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SR-6-F (73)~ ~ r i~~~~ - 9 ~9~3 CA:JL:wwrevbds\hpwd\pc~df City Council Me~ting November 9, 1993 STAFF REPORT TO: Mayor and City Cauncil FROM: City Attorney Santa Monica, Ca~iforna~a SUBJECT: RESQLUTT~N AUTHQRIZING ISSUANCE OF WASTEWATER REVENUE REFUNDING BONDS FOR THE HYPERI4N PRaJECT. APPROVING THE EXECUTIDN AND DELIVERY 4F A FIRST SUPPLEMENTAL INDENTURE, BOND PURCHASE AGREEMENT, ESCRQW AGREEMENT, aFFICIAL STATEMENT AND OTHER MATTERS RELATED THERETO INTRODIICTION This staff report requests that the City Cauncil adopt the attached resoluti~n pertaining to the issuance of up ta $39.75 mil~ian af Wastewater Enterprise Revenue Bonds (Hyperion Project) 1993 Refunding Series for the purpose of advance refunding the City's 1491 Wastewater Enterprise Revenue Bonds. The 1991 bonds were issued to finance a portion of the City's share af the costs of the upgrade af the Hyperion Wastewater Treatment Plant. By refundinq the 1991 bonds at tha.s time, up to $1.1 million in savings will be realized. BACRGROUND The City is required by its agreement with the City of Los Angeles to pay a proportianate share of certain capital impravements to the Hyperian Sewage Treatment Plant and related facilities. The City pumps its sewage to the Hyperion Plant far necessary treatment. During the Fall of 1991, the City Council approved a long-range plan to finance the City's share of these capital impravement costs, authorized - 1 - I~ ~ V- 9 1993 ~-F the issuance af $34.2 million af bonds to hegin to implement the financing plan, and approved a wastewater service rate restructuring to generate sufficient funds to pay annual debt service an the bonds and provide for the sound financia]. operation of the City's wastewater system. The 1991 bonds were issued at an interest rate of 6.25~. Interest rates have recentZy dec~ined to a leve~ where it is financially desirable to advance refund the 1991 bonds, thereby realizing up ta $1.1 millian in sa~ings. niscussioN The attached resolutivn authorizes the City to proceed with all steps necessary for issuance of the Wastewater Enterprise Revenue Bonds {Hyperion Pro~ect), 1993 Refunding Series (the "Bonds"). Such bond issuance would be in the aggregate principal amount of not to exceed $39.75 million and at an intere~t rate nat to exceed 5.95~, on the terms and conditions and subject to the iimitatians set f~rth in the First Supplemental Indenture relating to such Bonds. Attached ta this staff report are copies of the fo].lowing documents necessa~y for the issuance of the Bonds: 1. First Supplemental Indenture by and between Bank of America National Trust and Savings Association, as Trustee, and the City; 2. A Band Purchase Agreement between the underwriter (buyer) of the Bonds and the City; 3, A Prelimi.nary OffiCial Staten~ent to be us~d in connection with the offering and sa~e of the Bonds; and - 2 - 4. An Escrow Agreement between Bank af America National Trust and Savings Association as Escrow Bank to be used ta accomplish the advanced refunding of the 1991 bonds. The attached resolution approves all of the above documents substantially in the form presented to this meetinq, and authorizes execution and delivery of these documents by specified City officials and amployees. The preparat~on, execution and delivery of a Final Officia~ Statement, the execution and delivery of any additiona~ dacuments and the performance of such acts as may be necessary or desirable to effect the offering, sale and issuance af the Bflnds is also authorized and approved by the attached resolution. BQDGET AND FINANCIAL IMPACT The Bonds will be special obligations of the City, payable solely from the rates, fees and charges received by the City from the operation of the City's wastewater collection, treatmant and disposa~ system, ineZuding any proceeds of insurance and investment earnings. The Genera~ Fund af the City is nat liabl~, and the credit or taxing power of the City is not pledged for ~he payment of the Bonds. The principal and interest an the Bonds shall nQt be a debt of the City~ nor a lega~ or equitabie pledge~ charqe, lien or encumbrance up~n any praperty of the City or upan any of its incame, receipts, or revenues, except the revenues described above from the Wastewater Enterprise and such other amounts held by the Trustee and pledged to the payment of such ob~igations as provided in the First Supplemental Indenture. - 3 - RECOMMENDATI~N It is respectfully recommended that the City Council adopt the attached resolution autharizing the offering, sale and issuance of the Waste- water Enterprise Revenue Bonds (Hyperion Project) 1993 Refunding Series, and all documents and actions necessary for such proceedings, including approval of dacuments substantially in the form attached hereto. PREPARED BY: Joseph Lawrence, Acting City Attorney Linda A. Moxon, Deputy City Attorney Mike Dennis, Directar of Finance Attachments: Z. Resolution Authorizing Issuance of up to $39.75 Million Wastewater Enterprise Revenue Bonds, (Hyperion Project) 3.993 Refunding Series 2. First Supplementa~ Indenture 3. Bond Purchase Agreement 4. Preliminary Official Statem~nt 5. Escrow Agreement - 4 - 29199-04 JfiHR'-CH ]w eac RE50LUTION NO. 8 67 ~ RESaLUTIOIri OF THE CITY COUNCII. OF T~iE CTTY OF SANTA MDNICA AUTHORIZING THE ISSUANCE ~F NOT TO EXCEED $39,730,00~ AGGREGATE PRINCIPAL AMOUNT OF CTI'Y OF SANTA MQNICA WASTEWATER ENTERPRiSE REVENUE B~NDS (HYPERI~N PRQJECT}, 1993 REFUNDING SERIES, AFPRUVING THE EXECUT~ON AND DELIVERY OF A FIRST SUPPLEMENTAL INDENTURE AND A BOND PURCHASE AGREEMENT AND THE PREPARATIQN QF AN OFFICIAL STATEMENT AND QTHER MATTERS RELATED THERET~. 10)I4~93 11/03l93 WHEREAS, the City of Santa Moruca (the "City") is a municipal corgoration anc~ charter city, duly organized and e~sring under a freeholders' charter pursuant to which the City has the nght and gav~crer to rnake and enforce all la`us and regu~ations m respect to munlcipal affaus and certain other matters in accordance with and as more particularly provided in secaons 3, 5 and 7 of article XI af t~e Constitution af she State of Califarnia a~d secuan 400 of the Chart~r af the C~t} , WHEREAS, the City Cou~cil of the City, acan~ under and pursuant ta the povvers reserved to the City nnder art~cle XI of the Constitution of the State of Ca~~fornia and section 400 of the Charter of the City has enacted the Santa Monica Revenue Bond Act (being Chapter 5.5 of Amcle II of the Municipa~ Code of the G~ty), reiating to revenue bands, which incorporates, to the extent made applicable by said Act, the Revenue Bond Law of 1941, being Chapter b of Div~sion 2 of Title S of the Cahfornia Government Cade, as enacted and as thereafter amended (collectively, the "Law"}; wHEREAS, thc City now owns and aperates faciiities for the collection af sewage, waste and storm water, inciuding drainage, and ~as certain rights in facilit~es for the treatrnent and disposal of sewage and wastewater, including the Hyperion Treatment Plant; WHE1tEAS, in order to fmance certa~n improvements to said fac~lities, the City issued its Wastewater Enterprise Revenue Bonds (Hypezion Pro3ect), 1991 Serxes A(che "1991 5enes A Bonds"), in the aggregate principal amount of $34,2(~,000; WHEREAS, the 1991 Senes A Bands were issued pursuant ta an Indenture, dated as af November 1, 1941 (the "Inde~ture"), by and bet~reen Bank af America National Trust and Savings Association, as Tr~stee (the "Trustee") and the City; WHEREAS, the City has det~~r~~ined that debt service savi~gs can be achieved by adwa.n~e ref~di~g the 19915eries A Bonds; WHEREAS, the Indenture piovides that the L~ty may, subject to the reqwrements of the Law, hy supplemental indenttue establish one or more other series of bonds payab~e from Revenues (as defined in the ~.ndenturc), an~ the City may iss~e and the Trustee may a~thenncate an~ deliver, bonds of any series so established, for the purpose of zefunding any bonds iss~ed under the Indenture and then autstanc3in~, bui only upon compliance by the City with the grovisians af the Indenture; WHEREAS, in order to pm~~cie the moneys required to advance refund che 1931 3enes A Bonds, the City desues to autharize the issuance of its Wastewater Enterprise Revenue Bonds (Hypenon Pro~ect) 1993 Refunding Senes (the "1993 Series Bonds"}, in an aggregate pnncipal amount of not to exceed $39,750.000; WHEREAS, in order ta prov~de for the authentication and delivery vf the 1993 Series Bonds, to estabLsh and declare the terms and conditions upon which the 1993 Series Bonds are to be issued and secured and w secure the payment of the pruicipal thereof, premiurr~, if any, and rnterest therean, the City proposes to er~ter mto a First Supplemental Indentvre with the Tr~stee (such First Supp~emental Indenture, in the form pzesent~d to ttus meeang, v~nth such changes, insernons and orrussions as are made pursuant to this Reso~ution, being referred ta herein as the "First S~pplemental Indenture"}; WHEREAS, the City desires to solicit proposals from the underwriters listecl on Attachmen~ A hereto (the "Underwriters") to purchase the 1993 Series Bonds fram the CLty pursuant to a Bond Purchase Agreement {such Bond P~chase Agreement, m ihe form presented to thxs me~ung, with such changes, u~sernons and orrussions as aze made pursuant to ttus Resolutian, being referreti to herein as the "Bond Purchase Agreement"); WHEREAS, there have be~n prepared and subrrutted to ttus meetm~ fprms of: (1) the First Supplemental LZdenture; (2} the Bond Purc~ase Agreem~nt; (3) the Preliminary Official Statement tv be used in connecnon v~nth the offering and sa~e of the 1993 Senes Bonds (such Preliminary Official Statement in the form presente~ to this meeting, wit~ such changes, insertions and omissians as are made pursuant to this Resolution, being referre~ to herein as the "Preluiunary Of~cial Statement"); and (4) the Esczow Agreement betwcen the City and Bank of America National Trust and Savings Associat~on, as Escrow Bank, to be used to accomplish the advarice refunding of the 1991 Series A Bonds (such Escrow Agreement in the farm presented ta this meeung, with such changes, insertions and vmissians as are made pursuant to this Resolution being referred to herein as she "Escrow Agre~ment"}; and WHEREAS, the Citv desires to proceed to issue and sell up to $39,750,000 ag~egate principal amount of the ~993 5eries Bands and to authonze the execution of such documents and the performance of such acts as may be necessar}- ar desuable to effect the offering, sale and issuance of the 1993 Series Bonds; NOW, THEREFQRE, BE IT RESQLVED by the City Cour~cil of the City of Santa Mon~ca as fallaws: Section 1. Subject to the ~ra~isions of Section 2 hereaf, the issuance of the 1993 Series Bonds, in the aggregate grincigal amount of not to exceed $3~,750,Q00 on the terms and canditions set forth in, and sub~e~t to the limitauans specified in, the Fust Supplemental Indenture, is hereby authorizeti and approved. The 1993 Series Bonds shall be dated, shall bear interest, shall mature an the date, shall be assv~d in the form, anct shall be as otherwis~ provzded in tY-e First Supplemental Indenture, as the sarne shall be completed as provided in this Resolution. Seetion 2. The First Supglemcntal Indenture, in substantially the farm submitted to this meetmg and made a part hereof as thou~h set forth xn full herein, ~e and the same is hereby appraveri. The Mayor of t~e City, or sach member of the C~ty Council as the Mayor may designate, the City Mana~er, the City Attomey, the Director of Finance of the City and the CiCy Clerk (collectively, the "Autl~orized ~fficers") are, and each of them is, hereby authorized anc~ 2 d~rected, ~or and in the name of the City, ta execute and dehver the First Supplemental Indenture in the form presented to t}us mee~ng, with suc~ changes, insernons and omissaons as the Authorized 4ffice= execunn~ the same may reyuire or appro~e. such requ~ement or appraval to be conciusively evzdenced ~y the execution of the First Suppiemer~tal Indenture by such Auttaanzed Off cer; pzovided, however, that such changes, insertions and omissions shall not authorize an aggregate principal amount af 1993 Series Bonds m excess af $39,750,000 and shall not result in a mze mterest cast o~ the 1993 5eries Ba~ds ~ excess of 5_45~a. Section 3. The Bond Purchase Agreement, in substantiaily the form su~mitted ta this meenng and made a~art hereof as though set forth in full herein, be and the same is hereby approved. 'I't~e Authonzed Offfcers are, and ea~ch of them is, hereby a~thorized and direc~ecd, for a~d u~ the name of the City, to (i) select the UndeiwrEter, based on proposals subrrutted by the Underwriters, that will be the Underwnter for the 1993 Series Bonds, and (ii} execute and deliver the Bond Purci~ase Agreement in the form presented to this me~ting, witt~ such changes, insernons and omissions (including but not lirnited to the inclnsion of the name af the Underwriter selected pursuant to the precerling clause) as the Autilonzed Officer executing the sarne may reqcure or approve, such requuement or approval to be conciusi~ely evidenced by the execution of the Bond Purchase Agreement by such Authonzed Officer; pro~ided, hawever, that such changes, insemons and orrussions shall not result in an ag~regate undeiwriter's discount {nat including any original ~ssue dlscount ar band ix~surance prerru~m paid ~y the Un~erwriter} &om the pruicipal amount of the 1993 Senes Bonds in excess of .9590 of the aggregate pnncipal amount of the 1993 Senes Bonds. Sectia~ 4. The Preliminazy Official Statement, in substant~ally the form presented to this meeting and made a part hereof as thvugh set forth in full herein, vv~th suc3~ changes therein as rnay be approved by an Authorized Off cer, be and the same is hereby appraved, anc3 the ~se of the Preliminary OfFicial Statement in connection w~th the offering and sale of the 1993 Senes Bonds is hereby authonzed and approved. The Authorized Of~xcers are, and each af therr~ is, hereby authonzed and directed, for an u~ the riame of the City, to cert~fy to the Underwriter t~at the Preluninary Official Statement has been "deemed fanal" £or purposes of Rule 15c2-I2 gromu~gated by the Secunnes and Exchange Comrrussion. Section 5. The preparation and delivery of a final Official Statement (the "Official Statement"), and its use in connection with the offering and sale of the 1993 Series Bonds, be and the same is hereby authonzed and approved. The Offic~al Statement shall be in substantially the form of the Prelimu~ary Off'icial Statement vsnth suc3~ changes, insertians and omzssions as may be approvec} by an Authanzed Officer, such approval co be conclusive~y evidenced by ihe execution and delivery ti~ezeof. The Authorized Officers a~re, and each of them is, hereby authorued and duected to execnte the final Official Statement and any amendrnent or supplement thereto, for and ut the name of ttte City. Section 6. The D'uector of Finance af the Ciry is hereby authorized and curecte~ ta furnish, or ca~se to be furnished, to praspecti~e Underwnters far the 1993 Series Bonds, a reasonable number of capies of the Preliminary ~cial Statement, and the Director of F"uiarsce of the City is a~so authorized and dire,cted, after any proposal for the purchase af the 1993 Senes Bonds has been accepted on behalf of the City, t~ furn~sh or cause to be furnished to the Underwriter of the 1993 Series Bonds, as many copies of the Official Statement as said Under~vnter shall need, provided that no chazge shall bc imposed for the first 50(} copies of the Officia~ Statemen~ SeCtion 7. The Escrow Agreement, ~ subscantialiy the form submtcted to tlus meettng and made a part hereof as though set forth in full herein, he and t~e same is hereby appro~ed. The Authorized ~'ficers are, and each of them is, hereby authorized anc3 directed, ~or and ~n the name of the City, to execute and deliver the Escrow Agretment in the forrn presented ta this meeung, 3 ~;•ith such changes, ~nsernons and om~ssions as the Author~zed Offieer erecuting [he same ma~~ rec~uire or appro~~e, such requirement or approti~al to be conc~usi~~ei~~ eridenced by the erecutian of the Escron- ~greement b~~ such Authonzed Officer Section S The Authorized OFficers are, and each of them hereb}~ ~s. au~honzed and directed to e~ecute and dei~~~er an~~ and ali dacuments and ~nstruments and to do and cause to be done an~~ and al~ acts and things necessar}~ ~r proper for carr`°~ng out tne ~ssuance of the 1993 Senes Bonds and the transactions con[emplated b~~ the F~rs~ Supplemental Indenture, the Bond Purchase ~,greement. the 4fftc~al Statement, the Escro~;~ Agreementand this Resolution Section 9 All acti~ns heretofore ta.ken bt~ the Authonzed Officers ~~~~th respect to the issuance and sale of the 1993 Series Bonds, or in conneccion «~~th or related to an~~ of the agreements or documents referenced herein, are hereh4~ apgro~'ed, confirmed and rat~fied. Section 10 T~e Cxt~~ Council shall ceriif`~ to the adoption of this Reso~ut~on and thenceforth and thereafter the same shall be in full force and effect aPPRO`'ED AS TO FORN1 ; ~ r ose La~;•rence, Acting Cit~-Attome~~ ~ r Adopted and appro~°ed this 9th day af No~~em~er. 1993 ~ ~ ~~ Judith~, ~ia~~or I herebvi certif~.- that the Fore~omg Resolution ~o «'as dult• adopted b~~ the C~t~- Council of the C~tv oF Santa Momca at a meet~ng thereof held on No~~ember 9, 19}3 bt~ the follo«~~ns Counc~l ti~ote a~~es Councilmembers- Abdo, G~nser, Greenb~rg, Holbrook, Olsen, ~osenstein, Vazquez :~~oes Counc~lmembers Abstain Counc~lmembers :~bsent Councilmembers• ~TTEST ; r / fi~ ~ ~ _ ~~1~'l~_~, ,~~~ ~ Clance D4khous~. Cit~- Clerk 4 ~ CTI'Y OF SANTA M~IVICA WASTEWATER ENTERPRISE 12EVENUE BONDS (HYPERION PROJECT) 1993 REFUNDING SERIES BOND PURCHASE AGREEMENT Ctty of Santa Mon~ca City Hall 1685 Main Street Santa Monica, Calzfornia 90401 Ladies and Gentlemen: , as underwriter (the "Under~vriter"), hereby offers to enter into this Bond Purchase Agre~ment with the City of Santa Monica (the "City"} for the issuance by the City and the purchase by the Underwriter of the City of Santa Monica Wastewater Enterprise Revenue Bonds (Hyperion Projec#), 1993 Refunding Series (the "Bonds"). This offer is made sub~ect to acceptance by the City prior to 11:59 P.M., Los Angeles Time, on , 1993 and upon such acceptance this Bond Purchase Agreement shall be in full force and effect in accordance with its terms and shall be binding upon the City and the Underwriter. All terms not defined her~in, shall have the meanings set forth in the Official Statement hereina£ter mentioned. Section ~. Purcha~~~ Sale. Delivery and Terms of the Bonds. Upon th~ terms and conditions and upon the basis of the representations, warranties and agreements set forth herein, the Underwriter hereby agrees to purchase and the City hereby agrees to sell to such Underwriter all (but not less than ali} of the aggregate principal amount of the Bonds at an aggregate purchase price af $ {consisting of the aggregate principal amount of the Bonds in the amount of $ less $ of underwriter's discount {a n d $ of original issue discount) plus interest accrued with respect to the Bonds to the date of Closing (as hereinafter defined). The Bonds will be issued in book-entry form only, initially registered in the name of Cede & Co., as nominee o€ the Depository Trust Company, New York, New York ("DTC"). Purchasers will not receive cerfificates from the City representing their interests in the Bonds. individual purchases will be in the principal amount of $5,000 and integral multiples thereof. Payznents of principal, interest and redemption prem.ium, if any, will be made by the City (or the Trustee, as defined herein) to DTC for subsequent disbursement to DTC participants to them be remitted to the beneficial owners of the Bonds. At 8:00 A.M., Los Angeles Time, on , 1993, or at sur.h other ~ime or on such earlier or later date as the City and the Underwriter mutually agree upon {herein called the "Closing"), the City will deliver or cause ta be de~ivered to the DTC for the account of the Underwriter (a) through DTC in New York, New York or such other place as the City and the Underwriter mutually agree upon, the Bonds in definitive form, duly executed, ar~d (b) at the offices of Jones Hall Hill & White, a Professional Law Corporation, San Fran~isco, Califorrua, or such other place as the City and the Underwriter mutually agzee upon, the ather documents hereinafter rnentioned. The LTnderwriter will, subject to the terms and conditions hereof, accept delivery of the Bonds and pay the purehase price theredof by means of a federa~ funds wire payable to the Trustee in an amount equal to the purchase price. The Bonds will be made available far checking and packaging not later than 12:D0 noon on the business day prior to the Closing. The Underwriter agrees, subject to the terms and conditions hereof, to make a bona fide public offering of all the Bonds initially at the public offering prices (or yields) set forth on the cover page of ~he ~fficial Statement. Subsequent to the initial public affering, the Underwriter reserves ~he right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds. The Bonds may be offered and sold to ce~tain dealers at prices lower than such initral public offering prices. CUSIP identification numbers shall be printed on the Bonds, but the failure to print such number on any Bond or any error with respect thereto sha11 not conshtute cause for a failure or refusal by the Underwriter to accept delivery of, or pay for, the Bonds in accordance with the terms af this Bond Purchase Agreement. Al1 expenses in relatron to the printing of CUSIP nurnbErs on said Bonds and the CUSII' Service Bureau charge for the assignment of said numbers shall be paid for by the City from Bond proceeds. In the event ~hat, with the agreement of the Underwriter, ~emporary Bonds are delivered, the City will deliver or cause to be delivered definitive Bonds to the Underwriter as soon after the Closing as is reasonably possible, but in na event more than 5 days thereafter. The temporary Bonds will be made available for checking and packaging at the above-rnentioned offi~es not later than 12.00 noon on the business day prior to the Closing. The Bonds shall mature on the dates and in the amounts and bear interest as set forth in Exhibi# A hereto. The Bonds shall be as described in, and shall be secured under and pursuant to an Indenture dated as af November 1, 7.991, between the City and Bank of Arnerica National Trust and Savings Assaciation, San Francisca, California, as Trustee for the Bonds (the "Trustee"} as supp~emented by a First Supplemen#al Indenture, (the "First Supplemental Indenture"} dated as of December 1, 1993 between the City and the Trustee {as so supp~emented, the "Indenture"'), substantially in the form previously submit#ed to the LTnderwriter with onIy such ~hanges therein as shall be mutually agreed upon by the City and the 2 Underwriter. The Bonds are being issued pursuant to Se~tion 400 of #he City Chart~r of #he City of Santa Monica, and Chapter 6.5 of Art~cle II of ~he Municipal Code of the City ~the "Law"), relating to revenue bonds, in~orporating ~ertain provisions af the Revenue Bond Law of I941, being Chapter 6 of Division 2 of Title 5 of the Cai~fornia Governrnent Code, and under the provisions of the Indenture. Pro~eeds of Bonds will be used to (i) advance refund $ aggregate principal amount of the City's Wastewater Enterprise Revenue Bonds {Hyperion Project} 1991 Series A(the "Prior Bonds"); (ii) to pay costs of issuance relating to the Bonds. The City is obligated to pay the principal of and interest an the Bonds from Net Revenues, which are Reve~ues of the Er~terprise received by the City rernaining after payment of Operahon and Maintenance Costs (as such terxns are defined in the Indenture} and frorn amounts on deposit in the funds and accounts established under the First Supplemental Indenture. The Bonds will be on a parity vvith the remaining $ aggxegate princ~pal amvunt of outstanding Prior Bonds. Section 2. The Official Statement. The City has approved the use by the Underwriter prior to the date hereof af the Prelixninary Official Staternent relating to the Bonds dated Dece~ber 1, 1993 in con.nection with the public offering of the Bonds (the "Preliminary Official Statement"). The City has authorizEd the Official Statement dated the date hereof relating to the Bonds (the Preliminary Official Statement and the Official Statement, including the cover pages, the appendices thereto and aIl information incorporated therein by reference are hereinafter referred to co~lectively as the "Official Statement," except that if the Officzal Statement has been amended between the date thereaf and the date of Closing, the term "Official Statement" shall refer to the Official Statement as so amended) and the information and documents therein ~ontained or described to be used by the Underwriter in connection with the public ofFering and sale vf the Bonds. The City has delivered or caused to be delivered to the Underwriter the Preiiminary Qfficial Statement, wluch the City deems final for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 ("Rule 15c2-12"), except for information permitted to be omitted therefrom by Rule 15c2-12. Within seven business days after the City's acceptance hereof, the City shail deliver or cause to be delivered to the underwriter a suffi~ient number of copies of the printed final 4fficial Statement to enable the Underwxi~er to deli~er a final printed Official Statement to each purchaser of Bonds. By purchasing the Bonds, the Underwriter agrees {1} to disseminate to all members of the underwriting syndicate copies of the final Official Statement, including any supplements prepared by the City, {2} to promp#ly file a copy of the finaI Official Statement, including any supplements prepared by the City, with a 3 Nationally Recognized Municipal Securities Information Repvsitary, and (3) to take any and all other a~tions necessary to comply w~th applicable Se~urities and Exchange Commission rules and Municipai Securities Rulemaking Board rules governing the offering, sale and delivery of the Bonds to ultimate purchasers Section 3. Retiresentation and Warranties of the Citv. The City warrants, represents to and agrees with the Underwriter that: (a) the City is, and will be at the Ciosing, a municipal corporation, duly organized and validly ~xistrng under its charter, the ~aws and Constitution of the State of Califorrtia with the power under the Law and the First Supplemental Indenture to issue the Bonds; (b) (i) At or prior to the Closing, the City wi~l have taken all action required to be taken by it to duly authorize the issuance and delivery of the Bonds and the consumma~ion by it of all transactions contemplated by this Bond Purthase Agre~ment and the Offi~ial Statement, and such authorization sha11 be in fixll force and effect at th~ ti.me of the Closing; {ii} the Ci#y has full legal right, power and authority to enter into this Bond Purchase Agreement and the First Supplemental Indenture and full legal right, power and authority to issue and deliver the Bonds to the Underwriter and to perform its obligations under the Bond Purchase Agreement and #he First Supplemental Indenture, and to carry out and effectuate the transactions contemplated by this Bond Purchase Agreement, the Official Staternent and the First Supplemental Indenture; (iii) the execution and delivery of the Bonds, the First Supplemental Indenture, the Bond Purchase Agreement and the performance by the City of the obligations contained in the Bonds, the First Supplementa~ Indenture and this Bond Purchase Agreement have been duly authorized, and such authorization shall be in full force and effect at the tzme of the Closing; and (iv} this Bond Purchase Agreement has been duly executed and delivered, and this Bond Purchase Agreement, the First Supplemental Indenture and the Bonds constitute valid and legally binding obligations of the City, enforceable in accordance with their terms, except as such enforceability may be sub~ect to bankruptcy, insalvency, reorganization, arrar~gement, fraudulent con~eyance, moratorium and other laws relat~ng to or affecting creditors' rights, to the application of equitable principles, and to the exercise of judicial dis~retion in appropriate cases and to the limitations on legal remeclies agair~st cit~es in the State of California; 4 (c) no cansent, appraval, autharization, order, filing, registratian, qualification, e~e~tion or referendu~, of or by any person, organization, court or goverrunenta~ agency or public body whatsoever is requixed in conne~tion with the issuance, delivery or sale of the Bonds, entering into the First Supplemental Indenture or the consummation of the other transactions effected or contemplated herein or hereby or in the Official Statement, except for such actions as have been taken or as may be necessary to be taken to qualify the Bonds for offer and sale under Blue Sky or other securities laws and regulations or such states and j~risdictions of the Uruted States as the Llnderwriter may designate; (d~ #he issuance of the Bonds, execution, delivery of Bond Purchase Agreement, the First 5upplemental Inden#ure and the Bonds and performance by the City of its obligations under this Band Purchase Agreement, the First Suppiemental Indenture and the Bonds, and compliance with the provisions herEOf and thereof will not conflict with or constitute a breach of, a violation of, or default under, the Constitution of the State of California, or any existing law, char#er, jucigrnent, ordinance, administrative regulation, decree, order or resolution applicable #o the City whzch would result in a material adverse impact on the City's ability to perform its obligations; and do not conflict with or result ln a violation or ~areach of, or constitute a default under, any agreement, indentuxe, rnortgage, lease or other instrument, to which the City is a party or by which it is bound or to which it is sub~ect which would result in a material adverse impact on the City's ability to perfarm its obligations; {e} there is no action, suit, proceeding, hearing, inquiry vr investigation, at law or to the best knowledge of the City in equity, before or by any court, governmental agency, public board or body, pending or threatened against the City. (i} in any way affecting the existen~e of the City or in any way challenging the respective powers of the several offices or the #itles of the officials of the City to such oEfices; ar ~ii) seeking to res#rain, prohibi# or Qn~oin the s~le, ~ssuan~e or delivery of any of the Bonds, the appiicat~on of the proceeds of the sale of the Bonds, or the collection of the Revenues of the City pledged or to be pledged or available to pay the principai of and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Bonds, this Bond Purchase Agr~ement or the First Supplemental Indent~re, or contesting in any way the completeness or accuracy of the Officiai Statement, or in any way contesting the powers of the City or its authority with respect to the Bonds, the First Supplemental Indenture or this Bond Purchase Agreement; or 5 (iii) in ~vhi~h a final adverse decision, ruling or finding couId (a) materiaily adversely affect #he opexations of the City or the validity of the Bonds or the consummatian of the transactions conternpiated by this Bond Pux~hase Agreement or the First Supplemental Indenture, (b) declare this Bond Pur~hase Agreement to be invalid or unenfor~eable in whole or in material part, or (c) adversely affect the exemption of the interest paid on the Bonds from Federal in~ome and California personal income taxation; {#~ the Bonds when delivered and sold to the Underwriter as provided herein, will hav~ been duly authorized and exec~xted and will constitute validly issued and legally binding obligations of the City, enforceable in accordance with their terms, except as such enforceability may be subject to bankruptcy, insolvency, reorgaxuzation, arrangement, fraudulent conveyance, mora~orium and other laws relating to or af#ecting creditors` rights, to the application of equitable principles, and to the ~xercise of judicial discretion in appropriate cases and to the limitations on legal remedies against cities in the State of California, and in conformi~y with, and entit~ed to the benefit and security under the First Supplemental Indenture; (g) any certificate signed by any officer of the City and delivered to the Underwriter shall be deemed a representatian and warranty by the City to the Underwriter as to the statements made therein; (h) the City has cornplied in all respects material to the issuance of the Bonds with its charter and the Constitution of the State of California, and the City has not, is not prese~tly and as a result of the issuance of the Bonds will not be in violation of any debt limitat~on, appropriation limitation or any other provision of its charter and the Constitution of the State oF California that would have material adverse impact on the City's abiiity to perform its obligations under the Firs~ Supplemental Indenture and the Bond Purchase Agreement; (i) the City has by official action prior to or concurrently with the acceptance hereof, duly authorized and hereby approves and consents ~o the distribution nf the Preliminary Official Statement ar~d the Official Statemen~ by the Underwriter; (j) the informahon contained in the Preliminary Official Statement as of its date was, and in the Official Statement is, true and correct in all material respects and such information does not contain any untrue or rr~isleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, 6 (k) the City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonabIy request in order (1) to qualify the Bonds for offer and sale under the Blue Sky or other securities Iaws and regula#ions of such stat~s and other jurisdicrions of the United States as #he Underwriter may designate and {2} to de#ermine the eligibility of the Bonds for investment under the laws of such states and other jurisdi~tions, and wiil use its best efforts to conhnue such qualification in effect so long as required far distribution of the Bands, vrovided. however, that the Ci#y will not be required to exeCUte a special or ge~eral consent ta service of process or qualify as a foreign corporation in connection with any such qualzfication in any jurisdiction; {1} if between the date of thE Bond Purchase Agreement and the date of the Ciasing an event occurs, of vvhich the City has knowledge, which might or would cause the information contained in the Official S#aternent, as then supplemented or amended, to contain an untrue s#atemen# of a material fact or to ornit to state a ma~er2al fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misieading, the City will notify the Underwriter, and if in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or arnendment to the Official Statement, the City will cooperate with the Underwriter in the preparat~on of an amendment or supplement to the Official Statement in a form and in a manner approved by the Underwriter, provided all expenses thereby incurred will be paid for by the City; (m) if the informaHon contained in the Official Statement is amended or supplemented pursuant to the immediately preceding subparagraph, at the time of ea~h supplement or amendment thereto and (ur-~ess subsequer~tly again suppiemented or amended pursuant to such subparagraph) at all times subsequent thereto up to and inciuding the date of the Closing, the portions of the Official Statement so supplemented or amended (including any financial and stahstical data contained therein) will not contain any untrue statement of a material faCt or o~ut to state a material fact required to be stated therein or necessary to make such information therein, in the light of the Circumstances under which it was presented, not misleading; (n} as of the date of Closing there shall not have been any material adverse occurrence in the results of operations of financial condition or general affairs of the City since June 30,1993; {o) as of the da~e of Closing, other than as has been described in ~he Official Statement there shal.Z have been no increases in the ~ong term debt of the City, s~nce June 30, 1993, or in any debt of the City secured by a pledge of or payable from Revenues or Net Kevenues; 7 (p} between the date hereo€ and the Closing, without the priar written consent of the Underwriter, the City will not have issued any bonds, notes or other obligations for borrowed mvney on behalf of #he City payable from Revenues or Net Revenues, except for such borrowings as may be described in or contemplated by the Official Statement; (q} the City has not been notified of any listing or proposed listing by the Interr~al Revenue Service to the effe~t that the City is a bond issuer whose no- arbitrage certificates may no# be relied upan, The execution and delivery of this Bond Purchase Agreement by the City shall constitute a representation by the City ta the Underwriter that all of the representatio~s and warranties contained in this Section 3 are true as of the date hereof. Section 4. Conditions to the Obli~ations of the Underwriter. The U~.der~vr~ter has entered into this Bond Purchase Agreement in re~iance upon the repr~sentations and warranties of the City contained hexein, all other representations, warranties and agreements to be contained in the documents and instruments to be delivered at Closing and the performance by the City of its obligatrons hereunder, both as af the date hereof and as of the date of Closing. The Underwriter's obligations under this Bond Purchase Agreement are and shall be sub~ect to the following further conditions: {a} at the time of Closing, (1} this Bond Purchase Agreement shall be in full force and effect as a valid and binding agreement between the parties hereto and the Official Sta~ement shall have been duly authorized, executed and delivered, in substantially the form heretafore submitted to the Underwriter, and the First Supplemental Indenture and the Official Statement shall not have been amended, modified or supplem~nted except as may have been agreed to in writing by the Underwriter, and there shail be in full force and effect such resolutions as, in the opinion of Jones Hall Hiil & White, a Professional Law Corporation, San Francisco, California ~herein called "Bond Counsel"}, shall be necessary in connection with the transactions contemplated hereby, and (2) the representations and warranties of the City contained herein shall be true, correct and complete in all rnaterial respects on the date hereof and at th~ time of the Closing, as if made on fhe date of the Closing; (b) at or prior to the Closing, the Underwriter shall receive the following docurnents, in each case satisfactory in form and substance to the Underwritex: (1) the unqualified approving opinion of Bond Counsel, dated the date of Closing, addressed to the City and the Underwriter, substantially in the form attached to the Official Statement as Appendix E thereto; S (2) an opinion of the City Attorney, dated the date of Closing, addressed to the Crty and the Underwriter, to the effect that: {i} the City is duly organized and validly existing under its charter and #he Constitution and laws of the State of California as a charter city and municipal corpo~ation; (ii} the resolution of the City approving and authorizing the issuance of the Bonds and the delivery of the First Suppl.emental Indenture, this Bond Pur~hase Agreerrt~nt and the Bonds was duly adopted at a meeting of the City Council which was called and held pursuant to applicable laws and with all public notice required by applicable laws and at which a quorum was present and acting throughout; (i~i} there is no a~#ion, suit, pro~eeding, ar invesrigatian at law or in equity before or by any Court, public board or body, pending or, ta the best of the City Attorney's knowledge, #hreatened against or affecting the City to restrain or enjoin the issuance or delivery of the Bonds, in any way contesting or affecting any authority for the issuance of the Bonds or the validity of the Bonds, the First Supplernental Indenture or this Bond Purchase Agreement, or in any way contesting the existence or powers of the City with respECt to the issuance of the Bonds or the security therefor, wherein an unfavorable decision, ruling or finding would adversely affect the transactions contemplated by the First Supplemental Indenture or this Band Purchase Agreement or the validity of the Bonds; {iv) the ex~cution and deiivery