseum is governed by a ten-member Board ofDirectors. The Mayor of the City and the President of the Alameda County Board ofSupervisors recommend one member each for the Coliseum Board. A vacancy or vacancieson the Board of Directors is filled by the voteof a majority of the remaining directors.

In October 1963, the Coliseum executed a ground lease with the City and the County for aterm of forty years, subject to an agreement to construct the Complex. Concurrentlytherewith, the Coliseumsublet to the City and the County the complete facilities for a term toexpire ten days prior to expiration of the term of the ground lease. Rental provisions of thesublease require the City and the County to pay annual rent of $750,000 each, payable inmonthly installments.

Under the agreements, the City and the County hold title to the Complex. The agreementsspecifically state that no indebtedness or liability on the part of the City or the County shallbe created, except such indebtedness that may be repaid from the operating revenues of theComplex.

The Coliseum has authorized and issued 4-1/8% bonds for $25,500,000 of which$14,765,000 was outstanding as of October 31,1990, and due April 1, 2004. These bonds aresubject to an indenture placing properties and bond proceeds In trust for the benefit of thebondholders. Semi-annualpayments of principal and interest are made to the sinking fundonthe first day of April and October annually. Principal payments for April 1, 1991, andOctober 1, 1991, were$375,000 and $390,000, respectively. DebtService payments are madefrom lease revenues received from the Cityof Oakland and the County of Alameda under thesublease agreement

Additionally, the City and County each are entitled to receive 50% of the net operating

income of the Complex when the Coliseum has accumulated adequate funds to meet oneyear'soperating budget.

The City received nodistributions from the Coliseum during the fiscal year ended June 30,1991. Upon dissolution of the Coliseum, all assets are to be transferred to the City and theCounty.

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

LiabilitiesEquity

TOTAL UABlllTIES AND EQUITY

RevenuesExpenditures

DEFICIENCY OF REVENUES UNDER EXPENDITURES

$63,723

$19,68744,036

$63,723

$12,48303.948)

$ ( l , 4 6 ~

(20) RECONCILIATION OF OPERATIONS ON MODIFIED ACCRUAL BASIS

TO BUDGETARY BASIS

The "All Governmental Fund Types and Expendable Trust Funds Combined Statement ofRevenues, Expenditures and Changes in Fund Balances" has been prepared on the modified

accrual basis of accounting in accordance with GAAP. The "General Fund and AnnuallyBudgeted Special Revenue Funds and Debt Service Funds Combined Statement of Revenues,Expenditures and Encumbrances - Budget and Actual on a Budgetary Basis" has beenprepared on the budgetary basis, which is different from GAAP.

The following schedule is a reconciliation of the budgetary and GAAP results of operations

(in thousands):

AnnuallyBudgetedSpecial

General Revenue

Fund Funds

AnnuallyBudgetedDebt

ServiceFunds

B-66

Excess (deficiency) of revenuesover expendituresand encwnbrances- budgetarybasis

Net changes in encwnbrancesFEMA andPan bond reimbursements

budgetedona cashbasis

Net lransactions budgetedon amulti-yearproject or program basis

EXCESS (DEFICIENCY) OFREVENUESANDOTHERFINANCING SOURCESOVER (UNDER)EXPENDITIJRES ANDOTHERFINANCING USES- GAAP BASIS

s (975)(411)

(11,292)

984

$(11,694)

$ (983)(20)

$ 531

5.471



NOTES TO FI NANCIAL STATEMENTS

(21) FUND EQUITY RESTATEMENT

The beginning fund balance of the OMERS Pension Trust Fund has been reduced by$11,227,000 to reflect the liability associated with OMERS participants who were transferred

to PERS in 1973, 1976 and 1981. Employee contributions related to each transferredemployee were sent to PERS, as required by law; however, no assets related to employercontributions were transferred in 1976 or 1981 because of concerns about losses that wouldhave been incurred upon the saleof assets.

A liability to PERS for the non-transferred assets of $4,352,000 and the related accruedinterest ($7,637,000 as of June 30, 1991), was determined based on actuarial calculations.

Interest has been accumulated each year at the same rate as the investment yield of the Plan'sassets.

The liability to PERS will be paid in conjunction with the City of Oakland's actuarially

determined contributions to PERSover the next several years.

(22) FUND EXPENDITURES EXCEEDING BUDGETARY APPROPRIATIONS

The expenditures of the Pension Annuity Debt Service Fund exceeded budgetaryappropriations by $16,000. City management did not consider it necessary to pass a legalappropriation for such expenditures since amounts required to be expended are set forth in

bond indentures.

(23) POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS

The City has several programs in place to partially pay health insurance premiums for certainclasses of retirees from City employment.

The City pays part of the health insurance premiums for all retirees from City employmentreceiving a pension annuity earned through City service and participating in a City-sponsoredPERS health benefit plan. The City contribution constituted an average of approximately 5%

of health insurance premium charges for retirees. Approximately $274,000 was paid to 1,500retirees under this program in fiscal year 1990-91.

A City Council Resolution, dated November 12, 1985, and a related City AdministrativeInstruction, dated May 1, 1991,established a quarterly payment of $150 to qualifying retireesfrom City employment who were active, full-time or permanent part-time, unrepresented Cityemployees at the time of retirement on or after July 1, 1985. Such payments commenced thelast quarter of fiscal year 1990-91 and constituted approximately 20% of the premiumpayment required for retirees. Fifty-one employees received this benefit in the fiscal year1990-91.An expendable trust fund was set up to finance these benefits and theCity has made

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 ofUnderstanding with

Local 790 of the United Public Employees that established a trust to contribute toward thecost of health insurance premiums to retirees from City employment who were active, full

time City employees in represented units upon retirement on or after July I, 1987. The Letter

of Understanding required the City to contribute an annual amount of $119,333 to the trust

beginning on July I, 1987, and continuing through July I, 1992. Effective August 1, 1990,the City ini tia ted payments of $150 per quarter to e ligib le employees. This amount

constituted approximately 20% of the premium payment required for retirees. In fiscal year

1990-91, $34,600 in benefit payments were made. The trust fund balance was $658,626 as ofJune 30, 1991. Sixty-five employees received benefit payments in the last quarter of fiscalyear 1990-91.

The Port contributes monthly to a benefit account for certain qualifying retirees participatingin the PERS medical program. This program provides similar benefits as those offered to

retirees from City employment Qualifying retirees are paid the quarterly sums accrued in the

benefit account. At June 30, 1991, the Port's liability was $140,000. The Port contributed$45,000 in fiscal year 1990-91 and in fiscal year 1989-90.

(24) EARTHQUAKE DAMAGE

The City suffered significant damage from the October 17, 1989, Lorna Prieta earthquake.Consequently, the earthquake was declared a disaster by both the federal and state

governments. Damaged property and infrastructure have been identified and estimates ofreplacement and repair expenditures have been made. Additional ly, the City incurred

substantial non-recurring operational expenditures for police, fire, inspection, debris removal

and similar services.

The Federal Emergency Management Agency (FEMA) has been delegated the responsibility

for providing federal disaster assistance, under a Presidentially declared major disaster oremergency (disaster). It provides federal disaster assistance for individuals and their families,

for state and local governments, as well as for certain private, non-profit organizations.

Damage Survey Reports (DSRs) are the basis for reimbursement. Damage surveys are

usually conducted by a federal-state inspection team. An authorized local representativeaccompanies the federal-state inspection team and is responsible for representing the

applicant and ensuring that all damage and requirements for assistance are inspected. The

inspectors record pertinent information on a DSR, including a description of the damage,

proposed repairs or replacement, and the inspectors' best est imate of the cost of the

recommended work.

8-68




A summary of the earthquake related transactions through June 30, 1991, is as follows (inthousands):

ExpenditureslExpensesRecoveries

1991s 6,48215,525

City

1990$15,556

1,806

1991s2,5631,724

Port

1990s4,691

3,190

All essential repairs for general government service delivery have been completed. Estimateshave been made for the remaining property damage. Assuming all property damage will berepaired, the City believes that approximately $150 million ($103 million for the City and$47 million for the Port), including office building leases for housing displaced employeesand the repairs to City Hall and CityHallWest discussed below,will be the ultimate cost.

It is expected that most of the earthquake costs will be borne by the Federal Emergency

Management Agency, Federal Aviation Administration, private Insurance and the State ofCalifornia's Office of Emergency Services. City management believes that the ultimateresolution of the earthquake costs will not have a material adverse effect on the City'sfinancial positionor the Port's financial positionor results of operations.

City Hall

City Hall sufferedextensive damage rendering it unusable. As a result, the City wrote off thetotal carrying cost of $43,572,000 from the General Fixed Assets Account Group duringfiscal year 1989-90.

The City was self-insured for the total loss on the building, and is currently proceeding withthe repair and renovation of this building. The estimate to do this work is approximately$53,000,000. FEMA has approved a $45,799,000 DSR to rehabilitate the building. The Stateadvanced the City $18,118,000, which includes the State's share of the DSR plus anadditional $7,000,000 (the difference between the DSR amount and the total amountestimated to complete the building).

City Hall West

The City Hall West building also suffered extensive damage rendering I t unusable. As aresult, the City reported an extraordinary loss in fiscal year 1989-90 of $2,558,000,

representing the net carrying value of the building in the City'S Facilities Internal ServiceFund.

As required by the Agency, the City had combined insurance policies covering losses on thebuilding, its contents, and loss of rents. The City has settled with its insurance carriers andhas received $10,500,000 in insurance proceeds ($5.0 million in fiscal year 1989-90, $3.3million in fiscal year 1990-91,and $2.2million in fiscal year 1991-92).

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'" CITY OF OAKLAND

Since the 1988 Refunding Bonds on City Hall West continue to remain outstanding, the

Agency meets its debt service requirements with lease revenues received from the City. With

regards to the insurance proceeds, the Agency may either: (a) repair, replace, or reconstructCity Hall West, or (b) redeem all outstanding bonds at a redemption price of 100% of the

principal amount, plus accrued interest.

The Agency will not select either of the above stated options until a decision is made as to

whether the City Hall West site is the preferred location for a new City office building. In the

interim, the City has agreed to make lease payments on City Hall West so that the Agencycan continue to meet the debt service requirements on the outstanding bonds.

(25) COMMITMENTS AND CONTINGENT LIABILITIES

General Liability

Numerous lawsuits are pending or threatened against the City. The City Attorney estimates

that as of June 30, 1991, the amount of liability determined to be probable of occurrence is

approximately $12,300,000. Claims and litigation approximating $4,447,000 are estimated to

be payable with current expendable resources and are included as accrued liabilities of the

General Fund. The remainder is included in the General Long-Term Obligations Account

Group. The recorded liability is the City's best estimate based on available information and

may be revised as further information is obtained and as pending cases are litigated.

The City is self-insured for general liability. The City has not accumulated or segregated

assets or reserved fund balance for the payment of estimated claims and judgments.

Workers' Compensation and Unemployment Compensation

The City is self-insured for workers' compensation and unemployment compensation.

Payment of claims is provided through annual appropriations which are based on claim

payment experience and supplemental appropriations. Workers' compensation and

unemployment compensation approximating $7,400,000 are estimated to be payable with

current expendable resources and are included as accrued liabilities of the General Fund The

remaining amount of $15,907,000 is included in the General Long-Term Obligations Account

Group.

Grants and Subventions

Receipts from federal financial assistance programs are subject to audit by representatives ofthe federal and state governments to determine if the monies were expended in accordance

with appropriate statutes, grant terms and regulations. The City believes that no significant

liabilities will result from such audits.

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Construction Commitments

The Port is undertaking a number of capital improvement projects, the most significant of-which include certain airport improvements, container terminal construction, new containercranes, and channel dredging to accommodate larger vessels. As of June 30, 1991, the Porthad entered into commitments totaling approximately $21,886,000 for the acquisition andconstruction of such assets.

Individual Fund Deficits

As of June 30, 1991, the Oakland Redevelopment Agency Projects Expendable Trust Fundhad a deficit of $671,000. This deficit is expected to be funded through increased overheadand user charges for costs incurred on Agency projects.

The Central Stores Internal Service Fund had a deficit of $100,000 at June 30, 1991. Billing

rates to user departments will be adjusted in fiscal year 1991-92 to recover this shortfall.

Other Contingencies

Port ofOaldand

In July 1987, the California Department of Health Services (the Department) issued aRemedial Action Order determining that the Port and a former tenant of the Port areresponsible for the costs of cleaning up hazardous substances on a site leased by severalformer tenants. If a Remedial Investigation Report submitted by the Port in May 1989 isapproved, the Department will issue a Final Remedial Action Plan which will include an

apportionmentofliability for the costs

ofhazardous substance removal and remedial actions.

During 1991, the Port submitted a feasibility study to the Department and anticipatesreceiving a Remedial ActionPlan during fiscal year 1991-92. During fiscal year 1989-90, thePort recorded a liability of $900,000 for its expected 50% share of the total estimatedinvestigation and monitoring costs related to this site. In October 1990, the Port and theformer tenant agreed to shareequally in the remediationcosts. The ultimate remediation costshave not been determined.

The Port has certain legal obligations to modify or remove various underground storagetanks. A Tank Management Strategy Report on Port-owned underground tanks was prepared

for the Port by an outside environmental consultingcompany. The Port recorded a liability of$1,232,000 in fiscal year 1989-90 for the expected costs to modify or remove designatedPort-owned underground storage tanks. During fiscal year 1990-91, the Port began soilremediation and tank removal. It is the opinion of the Port's counsel that the Port has noliability to tenant-owned tanks.

As of June 30, 1991, the Port accrued approximately $.3,000,000 for various environmentalremediation programs in addition to those noted above. The Port's management believes that

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'" CITY OF OAKLAND

it has identified all significant hazardous waste sites, and the estimated probable costs areincluded in this environmental accrual.

In prior years the Port provided $1,600,000 to restore the presidential yacht "Potomac" to itsoriginal condition. This was done pursuant to an agreement with the Association for thePreservation of the Presidential Yacht Potomac ("Potomac Association"). This amount wascapitalized in Construction in Progress. During fiscal year 1990-91, the Potomac Association

initiated transferral of the vessel to the U.S. Department of the Interior at the request of the

Port. The Port and the Potomac Association are in the process of transferring the Port's

interest in the vessel to the Potomac Association. As of June 30, 1991, the Port's $1,600,000in costs were written off and recorded in other expenses.

Oakland RedevelopmentAgency

In connection with the sale of land for a Central District project, the Agency entered into anagreement to place $1,000,000 of the sales proceeds in escrow pending removal of hazardoussubstances and contamination. The developer has filed claims amounting to approximately

$2,700,000 which were rejected by the Agency. In accordance with the agreement, the

Agency filed for arbitration with the American Arbitration Association, and as a result haspaid $184,439 in fiscal year 1990-91. On October 1, 1991, the Agency agreed to pay anadditional $1,300,000 in settlement of these claims.

As of June 30, 1991, the Agency was committed to fund $6,096,000 in loans and had issued

$6,442,000 in repayment guarantees and letters of credit in connection with several low andmoderate income housing projects. The repayment guarantees and letters of credit wereissued to facilitate the construction of low and moderate income housing within the City of

Oakland.

(26) SUBSEQUENT EVENTS

Oakland Hills Fire

On October 20, 1991, the City of Oakland suffered one of the worst disasters In the City's

history as fire raged through the Oakland Hills destroying approximately 2,600 homes and

450 apartment units, and lolling 25 people. The fire was declared an emergency and eligiblefor disaster assistance by both the federal and state governments.

Vanous City revenues are dependent upon income from the residential properties located inthe fire area. including property taxes, utility consumption taxes, sewer charges, business

license taxes, landscaping and lighting assessment district fees as well as interest earnings onthose revenues. The loss of City revenues in fiscal year 1991-92 is estimated at $2,350,000.

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NOTES TO FINANCIAl STATEMENTS

In addition, the City's budget will be impacted by the costs related to fire suppression and

recovery. For the first seven days following the disaster, it is estimated that the City spent

approximately $7,850,000 (excluding general administrative costs) for personnel andequipment in the departments of Police, Fire, Public Works, Parks and Recreation, and the

Office of General Services. Damage to public facilities is estimated at $2,600,000 anderosion control costs are expected to be $5,000,000. The total expenditure impact for fiscalyear 1991-92 is estimated at $17,600,000.

It is expected that most of the costs for fighting the Oakland Hills Fire and the subsequentcleanup and rebuilding will be borne by FEMA, the State of California's Office of

Emergency Services and private insurance companies. City management believes that the

ultimate resolution of the fire's costs will not have a material adverse effect on the financialposition of the City. As a result of the fire, lawsuits have been, and are expected to be, filed,

The effect of the lawsuits on the financial position of the City cannot be esnmated at this

time.

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APPENDIXC

SUMMARY OF CERTAIN PROVISIONS OF LEGAL DOCUMENTS



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APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF LEGAL DOCUMENTS

THE FOLLOWING ARE SUMMARIES OF CERTAIN PROVISIONS OF THE

INDENTURE OF TRUST, THE LEASE AGREEMENT AND THE AMENDED AND

RESTATED GROUND LEASE. THESE SUMMARIES DO NOT PURPORT TO BE

COMPLETE OR DEFINITIVE AND ARE QUALIFIED IN THEIR ENTIRETIESBY REFERENCE TO THE FULL TERMS OF THE DOCUMENTS.

DEFINITIONS

ACquis i t ion Account. The term "Acquis i t ion

Account" means th e account by t h a t name es tab l i shed under,and held by th e Trustee pursuan t to , the Inden tu re .

ACquis i t ion Cost s . The term "Acquis i t ion Costs"means a l l cos t s of acqu i s i t ion of the i n t e re s t s in th e

Fac i l i t i e s , th e S ite s, and o ther p ro pe rty p ur su an t to theContracts of Sa le , in th e amounts descr ibed in the

Inden ture .

Addi t iona l Payments.Payments" means those paymentsth e Lea se Agreement .

The term "Addi t ional

spec i f i ed in Sect ion 411 of

Agency. The term "Agency" means the RedevelopmentAgency of the City of Oakland.

Amended and Resta ted Ground Lease. The term"Amended and Restated Ground Lease" means th e Amended andResta ted Ground Lease, dated as of November 1, 1992, betweenth e Ci ty , as l e s so r of th e Si t e s , and th e Au th or ity , asl e s see t he reo f .

Author i ty . The te rm "Au th or ity " means the

Cal i fo rn ia Statewide Communit ies Development Authori ty , asi s suer of the Bonds and l e s so r and sublessor under th e LeaseAgreement.

Author ized Representa t ive . The term "Author izedRepresen ta t ive" means: (a) with respec t to th e Authori ty ,

i t s Chairman, Vice Chairman, S ec re ta ry o r any Member of th eCommission of th e Author i ty , o r any othe r Person des igna ted

as an Authorized Represen ta t ive of the Author i ty by a

Writ tenCer t i f i c a t e of

th e Author i tys igned by i t s Chairmanand f i l ed with the Author i ty and the Trus tee ; (b ) with

re spec t to th e City , the City Manager or the Ci ty Manager 'sdepu t ies o r a s s i s t an t s o r any o the r o f f i c e r o r employee ofth e Ci ty who i s designated by the City Manager as anAuthorized Represen ta t ive fo r purposes of th e Indenture; and

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(c) with respect to the Trustee, any Senior Vice President,any Vice President, any Assis tant Vice Pres ident or anyTrust Officer of the Trustee and, when used with referenceto any act or document, also means any other Personauthorized to perform such ac t or sign any document by orpursuant to a resolut ion of the Board of Directors of theTrustee or the by-laws of the Trustee.

Bond Register . The term "Bond Register" means thebooks for reg is t ra t ion maintained by the Trustee pursuant tothe Indenture.

Bonds. The term "Bonds" means the Bonds issued byth e Authority purs uant to the Indenture.

Cert i f icates of par t ic ipat ion. The term"Cert if icates of Part icipat ion" means, col lect ively ,$43,500,000 Cert i f icates of Part ic ipat ion (Henry J . KaiserConvention Center) , executed and delivered pursuant to aTrust Agreement, dated as of September I , 1982, between theAgency and Bank of America National Trust and SavingsAssociation, and $38,000,000 Cert if ica tes of par t ic ipat ion(Oakland Convention Center - George P. ScotIan Memorial)Series 1983 executed and del ivered pursuant to a TrustAgreement, dated as of December I , 1983, between the Agencyand Bank of America National Trust and Savings Association.

City.C alifo rnia, asAgreement.

The term "City" means the City of Oakland,lessee and sublessee under the Lease

Closing Date. The term "Closing Date" means the

date of i n i t i a l delivery of the Bonds.

Delivery Costs. The term "Delivery Costs" meansa l l c os ts in cu rre d in connect ion with the preparation,review, execution and delivery of the Indenture, the Amendedand Restated Ground Lease, the Lease Agreement and theEscrow Agreement and in connect ion with th e iss ua nce, sa leand delivery of the Bonds, including, but not l imited to ,costs paid or incurred by the City, the Authori ty or theTrustee for f i l ing costs , print ing costs, reproduction andbinding costs , fees and charges of the Trustee, financingdiscounts, l ega l fees and charges and reimbursements,f inancial and other professional consultant fees and charges

and reimbursements, audi tors ' fees and charges andreimbursements, costs of ra t ing agencies for credit ra t ings ,fees for execution, regis tra t ion, t ranspor ta t ion andsafekeeping of the Bonds, municipal bond insurance premiums,i f any, and other charges and fees in connection with theforegoing.

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Fac i l i t i e s and the Si t e s pursuant to th e Lease A greemen t an das s e t for th in Exhibi t B at tached t he re to .

Municipal Bond Insurance Pol icy . The term"Munic ipal Bond Insurance Policy" means the munic ipa l bondin su ra nc e p ol ic y iss ue d by the I n su r e r insur ing the payment

when due ofthe p r i nc ipa l

of and i n t e r e s t onth e

Bondsas

provided the re in .

Municipal Obl iga t ions . Any bonds or o the r

ob l iga t i on s of any s t a t e of the United Sta tes of America or

of any agency, in s t rumenta l i ty o r l o ca l governmental un i t ofany such s t a t e which a re not ca l lab le a t the opt ion of the

ob l igor pr io r to matur i ty or as to which i r revocable

i n s t ruc t ions have been given by th e ob l igor to c a l I o n the

date spec i f i ed in the no t ice and which are ra ted , based onan i r revocable escrow account or fund, in the h ighes t ra t ingca tegory of S ta nda rd & Poor ' s CorporatioIl an d Mood y'sInves to r s Service o r any successors the re to .