of the Bonds, the First Supplemental Indenture and ~his Bond Purchase Agreement, and compliance with the provisions of the Bonds, the First Supplemental Indenture and Bond Pur~hase Agreement, under the circumstances contempiated thereby, do not and will not canfli~t with or constitute on the part of the City a brea~h of or default under any agreement or instrument to which the City is a party or by which it is bound or any existing law, regulation, court order, consent decree, charter, or by-laws to whiCh the City is subje~t; 9 (v) the First Supplemental Indenture and this Bond Purchase Agreement have been duly authori~ed, executed and delivered by the City, and canstitute the legal, valid and binding obligations of the City, enforceable against the City in accordance vvith their ~erms, subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affe~ting creditors' rights to the applieation of equitable prin~ipals, and the exer~ise of Judi~ial discretion in appropriate cases; (vi} the information contained in the ~fficial Statement relatir~g to the City (ex~luding therefrom the financial statements and financial and statistical data included therein, as to whi~h no opiruon need be expressed} is correct and camplete and nothing has come to the City AttQrney's attention which ~vauld lead the City Attorney to believe that the information in #he ~fficial Staternent relating to th~ City contains any untrue statement of a material faet or omits to state a material fact required to be stated therein ar, necessary to make the ~ircumstances under which they were made, not misl~ading. (3) the opinion of counsel to the Trustee dated the date of Closing addressed to the Underwriter to the effe~t that: {i) the Trustee has been dul.y organized and is validly existing as a national banking association under the laws of the United States of America and has all necessary power to perform its duties under the First Supplemental Indenture; (ii) #he Trustee by a11 proper corporate action has authorized the acceptance of the duties and ob~igations of the Trustee under the First Supplemental Indenture; (iii) exclusive of federal or state securities laws and regulations, to the best of such counsel's knowledge, other than routine filings required to be made with go~ernmental agencies in order to preserve the Trustee's authori#y to perforrn a trust business, no consent, approval, authorization or other action by any governrnental or reguiatory authority having jurisdiction over the trust powers of the Trustee that has not been obtained is or will be r~quired for the perforrnance by the Trustee of its duties under the First Supplemental IndEnture; and 10 {iv} to #he best of such counsel's knowledge, there as no litigation pending or threatened against or affecting the Trustee to restrain or en~oin the Trustee's participation in, or in any way contesting the powers of the Trustee with respect to the transactions contempiated by the Bonds or the First Supplementai Indenture. (4) a certificate, dated the date of Closing, signed by a duiy au#horized officia~ of the City satisfactory in forin and substan~e ta the Underwriter, ~o the effect that the representations and warranties mad~ by the City in this Bond Purchase Agreement are true and correct as of the date of Closing. (5) a certifi~ate of the Trustee, dated the date of Closing, signed by an authorized officer of the Trustee, in #orm and substance satisfactory to Bond Counse~, tv the effect that: {i} the Trustee is a national banking associatian duly organized and in good standing under the laws of the United States o€ America, is authorized to carry out corporate trust powers as Trustee and has all necessary power and authority to perform its du~ies under the First Supplernen#aI Indenture; (ii) to the knowledge of the Trustee, no consent, approval, authorization or other a~t~on by any go~ernmental or regulatory authority ha~ing jurisdiction over the trust powers of the Trustee that has not been obtained is or will be required for the performance by the Trustee of its obligations under the First Supplemental Tndenture; and (iii) ~omplian~e with the provisions of the First Supplemental Indenture has been duly authori~ed by all necessary corporate action on #he part of the Trustee and, to the best knowiedge of the Trustee, will not in any material respect ~onfli~t w~th or ~onstitute a breach of or default under law, administrative regulation, court decree, resolution, charter, by- laws or any other agreemenf or instrument to which the Trustee in its fiduciary capacity is sub~ect or by which it is bound. (6) two certified copies af the First Supplemental Indenhxre; {7) two copies o# the Preliminary Official Statement and two copies of the Official Statement. executed on behalf of the City by an authorized representative of the City; I1 (8} copies of resolution adopted by the City and certified by the City C~erk authorizing the issuanee of the Bonds, executivn and delivery of the Bond Purchase Agreement and the approvai of the Official Statement; (9) arbitrage certi#xcation by the City in a form and substance acceptable to Bond Counsel; ~~0) a report #rom the Verificatian Agent, dated the day of closing, stating that the firm has verified: (i) the mathematical accuracy of certain computations relating to the adequacy of the direct obligations af the United States and the interest thereon to pay, when due, the redemption price and interest due and to became d~ze of the 1991 Bonds on and prior to the redemption date thereof, and; (ii} the computations of yield on the Bonds and of investments in the Escrow Fund which support the ~onclusion of Bond Counsel that interest on the Bonds is excluded from gross income far federal tax purposes; (11) a copy of the municipal bond insurance policy issued by with respect to the Bonds, together wifh an opinior~ of counsel appraving the validity thereof and su~h other related documentatio~ in connection therewith reasonably required by Bond Counse~; (12) su~h additional legal opinions, certifi~ates, proceedings, instruments and other documents as Bond Counsel may reasanably request to evidence compliance by the City with lega~ requirements, the truth and accuracy, as of the time of Closing, of the representations contained herein and in the Official Statement and the due performan~e or satisfactian by the City a# or prior to such time of all agxeements then to be performed and all conditions then to be satisfied; (c) all matters relating to the Bonds and the sale thereof and the cor~summation of the transactions contemplated by this Bond Purchase Agreement shall have been approved by the Underwriter, such approvai not ta be unreasonably withheld. If the eonditions to the [Inderwriter's obligahons ~ontained in this Bond Purchase Agreement are not satisfied or if the Underwriter's obligations shall be terminated for any reason permitted by this Bond Purcha~e Agreement, tlus Bond Purchase Agreement shall terminate and the Ur~derwriter shall have no further obligation hereunder. In thE event that the Underwriter fails {other than for a reason permitted by this Bond Purchase Agreement) to accept and pay for the Bonds 12 at the Closing, the amount of one percent ~1%) of the principal amaunt of the Bonds will be accepted as Iiquidated damages For such failure and for any and all defaults hereunder on the part of the Underwriter and acceptance of such amount shall constitute a full release and discharge of all claims and rights af the City against the Underwriter Sectian 5. Right of Underwri~er to Cancel Qbligations. The Underwriter shal~ have the right to cancel its obligations to purchase the Bonds xf, between the date hereof a~.d the Closing regardless of whether any of the following statements of fact were in existence or known of on the date of this Bond Purchase Agreement• (a) the marketability of the Bonds or the market price thereof, in the reasonable opinion of the Underwriter, has been rnaterially adversely affe~ted by ar- amendment to the Constitution of the Uruted States or by any legislation in or by the Congress of the United States or by the State of California, or the amendment of legislatian pending as of the date of this Bond Purchase Agreement in the Congress of the iJnited States, or the recommendation to Congress or endorsement for passage {by press release, other form of notice or otherwise) of legislation by the President of the United States, the Treasury Department of the LTnited States, the In#ernal Revenue Service or the Chairman or ranking minority n~ember of the Comrnittee on Finance of the United States Senate or the Cornmittee on Ways and Means of the United States House of Representatives, or the proposal for consideration af legislativn by either such Committee or by any member thereof, or th~ presentment af Iegislation for the staff of either such Committee, or by the staff of the Jaint Committee on taxation of the CongrESS of the United States, or the favorable reporting for passage of legislation to ezther House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any decision of any federal or state court or any ruling or regulation {final, temporary or praposed) ar official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federai or state authorify affecting the federal or state tax status of the City, or the interest on bt~nds or notes sirnilar to the Bonds (including the Bonds}, or (b} ~here shall exist any event which in the reasonable opinion of the Undexwriter either {i) makes untrue vr in~orrect an any material respe~t any statement or inforrnation contained in the Official Statement or (ii} is not reflected in the Of€icial Statement but should be refle~ted therein to make the statements a~d informatian contained therein not misleading in any xrtaterial respect; or {c) there shall have occurred any new outbreak of hostilities or other national or interna#ional calan~#y or crisis or the es~alation af any such Qutbreak, calami#y ox crisis, the effect of such outbreak, calamity, crisis or escalation on the financial. markets of the United States being such as would rnake it impracticable, in the reasonable opinion of the Underwriter, far the Underwriter to sell the Bonds; ox 13 {d) there shall be in force a general suspension of trading on the New York S~ock Exchange ar rninirnwn or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have b~en required and be in faxce on the New York Stock Exchange or such other ex~hange, whether by virfiue of a determination by that Exchange ar such other exchange or by orders o# the 5ecurities and Exchange Commission or any other governmentai authority; or (e) a general banking moratorium shall ha~e been de~lared by either federal, Cali€ornia or New York authorities having jurisdiction and be in force; or (f~ there shall be established any new restric~ions on transactions in securities xnaterially affecting the free market for securities (including the imposition of any limitations on interest rates) or the extension of credit by, or the charge to the net capital requirernents of, underwriters established by the New York Stock Exchange, the Securities and Exchange Commission, any other fede~al or state agency or the Congress of the United States, ar by Executive 4rder; or {g} an adverse event has occurred affecting the financial condition or operation of, the City which, in the reasonab~e apinion of the Underwriter, requires or has required a supplement or amendment to the Official S#atement; or (h) the ratings of the Bonds shall have been downgraded or withdrawn by a nat~onal rat~ng serviee, which, in the Underwriter's opinion, materially adversely affects the market price of the Bonds; or (i) the Comptraller of the Currency renders an opinion or issues a regulation which has the effect of prohibiting the Underwriter from underwriting the Bonds. Section 6. Expense~. Whether or not the transa~tions eontemplated by this Bond Pur~hase Agreemen# are eonsummated, all expenses and costs of the City incident to the performance of its obligations in connection with the authoxization, issuance and sale of the Bonds to the Underwriter, includ~ng, wi#hout limitation, the cost of printing or reproducing and delivering the Bonds, the First Supplemental Indenture, the Preliminary Official Statemen~ and the Official Statement and all anci~lary papers, in reasonable quantities, credit rahng ageney fees, the fees and disbursements of Bond Counsel, fees and expenses of financial advisors and other consultants, and to the extent or in the event not so paid shali be paid by the City. The Underwriter will pay its out-of-pocket expenses, the fees and expenses o# its counsel, if any, Blue Sky and Legal Investment Survey, the fee of the Depository Trust Company, municipal bond insurance premiums, if any, the costs of obtaining CUSIP numbers for the Bonds, the California Debt Advisory Commission Fee and any regulatory fees imposed in connection with the primary offering of th~ Bonds. 14 Sec~ion 7. Notices. Any notice or other communicahon to be given ta the Underwriter shall be given by delivering the same to . All noHces ar communications hereunder by any party shall be given and served upan each other party Any notice or commuxucation to be given the City under this Bond Purchase Agreement may be given by delivering the sarne to the City of Santa Maniea, City Hall, 14$5 Main Street, Santa Monica, California 90401, Attention: City Manager. The approval of ~he Underwriter when required hereunder or the de#ermination of satisfaction as to any docurnent referred to herein shall be in writing and delivered to the City. Se~hon $. Parties ~n InterES#. This Bond Purchase Agreernent is made solely for the bene#it of the City and the Underwriter (including the su~eessors or assigrls thereof) and no other person shall acquire or have any right hereunder or by virtue hereof. All representations, warranties artd agreements of the City in this 8and Purchase Agree~nent shall remain operative and in full force and effect regardless of any inveshgat~on made by or an behalf of the Underwriter and shall survive the delivery of and payment for the Bonds. Section 9. Counter~art Si~natures, This Bond Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but aIl such counterparts shall together co~stitute but one and the same instrument. Section 10. Choice of Law. This Bond Purchase Agreement shall be governed by the laws af the State of California (UNDEIZWIZITER) By (TiTLE) Accep#ed and Agreed to: crr~r oF s~rrA Mo~rr~cA By Mayoz 15 PRELIMINARY OFFICIAL STATEMENT DATED ,1993 NEW ISSUE -~'UI,L BOOK FNTRY QNLY lZatings: See "Ratings" herein. Ir+ the opsn:o~ of rones Hull H:11 & White, A Prafess:onal Lazv Corporatwn, San Francasco, Californui, Bond Cnunsel, sUbject, howeaer fo certa:n qua~tficpttons desctxbesl heretn, under exisft~g la2v, the ~nteresf on t1~e I993 Borrds ~s excludad fram gross income for federal rncome tax purposes and such xnferest ~.s no! an iEem of tax preference for purposes of EFre fedesaI aIternaf~be mimmutn tax smposed an ~~~dtutduaIs arrd corporations, alEhough~r the purpose of computsng Ehe aJterrtaEtbe mi~imum tax tmposed an certain corporat~ans, 5uch ~nterest ~s taken tnto account tn ermintng certasn tncome and enrntngs In the fierEher aptn:on of Bond Counsel, such rnterest ~s exempt from Cclsfornta personal rntome taxes See "TAX MATTERS° here~n. ~ ~ CITY OF SANTA MQNICA Wastewater Enterprise Revenue Bonds (Hyperion Pmject) 1993 Refu~ding Series Dated: December 1,1993 Due: January 1, as shown below Ttus cover page conta~ns uiformation for quick reference only It is nat a summary of the financuig Investors must read thas ent~re Official Statement to obta~n u~format~on essential to the malarig of an ulformed uivestment deasian The Wastewa#er Enterpnse Revenue Bonds (Hypenon Pro~ect),1993 Refunclxn~Series {the "1993 Bonds"} of the City of Santa Momca (the ` Gry ') will be Fssued ta advance refund the Ciry of Santa Monica, ahfomia (the ' City") Wastewater Enterpr~se Aevenue Bonds,1441 Senes A, which were ~ssued to fuiance a~orhon of the Caty's contribui~on to the costs of the upgrade of the Hypenon wastewater treatment plant 'i'he 1993 Bonds v~nll be issued pursuant an Indenture, dated as of November ~,1991, and a First Supplemental Indenture, dated as of December 1,1993 (collect~velq the "ir-dent~re"), between the Ciry and Bank of America National Trust and Savvlgs Assoctation, as trustee (the "Trustee"} The 1993 Sands w~ll be issued in tlle ag~zegate prutctpal amoimt of 5 " as futly registered Bonds ui denamulahons of $5,OOD each or any ~ntegral mulhple thereof registered u-ut~all~ m the name of Cede & Co , as nomuiee of The Depositary Trust Company, New York, New York ("DI~C"} DTC w~lI act as secunt~es depos~tory for the 1993 Bands See 'THE 1993rSONI3S -$ook-Entr~r-C3n1y System"' herem Interest on the 1993 Bonds is payable semiannually on January 1 and J~u~ly 1 cammencrng July 1, 1994 Prfnapal of and interest on the Bonds will be paid to DTC by the Trustee See "THE 1993 B4NDS" here~n The 1993 Bonds are subjecE to optional and mandatory redemption priar to maturity. The 1993 Bonds are special obligations of the City payable solely fram the Revanues (as defined herein) and other arnovnts held by the Trustee, as prov~ded in the Indenture. The General Fund of the City is not Iiable, and the credit or taxing ~ower of the City is not pledged, for the payment nE the 3493 Sonds or their interesE. The owners of the 1993 Bonds sl~all nevex have the right to cnmgel tl~e exer¢1se af the taxing power of the City or the fnrfeitute of any prope~ af the Ciry . The princi~al of and interest an the 1943 Bonds and an~ prnmiums upon the redemption of any Ehereof shall not be a debt of the City, nor a legal or equitabie pledge, charge, l~en ar encumbrance upon any praperty of the City ar upan any af its income, receipts or xevenues excep# the Revenues, and uther amounts held by the Trustee, pledged to the payment thereof as provided in the I~denture. MATURITY SCHEDULE Year 199b 1997 1948 1999 2000 2001 2{~02 2UD3 2p04 2Q05 2Q06 2aa~ z048 2009 Principal Interest ~joun~ ~iate $ wp Teim Bonds due January 1, ~ % (To be d~gnated by the successful badder ~# one or more pnncipal amoun+s ~s combined intn one or more Term &snds ) (Plus accrued Interest from December i, 1993) Psice or Yield Year 2010 2011 2~12 2013 2014 2Q15 2016 2017 2018 2019 2D20 2021 2622 Principal Interest Price or Amouat Rate Yield The 1993 Bonds are of#ered when, as and if issued by the Ciry, subJect ta approval af legal~ry by Jones Hall Hill & White, a Professional Law Corporat~on, San ~ranc~,sco, CaliFomia, 8and Caunsel, and certa2n other condihons It ys anacipateci that the 1993 8onds will be available for delivery thmugh the facilit-es of DTC in New York, New York an or abaut ,1993 *PreIunulary, sub~ect ta change Dated ,1493 CiTY OF SANTA MONICA City Couneil Judy Abda, Mayar Antanio Vasquez, Mayor Pro Tempore Ken Ger~ser Asha Greenb~rg City Manager John Jalili Director o~' Finance Charles M. Dennis Director of Gerteral Serr~ices Craig Perk~ns Lltilities Martage~ John R. Mundy Acting C7ty Attvrriey Joseph Lasn~rence Deputy City Attor•ney Linda A. Moxon City Treasurer Raiph E. Bursey City Cierk Clarice Dykhouse Bond CounseI jones Hall Hill & White A Professional Law Cozporation San Francisco, California Co-Financial Advisors Connell and Assaciates Los Angeles, Calafornia Public Financial Management, Inc. San Francisco, California Dr. RobErt Holbrook Kelly Olsen Paul Rosenstein Trusfee Bank of America National Trust and Sav~ngs Associatron Los Angeles, California No dealer, broker, salesperson or other person has been authorized by the City to gi~e any information or to make any representations ather than those contained herein and, if given or made, such ather information or representahon must not be relied on as ha.ring been authorized by the City. This Of#icial 5tatement daes not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the 1993 Bonds by a person in any jurisdictian in which i# is unlawful for such person to make such offer, solicitation or sale. This Official Statemen# is not to be construed as a contract with the purchasers of the 1R93 Bonds. Statements contained in ~us Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressiy sa described herein, are intended solely as such and are not to be construed as a representation of facts. The ulformahon set forth here~n has been obtamed from sources whtch are believed to be reliable but it is not guaranteed as to accuracy or completeness The ~nformahon and expressions af apiruons hereu~ are sub~ect to change without noh~e and neither delivery of this Offictal Statement nor any sale made hereunder shall, under any circumstances, create any implicahon that there has been no change ~n the affairs of the Gty since the date thereof Thzs Off~c~al Statement is submitted with respe~t to the sale of the i993 Bonds re#erred to herein and may not be reprQduced or used, in whole or in part, for any other purpose, unless authorized in wrihng by the City Ail summaries of the dacumencs and la~vs are made sub~ect to the prov~sions thereof and do not purpart to be complete statements of any or all such provisions TABLE QF C~NTENTS ~~ INTAODUCTIaN .. .. . ....... ........... .. .... .......... .............................................1 General . ... .. . .. . . ...... ... ... ...1 . . .. . .... . .. .. .... . ..- - -.. . The City and the Enterpr~se .. . .. ........ .... . ... . . . .. .. .. . . .... . 2 THE 1993 BONDS. .. ... . .. . ... . . ......... . ...... . .. ..... ... ...... .. . .. . ... 3 General Terms. .. .. . . . . .... ........ .. .. ... . .. .. . . .. .. . .... . . ... .. ..3 ~ook-Entry Only System .. . . ..... . .. ... . . . .. . .. . .... .. ... . ... ..4 _ . . . ... . Aedemption Provisians . . . . . .. .... . .. g . . ... .. .... . .. . . PLAN OF REFUNDING . .... ... ....... .... ........ ...... ........ 7 ESTTh1ATED SDURCES AND USES OF FUNDS .... .... . ... . . . . .. ....... . .. .... . S SECURITY FOR THE 1993 BQNDS ... . ........................... .. ..... .. .. .... ... ......8 Source of Paymen# . ... .... . . .. . .. .. ..... .. . .... . . ... .... ... . ..... 8 Pledge of Reeenues .. ....... ... ..... . . ... .. ...... ... .. .. ....... .. . ... ................. .. 9 Rate Covenant ... . . . . .. ... ...... .. . .. .. . . .... ... . .. .. . .... ...9 Reserve Fund..... ... . .................... ....... ......... ...... ..... .... ... ... . 9 Additional Bonds ... .. ........ .... ....... .. .. . . .. ......... . ........ ................. ................. 10 Insurance . ... . .... ............. .. .... . ...... ... . . .. . .... . . .. ..... .. ..... ... . 11 RISK FACTORS . . .. . . . ..... .... . .. . ... . ..... . ... . ...... . .... . . .. .. . 11 THE PR~JECT . ............. . .... .. .. ..... . ....... .................... .............. .........12 THE ENTERPRISE ............. .. ... . .. .... .. ........... .... .......... ... . ..... .. .... ... 13 Local System ...... .. . ...... . . ... .................. .. . ... ..... .... . .... 13 Hyperian Plant ... . . . .......... .. .... ... . . . .. . .......... ..... .... .. .... . .... ... . .. . .... .13 REVENUES AND DEBT SERVICE COVERAGE . .......... ....... . . .. . . . lb ... . . .. ... ..... Sewer Ra#es and Revenues . .. ........ ....... . ... . .. .... . . .......... . .............. .. ... .. ...... 1b Historycal Sewer RateS and Charges............ .. ..... ... .. . . . . ......... .................. ...21 Rate Sett~ng Process . .... .... . ... ... ...... .. . . .... . ... .... ... . . ..... . .. 21 Billjng and CoIlection ... .... .... ... .. . .... .... .. . . .............. ............... . ....... .... .... .........22 Cash Receipts and Disbursements . . .... .... ... ...... . . .. . .. ... .. . .. . . . 23 Operation and Maintenance Expenses . .. ... ... . . .. ..... . .. . ... . 24 Pro Forma Statement of Revenues and Expenditures . .. ...... . .. . ........ .. .... .... .. .... .... .. ~4 Outstanding Bonded Indebtet2ness. ...._._. . ... ... . .... .. ..... .. .... ...... .. .. 26 Annual Debt Service Requirements .... . ... .. .. .... .. ..... ..... ...........26 Analysis of Debt Service Coverage ..... ... ... . .. . .. .. ... .... .. .. ... .. . . .. . 27 REGULAT~RY REQUfl2EMENTS ..... .......... . . . . ... . .. ..................................... .. .... ... .... . 27 TAX MATTERS.. . .. . . .... . . ............ . .. ... ........... . ..... ... ... .. .... ... . .... .. . . 28 ii OTHER INFORMATIaN . . . .. .. ... . ... ..... . .... .. . . . .. . .... _ . .. . ... .... 29 L~tigat2an. . .. .. .. ._ ... . . .. . ..... .......... . . ..... . ...... ........ .... ..... .... .29 I.egal Op~nion .. .... . . .. .. . . .... .. .. .. . ... .. .. .. ...... .... . ...... ... . . . ... .. 29 Rahngs . ... ..... . ... .. .......... . ....... ,..... .. ,.... . .,... . .... .. . .... . . ........ .. .......... , ., 29 Verification ......... ........ . .. .. ......... .... .... . .... . ....... ...... . ........ . ...... 30 Lizrutahon of Remedies .... .. ... .. ..... . ...... . ..... ... ..... . . .. ....... ....... . . ..... .. . .. ....30 Financial Advisor .. ... . ...... . . . .. ....... ............... ...... .. ... .. ... ..... ... . . . ...... .... ... .... ....3U Mxscellaneous ... . . ... . ..... . ....... . .... ..... ... ... ... ..... .. ...... . ........ . .... . .....30 APPENDTCES A. General-Purpase Fu~ancial Statements and Independent Auditor's Repart for the Year Ended June 30, 1992, and Unaudited Financial Statements - VVastetivater Enterpnse for the Year Ended June 30, 1993 . . . ..... . .. ... .. .... .. . ... .. .A-1 B . Summary of Certain Provisions of the Indenture ...... . . .. . .. . ...... .. . . .... . ... B-I C The City of Santa Monica . .... .. . ... ... ... ... .. . ..... ... ... ........ G1 D Form of Qp~nion of Bond Counsel .... .. .... ... .... . . .... .. ..... .. . .. . .... . D-1 iii OFFICIAL STATEMENT $ * CITY QF SANTA MONICA WASTEWATER ENTERPRISE REVENUE BONDS {HYpERIDN PROJECT) 1993 REFUNDING SERIES INTR~DUCTION General This Offic~al Statement, including the caver page and appendices, is furnished in cannection with the offering by the City of Santa Monica, California (the "City"} of its $ * aggregate pr~ncipal amount af Wastewater Enterprise Re~enue Bonds, (Hypenon Pro~ect), 1993 Refunding Series (tlie "1993 Bonds"), being issu~d to advance refund all af the City's outstanding Wastewater Enterprise Revenue Bonds (Hyperion Praject}, 1991 Series A~the "1991 Bonds"}. This introduction conta~ins a brief s~mmary of certain information contained ~n this Official Statement. It is nat intended to be complete and is qualified 6y the more detailed information contained elsewhere in this Official Statement. The 1993 Bonds are being issued pursuant to Section 4(}0 of rhe City Charter of the City and Chapter 6.5 of Article II of the Municipal Code of the City, relati~g ta revenue bonds, incorporat~ng certa~n pro~isians of the Revenue Bond Law of 1941, being Chapter 6 of Division 2 of Title 5 af the California Government Code, and under the provisions of the indenture, dated as of November 1, 1991, by and hetween the City and Bank of America National Trust and Savmgs Associativn, as Trustee (the "Trustee"}, as supplemented by the First Suppler~ental Indenture, dated as af December 1, 1993, by and between the City and the Trustee (said Indenture, as supplemented is referred her~in as the "Indenture"). The 1993 Bonds and any Additional Bands (as defined in Appe~dix B) issued under and secured by the Indenture are referred to herein as the "Bands." Certain cagitalized terms used herein have the meaning as set forth in Appendix B-- "Summary of Certain Pro~isions of the Indenture.,, Upon the refunding and defeasance of the 1991 Bonds, the 1993 Bonds will be the only Bonds outstanding under the Indenture. The 1993 Bonds ane special obligat~ons of the City payable solely from the Revenues (as defined here~} and other amounts held by the Trustee, as provided in the Indenture. The General Fund of the City is not liable, and the cred~t or taxing power of the Ciry is not pledged for the payment of the 1993 Bonds or the~r interest. The Owners (as defined in Apgendix B} of the 1993 Bonds shall nev~r have the right to compel the exercise of the taxing pawer of the Ciry or the forfeiture of any pmperty of the City. The principal of and interest an the 1993 Bonds and any premiums upon the redemptian of any thereof shail not be a debt of the City, nor a legal or equitable pledge, charge, lien or encumbrance upon any property of the City or upon any of its income, receipts or re~enues except the Revenues, and other amounts held by the Tn~stee, pledged ta the payment thereof as provided in the Indenture *Preliminary; su~ject to change. The City desires ta provide adequate disclosure at the t~me vf issuance af mun~cipai debt and thro~ghout the life of any mu~icipai debt issued. To this end, the City hereby makes the following commitment: 1. Upon request, the City will provide annual audited financial statements and other pertinent credit information relevant to the City's outstand~ng rnunicipal debt, including the City's Com~reh$nsive Annual Financzal Report, and provides cflp~es io faur major infflrmat~on providers in the state and local government secunt~es market 2. Appropnate cred~t information necessary for maintaining rat~ng(s) on the municipal debt wili be provided by the City to the rating agenc~es rating tY~e debt issae. The City and the Enterprise The Ciry was incorporated in 1886 and adopted its City Charter in 1945. Tn 1947 a council- manager farm of govemment was established fallowing a vote of the City's residents and approval by the Cal~fornia Legislature. The City is s~tuated on the western side af Los Angeles County, bordered by the City of Los Ange~es on three sides and by the Paci~c ~cea~ ta the west. Santa Monica encompasses an area slightly greater than eight square mi~es and has ari est~mated current population of 88,600, which makes it tl~e e~ghteenth largest crty in Las Angeles County. The "Er~terprise" cons~sts of the whole a~d each and every part of the municipal wastewater callec~ion, treatment and disposal system of the City, including the City's int~rest in the Hyperion Plant (as defined herein) pursuant to the Hypenon Agreernent (as defined herein), and all addit~ons, betterments and extensions to said wastewater system or any part thereof. The terrn "Hyperion Plant" means the Hyper~on Treatment Plant and appurtenant facilities located at 120(}0 Vista de~ Mar, Los Angeles, California, together with any wastewater collection, treatment and disposal facLlities related to the Hyperion Plant, and in which facilities the City has an interest pursuant to the Hyperion Agreement, and any aiterat~on, expansion, impravement, relacation, replacement or reconstruction thereof. The term "Hypenon Agreement" means the Jomt Powers Agreement, rnade and entered into February 21, 1964, by and between The City of Los Angeles ("Los Angeles") and the City govermng the treatment of sewage at the Hyperian Plant, and as such agreement may be amended, modi~ed or nestated and includes any agreement between such parties gaverning the treatment of sewage at the Hyperion Plant that replaces or supersedes tt~e exist~ng Hyperion Agreement. The Hyperion Agreement pravides, among other thmgs, that the City may d~scharge certain permitted sewage tlows inta the sewerage system of Las Angeles, and that Las Angeles will canvey such sewage to the Hypenon Plant for treatment and disposal. The term "Local System" r~eans all of the Enterprise except the City's interest ~n the Hyperion Plant. The Local System is managed by the City's Department af General Services, Utihties Division The operation of the Local System inval~es cleaning, inspecnng and repairing appraximately 125 m~les of sanitary sewers, 20 miles of starm drains and 825 catch basins as well as a pumping plant The system serves an eight square mile area with a population af approximately 88,5Q0. The Utiliaes Division is also responsi~Ie far irnplementing and enforcing the City's Industrial Waste Controt Program This involves inspecting and sampling approximately 900 City businesses m order to ensure that discharges to the City's sewer and storrn drains remain within the acceptable standards of the City, Las Angeles, and the state and federal governments. In additian, in support of the Enterpnse, the Ciry's Enviranmental Prngrams Division, created in Fiseal Year 19$9-9~, ~s responsible for developing and implement~ng water/wastewater and energy conservation programs and for the adrninistration af the City's enviranmental ordinances. The Environmental Programs L7ivision is partially funded by the Revenues. 2 This Qfficiai Statement contains brief descr~ptions of, among other things, [he 1993 B~nds, the Indenture and the City_ Such descr~ptions do ttot purport to be cornprehensive or definitive. All references in this Of~cial Statement to documents are qualified in thair entirety by references to such documents, and references to the 1993 Bands are qualified in their entu~ety by reference ta the form of I993 Bonds included m the Indenture. For certain ~nancial information with respece to the Crty and the Enterprise see Appendi~ A-- "General-Purpose Financial Statements and Independent Auditor's Repart for the year ended June 3~, 1992 and Unaudite~ Financial Statements - Wastewater Enterpr~se For the yeaz ended 7une 30, 1993." For a d~scussion of governmental, demograph~c, ar~d economic information w~th respect to the City see Appendix C-- "The Ciry of Santa Monica". Copies of the Indenture and additional informat~on may be obtained ugon request from the Office of the City Manager, City of Santa Monica, 1fi85 Maui Street, Santa Monica, California 90401. General Terms THE 1993 BONDS The 1993 Bonds will be issued in the aggregatc principaZ amaunt af $ *, will bear interest at the rates per annurn and wrll mature in the pr~ncipal arnounts in each year (subject to prior redemption), as set forth on the cover page of this Official Statemen~ The 1993 Bonds will be issued m fuliy registered form and, when i~sued, will be registered in the name of Cede & Co., as norninee of The Deposiwry Trust Company, New York, New York ("DTC"). DTC will act as securit~es depository far the ~993 Bonds. Individual purchases will be inade in book-entry form. Purchasers w~ll not receive cernficates represent~ng their interest in the Bonds. So long as Cede & Co. is the reg~stered owner of the 1993 Bonds, as nominee of DTC, references herein to the bondholders ar registered owners vf the 1993 Bonds shall mean Cede & Co., as afaresaid, and shall not tnean the Bene~cial Owners (as defined herein) of the 1993 Bonds. The 1993 Bands will be dated December I, 1993 and bear interest fram that date, payable on July 1, 1994 and each ]anuary 1 and Jnly 1 thereafter, calculated an the basis of a 360-day year cans~sting of twelve 30-day consecutive months. Interest on each Bond shall be payable from the interest payment date next preceding the date of authent~cation thereof unless it is authentieated as of a day dunng the period from the 16th day of the month next preceding any interest payment date to the interest payment date, or unless it is authenticated on or before .Tune 15, 1994, in which event it shall bear ~.nterest frorn December 1, 1993. 'The interest on the Bonds shall be payable to the person whose name appears on the bond registrat~on books of the Trustee as the Owner thereof as of the close of business on the lSth day of the month nnmediately preceding an interest pay~nent date, whether or not such day is a Business Day (as defined in Appendix B), such interest ta be paid by check mailed to such Owner at s~ch address as he may have filed with the Trustee for that purpose. The principal of and premium, if any, on the 1993 Bonds shall be payable to the Owner thereaf, upon the snrrender thereaf at the principal corporate trust affice of the Trustee, in Las Angeles, California. Beneficial interests in the Bonds will be avaitahle in denominations of $5,0(lQ and integral multiples thereof. So long as Cede & Co. is the registered owner of the 1993 Bonds, principal of and interest an the 1993 Bonds will be payab~e by the Tre~stee by wire transfer of New York clearing hoase or equivalent next-day funds, to Cede & Co., as nominee for DTC. DTC vvill, in turn, remit such aznounts to the DTC Particigants (as defined herein) for subsequent dishursement ~o the Beneficial Owners. See "B ook-Entry Qnly System" herein. *Preliminary; subject to change. Baok-Entry Only System The information in this sect~on concerning DTC and DTC's book-entry system has been obtained from sources that the City believes to he rehable, but the City takes no responsibility for the accuracy thereof. DTC will act as securities depositary for the ~993 Bonds. The 1993 Bflnds will be issued as ful~y-reg2stered sec~r~t~es reg~stered in the name Cede & Co. {DTC's ~artnership nominee). One fully-registered Band certificate will be issued for each matarity of the 1993 Bonds, in the aggregate principal amaunt of such maturity, and wi11 be deposited with DTC. DTC is a limited-purpose trust company organ;zEd under the New York Banking Law, a"banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a"clearing carparation" within the meaning af the New York Uniform Commercial Code, and a"cleanng agency" registered pursuant to the pravzsions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that rts participants ("Direct Participants"} deposit with DTC. DTC also facihtates the settlement among Du~ect Participants of se~urities transactions, such as transfers and pledges, in deposited secunties thrpugh etectronic computerized book-entry changes in Direct Participants' accounts, thereby elitninating the need for physical movement of securities certificates Direct Participants ~ncluc~e securities brokers and dealers, banks, trust compames, clearing corparations, and certain other organizat~ons. DTC is owned by a number af its Direct Participants and by the New York Stock Exchat~ge, Tnc., the American Stock Exchange, Inc., and the Nattonal Association of Secunnes Dealers, Inc. Access to the DTC system is also available to others such as securit~es brokers and dealers, banks, and trust companies that clear through or rnaintain a custodial relationship with a Direct Participant, either du~ectly or indirecdy {"Indirect Participants"}. The rules applicable to DTC and its Parkicipants are on file with the Secunties and Exchange Commission. Purchases of the 1993 Bonds under the DTC systern must be made by or through Direct Participants, which will receive a credit for ~he 1993 Bonds an DTC's records. The ownersh~p interest of each actual p~rchaser of each 1993 Band ("Bene~cia~ Owner") is i~ turn to be recorc~ed on the Direct Participants' and Indirect Part~cipants' records. Beneficial Qwners will nat receive written confirmation from DTC of their parchase, but Beneficial Owners are expected to receive written confirmat~ons providing details of rhe transaction, as well as penodic statements of their holdings, from the Direct Panc~ipant or Indirect Participant through which the Beneficial Owner entered into th~e transact~on. Transfers of ownership xnterests in the 1993 Bonds aze ta be accomplished by entrres made on the books of Direct Participants ar Indirect Pamcipants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests m the 1993 Bonds, except in the event that use of the book-entry system for the 1993 Bonds is d~scontinued. To facilitate subsequent transfers, all 1993 bonds deposited by Direct Participants witl~ DTC are registered in thc name of DTC's partnership nominee, Cede & Co. The deposit of the 1993 Bonds with DTC and their registration in the name of Cede & Co. effect no change in benefic~al awnersh~p. DTC has no knowledge of the actual Bene~cial Owners of the 1993 Bonds; DTC's records reflect anly the identity of the Direct Participan~s to whose accounts such 1993 Bonds are credit~d, which may or may nat be the Beneficial dwners. The Direct Participants and Indirect Participants will remain responsible for keepuig account of their holdings on behalf of their customers. Conveyance af notices and other communications by DTC to Direct Participanis, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Qwners, w~ll be governed by arrangements among them, subject to any statutory or regulatory raquirements as may be in effect from time to time. 4 Redemprian not~ces will be sent to Cede & Co. If less than aIl of the 1993 Bonds within a maturity are being redeerned, DTCs practice is to determine by lot the amount of the inte~st of each Direct Participant in such matunty to be redeemed. Neither DTC nor Cede & Co. will cor~sent or vote with respect to the 1993 Bonds. Under its usual pracedures, DTC mazls an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy to the City assigns Cede &. Co.'s cansenting or ~oting rights ta those Direct Participants to whose accaunts the Bonds are credited on the Record Date (identified in a hsting attached to the Omnibus Praxy}. Prineipal and interest payments on the 1993 Bonds will be made to DTC. DTC's pract~ce is to credit Direct Particigants' acco~nts on the gayab~e date in accor~ance evith their respective hol~ings shown on DTC's records unless DTC has reason to believe that it w~ll not receive payment on the payable date. Payments by Direct Participants or Indirect Participants to Beneficial Owners will be governed by standing instructions and cc~stamary praetices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and wi~l be the respansibility af such Direct Particigants or Indirect Participants and not of DTC, the Trustee or the City, subject to any statutory or regulatory requirements as may be in effect frvm time to time. Payment of principal and interest to DTC is the responsibility of the City or the Trustee; dis6ursement of such payments to Direct Participants shall be the respons~b~l~ty of DTC; and disbursement of such payrnents to the Bene~cial Owners shall be the responsib~ty of Direct Partieipants and Indirect Participants. THE CITY .AND THE TRUSTEE WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATION TO DIRECT PARTICIPANTS, T~ INDIRECT PARTICIPANTS, OR TD ANY BENE~ICIAL QWNER WITH RESPECT TQ (I) THE ACCURACY OF ANY RECORDS MAIlVTAiNED BY DTC, ANY DIRECT PARTICIPANT, ~R ANY INDIRECT PARTICIPANT, (Ii} ANY N~TICE (INCLUDIIVG AIVY NQTICE OF REDEMPTIQI~ THAT IS PERMITTED dR REQUIRED TO BE GNEN TO BONDOWNERS UNDER THE INDENTURE, (III) THE PAYMENT B Y DTC OR ANY DIRECT PARTICIP~iN°T OR IlVDIRECT PARTICIPANT dF ANY AMdUNT WITH RESPECT TO THE PRINCIPAL, PREMIUM {IF ANY} OR INTEREST DUE ON TIIE 1993 BONDS; (IV} THE SELECTION BY DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF ANY PERSQN TO RF.CEIVE A PAYMENT IN THE EVENT ~F A PARTIAL REDEMPT'ION OF THE BONDS; OR ~V) ANY CQNSENT GIVEN OR OTHER ACTIQN TAKEN BY DIl2ECT PARTICIPANTS, AS ASSIGNEES OF DTC AS B~NDOWNERS. THE RULES APPLICABLE TO DTC ARE DN FILE WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE PROCEDURES OF DTC TO BE FOLLOWED IN DEALING WITH DIRECT PARTICiPANTS AND INDIltECT PARTICIPANTS ARE ON FII.E WiTH DTC. The book-entry system with DTC shall be discontinued if (a) DTC deterrnmes not to continue tv act as secunties depasitory for the 1993 Bonds; or {b} the City has ad~~sed DTC that it dces not wish DTC to eontinue as securit~es deposrtory If the Ciry replaces DTC with another qualified secur~ties depository, a fully-registered 1993 Bond for each matur~ty registered in the name af the successor shall be prepared, consistent with the requirements af the Indenture. If the City fails to select another qual~fied securities deposrtary to replace DTC, the City shall execute and the Trustee shall authenticat,e and deh~er Bond cemficates (the "Replacement $onds"} ta the Beneficial Qwners of the 1993 Bands. 