Net Proceeds. The term "Net Proceeds" , when usedwith re spec t to any insurance o r condemnat ion award, meansth e proceeds from the insurance o r condemnat ion award withre spec t to which t ha t term i s used remaining a f t e r paymentof a l l expenses incurred in the col lec t ion of such proceeds .

Net Proceeds Account. The term "Net ProceedsAccount" means the account by t ha t name es tab l i shed under,and held by the Trustee pursuan t to , th e In de ntu re .

Outstanding. The term "Outs tanding" when used w ithr e fe rence to the Bonds and as of any par t i cu l a r da te means

a l l Bonds the re to fo re i s sued excep t : (a) any Bond cancel ledby th e Trus tee a t or be fore sa id d ate , (b) any Bond in l i euof o r in subs t i tu t ion fo r which another Bond s ha l l have beeni s sued pursuant to the Indenture , and (c) any Bond which i sdeemed to be defeased pursuant to th e terms and cond i t ions

of th e Indenture .

Owner. The term "Owner" o r "Bond Owner" o r "Ownerof Bonds" or any s imi la r t em when used w ith r e spec t to the

Bonds, means any person who sha l l be th e reg i s t e red Owner ofany Outstanding Bond; provided, however, t ha t the In su re r

sha l l be deemed to be th e Owner of Bonds insured by the

In su re r ( il a t a l l t imes fo r the purpose of giving consent

pursuan t to the Indenture or i n i t i a t i ng any ac t ion which maybe t aken by the t r u s t e e thereunder a t th e req ues t o r with

th e consent of the Owners of a major i ty in aggrega te

pr inc ipa l amount of Bonds Outstanding and ( i i ) fo l lowing anEvent of D efau lt fo r a l l other purposes .

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Payment Date. The term "Payment Date" meansOctober 1 and Apri l 1 of each year, commencing April 1,1993.

Permi tt ed Inves tment s. The term "PermittedInvestments" means:

(i) Federal Secur i t ies ;

( i i ) Obligations of the Export - Import Bank,Government National Mortgage Assoc ia tio n, th e Farmers Home

Administrat ion, th e Gene ral Services Admin is tr at ion , theU.S. Maritime Administration, the Small BusinessAdmini st ra tion, the U.S. Department of Housing & UrbanDevelopment or th e F edera l Housing Admin is tr atio n, o r acombination thereof, payable in cash, fo r which the fu l l

faith and credi t of the United States are pledged for thepayment of principal and in teres t ;

( i i i ) Bonds, notes or other evidences ofindebtedness rated "AAA" by Standard & Poor 's Corporationand "Aaa" by Moody's Investors Service issued by the FederalNational Mortgage Associat ion or the Federal Home LoanMortgage Corporation with remaining maturi t ies not exceedingthree years;

( iv) U.S dol la r denominated deposit accounts,federal funds and banker ' s acceptances with domesticcommercial banks which have a rat ing on the i r short termcer t i f i ca tes of deposi t on the date of purchase of "A-1" or"A-1+" by Standard & Poor 's Corporation and "P-I" by Moody'sI nves to rs Servi ce and maturing no more than 360 days a f te r

the date of purch ase ;

(v) Commercial paper which is ra ted a t thetime of purchase in the s ingle highest class i f icat ion, "A1+" by Standard & Poor 's Corporation and "P-l" by Moody'sI nves to rs Servi ce and which mature s not more than 270 daysaf te r the date o f pur chase ;

(vi)"AAAm" or "AAAm-G"

Corporation;

Investments in money market funds ratedor be t te r by Standard & Poor 's

(vii) Investment agreements approved in writingby the Insurer with not ice to Standard & Poor 's Corporation;

(vi i i ) Pre-refunded Municipal Obligations; and

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INDENTURE OF TRUST

AUTHORIZATION

Pursuant to th e In den tu re , the Trus tee i sauthor ized and d i rec ted to au then t i ca te and de l ive r to theUnderwriters the Bonds, which Bonds cons t i tu te spec ia l

l im i te d o b li ga ti on s of the Author i ty payable so l e ly fromLease Payments made by the Ci ty .

PLEDGE OF LEASE PAYMENTS

Pursuant to th e Indenture , the Lease Payments are

i r revocab ly pledged to , and s ha l l be used fo r , the punctualpayment of the p r i nc ipa l o f, premium, i f any, and i n t e re s ton the Bonds, and the Lease Payments sha l l not be used fo r

any o ther purpose while any of th e Bonds remain Outstanding.This pledge cons t i t u t e s a f i r s t and exc lus ive l i en on theLease Payments fo r the payment of the Bonds in accordance

with the terms t he reo f .

BONDS

Each Bond sha l l be dated as of November 1 , 1992.The pr inc ipa l o f , premium, if any, and i n t e r e s t on th e Bondssha l l be payable so le ly from the Lease Payments paid by the

City to th e Au th or ity fo r the l ease of the Fac i l i t i e s andth e sub lease of th e Si t e s , as s e t fo r th on Exhib i t B to theLease Agreement. The p r i nc ipa l of the Bonds sha l l bepayable on October 1 in each of the years and in th e amountsse t - fo r t h in the Indenture . I n t e r e s t on th e Bonds sha l l bepayable on October 1 and Apr i l 1 of each yea r , commencing on

Apri l 1, 1993, to and inc luding the da te of pr inc ipa lpayment or r edemp ti on , whi chever i s e a r l ie r . In te re s t onthe Bonds sha l l be payable from the Payment Date immediatelyp re ce din g th e da te of au then t i ca t ion th ere of , u nle ss :

(i) it i s au then t ica ted on a Payment Date, in which eventi n t e r e s t sha l l be payable from such Payment Date; o r ( i i ) it

i s au then t ica ted a f t e r the f i f t een th day of th e monthpreceding a Payment Date, in which event i n t e r e s t s ha l l bepayable from such Payment Date; or ( i i i ) it i s au then t ica ted

on o r before March 15, 1993, in which event i n t e r e s t sha l l

be payable from November 1, 1992; provided, however, t ha t

i f , as of the date of authent ica t ion of any Bond, i n t e r e s ton such Bond i s in defau l t such i n t e r e s t s ha l l be payable

from the Payment Date to which i n t e r e s t has prev ious ly beenpaid or made ava i l ab le fo r payment.

The Bonds sha l l be d el iv ere d in th e form of fu l ly

reg i s t e red Bonds without coupons in the denominat ion of$5,000 or any i n t e g r a l mu ltip le th e re of . The Bonds sha l l be

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payable in l awfu l money of th e United Sta tes of Americawhich a t th e t ime of payment i s l ega l t ender fo r th e paymentof pub lic and p r i va t e deb t s .

The regis trat ion of any Bond may, in accordancewith i t s te rms, be t rans fe r red o r exchanged upon th e BondRegister maintained by the Trustee as provided in th e

Indenture .

The principal of the Bonds sha l l be payable a t th eP rin cip al O f fic e of th e T rus te e. In t e r e s t on th e Bondssha l l be payable by check o r dra f t of the Trus tee mailed toth e Owners t h e r eo f as shown on th e Bond Regi s t e r on thef i f t eenth day of th e month p re ce din g th e Payment Date;provided, however, t h a t a t th e wr it te n d ir ec tio n f i l ed with

th e Trustee p r i o r to any Payment Date by th e Owner of Bondsin an aggregate pr inc ipa l amount of $1,000,000 o r more,i n t e r e s t on such Bonds sha l l be payable to th e Owner t he reofby federa l wire t r ans f e r i n i t i a t ed by the Trus tee on eachsucceeding Payment Date to the account number des igna ted in

such wri t t en d i r ec t i on .

The Bonds when executed, au then t ica ted anddel ivered wi l l be r eg i s te red in th e name of Cede & Co. , as

"Bond Owner" and nominee of the The Deposi tary Trus tCompany, New York, New York ("DT C"). So long as DTC, o r i t snominee, Cede & Co., i s the registered owner of a l l Bonds,a l l payments on th e Bonds wi l l be made direct ly to DTC, anddisbursements of such payments to DTC Participants wil l beth e responsibi l i ty of DTC, and disbursement of such paymentsto the person fo r whom a DTC Par t i c ipan t acqu i re s ani n t e r e s t in th e Bonds wi l l be the r e spons ib i l i t y of the DTC

Par t i c ipan t s .

FUNDS AND ACCOUNTS

Pursuan t to th e Indenture , th e Trustee s ha l le s t ab l i sh th e Convention Centers Trus t Fund. With in th e

Convention Centers Trus t Fund, th e Trustee s ha ll e sta bl is hth e A c qu is it io n Account, th e D eliv ery Costs Account , th e

Lease Payment Account, th e Reserve Account and th e NetP ro ceed s Acco un t. As provided by th e Indenture , th e Trustee

sha l l also es t ab l i sh a "Redemption Fund" and a "RebateFund". All am ounts on depos i t with th e T ru ste e, in clu din g,

without l im i t a t i on , in th e foregoing funds and accounts(except fo r th e Rebate Fund) are i r revocably pledged to the

Owners of th e Bonds fo r the punctual payment of th ep rin cip al o f, premium, i f any, and i n t e r e s t on th e Bonds.T his p led ge cons t i t u t e s a f i r s t and exclusive l i e n on the

foregoing funds and accounts (except fo r th e Rebate Fund)fo r the payment of th e Bonds in accordance with th e terms

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the reof .

ACOUISITION ACCOUNT

The Trustee sha l l depos i t in th e Acquis i t ion

Account pro ceeds of th e Bonds to be disbursed fo r payment of

Acquis i t ion Costs a s p rov id ed in th e Inden tu re .

DELIVERY COSTS ACCOUNT

The Trustee sha l l depos i t in th e Delivery CostsAccount proceeds of th e Bonds to be disbursed fo r paymenL o r

reimbursement of Del ivery Costs . Amounts remaining in s a id

account sha l l be t r an s fe r r ed to th e Lease Payment Account .

LEASE PAYMENTS; LEASE PAYMENT ACCOUNT

All Lease Payments and such o the r amounts to whichthe Author i ty may a t any t ime be en t i t l ed under th e LeaseAgreement, including moneys rece ived fo r the purpose o f

e f f ec t i ng a pa r t i a l o r comp le te p repayment of LeasePayments, sha l l be paid d i r ec t ly to th e Trustee as ass ignee

of the Authori ty under th e Lease A greem ent, and a l l of th e

Lease Payments and such amounts co l l ec ted or rece ived by th e

Authori ty sha l l be deemed to be held and to have beenco l lec ted o r received by th e Author i ty as the agen t of th e

Trustee , and i f rece ived by th e Author i ty a t any t ime sha l lbe depos i ted by th e Au th or ity with the Trustee, and a l l suchLease Payments and such o ther amounts sha l l be fo r thwi th

deposi t ed by th e T ru ste e upon th e r e ce ip t the reof in th e

Lease Payment Account. All amounts rece ived by the Trus tee

under th e Indenture s ha l l be held in t r u s t by th e T ru steefo r th e b en ef i t of the Bond Owners.