1993 Bonds represented by Replacement Bonds will be transferable only upon presentatian in form satisfactory to the Trustee and containing information required by tha Trustee in order to effe~t such transfer. Th~ Trustee may require the Owner to pay certain casts and expenses incurred as a recult of such transfer. Issuance of the 1993 Bonds m book-entry fvrm may reduce the liquidity af the 1993 Bonds in che secondary trading market since investors may be unwilhng to gurchase Bonds far which they cannot obtain physical certificates. In addition, because transactions in the Bonds can be effected oniy thro~gh DTC, Direct Participants, Indirect Particigants and certain banks, ttze ab~lity of a Benefieial Owner to pledge Bonds to persons or entities that do not parncipate in the DTC system, or otherwise S ta take actions in respect of such 1993 Bands, may be limiied due to lack of a physical cemficate. Beneficiat Owners will not be recognized by the Trustee as registered Ow~ers for purposes of the Indentnre, and Benefcial Dwners will ~e permitted to exercise the rights of registered Owners anly ind~rectly through DTC and the Dimct Participants. Redemption Provisions Extrraordinary Redemp~on. The Crty shall have the nght, on any date, to redeem the 1993 Bonds, as a wnole, or in part. by lot wxthin each matunty so that Annual Debt Service {as defined in Appendix B) for all years in which 1993 Bonds shall mature after such redernpt~on shall be as nearly eyual as practxcat, from proceeds of insurance ar grace~ds of eminent domain proceedmgs, upon the terms and conditions of, and as pravided for in the Indenture, at the pnncipal amaunt thereof and accrued interest thereon ta the date fixed for redernptian, withaut premium. Optional Redemption. Bonds due on ar after January 1, 2d05 shall be sub~ect to redemption prior tfl their respective stated maturiries, at the option of the City, fram and to ttie extent of any saurce of ava~lable funds, as a whale on any date on ar after January 1, 2004, or in part on any ~nterest payment date on or after 7anuary 1, 20C14 of such maturities or portions of matunties and af such tenor as shall be determined by the Ciry if less th~n alI of the Bonds are to be called for priar redernption and by iot withi~ any such maturity and tenor if less than all of the Bonds of such matzarity and tenor be redeemed, at the principal amount thereof and accrued interest therean to the date fixed for redemption, plus a premium (expressed as a percentage of such grincipal amount) as set forth in the follawing schedule: Redemption Redemntion Date Price January 1, 2004 through Decernber 31, 2004 ............... ...................... 102~7'0 7anuary 1, 2(}OS through December 31, 2U(}5 .......... .. ...................... . 1Ql~la January 1, 2{?Q6 and thereafter ...................................................... IdQ9o Mandatory Sinking Fund Redemptian. The fallowing provisions cancermng maradatory sinking fund redemption are contained in the Indenture. The actual principal axnourtts redee»table tre any year, if any, will be determined by bidders responding ro the Notrce Invrting Bids relat~ng to the 1993 Bonds. Bonds maturing on January 1, 20 ("Term Bonds") are further subject to redemption prior to their respecti~e stated matunt~es on each January 1 on or after January 1, 20 , and by lot within any snch ~naturity if less ~han all of the Bonds of such rnaturity and tenor be redeerned, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption, without gremium, but only ~n amounts equal to, and in accordance with, the schedule of the principal amo~nts af Bonds of such maturity to be redeerried in each such year as set forth below: ~anuarv 1 Princinal Amount - ~ - ~ * Maturity If, prior to November 1 in any year, Term Bonds of any rnaturity shall have previously been redeemed ar purchased by or on behalf of the City, and delivered to the Trustee for cancellat~on, in an amount in excess af the principal amount of such Term Bonds ident~fied in the preceding paragraph, there shall be deemeci to have been a reduction of the remaining amounts stated in the preceding paragraph on a Propflrtionate Basis {as defined in Appendix B). 6 Notice and Effect of Redemption. Notice of redemption will be mailed by the Trustee, not less than 30 days nor rnare than 60 days prior to the redemptian date, to (i) the respective Owners of any 1993 Bonds designated far redemption at the~r addresses appearing on the bond regisuation books of the Trustee, (ii} ttte Securities Depositones (as defined in Appendix B) and (iii) one or more Information Sen+ices {as def~ned in Appendix B) Each notice af redemption shall state the date of such no~ice, the series of 1993 Bonds to be redeemed, the date of issue of the 1993 Bonds, the redemption date, the redemption price, tl~e place or places of redemption (including the name and appropriate address ar addresses of the Trustee), the CUSIP number {if any} flf the maturity or rnaturit~es, and, if ~ess than all of any such matunty is to be redeemed, the distinctive certificate numbers of the I993 Bonds of such maturity, to he redeemed, and in the case af 1943 Bonds to be redeerned m part vnly, the resgective portions of the principal amonnt thereaf to be redeemed. Each such not~ce wili alsa state that ~n said date there will become due and payable an each of said 1993 Bonds the principal amount thereof or of said specified portaon of the principal amaunt thereof in the case flf a 1993 Band to be redeemed in part only, together with interest accrued thereon to the redernpt~on date, and the premium, xf any, thereon (such premium to be specified) and that from and after such redempt~an date interest thereon shall cease ta accrue, and shall requ~re that such 1993 Bands be then surrendered at the address or addresses vf the Trustee specified in the redemption notice. Failure by the Trustee to give notice to any ane or more of the Information Services or 5ecurities Depositories or the insuff ciency of any such natices shall not affect ihe sufficiency of the proceedings far redempnon. Neither failure by the Trustee to mai.l notice of redemption to any one or more of the respective Owners of any 1993 Bonds designated for redempuan nor any defect in such noace shall affect the sufficiency of the proceedings for redemption with respect to the Owners to whom such notice was mailed When natice of redemptian has been duly given as aforesaid, and moneys for gayment of the redemption price are held by the Trustee, the 1993 Bonds so called for redempt~on shall, on the redemption date designated in such notice, become due and payable at the redemption price spec~fied in such notice; and from and after the date sv designated interest on the i993 Bonds so called for redemption shall cease to accrue, said 1993 Bonds shall cease to be entitled to any benefit or security under the indenture, and the Owners of said I993 Bonds shall have no rights in respect thereaf except to rece~ve payment af the redemption pnce thereof. PLAN 4F REFUNDING The 1993 Bonds are being issued pnmarily to advance refund all af the 1991 Bonds currently outstanding in the aggregate pr;ncipal amount af $ . I~ order to effect the advance refunding of the 1991 Bonds, moneys wxll be deposited in escrow with Bank of Amer~ca National Trust and Savings Association ( the "Escrow Bank"} which, when invested ~n the securities described below, will be sufficient to pay the principal of, and premium and interest on, the 1991 Bands through , when the I991 Bonds will be redeemecl. The escrow deposit will be made fram the proceeds of the 1993 Bonds [and certain moneys h~Id in funds and accounts estabhshed in connection with the issuance of the 1991 BondsJ. In order to effect the escrow deposit, the City intends ta purchase U.S. government securit~es or awnership interests therein (collectively, "Defeasance Securities"), which will be held by the Escrow Bank The escrow fund will be established pursuant to an Escrow Agreement, dated as of December 1, 1993 by and between the City and rhe Escrow Bank. The Defeasance Securities will be ava~I.able only for the payment of the i991 Bonds for which ihe escrow is created and will not be avallable for the payment of the 1493 Bon~s. After the deposit of the Defeasance Securi#ies into rhe escrow accaunt as described above, the City will be diseharged from all obligations with respect to the 1991 Bvnds. , a firm of independent cemfied publ~c accountants, will verify t1~e arithme~ical computat~ons used to determine the sufficiency of rhe escrow deposit See "VERIFTCATION." ESTIMATED SOURCES AND USES OF FUNDS The proceeds to be received frorn the sale of the 1993 Bands as well as other funds are expected to be applied as follows: Sources: Principal Amaunt of the 1993 Bonds . . . . .. . . . . . . . . . . . . .. . . . . . . . .. . . . . $ Less: Or~ginal Issue Discount (or plus premiurn) .. ................ . Transfer from 1991 Series A Reserve Account ....... .. .............. Accrued Interest........,.. ............................................... Total Sources........ ................................................. U5@5: Deposit to Escrow Fund (1) ............................................. Costs of Issua~ce (2} ............. ........................... ............ Deposit w the 1993 Series Reserve Account (3) ...................... Underwriters' Discount .................................................. Total Uses ....... ................................... .................. (1} To be held by the Escrow Bank and applied to ~ay principal of, prernium and interest of the 1991 Bands. {2) Includes estimated fees and expenses for Bond Counsel, F~nancial Advisor, consulting engin~ers, auditars, printing, and rating agencies, and other costs related to the issuance of the 1993 Bonds. {3) Const~tutes an amount equal to the Reyuireci Reserve. SECLTRITY FOR THE 1993 BONDS Source of Payment All Revenues received by the City are deposited into the Wastewater Enterprise Fund (the "Revenue Fund") held by the City. The Revenue Fund has been operated as a separate fund of the City smce it was created by an ordmance. All expenditures related to the construction, operation, maintenance and repair of the Enterprise are accounted for in the Revenue Fund. General-Purpose Financial Statements and Independent Auditvrs' Report for the year ended J~ne 3a, 1992 and Unaud~ted Financial Statements - Wastewatcr Ent,ergrise for the year ended June 30, 1993 are attached as Appendix A Pursuant to the Indenture, the Ciry is required to annually prepare audited fmancial statements of the Reven~e Fund. "Revenues" means, for any F~scal Year or other period, all rates, fees and charges received for, and all otner income and receipts derived by the City from, the operation of the Enterprise ar arising from the Enterprise det~rmined in accardar~ce with Generally Accepted Account~ng Principles (as defined in App~ndix B), ineluding all proceeds of insurance covering business intecruption loss relating to the Enterprise, invesunent earnings on amounts held in the Revenue Fund and Reserve Fund, established under I,he Indenlure, and all other money howsoever derived by the Cily from the operat~on af the Enterprise or arising from the Enterprise, but exclnding connection fees and charges, refundable deposits made to esta.blish credit and ad~ances or cantribut~ons in aid of construction; provided, however, that Revenues shall include connecuon fees and charges collected during such Fiscal Year or other pe~iod, but only to the extent that sucn connection fees and charges could be praperly expended on a projeet for which the proceeds of the subject Bonds were used or are available to be used Proceeds of the 1991 Bonds were not expended on a project for which connection fees and charges could properly be used. Consequently, the Re~enues available for payrnent of the 1993 Bonds do not include any connection fees or charges. {See "REVENUES AND DEBT SERVICE COVERAGE" herein.) Pledge of Re~enues Under the terms of the Indenture, all Revenues and any other amounts (including proceeds of the sale vf the 1993 Bvnds) held by the Trustee in any fund or account estabIished under the Indenture (other than amounts an deposit in the Rebate Fund created pursuant thereto} are irre~ocably pledgec~ w the payment af the interest or~ and principal of the 1993 Bonds as provided therein, and the Revenues may not be used for any vther purpose whi~e any of the 1993 Bonds remain Outstanding (as de~ned in Appendix B); provided, however, that out of the Revenues and other moneys there may be applied such sums far such purposes as are permitted under the Indenture. Such pledge constitutes a~rst pledge of and ct~arge and lien upan the Revenues and all att~er amounts held by the Trustee in the funds and accoun~s established under the Indent~re {other than amounts on deposit in the Rebate Fund created pursuant thereto} for the payment of the ;nterest on and princ~pal of the I993 Bonds in accorcfanoe with the terms ther~of and of the Indenture. In the Indentur~, the City covenants that so lot~g as any 1993 Bonds are Outstanding, the City wiIl not issue any bonds or flbligations payable from Revenues or secured by a pledge, lien or char~e upon Re~enues prior to or on a pa.rity with the 1993 Bonds, ather than the 1993 Bonds, provided that letter af credit agreements entered inta in connectian with variable note or tender option Additional Bands may be payable on a parity with the 1993 Bonds. Additionally, the City covenants in the Inden~ure that it will not martgage or otherwise encumber, pledge or place any charge upan the Enterprise or any part thereof, or upon any of the Revenues, prior ta or on a par~ty with the 1993 Bonds, pravided that letter of credit agreements ent~red ~nto in connecdon with variable note or tender optian Addit~onal Bonds may be payabie on a parity with the 1993 Bonds. Notwithstanding the foregaing, nothing in the Indenture pre~ents the City frvm authari~ing and issuing bonds, notes, warrants, certificates or other obligat~ons or evidences af indebtedness which as to principal or interest, or both, (~) are payab2e frorr~ Revenues after and subordinate to ~he payment from Revenues of the pnncipal o€ and interest on the 1993 Bonds, ar {ii} are payable from moneys which are not Revenues as such term is defined in the Indenture. Rate Cavenant The Ciry has cavenanted in the Indenture that it w~Il, at a11 times while any of the Bonds remain Outstanding, establish, fix, prescnbe and collect rates, fees and charges in connectian with the vvastev~ater services and facilities furnished by the EntEr}~rise which vsr~ll be sufficient to yield dw7ng each Fiscal Year, after making reasonable allowances for contingencies and error m the estimates, Net Revenues tas defined herein) equal to at least i20°lo of the estimated Debt 5ervice {as defined in Appendix B) for such Fiscal Year "Net Revenues" means, for any Fiscal Year or oEher period, the Revenues during such F~scal Year ar period, less the Operation and Maintenance Costs (as de~ned ~n Appendix B) of the Enterprise during such Fiscal Year or penod. The Ciry may make ad~ustments from t~me to time in sueh rates, fees and charges and may make suc~ c~assification thereoF as Lt deems necessary, but shall not reduce the rates, fees and charges then in effect unless the Net Revenues ~'rom such reduced rates, fees and charges will at all times be sufficient to meet this requirement af ~he Indenture. Reserve Fund Under the terms flf the Indenture, the Reserve Fund is re~uired to be created and funded in an amount equal to the "Required Reserve", which xs an amount equa.l to the least of {i} the Maximum Annual Debt Service on all $onds Qutstanding, (u} 12S°Io of Average Annual Debt Service (as defined in Appendix B) on all Bands Outstanding, and ,(iii) the amount of proceeds of Bonds permitted to be ~eld in tt~e Reserve Fand by the ar~itrage ~ond regulat~ans issued by the United States Depar[ment af the Treasury, as sueh regulat~ons are, at the time, applicable and in effect, withaut the imposit~on of yield ~strictions. At the time of ~ssuance of the I993 Bonds $ will be transferred from the 9 1991 Series A Reser~e Account to the 1993 Series Reserve Account created under the Indenture, which will be th~ Required Reserve fallowing the issuance of the 1993 Bands and defeasance of the 199i Bonds. Moneys held in the Reserve Fund are ta be used for the purpose of paying principal of and Minimurn Sinking Fund Account paymen~s w~th respect to, and interest on the 1993 Bonds if on any pnncipal, redempt~on or interest payment date the arnounts in the Principal Fund and Interest Fund available therefor are insufficient to pay in full the arnounts then due, as described in Appendix B-- "Flow of Funds - Deposits to the Interest FUnd, Principal Fund and 1993 Band Reserve Fund". Additianal Bonds General In addition to the 1993 Bonds, the City may, subject to the requirements of the Law {as defined in Appendix B), by Supplemental. Indenture, establish one ar mare other senes of Additaonal Bands payable from Revenues on a parity w~th the 1993 Bonds and secured by a lien upon and pledge of Revenues equal ta the lien and pledge securing the 1993 Bonds, in such principal amount and for sach law~ul purpose or purposes as shall be deterrnined by tiie City in such 5upplemental Indenture. The ~ssuance af such Additional Bonds, is subject to the satisfaction of certain conditions precedent specified in the Indenture, including the f~ing af the following documents with the Trustee. (i} a cert~f'icate of the Ciry setting farth (a) for any period of 12 consecutive calendar manths out of the 1$ calendar months next preceding the authent~catian and delivery of such Additional Bonds, the Net Revenues for such 12-month period and {b} the Annua~ Debt Serv~ce for such 12-month period, and demonstrating that far s~ch 12-month period, Net Revenues equaled at least 120% of the Annual Debt Service for sueh 12-month periad, (u) a written report of a Quah~ed Independent Consultant (as defined in Appendix B) sett~ng forth for the next Fiscal Year, or i~ interest vvith respect to such Additional Bonds is being capitalized from the proceeds of such Additional Bands, the Fiscal Year fvllowing the Fiscal Year in which such intec~st is capita.~i~:d in full, estimates of (a) Reven~es, {b) ~peration and Maintenance Costs of the Enterprise, and {c} Net Revenues; provided, however, far ptITp05BS ~f SUCII ~SilIDatCS, the determinat~on of Revenues may talce into accaunt any mcreases (and shall ~ae adjusted far any decreases) in rates, fees and charges for wastewater services and facilities furnished by the Enterprise which have been authonzed by the City tn be implemented and which will be effective pnar to the tirrie of issuance flf the Additional Sonds, and (iii} a certificate of the City setting forth (a} the est~mates of Net Revenues, as set forth in a wntten report of a Quali~ed Independent Cansultant pursnant to (ii) above, for each of such F~scal Year, and (b) the Annual Debt Service for each of such Fiscal Year, and demonstrating ihat the estimated Net Revenues se~ forth ~n (u} above is at least equat to 120~0 of Annual Debt Service for the correspanding Fiscal Year. Bonds for Refunding. In addit~on to the 1993 Bonds, the City may, subject to the requirements af the Law, by Supplemental ~ndenture establish one or more other s~ries of Addit~onal Bonds on a panry w~th the 1993 Bonds and secured by a hen upon ar~d pledge of Re~enues equal to the lien and gledge secunty of the 1993 Bonds, for the purpvse af refunding any Bonds issued under the Indenture and then Outstanding. The ~ssuance of such Additional Bonds for refunding is subject to the satisfact~on of certain condit~ons precedent specified in the Indenture, including the ~ling with the Tcustee af a certif'icate of an Independent Certi~ed Public Accountant (as defined in Appendix B) that the Average Annual Debt Service for such series of Additional Bonds (during the per~od from iheir issuance to their las~ maturity date) is equal ta ar Iess than the Average Annual Debt Serviee for the 1993 Bonds to be refunded (during the penad from the issuance of the series of Additional Bands to the last maturiry date of the 1993 Bonds ta b~ refunded). 10 Insurance For a descnption of the provisians of the Indenture relating to insurance see Appendix B-- "Summary of Certain Provisions o~ the Indenture." The City has obtained commercial ussurance having limits of at least $2S million for risks of physical damage to real and personal property Th~s ca~ers all locations for "alI risl~' property ~nsurance including extra expenses. The City has a$5 million boiler and machinery pvlicy, and a program of $2a m~llion in liability coverage which consists of a combination of self-insurance, self-ins~irance paoling and commercial coverages. In add~t~on, the C~ty mamtains an honesty blanket banc~ far all emplayees np to $500,0()0 and Faithful Performance insurance which includes honesty coverage up to $1,000,0{}0 for those individuals identified by City ardinarice (typically department heads). RISK FACTOR5 The fallowing factars, aIong with other information gresented in this Official Statement, should be considered by potential ir~vestors in evaiuating the purchase of the 1993 Bonds. Generad. The 1993 Bonds are payable so~ely from Revenues of the Enterprise and from certain funds held under the Indenture. No assurance car~ be made that Revenues, est~mated or otherwise, will be reaiized by the Enterprise in amounts su€fcient to pay pnncipal of and interest on the 1993 Bonds. The realization of future Revenues is subject to, amang other things, the cagabilit~es of management of the Enterprise, the ability of the Enterprise to gra~de wastewater service to its custamers sufficient to provide the required deht service coverage as well as pay for Qperation and Maintenance Costs of the Enterpnse. Accordingly, there can be no assurances made to the Owners that the Revenues af the Enterprise will not decrease during the term of the 1993 Bonds. Wastewater Service Demund and Growth. There can be na assurance t~t der~and for wastewater services in the City will be mair~tained at the projected levels described in this Official Statement. In particular, economic and demographic factors could have an adverse effect vn wastewater service demand. Reduct~an in levels of service wauld rec~uire further increases in rates ar charges in order ta comply vs~th the rate covenan~ Completion af the Hyperion Upgrade. There can be nv assurance that the Hyperion upgrade will be completed fvr the costs and within the t~mes set forth an this Official Statement. Failure to complete the project or excessive increases Un casts could require further increases in rates ar charges in vrder to comply vv~th the rate co~enant Earthquake and Orher Narural Disaster. Wastewater fac~liues of the City are designed and constructed in accordance with sound engineering practice and all applieable seismic standards. To date, no such facilities have suffered any darnage as a result of seismic activity. Additionally, the City has prepared an emergency o~rations plan for the operation of the major local components af the Enterpnse in the event of a major earthguake. Accord~ng to Los Angeles sraff, Hyperion Plant capital improvements have been canstructed to Zone 4 seismic standards under the issue of the Uniforrn Building Code in effect at the t~me of permitting. In spite of these precautions, there can be na assurance that earthquakes vr other natural disasters will not interrupt the ability of the Enterprise to realize Revenues sufficient to pay princrpal and interest on the 1993 Bonds. Draught and Wuter Conservatian Measures. The State af California suffered from severe drought conditians in the past, and as a result the City adopted an ordinance requiring mandatory 20 percent cutbacks in water usage from 1990 ievels. These cutbaclcs, which applied to all City water custamers, went into effect in April, I991, and remained in effect until California water supghes reached normal levels in Aprii, 1992. 'The sewer service charges adopte~ by the City in October, 1991 contain a fixed char~e cor~aponent which is independent of water usage. ~1 In addition to the mandatory water cnnservation program, the City has progressed with its program of retr~fitting bathrooms in the Ciry with u~tra law flow tailets and low flflw showerheads. This program, which will result in a reduct~on in wastewater generatian of approximately 1.9 mil~on ~altans per day, signi~cantiy reduces the City's wastewater treatr3nent and dispvsal costs, and ehminates the need for the City to acqu~re add~tional capacity in the Hyperion Plant However, it also has the potential to ad~ersely affect Re~enues. Inab:lity of the City and Los Angeles to Reach Accord an Future Contractual Terms. Los Angeles has been unable to reach accord with the City and with other Subscribing Agencies (as defined herein) on the terms and condit~ons of the Proposed Hyperion Agreement (as defined herem}, and Los Angeles has insntuted litigation. (See "OTHER INFORMATION - Litigation°'). it cannot be predicte~ what the outco~ne of such litiga~ion might be or what impact it might have on th~ costs to the City for wastewater treatment and disposai. Addctional Bonds. The Indenture permits the issuance af Additional Bonds, which shall be payable an a par~ty with the 1993 Bonds. Such Additional Bonds would increase debt service requirements, and could adversely affect debt service coverage on the 1993 Bonds. In suct~ event, however, the rate covenant desc~ibed herein will ~main in effect. THE PRUJECT Pursuant ta the Hyperion Agreement, the City is required to pay to Las Angeles an annual operat~on and maintenance charge for sewage transportation, treatment and disposal. Additionally, the Hypenon Agreement requires the C~ty to pay a prvportionate share of the capital costs flf alteratian, improvernent, relocation, replacement or reconstruction of the Hyperion Plant. The Bonds are being issued to advance refund the 1991 Bands which were issued to fnance the costs of the upgrade of a partion af the Hypenon Plant (the "Project"). Los Angeles 1s the pla.nning agency, pnncipat owner and operator of the Hyperion Plant. In February, 19$7, Las Angeles entered into an Arnended Cansent Decree {the "Amended Consent Decree") with the United States Government and the State af California {the "State"}, wherein Los Angeles agreed to upgrade the degree of treatment at the Hyperian Plant~ This followed an earlier consent decree requiring that Los Angeles discontrnue the discharge of sewage sludge into the ocean. Both the original and Amended Consent Decrees were necessita.ted by federal and state regulatory requirements relating to the ei~m~nat~on of discharges of pallutants into navigable waters. In accordance with ~he provisions of federal and state law, and the Arnended Cvnsent Decree, Los Angeles is now carrying out a ma~or program of cons~ruct~on to upgrade and expand the Hyperion Plasit. Under the terms of the Hyperion Agreement, the City is obl~gated to share in same of these costs. It is estimated by Los Angeles that the Hyperion upgrade will cost approxunately $4.73 billion ta complete over the next ten years. 'I'he Crty's payments towar~ the uggrade, based on est~rnates ava~lable from the Las Angeles, will be approximately $76.5 million t~u-ough Fiscal Year 2a02-~3, including c~u-rent bills and payments to date. Arnounts currently on deposit in the Irnprovernent Fund (consisting of a portion of the proceeds of the 1991 Bonds and earni~gs thereon} are expected to be sufficient to pay the cos~s related to the Hyperion upgrade through Fiscal Year 1994-95. It is anticipated that Addinanal Bonds w~ll be issued start~ng in FY 95-96 to finance the remainder of the City's cantnbut~an_ Due to litigation mstituted by Los Angeles, the City has not paid any praceeds from the 1991 Bonds to Los Angeles. Hawever, appropriate expenses have been accrued on City financial records and a11 proceeds remain with the Trustee In addition, pending outcome of litigauon, operation and maintenance payments to Las Angeles have been suspended by the City, however, these expenses have also been appropriately accrued on City f nancial records. 12 THE ENTERPRISE Lncal System The Local System is owned by the City and is rnanaged, operated and mamtained by the Utiliaes Division of the City, Departrnen~ of General Senrices. Management af the Lacal System involves physical facilit~es planning; financial p~anning and budgeting; development of operati~g systems and groeedures; Iiaison with Los Ange~es and othec agene~es an matters affect~ng the Enterpnse; an~ billing and collect~an acnvities. Operation of the Local System invoives cleaning, inspecting and repairing appro~umately 125 miies of san~tary sewers, 20 rriiies of storm drains and 825 catch basins, as well as a pumping plant. The Loca~ System serves an area of eight square miles w~th a papulat~on of approximately 88,604 There are appro~mately 15,SIX} active sewer ser~+ice accounts, and average wastewater flow from the Locai System ta the Hyperion P1ant is current~y approx~mately 8.7 m~lhon gallons per day. In recent years, this flow rate has decreased as a result of permanent water conservation measures and tetnporary water rationing measures taken by the C~ty. When the drought cond~aons in California ended, and the temporary water rationing measures were hfted, sewage flow mcreased sornewha~ Engineering design of Local System improvements is performed by the Office of the Ciry Engineer, utiliaing either City engineering staff or external consulting engineers. Constructaon of Local System impro~ements is performed by qualified contractors under the direction of the City Engineer. The City Environmental Pragrams Division is responsible for developing and ~mplementing water and energy conservation programs and wastewater flow reduction programs, as well as for admimstering the City's environmental ordinances. Both the Office of the City Eng~neer and the Environrnental Programs Dlvision work in close liaison with the Utilities lhvision. The Utihties Div~sion is alsa respons~ble for irriplementing and enforcing the City's industrial Waste Contrai Program. This involves ~nsgecting and sampling approximately 9()Q City bus~nesses m order ta ensure that discharges to the Lacal System and subsequently to the Hyperion Plant satisfy the regulatory reyuirements of the C~ty, Los Angeles, and tt~e state and federal governments. (See "REGULATQRY REQUIREMENTS" herein). Hyperion Plant The Los Angeles Hypenon Wastewater System (the "Hyperion Systern") provides wastewater cflllection, treatrnent and disposal sero~ces for an area of approxunately 60(l square m~les. In addition to Los Angeles, it serves 29 other a~encies pursuant to sewage disposal contracts executed and in force with each agency The Hyperion Systern consists of the Hypenon Plant, two water reclamat~on plants, twenry eight pumging piants, and a series of lacal, collector and interceptor sewers terminating at the Hypenon Plant. The current capac~ty of the Hyperion Plant is 420 mgd, with an average dry weather flow of 304 mgd in 1992 The plant pm~ides primary treatment far all influent flaw and secandary treatment for 175 mgd, utilizing the actavate~ sludge process. Contractual Agreements Between the City and Las Angeles. Since 1426, the City and Los Angeles have had various contractual agreements goveming the transportation, treatrnent and disposal of sewage. The cur~rent agreement between the twa municipalities, the Hyperion Agreement, ~s dated February 21, 1964, anci provides that Los Angeles allocate to the City an average flow in the Hyperion Plant of 11.04 mgd or 11/420ths of the average tlow through the plant, whichever is greater. It also allocates certain peak flow capacities in Los Angeles connecting sewers between tlie City and the Hyperion Plant. Xn the event that additional capacity ~s needed by the City, an amendment may be negotiated between the parties. The Hyperion Agreement alsa provides that the City pay annual sewage transportation, treatment and d~sposal charges which shall be a groportionate share of the operat~on and maintenance expendrtures by Las Angeles. Capital costs far alteration, expansian, improvernent, relocauon, replacement, construction or recanscruction shall also be borne by the parties, proportioned on the basis of flow. ]3 The Hyperion Agreement, as well as agreements between Los Angeles and other contributars to the Hyperion System (the "Subscnbzng Agencies"}, has been found not to be in compliance with all requirements of the Environmental Protection Agency ("EPA") and Califarzua State Water Resources Control Baard ("SWRCB") Spec~fic areas where contractual changes are bemg mandated by these agencies are as follows: {1) Operatian, maintenance and replacement charges must be l~ased on sewage flow and strength rather thar~ just sewage flow, as provided in the Hyperion Agre~ment; (2) Differences in charge systems for vanous contributors to the Hyperion System must be el~ninated, and charge systems replaced with a c4nsistent system which is fair and equitable; (3) Operation, rnaintenance and replacement c~sts of it~e three Hyperion System treatment plants must be amaigamated; (4} Responsibility for system-wide comphance with EPA industrial discharge pre-treatment requirements must be assumed by Los Angeles. `Thus the current Hyperion Agreement must be amended or a new contract executed between the Ci~y and Los Angeles. Los Angeies is currently developing two new sta~dard agreements for gresentation to those outside agencies which contr~bute sewage to the Hypenan Systern. One agreement will deal with the responsibilities of the Subscr~bing Agencies and Los Angeles with respect to industrial d~scharge pre- treatment requirements. Since the City has already implemented and is now enforcing an mdustnal waste cantrol prograrn which me~ts the requirerrients of the Ciry, Los Angeles, and state and federal re~ulatory authorities, it is expected that this inclustrial waste agreement will have little new impact on the City. The second agreement being developed (the "Proposed Hyperion Agreement"} will address xssues bein~ mandated by regulatory agenc~es. Los Angeles also proposes ta incorporate into this agreement provisions which wiil simplify and standardize its billing and payrnent terms, as well as a number of other pravisions. Many of the provisions of the Propased Hyperion Agreement have been develaped joindy by Los Angeles and the Subscribing Agencies, but other pravisions have yet to be negat~ated It is anticipated that new agreements will be negotiated within the next ~welve manths. However, any new cantract must be approved by the Ciry Cauncils of both the City and Los Angeles, and until the te~ns of the Proposed Hyperion Agreement have been negotiated, there is no assurance that ihis will occur. In the meant~me, the City will c~ntinue to use the Hypenon Plant under the terms of tt~e Hyperion Agreement. In the Indenture, the City covenants that it will not enter into or consent or agree to any amendment, madi~cat~on, restatement, replacement ar superseding of the Hyperion Agreement unless and until the City Cauncil of the C~ty finds and detern~ines that such amendment, modificatian, restatement, replacement 4r superseding will not materially impair the securiry for the B onds. Hyperion Upgrade and Expansaon Program. The Los Angeles Wastewater System Cap~tal Impro~ement Program is an on~oing capital expendrture pmgram presently covering ten ~scal years. The general ob~ectzves of the prograrn are to meet federal and State requirements and Los Angeles policy regarding water pollution control, to provide satisfactory levels of serv~ce to u5ers of the system, and to maintain the integrity of the system Planned impravements in the program include instaliation of rriajor interceptor sewers, renovation or replaceraent of other major sewers and pumping stations, and modernization, expansion and upgrading of sewage treatrnent facilit~es, includin~ the Hyperion Plant. The C~ty's obligation for the program is hmited to its contribut~on to the upgrade of the Hypenon Pla.nt piusuant to the Hypenon Agreement. 14 A summary of estimated future year expenditures for the Hyperifln upgrade, exclusive of any capacity expansion, is presented in the table ~elow_ The esamated share of these expenditures which are to be borne by t~e City is also shawn. Since Fiscal Year 1983-84 and pnor to the issuance af the Bonds, the City has paid to Los An~eles appraximately $9.97 milhon toward rts share af the capitai costs af the Hypenon upgra~e. It is anticipated that amounts current~y vn deposit m the Impravement Fund (consisting of a portian af the proceeds af the 1991 Bands and earrungs thereon} are expected to be sufficient ta gay eapital billings from Los Angeles of $18.79 millian for the penod of FY 1985-89 through FY ~992-93 and wii~ fund capital bi~lmgs from Los Ange2es thrvugh Fiscal Year ~994-95. The amounts shown ~n the table belaw as Santa Monica's share represents both estimates by Los Angeles of actuai b~l~ings. CITY ~F 5ANTA MONICA SHARE OF HYPERION CAPITAL IMPROVEMENT PROGR.AM (In Thousands} Fiscal Year 1991-92 ........... .... 1992-93 ................ 1993-94 ..... .... .... 