On each Payment Date , th e Trus tee sha l l withdrawfrom th e Lease Payment Account an amount su f f i c i en t to payany p r i nc ipa l o f , premium, i f any, and i n t e re s t on th e Bonds

due on such Payment Date .

Any amounts rece ived by the Trustee from the Ci ty

fo r th e purpose of pa r t i a l o r complete prepayment of LeasePayments sha l l be app lied to such prepayment . The Ci ty

s ha ll th e re af te r prepare and submit to th e Au th or ity and the

Trustee a rev i sed Lease Payment schedule re f lec t ing such

prepayments .

NET PROCEEDS ACCOUNT

The Trustee s ha l l e s t ab l i sh a spec ia l accountw ith in th e Convention Centers Trus t Fund designated as th e"Net Proceeds Account." The Trustee s ha l l disburse Net

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Proceeds deposited by the City pur suan t to the terms of theLease Agreement for th e rep air , r econs truc tion o rrepla cement o f the Si tes or the Faci l i t i es or for theprepayment of Lease Payments.

RESERVE ACCOUNT

There sha l l be deposited in the Reserve Accountproceeds of the Bonds in an amount equal to the ReserveRequirement. All moneys a t any time on deposi t in theReserve Account sha l l be applied as provided in theIndenture to make up any def ic ie nc ie s in the Lease PaymentAccount and as a cred i t against the l a s t r emaining LeasePayments. I f on any Payment Date, the amounts on deposi t inthe Lease Payment Account are less than the principal andi n t e res t then due on the Bonds, the Trustee sha l l t rans fe ran amount suff ic ient to make up such deficiency from theReserve Account to the Lease Payment Account. Upon receiptof any delinquent Lease Payment or portion th ere of w ithrespect to which moneys have been advanced from the Reserve

Account, such lease Payment or por ti on t he reof sha l l bedeposited in the Reserve Account.

INVESTMENT OF FUNDS

All moneys in any of the funds and accountsestabl ished pursuant the Indenture shal l be invested by theTrustee as directed by the City solely in PermittedInvestments. In the absence of t imely direction by theCity , as provided in the Indenture, such investments sha l lbe made in Permitted Investments selected by the Trustee ini t s sole discre t ion. All in te res t and other income receivedby the Trustee on in ve stmen t of the Lease Payment Account orRedemption Fund sha l l be retained in the Lease PaymentAccount or Redemption Fund and be applied as se t forth inthe Indenture, provided, however, tha t in the event tha tamounts on deposi t in the Reserve Account are less than theReserve Requirement, said in teres t or income shal l bedeposited in the Reserve Account unt i l there is on deposi tin the Reserve Account an amount equal to the ReserveRequirement. All i n t e res t and other income received by theTrustee on investment of the Reserve Account shal l bere ta ined in the Reserve Account in the event that amounts ondeposit in the Reserve Account are less than the ReserveRequirement. In the event that amounts then on deposit in

the Reserve Account equal or exceed the Reserve Requi rement ,su ch ex ces s sha l l be t ransferred to the Lease PaymentAccount. Any in teres t or other income received by theTrustee on the investment of the Acquisi t ion Account and theDelivery Costs Account sha l l be deposited, respect ively, in

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th e Acquis i t ion Account and th e D eliv ery Costs Account un t i lsa id accounts a re closed pursuan t to th e Inden tu re .

For th e purpose of determining th e amount in anyaccount held by the Trus tee under th e I nd en tu re , a l lPermit ted Investments c red i t ed to such account sha l l bevalued as prov id ed in th e Inden tu re .

Investments in any funds and accounts may becommingled in a separa te fund o r funds fo r purposes of

making, holding or dispos ing of i nv e stmen ts , no tw i th s tand ing

prov i s ions in th e In de ntu re fo r t r ans f e r to o r holding in o r

the c red i t of pa r t i cu l a r funds and accoun ts of amounts

received o r he ld by the Trus tee thereunder , provided t h a tthe Trustee s ha l l a t a l l i t ems account fo r such inves tmentss t r i c t l y in accordance with th e funds and accounts to whichthey are c red i t ed and o th erw is e a s prov ided in the

Inden ture .

EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS

Pursuan t to the Lease Agreement, th e Authori ty hast r ans fe r red , assigned and s e t over to th e Trustee a l l o f the

Author i ty ' s r i gh t s in and to the Lease Agreement (except ingas to ce r t a i n of the Author i ty ' s r ig hts th er ein ), i nc lud ing

without l im i t a t i on a l l of th e A u th or ity 's r igh t s to exerc i se

such r igh t s and remedies confer red on th e Authori ty pursuant

to th e Lease Agreement as may be necessary o r convenient( i) to enforce payment of th e Lease Payments and any o the ramounts requ i red to be pa id under the Lease Agreement, and( i i ) otherwise to exerc ise th e Autho r i t y ' s r igh t s and t ake

any ac t ion to p ro t ec t the i n t e r e s t s of th e Bond Owners in

the case of an Event of Defau l t .

I f an Event of Defaul t occurs o f which th e Trus tee

has , or i s deemed to have, no t ice as prov ided in th e

Inden ture , the Trustee sha l l promptly g iv e n ot ice to the

Insure r and th e Owner of each Bond. Upon th e o cc urre nc e o fan Event of Defau l t , and in each and every such case dur ing

the cont inuance of the Event of Defau l t , th e Trustee may,

and upon the w ri t te n d i r ec t i on of the Owners of a major i ty

in aggregate p r inc ipa l amount of Bonds then Outstanding andupon r ece ip t of indemnity to i t s reasonab le s a t i s f a c t i on ,the Trus tee sha l l , upon no t i ce in w rit in g to the Author i ty

and the Insure r , exerc i se th e remedies prov ided in th e Lease

Agreement to the extent permi t ted by law. Anything in th eInden ture to the cont ra ry no tw i th s tand ing , upon th e

occurrence and cont inuance of an Event of D efau lt , th e

Insure r sha l l be ent i t l ed to con t ro l and d i r e c t the

enforcement of a l l r igh t s a nd remedies g ran ted to the BondOwners or the Trustee fo r th e b en ef i t of th e Owners of th e

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Bonds under the Indenture and the Insurer sha l l be ent i t ledto approve a l l waivers of Events of Default .

Notwithstanding anything in the Indenture or theLease Agreement to the contrary, there sha l l be no r ightunder any circumstances to accelerate the maturi t ies of theBonds or otherwise to declare any Lease Payment not then in

defaul t to be immediately due and payable.

AMENDMENT OF INDENTURE

The Indenture and the rights and obligations of theOwners of the Bonds may be modified or amended a t any timeby agreemen t among a l l of the par t ies and the Trustee, whichsha l l become effect ive upon the w ritten consent of theOwners of a majority in aggregate principal amount of theBonds then Outstanding. No such modification or amendmentsha l l impair the r igh t of any Owner to receive the principalof , premium, i f any, and i n t e res t on h is Bond.

The Indenture and the r ights and obligations of theOwners of the Bonds may be modified or amended a t any time,without the consent of any such Owners but only (1) to cure,correc t or supplement any ambiguous o r d ef ec tiv e provisioncontained in the Indenture, or (2) in regard to questionsar is ing under the In denture, as the City may deem necessaryo r d es ir ab le , and which sha l l not adversely af fec t thein te res ts of the Owners of the Bonds or the exclusion fromincome fo r Federal income tax purposes of the in te res t onthe Bonds. Notwithstanding the foregoing, any provision ofthe I nden tu re exp re ss ly r ecogni zing or grant ing r ights in orto the Insurer may not be amended in any manner whichaf fec t s the r ights of the Insurer without the pr ior writ tenconsent of th e Insurer.

CONSENT OF THE INSURER

Except as expressly provided in the Indenture, theInsurer 's consent sha l l be required in a dd itio n to theconsent of Bond Owners, when required, for the followingpurposes: (i) execution and delivery of any supplementalIndenture o r any amendment, supplement or change to ormodif icat ion of th e I nden tu re ; ( i i) removal of the Trusteeand select ion and appointment of any successor Trustee; and( ii i ) in it i at io n or approval of any other act ion requir ing

the consent of the Bond Owners.

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DEFEASANCE

The Bonds may be p a i d and discharged i n a n y o n e o rmore o f th e fo llowin g ways:

(a) by wel l and t r u l y paying o r c a u s i n g t o be p a i d

t h e p r i n c i p a l o f and i n t e r e s t on a l l Bonds, a s and when

t h e same become due and payable ;

(b) by d e p o s i t i n g with t h e T r u s t e e , i n t r u s t , a to r b e f o r e m a t u r i t y , moneys i n an amount which, t o g e t h e r

w it h t h e amounts t h e n on d e p o s i t i n the Lease PaymentAccount and t h e Rese rve Account , a r e f u l l y s u f fi c i e n t t o

pay a l l Bonds t h e n o u ts ta n d in g ;

(c ) by d e p o s i t i n g with t h e T r u s t e e , i n t r u s t , casha n d / o r d i r e c t o b l i g a t i o n s of t h e United S t a t e s o f

America i n such amount as w i l l , t o g e t h e r w i t h t h ei n t e r e s t t o be r e c e i ve d t h e r eo n and moneys t h e n on

d e p o s i t i n t h e Lease Payment Account and t h e Reserve

Account, t o g e t h e r with t h e i n t e r e s t t o be r e c e i v e dthereon , be f u ll y s u ff i c i e n t t o pay and d i s c h a r g e a l lBonds a t o r b e f o r e t h e i r r e s p e c t i v e m a t u r i t i e s ; o r

(d) by d e p o s i t i n g with t h e T r u s t e e , under anescrow d e p o s i t and t r u s t agreement, s e c u r i t y f o r thepayment of a l l Lease Payments a s provided i n t h e LeaseAgreement.

Notwithstanding t h a t any Bonds s h a l l n o t have beens u r r e n d e r e d f o r payment, upon t h e payment and d i s c h a r g e o f

t h e Bonds as prov ide d above, a l l o b l i g a t i o n s o f t h e

A u t h o r i t y , t h e T r u s t e e and t h e C i t y under t h e I n d e n t u r e

s h a l l cease and t e r m i n a t e except o n l y the o b l i g a t i o n of t h e

T r u s t e e t o p a y o r cause t o be p a i d , from Lease Payments p a i d

by o r on b e h a l f of t h e City from d e p o s i t s p u r s u a n t t o

paragraphs (b ) through (d) above, t o t h e Owners o f t h e Bondsn o t so surrendered and p a i d a l l sums due with r e s p e c t

t h e r e t o ; provided, however, t h a t n o tw i th s ta n d i ng a n yt hi ng i n

t h e Indenture t o t h e c o n tr a ry , i n t h e event t h a t t h e

p r i n c i p a l of o r i n t e r e s t on t h e Bonds s h a l l have been p a i d

by t h e I n su re r pursuant t o the Municipal Bond I n s u r a n c e

P o l i c y , t h e Bonds s h a l l remain Outstanding f o r a l l purposes ,n o t be defeased o r otherwise s a t i s f i e d and n ot c on si d er e d

p a i d by the A u t h o r i t y , and t h e assignment and p l e d g e of t h e

Lease Payments and o t h e r amounts under the I n d e n t u r e t o t h eT r u s t e e f o r t h e b e n e f i t o f t h e Bond Owners s h a l l c o n t i n u e t o

e x i s t and s h a l l run t o t h e b e n e f i t o f t h e I n s u r e r , and theI n s u r e r s h a l l be subrogated t o t h e r i g h t s of t h e Owners oft h e Bonds.