1994-95. ... .... .... 1995-96 ........... .... 1996-97. ... .... .... 1997-98 ...... .... .... 1998-99 ........... .... 1999-00 . .............. ~oao-o ~ .. ....... .... subtot~i......... Los Angeles Hyperian Upgrade Capit~l Costs $371,76( 447,235 471,2[}9 5b7,473 495,803 479,369 442,95fi 335,764 253,Q40 203,950 ~~fl2,4as Santa Monica Share of Hyperian Upgrade Capital Costs {1} ~4,033 (2} 6,277 6,322 7,214 6,346 fi,472 5,699 (3} (3} (3) (3) Souree: Los Angeles, 1993. (l.) As bt~led by Lvs Angeles. (2} Actual Billing by Los Angeles. (3) Information not available. Regulatory Requirements Opera~ans at the Hyperian Plant are subje~t to regulatory requirements contained in the Federal Water Poll~tian Control Act, as amended, (the "Clean Water Act") and the State of California Parter-Calogne Water Quahry Control Act of 1969, as amended Both federal and State regulations are admin~stered through the SWRCB, and generally deal vvith the quality of effluent which may be discharged from t~e wastewater treatment facilities, the disposal of sludge fram the wastewater treatment plant, the d~scharge of poilutants into the groundwater, and the nature vf waste mater~al(pamcularly u~-dustrial waste) wh~ch may be discharged into the collection system. Additional requ~rements were impased when Los Angeles applied for and reeei~ed federal EPA grant funds under the Clean Water Act. In addition to the afc~rementioned regulatory requirernents, Los Angeles rnust comply with provisions of an Amended Consent Decree negotiated m 19$7 with the Umted States Government and the State. This Amended Consent Decree re~quires that Los Angeies upgrade the degree of treatinent provided at the Hypenon Plant w~thin an established complian.ce schedule. Los Angeles has met many of the requirements of rhe Amended Consent Decree, and has plans to construet and put into operati~n the necessary fac~I~t~es for satisfying other requirements relating to its wastewater discharges. A proport~onate share of financ~ng for the required improvements to the Hypenan Plant must be pravided by the City and other agenc~es contribut~ng sewage to the Hyperion Plant. i5 REVENUES AND DEBT SERVICE COVERAGE Sewer Rates and Revenues The City curr~ntly reco~ers the cost of operating, maantairung, regairing, replacing and expanciing the Enterpnse through five user fees, plus interest earrungs. The five users fees are: 1} Sewer Service Charges; 2) Industnal Waste Fees; 3) Sewer Connect~on Fees; 4) Hazardous Waste Fees, and 5) M~scellar~eons R~venues All revennes derived frorr~ the five fees listed above, pursuant to the Santa Mamca Mumcipal Code and subject to the lunitahons of Cal~foriua Govemment Code Sectian 664Q0- 660(}3 ("AB lb{}~") as they relate to Sewer Cannect~on Fees, are placed mto the Revenue Fund and are expended only for sewer, storm drain, industrial waste or hazardous waste purposes. All interest earnings on moneys held in the Revenue Fund are retained ui the Fund. The methodology for develaping the fee schedules for the above outhned charges is governed in part by the Santa Monica Municipal Code and the SWRCB, acting on behalf of the EPA. T~e Mun~c~pal Code of the City requires that the income fram the fees and charges assessed for sewer services equal the overail cast of operat~on, maintenance, debt co~erage and capital improvements of the Enterpnse. Additionally, the SWRCB and the EPA require that the City's wastewater ancom~ structure be such that users of the system pay according ta use of the system and the quahty of wastewater discharged xnto the system. Rate Study. In 1991, the City contracted with the independent cons~lting firm of Kennedy/Jenks/Chilton to prepare a comprehensive wastewater revenue and rate analysis. The consu~tant's study report (the "Study"}, dated September 11, 1991, contains an assessment of wastewater revenue requirements and recommendatians on wastewater rates to cover all operation and rnaintenance costs, capital improvernent casts, and debt service costs thraugh Fiscal Year 2000-01. The consultant recommended ihat the City modify its wastewater rate structure ta include a fixed charge component, thus stabilizing wastewater revenue and makang it less dependent upon water usage. The consultant also recammended that the rate structure include a wastewater strength companent to sat~sfy 5tate and federal requirements assoc~ated with grant funding of port~ans of the Hypenon upgrade. In October 1991, rhe C~ty Counc~l approved a revised Wastevsrater Rate Structure an~ correspondin~ increase in the wastewater rates that generated an additional 37% of revenue. In add~t~on, a revis~on of the Capital Facil~ty Fees was approved to address re~+enue requ~rements for capital fac~lity upgrades to the wastewater ~allection system To date these fee rev~sions have pro~rided satisfactory re~enue far the C~ty ta meet its wastev~~ater bond obhgations, operatmg expenses and capital unprovements requirements. i~ater Conservatron 1Vfeasures. Since its incept~on in December 1989, the City's Baysaver Fixture Retrofit Program has retrofitted bathroams with approximately 35,00(? ultra law flow toilets and law flow showerheads. The program goa~ is to retrofit SO~Io of all residential bathrooms and 2590 of all commerc~al to~lets in the Ciry. Achievement of these goals w~ll reduce the City's water use and wastewater generat~on by approxunately 1.9 million gallons per day lb Sewer Service Charge. The City's Sewer Service Charge, approved by the City Council ~n Octaber 1991, is comprised of a fixed eharge and vanable charges for flow and strength, multiplied by the apprapriate discharge factor. The charges are as follows: Clser Class By AZeter Size 5/8-3/4" 1" 1 1/2" 2" 3" 4" 6" g~~ BI-MONTHLY FIXEB 5E~V~R SERVICE CHARGE Sin~le Famil~ ~ 16.98 23.77 30.56 49.24 186 76 237.69 35G.53 492.36 Commeresa~l Commercial! Industrial Industrial 11Zulti-Familv No Permit Permit r $ 34.54 $ 42 $1 $ 70.54 48.36 59.94 98.75 62.17 77.07 126.97 140.17 124 16 204.56 379.94 470 96 775 92 483.56 599.40 987 53 725.34 899.10 1,481.29 1,0~1 66 1,241.62 2,045.b0 BI-1~ZONTHLY V~RiABLE FLOti~ CHARGE User Class Dischar~e Factar Single Fam~Iy 51 %Q Business ~n Residence 519~ Duplex $0°!0 Tnplex 85°l0 Fourplex 9090 O~er Four Apartments 95% Commercial and Industrial 89~Io 1~4unic~pai and Qther Institut~onal 89% Pubhc Schools and Churches 89% Variable Flow Char~e (I) 5rngle Family $1.13 per Hcf Muln-fam~ly L 13 per Hcf Goverriment and Institutional 1 13 per Hcf Commercial, no uidustrial discharge permit required 1 13 per Hcf Commercial, industnal discharge perm~t required ~ 84 per Hcf Industrial , no industrial discharge permit required 1.13 per Hcf Indusmal, xndustrial dischar~e permit requ~red 0.$4 per Hcf 17 BI-MONTHLY VARIABLE STRENGTH CHARGE User Cla~s Comrnercial, mdustrial discharge permit reyu~red Inc~ustrial, industrial discharge permit requu'ed Commercial, industrial dischaxge permit required Tndustrial, industnal dischaxge per~nit reqnixed Bi-monthly Char~e (2} $ 0.15 per pound BOD 0.15 per pound BOD 0.38 per pound SS 0.38 per pound SS Source: City af Santa Monica Utzli~es Division. (1} Hcf refers to hundred cuhic feet. (2) BOD refers to b~ochemical oxygen demand and SS refers to suspended solids. The ten largest customers of the Enterprise, as measured by estimated Sewer Service Charge billings for Fiscal Year, 1992-93, are est~mated to be respons~ble for approx~mately seven percent of Sewer Servace Charge revenue in Fiscal Year 1992-93. The following table shows estimated ~ewer Service Charge bilhn~s far the ten largest eustomers of the Enterprise in Fiscal Year 1992-93. SEi~~;ER SERVICE CHARGE REVENUE PROVIDED BY TEN LARGEST CUSTUMERS (1) FISCAL YEAR 1992-93 User St John's Hosp~tal Santa Monica Hospital Santa Monxca Bay Hotel I~ern Land Company M~ramar Hotel Ocean Tawers Gillette/Papermate Huntley Hotel Sparts Connect~an National Med~cal Enterprises Total Sewer Service Charge Re~/101argest aecaunts Total Sewer Service Charges FY 1992-93 Percent af tota11992 Sewer Service Revenue Source: City of Santa Motuca Ut~liues Division. (1 } Customers ranked on basis of 5ewer Service Charge revenue Fiseal Year 1992-93 Biliin~s $a~,aio 89,8$9 67,986 65,481 55,885 44,73d 42,445 37,428 32,212 2Q,727 $548,809 $9,951,391 6~70 18 Industrial Waste Fees. Pursuant to Ordinance 1373 (Ciry Council Series), the City assesses an Industrial Waste Fee on targeted bvsinesses to ensure that they do not discharge more than a spec~fied limit of indusmal waste into the wastewater system. Th~ targeted business are separated into six categanes based on type of wastewater d~scharge and number of inspections required each year. The fee consists of a bimonthly mspect~on/samplmg fee and a permit application fee renewable every three years. The table beiow hsts and def nes each category. Annual Sampling Cate~ory Inspectian Fee 1 Restaurants, Gas Stat~ans, Others $ 117 2 Printers, Others 432 3 Auto Repair, Problem Restaurants 648 4 Large Photo Fimshers 939 5 Sigmficant Users 1,410 6 Categoncal {Specified ma~or mdustry 4,578 categories) Tri-Annual Permit Fee $ 78 7$ 78 78 78 128 Revenue from the Industrial Waste Fee is estunated to be $376,916 for F~scal Year 1992-93 The fi~e largest industrial wast~ customers identified below account for approximate~y two percent of all Indusmal Waste Fee revenues. INDU5TRIAL WASTE FEE REVENUE PROVIDED BY FIVE LARGEST INDUSTRIAL WASTE CUSTOMERS FISCAL YEAR 1992-93 User Estimated Bil~in~s Gillette Co /Papermate Divis~on $ 4,578 Lansdale Semiconductor 4,578 St. John's Hospital 4,227 Santa Momca College 2,81$ Santa Manica Hospital 2.818 TOTAL $ 19,019 Source: C~ty of 5anta Monica, Utilit~es Division. Sewer Connection Fees: The City charges a Sewer Connection Fee for connection to the Enterpnse. Th~ connect~on fee for new resident~al construct~on or reconstruction is based on the number of dwelhng units. Far cammerc~al development, the fee is based an square foota~e, the number of seats in a restaurant, ar the number of un~ts ~n a hatel. Use of these fees is sub~ect ta the prov;sions of AB 1640. For purposes Qf the 1993 Bonds, Sewer Connection Fees are not used. In general, AB 1600 requires a city or caunty to establ~sh a reasonable relat~onsh~p between a develogment project or class of develapment pro~ect and the pubhc ~mprflvement for which the developer fee xs charged, and to segregate and account for the money separate from general revenues. Re~jenue from the Sewer Cannection Fee is est~mated to be $142,862 for Fiscal Year 1992-93. The fees are as shown on the follawing page: 19 User Fees Single-family residence $1,982.OQ/unit Multi-family residence 1 bedroom 991.OO/unit 2 bedroom ~,487.~~/unit 3 bedroom 1,982.Q4/unit HateUMotel 1,140.OOlunit Commercial Building 107Q/1000 sq, ft. Medical Building 1982/1000 sq. ft RestaurantlBar Sit Down 247.751seat Carcy Out 2636/1000 sq. ft. Storage Building 248/1a00 sq. ft. Industna~ Build~ng 991110~0 sy. ft Source: City of Santa Momca, Utilit~es Di~~sion. Hazardous Materaal Fees. The City charges a Hazardous Material Planning Fee based on the size and degree of the potentaal hazard that a business poses to the community. The size of a business is determined by the physical plant size and the number of employees. The degree of hazard is based upon the type, volume and number of hazardous materials hanriled at the facihty. The fee is ehargec4 to tnose businesses required to f~le a hazardous matenals business plan, to reca~er the c~sts to the City of adminzstering the program. Pursuant to a City Council Resolut~on, each business handhng hazardous matenals within the City is class~fied into one of the follaw~ng fo~r categaries, based on a formula deve~oped for th~s purpose- Cateeory T~vnical Basines~ Descript~on 1 Low volume photographic shop, small dry cleaner, small pnnt shop, small auto repasr fac~liry, s~ngle pract~txaner medical faci~ty. 2 Gas station, eabinet and furniture re~nisher, medium size auto repair faciliry, multi-pracutioner medical office 3 Large auto repair facihty {dealershig}, small manufacturec and industrial shop, small chemical producer. 4 Lar~e scaZe manufact~rer, hospitai, utility eornpany. Based on the costs associated with the time requirements for each permit type, annual fzes are assessed according to the fee structure outline below Number of Cate~ory Fee Amount Susinesses 1 $ 172 180 2 295 190 3 552 155 4 1,099 25 Forty-fo~r percent of the revenues derived from these fees accrues to the Revenue Fund ta reimburse for wastewater pragram costs. T'he remaining 56~Io of the revenues is received by the General Fund to reimburse for administrative and inspection cost of the program Za Miscedlaneaus Revenues: These xnclude saddle fess, undergrou~d tank permits, reimbursement from Los Angeles far a portson of the operation and ma~ntenance of the Moss Avenue Pump Station, sale of ~xed assets, and other miscellaneous revenues. Historical Sewer Rates and Charges The follawing table shows histoncal levels of the Ciry's Sewer Ser~vice Charges: HISTORTC RATES Sewer Service Fiscal Year Charge Per Billing Unit (1) 1985-86 $ 0.26 1986-87 0.39 1987-88 4.58 1988-89 4.8778 1989-90 1.59 199Q-91 1.59 1991-92 1.13 (3) 1992-93 1.13 (3) Average Bi-manthly Residential Sewer Service Charge (2) $ 4.16 6.24 9.28 14 04 25 44 25 44 35.42 (4} 35.~2 (4} Saurce: City of Santa Momca, Utilitxes Division. (1) Multiphed by appropr~ate percentage for each user group. (2) Fee for a single family dwell~ng assuming 32 Hcf per bi-monthly periad. (3) Bi-monthly Vanable Flow charge only An additianal Bi-Monthly Fixed 3ewer Service charge was implemented m November 1991. {4) Includes Bi-Monthly F~xed Serv~ce Char~e The table below presents a comparison of the City's current average bi-monthly res~dent~al sewer bill with that of otner commumties in the county as of November, I993. COMPARIS01v OF AVERAGE BI-1~IONTHLY SE~'VER SERVICE CHARGES Utility $gwer Ser~ice Char~~ C~ty of Santa Mon~ca ........................... . ......... .. ..... ... $ 35.42 City of Los Angeles .... ...... ......... ... .... . .... .... ................43.74 City of Burbank ... .... .. . ... ........... ................. ....... .......31.92 C~ty of Culver City . ........... .......... ... .... . .. .43.74 .... .. ...... . ...... City of Glendale ... .... .. . . ..... .... . .. . .... . .. ....... . ..... . .. .... . . 28.21 C~ry of Beverly Hills .. ... ........... .. ........ .......... .. ....... ...... . 40.(}0 Source: C~ty of Santa Momca (1) All b~lls are bi-inonthly and based on water usage of 32 Hcf/bill~ng penod. Rate Setting Process The Crty is reqU~red by the Indenture, at all t~mes while any 1993 Bonds remain Outstandmg, ~o establish, fix grescr~be and collect rates, fees and charges m cannect~on with the wastewater services and facilities furmshed by the Enterpnse which will be suf~cient to yield dunng each Fiscal Year, after mak~ng reasonable allowances for cantingenc~es and errar m the estimates, Net Revenues equal 2] to at least 120~70 of the estimated Debt Serv~ce ~n such year. The Sewer Serviee Charge, Sewer Connection Fee, ~ndustnal Waste Fee, Hazardous Waste Fee and other miscel~aneous fees and charges are authonzed by ardinance. The amounts of such fees and charges are revised periodically by resolut~an of the Crty Counc~l The City b~anager annually reviews the sy~tem of rates and charges as part of the budgetary process. In May of each year, the City Manager submits to City Council a proposed operat~n~ budget for the ~isca2 Year camrr~enc~ng the follow~ng Ju~y 1. The operating budget ~nc~udes proposed expenditures and expenses and the means of financing them. Public hearings are conducted by the City Council to obtain cit~zen comments. The bud~ei is adagted, pnor to 3une 30, through passage of appropriate r~solutions The final adopted budget is subject to rnid-year revisions to reflect any significant changes in expenditures or revenues due to state or federally mandated programs, emergencies, or other unforeseen accurrences. Billing and CallecNon 5ewer Servace Charge. Sewer Service Charges for resident~al and commercial users are billed bi- monthly for approx~mateiy 61 days of service. The Ut~lities Div~sion of the Department of General Services prepares a bill covenng charges for water, sewer, refuse ,water conservat~on services and ut~hty user's tax A separate b~ll is sent for the Industrial Waste Fee A billing summary is sent to the Finance Department monthly, at which time accour~ts receivables are created and revenue ~s credited to the Revenue Fund. When the actual momes are ~rece~ved, the accounts receivable is reduced accordingly. Payments received by the Ut~lities Division are credited ta the billed accounts in the followmg order: ut~Iity user's tax refuse, sewer, water conservat~on, and w~ater. Payments received are credited first to the accounts in arrears and then to the current amounts for each utility in the order stated aboae. If an account is not paid within 31 days of date of billing, a second notice is sent. After 45 days from the date of b~lling, the accounts appear on a shut off list at which t~me an inspector ~s sent to the sei-vice address ta either coilect the amount due ar d~scontmue water ser~ice. On closed accounts, the custamer receives a closina reminder not~ce 21 days after the closing b~Il was sent. If not ~aid the Cltjl WILI ~gin an intemal collectian process Sewer Connection Fees. The Sewer Connect~on Fee is collected as part of the buildmg permit and sewer connection permrt application proce~vres, Permits are not granted unt~l payment has been rece~~ed. The fee ~s deposited inta a deferred Reve~ue Fund account, under the prov~sions of AB 1600, until specific and appropnate projects to be funded by the deferred monies are identified by the City. Iradusrrral ~'Vaste Fees. The Industnal `Vaste Fee consists of an insp~ction/sampl~ng fe~ and a permit applicat~on fee due ~very three years. The inspection/sampling fee is billed bi-manthly and the perm~t apphcat~an fee appears on the same bill at the appropriate renewal date. Tndustrial ~'Vaste Fee bills become delinquent if not paid within 3~ days of the invoice date, at which time a delinquent not~ce is sent. Delinquent notices provide an addit~on IS days for payrnents and not~f~cat~on that if payment is not received, the bill will be turned over ta the City Attorney far callecuon. Hazardous ti~c~,ste Fees. The Hazardous Waste Fee consists of an annual filing fe~ associated with the submittal of hazardous materials business plans T'his fee is due at the appropriate annual renewal date far the business. The fee payment is received by the Environmental Programs Division and forwarded to the Treasury Div~s~on of the C~ty's F~nance Department for processmg. Businesses which do not pay the applicable fee prior to their renewal date are referred to the City Attorney's Office for apgropriate legal act~on. 22 Cash Receipts and Disbursements The following table presents unaudited cash revenues and expenses af the Revenue Fund for the past five Fiscal Years REVENUE FUl\TD HISTURIC REVENUES AND EXPEI~DITURES {In Thausands) 1988-89 1989-9fl 1990-91 1991-92 91 92-93 REVFNLTES (ect~mated) Sewer Service Charges. .. __. .__ 54,077 $8,987 S7,907 S7,654 $9,951 Indusuzal Waste Fees ... ...._ . ... 0 272 375 315 377 Ha~ardous Waste Fees (1) . . ... 0 0 42 70 69 Nliscelfaneous Revenues (2) . .. . 414 860 1.036 ¢Q4 44$ Total Operatmg Revenues . . .. $4,491 $1Q,1i9 $9,360 $8,643 S14,845 DF~'FRRFD REVEN[.TE.S: Seaer Connect~on Fees (2) . . 94~ 5~4 1.042 ...788 4$4 Total Rer-enues $5,432 ~10,713 $9,879 59,431 $11,329 EXPENSES Operatuig (3,4) _ ._ . _ . ~,125 S4,743 $6,215 $5,196 55,509 Interfund Transfers (5) . Q ~ 294 608 105 TotalExpenses . .. . . . . . .. .. . . 54,125 ~4,743 56,605 $5,804 $5,514 I`'ETOPERATII~TGINCOA~ . . . 51,307 $5,970 52,132 $2,839 $5,231 Capital Expenditures . . 289 818 4,439 1,223 1,753 REVF..I~'UES OVER EXFFNSES Excess/(Deficit) _ $1,018 55,152 {~2,307) $1,615 $3,468 BEGINNING ~-UND BALANCE . 52,110 53,128 57,686 ~5,379 $6,995 E:'~iDING FUNi~ BALANCE. .. S3,128 57,586 ~5,379 ~6,995 $10,463 Source: C~ty of Santa Monica, Ut~l~ties Ih~s~on. (1} The Hazardous Waste Fees were not adopted unt~l Fiscal Year 199Q-91. (2) Begimm~g ~n FY 1989-9d deferred revenues are nat ~ncluded m"Total Revenues" or "Net Operatuig Income" and no deferred revenne transferred to operatuig revenue is shown. (3} Excludes depreczation (4) Operat~ng expenses are Division 661 and Division 662 net of Environmental Reimbursemenc ~nterfund transfer. (5} Other interfund transfers excluding En~~~ronmental Reimbursement (6^ Excludes accrual for Hyperian capital expenses financed from bond proce~ds. 23 Operatinn and Maintenance Expenses Operation and mairnenance expenses include those incurred for tY~e Local System plus the Ciry's proportionate share of operat~an and maintenance costs of the Hyperion Plant, as pro~ded u~ the Hyperian Agreement. A pro~ection of the City's share af operation and maintenance costs for the Hyperxon Plant through Fiscal Year I997-9$ is shown in the following table. CITY OF SANTA 14~O1~ICA'S SHARE OF HYPERYON OPERATION AND 1~ZAINTENANCE COSTS (In Thousands) Prajected Operation & Fiscal Ye~r Maintenance Billin~s I991-92 $3,145 {1} 1992-93 3,885 {2} 1993-94 4,251 {2} 1994-95 4,593 (2} 1995-96 4,94b (2} 1996-97 5,299 (2) 1997-98 5,668 (2) Source: City of Santa Monica Utilihes D~vzsian. ~1) Actual amount billed. {2} Determined by Los Angeles Pro~ected B~lluigs Memo m 7une 1993. Pra Forma 5tateinent of Revenues and Expenditnres The table on the foilowing page is a pro forma operations statement developed by the City. The table shows the revenue increases required to meet the cost of operation and maintenance of existing and praposed facilit~es and to meet pro~ected debt service requirements while maintaining Net Revenues of at least I20~Io of Annual Debt 5~rv~ce. Future revenues are based on current rates and ant~cipated growth le~els, reflecting current and proposed palicies regardin~ building permit limitations and canservation meas2u-es The ind~cated revenue increases are overall averages. Individual rates and cY~arges will be increased at d~fferent rates to reflect the related cost of service 24 WASTEWATER FUND PRO F4RMA STATEMENT OF FINANCIAL OFERATIQNS Budg~trd P~oNcl~d Pro~ected Pro~ectad Piqect~d F~H~ L~ S 1~43-g4 10D4-OS l~D5-96 7998•97 1997•98 + . S~war Senias Clsaryes (1) S1D.250,004 570,250,000 516,250,400 Si0.250.000 510,250,000 Ind~ Waaia Fees $337,534 5375.000 5379,836 t39B,B28 5418,789 Cry o~ ios Argelaa (2} Sga,aoo ieo,aoa ~9a,ooo Ss~,ooo ;ao.ooo i-~z~w~r~ sae.i~2 stao,ono s~~5,o0o sii5,ooo s~is.ooo Interest (3} 591,800 52~4,265 s224,005 5282,159 5289,531 l~Aisoepenepua Hevenuea s50~281 SIO~Q00 S40,OOU ~ 540~000 S40,OQ0 Tqal OpereExig Ex~1mp Ra1es 510,608,587 511,468,265 ~11,09~,841 s11.155,987 511.183,300 ada~ c~avanuas ~nom Aeue tncresse ~r~ - 2~ ss,aoo,ooa sa,aoo,oon ta,oao.ooo naa~ ~~ t~ c~ ~ rz •~c t~oo.aao Add'I Revanues ham Fleta IAasaee i3 tdaf flavanues 51Q~~OBi587 511~089~265 51,~~85~8~1 Sf4,155,99T 514,583~300 D~~S Operatmy (4) Peraonnel5emoes S$01,246 5~00,7'73 s93O.811 5882,552 iS95,489 AdmFrrstrative Indirect 5279,030 S31t,771 ~333,595 ~356,9~7 5381,~33 Cartradu[eJ Serwces {5) 53,515,D00 54,251,000 S4,'S93,OD4 54,946,460 55.298,000 IndtLStne! Was1e OperaGrip E~ehses (e) 5381,74~ S37S.B3B S39H.828 t418,788 O[herG.4A Sf,023~588 5821.Ot8 5862,470 SAQ5,1T3 5950~432 Sublotal Operat~p E%penses 55,817,614 s6,$4B,312 58,788,312 ST,289,300 t7,745,603 Enwanmemal Proprems (~ S1,102,136 51.148,221 51,792.070 51,239,753 1288343 Interfund Tranafera Q~t (S} SiQ8,252 5112~582 5117~OBb S72i,769 5126,844 Taal E~ernas 56,828~302 57.805,118 ~~ S8,t48,468 __._.S8,83o,822 59,161,5e8 ~ETOPEFiAT1~~~~£ S4.080,285 S3,L64,1/9 55,9~0,373 55,525,1~5 55,421,T15 p~Tp0llEFiA~`,ERAl10 7 49 1 71 1 58 1 29 1 27 DVgbf $errps - 1981 Sertes A Basds S2, 741,OQo Debt Serwce - t9B3 Re(undinp 5enes Bonda S2,028,1T4 32.067,438 52,575,515 S2,568,880 Debt Serv~e - 1985 5enes Ba~ds 51,707,000 59,712,000 51,710,000 Locai Capdal E~en~lures (repar/replac9ment) 5287~580 S1 ~t 11 ~000 , 594~~130 ~991 ~910 5871 ~3Qff F~VENUESTOD(PENSESE~aoassJDe~fio~ 51.05i,785 332d,B75 St,271,805 ,• 5245,740 5271,525 ~C'aMlVGFI~BALl1I~E 51Q,463,000 56.548,158 SB,872,833 58,144,636 58,390.378 Lesa CIP Pro~ecla approprieted hom pnor yea~s SA,966~827 EI~EIINGR~BALANCE(9) 58.548,158 38,872,833 58,144,638 38,39D,378 n ui t8,B61,903 RESTRiCTEpFTEVEIajEBeymrgBeianoa(10} 53,758,484 ~3,Bi6,484 S3,449,484 53,398.814 53,222,524 ResincYed AB 1890 Revenue (11j 5325,000 ~325,00~ =325.D00 5325,Ofl0 5325,400 Less ~ocalCepMal Expana~on Ex~~d'itures 5437,000 3522,d00 5~35,870 5441,090 i443,740 REST'RICT~~M~Erld~rgBal~r~ 5~,~~8,484 s3~~49~484 x3~338,814 53,222,524 S3,1D3,824 {l} IQ FY 42-93, ihe actual sewer sernce charges we re 59,951,391 C~ty staff is ant~c~pateng that water sales (and correspondmg sewer service charges) have reached equilibrium due to the end af mandatory water codservabon, permanent effects of ~nstalla4on of water consernng futures, and con uuu~ng water uut~gation of new de~elopment FY 1993-94 Adopted Budget of $9,U21, 735 has beea revx sed to ecfuilibnum 1eve1 (2) Ref~ects annespated payment followmg ezecut~on of qew coetract, rev~ses FY 1993-94 Adopted Budget (3) Ezcept for FY 1993-94, ~nterest ss calculated at 3°7a of Endutg Fund $alaaae from previaus year (4) ExcIudes deprec~at~on (5) FY 1993-94 amouni has been updated to reflect mqre recent flow and utut pnc~eg d ata The remainmg fiscal year est-mstes are fsam Los Angeles (4) For FY 1993-44, Industnal Waste progtam expcnses are mcluded m Personnel Strnces, Admin~strat~ve Induect, and Otber G&A {7) Env~ronmentai P~v~ams are net En~uonmentai Re~mbursement Iaterfund Transfer ($} Othor mtedund ~ansfers eacludiug EavsronmentaI Programs Reimbursement (9) Does uot mcIude any Sewer Connectioa Fee revenuc ~ansferred to nperating budget (k0) Beginning Balance reflects net amoaat after previous years transfer for Sewer Connect~on Fee re~enue to operat~ng budget (ll) Revenue from Wastewater Fac~ty Fees (conaect~on fees) has been reduced seflecung a decLne ~n development and construcuon act~vity 25 Outstanding Indebtedness The City has prev~ously issued $ 34,200,000 a~gregate principal amount of 1991 Bonds. Upon issuance of the 1993 Bonc~s, and the appl~cat~an of the proceeds thereof to refund the 1991 Bonds, the 1993 Bands will be the only Outstandmg Bonds Annual Debt Service Reqairements The following table sets forth the amounts required each Fiscal Year fflr the payment vf pnncipai of and ~nterest on the 1993 Bonds. For purposes of calculat~ng the principal payable in any year, the relevant senal matunty or mandatory sinl~ng fund redemption amount is used. CITY OF SANTA MONICA WASTEWATER ENTERPRISE REVENIIE BQNDS (HYPERION PROJEGT) 1993 REFUNDING SERIES AN;~UAL DEBT SERVICE Fiscal Year Principaf Interest Total 1994 . S S ~ 1995 1496 . 1997 . . 1998 1999 2000 2001 . . . 2002 . 2003 . 2Q0=t .. - • -- - zoos . . 2006 . 20{l7 . . _. . . 2008 _ _. 2009 - - 2010 . .. .. 2011 .. 2012 . .. . . . 2013 . _ . 2014 . . 2015 . . 2016 . 2017 2018 2019 .. . . . 2020 . . 2021 .. . . 2022 . . TOTAL .. 2~ Analysis a€ Debt Service Co~erage The following table shows projected debt serv~ce caverage for Fiscal Years 1993-94 through 1997-9$. DEBT SERVICE COVERAGE PROJECTIONS (In Thausands} Budgeted 1993-94 1994-95 ]995-96 1996-97 j997-95 Net Operatui~ Income With Tncreases {i} __. 55,291 54,723 $7,299 55,887 $6,838 Pruicipal & Interest 1991 Series A Bonds _ .. 2,575 ~ 0 0 0 Pnncipal & Interest 1993 Refundtng Bonds 2,028 2,067 2,575 2,569 Pnncipal & Intcrest 1995 Senes Bonds {2) .. ¢ Q 1,7(17 1,712 1.710 Total Projerted Pnnr~pal & Interest . 2>575 2,028 3,775 4,288 4,279 Prajected Debt Serv~ce Coverage . .. _. 1 SS 1 71 1 59 1 29 1 27 Source: C~ty of Santa Momca (~} Net operatin~ income inciudes rate lncreases snown in Pro fa rma 5tatement of dperat~ons. (2} 1995 Series Bonds anticipated in October 1995. REGULATORY REQUIREMENTS Since the Crty d~scharges wastewat~r to the Hypenfln Plant for treatment and disposal, the City's wastewater operat~ons are sub~ect to many af the same regulatory requ~rements as Los Angeles These requirements are contaaned in the Clean Water Act, and in the State af California Porter- Cologne Water Quality Control Act of 1969, as amended. Both federal and state regulations are admulistered throu~h the SWRCB, and generally deal with the quality of effluent discharged from the wastewater treatment facilit~es, the disposal of sludge from the wastewater treatment plant, the discharge of pollutants into the graundwater and the nature of waste matenal (particularly industrial waste} discharged into the collection system Addit~onal requurements were irnposed on Los Angeles and all Subscnbmg Agencies, includmg the C~ry, when Los An~eles applied for and received federal EPA grants under the Clean Water Act. Ther~ were grant-related requiremen~s re~arding planning methodologies, des~gn criteria, construct~on act~vities, and the operat~on, maintenance and financmg of facihties. Ta comply wxth mandated effluent quallty and disposal criteria, Los Angeles must operate ~ts wastewater treatment facilities accordmg ta requirements set forth in Narional Pollutant Discharge Elimmation System (I~TPDES} permits. It must also cvmply with prov~sions af an Amended Consent Decree negot~ated with the Umted States Government and rhe State. This Amended Consent Decree establishes a compliance sehedule for systemat~cally upgrading the degree af treatment pro~ided at the Hyperian Plant Los Angeles has met many of the requirements of the Amended Consent Decree, and has plans to canstruct and put into operat~on the necessary faeilities to satisfy the many requu~ements rePat~ng to its wastewater discharges. A proportionate share of funding will be provided by the City and other contributors to the Hyperion Systern. To comply w~th regulations and grant requirements dealing with the discharge of waste rnatenals into the sewer system, Los Angeles and all Subscribing Agencies must admimster and enforce industnal pre-treatment standards on certain users af thexr collection systems. Since 1986, the City has had such a program, the pro~islons of which are contained in Chapter 4, Article V of the Santa 141onica Municipal Code. The costs of this program are barne hy industrial waste fees gaid by industrial waste d~schar~ers to the system. 27 Another grant-reiated regulatory requirement is that Los Angeles and a11 Subscnbing Agenc~es have approved user charge systems to recover annual nperat~ng, maintenance and replacement casts from users of the system in a proportionate manner, according to the eustomer's levei of use. Deli~ery flow rate and strength of wastewater are considered 1n determining proportionate use. The City has such a system wherein user fee rates are reviewed periodically and established at a ler~el sufficient to reco~er all costs associated with the operation of the system, including contractual costs of wastewater treatment and disposal by Los Angeles. The City must penod~cally file reports with the SWRCB describ~ng its wastewater revenue program_ At the present t~me, agreements becween Los Angeles and other Subscribing Agencies to the Hyperion System do not include all of the federal ar~d state regulatory requirements and do not adequately describe the manner in which costs of upgrading, operating and maintaining the Hypenon System will be appart~oned among contr~butors. Thus, Los Angeles and other 5ubscribing Agencies, including the City, are in~olved in lit~gat~on to modify the form and content of these agreements to achieve compliance with applicable wastewater discharge regulat~ons, and to estabhsh a methodology for cost sharing. TAX hTATTERS In the opimon of Jones Hall Hill & White, A Professional Law Corporation, San Francisco California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the 1993 Bonds is excluded from gross ~nc4me for federal income tax purposes and such ~nterest is not an item of tax preference for purposes of the federal alternat~ve minimum taac imposed on indiv~duals and corporat~ons, provided, however, that, for the purpose of carnput~ng the alternative rninimum tax imposed on corporations {as defined for federal income tax purposes), such interest is taken into account in determinmg certain income and earrungs. The opinians set forth in the preceding paragraph are sub~ect to the cond~tion that the City comply with all requirements of the Internal Revenue Code of 1986 {the "Cflde") tliat must be satisfied subsequent ta the 1993 Bonds in order that such interest be, or continue to be, excluded fram ~ross income for federal income tax purpases. The C~ty has covenanted to comply with each such requ~rerrtent. Fa~lure ta carnply ~vith certa.~n of s~eh reqvirements rnay cause ttze inc~us2on of such interest in gross mcame for federal income tax purposes to be retroact~ve to the date of issuance of the 1993 Bands. Bond Counsel expresses no opimon regardxng other federal tatc consequences arising with respect to the 1.993 Bonds. Prospective purchasers af the 1993 Bonds should be aware that, under existing law, for the purpase of comput~ng the 2Q percent federal alternatrve mimmum t~ ~mposed an corporations, an amount equal to 75 percent oF the amount by which ad~usted current earning~ exceed alternat~ve minimum taxable income is added to alternative minimum taxable income. Interest atherwise excluded from gross income, such as interest on the 1993 Bonds, is included in adjusted net book ~come and ~ adjusted current earlungs. Frospective purchasers of the 1993 Bands should also be aware ihat (i} seetion 2fi5 of the Code den~es a deduction for interest an mdeb~edness incurred or continued to purchase or carry the 1993 Bonds, or in the case of a financial institution, that portion of such financial instrtution's interest expense allocable ta interest payable on the 1993 Bonds, {li) with respect to msurance companies subject to the tax imposed by section $31 of the Cade, section 832 (b)(5){i} of the Code reduces the deduction for loss reserves by 15 percent of the sum of certain items, including interest on the 1993 Bands, (iii} for taxable years beginning before lanuary 1, i996, interest an the 1993 Bonds earned by some corporattans could be subject to the envxranmental ta~c impased by sect~on 59A of the Code, {iv) uiterest on the 1993 Bonds earned by certain foreign carporatfons doing business in the United States could t~e sub~ect to a branch pro~ts tax irnposed by sect~on 884 of the Code, {v} passive mvestment income, ~nclud~ng uiterest on the 1993 Bonds, may be subject to federai uicome taxation under section 1375 of the Code far Subchapter S corporatians that have 5ubchapter C earnings and profits at the 28 close of the taxable year if greater than 25~/c of the gross receipts of such Subchapter C earnmgs and profits at the ciose of the taxable year if greater than 25~10 of the gross rece~pts of such 5ubchapter S corporation ~s passlve in~estment ~ncame and (vi} section 86 of the Code requires recipients af certain Soc~al Security and certain Railroad Retirement benefits to take into account, in determ~ning the taxability of such benefirs, receipts or accruals of interest on the 1993 Bonds In the further opmion of Bond Counsel, ~nterest on the 1993 Bonds is exempt from Califorma personal taxes. OTHER INFORMATI4N Litigation There is no controversy of any nature now pending against the City or, to the knowledge af its respect~ti~e officers, threatened, seeking to restrain or en~oin the issuance, sale, execut~on ar dehvery of the 1993 Bands or in any way contest~ng or affect~ng the validity of the 1993 Bonds or any proceedings of the Ciry taken with respect to the issuance or sate thereof, or the pledge or appl~cation of any moneys or secunty provided for the gayment of the 1993 Bonds or the use of the 1993 Bond proceeds. There are no pending lawsuits wh~ch in the opinion of the C~ty Attorney challenge the ~alidity of the above issue, the corporate existence of the City, or the t~tle of the officers to their respectiae offices. As determined by the Office af the City Attorney, the City is involved in no legal proceedin~s whzch could have a material adverse effect on the Revenue Fund or the aperation of the Enterprxse. [Litigation Discussian to be Inserted] The C~ty bel~eves that, based an the above information, an unfavorable result u~ e~ther or both of the above cases wauld not have a rnaterial ac~verse effect an the Revenue Fund or the operation of the Enterpnse_ Legal Opinion The legal opinion of 7ones Hall Hill & White, A Professional Law Corparaaan, San Francisco, Californ~a, Bond Counsel, approving the validity af the 1993 Bonds, will accompany each 1993 Bond. The propased form of such legal opinion is attached h~reto as APPENDIX D. Ratings Moody's Investors Service, Inc. and Standard & Poor's Corporatxon have rated the 1993 Bands and respecti~ely. The City applied for such ratings and supplied certain informat~an ta such rating agencies to be considered in evaluahng the 1993 Bonds Svch ratings reflect only the respect~ve views of such rating agencies, and any explanation af the sigruficance of such rat~ngs should be obtained from the rating agency furmshing the same. There is no assuranee that either of such raungs wxll be retained far any given period of time or that the same will nat be revised downward or withdrawn ent~rely by the rat~ng agency furnishing the same ~f, in ~ts judgment, circnmstances sa warrant The City undertakes no respansibility either to bring to the attention af Owners of the I993 Bonds any downward revision or withdrawal of either such rating or to oppose any such revision or withdrawai. Any such downward revisian or withdrawal af such ratings, may have an adverse effect on the market price of the 1993 Bands. 29 Verificatian Upon delivery of the 1993 Bonds, , independent certified puhlic accountants, will deliver a report stating thaf the firm has venfied (a} the mathematical accuracy of certain computat~ons relat~ng to the adequacy of the direct obligat~ons of the Umted States and the uiterest thereon to pay, when due, the redemption pnce and znterest due and to become due on the I991 Bonds an and prior ta the redemption date thereof, and (b} the cornputations of yield on the Bonds and of investments in the Escrow Fund wh~ch suppart the conclusxon af Bond Counsel that the ir-terest on the 1993 Bonds is excluded from gross income for federal tax pu~poses. Limitation of Rernedies In addit~an to the limitations on remed~es contained in the Indenture, the nghts and remedies provided in the Indenture may be limited hy and are subject to bankruptcy, insolvency, reorganization, moratonurn and other sim~lar laws affecting creditors' nghts, to the appl~cat~on of equitable pnr-ciples, to the exercise of judicial discretion m appropriate cases and to limitat~ons on legal remedies against cit~es in the State of Califor,ua. Financial Ad~isor Connell and Associates and Public Financial Managernent served as Co-Financial Advisors to the City in connection with the issuance of the 1993 Bonds. A~Zisceilaneous Tlus Official Statement has been duly agproved, executed and delivered by the C~ty. There are, appended to th~s Official Statement, Audited Financzal Statements of the City, a summary of certain provisions af the Tndentvr~, ger~eraI mformation regarding the City, and the proposed form af apinion of Bond Counsel. The appendices are integra~ parts of this flfficial Statement and rnust be read together with all other parts of this ~fficial Statement. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or holders of any of the 1993 Bonds. Any statements made in this Official Statement involving matters of oginion, whether ar not expressly so stated are intended merely as an opmion and not as representat~ons of fact. The informat~on and expressions of op~mon here~n are subject to chan~e without not~ce and neirher the delivery of th~s ~ffcial Sratement nor any sale inade hereunder shall, under any circurnstances, create any implicatian that there has been no change m the affau~s of the City since the date hereof. All references to the Law and the Indenttzre are brief outlines of certain provisions thereof. Such ~utlines do not purport to be complete and reference is made to such laws and such documents for a full and complete statement of such proti7sio~s. CITY OF SANTA MQi~TICA BY Judy Abdo, Mayor 30 APPENDIX A General-Purpose Financiai Statements and Independent Auditor's Report Year Ended June 30,1992 Unaudited Financial Sta#ements - Wastewater Enterprise Year Ended June 30,1993 ~ i ~' INDEPEIVDENT AtmiTORS' REPORT The Honorable Gity CaunCil af #he City of Santa Monica, California: ~ We have sudited the general purpose ~inancial stabements of the City a( Santa Manica, C.ali(o~nia as of and for the y~-r ended June 30,1992, as l~stied in the table of contents. 1'~~ese general PurPae'e firtancial st~~c.~~ents are the responsibility af the Cit}~s mariagement. Our respons~ility is bo express an opuuon on thes~e generai purpose ~inancia3 stateme~ts based on our au~di~ We conducted our audit in a~ordance with generally aroe~pted auditing sl~ndards Those standards require that we plan and perform the audit to obtain reasonable assurance abont whether the fuiancial statemesrts are (ree of matena] misstatement An audit includes e~ca~uning, on a 6~st basis, evidence supporhng the a~nounts and disdvsunes in the t'inancial staEeme~nts. An audit alsa indudes assess~ng the account~ng pr~ntlples used and szgnificant eshmates made by management, as w~eI~ as evaluahng the overall financ~aI staternent presentaao~. We believe it~t our aud~t provides a _ reasonable bas~s for our opimon ~ In our npuuan, the general gurpose financial staternents referred to above present falrly, in all matenai res~etts, the financ'saf posihon of the C~ty of Santa Mor+ica, ~'a>>~ornia as of Jnr~e 30,1992 and the results of its opesafiions and the cash flows vf ~ts propnetary fund types a~d ssmilar trust fund type far the year Ehen ended in conforrrnty with generally accepted accounfing pnnap~es. ~ Our audit was made far the purpose of fornung an opinion on the general purpose ~inancial statements taken as a whale• The combuung, individuaf funds and aeco~nt groups financial statements and schedules and supple~nt~ary financEal data l~sted in the accompanymg table oE rnnt~n#s are Y ~ presented for purposes of additional analysts and aze not a required part of the g~.~'al pnrpoee financial statements of the Gty of Santa Monica, Cali#ornia. Such information has been subjerted to the auditing pr~oc~dures appl~ed in the audit of the general purpose financ~al sta~a~nts and, in aur i opinian, is fa~rly presented, in al~ matenal respects, in r~ation ~o the $~erai PurP°se financial statem~nts taken as a whole. ~ ~L'~7~t ~r n.r.~ 7~~~ November ]3, ~992 ~ ~ ~ ~ i ~ ~ ~ t: , t [ F ~ ~ ~ ~ ~~ CFHIS PAGE LEFT iNTENTIONALLY BLANK) ~ ~Wlt 1 [;i~t Y OF SANTA MONICA, CALffORNiA Combsned Ba2ance Sheet -- All ~und T~pes aad Account Groups june 30, 2992 weth comparatr~ne botaLs forJune3(1,194i Assets u-d Other Debits ti.~d?II ~Llµ ~fvWf.lf~t~ Rece~vables (net, where appl~ble, of albwattces for uncollec~bles)- .4~~t~ Notes Grants Acaved mtenst ProPert9 ta~. Otlier re~~vables Due ~oa- oth~ fimds I~~+~entory ~~ ~ a~~ R~,ctea a~ Cash a~ imv~~ Aacaun~s netdvabie Mot~es reaesvable ~I~C uanai ~~ A~VS1l065 bD O~i f3et~5 T~oed a~,, ~et Land ~eid for resslr Amo~t svailatak m dek~t ~esviot ltiu~ds .4~t~otn~t to be }~a+o+-iaed for ~mt of ---~~t~~bt Tota! a~ee~s a~ otf+er debnts Go~ea~mmhl fuxd tgpes Speciat Debt Capital Cenerat xvenue seraice p:o~ects S 26,326,873 4 563~08 - 636.~35 2,008.494 1,788~70 -- 7,6T4 1,0.37.53] 457.8Q5 ~ ~ - lb,4I3 - - 381,938 - -. - 263,454 - - 251Af~ 1.253JJ~3l2b - - - 6?3,$63 --- - -- - z~ ~ ~ ~m;vsi iob,aao ~ _ ~A12 4,567~20 4.]44.523 ?74,763 35.156,,,314 3.99'1~18 - - 21~41,254 - - - 3 111.4.~2.$~W 19.48$A91 ~~l44r57~i 7~669~9:37 (Ca~~6nued) 3 ,~ ~ F '_~ ~ r~ ~ ~ 1 ~ ~ ! ~ } 's 1 ~ ~ ~ ~ ~ ~ , ~ i :.~ Fadua=rp Aeco~nt ~rv~ps pr~prietar~• fnaa rvnes ivna tppes Generil r~eneral rotals Is~t~*+~~1 Trnst and fixea iOng~ (asemorandsem oAtr1 ~n[+erv,nse scr~ice ~~pencp assels de~t 1992 !94'~ 26.136,~ 14.G09.322 23.T15.~96 - - 98.947.T74 923~ 16] y.~~.~ ._ ~ _ - ~osi~~ e,a¢~srz ._ _ ._ _ - i.~~ ~o~.oeb ~oc,~~? - - -~ - z~~~~ i,~~ ~,zn - - - - ~,~1~ ~~o - ~ -- ~ - 5]4,51~ 1,1bZ.~90 - -- 6.938 -- - 6.936 I~64 ~ _ _ ..~ ~ 1,?.s3Jq?+6 - 1.128.5f8 - - ~ - l.~411 ~.73i1.716 - - - - - 2.637 3r3~6 300 26,495 -- - - 334,496 ~,G68 330.295 - - - - 330,295 - '14,'l~.l'14 - G.644~28 - - 83r427,$86 49A~b8.92~ 39,848 - - - --- 39.848 24.36U 487.2T2 -- - ~ - qg7,2TI ~ ia.s~s.~ - - - - iosgs.asb ~~zo,o~ 22,02S.I77 - - - ---- 5QT75.lrl9 ~15Tf1.g32 130,6~L5A'73 - - 135.60'7,~43 - 266.252,312 236.6T3~09 -- - -- - -- 21.241,254 ]7~7Da91 ~ - - -- 4.1+l4,5I3 4.744.523 3~6S.G62 ~ ~ _._. ~ 38.718.198 38,718~I98 ~1r314,745 2i3.1I136Z I4~635~877 28r376,662 135~6f~7r241 ~2,8G2~1 94I,~9.994 3I03~iA67 4 ExhiMt 1-3 - CITY OF 5ANTA MONICA, CAI,IFORNIA Coes~b+ned Balance Sheet - All Fund Types and Acsouat Groups, Connnued hme 30. ]992 witb co~np:raWe to~s for )~u~e 30. ]94] Go.eisme~-!a1 f~end t~pes Special Debt Gpaa1 Lib~i6e5. E9mt~' and Otl~c Gldtls Genesal +e~moe aervie! ~mfects lsatx3~Oes Aavm~ls payable and scaued 1~?'t"' S C~mr~ s abl 5.648320 1.367.488 -- 49.626 p~ e ,v Contra~cls ~ra51e (eetained ~ ~ ~ - pe~ca~ta~cl 21?.77~ 85.645 - 8.000 Not~, psYabk 2.2Zi~D0 - -- -. Lk~e ~o other ftu-ds - 35b.01Z -- - Intea[~6t j,.~.6k ~ - , _ Dur to p~atra~snts - ~ ~ ~ Due b boad)wldets - ~. ~ ~ L~d rev~ae 29.SZ7.575 I.T~5.447 - - ~ - YlJ~~I! ~'Olfl ~7CIla ~ ~.~~ ~ ~ ~ ~~ ~ ~ ~ ~6"~ ~ 1~OQ8 !16 „ - 9166; L12 ~- - - t6,3G8s~D - sord babr~' ~_ 45Z~ mf - 16.425.az6 Ee~h- (defiatl aad oN~er a~eails: i~ ta ~al fnced apetf - ... _ .._ Co~s'b~~ed ap~a~ ~ Fioa~ ot~erlwds - - -- - Fiva~ oti~ ~anner~ 1n~sted m fiaoed arels - - -- - R~C~d for F~d assets ~..e ... + ~ aC^ ~ ~Ot' ~ htld _ -- _ ~ -.- _ ~ _ ~dti7itl~ ~Q[ 1'i~ f~-f~R1 ••• ~ - ~ R~7[t!d EOfi /~-~JII~ QldttS - , - -- R~tamed asrxue-gs (acc~o~laLed ddx~tl- unr~sved - 4 - -.- [C~tinued) S F~atic~sry wccouar ~onps Propaetarv fund typrs [~md tv~s G~aal Ge~a! Sonts Iutesnat Tsust sad fixtd MsE-ir:m (~emo:and~un oalYr EAbesvrrse service _ s~tncv astets d4bt ~992 294] ]I.(A9.570 236.305 l.6'9~I.Ib2 - - 24.~95.6fi7 14.Zi35,496 - 12,b53,T52 -- - - I2.663,~ 1z.996.318 37S.5~S -- - - - b8~.'166 574.OD5 - _.... - - - 1.2z3AD0 - 897A1a -- -- - - 1~4 - j; E58~T2 -- - - - 1,~5g,Z71 - - - 17,814~92 - - 17,919,Z92 14,221;p46 - ~ 7~65T - -.. 7,657 12900 7.90d.994 - -- - - 34,176,016 41,029.+t&f 38'7,98D - ~ - -. b42.992 408.776 2~,413,420 - - - ..... 50.T16.648 45.TT1.93? 38.T13?33 i - ~2~862rTZI $1~535~9~r 2Ti 5Q 557 ~~ ~ Y $2,9] 1,579 12,900,053 i4,S21.1 ] 7 - 42~2,T21 228,~i6r?42 , 179~711~34 - -- - I35.G07~~I - 135.607.~41 1~.b08.306 i,~? ~ - - - ~ 1.562,03$ 1~.~6 35.I25.198 ~ - - - 35.125.196 3~.437,137 67U,8Q5 .- Y- - - 670.805 238 706 3.I37~b44 - - - -- 3.137b~ 2.8~15.5~5 2~.~2b3~ - - - -- »_~,3T3 2I.OBI~55 249,OZ3 ~ - - -- 249.02~ - 86~8.7C12 1.735,764 - - -- 86.444A66 79.709.916 fi ~ Eachibt 1-3 CITY OF SANTA MONICA, CALIFORNTA Combined Baiance Sheet - All Fund Tvpes and Acconnt Groups, Contmued 3une 30,1992 wids comparahve totals for )une 30, 1941 Liabilities, ~quity and OtLer Ctedits Fund balances (defir~t? Reserved for Maii unprovements : Prepa~ds lnvererary Advances to other fs~nds I~iotes receivabie Encvmbrances (GANNed? Arts pm~ Caprtal smprvvements (GANNed? Cash hquultty fGA1~°IVed1 Transpartahon equi~ment D~ebt sesvue Ra~I constructron Perpetual car+e Gvx area devebgment (GANNed) Homekss progra~ Low and nwderate ~eome hovsing Matl ~ma~t dis~ct {GpNAFed} Prer resto~aOor+ Gmeral m~rgenoes Office equipn~t Computei u~e l.egat fees Llxary G.O Ho~.ds Lat~d l~dd Ecr resale A~epoct loan <G1WNed1 Amere~ Youth Hostd AB71?2 aed~ts {GANNed? 5pec~c cw'es~B pP~ P~ ~GANNed) S~peac~c oon~"~ ~„P~ P~ Unr~seeved- Des+g~utcd ~vr futuee expendstures (GANNed1 Undes~gnated Total re~ned earnuigs and [und balaec~.s (deFiak} Total equ~t~: (defecetl and ather cred~u Tvt~l l~sbil~ties, equ~tv a~ other c~d~ts G~aventmental €und t3•pes 5pecia~ Debt Gg~W Gener~l revenue servue pm~ects 1,127,234 - - - 201,0$1 436A49 - - fi73,863 - - - 24.002.932 ~.846,n1 - - -, 449.300 - -. i,ns.~ s~.z~ - a3.o~ - 36,149 - - 948,27'4 - - - 3.545,`~i ~ ~ - ~ ~.. 4,7q4,523 - ` 6d1.143 ~ 1,545~479 - - - - 300,000 - - - 1 gp4,715 , : _ - b4..b97 - - - 35.010 - - 1~~7 - - - 7.990.136 -- - - 981.999 - - - - 90DJ000 ~ _... -- z,~,7D7 99A09 - 8.702 bA69AQ3 3~14.763 - - - 9,809.919 - 1~Dd~l,394 ~.64I 534 I7.323 - - - I~I5I~08] fIS.'19I.6$]) 62.338 592 ]4,9G7~487 4,741,523 (]4~756,p~89) 62,338,59? 14,96i,48i 9~194,523 f1~,756,089) S 111,432,840 i9~4$8r491 4~744r5"~~ 1,669~9~% See scrorr~areyu~g notes to combu~ed f~nanc~ ststemenCs 7 .~ J r~ ~ ~ ~ .~ ~ _~ ~ ~ i.J ~ ~ ~ ~ J r _J ~ ~ ~ ~ F ~ h Faduccary Account p,~oups Propne~ fund tqpes fand types GeneraY General Totals Internal Trast u-d fi~oed to~s-tesm jmemorandum onlvl ~ntaprtse scrvice it,vicp asxts , drbt I992 1991 ~ - - - - - i.l?lZi4 1.4G5.127 ~ -- - -~- - 637.13f? 408.342 - - "" - - b?3.863 4s8.994 ~ - - -- - - ?5.8l9.703 22,120.943 - - - - --- 4l4,30Q - '- - - - ~ ].808.3l5 1,910.964 ~ 36,l~l9 -- - - - - - 418~79 948,279 - - - - - 3.54G.996 3.5d6.99b - - 5q19,1% - - 5,4l9,i% 5,112,~i ~ ~' ~ - - - 4,7445~ 3 968~i62 , ~ - - ~ - - bll.l43 b3Q.450 - - 3A~b.3~ -- - 3.4'1~56 3.131,O~i r - - - - - I,5~L5 419 t,5~0,590 i - - - - - 3DO.OElO - ~ - - - - - 1,23~,Q24 - " - - - - 9D4.91S 643~06 - - - -- - - 2,265.%7 - - - -- --- 64.647 50A00 - - - - - 35A7~ 120.793 ` T - - - - 56,376 -- - - - ~ - 34.5T3 ! - - - -- 1,264a17 1.3I6.876 - - - - - 7,994,138 5.] 75,OOD ! - - - - 981.999 30d,00D - - -- - - 5+~O.UOU 500.OOD - - - - - 2,796,SI8 b6~30 ~ - - - - - 6,413,766 8.295.~Q3 t E. . - - -- - - ]D.814.313 5.164.357 - - _ ! _ ~.~,~ 9.506.638 ~ (14.640.600] {9213.43E1~ [ ~_ 8b.7[~~.7Q2 ~ l r735~Tb4 Sr855~,55~ . - l 63~994.53Q 7 49,T1l,~7{~ ~ ~ 150,194,78; 1,T35,764 8r855,551 135~607~4] - 363.Q92~852 330,b71,833 ~ ~ Z33,111362 14~535,877 28,376~662 i3S,60^,241 ~862,TL1 591,329,994 5tOr383,d67 R r L ~ ~ ~ a ~ 10 ~ ~ ~ ~ ~ ~ ~~~ ~~ ~~ ~ n ~ g .~ •~ ~ ~ ~ ~ ~ ~ ~ -~ ~ ~ ~ ~ ~ ~ ~ ~. ~ ~ ~ ~ ~ ~~ ~ ~~, .~ ~ ~~ ~ ~ ~ ~ ~ ~~ ~.. ~ ~~ ~ ~ ! ~' ~ ~g~ ' ~ ~ ., r ~ ~ ~ .. ~ ~~ ~ ~ ~. ~ ~ ~ ~ ~ a ~ ~ ~ ~ ~ .. ~ ~ ~ ~ ~ ~ ~ ~. ~ ~ ~~ ~ N ~ ~ ~ ~ ~ ~~ L~ iF ~ ~ ~ ~ ~ ~ N a yW V Wy~ ~ #. W Wy ~ P ~ ir+ W ~D I4~i ~ ~ I 1 + N ~ 1 ~ ~ ~ ~ 1' r I ~ ~ ~ ~~~~~~~~ ~ ~~ (~~~~~~~~ r b` ~ w ~ ~~p r'.- 'ua i~ i ~ I f~ I I N o I i. Y1 N V V ~ O$ !~l!!!II! ~~~~~'~ ~~~:~ .~ ~~ ~~ ~ ~.~ ~ r~~ ~ i~ ~ N ~ ~ ~~~~~~~~~ ~ ~ ~~~~~~~~~~~ ~ u w ~ ~ ~k~il~~l~ll ~~~ ~ ~ ~ ~ ~ ~ ~ 11~111I1111 ~ ~'~, ~~ ~*f ~ N ~ ~~~~a r ~ 8 ~ ~ ~ "~~,~°.~~ ,~~~~~ ~~ w ~ 3 ~ ~ ~~ ~ y~' ~ G ~ ~.~'~ o ~ ~~ ~ ~ ~. ~ ~5 ~.. l. , t....~ . w- -- #~.. _....~. ~ ~ ~~ ~....~ ~r.~'.r ~.,......~ ~;,,,;.~ ~;,) * , w..-- y,.-.,-J ~ .._._~ .~ ~ + ~~ ~~~~~ ~ ~~~ ~~~~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~~~ ~ ~ ~~ t ~~r~~ ~ ~~~ " Illllili~l~ ~ ~~r~ ~ ~ w~ ~~~~ ~~~~~{ ~iA~~ '°~~`" ~~~~~~~~~ ~~~~!^~~^' ~~ ~ r~~ ~ .. M ~ .~ .~ ~o .. ~~ ~ ~ ~~ ~ 8 ~ ~ M ~ Illlllk~l II ~ ~ il! I ~ ~ ~ ~iiiii~i~~~ iiii~iii~ ~~ ~ ~ ~i ~ ~~~~ ~ ~~ ~ ~ ~ s~ ~ ~ ~ ~~ ~ + ~ ~ ~1 @~ i ~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ I ~ ! ~R P ~ ~ ~ v1 vi ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 «.. ~w.~ ~:~ .~. ~~._ ,. _, ~_~., ~ ~ ~ -~ r~..,... ~ . . ~.. ._ ~....~.~ ~...,.,:~ ~:.::,~ ........~ .___.., ~__. ._ _ .~ k•h~hu ~ C17Y OFSANTA MONICA, CAE.IFURNIA Cemhmcd Sl~lc~ncnl u! Revcnua, EKpcndih+rr~ ~nd Ch~ndes ie Fund Balance (Pc1~S1 - BudacllNon GAAI' 1-atiisl ^nd /ktutl - Gcneral ~nd Spcciat Revmuc F1md TyFx~s Ye~r ended Sune 30,1992 w~~h rMn~.arMlve ~rlual lol~I fundional ~mounlslor Ihe rear rnd~r# ~ian~ 7(f, 19H1 ___,Gensral tunA _ ~ ~. Rcvcnu~s Properly llu~tis Sak~ lax 01h~ilaMei l krnsis and ~rrmlMa 1nle~auvcrnmcnl~l Ch+r6e' fnr ~erv~cn Finee and forlrH~ i.ow rnd ~rmd~nle in[ome howins tl~e ol money and pwpeny Olher rdal revenue~ 8r,pendU~uea Currenl GlnCral6arn'nmrnl 11~blir urely [iener~l ~erriee~ P~rka ~nd retrealion LlArary Rellrrmeal ~~I~rFe~ Harin6 anJ communily devebpmrnt Olher [?ehl ~ervin~ PrlniipN Inlerat Toul npendHurn $RCeee IdefidencyY ol nwsnws ever expend~hurs 01her 8eaerYnd eau.ra luee+) [anA uader dispo~ifion ~nd devrbpmrnl ~srecmcnl Operdm6lr~nefer~ M Oper~hn~ l+u~~fen oul Tol~l olher Nn~ncins wurces (u~1 8rcns (dehncncrl ol rcvrm~o ~nA AIhPf sourcea ovrr c~pendllur~ pnA dl~cr u~ls FLnd balame (dvficdl ~! 4~c~ylnnlu~ ul yrar Reudual aqudr Irsnsrer Pund bal~n[e (ddxd) al cnd uf yc~r Len 1l96~19l1 Plua Atlu~l, Variance- eneumbe~d 1991•149~ Oiher n!I laverable 199! ~rdeet Adual ~^u!„dllwe~ encumbranaes adiualmrnta ~6,udeel6a~ls) [ual+vorabld Actua!___ f 11,711,001 1i,974,921 - U91192] 61392! 19,137,939 17,lOQ;Of10 IS.IS4,6SS - - IS154655 f19~U,'i~51 16.2R.'~,57'2 51,414,061 29.345,751 - - -- 24.315.73~ 1256f13271 25.717,7f16 ~9.ne.s~e ~e.~i;si~ -- -- - ~e.aei 3» ~~ iw~.zsit ie.cw+~,~as IS1~000 1W,776 -. _. - 161275 17275 225.195 S,E13,9~9 #560,657 --• -- -- B'~GO.b57 f257,2921 BD3G.698 ~,AAS,5U0 I.1M5,552 - - - ~ i M5.552 (8~2,9181 ~,~i12 789 - 1.7.17,029 ~ ... ~- 1.2JP.{129 1.232A~ -- 6,~10.565 6,455,299 - - - b.~8S,2A9 7~.774 7.329.46U ~ 5.310/57 - - 8.310AS7 _ 2.607.131 _ B 771.552 _ ~09 S~O ~Q 1d/ 399 998 - - 107.~,9848 r,[2121.0*21 iR7.120_666 _ . . _ . . ~ 11,3J9,1~0 I1.769.959 {I59,718? l29,I99 --~ 11a79N0 - 10,MI~IW7 333.'~3A71 39.129001 11.40i,435) /V9.W5 -- J2.733,071 - 28.571,8fk 13,71~,907 y 13,S20,aS5 (1,325,0171 t 4l9,(161 ~- 13,7t~,9U7 -~ 17789,109 9.752,~99 6.096,262 (S76,OS3) 161~,iB7 - 9.131,3f~6 ~IS,(143 6,870.121 ~,910.IU 1,779,~36 (I33A4Z? 255.7~9 -- /9101~J ,., 4,S1d,1~17 ~~~ ~~~ ._ .~ - 7.838,572 ~~- B 242 296 Ii,OS2~2Q 16,750,497 (1,796.T,~x) i 090,355 -- Ie.057 7211 •- 16 71~.7~8 4,913~ IO,OQ3.~5 p37,T1~) 27.210 - 4.913 Obp •~ 1p.491,B~S 64'S,d09 e67.900 .•.. - (166,691) 695,R09 ~- 862~500 2Ed.7d3 2e6.7~ - _... - - -- ~86.78J 551.3.7J - 1~,,,476~'Y __ lOS.66b.E00 ~ LS32S2lgl- ~9,,,_,_ ~, [166,,,,,_69U IU9.21S.~79 _, 2l8.093 100.042_000 ~_,,, 51.26S7QQL ~ IS.041.~4?l_ 166.691 (Di65811 _1~.4D2.979) 3.07s.666 _ ~y~y.~61 ..- -- - 2,7~7.162 2,747,162 - 1,515,1~3 4,515,1~3 - - -- 1,515,1~1 .. 1.51~.591 1Ib26.ISU ~,_,_ - - ~11.626.181} ~1.626.181~. T p,569.002}.-- S b~43~ / SIS l~ ~ 1.121381 Z.945SR9 _ . . . 5,599.511 ~,370.727 5.175,299 [4M~Nh9) l6RAY1 ~,X17,(t47 (7N1.69B) 6,024255 SIl.fIQ1~b51 SS,OT1,654 - SR,OZi.6S1 41.9%,826 {5~.78{l - _ 1537$d~ 151,7tH~,_ 10,5?3 ~ ~ 6 ~ l i~R ]00 ~ 166.69! b2~ (B35Atl27 Stl.U21.654 . ~ - ~ IConllnued~ 1 1. ~-~ ~. ., . ._ ._ L....~..~ ~..~..~..r ~.-r~w ~......J ~W.~.w...r ~........,+ ~.~ .... .~....,.... ++..+... L......... +.....~.. .,.,,..~.. ..,...._..+ , ...._J -"^ r-- -- r^-- ... ~.....,,,~ r•..w..' ~ ~ . _ }~T~~ ~!~ _. . _ F ~ - r ^ 'ti r..'~"+1 Ir"r"~+"1 ~ '~,. `.~ E~',`~A,,! '"'~~..,~ ~ t "'' ~ 's^ ~ N Revemi.y I'rap~yly lexea Sali~s la~ L?Il~er farw Uren+aa ~nd prrndl~ In~MR~w~mme,Nnl cn..aM rn~ ...,~~.~. Fines ~nd Lrlrlu (.aw rnd mesder~le inmme h~w~ln6 U~e ~d owney and pr~per~y C~hM TaNal ~evenu~y 4.K~endieurn Cunenl 4rl~rnl 6overnmrnl 1'ubllr ynfe+y Ceneral servicn !'arYaand reae~llon 131+rrry 1[af Imnm~ - ~alartn Ilvu~ln6 and rnmmunNr dr+rdapment 1114er fk~FM a ~rvke Prinelpnl In1~reJ Tnl~~ f1f~14'11d~lYM F~ns~ (deH~lenryl vf revenuer nver eMpendlluees O~ha hnandnd urw - Upeulin~ 1nn~kn oul &~cN~ (drHri~nryl d nwnurr wMr eMpendNwa~ and o1Mr rus Fund LwMnce ~! be~dns d rerr, a P~~~Y "PO11~ Chsrge in repor+lna e+dily Yund kal.nn ~I b.~n~ of yra~, n ~d~wrrd Rntdwl equiey tr.asf~ Fund l+~l~nn (dafidl) N~nd d ye~r E~luln~ ? 2 CiTY pF 5AN7A MONICA, CALII'ORNIA ('nml+lnal Sl~hnn~n! M Ro~ enu~r E~~+endhurwM~d C'Iwm`ninFundUslnnct~iV~h.di uu~16.y1N.~nGAA1'Mi~l snJ A~1un! -[~enerd and Spa~f ~I ltew~nw~ Fund iyEw, CmNMred Ymr rnd r! ~nn~ yl 1y92 wilh enm~rrd~o aRu~ Idel fw~~f hmal im~ r~mM !~r y.+~r rndnd ~une 70, ~991 .. _ )~~~ re~w fM~ 1m~ - - --- ~~ _ , ]~LL - - - _ ," ~ ~ ~,en .,~ 19~0.1M1 rlw AAUrI, Vrl~nce - M~ttt~bfn/ 1!1!•1N! C11hN ~N I~wr~ble Iv~1 •adae _. Anu~l earrndlfrrer ~mwwh~Mw aAlwl~rM~ ad ~r~awr~bl~1 Adual : ._ _. .... .... - -- ... ~ I.IM~N Z,7M ~] ~-- - ~-- l,21N 663 720 619 1 7~ 1 615 ~.7W.W 7,779A~11 - ,-. - 7~?J9,091 ~~.o~n »ay 9 J3S.kS! ~,[no.~ e~on ws _ ~ _. =,~oo~,ws i~r~sa i ~ e v,e «r, 79S,6R! I 12Ap75 - ~ - I,l2pp75 324 Y9~ 1 160 hu1 A9.~ _ 7d7.?10 _ - - - 1l~.2f0 91.711 __, _ llg bG7 _ 70.991A1] r,19.Nl~0/ - __~__~,~,~,,,, 1l.6113W [1.347.~79l... ~T~3.~9._.. s,lkS,709 i.J7~,IS1 121371 21.411 -- 1.~'1J,16~ 1,r95~~7 ~,191,Ie7 2.1~7~3{ 315.560 (~.~=) ~,~67 -- l2~,1~ 2,0'7s,Od9 1071,757 S]24.~E0 1,1171~2 t66,9e71 961,17~ - S,US7~1]I4 1e7,152 4,79/,~17 S~A33 5,~1409a - - 5,61{~ 7,~60915 ~,~lM116e u.es0.~ . 11.~1s.9s1 _ t799.qv~ ~~ IW 3S ~ 4.6~1.47) ... _, .1 ~zio iis„-- (369y,d~~) 5~01~SQ ZlM1~002 (Ipl'~.a11 ~ 4.479,1y1 l,1.1fl,184 F115llil E (11i73441_ (~.75;t.1Ql1_ - (3L79t.1011 435.~97 l3•572,171 _ i ", , - [6AI~.i111 ~ 790.0~ llD110r1f ~_ 7~7W0 ~II,_ 6~1 ~.bl].Ki T,~ 13.3l0,76i 17~l0,766 - ~ - 1~a.2e~- 1~~_ ~ ~ I~.b0.7i~ .I~.y+i - 10 417,6T7 ... _..-----~. 17,M~¢S~ 19,IN~5/ - + - I71it~ - IO.M7,R7! _ 53 ~, ~. _ - - S].7s1 ~,,, 5?.~AI_._. ~,.. -_ i lOS7]} ~ ~ ~ ~ ~ ~ ~ E.b27.IG5 _, 13~_.,,~-~„„~_..-.~~_-~ Sar R~r~~~~p~nyln~ IIMM 1P cr+O~bin~d 11n~nrW R~IM»M~ Exh:bit 9 CITY O~ SANTA MONICA, CALIFOItNLA Combu-ed Skateme~u af Reves-ues, fixgenses anc# Changes ~ Reta~ned Earntngs (Defiat)/Fund Balance-.A]I Propnetary Fund'~ypes and Stmilar'Trvst Funds - Year ended Jut~e 30, I942 ~nth campara4ve totaLs for year ended june 3p, l991 Operahng revenues - charges for savict3 ~a~$ ~ Peisonnel ~ Adnnmstradve ~duprt Contsactual se~v~cws R~epa~rs and a~atenance 14iates~als and wpph~s U6L~ Waber ~rrhases Casvalty, ~ ~~,esty a~,d 1~abili#y- ~ ~~ Other Tot~l aperat~ng ~cpmses OPe*~emg mmmne ~' Nonoperrhng revmue~ ~a~S ~~ Stafie sales tax p:ooeeds 1nEes+ASt ~~,,,...e _ ][~Eapst oc~~ OtlfRx Tutal nonoperatit{g ~ev~ ti ~ Tlet moCC~e «) beEOte op![ating ~ess Ope~ahng truisf~a m DperAt~ng transfss ovt Net ~e (lossS Add depr~eaad~on o~- aontr~~*~? a~eis ~ed ear~+a+g~lfund b~lanae at be~ of yea,r Retamed earzungs/lwrd b~-oe at ~d a~ ye~ ~!'C ~C+D~Il~1i11~1R~ IIO~GR ~D ~ViT7L.7ulCU ~ 5~1~1t$ ProQrictuy fw~d lypes lntea~t Entcrpiise savice , S 43~186~71 7~TZ]~d45 21,394,679 4,7f77~47 6,756~13 4g2„584 4y2,60~6 1,4~Z,624 I66,316 ].945A47 5,~1.1Q5 29SL46~8 44341.946 i6155.1691 7,1%A65 7,1%A65 524,,580 3gi~429 S,Z06,845 1.928,16! ~36~.~Ob~ 3.~68589 10 b3G.521 ~~~ 3.9917~0 (4307,498) 4,IIS~94 3,1QZ,213 ~ ~r~r9~~ S _ _ 86,957'.723 959,950 ~r~ I,5I~,530 3~:i,T28 {3614?97~ 1,4TJ,I6I 258.604 1~?35i765 ~dnaary fund type NOA- expendabie , ~ust 29~294 29rI99 115,349 160.623 275 972 30.5,~T7 3E~*~!I 3~231A85 3,436r35B ,~ _~ ~~ ~ ~ `J .~ J ~ ~ ~ ~ ~ ~ ~ ~ ~ , ~ ~ i ~ _J ~~ ~ ~ ~- f-- ~ e r- 1 f TO~LS ~ (memorandam an1Y~ 1992 l941 ~ 50,937,j 91 45?.41.9~6 ~ 27.394.679 20,356,568 4,707~47 4.356.~ ba5b,913 7~5~i 492,5~ ~.3ab ~ 4,252a608 5,538~049 7.432~b29 1~91A(11 16~,316 $,791,9IZ 2,22$,915 8,~159~W? 5,591,106 5,3$6r~99 2,952.468 I.7W3Q7 ~ 56 538 461 519 56 495 , r , ~ r { ~ 55~1~~ (1~~.~9) 3~3,~9 33~89 ; 5,205,845 5Z13,575 ~ 3,033 463 '~'~Q3.~4 (:354,5U6) (378,{~) ~ 3r629r212 Z,417r318 , ~- ] ] ~443 11~589,,309 b,~81.153 (1.688~40) 4.315A68 ?,314,350 ~ {4,6G8S95) S'1.593.~173) 5.928AZb (1.917,363) ~ 3,1Q2,2I3 3,764,p99 83~094,G05 , $I r252r869 ~ i ~rl~r~4 . ~r~r~ 14 ~ ) Fx}ub~t 5 u 1Y OF 5ANTA MOrTICA, CALIFpRNIA Cambined Staeement of Cash Fbws - All Prupnetarv Fund Types and S~uular Tivst Funds Year ended June 30,1992 wlth camparative eatais for year ended ~une 30.1991 Cash f14wS ftOnc! G~,c~ating ac~vihe5. Cash neae~ved frum nisto~ners Cash payitrents for atater~ais and servioes C'~al. ~~~ tD Erxlpbyee5 for semaes IVet cash pKrvded (used) by ~~cia~!!g ~bCS Cash flo~ws Frmm ~onczpital fmancng ac~.nt~es. Sales taac praa~e~~ Tr+ns~ortaaan Devebpment Ace ~FDA) operatu~g Pxop A locaI ~tum Sq~te Transportabon Authonty Funds (STA~ ~x~ease ~n borroWSngs fmm otfier fusids btha °Peraes+$ grants IJet caah p~vvided by t+oncaprtal finaricing ~l:.,he6 Cish Ao~wa favm ca}aitai ud ielated ~++~~cmg act»ities Ssles tax pio~eds - T~A apita] Acqw~rion acid ao~tnsmon of npitsl ~s Ptoaeds ~vm s~le of equ:pn~nt L,~,~m eo kaBees P~o~eds froon ~aaoe o~ bng-eerm a~gatians Nkt ~+edttedon m 1ou~-ternn ob&o!~+~!~ lsdene~ pa~ on lang-tsrm obLg,a~ns A~dv~aea i~vae otl~er fu~ds A1et c~sh nsed by c~t,::.: and ~~ela6ed S~g a~tsvibes Casb SO~va irnlri ~ ~ ~~t on inv~ata~sts I~ase nenes~ arrd ot~ter +~+*~•t~,seo~us Net ~ psvvsded by mvestsng uu~vihes Akt nx~e in cash and ~ e~uvajents Casl- u~d arsh equivaknss at beginnuEg of ycar Cash ud a~h equivalents at ad of vear ~1~UC1~lY „ivnd i~e Psa~rieearq fpt~d tjrpes N~m- In~ernat ex~dz~ie Enta'pr~se _. aervice trnst S 45~668,483 8,444,TT3 29,?99 (26.788.13ZJ (7,9~0.891 } - S~~N~r~I „ - ¢r314~ 63,882 29,2g9 3,I OB,888 - - iSll~iB -- - 719r504 - - 897A1~1 - - ~~+ - - 6,58#~?30 6,498,008 - - (i3.b99J~91 - - 85,421 - - (487~1 - - 33376~65 - -. {197~19} - - (369~Q69 - - 3p5,821 - - ?8.~82.~49 . -- -- ?.,751,711 1~,6T3 1153l9 3~46B,589 - 1b0~fi22 6~20~300 1,Q22,613 275~9T1 'J8.9T3.152 1,066,495 305Z10 31~565,~2$ 13~461,4~0 3~I31~065 S 70r438~~80 14~18~435 3r436~55 (~) 15 ~ ~ ~ ~ _~ 1# J ~ ~ ~ ~ r ;~ 1 1 a i J i ~ ~ ~ t ~ ~ ~ ~ ~ r e ~._ . l; Total (memo ra~dnm only) i~n r~~ , 53,942,555 49,274~56 ~34,769A~3' ) p1.~90.~i1) Y'lr~`~r~} QA.356.5~ ~ ~ .14~ R6T1.74~ 3,10l~,~ '~~,~'j 1~11,~{8 26~,919 714r504 1,700,000 871,O1~t - 348~086 132Z1I b~964~730 6~93b~69~4 b,49B.008 937~GQ5 {13~699,089) (15,656,OI1) 85,423 28,366 (487,2'lZ) - 33.A5~85 - f197119) (I70,ST9~ {369~06) (378A6~ 3~75r821 - zs,~2,~s n~z~s.grn a.as~~ ~a.~ ~~~~1 ~~ ~~ g~ ~~~~ 40~Cr4,917 (4~97~51) +l8,1S8r358 52~455~9(34 88~r2'10 4$~158~53 16 ~ Exh~b~t 5-? t:t YY OF SANTA MONICA, CALIFORNIA Camb~ned Statement of Cash F3o~vs - AIl Fropnetary Fund'i'ypes and S~m~ar Tnist fiunds, Conhnued FiduCiary fund tyge Pmprieta.ry fund ty,pes , , Non- Internal ta~pendsble Enterprise service ~tst Recondua~ of operatrng loss to ne# cas~h pmvsded (tLSE'C~} ~ D~dk71t& d[C1Yf~S Operatmg mcome (loss} S_(6,155,167'1 524,.574 29r299 Ad~us~tts to recanale operati~g utiu,u~e (fa6s} ta net as~ pr~av~ded (r~sed) by operattng actrvzt~_ Adsi d~~,~a#on 5,591,105 - ~. Add bss or sale of eq~upmer-t 149,506 - - Opaatmg transfers, net (375.758) (37,3b9) Change ~n assets and Latxlihes. Inaease {dea+ease) in acaounts reoeivable i1A59,921) -- ._.. (Increase) decrease u~ prepaids 1b,281 7D,050 - Dr~ease:n u~vento~y 53.274 - ~ ca~> ~ ~e~ ~y~~ c~w~,~s~ c~w,s~~~ - r.~~ ca~~,~ ~~ r~~ t~,s~s~ - _ r~~ ~ a~ 2ia~ -- - ~se (decrease) ~ daia~ payable -- {33~566} - laaeasem o~ntra~cts paya~le 1243T4 _ , - - Tahi adje~smi~nis 3.8lQ.840 (4bb,b97} -- Net cash g~av~ded (u~) b3' QP'~~S acdv~+~ S (2374.327) 63,682 29,299 5sgiufiant ~wnca~ mveslmg and fman~$ a~ty: Aa~..~.:.w~. uid aa~trucbon of apital aasds S ~8.7~'TAi3) - - h-~aae ~n cie(+e:t+td chaxg+~ {330~g5} - - increaar in ~m ob~i~abous ~,2g5 - ~ Iaae~ in ~nbarst p~]able 1,458,~T2 - ~ ~~erest an rn~ts neaetv+~d a~d capi~~~d Cf35.2b3) - - ~11Q'!~! 1!1 i4«s~i11~5 ~~i~! t0 ~1f1alk0e fDC~ ~SS 7r~~ , '-"' Net nonc~ah inv~i.~g and iv~annng act~vsbes S - ~-- See a«:~~anyu:g notes to coflr~eaed frna.tx~l staterr~er~ts !7 ~ ~ s_J ~ ~ ~ :~ ~ ~ ~ ~ ~~ ~ ~ .~ ~ a , ~~ 1 ~ ~ ?otal (memorandna~ only) 1492 1991 f~~601.2B9) SI3r2T1,549} ~Sg1.lU5 6,386 459 i49,506 - {353,1711 f2Z9,l.?3) (1,099,921} 152,420 86,331 (109,9~3) 53,1?4 ~3.675 (628,57D) 1,199,219 (+~~.~b8? 3,8~0,29~ 212.7[)6 17,957 !'~~Sb6) 596.956 124.374 f134Z.696) 3.380.1~L'j 10bD4.804 ~~rl'~~ ~~745) (8~f7A13) -- C~~D~ -- 330~95 - 1,4~8~T2 -- {T~5~b3) --- 7.~1A~4 - ~~ .~ ~ ~ ~ ~ ~ .~ _~ ~ ~ ~ ~ ~ ~ ~~ ~ i _.~ _J _~ s , ~ ~ r GITY OF SRNTA M4HICA, CALIF4RNIA I~otes to Combined Financial 5tatements ~ J~ne 30, 1942 ~1) Summary of S~gnificant AccaunL~ng ~olicies ~ E The City of Santa Mor~ica was incorporated Nn~ember 30, 1885. The City operates under a Cau~cii-Manager forn- of gavernment and provides the follow~ng tradit}onal mun~c~pal services as author~Zed by its charter: public safety (pol9ce and fire), h~ghways and streets, public improvements, library and cultura], recreat~an and parks, plann~ng and zoning, hausing and canmunity development and genera7 admin~strative suppart services. In addition, the City prov~des t~e followang enterprise services: water and wastewater, so~ id ~vaste managemer~t, pier, civit auditoritror, airport, ~emetery, bu~ ~ lines, parking structures and lats, and cable communications. The accounting policies of the City of Santa Monica conform to generally accepted accounting princ~ples. The fallowing is a sammary of the more significant palicies. A. Fund Ac~oun'ting 7he accounts flf the City are organized on the baszs o~ funds and account groups, each of rrhich is cansidered a separate accounting entity. ~ 7he o~erations of each fund are accounted far with a separate set af self-~alancing accounts that camprise its assets, liabilities, fund equity and revenue5 and _ expenditures or expenses, as appropr~ate Government resources are allocated to, and accounted for, ~n ~nd~v~dual funds based upon the purposes for which they are to 6e ~ sper~t a~d the means by which spend~ng activities are controlled. The various funt~s are grnuped i~ the co~nb~ned financial statements in th~s report into seven g~ner~c , fund types and three board fund categories as follows: o Governmental Funds ~- • - General fund - The general fund is t~e general operat~ng fur~d of the City. ~ It ~s used tn account for all f:nancial resources exce~~ those required to be accounted for in another fund. ~ - Specia] rever~ue fur~ds - Specia~ revenue funds ar~ used to account f~r the proceeds of spec~fic revenue sources (ather thar~ expendabie trusts ar ~ajor ~ capital pro~ects) that are legal~y restricted to expenditures for specific purposes. - Debt service fund - 1'he debt service fund is used to actaunt for the z accumuiat~on of resources far, ar~d the payment of, general long-ter~ debt ~ princi~al, interest and related costs. r - Capital pro~ects fund - Capital projeCts funds are used to accaunt for ~ financial resaurces to be used for the acq~isi~ion or construction af ~ajor capita7 faci2~ties (other tha~ those fzr~arrcea by pro~ri~tary funds~. ~_ - 19 - ~ITY OF SkNTA ~~HICA, CRLIFOR~IR 'j Notes to Combi~ed Financial Statements, Continued ~ . o Propraetary funds ~ - Enterprise f~nds - Enterprise funds are used to ac~ount for aperations that ~ are financed and operated Zn a manner similar ta private business enter~rises: (a) where tMe intent is that the casts (expenses, including depreciation) of providing goods or services to the general public nn a ~ continuing basis be fina~ced or recovered pri~arily through user charges, or (b) where the City has dec~ded that periodic determinat~on of revenues earned, ex~enses ~ncurred and~or net incame is approprzate for ~apital ~ maintenante, public policy, roanage~ent cantrol, accountability or ather purposes. - Internal service fur~ds - Internal service funds are used to account for the ~ financing of goods or serv~ces by ane department or agency to other departments ar agencTes of t~e CTty or ta ather governments, ~n a cost-reambursement basis. ~ o ~iduciary funds - Trust funds - Trust funds are used to account for assets held by the G~ty ~n ~ a trustee capacity for ind~v~duals, pr~vate organzzatjans, other govern~ent5 and/or other funds. These include expendable trust a~d nonexpendable trust funds. Honexpendable trust funds are acco~nted for in essentially the same ~ manner as proprietary funds since capital ~ainte~ance is critital. The ~ expencSable trust fund is accaunted for in essentially the same manner as gov~rn~en#a] funds. ~ - Agency funds - Agency funds are custodia~ in nature and are used to receive and disburse funds for an entity/ind#vidual whiCh is not part of the City. Agency funds fu~ttion as a clearing account and do nat measure results ~f ~ operations. B. fixed Assets and Long-7et~m Liabilities ~ General fixed assets used in governmental fund type aperatians are accounted for ~n the general fixed assets account group, rather than in governmental funds. 5uch an accaunt group is not a"fund," since it is for the purpose of ineasuring financjal ~ position and is not involved in the measurement of rssults of operations. ~ublic doma~n (infrastru~t~re) genera] fixe~ assets ea~sist~ng af certain ~m~rovemQnts ~ other than buildings, includ~ng roads, bridges, curbs and gutters, streets and sidewalks, drai~age systems and ~~ghting systems, have not been cap~tal7~ed along w~th other ge~era? fixed assets. Such ~ssets are norma27y ~mmovable and af va1~e o~ly to the City. Therefare, the purpose of stewardsh~p for capital expenditures ~s sat~sf~ed wzthout recording these assets. in ac~ordance with genera]ly accepted accounting J printipies (GRRPj, no depreciation has been provided on ge~era~ fixed assets. All fixed assets are valued at historical cost ar estimated h~staricai cost ~f actual ~ histor~cal cost ~s not ava3lable. Donated fixed assets are val~ed at t~e~r ~sti~ated fair a~rket value an the date donated. ~ - 20 - ~ ~ t- ~: CITY OF SANTA MOHICA. CALIFDRNIA Notes to Comb~ned Fsnancial Statemer~ts, Cantinued Deprec~at~on of all exhaustible ftixed assets used by proprietary funds ~s charged as an expense against thejr operations. Depret~at~on on assets acc~~ired from cap}tal grants 1s charged to contr~buted capital and not retajned earn~ngs. Accumulated deprec~at~on is reported on the propr3etary fund i~aTance sheets. Depreciatian has been provided over the estimated usefu~ l~ves using the stra~ght-line method. The " est~mated useful i~ves are as fol~ows: ~ Bu~ldi~gs 25 to 50 years ~ Improvements 15 to 75 years Eq~ipmer~~ 3 to 25 years Long-term liab~lities expected to be financed from gavernmental funds are accaunted for in the general long-term debt acc~unt group, not in the governmental funds. C. Reporting Entity ~ For annual financial reporting purposes, the City has included the Redeve~opment Agency af the City of Santa Monica, the Parking Authority of the City of Santa Mon~ca, the Pier Restoration Carporation {PRC~, the Bayside District Cor~oration (BDCf, ~ farmerly known as the Third Street Qevelopment Corporatior~, the Nousing Authority of the City af Sa~ta Monica (NA), and the Santa Monica Rrts Faur~dat~or~ {AF) ~n the accompanying combined f~nancial statements. The criteria far inclus~~n as provided ~n ~ the accompanying combined financ~ai statements ~s as fo~~ows: a The Redeveiopment Ager~cy of the City of Santa Mon~ca was established by the Sa~ta , Manica City Counci~ in 1957 p~rsuant to the Cortmunlty Redevelopment Law of f Caiifornia. The purpase of the Age~cy ~s to e~am~nate b~ight and to pror~ate i etonom~c revitaiazatlon within designated pro~ect areas of the City. The Agency`s aperat~ons are included in the ~amb~ned f~nan~~al statements because ~ t#~e City Council constitutes the governing b~dy of the Agency, designates Agency ~anagement, sjgn~~icant7y in~luences Agency aperations and appro~es the Agency , budget. As t~e operations of the Agency are governmental in nature, it has been desegregated in the accompar~y~ng general purpflse financial statements, with ~ts • operations included ~n the debt serv~ce and capital pro~ect f~nd types. T~e Agency's ior~g-term debt ~s included ~n the general long-term debt acco~tnt group_ ~, Separate ~inar-cial statemer~ts for the Redevelopment Agency can be obta~r~ed #rom the City's ~3irector af Fi~ance. ~ o ~he Parking Authurity flf the City of Santa ~lonica rras established by the City ~n ` I950. At the present t~me, the operatians comprise 11 parking lots ar~d 6 paric~ng structures. These were acqu~red and/nr constructed principa~ly from the proceeds of bonds sald in 1966. The Authority's operations are incl~ded in tt~e combirred financia~ statements r be~ause the C~ty Counc~l, since Y963, has acted as the goverr~~ng bady of the ~ Authorlty, des~~~ates Author~ty r~aerageme~t, sign~f~~antly ~nf~ue~ces Authar~ty operat~ons and approves the Author~ty budget. The Author~ty 15 included as an , enterprise fund ~n the accompanying general purpase financ~al statements. - 2l - ~ CITY OF 5AHT1k MQNiCk, CALIFQttHIAt `~ Nates to Co~b~ne~ Financial 5tatements, Cor~t~nued Separate fir~ancial statements for the Parking Autharity can be obtained from the ~ City's Director of F~nance. o The PRC was created as a Cal~fornia nonprofit ~ublic benefit corporatior~ dur~ng ~ the fiscal year ended June 30, i984 for the purpose af maintaining and aperating the pubiic educational and retreatiana~ facillty in the City of Santa Montica, cor~nly kn~wn as the Santa Monica Pier. ~ The PRC's operations are included i~ the combined f~nanc~al statements becau5e the C~ty Cou~ci2 appoir~ts the PRC Board of E7i~^ectors; the Coanc~l ~s tt~e so~e ~ member of the PRC; the operatians af the PRC are to result in a f~r~anc~al benef~t to the City; all assets, debts and l~abilities may be distr~buted to the City upan dissoiution of tf~e PRC; t~e ~R£ cannot borrc~w ar ~ncur debt withaut approva~ -~ of the City Counc~l; and the C~ty Counc~l approves the PRC's budget. The PRC ~s included as a special revenue fund }n the accompanying general purpose f~nancial 5$8~£~lpf1~S. Separate financial statements for the PRC can be abtained from the City's ~ ptrector of Finance. a The B~C was created as a nor~profit public benefit corporat3on d~ring the f~scal ~ ` year ended June 3Q, 1984 ta combat communrty deterioration by develap~ng and impro~ing the ag~ng areas jn and around the City of Santa Monica`s central business d7stritt, espec3ally arount# those partior~s of Th~rd Street, which are ~ cormronly knaw~ as the Sa~ta Mo~~ca Ma~l, and by Goordinating public and private sector ~c~ivities. Until f~scal year 1987 -1988 when its name was changed, the 8DC was kr~own as tt~e Third Street Deveio~ment Corporatian. ~ The $pC's aperations are included in the combined fiaar~cial statements because the City CounciT appoints the BDC Board of D~re~tors; the City Council is the sale memt~er of the BDC; the operations of the BDC are to result ~n a f~nancial ~ benefit to the City; ali assets, de5ts and liabilities a-ay be distributed to the ` City u~on dissole~tion of the BDC; the B~ cannot borraw or ~~tzur debt ~rithaut approval of the City Council; and the City Council approves the BDC's annua~ ~ ` budget. The BDC is included as a special revenue fund in the accampanying general purpose financiai sta~ements. Ssparate financial statements for the BDC can be obtained from t~e City's ~ Qirector of Fir~ance. o The Ho~ts t rtg Authorl ty ~HA) of the Ci ty vf Santa ~lortica was establ i shed by the F C~ty in 1975 for the purpose of address~ng two condit~ons ~n the City: (a) the , ex~stence of unsanitary ~nd unsafe int~abited dwelling accommodatjons, and (b) the 5hortage of s~fe and sa~~tary dweTl~ng accomrtwdat~ons available to persons of low j in~orne at rentals they ean afford. Subsequently, ~ur~ng 1976, the HA entered , into a C4ntract w~th the Housing Aut~ority of the County of ~os Angeles (HACOLA} J for the adm~n#strat~on af publicly assisted housing programs in the City of Santa Monica. The program admin~stered by the kiACOLA on behalf of the City through ti ~ December 31, 1988 was the 5ection 8 Housing Assistance Payments Programs ~ (vouchers and certificates) as funded by the Un~ted States Department of Hous~ng ; _~ -22- ~ ~ CITY OF 5ANTA M4N1CA, CALIFORNIA l~otes to Comb~ned ~inanc~al Statements, Continued and Urban Development. S~nce Jan~ary 1, 1989, the C~ty has directly admin~stered these programs. The Authority's operatians are included in the comb~ned fznancial statements because the C~ty Council, since 1975, has acted as the govern~ng bady of the r Authority, designates Autharity management, and signif~cant~y ~nfluences , Authority operatians and approves the Authority's budget. The Aut~ority ~s irrc~uded as a s~ecia~ ~~ven~e f~r~d ~n €he accort~parry~ng geReral pur~ose fir~ar~t3al r s~at~ments. `- Separate financiai statements are nat prepared for the HA. [- o The Santa Monica Arts Foundatian (AF) was ereated as a nonprof~t public benefit [~ carporatian d~ring t~e fiscal yea~ er~de~ June 30, I984 to ~roawte the arts by raising funds to finance art programs, including, but not limited ta, pub~ictiart festivals, outreach programs and art exhibtits. On June 8, 1990 the C~ty Lounc~l ~ merged the City's Arts Commission (which was respons~b~e for formulating ar~d recor~ur~ending to the City Couricii City arts polic~es) with the Arts Foundation. ~ The AF's operations are ir~cluded in the combined f~nar~cial statements because the City Council appoints all ~embers of the AF, the AF is to provide a financ~al b~nefit ta t~e City by raisirrg private f~~ds far ~~b]2c arts pro~ects and prograrns, staff of the AF are City empioyees, ar~d to not include the AF in Lhe ~ City`s cambined financial statements could be misleadir~g to ~sers af the City's f~nanciai statements. 