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COVENANTS

The Author i ty covenants and agrees with th e Owners

of the Bonds to perform a l l ob l iga t ions and du t ies imposedon it under the Leas8 .

LIMITATION OF LIABILITY

Except as prov ided in th e Indenture , ne i the r th eAuthor i ty nor th e Trustee s ha l l have any o blig atio n o rl i a b i l i t y to th e Owners of the Bonds with respec t to th epayment of th e Lease Payments by the City when due o r withr espec t to th e performance by the C ity of any o the rcovenants made by it in th e Lease Agreement.

AMENDED AND RESTATED GROUND LEASE

AGREEMENT TO LEASE; TERM OF LEASE« LEASE PAYMENT

The City agrees to lea se the Si tes to th e

Author i ty , and th e Au th or ity a g re e s to l e a se the S i t e s fromth e Ci ty , upon th e te rms and condi t ions s e t fo r th in theAmended and Resta ted Ground Lease .

The term of th e Amended and Resta ted Ground Leases ha l l commence as o f November 1, 1992 and sha l l end on theea r l i e r of October 1, 2019 o r the date on which th e LeasePayments sha l l have been paid in f u l l unless extended o rterminated e a r l i e r in accordance with th e p ro vis io nsthe reof . I f on October 1, 2019, the Lease Payments s ha l lnot have been pa id , then th e term of the Amended andResta ted Ground Lease sha l l be extended un t i l ten (10) days

a f t e r a l l the Bonds have been pa id . The term of the Amendedand Restated Ground Lease s ha l l in no even t extend beyondOctober 1, 2032.

The Author i ty agrees to pay to the Ci ty , as r en t a lfo r th e use and o ccup an cy of the Si t e s dur ing th e term ofth e Amended and Resta ted Ground Lease , payments as s e t for thin the Amended and Restated Ground Lease . No fu r t he r

amounts sha l l be due and payable by th e Authori ty to theCity under th e Amended and Resta ted Ground Lease.

Upon t e rmina t ion of the Amended and Resta ted Ground

Lease, a l l r i gh t , title and i n t e r e s t of th e Au th ori ty in and

to th e Si tes s ha l l rev er t to th e Ci ty .

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CONDEMNATION; DAMAGE OR DESTRUCTION

In th e event of damage or des t ruc t ion to th e Si t e s

or any pa r t the reof o r in th e event a proceeding in eminentdomain o r condemnation i s i n s t i t u t ed aga ins t th e Si t e s o rany pa r t the reof , the Lease Agreement wi l l e i t h e r con t inue

or t e rmina te pursuant to i t s terms. I f th e Lease Agreement

t e rmina tes (the C ity , as sub lessee o f the Si t e s and l e s seeof th e Fac i l i t i e s , has th e opt ion , a t its sa l e d i s c re t i on ,to exe r c i s e or not exe rc i se any r igh t s contained in th e

Lease Agreement), the Amended and Resta ted Ground Leasesh al l a ls o terminate and a l l Net Proceeds s ha l l be a l l oca t ed

in a cc or da nc e w ith the provis ions of th e Lease Agreement .I f th e Lease Agreement does not te rm ina te , the prov i s ions ofthe Lease Agreement with r espec t to r epa i r s o r r e s to r a t i onand th e a l loca t ion of Net Proceeds s ha l l govern .Notwithstanding the foregoing, in the event th a t fo r anyreason the Lease Agreement has been t e rmina ted and th e

Amended and Resta ted Ground Lease co ntinu es , th e Author i ty

sha l l no t be en t i t l ed to th e Net Proceeds o f any insurance

o r condemnat ion award o r any por t ion the reof , and a l l of the

same sha l l be th e proper ty of the C ity to th e ex ten t s e tfor th in th e Lease Ag reemen t.

MISCELLANEOUS

The Authori ty sha l l not , d i r ec t ly o r i nd i r e c t ly ,crea te , assume or su ff e r to ex i s t any mortgage, pledge ,l i en , charge, encumbrance o r claim on o r with re spec t to th e

Si t e s , o the r than the r espec t ive r i gh t s of th e Au th or ity andthe C ity as provided in th e Amended and Resta ted Ground

Lease.

LEASE AGREEMENT

AGREEMENT TO LEASE

In cons idera t ion of the payment by th e C ity to th e

Author i ty o r i t s assignee of the Lea se P ayments , the

A u th ority su blea se s th e Si t e s and l eases th e Fac i l i t i e s tothe City pursuant to , and on th e terms and condi t ions s e t

for th in , th e Lease Ag reemen t.

TERM OF LEASE AGREEMENT

The term of th e Lease Agreement sha l l commence asof November 1, 1992 and sha l l end on th e ea r l i e r of( i) October 1, 2014, o r ( i i ) the date upon which LeasePayments a re paid in fu l l , unless extended o r t e rmina ted

ea r l i e r in accordance with th e p ro visio ns h ereo f. I f onOctober 1, 2014, the Bonds have not been paid o r p ro vis io n

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for the payment thereof has not been made, then the term ofthe Lease Agreement sha l l be extended unt i l ten (10) daysaf t e r a l l the Bonds have been paid o r p ro vis io n therefor hasbeen made, except that in no event sha l l the term hereof beextended beyond October 1, 2032.

LEASE PAYMENTS

The City agr ee s to pay to the Authori ty , i t ssuccessors and assigns, as renta l for the use and occupancyof the Si tes and the Faci l i t ies , the Lease Payments. EachLease Payment shal l be for the r igh t to possess the Si tesand the Faci l i t i es for the semiannual period commencing thesecond day of October or April of each calendar year andending on the f i r s t day of the following October or Apri l .For each semiannual ren ta l period, the City sha l l make LeasePayments durin g sa id semiannual period as more part icularlyse t forth in Exhibit B to the Lease Agreement , as Exhibit Bmay from t ime to time be modified, following prepayment of

Lease Payments. In addition , in the event of damage to ordestruction of the Fac i l i t i e s , i f the City e lec ts to repair ,reconstruct or replace the Faci l i t i es and the Faci l i t ies arenot restored and made Usable within two years (or suchs ho rte r p eri od of time as Net Proceeds of renta linterruption insurance and moneys in the Reserve Account areavailable fo r the payment of Lease Payments), the City wil lpay addi t ional Lease Payments in an aggregate amountnecessary to replenish any deficiencies in the ReserveAccount by reason of such damage or destruct ion of theFaci l i t i es . Such addit ional Lease Payments wil l be made inconsiderat ion of the City 'S r ight to possession and use ofthe restored Faci l i t i es and sha l l be payable in equal

semiannual payments, commencing on the date fo r the paymentof Lease Payments hereunder next occurring followingrestorat ion and repair of the Faci l i t i es , fo r the le sse r offive years or the remaining term of the Lease Agreement,unt i l such additional Lease Payments are paid in fu l l .

Lease Payments for each semiannua l payment periodduring the term of the Lease Agreement sha l l consti tute theto ta l amount due for sa id payment period and shal l be paidby the City for and in considerat ion of the r igh t ofpossession of, and the continued quiet use and enjoyment ofthe Si tes and the Fac i l i t i e s (including, in the case ofaddit ional Lease Payments, the res tored Fac i l i t ie s ) during

such payment period.

An amount equal to the Lease Payment at tr ibutableto each semiannua l payment period sha l l be due on the 15thday of September and March in each year as specif ied inExhibit B to the Lease Agreement; provided tha t there sha l l

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be applied as a cred i t against the Lease Payment payable onsuch date an amount equal to the sum of ( il the amount ofin te res t or income, i f any, theretofore earned on the LeasePayment Account and Redemption Fund since the date of theprevious repor t made by the Trustee in accordance with theprovisions of the Indenture, plus (ii) the amount, i f any,then on deposi t in the Lease Payment Account, which to ta l

c re dit sh all have been reported on the precedingSeptember 15 or March 15 by th e T rustee to the City pursuantto the Indenture. In the event tha t the to ta l amount ofcredit exceeds the Lease Payment due on the Payment Datefollowing sa id re po rt , the amount of said excess shal l beapplied as a cred i t against subsequent Lease Payments. Inaddit ion, the amount in the Reserve Account sha l l be appliedas a cred i t agains t the l a s t Lease Payments due pr ior to theexpiration of the term of the Lease Agreement.

Should any Lease Payment be made l a te r than thePayment Date to which such Lease Payment per ta ins , suchLease Payment sha l l bear in te re st a t the same ra te as the

ra te represented by the in te res t component of said LeasePayment from such Payment Date to the date of actualpayment.

Pursuant to the Lease Agreement, the Authorityd ire cts th at the City make the Lease Payments direc t ly tothe Trustee fo r deposit in the Lease Payment Account.

PREPAYMENT OF LEASE PAYMENTS

The Lease Payments are su bject to mandatory andoptional prepayment as provided in the Lease Agreement andcorresponding to the mandatory and optional redemption of

the Bonds.

DEFEASANCE

The City may on any date secure the payment of a l lor a port ion of the Lease Payments by a deposit w ith theTrustee, as escrow holder under an escrow deposi t and t rus tagreement as referenced in the Indenture, of ei ther (i) anamount, i f any, which, together with amounts on deposi t inthe Lease Payment Account and the Reserve Account, i s , inthe opinion of an independent cer t i f ied public accountant,ful ly suff ic ien t to pay a l l unpaid Lease Payments, includingthe principal and in te res t components thereof , andprepayment penal ty, i f any, thereon, in accordance with theLease Payments schedule se t for th in Exhibi t B of the LeaseAgreement, or ( i i l direct obligat ions of the United Statesof America, together with cash, i f required, in such amountsas wil l , together with in te res t to acc rue t he reon and, i f

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MAINTENANCE; UTILITIES AND TAXES

Throughout t h e term o f t h e Lease Agreement, a s p a r t

o f t h e c o n s i d e r a t i o n f o r t h e r e n t a l o f t h e S i t e s and t h e

F a c i l i t i e s , a l l improvement , r e p a i r and maintenance o f t h e

S i t e s and t h e F a c i l i t i e s s h a l l be t h e r e s p o n s i b i l i t y o f t h e

C i t y , and the C i t y s h a l l pay f o r o r o t h e r w i s e arrange f o r

t h e payment of a l l u t i l i t y s e r v ic e s s u p p li e d t o theF a c i l i t i e s and a l l c o s t s o f o p e ra ti o n o f t h e F a c i l i t i e s anda l l c o s t s of t h e r e p a i r and replacement o f t h e F a c i l i t i e sr e s u l t i n g from o r d i n a r y wear and t e a r o r want of c a r e on t h e

p a r t o f t h e C i t y .

The C i t y s h a l l a l s o p a y o r cause t o be p a i d all

t a x e s and assessments o f any type o r n a t u re , i f any, chargedt o t h e A u t h o r i t y o r t h e C i t y and r e l a t e d t o t h e S i t e s o r t h e

F a c i l i t i e s o r t h e i n t e r e s t s o r e s t a t e s t h e r e i n .

MODIFICATION OF THE SITES OR THE FACILITIES

The C i t y s h a l l , a t i t s own expense , have t h e r i g h tt o remodel t h e F a c i l i t i e s o r t o make a d d i t i o n s ,

m o d i f i c a t i o n s and improvements t o t h e S i t e s and F a c i l i t i e s .A l l a d d i t i o n s , m o d i f i c a t i o n s and improvements s h a l l

t h e r e a f t e r comprise p a r t o f t h e S i t e s and F a c i l i t i e s and bes u b j e c t t o t h e p r o v i s i o n s o f t h e Lease Agreement. Sucha d d i t i o n s , m o d i f i c a t i o n s and improvements s h a l l not i n anyway damage t h e S i t e s o r F a c i l i t i e s o r cause them t o be usedf o r purposes o t h e r t h an t h o s e a u t h o r i z e d under t h e

p r o v i s i o n s of s t a t e and f e d e r a l law; and t h e S i t e s andF a c i l i t i e s , upon c omp le tio n o f any a d d i t i o n s , m o d i f i c a t i o n s

and improvemen ts made t h e r e t o pursuan t t o t h e Lease, s h a l l

be o f a v a l u e which i s no t s u b s t a n t i a l l y l e s s than t h e v a l u e

o f t h e S i t e s and F a c i l i t i e s immediately p r i o r t o t h e makingo f such a d d i t i o n s , m o d i f i c a t i o n s and improvements.

INSURANCE

The C i t y s h a l l m a i n t a i n o r cause t o be m a i n t a i n e d ,

th roughout t h e term o f t h e Lease Agreement , a comprehensiveg e n e r a l p u b li c l i a b i l i t y i n s u r a n c e p o l i c y o r p o l i c i e s

a g a i n s t d i r e c t o r c o n t i n g e n t l o s s o r l i a b i l i t y f o r damagesf o r p e r s o n a l i n j u r y , d e a t h o r p ro pe r t y damage occasioned byr e a s o n o f t h e o p e r a t i o n o f t h e S i t e s and t h e F a c i l i t i e s .S a i d p o l i c y o r p o l i c i e s f o r comprehensive g e n e r a l p u b l i c

l i a b i l i t y i n s u r a n c e s h a l l provide a t o t a l coverage i n

amounts a u t h o r i z e d by t h e C i t y ' s l i a b i l i t y insuranceprogram, and may be s u b j e c t t o a d e d u c t i b l e amount i n anamount n o t t o exceed $500,000, o r such g r e a t e r amount a s maybe a u t h o r i z e d by t h e C it y 'S l i a b i l i t y i n s u r a n c e program.

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The City shal l procure and maintain, or cause to beprocured and maintained, throughout the term of the LeaseAgreement, insurance ag ain st lo ss or damage to the Si tes andany structures const i tu t ing any pa r t of the Faci l i t i es byf i re and l ightning, with extended coverage and vandalism andmalicious mischief insurance, and earthquake insurance (butas to earthquake insurance only i f , in the opinion of the

City, such insurance i s avai lable a t reasonable cost on theopen market from reputable insurance companies). Saidextended coverage insurance sha l l , as nearly as pract icable ,cover loss or damage by explosion, windstorm, r io t ,ai rcraf t , vehicle damage, smoke and such other hazards asare normally covered by such insurance. Such insuranceshal l be in an amount equal to 100% of the replacement costof the Si tes and the Faci l i t i es . Such insurance may besubject to deductible amounts as may be authorized by theCity 's l i ab i l i ty insurance program, except tha t theearthquake insurance may be subjec t to a deductible clauseof not to exceed ten percent (10%) of said replacement costfor an yo ne lo ss .

The City sha l l maintain or cause to be maintainedthroughout the term of the Lease Agreement ren ta lin terrupt ion or use and occupancy insurance, in an amountnot le ss than the maximum to ta l Lease Payments payable bythe City on any four consecutive dates for payment ofsemiannual Lease Payments hereunder, to insure ag ainst lo ssof Lease Payments to the Authority or i t s assignee caused byany of the per i l s covered by the f i r e and extended coverageinsurance described above.

The City sha l l maintain or cause to be maintainedthroughout the term of the Lease Agreement , Workers'

Compensation I nsur ance cover a l l persons employed inconnection with the Faci l i t i es who are not o th erw ise coveredas required by the Labor Code of the State of Cali fornia .

Each policy of f i re and extended coverage andrental interruption insurance required by the LeaseAgreement shal l provide that a l l proceeds thereunder sha l lbe payable to the Trustee as and to the extent requiredunder the Lease Agreement.

APPLICATION OF NET PROCEEDS OF INSURANCE

Any Net Proceeds of any insurance re la t ing to an

accident to or dest ruct ion of any par t of the Si tes or theFaci l i t ies which i s col lected by the City in consequence ofany such accident o r d es tr uc tio n sha l l be deposi ted by theCity in the Net Proceeds Account to be held in t rus t by theTrustee as assig nee of the Authority pursuant to the

C-20



Indenture and sha l l be applied and disbursed as se t forthbelow.

I f the Ci ty determines that such Net Proceeds areto be ut i l ized for the repair , reconstruction or replacementof the damaged or destroyed portion of the Si tes or theFaci l i t i es and tha t such repair , reconstruction or

r ep lacement can be completed within two years from the dateof damage or d estru ctio n, as evidenced by a cer t i f ica teexecuted by an Authorized Officer of the City and f i led withthe Trustee, then the City sha l l cause such port ion of theSites or the Faci l i t i es to be repaired, r econst ruct ed o rreplaced to a t l eas t the same good order, repair andconditio n a s it existed pr ior to the damage or destruction,insofar as the same may be accomplished by the use of saidNet Proceeds, and shal l di rec t th e T ru ste e to withdraw saidNet Proceeds from the Net Proceeds Account from time to timeand to pay such Net Proceeds to the City for the purpose ofsuch repair , reconstruction or replacement. The Citycovenants tha t such repair , reconstruction or replacement

shal l be completed and the Si tes or the Faci l i t i es madeUsable within two years from the date of damage to ordestruct ion of the Fac i l i t i e s . The City s ha ll d ire ct theTrustee to deposit any balance of said Net Proceedsremaining in the Net Proceeds Account and not re qu ire d fo rsuch repa i r , reconstruction or replacement into the LeasePayment Account as a prepayment of Lease Payments. Subjectto the provisions of the following two paragraphs, the Cityshal l be oblig ate d to continue to make Lease Paymentsrequired by the Lease Agreement notwithstanding accident too r d es tr uc tio n of a l l or a port ion of the Si tes or theFaci l i t i es ; provided, however, that in the event thataccident or damage to any port ion of the Si tes or the

Faci l i t i es i s such as to cause such portion not to beUsable, then such Lease Payments sha l l be abated in theproportion to which th e unu sab le portion of the Si tes andthe Fac i l i t i e s bears to the entire Sites and Faci l i t i esbased upon the fa i r market value of the Si tes and theFaci l i t i es on November 1, 1992 or the date of suchaba tement , whichever i s greater , or to the maximum extentpermitted by law, u nti l rep air of such damaged port ion iscompleted to such an extent as to enable use thereof .Notwithstanding the foregoing, there sha l l be no abatementso long as moneys then on deposit in the Lease PaymentAccount or Reserve Account or Net Proceeds of ren ta lin terrupt ion insurance are suff ic ien t for the making ofLease Payments when and as they become due and payable.

In l ieu of repair , reconstruction or replacement ofthe damaged or destroyed port ion of the Sites or theFaci l i t i es , the City may (and, i f the City sha l l determine

C-21



tha t such repair , reconstruction or replacement sha l l not becompleted within two years, the City sha l l ) , by acer t i f ica te executed by an Authorized Officer of the Cityand f i led with the Trustee, d i rec t the Trustee to apply theNet Proceeds of insurance to the prepayment of LeasePayments, provided that , in the case where the Citydetermines tha t such repai r , reconstruction or replacement

may be completed within two years of such damage ordestruction, the remaining Lease Payments wil l be suff ic ien tto pay a l l of tha t port ion of principal and i n t e res t on theremaining Outstanding Bonds.

Any Net Proceeds of ren ta l in terrupt ion insurancerequired by the Lease Agreement sha l l be used to pay LeasePayments during any period in which abatement of LeasePayments would otherwise have occurred except for theava i lab i l i ty of such Net Proceeds of rental in terrupt ioninsurance. Such Net Proceeds sha l l be paid by the City tothe Trustee, as assig nee of the Authori ty, for deposi t inthe Lease Payment Account and applied to the payment of any

Lease Payments then· due and, . thereaf ter , sha l l be applied asa credi t against th e next subsequent Lease Payments.

TITLE INSURANCE AND CONDEMNATION

The City sha l l provide, or cause to be provided, a ti t s own expense, an American Land Tit le Associat ion t i t l einSurance policy with.such endorsement so as to be payableto the Trustee (as assignee of t he Au thor ity) . Such policysha l l insure the City 's fee t i t l e and the Authori ty ' sleasehold t i t l e to the Sites , the Authori ty 's t i t l e to theFaci l i t i es and the City 's subleasehold t i t l e to the Si tesand leasehold t i t l e to the Fac i l i t i e s . Said t i t l e insurance

polic y s ha ll be in a principal amount equal to the aggregateprincipal component of Lease Payments se t for th in Exhibi t Bto the Lease Agreement.

All Net ~ r o c e e d s received under the t i t l e insurancepolicy provided for by the Lease Agreement or in anycondemnation proceeding undertaken by any governmentalagency re la tin g to a l l or a port ion of the Si tes or theFaci l i t i es sha l l be paid to the Trustee and deposi ted in theNet Proceeds Account and shal l be applied and disbursed asse t forth below.

I f the City determines tha t such t i t l e defec t or

condemnation has not material ly affected the operation ofthe Sites or the Faci l i t i es or the abi l i ty of the City ori t s assignee to meet any of the obligations under the LeaseAgreement, or i f such Net Proceeds are insuff ic ien t toenable the City to prepay Lease Payments in fu l l , as se t

C-22



fo rth in a cer t i f i ca t e executed by an AuthorizedRepresentative of the City and f i led with the Trustee, theCity sha l l di rec t the Trustee by said cer t i f i ca te of anAuthorized Representative to hold such Net Proceeds in theLease Payment Account and apply such Net Proceeds as aprepayment in par t of Lease Payments. SUbject to theprovisions of the fol lowing paragraph, the City shal l be

obligated to continue to make Lease Payments required by theLease Agreement notwithstanding condemnation of or a t i t l edefect re la t ing to a portion of the of the Si tes or theFaci l i t i es ; provided, however, tha t in the event that suchcondemnation or defect i s to such extent as to cause suchport ion not to be Usable, then such Lease Payments shal l beabated in the proportion to which the unusable port ion ofthe Sites and the Faci l i t i es bears to the en t i re Sites andthe Fac i l i t ie s based upon the fa i r market value of the Si tesand the Faci l i t i es on November 1, 1992 or the date of suchabatement, whichever i s greater , o r to the maximum extentpermit ted by law, except that abatement sha l l not resul t solong as moneys then on deposi t in the Lease Payment Account

or Reserve Account or Net Proceeds of t i t l e insurance orcondemnation are suff ic ient for the making of LeasePayments.