7he A~ is inc]uded as a s~ecia~ revenue f~nd ~n the accompanying general purpose financial statements. ~ Separate f~nar~cia~ statements for the AF can be obtained frnm the Cit~'s Director of Finance. _ Wfi~en evaluated uszng the report~ng ent~ty triteria, na oti~er ent~ty with~n the boundaries of the City of Santa Monica qualif~ed for incl~sion ~n the accompany~ng genera~ purpose f~nancial state~ents. ` The ~ity is also a part~cipant sn a ~o~nt venture insurance pool (see note 17), wh~ch ~s not cor~s~dered gart of the re~orting ent~ty, as the City does ~ot exercase pr~mary ~ flversight respons~bility for ats operation. ~T. Basis of kcco+~nt~ng ~ ~he actount~ng and finar~cia~ reporting treatment applied to a fund is determined by its measurement fac~s. R11 governmenta7 funds and expendabie tru5t funds are accour~ted for usir~g a current financial resources measurement focus. With this ~ measureme~t facus, only current asset~ and current liabilities genera~ly are tint~u~ed ~ on the balance sheet. Operat~ng statements of these funds present increases (i.e. revenues and other financ~ng sources) and decreases (i.e. expend~tures and other ~ f~nancing uses} ~n net current assets. All pr~prietary f~nds and nor~expendable trust funds are accounted for on a flow of ecorromic res~t~rces meas~remer~t focus, Wit~ this meas~rement focus, a]7 assets and all : 1~ abi 1 i ti es associ ated wi th the operat i on af these f ur~ds are ~ nGl uded i n the bal anee - 2 3 - _~ 1 CITY ~F SANTA MOHICA, CALIF4RNIA ; ~ , Notes to Cambined Financlal Statements, Continued sheet. F~~d equ~ty (~.e., net total assets) ~s segregated ~nto co~tr~b~ted cap~tal ~ and retained earnrngs components. Propr~etary fund typ~ operat~ng statements present increases (e.g., revenues) and decreased (e.g., expenses) ~n net total asset5. ~ R~~ go~ernmental funds, expendable trust funds and the agency funds are accounted for using the modif~ed-accrual basis of accaunt~ng. Their revenues are recogn~zed when ~ they became ~easurable a~d avai~able. ~he City cons~ders attounts receivable (net of allowance far unco~lectibles}, notes, interest, property taxes receivable co]letted within 6Q days of year-end and gran~ revenues billed but not received, as susceptible ta accrual. Expenditures are generally recagnized under the modified-actrual basls af ~ accounting when t~e related fund ~iab~lity fs incurred. The exception tfl this general r~~e ~s priRcipa7 a~d ~~terest an generaT ]ong-terrtE deb~ which ts receqn~zed whe~ ~ue. All proprietary funds and ~onexpendable tr~st funds are accounted ~or using the accrual basis af account~ng. 7he~r revenues are recognized when they are earned, and their expenses are recognized w~en t~ey are incurred. ~nbiiled service recetvab~es ~n the enterprise funds are accrued at year-end. E. Budget and Budgetary Ac~ount~ng The following protedures have been used in establishing the budgetary data reflected in the general purpose finaneial statements: o During May, the City Manager sub~tiits to the C~ty Cou~cil a proposed operating ~ budget for the fistal year ~ommenci~g the fallow~ng July 1. The aperating budget i~cludes proposed expenditures and expenses and the means af fi~ancing them. Public hearings are canducted by the C~ty Council ta obtain taxpayer comrnents, ~ ~nd prior to June 30, the budget is legally adopted through passage of appropriate resolutions. Any revisions that alter the tatal expenditure of any depart~e~t, major acco~nt category li.e., sa7ar~es, supp~~es, capita] o~t]ay and ~ capiLal i~pravementsj or fu~d must be approved by the City Council. a in accorda~ce with t~e City Charter, formal ~~dgetary adoption fs emp~oyed as a iaanagement contro~ device during t~e year for the general and special revenue ;J~ fund budgets. I~ addition, yearly operating budgets are adapted for the City's ~~ praprietary, capital project and internal service funds to facilitate ~anageme~t eval~atian. ~ t o The 5udget is prepared on a non-GAAP budgetary basis which considers encumbra~ces outstanding at year-e~d as an expendit~re of that year, whereas eneumbrances are not considered as expendTtures ~nder genera~~y accepted accouRting prineiple~. k Encu~brances outstanding at the beginning of a fiscal year, which were recognized _ as budgetary expend~tures ~n the pr~or year, are recognized as GAAP-basis expenditures but not as budgetary expenditures unless reapprapr~ated. It ~5 the City's policy to o~ly reappropriate cap~tal encumbrances and unencumbered balances af spec~fic capital apprapriations. In addition, capita~ leases are ~ budgeted on the cash basis, whereas GAAP requires the full amount af th~ leased asset ~urchased ~e shown as an expend~t~re af ~he curreRt year. However, ~n the 1 turrent fiscal year, the d~fferenc~ between the GAAP and the budget basis for -~ capital leases is imt~aterial. Certain ather items are also budgeted on the tas~ basis, and ac~ordingly, an "other ad~ust~ents" column on the combined stateme~L • - 24 - ~ r- ~ CITY DF SANTA ~ONICA, CALIFORNIA Notes to Combined F~nanc~al Statements, Cont~~ued of revenues, expe~ditures and changes in fund balances - hudget and actual has been ~repared on the non-GAAP budgetary basis. o Budgeted amount5 are as or~gina~ly adopted or as amended by t~e City Council dur~ng the year. Indiv~dual amendments were not mater~al in relation to ihe f or~g~nal appropriations, except as dlscussed in note 3. o A~p~~pr~at~ons o~tstand~~g at year-eRd 3apse except €or e~cumbe~ed a~a~nts, wh~ch are reserved at year-end for governmental ~und types. ` a R Camprehensive Annuai Financia~ Report - Budget Suppiement is publishe~ wh~ch recanciles expenditure s/expenses and revenues at the legal level of control to ~ the summarized amounts presented i~ the Com~rehensive Annual Financial Report. F. Cash and Inves~ments - ~ It is the City's policy to invest its available funds to the fullest extent possib~e. Accordingly, the City pools for i~vest~ent purposes, idle cash of all funds except the nonexpendable trust f~nds and those funds he7~ in trust for the City b~ various ~ financia~ institutions i~ accordance with applieable trust agreements. Interest ~ revenue is then al~ocated to the fund s on a quarterly basis based upon the relat~ve cash balances. ~. Investments Investments are stated at amart~zed cast, except far investments of the deferred compensation ageney fund which are carried at market (please see Note 2) ~. Reserved Fund Ba~ances o Mall Improvements - Qn August 1, 198fi, the City real~zed proceeds o~ 512,714,613 fram the sale of certif~cates of participatlon which were reserved to make ~mprovements to the C~ty's Thtrd Street Mali and perzpheral areas. As of ~une 30, 1992, ~1,i27,234 remains ava~lable. o Prepaid Expenses f Var~ous expenses have been prepaid and therefore have been reserved as they do i not represent "available spendable resources." o Inventory ~ Inventory as vaiued at average cost. Inventory ~~ the general ~und cons~sts af expenda~le supplies held far tonsumpt~an. The tost is recorded as an expendzt~re • at the time individual in~entory items are put inta use. Inve~tary ~n t~e ~ general fund ~s fully reserved to ~ndlcate that the amount does not represent "availabie spendable resources." - 2 5 - CITY OF SA1~fTR M4NICA, C~~IFORNIR ~otes to Co~bined ~inaR~ia1 Stat~ments, C4nt~nued o Advance to Other Funds Na~~urrent portions of iong-term interfund ~oans recejvabie {reported ~n "advance ~ to" asset accaunts} are offset by a deferred revenue accnunt for certaan ~ang-term advances. The deferred revenue amaunts relate to transactions that ~ would give rise to revenue (interest on past #ndebtedness and the value of la~~ transferred to the Redevelopment Rgencyf; however, t~e amounts are not availabie, and as such, t~e recognitian of revenue has been deferred. Al1 other long-term ad~ances (i.e., advan~es of cash which would not give rise to revenueJ are offset r~ by a fund balance reserve accou~t wh~ch indicates that they ~o not ~onstitute "avaiiable spendable resources" sinte they are not a ca~pone~t of net current assets. - o Reserve for Notes Recervable Two Prom~ssory ~otes, for ~200,004 eaGh, have been executed w~th the owners of re~tal propert~es at 3 V~cente Terrace and 2020-2030 Cloverf~eld Blvd. The notes ; are for fave years at 3% jnterest per annum, and may be renewed for f~ve a~d~tional f~ve-year terms as ~ong as the re~ta~ propert~es are ma7nta~ned for j low and moderate income households The 3 V~cente ~errace Prom~ssory Note is due ; aecember 22, 1993; tha 2020-2030 Cloverf~eld Blvd. Promissary Hote is due ' December 29, 1994. ~~e Pramissory Nates are payable ih fu~l upo~ sale or transfer a# the property (whichever occurs first) ar until expiratian of the term 1 of the Pro~issory Notes. Upon payr~ent to the CiEy, praceeds must be paid to the .~ State of Cal~forn~a as repayment for t~o 5280,000 State Department of Housing and Urban Deve7opment Deferred Payme»t Rehabilitation laan Program (DFRLP) lnans. A third Promissary Nate (seeured by a Deed of ~rust) for ;49,3~0 was executed ~ January l~, 1992 to the o~ner of pro~erty at b10 Strand Street, ~9, as a no interest Limited Apprec~ation Loan pursuant to Tenant Ownership R~ghts Charter Ame~dment (T4R~A} program guide]i~es to assist ~a~ a~d moderate SncQme househo~ds ~ p~rchase the~r rental units. Term of the loan is 3Q years. o Encumbrances : Enc~mbrance accounting, under which ~urchase orders, contracts and other ca~r~tmet~ts for the expenditt~re of monies are recorded in order to reserve that ~ partior~ of the applicable appropr~ation, ~s employed as an extensian of formal budgetary integration in the governmenta2 funds. fncu~nbrances autstandirtg at year-end are reported as reservatians uf fund balar~ces since tfiey do not canstit~tte expend~tures o~ iaabiiitTes. Rmounts reserved for outstanding " encumbrances may not equal "199I-92" encumbrances reparted sn the "Combined ; Stat~me~t of Revenues, Expend~tures and Changes in Fund Ba~ances {Deficjt)- 8udget (Non-~AAP) Bas~s and Actual-General and Specjai Revenue Fund Types" exhi#~its as reserves for encumbrances may also ~ncTude prior year reserves for er~cumbrante items still not expended and do r~ot include FY 199I-92 capital in~rovement encumbrances wfiich have ~een reapprapriated to FY lg9Z-93. I - 26 - ~ ~ ~ s CITY OF SANTA MONICA, CAL3FORNIA ~ ~ Notes to Cambined ~inanclai Statements, Continued o Arts Pra,~ect ~ Funds reserved far specific on-go~ng art s pra~ects. ` o Cap~ta~ Ir~provements ~ Qn June ~l, ]980, the City Council by Resolut~on 6Q12 (C~5) appropriated 54.9 m~iiion of the genera~ fund undesignated and unreser~ed fund balance ta a Cap~tal ~ Improvemen~s Reserve for future cmm~itments for capital improven~ent. Subseq~ent uses of portians af these funds have been approved by specific City Counci3 actions. Funds available as af June 30, 1992 are 5948,279. ~ o Cash ~fquidtty Reserve ~ The Santa Monica City Gharter, 5ectian 1509, requires a reserve for the p~rpose of placing the pay~ent of ~he an-goSng expenditures of t#~e City on a cash bas~s. The reserve must be suffic~ent to meet all lawful demands against the City far the first five months or other Rece~sary period of the preceding fiscal year pr~or to the receipt af a~ valorem tax revenues. The reser~e for cash liquidity " is not avaiiable for apprapriatton and cannot be used wit~out ~ity Cour~c~l authorizati~n. Pursuant to provisions of the City Charter, any use of these funds during the fiscal year must be restored by the using fur~d by the er~d of the ~ f~scal year~. r, o Transportation Equip~nent ! i These are City funds, and subsequent interest earnings, previous7y contributed to the Transportat~an F~r~d for transportat~on e~~a~Ament wh~ch has been f~71y ~ depreciated. purtng f~scal year 1983-84 these funds were transferred fraa the ~ Transportat~on Fund to the City's Trust Fund and reserved for future transportation-related or other Ci~y uses. o Qebt Serv~ce 7hese are funds ~e1d by various trustees which have been reserved for future deht ~ service and assotiated payments in the City Debt Servi~e Fund. ~ o Rail Construc~ion ~ On January 22, i985, the City Counci~ entered into a Memarandum of Understanding (City Can~ract #4359[CCS]) with the Los Angeles County Transportation Co~i3sion to establish a Ra~~ Construction Reser~e utllizing Proposition A local return funds i~ the City's miscellaneous grants fund. These funds are to be used - exclustvely for rail transportation ~mprovements alang the Santa Mon~ca corridor. a Perpetua~ Care 7hese are funds held by the City and invested through the City's investme~t agent. Investment earn~ngs are for expenses associated with the perpetual care of the City's Cemetery and Mausoleum. ~' -21- _~ ~ CITY OF SANTA MaNICA, CALIFORNIA Nates to Combined ~inanc~ai Statements, Continued a a Ci~ic Area Developme~t Tn con~unctio~ w~th adaption of the fiscai year 1985/86 Caty budget, the City Cauncil directed that until further natice, funds equ~valent to ane percentage point of the Trans~ent Occupancy Tax rate ~e reserved for future development of the Cjty`s Civic Center area. Use of these funds requ~res ap~roval of the Gity Council. Nomeles5 Programs These are unexpended ~iscal year 1991-92 funds appropriated for various services to homeless persons whic~ the City Cauncil directed be reserved for ~uture homeless serv~ce programs. ~ 0 0 0 4 Low~Moderate Incame Housing The Third 5treet 5enior ~ouszng ~ro~ect for low and moderate income households was constructed over land owned by the G~ty by a pr~vate developer ~n part with a c~ntributian of C1ty Na~s »g M~tigat~on and I~c~us~4nary ~o~st~g fu~~s. Subsequently, the ~rivate developer paid the City ~1,232,029 for the util~zed a~r rights. The City tonsiders th~s payment a repayment of th~ pre~~ously cantributed Housing M~t~gation and Inclusianary Hous~ng f~nds and as sucM fias reserved thzs amaunt for future expenditure for add~tional low and moderate inco~e housing. Mall Assessment District ~ ~ ~ ! 1 ~ ~ On August 19, 1986, the City Counc~l adopted Council Resalut~on No. 7286 (LCS} whi~h formed the Third Street Mall and Downtown Assessment Q~strlct. Annual `~ Assessment revenues derlved from the ~istrict f~nance the annual debt service payments for the C~ty's certificates of ~articipatian (COPs), Series 1986. The COP praceeds have been used to make variflus improvements to the City's T~ird Street Mall and peripheral areas. The S9fl4,715 reserved represents the ~ difference between actual assessment revenues received since f~scal year 1987-8$ and actual debt service payments made. These reserved funds wi~l be ~sed ta help finance a portian of future debt serv#te ~ayments. ~ Reserve for General Emergencies and Office Equipme~t These reserves have been establzshed by the Re~t Control 8aard to prov~de far ' operational uncerta~nt~es. _~ Library General Obligatio~ Bonds - Qn April 10, i990, the City ~ssued E4.5 million of general obligation bonds for ' the acquisit~on and ~mpravement of land far park~ng and/or additional , ampravements ~n connect~on with the 5anta Monica Publ~c Library Main Sranch. Rs i af June 30, ~992, S1,264,711 remains ava~lable. ~- - 2 $ - ~ ~ CITY OF SAHTA MONIGA, CALIFORNIA 0 Notes to Cambined Financial Statements, Continued Land Held fnr Resale an October I3, I989, the City acqu~red, for 517,270,791, 9.5 atres of la~d as the site for a rail yard that would be req~ired if the proposed Los Ange~es - Santa Monica light rail line is con5tructed. The purchase price and associated C05~5 were faRded by drawi~g ~own 310,49Q,Ofl0 ~atnta~ned i~ a ra~l reserv~ acc~unt held by the Los Angeles County Transportat~on Cortunissia~ (LACTC) and a lang-term loan fram the LACTC in the amount of 56,900,000. Pursuant tn the terms af the transactian, the la~d acq~~red ~ust be ~ti~2zed for t~e preposed rai7 yard. Shou~d the raii line not be built, the land acquired will be reso~d with the proceeds repayable to the LACTC and the City. As of June 30, 1992, 55,242,675 re~ains ta be repaid ta tfie LACT~, x~~ch represents the dzfference bet~een the "Land Held for Resale" asset and t~e "Advance froip Ot~er Funds" liab~lity (from the Transpartatian Fund's Rail Reserve). As such, this amount does not constitute "availab~e spenda~le resources" and is t~erefore reserved. 7he City af Santa Monica purchased ~and at 2827 Linco~n/827 Ash~a~d for the future develop~ent of farty-five affordab7e housing units. The purchase price of the la~d was 53,970,462 a~d was financed through a 5923,000 State of Cal;furn~a Predevelopment LQan, a ioan of S3Q0,000 from the McDonald`s Corporat~on (prev~ous owners of the land} and 52,747,462 of Czty funds. The purchase af this la~d was recorded as an expenditure in the 6eneral Fund and as an increase tn Genera~ Fixed AsSets. 0 0 irt Fisca~ Year 19g1-92, the C~ty e~tered ~nto a a~spositfon and Aeve~o~rne~t Agreement and transferred the land from General Fixed Assets to Land Held for Resale. ~hen the affordable housing units are canstructed, t~e land will be sold to the deve]oper and the two loa~s w2~) be re~a~d. As of June 3~, 1992, 52,747,462 ~anst~tutes the difference between the "Land Held for Resale" asset and the "Notes Payable" of 5i,223,000 13ab11ity. As sUCh, this amount does nvi constitute "ava~lab7e spendab~e resour~es" an~ is therefore reserved. A~rport This reserve represents funds which may have to ~e loaned ta the A~rport Fund as the result of var~ous 1ega1 settlements and/or for the f~nancing of certa~n ca~ital improvements. This reserve was authar~Zed in t~e C~ty`s adopted fiscal year 1992-93 budget and in subsequent legal settleme~t actions of t~e C~Ly Cauncil . Reserve far American Youth Hostei Qn April 12, i990, the C~ty loaned 5500,OOD from the General developer pa,yr~ent), znterest free to American Youth Hoste~, fi~ancing construction of a 200-bed international youth Repayment of the loan is to begin ~n ~996 in 22 ~ns~all~ents. Rece~vab~e amaunt does r~ot eor~st~t~te °avar~able s~endable therefare reserved. Fund (f}nanced by a Inc. to ass~st ~n hastel facil~ty. As such, th~s ~Vflte resources° and ~s - 24 - ~ ; CITY OF SANTA MONICA, CALIFURNIA ; 1Votes to Combined Financial Statement5, Continued I ~ o AB702 Reserve ~ As part af the State's f~scal year ~991-92 budget settlement ~n July 1991, a b~ll ~ was signed into law which elzminated mult~p~e cost-of-l~ving fun~s ma~nta~ned by the Publ~c Employee's ~etirement System (PERS}. The law, referred to as Assembly B~11 {qBj 702, returned these "s~rplus assets" tfl FERS employers by re4uir~ng ~ that ~ERS emplayers (effective December 1, 1991) use these funds to finance current employer ct~ntr~butions. The City's share of these AB 702 funds totaled ~1,421,712. Dur~r~g fista~ year 1991-9Z, the C~ty's General Fund did nat make ~ payments to PE~S totaling 52,b89,707. The d552t resulting fro~ not making these - payments was reserved pending C~ty Counc~~ decision on how to use these funds_ S~milar reser~es have been establ~shed 1~ var~ous otk~er fur~ds. ; I. Com~ensated Absences ~~ It ~s the pol~cy of the City to accrue for compensated absences ~n accordance w~th ~ genera~ly dCC~~1t@CI accounting pr~nciples. The C~ty has accrued one-half of this ~ l~ability ~n the appl~cable funds, s~nce it as antic~pated that th~s portion of the l~ab~lity w~ll be paid with available spendable resources. The C~ty has retorded ~ one-half af this ~iabi~~ty 3n the long-term debt account group, since it 3s ~ ant~cipated that this portian af the liabil~ty w~ll not be paid with current resources. _ J. 7ota1 Columns on Co~nbined Statements-Overview Total ~olumns on the cambined statements-a~erview are captioned "memorandum only" to ? ind~cate that they are presented or~ly ~o ~acilitate f~nancjal ar~alysis and are nat ~ necessary for the fair presentation of the general purpase financ~ai statements zn conformity with genera~ly accepted accour-ting prlr~ciples. Neither is such data comparabie to a consoltdation. Interfund eiiminatlons t~ave nat bee~ made in the ~ aggregatian of this data. J K. Reclassifications ~ Certain rec~assifications have been made to the m~maranciu~ only totai ar~ounts as af and for t~e year ended .l~ne 30, ]991 in order to be co~sistent with current year's ~ presentat~an. {2) Cash a~rd i~vestments Deposits As of Jur~e 30, 1992, the carryi~g amount of the City`s depos~ts was S8,122,9~3, and the bank balanee was 38,607,552. Tf~e entlre amo~nt of the bank balance was eit~er ' covered by federal depository jnsurante or c~llatera]~zed w~th collateral held by the pledging financial institution's trust department or agent ~n the C1ty's name in ~ accordance with prav~sions af the Califarnia Govern~nent Code. -~ - 3 0 - ~ CITY QF SAHTA MONIGA, CAL1F(?RNIA Notes to Combined Financial Statements, Continued As of June 30, 1992, both the carry~ng amount and bar~k balances af Trustee-~eld _ deposit were 5160,I78 7hese deposits were ur~~nsured and uncollateralized a~aounts held in the C3ty's name iiowever, trustees are lega~ly responsable via app~~table trust agreements to the C~ty for the safekeeping of these funds. F Investments ~ The City manages its pooled idle cash investme~ts under the guidelir~es of the State of California Government Code 536U1 whtch spec~fically authorizes investments in the ~ fo~iow~ng 9nstr~nner~ts: treasury b~7~s, treasury notes, Federa~ agency sec~rities, bankers' acceptantes, non-negotiabie certificates flf depo~it, conmercial paper, negfltia6le certificates of depos~t and re~urchase agreements. All investaaer~t activ~ties are canducted witi~ banks and savir~gs and loan associations specifically ~ approved by resolution of the Sar~ta Ma~ica City Countil. ~ Investments af cities and other state or lotal governments are Glassified in three categories to give an indication af the level of cusiodiai risk assumed by the entity at year er~d. The City's investments are categorized in the followir~g tab7e: ~ o Category 1- Includes investments that are insured or registered or for which t~e securities are held by the City ur ~ts agent (a~her than the institution through which the City purchases the securities} fn the City's name. ~ o Category ~- Includes uninsured and unregistered ~nvestments for ~rhich the securities are hel~ by the counterparty's trust department or agent ~n the City's name. t ~ o Category 3- Includes un~nsured and unregistered in~estments far wh~ch the sec~r~ties ar~e he~d by the counter~party ar by ~ts trust departmerrt or agent b~t , not in the City's name. Cash Equ~valents ; Cash equ~valents are def~ned as shart-term, highly liquid ~n~estments that are both ~ readi~y convertible to known amounts of cash ar~d so near their maturity that they present insign~fican~ risk af changes in value be~ause of changes in ~nterest rates. ~ ~. ~~ 4 ~ ~ L i ~ L - 31 - i ~. CITY OF SANTA MONICA Notes ta Combined f~nancial Statements, Continue~ 2 Cash an~ ]nvestments continued ~.-.__.___~_....~ ----5.~..~ i w N t ~ Cate ar 1 ~~ Cate o__r~ 2 ~n r d ~ Cate ~ 3 ~ d ~ nsure or su e ; in ure ; n Carrying Market Registered Trust Dept. Not Held in Amount Value He~ d by the City C~t ~ame City ~Var~e June 30, 1992 June 30, 1992 City-hel~ Investments; -' Federal Agencies {b) S 51,I99,20i - - 5l,]99,201 ' 51,456,257 Treasury Biils (b) 3,838~b11 - - 3,838,61~ 3,819,993 Treasury Motes (b) 41,C45,892 ~ - 41,645,892 4~,5$3,125 Trustee-held Securities: Treasury Bills (b) - - 13,~495,506 13,495,506 13,495,50G Treasury Notes (b) - - 14,b06,4Q6 14,fi06,406 14,613,979 Treasury Bonds (b) - - 215,234 215,234 217,375 Federal Agencies (b~ ~, - ~ 743,137 143,737 75~,661 Corporate Bnnds (Cemetery Perpetua~ Care Fund) - 307,877 - 307,877 3~O,t02 Common and Preferred Stack (~emeter~y a~~ Mausoleum Perpetual Care Fund} - 1,245,774 - I,245,774 2,464,229 Carrrnercial Paper - 8,653,081 - 8,653,081 8,653,Q81 , 60, 8 3`~3~5~I, ~~ 5~~, d~~$ ~ , ~ ~os Rngeles County Temparary Investment Pool 14,598,25b 10,598,256 Deferred Compensation Assets (a): Guaranteed investment Contract 16,i52,640 16,152,6Q0 Bond Fund 96,703 96,103 Stock Fund I,230,084 1,230,084 Money Market Fund ]99,873 199,8T3 Annuities 139,992 139,992 State Treasurer's Local Rgency Investment Fund 12,148,152 12,748,152 U.5. Treasury Fund 4,768,819 4,768,819 Money Market Fund 2,848,927 2,848,927 Tota) Investments: SI84,734,165 (c) ~1$5,247,654 ~y 41Wr~~ ~'".'~r. `n..~w ~ ~ ~ ~.Fr~.~w ~'^~Y ~~ v.~.......r M„~.~..~ M wnrwn~ ~ ~ 4 w+wj _1 .w..~w~M r,,,.,.~..~ r.......^ -"--~. ...~ ~....,,.,.~ ~..,. ...~ r,~-,~ ~ . ~ '~~ r~ ~~ ~~ ~~ ~~ ~,`~,''~ '""'""'~ ~' ' , ,.;,~ ~ (a) Employees have the option to c#~oose a~ong various investment alternative5. (b) Represents securities held through a bonk entry system that eliminates the need for physical1y transferring bearer-form paper or registering securities by using a central depository facility. Governmental Accounting Standards Board pravisions require that boak entry securities for trustee-held securities be clas5ified ~n Category 3 even thaugh trustees are legally respons~b~e via app~~cabie trust agreemerrts to the City for the safekeeping of these securities on behalf oF the City. (fi? Reconcilaation of this amount to total cash and investments as shown on the Combined Balance Sheet ~s as follaws: Combined Balance_Sheet Cash and Investments 3 98,991,714 Restricted Cash and Investments 83,421,886 ~ue fram ~.ACTC, Restricted Cash 1a,598,256 Total Cash and Investments ~ 143,011,916 1 Carrying amount af tata] invest~-ents S 184,734,7fi5 W Carrying amount of deposits 8,122,973 ~ Carryi~g amvunt and bank balances of ~rustee-held deposits ]60,118 Total Cash and Investments S 193,Q11,916 ~ 1 CiTY OF SANTA h1QHICA, CALIFORNIA ' ~ Notes to Cflmbir~ed F~na~ciai Statements, Continued .~ (3} Designated Balances - GaNN L~m~tatian ' ~ On June 25, i991, the City Caunc~l approved the C~ty s ~AFiN L~~it of ~11,750,466 €or fis~al year 1991-92. Subsequently, thls lim~t was re~~sed by tfie Ctty'S voters on June 2, 1992 to ~81,444,846. Based on the f~scal year 1991-92 City budget, it was estimated that fiscal year 1991-9Z appropr~atian5 sub~ect to 1lmitation would be ~ 571,023,~28. Based or~ actua~ fzsca~ year 2991-92 nFeratiRg res~~ts, act~al appropriatians sub~eCt to limitatior~ were 5~9,9~I,14b. Under t~e pravisians af Article XIIIB af the 5tate Const~t~t~on, a city is authorized at the end of a f~scal ~ year to appropriate the difference between attual appropriations sub~ect to ~imitation and the spend~ng l~mitation formu7a speczfied by the State Constitutian (~ommonly ca]~ed the GRl~t~ ltrn~t). Qn ~}~ne Z3, 2992, the C~ty Ca~nc~l by Reso~ut~on 8422 adjusted appropriations ~n tne General Fund and the Parks an~ Recreation Spec~al ~ Revenue Fund to actual expenditures as determ~ned sn the GAFR excl~sive of Federal and State grant appropr~atior~s and appropr~ated tf~e d~fference between these ad~usted appropriations and the City's GAHlV Lim~t to GAN~i acCaunt designat~ons ~n each fund, to ~ ~ the extent a~' avai]able funds, but not to exeeed ~i0,421,818. Appropriat~ng available - funds in th~s manner ~ncreases the abll~ty of the C~ty Council to respond to the serv~ce needs of the c~t~zens af the City u~der subsequenL years' GA1~N Lim~ts. ~ The follow~ng indi~ates the fiscal year 1991-92 budget praor to the re~erenced Counci~ action a~d the fysca] year ]991-92 budget after ths referenced Counc~l actinn ~used for CAFR purposes and far purposes of calculating the GAN~! designation amounts} ~n the ~ two funds affected: Parks and General Fun~ Recreat~an Fund ~ Budget Budget Budget Budget Expenditure CateQory befare after before a~'ter ~ - General guvernment~ S 12,492,245 S I1,339,440 S 3 Public safety 34,OI1,3lb 32,333,07~ - - General 5ervices 20,615,55b 13,714,907 - - ~~ Parks and recreation 11,325,670 9,352,459 fi84,588 34$,161 ;,} ~ibrary ~,5~0,288 4,9IQ,143 - - Retfrement 9,961,457 7,838,572 - - lious i ng and comnun i ty ~ deve~opment 24,596,834 ]8,052,320 - - ffther/debt serv~ce „20,3fi3,238 10,895,660 - - Sotal S138,907,6U4 5108,43~,572 Sfi84,588 5348,1b1 _~ ~ ~ ~ , ~ ~ - 34 - ~ ~ CITY OF SANTA MONICA, CALIFORNIA E ~ Notes to Com~~ned financ~al Statements, Eor~tinued As a result of Council Resolution 8422, the follawing changes ~a~e been subjected to the Gity's fiscal year 1991-92 GANN Limit and can be expended in fu#.ure fisca] ~ears free of fut~tre fiscal years' GANN Limrts: Fiscal Year ~ascal Year 1990-1991 I991-92 Item Rrr~o~r~t Amount Char~c~es ~ ~ ~ ~ ~ ~ l ~ General fund: Specific continuing ca~ital projects reser~e Desiqnation far future expenditures Civic area development reserve Mall assess~nent district reserve Airpvrt loan reserve A8702 Reserve Reserve far encumbrances Homeless Programs Parks and ~ecreation Fund- ~es~gnatior~ for future expenditures Total ~4} ~raperty Taxes S 7,954,740 S b,069,003 S(1,881,737) 9,182,SD4 5,641,534 (2,541,270) 3,540,590 1,545,4t9 4,829 693,206 9€~4,7I5 ~ 213,509 3DQ,000 981,999 681,999 6b,830 2,689,707 2,622,871 1,833,710 1,718,94b (114,764} -D- 3~0,000 30D.OOtI 325,834 344,7fi3 18,929 521,893,714 523,196,086 S {697~628~ Real praperty {iand and permanent~y attached improvements, including m~neral rights} and personal (movabTe) praperty are subject to the property tax. All property except utility, ra~lroad and certa~n ~ntercounty property ~s assessed loca~ly by the cour~ty assessar. These exceptians are assessed by the State Board of Equa~izat~on. The local assessment roll is d~vided inta two parts, secvred and unsecured. The secured roll consists of all property, t~e payment of tax on which is "secured" by a lien on reai property owned by the taxpayer in that county. The lien date ~s March l. Persanal property car~ a~so appear on this roli if ~ts owner owns real property in the caunty. 141~ state-assessed proper~ty ~s a]so entered or~ the ~aca] secured rv]~. T~e unsecured roll cons~sts of personal property and nanfee real property interests {possessory interestsj of taxpayers who do not own r~ai pro~erty in the co~rnty on wh~ch a lien can be ~mposed that the assessor believes will secure eventual payment of t#~e tax shauld it became delinquent. Art}tle XIIIA o~ the State Eanstitution {Proposition I3, approved by voters in J~~e 1918) limits the reaT property tax ra~e to 1% of fuil market cash value p~us rates ~mposed to fund ~r~debtedness appro~ed hy the ~aters. ~~e 5tate Constitution was amended in 1986 (Praposition 45} to allow lacal go~ernments to increase the property tax rate abave 1~ for the period necessary to pay off new general obligation bonds under the fallowing conditions: twa-thirds of those vot~ng in a lacai e~ection must approve tt~e issuance of the bonds, and t~e money ra~sed through the $ale af the bonds must be used exclusive~y to ~urchase or ~mprove real praperty. - 3 5 - ~ CITY OF ~AHTA MONICA, CALIFQRI~IA Notes ta Cvmbined Financiai 5tatemen#.s, Cont~nued Loca~ly assessed real property js appraised at the i975-75 "full cash value," called ' the base year val~e, and is ad~s~sted each year after 1975 by the change ~n the cons~roer price ~ndex {C~I), r~ot to exceed an increase of 2%. ~fhTs property Ts ~ reappraised to curre~t full vaZue upon either: {a) a change ~n ownersh~p or (b} new co~struction, as of the date af such transactaon or complet~on of construct~on (anly the new~y constructed portion of the property ~s reappra~sed). jhereafter, 3t r-~ cont~nues to be increased annua~ly by the change 1n the CPI, not to excee~ 2%. ~ Pr-operty ~rttich dec~ i~es be~ew ~ts base year value zs reassessed to ref~ect tf~e ~awer val~e. ~ Lacally assessed personal property is appratsed the saroe as real property was prior to Praposit~on 13, ~.e., at full cash value each year. The rate applied to the roll ~s the sarr~ as the secured ro~~ property tax rate tI% p~~s ~n~ebtedr~ess}. ~ ~raperty taxes are levaed by the County Assessor by March 31 of each year for the - fisca~ year 7mmed~ately fo~lowing ~uly 1 t~rou9h June 30. A1] ~ev~ed pr~perty taxes are due an ~lovember 1 each year but may be pa~d ~n trvo equa] ~ ~nstal7ments. The first ~nstallment is considered delinquent ~f not pa~d by December 10, and the second installment is con5~dered delinquent ~f nat paid by Apr~l 10 each year. :~ Distribut~ons of co1]ected property taxes to the C}iy are made by the ~aunt~- in accordance w~~h the followir~g schedule. ~ Secured UnSecured ~ 40% of tax levy December 80°~ of tax levy~ August 1Q°G of tax levy January Baiance of first insta~lment ~4arch-AuguSt collections* October coliection5 February ~ 8~~ ~f adjusted tax, iess September-Dece~nber previous remittance April collett~ons March 8alance of secand iRSta~lment ~ ~ollections May January-June col~ectians A~tgust BaZance of third insta~iment coliectians Ju~y Balance of tollections for ~ flscal year August ` * Distrlbutfon of 8090 of unsecured ~ax 3evy and March-Rugust unsecured coiiect~ons js ~ in November far the Redevelopment Agency Pro~erty taxes rece~vable at Jur~e 30, 1992 represent delinquent praperty taxes that ~ were collected w~thsn 60 days of year-end Other del}nquent praperty taxes are nat s~gn~f~cant. ~ , :~ ..~ ~ ~, - 3 6 - ~ ~ ~ .-- CITY OF SANTA MOHICA~ CA~IFdRNIA E Notes to Combined Financial Statements, Car~tinued ~ -- ~5} Fixed Assets ~ A summary of changes 3n general fixed assets for the year er~ded June 3 0, 1992 is as fol i ows : r ~ 8alance at $alance at July 1, 1991 Add~t~ons aelet~ons June 30, 1992 ~ f.ar~d ~ 8,432,~a7 S - E - S 8,432,2~7 Buildings 32,957,089 15,715 - 32,982,854 Improvements other ~ than b~~2dings 31,474,735 5,222,371 21~,289 36,485,8]7 F~athinery and equipmer~t 1~,fl90,045 1,585,887 454,877 16,221,05~ Canstruction in ~ progress 34t644,334 13,549,14b 6,708,078 41~485,398 ~ Total 5122,608,30fi 520,313,i79 S 7,374,244 ~135,6a7?241 A su~ary of construction in progress, by funding source, is as fallaws: ~ Project Req~ired budget Expended to fut~re ~ author~zat~an June 30T 199i Cammitt~d finantrng Ger~era7 fund S5G,460,64~ S31,a14,5$~ S 3,31~,497 None Beach fund 538,550 506,250 5,878 None ~ ~edevelap~ent fund 1,669,112 183,b39 NDh2 M~sce]~ane~~s grants ~ f~tnd 4,595,7~1 I,892,782 725,4b6 None ~ Gas tax fund 4,274,614 1,556,290 Ib,235 None Comm~nity develo~n~ent block grant fund 2,g45,331 1,988,885 - None ~ Recreation and parks fund 902,675 382,97i 85,299 None ~ ~_ Tota~ ~71,286,681 544,085,398 i 4,155,375 ~ ~_ ( ~_ ~ - 31 - ; ~ ~ CI~Y OF SANTA ~fDNICR, CALIFOftNI+4 ~ Notes to Combined F~nanc~al Statements, Cor~tinued ~~ A schedule of general fzxed assets, by source, is as fa llows: ~ Improvemen#.s Mach~nery other than and ~and Bulldings bu~jdings equipment ~ General fund S 8,087,6fi4 ~I7,987,~70 SI9,170,468 S14,481,753 Beach fund 1QI,300 412,407 433,558 701,Z4~ Redeve]apment fur~d 1,000 3,378 8,597,054 - ~~ Miscellaneo~5 grant5 = fund - 700,000 1,678,951 T9,714 Gas tax fund 87,OOQ 52,570 4,~TT,85$ - Commun~ty deve3opment ~ block grant fund 155,143 43,735 1,272,018 - Recreation and parks fund - 38, 400 2fi~, 7I8 65, 755 ~ Rent contra~ f~r~d - 25, 247 90,175 77~, fi50 Spee~al ~ra~ect fund - 444,746 - 117,927 Capital lease - I3,275,211 - - ~ Tot~1 ~ 8=432,107 532,982,864 536,4$5,817 516,221,055 A surr~ary of enter~r~ se fund ty~e praper~y pl ar~t ar~d equ }pment at J~ne 30, 1992 ~ s a5 follows: ~and 3 24,380,372 j Buildings 29,021,508 ,j Impravement other than build~ngs 55,023,775 Machinery and e~uipment Gonstructior~ i~ ro ress 43,959,945 45 1OZ 772 ~ p g , , Tatal 5187,288,312 l t L d d i 4 ~ ess accumu a e eprec ation 55,6 3~3Q1 Net Total 513~~645,071 ~ (6~ Restricted Assets Restr~~cte~ assets ~n the enterprrse fur~c~ type co~s~si of an ~r~div~dual enterpr:se ~ fun~'s equjty in pooled cash and investments. ~he prir~cipal fund ~nvolved is the transportation enterprise f~nd, where such assets relate to contrtbuted capital restricied for future tnvestment in fixed assets. In addltion, the City's governmentai , fund types ha~e restr~cted assets held by a trustee in connection w~th var~ous bond ` issues, various ~n-lieu fees paid to the City per City ardinances and deve~opment " agreements ar~d amounts restricted due to grant agreements. j ~ t .s ~ _J - ~8 - # ~ CITY D~ SANTA MONiCA, CALIF~RNIA Notes ~o Combined F~nanc~al Statements, Continued (7~ Interfund Advanees T~e folIowing table summarizes ~nterfund advances to/from amounts at 3une 3a, 1992: Advances to~from ReCeivables ~ayables General Fund 5petial Revenue Funds: Ccm~aunity Development Block Grant F~nd Parks and Recreation Fu~d Seach Recreation Capital prajects Funds: Redevelopment Agency Pro~ects Fund Enterprise Funds: Solid WaSte Management Fund Airport Fund Pier F~nd Cab~e Communicatians Fund Transportation Fund Tatal {8} Reterement Plan Plan Descript~on 535,156,314 512,028,116 3,192,218 - 400,000 - - 96fi, 412 - 1b,358,200 383,205 - 2,4b7,436 - 18,1fl0,bfi5 - 462,614 12,028t116 - 550,776,fi48 5~0,776,b48 T~e Cit~ contributes to the State of Califarnia Publ~c ~mplayees` ~etirement System (PERS}, an agent mult~ple-employer pub~~c empio~ee ret~rement system that acts as a common investment and adn~~n~strat~ve agent for citjes in the state of Ca~ifornia. 7he City's payro~l for employees cavered by PERS for the year ended June 30, 1992 wa5 555,989,825. ~otal payr~ll for the City for the year ended June 30, 1992 was S17,494,459. All full-time City employees are elig~ble tfl participate ~n PERS, with benefits ~ vesting after 5 years of serv~te. Employees are designated as safety [police aff~cers, f~refighters and others designa#ed as safety by 1aw) ar mistellaneous (all otf~ers~. Safety employees who retire at or after age 50 with S years of credited service are entitled tn an annual retirement benefit, payable manthly for l~fe, in an ~ amo~nt equaT to a benefit factor mu~t~piied by their fina~ compe~satian which is the average monthly pay rate for the last consecutive }2 months of employment (or any 12-month period in wt~ec~ pay was higherj. The bene~~t factar is an amount equal to ~ between ~.096 and 2.7% multipiied by the number of years of credited emplayment. 1'he ~ perce~ta~e ar~ount is based ~po~t tt~e age af the e~ployee at ret~rement, ~ncreasi~rg fror~ age 50 ~o age 55. -39- ~ CITY OF SRNTA ~10NICA, CA~IFORNIR '• ~ Notes to Com~~ned Finaneldl Statements, Continued ~fiscellaneous members who retire at age 50 w~th 5 year5 of credited servjce are ' entitled to an annual retirement benefit, paya~Te montfily for 1ife, ~n an amou~t equai to a beneflt factor mult~plted by their final campensat~on. F~nal campensat~on for i~ ~~ sce7 ~ ar~eo~ts r~embers ~~ the aver~age r~onth~y pay rate for the 1 ast consec~t ~ ve 36 ~onths (ar any 36 months during wh~ch the pay may have been higher} of employment. The be~ef i t factor i s an ar~ount equal La between i.092% and 2. 4189'o mul ti pl i ed by ~he ~ number of years of credited employmen~. ~he perce~tage amount ~s based upon the age of the empioyee at retirement, increasing from age 'S0 to age 63. The PERS also pro~ides death and disab~l~ty benefits. These henefit provisions and F~ a~l other requ~rements are establishe~ by state statute ar~d ~ity ordirtar~ce. PERS requ~res that miscellaneous employees contrib~tte 7~ and safety emp~uyees contrtbute 99b of their ann~al salary to PERS. However, th~s benefit, l~ke a11 others, ~ is subject to col~ective bargalning. A~1 b~t one of the City's bargaininq un7ts has negotiated for the C~ty ta contribute this portior~ on behalf of the em~loyee. The C~ty ~s requ~red to cor~tr~bute the remaining amounts necessary to fund the ber~ef~ts ~ far ~ts members using the actuaria~ ~asis reco~rnended by the PE~S actuar~e5 and ~ actuar~al cor~sultants and adopted by the PERS 6oard of Adm~nistration. For f~scal year I991-92, employer contribut~on rates were as follaw5: ~ MISCE~LANf0U5 SAFETY CA~EGqRY ANNUAL RA~E CO~IPQNENTS CATEG~RY FIRE POLICE -~ A. Normal cost rate 5.983% 15.399°6 13.753% B. l~nf~nded liability rate 4.783 3.179 3.204 _~ C. 7ota1 requ~red 6.766 18.578 1fi.957 ~ Fund~ng Status and Progress Ir+ order for asers af governnrental ffnartcia~ reports to assess the progress made in accumulating sufficient assets ta pay benefits when due and to make comparisons a~ang ~ employers, Governmenta~ Actounting Standards Board Statement No. 5 requires d~sc~asure of a standardiaed measure called the Qension Benef~t Obligation {PB~). This measure ' ioyer is independent of the actuarial funding method used to deter~ine emp ~ contributions. The FBO ~s the portion af tfie aetuaria~ present value of pro~ected pens~an benefits (zncluding projected f~t~re salary increases) est~mated ta be payable in the future as a resu7t of em#~loyees' serv~te to date. ~ The pens~~n benef~t ob]~gat~~n was ~ampuied as part of an act~ar~al va]uat~on performed as of June 30, 1991. 5~gntficant assumptions used in ti~e valuation include: 1) a rate of return on the ~nvestment of ~resent and future assets of 8.75 percent a ~ year compounded annually, 2) pro~ected salary increases of 4.5 percent a year ~ tompounded annual~y, attr~butable to in~lation, 3) addit~onal salary increases of 0.75 percent a year attr~butabZe to across-the-board salary inGreases, 4j 1.T5 percent a ; year attr~butable to merit ra~ses for miscellaneo~s employees and 2.D0 percent a year .~ attributab7e to merzt ra~ses for safety employe~s and ~) post-retirerrfent ber~efit increases based on the contract w~th the member agenc~es. - 40 - ~ r CITY OF SA~ITA MONICA, CALIFORN]A ~ ~ r ~ ~ C i ~ t _ ; ~ ~ ~ 1 Notes to Combined Financial Statements, Cont~nued fio~al unfunded pension benef~t obl~gati4n applicab~e to the Caty's employees was 56,349,861 at June 30, i991, as follows: Pension benefit obTigation: Retirees and benef~c~aries currently rece~v~~g benef~ts and terminated er~ployees nat ye#. receiv~ng benef~ts 3 77,~90,305 Curren#. employees: Accumulated employee cantr~butians including allacated i~v~stment earr~~ngs 44,841,8Q2 Er~ployer-financed vested 50,Q55,876 Employer-financed nonvested 1,990t3bfi Tota~ pension benefit obl~gation 113,978,350 Net assets available for benefits, at cost (market value is ~285,899,994) 167,628,489 li~funded pension benefit obl~gation S 6,349,$bl Actuarially Determ~ned Contr~but~on Requirements and Contribution ~lade PERS uses the entry-age-r~ormal-actuarial-cost method, wh~ch is a pro~ected benef~t-~ost meL~tod; that ~s, it takes inta account those benefits that are expected to be earned in the future as we1~ as those already accrued. Accarding ta thls G~S~ method, the norsnal cast for an employee pens~an benef~t o~i~gatior~ is t~re ~evei arrsount which wou]d funci t~e p~^a,~ected ber~efit if 1t were pa~a annually from the date of emplayment until retirement. ~~RS uses a mod~f~cat~on of the entry-age-cost method in which the employer's tatal normal cost ~s expressed as a leve] ~ercenta~e of payroll. PERS also ~s~s th~ 7eve~-percentagQ-of-payro3l ~ethod io amartize any unfunded actuar~al 1~a6~lities. The amort~zatiar~ periad of the unfunded actuar~al iiability ends an the year 2040 for current service benef~ts and ~r~ the year 2001 for prior service be~efits. The signif~cant acLuarial assumptians used to campute the actuarjally detet~ined contribut~on requirement are the saroe as those used to Gompute the pension benef~t obligation as previausly described. The contribution to PERS for 1992 of 510,024,280 was made in accordar~ce w~th actuari al 1y determir~ed requi rements computed tl~rough an actuarial val ua~i an performed as of June 30, 1991. ~he contribution consisted af (a~ 34,805,149 narmal cost (8.4% af current covered payroll} and (b~ S5,219,131 amortization of the unfundecf actuar~al accrued liabiiity t9.2% af current covered payroli). The ~Tty contributed £5,652,017 ~9.9~ of current covered payrol~}; employees contr~buted 54,372,263 (T.7% of c~rrent eovered payroll). The actua~ employer contributions were reduced by ~3,275,640 due to perr~itted usage of s~rp~~s assets. - 41 - ~ C1TY OF SAt~TA MONICA, CALIFORHIA Notes to Comb~ned Financ~a~ Statements, Contanued Trend Information Trend 3nformatian g~wes an ind~cativn af t~e progress made in accumulating suff~cient assets to pay benef~ts when due. The City has ~een informed by PERS that systemw~de ten-year trend information may be fnund ir~ the California P~b~ic Emplayees' Retirement System Annual Report. Until ten years af City of Santa Manica data are available, as many years as are a~ai~able w~ll ~e presented. W~thin the City's f~nancial statements, ter~ years of hzstor~ca~ trend ~nformat~on are requ~red. However, f~scal year 1986-87 i~ the f~rst year that this actuarial ir~format~on has been made ava~~ab~e by P~RS. Therefore, the availab~e trend informat~on is summarized as fa~lows (in thousands): Unfunded pension Cvntr~- beneftt butions abligat~on as a Unfunded Est~mated as a Total % of Net assets Pens~on Pensjon A~r~ual ~ of C1ty annual F~scal ava~lable benefit Percent benef~t covered eavered contri- covered year for benefzt obl~gation fun~ed obl~gation payroli payroll butions payroll 1981 ~ 1~7,400 S]26,700 84.8 S 19,200 ~40,900 47.1 S 6,994 17.1 1~88 i2I,100 135,700 89.2 14,600 43,100 33.9 5,665 13 I 1989 138,2Q0 147,100 94.Q 8,800 4b,300 i8.9 5,602 1i.9 199{1 155,404 163,500 95.0 8,100 50,800 16_0 4,860 ?