I f the City determines tha t such t i t l e defect orcondemnation has mate r ia ll y a f fec ted the operat ion of theSites or the Fac i l i t i e s or the ab i l i ty of the City to meetany of i t s obligations under the Lease Agreement, as se tfor th in a cer t i f i ca t e executed by an AuthorizedRepresentative of the City and f i led with th e T ru ste e, or i fsuch Net Proceeds are s uf fi ci en t to enable the City toprepay Lease Payments in fu l l as se t forth in the LeaseAgreement as se t forth in a cer t i f i ca te executed by an

Authorized Representative of the City and f i led with theTrustee, the City s ha ll d ire ct the Trustee, by sa idcer t i f i ca te of an Authorized Representative, to t r ea t suchNet Proceeds as the prepayment of Lease Payments in fu l l .

In the event of condemnation of the Si tes and theFaci l i t i es , the City wil l use a l l effor ts to assure that anyaward made as a resul t of said condemnation i s suff ic ien t topay the s t ipulated value (as se t forth in Exhibi t B of theLease Agreement) of the City ' s i n t e res t in the Si tes and theFaci l i t ies .

C-23



EVENTS OF DEFAULT AND REMEDIES

The fo l lowing a re "Events of Defau l t " under the

Lease Agreement:

(i) Fai lure by th e C ity to pay any Lease Paymentwhen due and p ay ab le un de r the Lease Agreem ent, and the

con t inua t ion of such f a i l u r e to th e B usin ess Day p r i o rto the Payment Date to which such Lease Paymentpe r t a i n s ;

( i i ) Fa i lu re by th e C ity to pay any Addi t iona l

Payment when due and payable under th e Lease Agreementand th e c on tin ua tio n of such fa i lu re fo r a period of ten(10) days;

( i i i ) Fai lure by th e Ci ty to observe and perform anycovenant , condi t ion o r agreement on i t s pa r t to beobserved o r performed, o ther than as r e f e r r ed to in

c lause (i) above, fo r a pe r iod of s ix ty (60) days a f t e r

wri t t en no t ice spec i fy ing such fa i lu re and reques t ingt ha t it be remedied has been given to th e Ci ty by th e

Author i ty , the T ru ste e o r Owners of not l e s s than f ive

pe rcen t (5%) in aggrega te Pr inc ipa l Amount of Bonds then

Outs tanding, unless the Authori ty , Trus tee and such BondOwners agree in w ri t in g to an extension of such t imep r i o r to i t s exp i r a t i on ; provided, however, if thef a i l u re s t a t ed in th e no tice can be cor rec ted , but notwithin th e a pp lic ab le per iod , the Author i ty , the

Trus tee , o r such Bond Owners sha l l not unreasonablywi thho ld t h e i r consen t to an ex tens ion of such t ime ifcor rec t ive ac t ion i s i n s t i t u t ed by th e City within th e

app l icab le period and d i l i g en t l y pursued un t i l the

defau l t i s cor rec t ed ;

( iv) A cour t having j u r i sd i c t i on sha l l en t e r adecree o r order fo r r e l i e f in respec t of the City in aninvolunta ry case under app l i cab le b an kr up tc y, i ns ol ve nc yor o th er s im i la r laws in e f f e c t or appoint ing arece iver , l i qu ida to r , ass ignee , t r u s t e e , custodian ,

seques t ra to r o r s im i l a r o f f i c i a l of th e C ity o r fo r anysubs t an t i a l pa r t of i t s proper ty , o r o rd er in g the

winding up o r l i qu ida t ion of i t s a f f a i r s , and suchdecree o r orde r remains unstayed and in e f f e c t fo r s ix ty

(60) days ;

(v ) The City sha l l commence a volun ta ry case underany app l icab le b an kr up tc y, i ns ol ve nc y o r o th e r s imi la rlaw in e f f e c t or sha l l consen t to the en t ry of an orde r

fo r r e l i e f in an i nvo lun ta ry case under any such law, o r

sha l l consen t to th e a pp oin tm en t o f o r t ak ing possess ion

C-24



by a receiver , l iquidator , assignee, t rus tee , custodian,sequest ra tor or other s imi lar off ic ia l of the City forany subs tan t ia l par t of i t s property, or sha l l make anygeneral assignment fo r the benef i t of credi tors or shal lfa i l generally to pay i t s debts as they become due andsha l l take any corporate act ion in f ur th er ance o f any of

the foregoing.

Upon the occurrence and continuance of any Event ofDefaul t descr ibed in ( il or ( i i l above, the Trustee, mayproceed to (a l re -en te r and take possession of theFaci l i t i es holding the City l iab le fo r the Lease Paymentsand other amounts payable by the City pursuant to the LeaseAgreement; (bl re-enter and take possession of theFaci l i t i es and r e - l e t the Faci l i t i es to a th ird party forthe account of the City, holding the City l iab le for thedifference between the amount received under such lease andthe Lease Payments payable by the City under the LeaseAgreement;

or(cl take whatever act ion a t law or

inequity

may appear necessary o r d es ir ab le to enforce the r ights oft he Au thor ity . Under no circumstances may the Author ity o rth e T ru stee declare the Lease Payments not then in defaul tto be immediately due and payable.

C-25



APPENDIXD

FORM OF OPINION OF BOND COUNSEL



APPENDIX D

Form o f opinion o f Bond Counsel

December __ , 1992

Cal i fo rn ia Statewide CommunitiesDevelopment Author i ty

7901 s toner idge Drive , su i t e 225

Pleasan ton , Cal i fo rn ia 94588

Re: Cal i fo rn ia Sta tewide CommunitiesDevelopment Author i ty 1992 LeaseRevenue Bonds (C i ty of OaklandConvention Centers Projec t )

Fina l Opinion

Ladies and Gentlemen:

We have ac ted as Bond Counsel in connect ion withth e a u th o ri za ti on , issuance and de l ive ry by th e Cal i fo rn ia

s ta tewide Communit ies Deve lopment Author i ty ( the

"Authori ty") of its 1992 Lease Revenue Bonds (Ci ty ofOakland Convention Centers Pro j e c t ) , dated December , 1992

( the "Bonds"). In t h a t connec t ion , we have examinedcer ta inp ro ce ed in gs o f th e Authori ty and th e Ci ty of Oakland,Cal i fo rn ia ( the "C i ty " ) , i nc lud ing but no t l imi t ed to

Au t hor it y Resol ut ion No. , adoptedOctober 19, 1992, and C ity O rd in an ce No. C.M.S.,

adopted October _, 1992 ( the "Resolut ion" and "Ordinance",r espec t ive ly ) and executed coun te rpar t s of th e Ind en tu re o f

Trus t , dated as o f November 1 , 1992 ( the " Inden tu re" ) , byand between Ameri t rus t Texas National Assoc ia t ion , ast ru s t ee ( the "Trus tee" ) , and th e Authori ty , the Amended andResta ted Lease and Sublease Agreement , dated as o f

November 1, 1992 ( the "Lease Agreement") , by and between th e

Author i ty and th e C ity , and such opinions and ce r t i f i c a t e sas to c er ta in f ac tu al mat te r s , and such othe r documents andmat te r s as we deemed necessary o r appropr ia te to render th i sopin ion . Any cap i t a l i zed term no t def ined here in sha l l haveth e meaning given to such term in the Inden ture .

The opin ions he re i na f t e r expressed (1) a re based onan examinat ion of ex is t ing s t a t u t e s , r egu la t ions , rUl ings



Ca li fo rn ia s ta tew id e Communities

Development Author i ty

December __ , 1992Page Two

and jUdic ia l dec i s ions and cover ce r ta in matte rs n ot

d i rec t l y addressed by such au thor i t i e s ; (2) may be af fec ted

by events or ac tion s occurr ing a f t e r the date he reof ; and(3) are sUbjec t to the e f f e c t of bankruptcy , inso lvency ,

r eo rgan iza t ion , moratorium or s im i l a r laws genera l ly

a f fec t ing c r ed i t o r s ' r i gh t s and to the app lic a t io n ofgenera l pr inc ip les of eq uity , includ ing bu t no t l imi ted to

the r i gh t to spec i f i c performance, whereby a cou r t might not

enforce ce r ta in covenants if it concludes t h a t suchenforcement would be unreasonable or no t under taken in goodf a i t h under th e then ex is t ing c i rcumstances , and the

l imi t a t ions on remedies a v ai la b le a g ai ns t pUblic en t i t i e s .

Based on and sUbject to th e foregoing, and in

r e l i ance the reon, as of the da te hereo f, we are of the

fol lowing opinion:

1 .organized andCal i fo rn ia .

The Author i ty i s a j o i n t powers au thor i ty dUlyopera t ing under th e laws of th e Sta t e of

2. The City i s a municipal corpora t ion andcha r t e r c i t y , dUly organized and va l id ly exis t ing under th e

Cons t i tu t ion and laws of th e s t a t e of Cal i fo rn ia and dulyex i s t ing under i t s Char te r .

3. The Author i ty has f u l l power and au thor i ty

under th e laws of th e S ta te of C alifo rn ia to issu e theBonds, and th e Bonds cons t i tu t e th e l ega l , va l id and bindingl imi ted ob l iga t i on s of th e Au th or ity .

4. The Author i ty has fu l l power and au thor i ty

under the laws of the Sta te of Cal i fo rn ia to acqu i re title

to the Fac i l i t i e s and to l ease the Si tes from th e City , andto l ease and sublease to the City th e Fac i l i t i e s and the

s i t e s , re spec t ive ly , to en te r in to the Amended and Resta tedGround Lease and th e Lease Agreement, and to perform i t sobl igat ions the reunder .

5. The Indenture has been duly and va l id ly

author ized , executed and de l ivered and cons t i t u t e s thel ega l , val id and binding ob l iga t ion of the Author i ty . TheIndenture c rea t e s a va l id pledge, to secure th e payment ofth e p rin cip al o f , premium, i f any, and i n t e re s t on the

Bonds, of the Lease Payments and any other amounts( inc luding proceeds of the sa le of the Bonds) held in anyfund or account , o ther than the Rebate Fund, es tab l i shed

pursuan t to th e Indenture SUbject to the prov i s ions of the



Cal i fo rn ia s ta tewide CommunitiesDevelopment Author i ty

December __ , 1992Page Three

Indenture p erm itt in g th e ap pl ica t ion th ereo f fo r the

purposes and on th e terms and cond i t ions s e t fo r th in the

Indenture . The Inden tu re a l so crea tes a val id ass ignment tothe Trus tee , fo r the bene f i t of th e h old ers of th e Bonds, ofthe r i gh t , title and i n t e r e s t of th e Author i ty in th e LeaseAgreement ( to the ex ten t and as more pa r t i cu l a r ly desc r ibed

t h e re i n ) .

6. The Lea se Agreement , th e Amended and Resta ted

Ground Lease and the Inden tu re have been dUly author ized ,

executed and del ivered by th e Authori ty and cons t i tu te th e

l ega l , va l id and binding ob l iga t ions of th e Author i tyenforceab le aga ins t the Author i ty in accordance with t h e i rrespect ive terms.