-6 199I 1b7,6~0 173,940 96.4 6,300 55,000 I1.5 4,52T 8.2 1992 H/A N/A N/A N/A 57,004 N/A 5,C52 NfA As-Needed Employees Ret~rement Plan Effective January 1, 1992 the City established a defined benefit retirement ~lan far ali employees wha are class~f~ed "As-Nee~ed" and who are nut covered by PERS or c~rrent~y receiving benefits from PERS or STRS. This plan is governed by the rules of 5ection 457 of the Internal Revenue code. Vest~ng is full and ~~aned~ate. The fund~ng ~ethad is "pay as yau go" with emplayer contributions. 3here are n~ employee contributions. Lump sum ber~efits are payable to el~gible employees upon termination of employment w~th the Clty Lump sum payment calculat~ons are based on earnings s~nce January 1, 1992 and employee's age at time of separat~an from City employment. Lump sum bene~~ts are 2~5~ payable an an annual bas~s to actave employees who have attained age 1~ 1/2. No death benef~ts are payable at any t}me. {9~ Deferred Comper~sat~an Plan During the f~scal year 1974-75, the Cjty Cnuncil adapted ReSOlut~on 457fi estab7ishing a deferred compensat~an plan for the benefit of jts eljgable emp~oyees, as def~ned. Such plan was qualif~ed under the appl~cable ~ravis~onS of the Federal Ir~ternal Revenue Code and comp~zes with the provis~ons of Se~tions 53212 and 53214 of the Government Code of the State af California. In accordance with Internal Revenue Code Sectlon 457, a~l assets ~n the plan remain the property of the Cjty until pai~ or made _~ } ~ ~ ~ ~ ~ a ~ - 4 2 - . ~ ~' 4~ ~ CITY OF SANTA MONICA, CALIFQR~IIR ~Y Nates to Combined F~nanc~a~ Statements, Centinued ava~7ab~e to part9ci~arrts, s~blect only to tl~e c~a~ms of the City's ger~eral credrtors. ~ The C~ty has no l~ab,l~ty for losses under the plan but daes have the duty of due care that would be required of an ordinary pruder~t ~nvestor. The City bel~eves that ~t ~s ' unlikely that it w~11 use assets ta sat~sfy cla~ms of genera~ tred~tors jn tt~~ future. ~ The pr~mary ~~rpose af the p]an ~s to attract and hold we3]-quali~~ed C~ty employees i_ by perm~tting Lhem to make special prov~sions for monthly pay~ents upon ret~res~ent. The City has full power and author~ty to admen~ster and to adopt rules and regulations ~ far the pTan. Under certain circumstances, em~~opees may modify their arra»gements with the plan Lo pravide for greater or lesser cantributions or to terminate their part~cipattion. I~ participants retire under Lhe plan or terminate service with the City, they ~ay be -' eligible ta receive payments ~nder the p~an in actordance with the provistio~s thereof. - In the er+ent of a serious financ~al ernergency, th~ City may approve, upon request, ~ withdrawals from the plan b,~ the particlpants, along with their allocated contributions Accumulated deferred co~pensation fu~ds of 517,8i9,292 have been segregated in various ~nvest~ent acca~nts w~th P~B5C0. A corresponding ~~ab713ty has been established to accaunt for ar~ounts due to plan part~ctpants. ~ The fflllow~ng 3s a summary of the increases and deCreases in the fund as5ets far the year ended J~ne 30, I992: ~ 8aiance, J~~y I, 1991 S 14,22I,046 ~ Employee contrlbutions 2,922,916 Net investment ear~tings 1,4b0,946 P~yments to part~cipan#s (785,616) ~ Ba~ance, Ju~e 30, i992 S i7,814,292 At June 3a, 1992, the aroour~t payable u~der ca~tract d~stribution to eligibie ~ par#.acipants and be~efaciaries totaled S1,512,704. Individua~ agreements stjpu~ate ~ payrrrent pe~zods averaging ten years. _ {10~ Risk Management - Self Inst~rance ~ The City u~il~zes internal serv~ce funds for ~ts self-~nsurance programs. ~ Four separate funds are maintained, provid~ng for different types of risks. 7hese are as follows: ~ o Comprehensi~e - provides for general liability, property and bond coverage req~ired by the C~ty. o Bus - provides liab~lity coverage for the Santa Monica Municipal Sus L~nes opera~ed by tf~e City's Transportat~or~ Department a~d hus pf~ysital damage ~ co~erage. a Automobile - provide5 for l~abil~ty, coll~s~on an~ comprehens~ve coverages for ~- City vehicles. - 43 - CITY OF SANTA MONICR, CALIFORNIA Nates to Combined Fir~anc~al Statements, Cantinued o Warkers' Cam~ensation - prov~des statutory caverage far a11 C~ty employees lnvolved in on-the-~ob ~njuraes/illnesse5. Th~ self-~nsurance f~nds were established at different times. The comprehens~ve and bus funds were imp~emented ~r~ 1952, the autnmob~le fund ~n 1953 and the workers' compensatian fund ~n 197b. ~und re~enues include pr~nc~pally interest earn~ngs ar~d contr~but~~ns from other funds. The lat~.er are intended ta match the charges for 3nsurartce premiums far coverage ~n excess of self-insured amaunts est~mated payments resu~t~ng from self-~nsurance pragrams, operation expenses and prav}s~ons for pend~ng and ~QSSZb~e future c~a~ms It ~s #~~e C~ty`s ~nter~t~on that contr~but~an~ to the funds be reflec~~~e of actual expenses and the necessary ~~ab~7zt~es and reserves for pending and possible future claims. The fal7owi~g are the self-insurance retentions and insurance coverages for each self-~nsuran~e fund: Excess coverage Self-ensurance (amou~t aver Se~f-insuran~e fund retent~on (SiR} SIR~ Genera3 liability ~ 1,0OO,OaO S I9,OOQ,004* Automobiie liability 1,000,000 19,00O,O~U Bus aperat~ons l~a~~lity 100,00U 900,004** Workers' compensat~or, 500,DD0 5tatut~ry * Coverage provl~ed through Authortity for Californ~a C3t~es Excess Ljab~l~ty ~RCCE~), a~oint powers a~thority of Cal~forrtia murr~cipa~~ttes tor l~ab~~~ty purposes (see note 17) and the purchase of excess liabtlity insurance. *'r Addit~onal exeess caverage up to ~20 miil~on pravided by ACCEL and the purchase of excess l~abil~ty insurance. Reser~es far pend~r~g cia~ms are determined as follows: o Lzab~l~ty Coverages - Aggregate reserv~s are compiled by the R~sk Management div~sion of the C~ty Manager's office, which provide5 ~n-hou5e cla~m adm~n~stration. An Incurred But Not Reported (IBNRJ claims reserve is determined based on the recommendations of a consu7t~ng actuary. Th~s reserve ~s to atcount for cla~ms incurred dur~ng the fascal year but not reported ur~til after the close of the f~scal year. lVet present values of the comb~ned aggregate and IBNR reser~~es are est~r~ated basea Qn a b~ interest rate over 3 years for both ger~era] liab~l~ty and automobile liab~lity. Net present vaiue ~s nat computed for bus liab~lity. o Worker5' Compensatian - Aggregate reserves are obtained from the lass report comp~led by tt~e C~ty's indep~ndent workers' campensatian claims admin~strator. An Inc~rred But Not Reported (IBI~R) reserve ~s determ~ned based on recortanendat~ans of a cansuit~ng actuary. This reserve is to actount for cla~ms in~urred d~r~ng the ftscal year but not reported unt~~ after the close of the year. The net ~resent value of the comb~ned aggregate and IBNR reserves ~s estimated based or~ a 6% ~nterest rate over 3 years. ~ , s 1 i ~~ i 1 a E t , ~ j ~ ~ i ~ ~ 1 t - 4 4 - ~....'.~..' ""_""' ~""_'""' ~."""' '"",.7 ~'""""", """' .~ r.. '....., ^-~ ''...."~ r"", t~.'""! ~"".."'"~ E"'~"~ ~-._.,.~ ~ ~ .~.~ • , _. _.~ CITY OF SANTA MONICA Nde~ ta Combin~d Flnrnclel Sfatamanb, Continusd 11) Ssgmmt~ d Enlarpri~a Acllvitla~ Tfie ldlowlnq i~ e~~mmary of Ihs Cily'~ anlsrprlre apsr:tlon~ u of ~nd ior Ifia yaer ended June 30 IYO2 , Cabh Spsciel Psrkirtp Witar sd~e w.a. Pier Weelsweler Auditprium Alr ort CamaterY Tnn tlon Communic~lion• Avietion Authorllv Total Op~nllnp rewnue~ 11,s01,380 S 677,M6 1.10~,6117 a 4ep ~0 1 RI~ 2R2 1 99~ 18E 157,042 7,77t,7l2 467,000 - 794,362 13,~~O,d27 Dspnclalfon eKpsnte ~p5,~04 3f0,31T ~E,T72 4s3 7T1 iSS,234 ot 412 27,002 3,142,213 10,2T3 - 22E,i17 6,b91,105 OperalinQ incoms (lo~s) 5,282,94R (~e2 030~ (1,SAE,340~ 222,110 {19 27e) 4~ 59a (35a 213) (o,E4a R~by o na - ~~os e2o~ (b iSS,10tiy ~ dperallnQ pranl• - - 1Y 753 - - 31e,10a - - - ~7 1EQ - 3d3 42Y ~ llt qpsr~tlnq Ir~nder~ In bS2,Yl~ ~67,401 RIA ~39 r eoe e~~ - - - - - - ss osa 9 901 7~0 1 dperaNny trenslen out f2 5710~ {42b,37~) - (7~ 70~- - - - - - - f~ ~~l (4 967 IoA) 31e1e ~ales iax procsede - - - - - - - 6.205,515 - - - 5,205,l45 Net income (loes) 5,076,630 (223,100) (1.140 2221 2 581,65I 79e,e22 695 D02 s9 114 (5.102,219) 16 42i 57.31E (5A71~D) 4 1i5 59! Caplteleonlribullons - - - - - - - a.05l,/1~ - - - 305R,4t4 Fixed rrsats AddhiDrn 3.b6T,6i6 T~626i Z,1~E9l1 10,1l0,31p 11td1,i3! a7075s ~15,lf07 6,7Y0,2l0 P70,7~ - 4~000 25,t~7.~~J Deleliom 1.1A2,Y5S 4a6,3a3 1Ea 077 230 073 a11,dd1 - 215,014 - 2~1965 - 80 ~72 3~22 SOJ Ns1 vrorkinQ cepital 6,301 077 1,330,62~ 1 i2~ 020 ~3,223,029) 1,227,926 (5d9115~ 7d9,044 •,e01,E91 23,641 171 64d 535 ~52 1e da1,~2A Tdal ~h~ta p6.l73,476 6,9R4.1o3 fe p0,,7o0 72 e~0 067 1,AS3 O]a 1~ ~ Q73 2 282,104 72.611.YfA ~41 e71 e~l 485 13 2f 1 958 233 t 11 9e2 Bond~ psyeblalOthsr lonp-tstm oblipatiana - - 1~5 001 33 TOS 68D - 4,72~,432 - - - - - 3a SN Ot~ Tdalsquity(dsllcit) 26,217,o3Y ~.667,607 92e,218 25,694,913 4291.Y57 O,OS0,101 2,44P675 ~,~p,~6T (57.da2) R91,~85 18,19~,71E 156,1M,7R3 CITY OF SAHTA MOHICR Notes ta Cambined Financial Statements, Cont~nued 12 C~ancjes i~ Co~tribute~d Capital A summary of the changes in contributed cap~tal for the year ended June 30, 1992 is as fallo ws: Deletions -- Ueprec~ation and Sale of Balance at Cnntributed Balance at July 1, 1991 Additions Assets June 30, 1992 wastewater S 30,764 - - 3 3Q,764 Ruditor~~m 429,25! - - 929,251 ~ Transportation 54,805,063 8,058,414 3,102,213 59,7b1,264 ,p, Parking Authority 2,520,779 - ~ 2,520,179 ~ ~ Total f59,285,857 ~8,458,414 S3,102,213 ~63,242,058 (l3) Long-Term Oebt A summary of the changes in the long-term debt of th e City ~or the year ended June 30, ~992 is as follows: Library Improvements General Pro~ect -- Redevelopment Obligation Certificates CapTtal Accrue~ Agency Bonds Bonds Loan of ~ease Compensat~d Pa abie P~ab~e ~ Payab~~ Partic~pation Ob~~gations Abs~nces Total Balance at June 30, 1991 520,580,000 54,500,d00 ~5,175,OQQ 512,575,000 $1,172,424 51,285,983 545,288,401 Principal Reduction (455,000) (5,000) (1,125,000) (150,000) (325,04~} - (2,660,U44) Increase in Accrua~ for Compensated Absences - - - ~__,_ ,~ - ___?34,358 234,358 Balance at ~une 30~ 1992 S20l125,000 S~ 495,Q00 ~3 45~0,000 $1~4Z5~0U0 S 847,380 S1,520,341 ~42,862,72I ~ - ~ I~.~ ~r...r , r ' ~ l 1 . -,_ 4.,.,-W.. ~.+r~./ 4r.~~ Y~r.~wr/ ~ti...~.~ 4.~....~..~ -~......r -..._`~ L__~..~.., W...-.~.r r.«.+..J '~-~~J +..~.~1 w..--.n w~...~ r ~ ~- ~ ~ t CITY QF SANTA #fONICA, CA~IFDRNIA ~lotes to Combir+ed F~nanc~al 5tatemer~ts, Cont~nued r {I3j Long-Term E}ebt (cor~t~nued) E Enterprise Funds ~ lVates Not2s Hyperi or~ Certificates of Payable- Payable- Pra~ect Part~cipation- P~er Airport Wastewater ~ A~rpart Furrd Fu~d Furr~ 8onds Tota~ Balance at June 30, 19gI 54,034,513 S135,001 S1,094,355 S - S 5,2b3,869 , Debt issued - - - 34,200,400 34,24Q,000 Unamortized diseount on debt issued - - - (493,420) {493,420) ~ ~lebt ret~red (]25}000~ - (72r218) - (197T21$) Balance at June 30 1992 3 909 513 , S, ~ I35 0 1 0 2 137 33 7 6 580 38 71 31 5,O1 5, 2, S,0, S, 3,2 ~~ D~bt recorded within tf~e general long-term debt accaunt group ~s cnmprased of the following: ~ Redevelopment Agency Bo~ds Payable a po~rntown Redevel opment Pro,~ect Park~ n~ _ Lease Revenue Bonds On November 2, I478, the Redevelopment Agency of the City author~zed the offering of S14,47~,000 in Downtown ~ Redeve] opmer~t Ara~ect Park~ r+g tease Reven~e BoRds . Proceeds from the bor~ds have been used by the Redevelopment Agency ta f inance the acqulsit~on and construct~on nf two garages {the Parking Facility) that prov~de parking facilit~es for a ma,7or s~opp~ng ~ center in the City of Santa Mo~~ca. A summary of pro~ect bor~~s payable held at June 30, 1992 is as follows: ~ Interest Outstanding Uate of Issue Rate June 30, ~99 2 Annual Requirem~nts 1~atur~ty Qates 3 December 1, 3978 6.25%- 511,535,000 llar~ous arnounts from December 1, 1992 to 7.75~ 5375,DOD to 3I,lI5,Q00 Dece~b~r ~, 2~?08 ~ ~ Ocean Par~C Pro~ect Bands - On April 1, refunding and refinancing bonds to de 1988, the Redevelopment Agency issued 58,773,000 fease Lhe 1984 Ocean Park bonds and to pay a portion of certain prom~ssary t~otes d~e to the City of ~anta Monica. s ~ A summary of praject bonds payable held at ,}~~e 30, 1992 is as follaws: Interest Outstandin g ~ Date of Issue Rate June 30, 199 2 Annual Requirements Maturity Dates Rprii 1, I988 5.25%- S 8,490,000 Various amounts from Ju1y I, 199Z to , 8.25~ ~105,000 to 5725,aao July 1, 2018 ( - 4 7 - ~ ~ i CITY DF SANTA MQNiCA, GALIFORNIA ~i 1 Notes tn Combined Financial Statements, Cont~r~ued ~~ Defeasement of Redevelopment Agency Bonds Payable ~ Dur~ng the flscal year ended ~une 30, 1988, the Czty defeased its outstand~ng Redevelopment Agency Tax A~location bonds of a5,7Q0,000. At June 30, 1992, b5,255,000 af these bonds were stil~ outstanding and have not been ~nclu~ed ~n the accampanying general ~ purpose financial statements. Library General ob~igat~on Bands ~ On April 10, 1990, the City ~ssued 54,500,000 ~n L~brary I~nprflvement General Obl~gat~on Bonds. Proceeds from the bands will be used for the acq~is~tian and amprovemer~t of land for parking and/or add~t~onal improvements in connection wit~ the Santa Monica Public ~ L~brary Main Branch. A sunrtnary of pro~ect bon~s payab~e held at June 30, 1992 is as fallows: ~ ~1 Ir~terest Outstanding Date of Issue Rate June 30, 1992 Anr~ual Requirements Matur~t,y Dates ~ Apri~ 10, 199~ 6.40~ ~ 4,495,oao Var~ous a~ounts from Ju?y ~, 1992 to 1 565,000 to 35~5,OQD July 1, 2010 ~ Certificates of Partfcipat~on ; ~ Or~ August 1, 1986, the Cit ~ issued 512,955~000 af ~ert~ficates of participation at an , interest rate of 7.874~. The proceeds af the sale af the certif~cate s have been pri~narily used to ma~Ce impra~ement to the C~ty's Third Street Mall and the peri pheral area. ~ A sunanary of the certificates of participation held at June 30, 1942 is as follows: Interest Outstanding -~ ~ate of issue Rate June 30t 1992 Annual Requirements Maturity Dates August 1, 1986 7.874% 312,425,000 Various amounts from Augus~ Z, 1991 to ~ S1b3,000 to 51,095,OU0 August 1, 2Qlfi Capita~ ~ease QbTigatians ' ~ The City has entered ~nto s everai noncancelable long-term leases for the purchase of tertaZn equi~ment utilized by departments and aperatir~g divis~ans af the City. The assets • have been ca~~tal~zed ~n the general fixed assets group of accaunts, w~th tt~e obl~gations , shown in the general lor~g-term debt actou~t group. ~ , .~ - 48 - ~ t~ ~., 4 CITY OF 5AN1'A M4HICA, CALIFORNIA Notes ta Combz~ed F~nancaal Statemer~ts, Continued ~ The following is a sc~tedule by years of future manimum lease payments under these capital leases, together w~th t he present value of the net min~ m~m lea5e payments, as of Jttne 30, ~ 1992: r- ~ Optica~ D~sk Aer~ai Tripie Storage Speetrum Ladder Fire Other ~ System ComputQr Tr~ack Trucic Equipment Total Year ending June 30: ~ I993 S 39,69b SI06,997 S 51,438 S 3I,273 S1b0,069 S 405,473 1994 39,69b 7~,333 31,273 1G0,068 302,370 ~995 18,624 - - 31,273 ~ 160,073 209,970 ~ ~995 - - - - 25,74~ 25,746 7ota1 minimum ~~ lease payments S 98,016 5178,330 S fi7,438 S 43,819 5~05,95b S 943,559 ~ Less amount representin g ;nterest {12,474) ~11,244) ( 2,438} (13,12fi} ~55,891) < 96,179> ~ Present value of net minimum lease ~ paymet~ts ~$5~542 3~b77086 S 65t000 S 80rC93 5449~059 ~ 847~380 ~ t Loan Payab]e ~ In additian to the above ~ndebtedr~ess, the LAC~C laaned the City Sfi,900,000 i n October ; 19$9 tn assist ~n t~e purGhase of 9.5 acres af land as the possable site for a raei fac~l~ty. At June 30, i992, 34,312,500 remains ta be repaid. Princ~pa7 in the amount of f S431,25D together w~th accrued ~r~terest ~s payab~e sem~ an~ual~y through 1997. ' At June 30, 1992, ~utur e debt payments, excluding ~nter est thereon, are as follows: ~ ~ Loan payable- general ~ long-term debt Year ending June 30 account group . 1993 S 862,500 ~ 1994 862,500 1995 862,500 1996 86~,500 1997 862}500 ~~, Total ~4,312,5~0 r I ~ j ~ ~I ` ~J .~ CITY OF SANTA MO~ICA, CALIFORNIA Notes to Cambined F7nancial Statements, Cont3nued 1 i The in~erest rate var~es monthly on the abave loan as it ~s the actual rate of lnterest real~zed by the Los Angeles County Pooled Surplus Investment ~und. For the year ended June 30, 1992, such rate approx~mated 5.6% At June 30, 1992, C~ty management believes that the City has camplied with all requirements of its var~ous debt agreements. Long-term debt recorded within the en~erprise funds zs campr~sed vf the following: Cert~f~cates of Fa~tic~pation On October 1, 1985, t~e City ~ssued ~4,625,OOfl of certificates of partic~pation at an interest rate of 9.11~. The proceeds of the sale of the certlficates fiave been used for constructian of an administration building and ~angars at the G~ty`s airport. A summary of the certif~cates of participatian held at June 30, 1992 ~s as follows: Date of Issue _~ ~ , Interest Dutstanding ~ Rate June 30, 1992 Annuai Requirements Maturity Dates j Qttober i, 1~$5 9.I~~ ~ 4,~75,D0~ Yarious amounts from Q~tatrer 2, 1991 to 513~,000 to 5455,000 October 1, 20U7 Hyperio~ Project - Wastewater Bonds - On November 26, 1991, the C~ty 155U~~ 53~,200,400 in Wastewater Enterpr~se Re~enue Bonds. Proceeds af the bonds wtill be used to f~nance a portion af the City's contr~but~on to the casts of the upgrade of the Hyperion Wastewater Treatment Plant. A summary of Project Bonds payable held at June 30, 1992 is as foliows: Date of Iss~e November 2b, 1991 Notes Payable Interest Outstanding Rate June 30, I992 5.25~ S 34,200,000 ~ , Rnnuai ~equ~reme~ts Matur~ty ~ates ~ Various amaunts from Ju1y 1, I993 to 5285,0~0 to 52,520,000 July 1, 2022 At June 30, 1992, the C~ty had other notes ~ayable due to the State Department of Transpartatia~ in the amount of 51,022,137. The funds are be~ng used far co~struct~on at the City`s a~rport. This amount is payable in equai yearly increments through the year 2011. In addition, 5135,Oa1 recorded in the Pier Fund was due to the state Coastal Conser~anty. 7he funds are be~Rg usea for the restorat~on af the Santa Mon~ca P~er. At xhe present t~~e, no repayment schedu~e exYSts. ~ ~ , , ~ 1 ~ - So - t ~ CITY OF SAHTA MONICA, CALIFDRNIA ~otes to Combjned F~nancial Statements, Continued ~ ~` ~ Future Debt Pa,yments ' At June 30, 1992, future debt payments, incl uding interQSt thereon, are as foTlows. r i Certificates t af Part~c~- Certif}- pation - cates af Redevelflp- Generai Lony Partic~- Nates Fkyperion ~' Year ment Ter~r Debt ~atio~ - Aayable Project Ending Agency Library Account Airport Airport Wastewater June 30 Bor~ds 8or~ds Group Fund Fund Snr~ds Tota~ ~ 1993 S 1~90$,877 S 380,6~5 S 1,136,972 S 499,915 S 140,958 S 2,836,973 S 6,904,45D 1994 1,912,915 385,095 1,138,388 499,850 i36,099 2,574,593 6,646,940 1995 1,9I4,377 393,495 1,138,622 498,513 131,241 2,579,280 5,655,628 ~ 1996 1,913,222 395,895 1,137,675 496,213 12b,383 2,572,a93 fi,641,481 1997 1,918,949 402,295 i,135,547 497,583 121,~26 2,513,655 6,649,fi55 ~ There- € after 30,726,254 6,407,218 22,736~843 5,481,4~7 911,935 b6,002,844 13Z,266,611 7ota1 S4U,294,594 56,364,153 528,424,047 57,973,791 51,56$,142 579,139,438 Si65,764,765 ~ pefeasement of Bonds Payable ~ ~~ During October and Novem~er 1992, ~he City defeased th ree bond is sues: the 1978 Downtown ~ Redeve~apment ~rojec t Par~Cing ~ease #tevenue Bonds, tl~e 29$8 ~cean ~ark Rede~re~opment Project Refunding and Refir~ancing Tax A~location Bonds, and the 1986 Certtificates of Partic~pat~vn far var~ot~s improvements ta tF~e C~ty's Th~rd 5tr eet Ma3~ an~ per~phera3 i area. Outstanding 1978 Downtown Redevelopment Pro~ect Parkjng Lease Revenue bonds of S11,635,000 E at an interest rate of 6.71~ were currently refun~ed by ~ownto~rn Rede~elo~meni ~ease ~ Revenue bonds on October 1, 1992 at an ~r~terest rate of 5.98~ resu~tinq ~n ar~ eco~omic gain of 51,2 million (net present value savifigs 4f b.89~ of the prifl r issue). ~ Outstanding 1988 Qcean Park Redevelapmer~t Pra~ect Refunding and Refinancing Tax Allocat~on bands (which in 1988 advanced refunded the 1984 Ocear~ Park Redevelopment Pro~ect Tax Allacatifln Bonds and refinanced a portian af certa~n promissary notes between the ~; Redevelopment Agency and the City of Santa Mon~ca} of 58,385,OOO,at an interest rate af ~ 8.09%, were advanced refunded and 51,285,000 af additional promissory notes between the Redevelopment 14gency and the City of 5anta Monica were refinanced (resulting in a current ~ yea~ budgeting savings of this amount) by Ocean Park Rede~elopment Tax Allocat~on ~onds an hiovember i, I992. The refunding 6onds were issued at an intere5t rate of T OI~ result~r~g -~ in an economic gain of 5140,809 (net present value savzngs of .74% of the prior ~ssue), ~xtiusive of the add~t~ona~ Pramissory ~lotes refinancing. ~_ Outstanding 1986 Certi~icates of Participation of ~~2,2G~,000 at an interest rat~ of 7.87% were advanced refunded by Park~ng Authority Lease Revenve Bonds at an interest rate of b.3~~ resulting ~n a~ ecoROm~e qain of S.7 r~~13 zor~ ~net preser~t va~lue savings of 3.67~ of ; the prior issue). E_ ~ - 51 - 1 ~ CI~Y 4F SANTA MONICA~ CALIFOitNIA ~ NoteS to Cambined Financ~al 5tatements, Continued ~ 14 Fund Defic~ts ar~d Ex enditures Exceedin A ro riations ~ ~ P 9 PP ~ 7he fol~owing funds had fun~ def~e~ts at Ju~e 30, ~992: ~ Deflcit Source of Rever~ue Balance Fund to Alleviate Defzc~t -~ S(14,756,089} Redevelopment Age~cy ~uture tax i~crement re~enue ~ and other projected revenue ~ (5~,883) Cable Commun~cations Future revenues from cable franchise payments ~ (281,355} Self-Insurance Ruto Future cflntr~but~ons from ~ : part~c~pat~ng fur~ds (799,260) Beach Recreatian Future revenues from beach ~ parking Expenditures exceeded appropr~at~ans ~n the BayS~de ~~str~tt Corporation Spec~al Revenue Fund due to personnel termination expenses wh~ch were approved by the C~ty ~ Lourrcil but where r~o farmal approprlation change was made, an~ in the ,4rts Foundation (AF} Special Revenue Fund as no budget was set by the AF for Fiscal Year 1991-92. 7he AF only ra~ses pr~vate funds; no Clty funds are spent by the AF. ~ (15) Lit~gation and Contingencies Several lawsuits and claims were pending against the City on June 30, 1992. In the , opin~on of the City Attorney, there are adequate legal defenses to these actions, and it i~ not ar~ticipated that there wi~l ~e any adverse mater~al effect on the financzal position of tt~e City. ~ (16~ YMCA Revenue 6a~ds and 1911 Bond Act Street Light Assessment ~ On Uecember 24, 1985, t~e City of Santa Moni~a isst~ed S3.S million of revenue bands on behalf of the Santa Monica Young Men's Chr~st~an Associatian (YMlCA}. 3he YhIGA has used the proceeds to add 25,000 square feet to its ex~st-ng facility to accanmodate various new and expanded services. Tt~e City had no direct invalvement ~ with the ad~~n~stration af these bonds, except to a71ow their ~ssuance under the na~ne of the C~ty. These revertue bonds were ~ssued under prov~sions of state law that provic~e that the bonds do not const~tute an indebtedness af the City. For thzi ~ _ reason, these non C~ty obligat~ons are not reflected rtn the accompanying combined financial statement. The cost of new street lights is shared by both the City and local proper~y owners. ~ The City pays one-half of the cost with the property owners pay~ng the other one-half. If payment frfl~n the ~roperty owners is not received within 3Q days of assessment, bonds under the 1911 Sand Act are issued, t#~e proceeds of whict~ are used ~ to pay for the cost of the street lights. Property owners pay bath principal and -~ interest on the bonds ta the City, which serves solely as f~scal agent betrreen ti~e f ~ - SZ - ~ ,~ ~ ~_ CITY UF SANTA ~(D~liCJl, CALIFORHIA Notes to Comb~ned F~nancial Statements, Continued r- ~~ i ~roperty owr~ers arrd the borr~h~l ders . As af 3une 30, 1992 , 2~~ 3 8or~d Att bor~ds ~- outstan~ing were 31,557. ` ,~17} Jo~nt Ilenture r~ The City has obta~ned excess liabi~~ty coverage thraugh the A~thar~ty far Ca~ifarn~a ~ Cities Excess L~ability (ACCEL}, a 3oint powers authority of eleven (11) medium-size California municipalities. ACCEI poals catastrophic general liabi3ity, automobile lvab~~~ty and pub1~G offic~als errors and omissions lasses. ACCE~ intends to pool ~~ virtually every catastrophic loss ~ncurred by its mem~ers, thereby elaminatir~g the need for coc~nercia] excess insurance protectio~. Rs a result, each ~ember's share of pooled costs will depend on the catastrophic losses of all the members. In ~ ad~zt~on, the cast to a~ember ~ity wi11 also depend on that member's own loss experience. Entities with a consistent re~ord of costly clai~s will pay more than entities with a consi5tent-~ecord af little serious claims activity. ~ In order to pra~ide funds to pay cla~~s, ACCEL col~ects a deposit from each member. The deposats will be eredited witfi ~nvestment incame at the rate earned on the Author~ty's ~nvestments. Sased on in~ormation received fram ACCE~ at June 30, I932, ~ the City had 54,925,536 or~ deposit with ACCEL out of a total of 532,910,007, or approximately 15.0~ of the total. The ~Follow~r~g mu~~cipalit~es (with their respec~ive shares of total investments as ~ of June 30, 1992} are also merobers of ACCEL: Palo Alto (10.5~}, Sa~rta Barbara (8.5~}, Y~sal~a (3.5%), Modesto (9.0~}, Ontaria (7.8°~}, Bakersfield (9.8~), Anahelm ~ ( i9. 7~0) , Gardena (3. ~~'o) , Burbank (11.0°b) and Mor~terey { 1.7X} . A representat}ve fram each member c-ty, appointed to the position by their city council, serves on the Board of Directar5 of ACCEL. The Board is responslb~e ~ar dec~ding the r~sk5 t#~e Authority wi]1 underwrite, monitorang the costs o~ iarge clajms and arrang~ng financ~al programs. Each member of the Board has an equal vote in ~atters ~ cancerning the Authority. ~ ~' ~ L -53- ~ ~ CITY OF 5A1~ITA MQNIGA, CALIFORt+IIA ~~ Nates to Comb~ned Financiai Statements, Continued F ~ Ti~e following are ACCEL's balance sheets at June 30, 1992. 8alance Sheet ~ June 30, 1992 ~~ ASSETS ~ Ca~h E 203,5T3 Investments 34,49~,798 ~remiums receivable 372,807 ~ Claim deductible receivable Interest receivable 343,436 ~ Total Assets b 35,415,514 ~ J LIABI~ITI~S Acco~nts payable ~ b,100 ~ Mer~bers ~ayab] e 39, 966 ~ Deferred adm~n~strat~ve ir~come 45,500 Deferred premlums 541,514 Unpai~ claims TiabiTity 3,039,5I9 ~ Retrospectively rated refunds iiability 31~324,573 Total Liabilities 34,997rI72 ~ HEFfBERS' EQU I TY ~418, 442 Tatal Liabi7~t~~s and hfembers' Equity ~ 35,415,614 ~ As of June 30, 1992, ACCEL does nat have any long-term debt. ~ {18) In-Lseu Ho~siny and Parks M{~t~gat~on Fees During 1987, the City adopted two ordinances that relate to praperty development. ~ Ordinance No. 1389 (subsequently revised by Ordinance No. 1448 ~n 198$y requires that as a ~ond~t~on of deveioping muit~family residential property, deveiapers must either provide on-site Tnclus~onary hous~ng units for low-to-moderate in~ome :~ reside~ts ar pay an in-lieu housing fee to the City. Ordinance Na. 13b1 requ~res developers of aff~ce space ta prov~de affordable housing units and park space in their office developments ar pay a mit~gatton fee to the City. ~ i Payment of in-l~eu housing or parks mitigatian fees may be made through one of the -l four fo~lowing aptians: cash, the assignment of a certaficate af deposit, a letter of credit or a letter of credit that specifjes that a port~on of the developer's ; loan proceeds from the developer's real estate construction laan be set aside for the ~enefit of the City. F~~s received in cash or the proceeds far a~etter of credit or certificate af deposit are recorded as deferred revenue in the general €und. - ~ _~ ~ f _ ~ q _ ~ ' . . r.,.'"~, r.,_." ""`"""'f ` , ~...,.....5 , ,~..... ..._~ .......„~ t..•_..y r.,._.~ .-~-,j ~'"'""1 ~._~..,~ _ ~ ..~,,.,~ . , ~~• w--l i ~ ~ i CITY OF SANTA MONICA, CALI~ORNIA No~es to Combined Financial Statements The following is a summary of all instruments other than cash held at June 30, 1992 to meet an-lieu housing and parks m~tigation fee obl~gations: Instrument lrrevocabie Irrevocable Certificate Irrevocable lrrev~c~ble Irrevacable Irrevacabl~ Frrevocahle lrrevocable Irrevocable Irrevocable Irrevocable lrrevocable Irrevocable Irrevocable Irrevocable lrrevocable Irrevdcable Irrevncable Irrevoeable standby standby of depo star~dby standby standby standby standby standby stand~y standby standby standby star~dby standby standby standby standby standby standby l~tter nf credit letter of credit ;it letter of credit letter of credit letter of credit letter of credit letter of credit letter of credit letter of credit letter of credit letter of ~redit letter of credit letter of credit letter of credit Tetter of credit letter of credit letter of cred~t letter of credit letter of credit . ~yPe. .._-.. Amount ~~ Mous~ng in-lieu Housing in-lieu Housing in~lieu Mitigation fees Housing in-l~eu Housing in-lieu HouSing in-lieu Housing in-lieu Housing in-lieu ~lousing in-1 ieu Housing in-lieu Housing in-Tieu Housing in-lieu Housing in-19eu Housing in-lieu Mltigation fees Mitigation fees Mit~gation fees Mitigation fees Housing inwlieu fees fees fees fees fees Pees fees fees fees fees fees fees Fees fees Fees 584,b09,00 32,269.62 10,970,20 6G,595,00 40,000,00 61,108.2Q 70,159.50 48,732.84 zoo,ooo.aa A0,000.00 123,228.88 1Z6,846,Q0 95,411,04 2aa,oaa,oo 51,178.~2 300,OOO.flO 163,722.96 ~ia,s~~.~a 123,00(3,00 155,~14,24 A~dress of Property 8p7-811 21st Street 1925 22nd Street 2226 6th 5treet 1260 Lincoln/725 Arizona 3003 3rd 5treet 1018 2nd Street 1531 12th St. Condom~nium 1235 Yale Street 1114-1~28 Princetan 5treet 1135-1139 llth Street 1258 4th 5treet Z51B ~8th Street t427 lBth Street 8zz ~a~~~~~ str~~t 2501-03 28th Street $00 kiilshire Blvd. 145I Cloverfield Blvd. 5a8 Pier Avenue 1919 5anta Monica Blvd. 524-34 Wilshire Blvd. ~~ CItY OF SANtR MONICA, CALIFOR~IA ~ J Notes to Comb~~ed Financial Statements, Continued _~ t {19) Dependent Care Ass7stance Plan The ~ependent Care R5515tanCe Plan of the City ~s a~ employee welfare ~enef~t plan ~ that iS com~osed of two programs. The fzr5t ~s a voluntary sa~ary reductton program pursuant to Sect~an 125 af the Internal Revenue Seruice Cade that perm~ts el~g~ble _~ ~mplQyees ta redu~e their taxable 3ncome by sQtt~ng as~de a portian of the~r cash campensation in a~ependent ~are asszstance accou~t. The second ~rogram pro~~des a subs~dized benefit whereby the C~ty makes a yearly contrjbut~on ta each part~tipa~t's accauRt. These a~au~ts are then ava~lable to the em~~oyee to provide ~ depende~t care ass~stance dur~ng t~e plan year. The City ~s the pian ad~~ntstratar. ~Urtng the fiscaT year ended June 30, 14g2, the City ~ade cantrzbution5 tutaling ~87,842 to the participants' dependent care ~ assista~ce a~caunts. ~ {20} Deferred Reve~ue ~ ~ The fol~ow~ng table summar~zes deferred re~enue at June 30, 1992: Genera~ Fund: ~ Rdvances to the Redevelopment Agency 5 10,897,14fi ' 6reenwood ~evelapment 89D,040 I~-lie~ hous~~g and parks m~t~gat~on fees 4,74b,727 ~ Colorado ~lace parks 18,489 Lo3arado Plate - traff~c 4,726,354 Home~ess contr~but~o~s 165,985 Snyder - art 2,803 ~ Snyder - traffic 4,757,247 Hyatt - art Hyatt - beaeh 48~,3~8 263,445 ~ Cnlarado Place 1,7~6,080 Pasea Del Mar - art 9,930 Advances to airport 256,Z36 Bayview Shuttle 148,392 ~ Mall Parking Levy 346,16~ Development Review Case Ha. 441 20,ODQ . Air Quality Improvement Tr~st Fund 8,34] `~ Maguire Thamas Traffic 75,OQ0 Tatal-Genera~ Fund 29,527,575 Special Revenue Funds - Cammunity ~ development 81ock ~rant advances to the Redevelopment Agency 1,745,447 Enterprise Funds: ~ Transportat~an 4,485,~72 Mastewater 3,417,422 ; Total S 39t116,016 =~ r ~ -56- , ~ CITY OF SANTA MONICA, CALIFORNIA Notes to Camb7ned F7nancial Statements, Cont~nued ~he follawing is a sur~mary af activity involv~ng in-l~eu ha~sing and parks mitigatio~ fees (see note 18) recorded a5 deferred revenue in the general fund far the year ended June 3~, 1992: Balance as of Ju~y 1, 1941 ~ 5,846,~27 Payments received 2,023,8b3 Interest rece~ved 493,326 Payments made {3~61~r484) ~ ~ ~ ~ ~ r- ~ r L t i ~ ~ Balance as of June 30, 1992 $ 4,146,727 {2I) Nates Receivable = 0~ Aprii 12, 1990, the Ci~y laaned 5500,000 from the genera~ fund, interest free, to Ar~-erica~ Yauth Hostel, Inc. to assist in financ~ng construction of a 200-bed international youth hostel faci~ity. Repayment of the ~oan is to beg~n in 1996 ~n 22 installments. On Qctober lI, ~991, the City ~oaned E537,531 from the general fund's Greenwood Develo~ment Agreement deferred revenues, ~nterest-free, ta Co~nunity Corparation of Santa Manica to prov~de inter#m financing for a per~od of t~ree years. (22~ Post-~tetirement Benef~ts Other ~han Pens~on Benefits In addition ta prov~ding pens}on benefits through PERS, the City, an accordance wlth City Memorandums of Understand~ng (MOUs}, a~so prov~des medical coverage to certa~n ret~red employees. Emp~ayees of the Supervisory Team Assoc~ates {STA) and United Transportatior~ Ur~ion {UTU} bargaint~g un~ts become eligzb~e for this benef~t if they fulfill length of service requ~rements a~d have more than 75 ur~~sed s~ck leave days upon retirement. Er~~loyees of the Executi~e Pay Plan bargain~ng unit and management employees of the Rent Contral Board are also eligibie for this benef~t af their combined re#.~r~ment age and years of City SerV~Ce equa7s or exceeds 70. 7he retirees may participate in ane of the City's health ~ians for retirees. The City pays the entire amaunt on a pay-as-you-go bas~s through monthly prem}ums to the vari~us health insurance providers. For f~scal year ~991-92 there were 14 retirees receiving th~s benefit far a tatal cost to the City af 563,873. Of the 14 retlrees receiving this benef~t, 1 were members of the Execut~ve Pay Plan for a cost af S33,$40, 3 were members af the S~A barga~n~ng unit for a cost af 515,228, 2 were members of the U~U bargaining unit for a cost of ~4,653 and 2 were members of the Rent Cantro~ Board far a cost of 510,152. The maximum fut~re ~iabiiity of providi~g this benefit to retirees has been est~mated at a cost to the City of 52,849,530. This estimate is based upan current employee data and the estimated cost of inedacal coverage used for fiscal year 199Z-93 budget pra,~ections. Currently, there are 93 employees who would be elig~ble for th~s benefit upon ret~rement. -57- G~,~,IFOR~,l ~ ~ G z ~- ~ o • ~ ~, z ~ ~ ~ ~~s ~o ~y~~ crr~c oF sa~rrA Mornca s~~~~ s~t (UNAUDITED] Wastewater Fund June 3o,199s with compazative totals far June 34,1992 1992~93 1991 J92 Assets Gument assets: Cash and invest~menrs Receivab~es (net, where applicabte, of allowances for uncollec~les~: Accounts Acaued Interest Prepaid expenses flef~red Charges 8,0$8,772 3,617,098 3,2Q1,282 2,553,730 0 0 0 0 311,945 330,295 Total current assets f~@S~I'IC~9d P1SS~fS' Cash and inv~unen#s Property, Plant and Equipme~t Land Bui[dings lmpro~ements other than buildirtgs Machinary and equipment Construction in progress Less accumu~a~ed depreciat~on Net p~operty~ plant and equipm~t ~ ~ s{7VL~LW {3~Jt! 1 y~ L.~ 40, 338, 845 38, 9~3, 389 3D, 76d 1 t 1,9d5 ~ 7, 549,110 596,319 18, 760,41 S 3?,046,516 {5, 695,655~ 31, 352, 862 30,7fi4 1 i 1,905 9?,146,3~0 5fi9,877 14,610,OB1 32,468,937 (5,193,382} 27, 275, 555 TOtal assets 83,293,707 72,fi80,067 A-58 CTTY OF SAN'TA MOrTICA &+lance Sheet [UNAUDITED] Wastewater Fund june 3~,1993 with compazative totals for ~une 30,1992 Curnent liabilities (psyable from current assets~: Accounts payable and aocnaed liab~l~ies ContracLs payable (retamed percentage~ Int~est payable Total current liabili~es (payable irom current assets) Deferred reyenue l.ong-term obGgations, net of current portion Total {iabilities 1992f 93 199#~92 14,220,B69 8,200,985 7fi,453 64,895 1,084,796 1,458,272 15,382,117 9,724,152 3,758,484 3,4i?,422 ~ 33,"". 