7. The Lease Agreement and th e Amended andRestated Ground Lease have been duly author ized , executedand de l ivered by th e C ity and are th e l ega l , va l id andbinding ob l iga t ions of th e City enforceable aga ins t th e Ci ty

in accordance with t he i r respect ive t e rms, and th e

ob l iga t ion of the c i ty to make the Lease Payments under th e

Lease Agreement does not cons t i tu te a deb t of the Ci ty , th e

s t a t e o f C ali fo rn ia or any po l i t i c a l subdivis ion t h e r eo f

within the meaning of any cons t i t u t i ona l o r s ta tu tory deb t

l imi t o r r e s t r i c t i on .

8. The Bonds a re lim ited ob l iga t ions of the

Author i ty and are not a l i en or charge upon the funds o rproperty of the Author i ty except to the ex ten t of th e

aforementioned pledge and ass ignment . The fa i th and c r ed i tof the A uthori ty i s not pledged to th e payment of p r i nc ipa l

of or premium or i n t e r e s t on the Bonds. The Bonds a re not adebt of th e s t a t e of Cal i fo rn ia or any po l i t i c a l subd iv i s ion

or agency the reof , othe r than th e Au th or ity to th e ex ten t of

the aforementioned pledge and ass ignment , and ne i t he r the

s t a t e nor any such po l i t i c a l subdivis ion or agency i s l i ab l efo r the payment the reof .

9. In t e r e s t on the Bonds i s exempt from s t a t e ofCali forn ia persona l income taxes .

Respec t fu l ly submi t t ed ,



(THIS PAGE INTENTIONALLY LEFr BLANK)



APPENDIXE

FORM OF OPINION OF SPECIAL TAX COUNSEL



(THIS PAGE INTENTlONALLY LEFr BLANK)



APPENDIX E

FORM OF OPINION OF SPECIALTAX COUNSEL

California Statewide CommunitiesDevelopment Authority

7901 Stoneridge, Suite 225

Pleasanton, California 94588-3657

Re:

Ladies &. Gentlemen:

$ Califomia Statewide Communities Development Authority 1992

Lease Revenue Bonds (City of Oakland Convention Centers Project)

We have acted as special tax counsel in connection with the issuance and sale by the

California Statewide Communiti..'sDevelopmentAuthority (the·Authority·)of its* _1992 Lease Revenue Bond' (Henry J. Kaiser Convention Center and George P. Scotian Memorial

Convention Center) (the "Bonds"). The Bonds are 'Aued under and pursuant to an Indenture of Trust

dated as of , 1992 (the ·Indenture"), between the Authority and Ameritrust Texas

National Association, as Trustee (the ·Trustee"). The proceeds of the Bonds will be used (a) to pay

Oalder Associates Umited Partnership ("Oalder·) and Oalcbay Associates Umited Partnership

("Oakbay") the acquisition price in connection with the purchase of the Henry J. Kaiser Convention

Center ("Kaiser Convention Center·) and the Oakland Convention Center-George P. Scotian Memorial

Convention Center (·ScotIan Convention C e ~ r " ) , respectively, by the Authority; (b) to fund a reserveaccount created under the Indenture; and (c) to pay COsts incurred In connection with the executionand delivery of the Bonds. The proceeds from the sale by Oaktar of the Kaiser Convention Center

will be used to prapay the related Installment Sale Agreements and redeem the Redevelopment

Agency of the City of Oakland', (the "Agency") $43,500,000 Certificates of Participation (Henry J.

Kaiser Convention Center), dated September 1, 1982 (the ·Kaiser CertifICates") and the proceeds from

the sale by Oakbay of the Scotian Convention Center will be used to prepay the related Installment

Sales Agreements and to redeem the Agency's $38,000,000 Certificates of Participation (Oakland

Convention CenteroGeorge P. Scotian Memorial) Series 1983 (the ·Scotlan Certificates"). Pursuant to

an Amended and Restated Lease and Sublease Agreement dated as of , 1992 (the ·Lease

Agreement") between the Authority and the City of Oakland, California (the •City), the Authority has

agreed to lease to the City the Kaiser Convention Center and the Scotian Convention Center and the

City has agreed to make leaM payments suffICient in amount to pay when due the principal of andinterest on the Bonds. The payment of the principal of and Interest on the Bonds will be guaranteed

under a municipal bond guaranty policy to be iAued by AMBAC Indemnity Corporation (the "lnsurer").

Terms not otherwise defined herein shall have the same meanings provided in the Indenture.

As special tax counsel, we have examined the pertinent statutes, such documents, records

and other Instruments.a we deemed necessary to enable UI to express the opinions set forth below,

including without limitation, the Indenture, the Lease Agreement and an Arbitrage and Tax Certificate



Californl8 8mt8w1de Community

Development Authority

Page 2

of the Authority dated .. of th e date hereof. We ha"e alao examined and relied upon the legal

opinion of M o rri s o n . Foerster, bond counsel, dated .. o f th e date hereof, related to th e legal status

of, due authorization, execution and delivery by, and th e binding effect upon and enforceability

against, th e Authority o f th e Bonds.

Based on the foregoing, it is ou r opinion t ha t t he interest on the Bonds is excluded from gross

income fo r federal income ta x purposes under the Internal Revenue Code of 1986, as amended lthe

-Code-), under existing laws as enacted and construed on th e date of initial delivery of the Bonds,

assuming th e accuracy of and continuing compliance with th e certifications of th e Authority and the

City with certain covenants in th e documents and requirements of the Code. Failure by th e Authority

or the City to comply with such covenants and requirements may, however, cause interest on the

Bonds to be included In gross income fo r federal income ta x purposes retroactively to the date of

delivery of th e Bonds. Interest on th e Bonds will no t be an item of ta x preference fo r purposes of

either individual or corporate federal afternative minimum tax, but interest on th e Bonds held by a

corparation (other than an 8 corporation, regulated investment company, real estate investment trust

or real estate mortgage investment conduit! may be indirectly subject to federal alternative minimum

ta x and environmental ta x because of it s inclusion in th e earnings and profits of a corporate holder.

Interest on th e Bonds held by a foreign corparation may be subject to th e branch profits ta x imposed

by the Code.

Ownership of th e Bonds ma y result in collateral federal income ta x consequences to certain

taxpayers, including, without l imitat ion, financial institutions, property and casualty insurance

companies, certain S corporations, individual recipients of Social Security or Railroad Retirement

benefits, and taxpayers wh o ma y be deemed to have incurred or continued indebtedness to purchase

or carry th e Bonds. We exprasa no opinion as to such collateral tax consequences.

We have not been engaged to review, nor ha"e we undertaken to r ev ie w, t he accuracy,

completeness or sufficiency of the Official Statement or other offering material relating to the Bonds,

and we express no opinion herein relating thereto.

Very truly yours,



APPENDIXF

FORM OF MUNICIPAL BOND INSURANCE POLICY



IIIBACMunicipal Bond Insurance Policy

A \1BA( lndernmtv ( o r p o rJIHl'l

c- o ( " I COrpOfJlIOn ~ \ . , l c m ...

-H Fa...t vlrfflm .... t ~ J ( l I ..on \ \ r-con ...in ~ ~ - O ' "Adrniru-tranv v Ofbc c

One: 'llJ((.. vtrcet Pla?.J ' \C \ \ '\ or}... '\ Y IOOO-t

Issuer Polley Number

Bonds Prerniurn

Secretary

Authonzed Representatlveffective Date

AMBAC Indemnity Corporation (A"ffiAC) A Wbcon.>In Stock Insurance Company

m considerauon of the payment of the premium and subiect 10 the terms of thl> Poiley, hereby agree' to pay to the UnitedScatesTrust Cornpanv of New York, as trustee, or Its successor (the 'Insurance Trustee"), for the benefit of Bondholders, that

portion of the prmcipal of and interest on the above-described debt obhgauons (the" ') which shall become Due forPayment but shall be unpaid bv reason of !'<onpavment bv the Issuer

AMBAC will make such payments to the Insurance Trustee wuhm 5 davs folio AMBAC of Nonpavment

Upon a Bondholders presentauon and surrender to the Insurance Truste s r appurtenant coupons,uncanceled and In bearer form and free of any adverse claim, the Ins Tr t the Bondholder the face

amount of pnncipal and Interestwhich IS then Due for Pavment b a U nt, AMBAC shall become

the owner of the surrendered Bonds and coupons and shall er s rights to payment

In cases where the Bonds are issuable onlv 10 a form w r Bondholders or their assigns,the Insurance Trustee shall disburse prrncipal to a B aH d as afo on p ruauon and surrender to the

Insurance Trustee of the unpaid Bond, uncance n f t er With an Instrument of assignment,In form sausfactorv to the Insurance Trust ulve. such Bondholders dulv authorizedrepresentanve. so as to permit owners p su B arne of AMBAC or Its nornmee In cases

where the Bonds ar e Issuable on Iv r wh Ie egistered Bondholders or their assigns the

Insurance Trustee shall disburse 1 ere to a nih upon preseruauon to the Insurance Trustee ofproof that the claimarn IS en t he rest on the Bond and dellvery to the Insura.nce Trustee

of an rnsrrumenr of ass m ~ I 0 sa ate [ urance Trustee dulv executed bv the claimant Bondholder orsuch Bondholders Iv th ed se uve, ansf 109 to AMBAC all rrghts under such Bond to receive the Interest

rn respect of w. tH I ra dr u m ae AMBAC shall be subrogated to all of the Bondholders nghts topavrnenr on IS t ih xte of urance disbursements so made

As used here: the ho er m anv person other than the Issuer who, at the ume of Nonpavrnent, IS the owner

of a Bond Or0 to a Bond 'Due for Pavmem': when referring to the pnncipal of Bonds, IS when the

stated marunry date t dempuon date for the apphcauon of a required sinking fund mstallrnent has been

reached and does t r to ny earlier date on which pavment IS due by reason of call for redempuon (other than bv

apphcanon of requir g fund mstallrnents), accelerauon or other advancement of rnatunrv, and, when referring toInterest on the Bonds, hen the stated date for pavmem of interest has been reached "Nonpavmenr" means the failure

of the Issuer to have provided suffiCIent funds to the pavmg agent for payment 10 full of all prrncrpal of and mreresr on the

Bonds which ar e Due for Payment

ThISPohcv IS noncancelable The premium on thrs Pollcv IS not refundable for any reason, including pavment of the Bonds

pnor to maturirv ThIS Polleydoes not Insure against loss of an, redemption. prepayment or accelerauon premium which at

any time may become due In respect of anv Bond, nor agamst n ~ other than Nonpayment

In witness whereof AMBAC has caused this Polley to be affixed Witha facsrrmle of Its corporate seal and to be Signed by Its

duly authorized officers In facsrrnrle to become effective as Its ongrnal seal and signatures and brnding upon AMBAC by virtue

of the counter-signature of Its duly authorized representauve@ UNITED SW'ES TRUSTCOMPANY OFNEW'tORI<acknowledgesthat Ithas agreed 10perform the dulles of Insurance Trustee under tlusPolley

Form" S66-00(H (V901

~ ( < . tu-, ':7AuthorIZed Olficer



MIBAC.

Endorsement

Pohcv issued to

AMBAC Indemruty Corporanon

c/o CT Corporation Systems44 East MIfflInStreet

MadISOn. WlSConsm53703AdrmrustranveOffice

One State Street Plaza

New York. NY 10004

Attached [0 and forming part of

Effective Date of Endorsement

oakland 1992 scda bonds

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