9, 992 33, 70fi, 5B0 52, 589, 593 46, 848,15~4 Fund Balances Contributed capital: lnvested in fuced assets Reta~ned earnings-- reserved for AB702 credi~ unreserved Total fund equiiy 3f),7fi4 30,764 69, 587 2$, 734 3o,so3,~s~ ~5,n2,4'!5 3Q,7Q4,114 25,831,913 TotalliabiEities and iund equity 63, 293~707 72, 660, Ofi7 A 59 crr~r oF s~rA ~rorncA Statement of Revenues, Expenses and Changes in R~e+a~nied Earnings [UNAUDITED] Wastewater Fund june 30,1993 with comparative totals for june 30,1992 Income 5tatement 1992~93 ,~~~92 ~pera~ng re~enues: Charges for services Operating expenses Personnel services Administrative indireGt Contractual services Repairs and maintenance Materiais and supplies uti~ities Casualty, property and iiabil~ty losses Depreciataon Other ~ o,sas,oa~ ~,ass,seo 1,257,130 ~ , 21 D,068 381,546 254,~498 3,3S2,S15 3, ~ 87,631 52, ~76 24,855 2aa,oss 2a2,s~ 3 80,229 68, ~ 49 261,514 ~ 71,594 502,272 483,771 956,460 2,fi44, 9 91 Total opera~ng expe~ses Operating incorne Nonoperating revenues tnterest income Other To#al nonoperatir~g re~enues Net income ({oss) before operating transfers Operating transfe~s in ~perating trans~ers out Ne# income {loss~ Retained earnings at beginnir~g of yeaz Retained eamings at end of year l,~i,919 8,247,57Q 3, 544, i 22 222,110 339,982 336,$58 10,115 fi3,540 350,097 400,398 3,894,219 fi22,508 1,496,052 2,fi98,847 (118,Ofi7) (739,701) 4,872,2Q4 2,5$1,654 25,8Q1,14fi 23,219,492 30,673,35D 25,841,146 A~(? APPENDIX C The City of Santa Monica THE CTI'Y OF SANTA MQNICA GEN~RAL AND ECONOMIC INFORMATION Introduction The economic and demographic ~nformation provided below has been collected from sources wluch t~e City deems to be reliabte. However, as there is a lag factar in the reporhng of such regional economic and demagraphic information, the current condition of the economy and its impact on the Ci#y may not be fully apparent in the regionai economic statistics provided here~n General The City of Santa Monica is situated on the westem side of I,os Angeles County, bordered by the City of Los Angeles on three sides and by the Paeific Ocean to the west. Santa Moni~a en~ompasses an azea slightly greater than eight square rtules and has an estirnated current papulahon of 88,C~, as of January 1, 2993, which makes it the eighteenth largest city in Los Angetes Couniy. The dimate is generally mild with an average annual mean temperature of about 62 degrees {F}. E~ctremes range from an average muvmum ternperature of 56 degrees (F} to an average high of 68 degrees (F). Annual rainfall has a~eraged about 14 inches. Elevat~on ranges from sea leeel to 4IX} feet above sea level. Government and Administration The Caty of Santa Monica was incorporated in 1886 and adopted iks C~ty Charter in 1945. In 1947 a council- manager form of government was estabhshed followu~g a vote of the City's residents and approval by the Cahfornia Legislature The City Council consists of seven rnembers with overlapping terms of four years Elections are held e~ery two years, at which rime three or faur Cauncil mernbers are elected. After each election, Council members select one of ti~eir group to act as Mayor, who then presides over Cauncil meetings. The City Counci2 appoir-ts, at i#s pleasure, a City Manager who serves as Cluef Execut~ve Officer and ~s responsible far superoising day-ta-day aperat~ons of #he Giy and for carrying out policies set by the Counci~ The City Counc~l also appaints the Caty Attorney and the City Clerk. During Fiscal Year 1988-89, the City began operating its "Pubiic Electronic Neiwork" {PEN) system PEN enabl~s the City's residenks to "talk" to elected Officiats and City warkers via their home-based personal computers. This two-way computer co~ununication system allows residents who have personal computers wrth moderns to access the City library's ma~n cazd catalag, send electroruc messages to Ctty staif to lodge compla~nts or ask far informahon, read City Cauncil agendas and staff reports, ateess a wide range of informat~on published by the City, and conduct puhlic electronic "conferences" on selected issu~s. PEN has enhanced ti~e abilrty of resxdents to participate in their Local government. Further, tiie City uses its own cable television channel to braadcas# City Counc~l and other commission and board meetings and a wide rang~ of City-created public informatinn prograrns abaut the City, its people, and government operations Listed below are brief biographies of the Mayor, City Council rnernbers, City Manager, Director af Finarice and Director of General Services, af the City of Santa Monica. Tudv Abdo, was elected to the City Co~ncil ~n 1988. Her current term expires in November 1996. She was selected to serve ane yeaz as Mayor frarn November 1490 to November 1991, and one year as Mayor Pro Tempore fram Navember 1991 to November 1992 In Novernber 1992 after re-elechon to a four year term on the Council, she was selected to serve as Mayor for a two-year term endLng in November 1994. Ms. Abdo works part time as the Admuustrator at the Ghurch in Ocean Park and part hme as Bookkeeper at the Peter 1Vorton Fairuly Office. G1 Ken Genser was etected to the City Council in November I988 and re-elected in 1992. His kerm an the Council expires ui 1996. He served as Mayor Pro Tempoze from November 1990 bQ November 1941. He served as Mayor for one year, frain November 1991 to November 1992 Mr. Genser works as a eonsultant in comrnuruty planning and deveiopment. Asha Graenberg+ was elected to the City Council in November 1992. Her terfn on the Council exp~res in November 1996. Ms. Greenberg is an atborney wii~ the Los Angeles City Attorney's Office. Dr. Rohert Halbrook. was eletted to the Citjr Cauncil in November 1990. H~s term on fihe ~ouncil expires ~n November 1994. Dr Holbrook previously ser~red two terms on the Board of the Santa Manica-Mahbu Urufied School Distnct, from 1983-199{1. He is an Assistant Professor of Cluucal Pharmacy and Director of the Uruversrty af Southern CaI~fornia Pharmacy. Keliv Olsen. was elected to the City Counei~ u1 November 1990 I~is term expires in November 2994. Mr. Olsen is a vvrrter. Paul Ros~.mstein was elected to the City Council u~ November 1992. His terrn expires in Navember 1995 Mr. Rosenstein xs an ele~trician. ~ntoruo (Tnny~ Vazauex was elected to the C~ty Council ~n November 199U. His term expires u1 Navember 1994. In Navember 1992 he was selected to serve a iwa-year term as Mayor Pra Tempore Mr. Vazquea is a commuruty planner and eduCator and he also works €or United Way. Tohn Talil~, City Manager, was appointed City Manager ui 1984. Prior to h~s appoin~nent, Mr. Jalili served as #he City's Assistant Manager for five years. From 1974 to 1979, Mr. Ja~ili served as the City's Commuruty Uevelopment Director Mr. Jalili has a Bachelor's Degree from CoIgate University and a Master's Degree from the Uruversity of Oklahoma Charies M D,~~s, Director of Finance, has been ~i his current posifion since May 19$3. Previously, for three years, Mr. D~n~us was Director af Financial Stud~es for a private cansulhng firrn and for thirteen years held vanous finan~ial management positions with Los Angeles County. Mr. Dennis has a Bachelor's Degree in Pol~ticai Science and Master's Degree ul Pubhc Admirustraf~on from UCLA and has cornpleted aIi requirements, except dissertatian, far a PhD in Pubhc Administration frorn USC r P 1 Director of General Senrices, was appoul6eci ta his current posit~on ~n August 1993. Pnor to that date Mr Perkins was, far two years, the City's En~ronmental Prograrns Manager. Fram 1988 to 1991, Mr Pezkins was the General Servlces Department's Administrahve Services Manager. From 19$3 ta 1988, Mr. Perkins served as Senior Management Analyst in the City Manager's OfExce Mr. Perkuls has a Bachelor's Degree in Sociolagy from the Uruversity of CaIiforrua, Berkeley, a Master's Degree yn Polihcal Science from UCLA, and a Master's Degree in Public Ad~unistrat~on frvm Cahforsua State University, Domu~guez Hills. Accounting Policies and Financial Reporting T'he City's accoun~g records are organized and operated on a"fund" basis, which is the basic fis~al and accaun~ng entity in governrnental accountuzg The three broad fund categories uiclude Govemmental Funds, Proprietary Funds and Fiduciary Funds. The operations of each fund are accounted far with a separate set af self-balancing accounts that compr~se its assets, liabil~ties, #und balance/equity, and revenues and expenses. The basis of accounting for all funds is more fully explazned in the notes to the City of Santa Monica combu~ed finanaaI statements containec3 in APPENDDC A. For the ninth straight year, the Government F~nance Officers Association awarded a Cerhfieate of Achievement for Excellence in Finaric~al Reporting to the City for its Comprehensive Annual Financial Report far the Fiscal Year Ended June 30, 1992. A similar award has been awarded to t~e City for eight consecut~ve years by the Califomia Socie#y of Municipal Finance Qf~icers. The City's Comprehensive Annual FtnanCial Regort for the Fiscat Year ended ~une 30,1993 will be subnutted for similar awards. G2 Budgetary Process During May of each year, the City Manager subnuts ta the City Council a proposed operating and capital impravement budget far the fiscal year cammencing the foliowing July i The operating and capital unprovement budget mcludes proposed expenditures and expenses and the means of financing them. Public hearulgs are conducted by the City Council to obtau~ citizen comments, and prior to June 3~, the budget is adopted through passage of appropriate resoluhons. Txansportatian The Santa Monica Freeway passes through the appmximate center of the Ciry on an east-west caurse and provides direct connection with downtown Los Angeles, appraxrmately 16 rrules to the east. About six miles sautheast of the City is the ~os Angeles ]ntemahonal Airport, which is easily accessible via the San D~ego Freeway, about one mile beyond the eastern border of Santa Monica on a north-south ~aurse. In the Fall of 19$9, the Gty purchased property ta encourage and facilrtate the possible future extension of a l~ght rail comit~uter Iine from downtown Los Angeles to the City. The pmperty could be used as a ra~l station and/or switching stahon. Regional transportation authorities are currently considering such an extension Population The follawing chart uldicates the City's populat~on from 1988 to 1993. CITY OF SANTA MONICA FOPULATION Year ~pvulation 1988 . ....... .......................... . ... .... . ... .. .... .. .... 88,9QQ 1989 .. . .. . ........... .......... ........... ...... . ..... . . 87,5Q0 1990 .... . ... ........................ .... ...... . ..... .. ..... .... 86,9a5 1991 ................. ... ... .... .. .... ..... .................. .. . 56,500 1992 .... . . ............. .. .................. .. . .. ........ . ... 87,3Q(} 1993 .. .. .. .. .. . ..... . . . .. . .. . . .. .. . .. .. .. . . . . .. ... . .. .. .. . . 88, G00 Source: U.S. Census for 1990, ather ~igures are State Departrnent of F~nance es~mates as of January 1, for each year Self - Supporting Opezations Santa Moruca operates an airport, a bus line, a cemetery and a pier The city alsa provides its residents with water and wastewater service. A portion of the net income from these enterprises, as determined in accordance with fecieral cost allocahon guidehnes, is trans#erred annuaIly to the General Fund to pay Eor adrrurustrahve support servi~es provided by General Fund depa~l~t~ents The Santa Moruca airport is a 215 acre general aviat~on airport, located a# the southeastern corner of the Crty It is the base of approximately 550 aircraft Signif~cant revenue is received through various leaseholds. The C~ty rerits an average of 18~ tv 240 of i!s Qwn aircraft t~e-down spaces, and also receives cornmissions on fuel sald at the airport In 1992, the City's 135 buses carried approximately 18.8 riullion revenue passengers, while traveling 3 6 rrullion miles. The systEm provides excellent coverage (a bus route operates wrthui a qUarter-rrule of almost e~srery resident) at a low cost (regular fares are $0.50 with discour~t fares available far the elderly, disabled and students through the purchase of tokens). The City's Transpartation Department also sponsors charter and excursion programs The Crty's transrt system, the Big Blue Bus, [1as been the rec~pient of awards far excellen~e in publxc transportation. In 1987, the Big Blue Bus received the American Publ~c Transit Association's preshgious Public Transportation System Outstanding Achievement Award for extraordinary achievernent in efficien~y arid effectiveness ~n 1990, the North American Transit Researcl~ Graup bestowed upon the Big Blue C-3 Bus its first annual Nabonal Transit Performance Award #ar Total Performance. The arganizat~on ranked the Big Blue Bus the best of 45 similarly sized systems in North Amenca. The Woodlawn Cemetery and Mausoleum was purchased by the City in 1976 and ~s operated as a self- supporting enterprise campetitive wlth Comparable private facilit~es. It is located in the south central portion of #he City. The Santa Moruca Pier is a Los Angeles County and City of Santa Manica landmark built at the turn of the century. It currently contains various restaurants, amusemen# and other retail establishmenfs The Pier's famous 1900-vintage tarousel, which has been designated a nahonal histor~cal landmark, has been completely restored and a new en#ry-way to the Pier contauting a children s park, add~t~onal deck space and retail space has been wmpleted The Water Division af the City is operated as a self-suppor#ing enterprise About 5f?°'a of the City's water is supplied by rts awn wells, stored in aver 16 acr~s of well fields and reservo~r grounds on Gty owned property u~side and outside the City limits. The remaining 50% 6f the water is purchased from the Metropoiitan Water Distriet of Southem Cal~fornia. The Cit~s modern a~bomated system delivers over 12 irullion gallons per day to 15,900 water accounts, at a cost of less than $ 27 per ton. The City's own water che~rusts supervise over S,IX]0 separate water quaiity and safety tests ger year in sta#e-licensed laboratories, to ensure that the lughest stan~ciards are met before delivering the water to the customer's tap. When the sta~e was suffering fram ongoing drought condit~ons in ].992, the City implemented conservai~an programs aimed at achieving 2~% cutbacks on water usage from,19901evels These programs rernained 'sn effect until Cahfom~a water suppiies reache~ normal levels. These water canservation prograrns also reduced the amour~t af mun~cipal wastewater that needed ta be treated and disposed. One af the Ciiy's water/wastewater conservation programs was a pmgram of retro~tt~ng bathrooms ~n the City with ultra low flow toilets anc~ ~ow flow showerheads 'This pr~gam wil result in a wastewater reduchon of appraximately 19 rrultion gallans per day, and sfgrufic~ntly reduce the Ciry's wastewater treatment and disposal casts by elirrunahng the need Eor the Cxty to acquire additional capac~iy in the local Hyperion Sewage Treatment Plant. Econamy, Industry and Empioyme~t Santa Moruca is a center of electronic, engineering, research, computer software and entertainment. Among its largest employers are the Rand Carporation, Lear Astronics Corporation, and Paper Mate Manufacturutg St John's Haspital and the City of Santa Moruca are the largest non-manufactunng empIoyers. Approximately 3,950 new enterpnses took out business heenses during Fiscal Year 1992-93 ~n order ta be among the I8, 435 businesses wluch part~cipate in the almost $4.9 billion City economy. 5anta Monica has expanded its tourism facilih~s t~ accommt~date a growing numbez of business ~isitors and vacahoners to the City Santa Manica completed its $12.6 rrullion renovation af the Third Street Mall, now called the Third Street Promenade. The renovat~on ~nc~uded adduzg 3IXl parlcu~g spaces to adjacent parkuig structures and compietely remodeled the area to enhance use by shoppers and those seeking night-tune entertauiment at severaI new movie complexes, restaurants, theaters, and other public serving facilihes S~nce the Promenade openeci ~ 1989, over $20Q million oE private rnvestment has flowed into the downtown sector, ~vith addihonal theaters, restaurants, and mixed-use pro}eets under construction. On tygual weekends the Third Street Promer~ade attracts up to 15,IX}0 visitnrs Dur~ng the gast year new reta~l ouflets have also located in the area During the past year, renovation was also completed on a regional shoppmg mal~, Santa Mon~ca Place, whxch is Iocatec! ad~acent to the Third Street Prornenade. Thzee major new hotels ha~e apened ~n the City since 1989 The 256 room Guest Quarters Hotel opened in Santa Monica in ApriI af 1990 and the new 350-room Loew's Hotel opened in June, 19$9. Most recently the 189 rovm luxury hatel, Shuiter's, also opened on the beachfront. Far the past several years, hotel/motel occupancy rates for the 3,2(X? raoms in Santa Monica have been among the l~ughest in the region. The City has alsa attracted sign~ficant new economic development, wtth the constru~tion of three ma~or busu-~ess complexes. The Calorado Place deveiapment, now called MGM Plaza when Metro-Goldwyn-Mayer Inc C-4 relocated from another nearby city, also hfluses such comgarues as IBM, Giorgio and Macguire Thomas Partners. Approxunately 660,IX}0 of the 1.26 rrullion square foot Water Garden office space cornplex has opened and is more than 90°/a leased with such fu~ms as the computer software Candel Corporarion. In addition, Sony Music Corporation, the largest retaii music prode~cer in the cvuntry, has relocated its west coast headquarters to Santa Moruca's new one rrullion square faot Arboretum development, a garden-affice eamplex, adding more than 250 new ~obs to the area. Even with tlvs new development, office vacancy rates in the City are approximately 129'0 During the last year, the National Acaderny of Recording Arts and Sciences, Inc. which puts on the Grammy Awards show also relocated to the City. Taking advantage of the City's tughly desirable environment, the Arnerican Film Institute began in 1991 to hold its annual rune-day intemat~onal meetir-g in the C~ty for mdependent movie producers to setl the~r films. More than 10,0(K? participants annuaity attend the event. Fuza~ly, a well known rnagazine, "Sunset - The Magazine of Western Living," has dubbed Santa Monica "Art City " More than forty galleries are open ir~ the City. Galleries in Santa Monica feature many of Los Angeles' leading edge art makers and those from other parts of the warld. Santa Monica's loeahon in Las Angeles County, the second Iargest rnetrapolitan area in the Uruted States, pro~ides access to varied employment opportuniries for its citizens, many of whom wark outsxde the City. The following tabie summarizes historical employrnent of nan-agricuitural wage and salary workers in Los Angeles County since I988 The f~gures presented are annual averages, based on a calendar year, estimatect by the Califom~a Emplayment Develaprnent Depaztment. LOS ANGELES COUNTY ESTIMATED AVE1tAGE ANNUAL EMPLOYMENT NON-AGRICULTURAL WAGE AND SAt,ARY WORKERS (In T~wusands) 1988 I989 1990 1991 1992 1993 {1} Mining 9.8 8 7 8.4 7.8 7 9 8 0 Construchon 14$.4 154.4 1b0.5 130.4 106 b 102 3 Manufacturing 904.3 88b 2 858 9 796.7 717.0 65b.4 Transportahon & Pubhc Uhlities 204.3 213 6 2216 214.7 203.2 197.6 Wholesale & Retail Trade 9515 961.4 972 0 $90.7 855 S 838 2 Finance, Insurance & Real Estate 286.0 288 4 292.5 272.3 254 ~ 247.5 Servi~es 2,098.2 1,18b.1 1245.7 1,180.G 1,133 7 142.3 Govemment ~Q~ ~ 521 8 538.4 539.3 539.U 518 7 Total {2) 4,1Q9 9 4,220.6 4,298 0 4,Q32 5 3,817 3 3,7ll Source• Califomia Employment Development Department. (1) Figures are for August 1993. (2} Totals may not add due to independent roundu~g C-5 The following chart provides a comparison, for the years indicated, of the unemployment rates in the City, the C~#y of Los Ar~geles, the County oE Los Angeles, the State o# Califorrua and the Uruted States ANNUAL AVERAGE UNEMPLOYMElV'T RATES Calendar City of City of County af State of United Year Santa Monica Las An~eles Las An¢eles Cali#ornia States 1987 4.2~0 6.6% 5 99~0 5.8~0 6.2~a 1988 35 55 4.9 5.3 55 1989 5.4 5.2 5.1 4.7 5.3 1990 4.2 6.6 6.1 5.8 5.5 1991 6 8 10.4 8.0 7.5 6.7 1992 6 3 la 9 9.6 91 7.3 1993 (1) 5.$ (2) 9 9{2) 9 7 4.1 6.4 Source State of Cal~forrua, Ernployment Llevelopment Department (i) Figures are for September 1993. (2) Figures are for August 1993. The major employers within the City and the number of persons empIoyed by each campany are shown below: CI1Y OF 5ANTA MONICA ~~o~ ~.o~s (as of June 30,1943} N~mber of Cornvanv Emvlovees St. John's Hospital 2,000 Santa Monica Hospital 1,475 City of Santa Monica 1,378 Santa Monica College 1,274 Santa Monica/Malibu Unified School District 1,067 Rand Corparahon 958 Lear Astrorucs Corporation 9IXl 1'aper Mate Manufacturing 82] Nat~onal Medical Enterprises 773 L A. Gear 750 Source• Santa Monica Chamber of Commerce. C-6 Personal Income Be#ween 1987 and 1991, the Ciiy of Santa Monica's rnedtan household effective buying income grew 28.8% compared to 19.9% for Las Angeles County, 21 7qo for the State and 2U 7% for the United States. 'Fhe fallowing table summarizes the total effechve buy~ng ~ncome for the Ciry, Los Angeles caunty, the State and the United States for the period 1987 through 1991. CTfY OF SANTA MONICA PEASONAL INCOME CALENDAR Y~ARS I987 THROUGH 1991 Total Effective Median House~old Buying Income Effect~ve Year and Area {OOOs omitteci) Buyin~ Inoome 1987 City of Santa Manica $ 2,p35,~8 $ 28,882 Lns Angeles County 130,015,864 30,059 California 42b,00$,347 3t1,357 United States 3,2~2,$47,131 25,888 1988 C~ty af Santa Mon~ca 2,002,46b 28,445 Los Angeles Co~mty ~24,522,222 29,561 California 426,174,[101 3(},088 Unrted States 3,064,0(}5,977 24,448 1989 City of Santa Moruca 2,Qb5,160 29,335 Las Angeles County 135,162,824 30,489 C ahfornia 444,488,647 30,713 Unrted States 3,287,489,252 25,976 1990 City af Santa Manica 2,086,448 31,7I9 Los Angeles CoUnty 138,244,091 32,976 Cali#ornia 477,7$4,771 33,342 United States 3,499,365,237 27,912 1991 (1) Crty af Santa Monica 2,426,202 37,213 Los Angeles County 14U,$72,315 3b,039 CaIifornia 49U,749,649 36,943 United States 3,728,967,Q43 31,245 Source: Sales and Marketing Management, The Surve,~ o~' Bu~ang Pvwer, Demographies USA 1992. (1) Updated data is not currently available. C-7 Education Publxc instrucrion in the City is provided by the 5anta Moruca-Malibu Unified School I7istrict with nine elementary schooZs, two rniddie srhools, three high schools and one altemahve school Total enrallmen# #or the last five years was as follows: CTTY OF SANTA MONICA PUBLIC SCHOOL ENKOLLMENT Frvm 1988 to 1992 1988/89 1989/90 19%)/91 I991/92 1992/93 Total Enrallment 9,242 9,133 9,289 9522 9,833 SoY.u~ce• Santa Moruca-Malibu Unified School Ihstrict, Second School Month Enrollment Culture and Recreation Southern Califomia's natuxal and cornmercial attractions brulg rnillians of visitors tv the area. The area's natural attractians include its modera#e weather, the Pac~fic Coast with its many beaches and small craft rnarinas, the desert and mountains. Among the ma~or cammercial atkrachons are Disneyiar-d, Knotts Berry Farm, Magic Mountair~, mot~on picture and telev~sian studios, the Los Angeles Mus~c Center and the Rose Bowl Tearns represent~g every ma~or league sport are based m the sunounding azea. Wi~hin the C~ty and ~r- the immediate area there is an exceptional selechan vf cultural and recreahonal opporturuhes According to the Santa Mon~c~ Chamber of Commerce, there are 52 churches of all denominat~Qns, 22 movie theaters, 51ive theaters and 4libranes ~n the C~ty The 23 parks in the City, totahng over 108 acres, include Falisades Fark and Clover Park Museums inc~ude d~e Santa Moruca Museum of Art, Hentage Museum and the Museum of Flying. Other recreational facilities include the Santa Manica Pier, witt~ shapping and duung faciIit~es and the faFnous Santa Monica Carousel, t~-e Santa Momca Cieic Auditorium, wtuch hosts trade shows, canventions and stage and music shows and 25 public tennis courts. The temperate climate of the area and access to the Pacific Ocear~ and nurnerous county, state and nat-onal parks provicie the City res~dents with a nch variety of outdoar acfivities ~nclud~ng boaiang, ~stung, hiking, horseback riding and bicyclmg. Retirement System The City contributes to the State of California Public Empiayees' Retiremen# System (PERS), an agent mulhple-employer publ~c employee rearement system that acts as a common ulvestment and adrnazustrahve agent far c~ties in the State. The City's payrflll for employees covered by PERS for the year ended June 30, 1993 was $b1,b44,717. Total payroll for the City far the year ended June 30, 1493 was $79,112,805. All full-time City ern~loyees are eligible to part~cipate in PERS, with henefits vesting after 5 years of service. Empioyees are designated as safety {police officers, f~refighters and a#hers designated as safety by law) ar rruscellaneous (all others). Safety employees who ret~re at or after age Sa with 5 years of credited service are enhtIed to an annual retirement benefit, payable monthIy for life, in an arnount equal to a benefit factor multiplied by their final campensation which is the average monthly pay rate for the tast conseculave 12 monkhs of employment (or any 12-month penod in which pay was tugher). The benefit fac#ar is an amount equal to between 2.0% and 2.7~o rnulttplied by the number of years of credited employment. The percentage arnount is based upon the age of the empioyee at ret~rement, ulcreasing fram age 50 bo age 55. Miscellaneous memhers who retire at age 50 with 5 years of credited service are enritled to an annual retirement benefit, payable monthly for Iife, in an amount equal to a beneht factar mult~plied by the~r final compensation. Final compensat~on for m~scellaneous members is the average monthly pay zate for the last consecut~ve 36 months {or any 36 manths during which the pay may have been tugher} of empfoyment 'The C-8 benefit factor is an amount equal ta between 1.042% and 2 418% mulhplied by the number of years of cred~ted employment The percentage amount ~s based upon the age of the employee at retirement, increasing from age 50 to age 63. The PERS aiso provides death and disability benefrts These benefit provisions and ali other requirements are established by state sta#ue and Caty orduiance. PERS requires that miscellaneous employees contribute 7~o and safety employees contribute 9% of their annual salary to PERS. However, this benefit, like all others , is sub~ect ro collective bargaining. Ail but one of the City's bargaining uruts has negotiated far the City to contnbute this portion on behalf of the empIoyee. the city is required to contribute the remain~ng arnounts necessary to fund the benefits for its members using the actuarial basis recommendec~ by the PERS actuaries and actuarial consultants and adopted by the PERS Board of Administrahon. For Fiscal Year 1992/93, employer contribution rates were as follows• Miscellaneous Safety Cate~or~r Annual Rate Componen~ Cate~orY Fire Police A. Normal cast rate 5.3603'a 14 6b2% 13.4$4~'0 B. Unfeinded liab~lity rate Q 342 1.981 1.97~ C. Totai required 5.702 1C.643 15.463 The contributions to PERS for 1993 af $9,987,691 was made in accordaxice with actuarially determuied requ~rements cornputed through an actuarial valuaf~on perfarmed as of June 30,1992. The contribution consisted of (a} $4,80(},$5b normal cos# (7.8qo of ctxrrent cover~d payroli) arid {b} $5,186,835 amort~zation of the unfunded a~tuarial accrued l~ability (8 5% af current covered payroll). The Gty contr~buted $5,300,377 (8 6% of current covered payroll), ernployees contributed $4,687,314 ~7 6°/0 oE current covered payr~lI}. The actual employer contribut~ons were reduced by $4,427,325 due to percrutted usage of credits resulhng from state legisIati~e achon, Chapter 83, statutes of 1991 (AB702) Labor Relations The City has adopted a procedure by which its ernpi~yees meet and confer with the Cxty on aA negatiable matters under the Meyer-Mihas-Brown Ack. Mast permanent City empfoyees aze represented by one of nine unions, including 291 by the CLOCEA Uruon, 3p7 by #he Municipa~ Employees Associahon, Z47 by the Transpartahon Union, 184 by the Santa Monica Police Officers Associat~an and 97 by the Santa Moruca Firefighters Associahon. Ail ageements expired u1 June 1993 and are currently be~ng renegot~ated. The C~ty has not experienced uzterrupt~on in City services due to labor disputes. C-9 Self - Insurance The City utilizes internat service funds for its self-insurance programs Four separate funds are mamtamed, pro~iding for the following ~nsurance coverages: general liabil~ty, autornobile liabihty, bus operations liab~lity and workers' compensation The City has obta~ned excess liability coverage through the Authority for Califorrua Cibes Excess I.iability (ACCEL), a~omt powers authonty of nnedium size Cal~farnja municipalit~es. ACCEL pools for vir[ually every catastraphic loss incurred by 1ts rnembers, thereby eiurunating or reducing the need for comanercial excess insurance protect~on The fallowing are the retentions and insurance coverages fflr each seif-insurance fund Self-Insurance F~ccess Coverage Self-Insurance Fund Retention (SIRI (Amount Over SIR} (3} General Liability $1,{~00,000 $ 19,0OO,OUO { 1) Automobile L~ability 1,000,000 19,000,0(}0 { 1 j Bus Operahons Liabil~ty 10(},000 19,900,t1aQ {2) Warkers Campensation 5IX},OUO statutory Source: City of Sanka Monica Risk Mar~agement Ofhce. {1} Caverage provided through ACCEL (2) The City purchases $9Q0,0(}Q of coverage in eaccess of SIR. In addit~an excess coverage of $1Q million prov~ded by ACCEL and the purchase of excess l~abihty ~nsurance. {3) ACCEL coverage is limrted ta $9IX},{)00,004 ultimate ne# loss for each occurrence, in excess of the liahihty Iimit, and $27,0(}0,00(l uldmate net loss in the aggregate for each member per year. Ketail Salea Reta~l sales for the C~ty in 1492 increased 8 325% over the 1987 IeveL Between 19$8 and 1992, Santa Monica experienced an average annuai growth ut taxable sales of I 67%. Wfule the Gty expenenced a decline in taxable sales in 199L The following table illustrates the growth of taxable transactions in the Caty by type of business. CITY OF SANTA MONICA TAXABLE TKANSACTIONS BY TYPE OF BUSINESS FOR CAI,~NDAR YEAAS 1987 THROUGH 1992 (OOOs omitted} Appazel Stores General Merchandise Drug Stores Food Stores Packaged Liquar Stores Eating & Drinking Places Home Furnishings & Apphances Building Mater~als & Farm Tmplements Aufo Dealers & Auto Supplies Service S#ations Other Retaii Stores Retail Stores Tatal All Other Outlets ~ 1988 1989 ~ 1991 1992 $85,122 $ 82,870 $ 85,44~ $ 93,227 $ 115,185 $ 115,314 113,527 109,902 10b,838 10(},632 98,814 99,16b 20,372 22,402 23,435 24,D22 26,464 30,3$2 39,691 41,725 45,403 48,602 54,993 54,014 9,486 9,210 10,138 9,688 10,421 10,731 173,103 175,655 185,323 195,740 195,804 208,600 45,302 53,927 5b,{~5 58,124 50,139 4b,75b 47,353 57,294 61,194 58,725 50,422 44,819 26C,491 278,792 302,661 305,152 244,309 221,961 44,G{}0 164.Ub9 $1,009,476 254.4&7 41,922 171.018 $1,0~44,717 278.ik~4 43,OQ9 4b,219 190.379 2{1£i.345 $1,109,905 $1,145,476 286.304 289.C164 TOTAL AI.L QUTLETS $1,263,943 ~1.322.761 Source• Cal~forrua State 8oard of Equalixation. ~1.39b.7I4 ~1.437540 41,298 46,427 ~Z 194.196 $1,Q88,9U1 $1,Q73,366 271.101 245 A06 ~1.3h0.[}[}2 ~1.3Fi9.172 C-10 ~uila;ng Permif A~avity The following table shows the number and ~alue of residential and commercial units constructed in the Clty between Fiscal Years 1988-84 and 1992-93. CT1Y OF SANTA MONICA NEW BUILDING YERMIT VALUATION FiSCAL 1fEARS 1988/89 THAOUGH 1992/93 Fiscal Year Encled T~ne 3Q 1989 1990 1991 1492 1993 Buildin~ Permits 1,21$ 1,258 1,105 9b8 943 Dwellin~ Units 429 394 26{l 375 145 Permit Valuat~on (OOQs o~rutted) 23i,614 177,129 149,586 115,597 65,943 Source: City of Santa Ma~uca. Bank Deposits ThE following table shows the amaunt of bank depasits in the Czty fram 1958-1992 Fiscal Years CITY OF SANTA MONICA BANK DEPOSITS (In Thausands ) Year Ended Total Bank Tune 30 Derosits 1958 ... ............ ............ ..... ............. . ..1,245,Q21 1989.... ...... . . .. . ....... . . . ....... .. 1,28$,86b 1990 .. . .. ......... .. . . ........ .. . ... .1,313,947 1991 ..... .... .. .... .. .. . .... . .. .. . ..... . .. .....1,613,409 1992 ..... ........... . . ... .. . . .. . .. . ..... .. . ...... .1,586,62$ Source. State Department of Banking 1943 figures not ava~iable unt~l Jariuary 1994. C-11 Princigal Property Taxgayers The ten largest secured taxpayers in the City for Fiscal Year 1.992/93 were as follows: CITY OF SANTA MONICA PRINCIPAL PADPERTY TAXPAYERS FISCAL YEAR 1992/93 Taxpayer Maguire Thomas Partners Water Garc~en Association St. John's Hospital Santa Moruca Hospital Barclay-Curci Inv Co. Prudenhal Insurance Ca Santa Moiuca Place Associates 1Q0 W~lshire Associates National Med~cal Enterpnses Inc. Santa Monica Hotel 'I~pe oF Business Co~nmercial Real Estate Lend~ng/I7eveloping Real Estate Development Hospital Hospital Commercia~ Real EstaYe Rentals IrLSUrance Real Estate Development Real Estate Developrnen~ Medical Services Hotel Percentage of 1992193 Assessed Tatal Assessed Valuation Valuation $ 254,862,T$1 2.76% 2{18,271,279 2 25 142,92b,768 1.54 84,327,171 0.9I 83,384,718 o.sa 82,788,369 0 9Q 79,938,559 0.87 70,518,695 0.76 6$,161,41{3 0 74 5fi,761,856 0 61 Total Pr~ncipal Property Taxpayers Assessed Va~ue Tntal City Assessec~ Vatue Source: City of Santa M4nica U#ilities $1,131~941~006 12 24% $9,238,032,876 100 00% Gas and eIectricity service are provided wrthin the City by Sout~ern California Gas and Southern Cal~fom~a Edison, respeCtively. General Telephone suppl~es telephone service. The City provides water and sewer service C-12 Asseased Valuation The valuat~on af property in the City is established by the Los Angeles County Assessor, except for public un~ty property which ~s assessed by the State Board of Equal~zahon Assessed vaiuahons are reparted at 1QQ9'o of the full value af the praperty, as defined in Arncle XIII A of the California Const~tut~on Two types af State-reimbursed exempttons affect the valuahan of praperky. The first currently exempts 100% of the full value of bus~ness inventories from taxaban The second exemption currenfly pmvides a creciit of $7,Q00 of the full value of an awner-occupied dwelling #or wl~uch applicat~on has been made to the County Assessar Revenue estimated tv be lost ta local taxing agencies due to the above exerr~ptions has u~ the past been reimbursed from State sources Reimbursernent is based upon total taxes due upon sueh exempt~on values and therefore is not reduced by any estimated amount of actual deliziquenc~es. CITY OF 5ANTA MONICA ASSESSED VALUE OF 'TAXABi,E PROPER?Y ~ISCAL YEARS 1988189 THROUGH 1992193 Fiscal Year Ended Real Property Personal Praperty I~Tet Assessed j~,uie30 Assessed Value l~) Assessed Value Less Exemption Value 1989 5.903,433,208 34,965,698 264,5G1,185 5,673,837,721 I994 b,G02,103,732 25,479,638 259,597,012 6,367,986,358 I991 7,467,D39,080 36,138,300 190,7755~ 7,312,421,874 2992 8,363,870,9Q3 62,O1Q,757 320,026,741 8,1Q5,854,959 I993 9,036,119,694 64,846,b69 340,632,216 $,760,334,147 (1) Consists of land, improvements and gublic utili~ies. Excludes net unsecured property. Source: City af Santa Monica. Ad Valorem Property Taxes Taxes are levied far each Fiscal Year an taxable real arid persanal property which is srtuated in the City as of the precedu~g March 1. For assessment and collection purposes, property is classified either as "secured" or "unsecured," anci is listed accordingly on separate parts of the assessment roll. The "secured rall" is that part of the assessment roll contai~vng State-assessed property, the taxes an which are a hen on real properry sufficient to secure payment af the taxes. Oeher property is assessed on the "unsecured ra2l." See "CONS~t~1~l~UTIONAL AND STATUT41tY LIMITAT14NS aN TAXES AND APPRQPI2IATIQNS;' above. C-13 CITY DF SANTA MONICA AS5ESSED VALUATIONS, TAX RATES, SECURED LEVIES AND COLLECTIONS AND DELINQU'~NCIES FISCAL YEARS 1998189 THROUGH 199?J93 Tax Rates Assessed Fiacal Year Total Assessed (per $lU0 Uncoliected Ended Valuatian ValuationZ City Secured Current Percent Tune3Q (OOas)[1) Citv (2) Total Tax Le`rv Lew(3} Delinauent(3} 1984 6,~25,429 ~ 1 Q3 9,p44,682 595,775 6 0 1990 6,745,846, -0- 1.~3 10,205,146 828,Q40 S 1 1991 7,735,589 U.Ol 1 Q4 11,902,3~0 892,673 7.5 1992 8,559,691 0 Ol 1,Q3 12,956,523 804,600 b 2 1993 9,235,033 0.01 1 ~2 13,036,247 $49,463 6.5 Source• C~ty of Santa Moruca (1} Consists of real property, secured and unse~ured personal property, public utilit~es, less total exempt~ons (2) Rates for Fiscal Year 199~/91 to F~scal Year i992-93 reflect voter approved overr~de for library general obhgation bonds. Property tax revenues are distributed by the County ~n accordance with applicahle law. (3} The data presenteci represents the Caty's proportionate allocahon of County-wide totals and is not based on the actual amount of taxes uncollected within the City. Tax Aeceipts Taxes received hy the City include Uhlity User's Taxes, Sa~es Taxes, Property Taxes, Business License Taxes, Franctuse Taxes and other miscellaneous taxes O# such taxes, U#~lity User's Taxes, Sales Taxes and Properiy Taxes const~tute the major sourees of revenues Property Taxes are discussed above. A brief dlsc~ssion of Uhlity User's Taxes and Sales Taxes foIlows• Ut~lrty User's Tax Ttie Utility Tax is imposed on aII users of naturai gas, electricity, water, wastewater, cable telev~sion and telephone services withu- the City's limits. 'T~e tax rate is 1{}°/0, effective Juiy 1993, af all udiity charges The prior tax rate was 9.5% and was in effect since Navember 1990 and was not applied to water and wastewater ser~ces The Utility Tax has been ~n effect since July, i969. An exemption frorn the Uti.lity Tax is available to senior citizens over the age of 65 and to permanently disabled ~ndividuals, pravided that the combv~ed ad~usted gross income of aIl household members is below $20,261 or $17,681 for persans l~ving alone. As provided by the State Constitution, insurance companies are exempt from the Uhhty Tax In addiaon, county, state, federa~ and foreign gavernments within the City are not subject to this tax, as the City has no authority to impose a ta~c on these entit~es. Exemgt~or~s account for a minar amount af the totai Utilrty base. Utility camparaes, with the exceptian nf the Ci#y's Water and Wastewa#er Divisions, coIiect and transmit the Uhlity Tax monthly to the City's Finance Department which then deposits the tax revenues nnto the G~eral Fund. C-14 Sa1es Tux A sales tax is impased on retail sales or consumption of personal property. The tax rate is estabhshed by the State Legislature. Effective July 15, 1991, the statewide tax rate is 7.25% An addit~onal 1% is collected ~n Los AngelES County far transportation purposes. The State collects and admirusters the tax, and makes distributions on taxes collected witlun the City as foAows: State General Fund....... . ................... .................. .......... ........................ b 00% Caunty.... .... . ... ................ . .. ..... ..... . ................... ..... ... ..... ... ... ... .. .25% City . . ... .............. . ........ .... ........................... . .. .. ...... ... ... ....... .......... 1.00% Los Angeies Transportation Commission ... . ...... .... ..................................... . .... .. .. 1 QO% Total ................. . . .. .... .... . . ............... .... ...... .. . ...... ... 8 25% The State's admisustrat~ve costs of 0 829'o are deducted hefore distribuhon Sales Tax revenue collected by the State is directly depositeci monthly ta the City's General Fu~d. The fallowing table sets forth Tax Revenues received by the City, by source. CITY OF SANTA MONICA TAX REVENUE BY SOURCE FISCAL YEARS 1988/89 THR~UGH 1942/93 (ODUs omitted) Fiscal Year Ended ~ 14R4 199D 1991 1992 1993f11 Source Utihty User's Tax $ 10,475 $ 12,449 $ 15,453 $17,217 $17,997 Sales Taxes 15,585 1b,161 16,284 ~5,460 1b,048 Property Taxes (2} 10,066 11,645 13,438 I4,935 14,410 8us~ness License Taxes 6,308 6,433 9,853 10,353 10,355 Transient Occupancy Tax 3,598 5,133 6,255 6,b53 7,086 State af Cahforrua In-Lieu Taxes (3) 3,363 3,340 3,302 2,974 3,072 Real I'roperty Transfer 'Iax T7~ 513 345 1,192 1,442 Franchise Taxes 2,421 2,824 757 824 840 Miscellaneous 213 Taxes {4) 676 629 6Q1 67b Total $53,264 $59,717 $6b,288 $70,284 $71,4b3 Source. City af Santa Moruca (1} Unaudited (2} Includes ad ualarem properEy taxes for purpases of pa}nng debt s~rvice on general obligation bonds. (3} Matar Vehicle In Lie~ taxes. (4} Condomiruum taxes, cigarette tau, kra iter caach hcense. Lnng Term Debt As of June 30, 1993, the combined total outstanding long term debt of the Clty was appzo~amately $79,430,OIX?, all of wtuch is self-supported from revenues The City's long-term debt is provided on the follo~nnng table: C-i5 CITY OF SANTA MONICA SCHEDl1LE O~' f,UNG-'T$1tM D~SHT FISCAL XEAIt 1992193 (1) LTb LTD LTp Oatstanding LTD Iesued Matured Outetaading ~`yQe of D~te af Xears d Lntarest qrlginal Iesue w of During Uurlag ~e of ~~ I~lg M~IIlY B~S~.` ~ Aln4~A~ ~G~f ~! Yerr F~~1 YeRr ~Q~ -Wsstewater Ea- ' terprise Revenue ~o~ds {I)Pgrade of Treatment PLeut} 111Z6J91 l993-22 6 25 534,200,C100 S34,20Q,OOd -0- 5285,000 533,915,000 --City af Sanca Montca General Qbligatlon Bopds (199~ Main ~,ibrary Improv~ mCntE) dl10-9Q 1992-14 6.9 4,SOQ,DI?0 4,495,OOU -U- b5,p00 4,43U,UQ0 _acy o~ s~~ Monica Re~de- velop. Agency ~ (1992 Tax A11o- h.a C8t104 ~C~1tld~Il$ °` $onds.dcean Pari~ 1 LIl/92 1943-18 6 84 1 I,32S,000 -a 11.325.OOD -0- 11,325.OOD --City af 5~nta Montca Par~ing Authority ltefund- ing I.ease ~tev- Cn-~e Bonds 12/1l42 1993-17 6 35 14,485,000 -a 14,OB5,000 -0- 14,OSS,000 --C~[y Of $8IIk3 IVI0I1~C8 ~C~k~w catea of Part.ici- patlon (1985 Alr- porc Fac~uc~esl iatrss 1~2-m g s t a,a2s,ooo 4, ~ ~s,ooo -a ~~s,ooo a,a~o,ooo --City of Santa Manica Re- develop. Agency 1492 Lease Rev- ea~e ~oads- {DpwutOWp} 1Q~1A2 1993-08 S 98 11,635,UOU -0~ I1,635,Q00 -(~ 11,b33,00D ~42~0~~ 537~400 S48~Swi~ S79~0~~ Source: City of Sants Monica (1) Exclu~dea 1966 Psrki~g Authority Sonds, 1984 Redevelopment Agency Bonds. 19$$ Redevelopment Agency Refund'eng and Refinancing Bonda, 198b Third Srreet Mal2 Cert.IFcsces nf P~rt3c#petion and 197$ Redevclap~t-cnt Agency Parking Le~se Revetwe Bonds which have been defeased. The follawing table sets farth assessed value within the City, the applicable debt lunit, the raria af ~sonded debt to assessed value and the bonded debt per cagita. CITY OF SANTA MONICA ASSESSED VALUE, DEBT LIMIT AND BONDED DEBT Aatio of Fi s ¢al Total Bonded Year Assessed Debtto Bonded Ended Estimated Value Legal Debt Legal Debt Total Bonded Assessed Debt Per ~une 30 Povulation {1} (p0ps) (3) Limit (4) Marvan Debt {5) Value Cauita 1989 87,500 $6,025,429 $b02,542,909 $5$3,193,361 $2i,405,000 0.3& $244.b3 1990 86,905 {2} 7,Q05,298 700,529,793 677,153,419 25,505,000 0 3S 293.48 1991 86,500 7,964,045 795,404,487 773,989,643 25,(}80,OD0 0 32 289 94 1942 87,408 8,940,59Q 894,058,987 872,219,994 75,740,OD0 0.85 866 51 Z993 88,600 9,&40,8(~i 964,080,595 940,402,5E}5 75,390,000 0.78 850 90 {1) All Estimates are per State Department pf Finance, except for 1990. {2) 199Q Census (3) All assessed values are stabed at 1{l0% ~f full cash value. (4) Pursuant to the City's Charter. (5) includes Lease Revenue Bonds and Tax Al~ocahon Bonds for Redevelopment Agenry, General Obligalaon I.ibrary Bands, Wastewater 8onds, and Parking Authonty Refunding Lease Revenue Bonds (Excludes Airpart Certficates of Participatian which is ~ot Bonded Debt) Source. Ciiy af Santa Monica CITY OF SANTA MONICA ~.EGAL DEBT MARGIN June so,199s Net assessed value $9,Z3S,Q32,87b ~'lus exempt property 402.773.07b Tatal assessed value $9,640,8Q5,952 Debt lirrut-1Q percent of total assessed value(1) $9&4,080,595 Amount of debt apphcable to debt limit: Total bonded debt $27,39fl,000 Less. Assets in debt serv~ce funds availabie far payment af pruic~paE 3.711.910 Total amount of debt applicable to debt limit Legal debt margu- $ 23.678, 0,_9Q $ 940,402,505 Source. City of Santa Monica (I) Per Sect~on 607 of the City Charter, bondec~ ir-debteclr~ess of the Crty may not exceed 10% of total assessed valuaaon of groperty within the City, exctusive of any indebtedness incurred for the purpose of water suppiy or sewers or storm drains C-17 Direct and Overlapping Debt Lhrect and overlapping bonded indebtedriess is shown in the fallow~ng table• CITY OF SANTA MONICA STA~I~~MINT OF DIRECT AND OVERLAPFING DEBT As oE june 30,1993 The 1492-93 Assessed Valuation is $9,043,858,871 affer deducting $263,325,533 redevelopment tax a~Zocation utcrernent. D~rect and OverlanoinQ Bonded Debt lll Los Angeles CoUnty 2 04$% $ I,596,211 I.os Angeles County Building Authoriries 2 048 49,2b2,588 Los Angeles County Supenntendent of Schools Cerhficates of Panc~ipation 2 048 391,061 Los Angeles Counry Flood Contro~ I]istnct 2136 2,228,774 I.as Angeles County filood Control Distnct Cerhficates of Participation 2.136 806,020 Metropahtan Water District 1147 8,5365~ Santa Monica Cornmunity College Distnct Cert~ficates of Participation 69.798 10,536,008 Los AngeIes Community College Distnct Cerhficates of Participation a.oa~ 4,SZ9 ~.os ar-~e~es vru~ea s~n~i n~s~~ a oa2 ~ Santa Mon~ca-Malibu Urufied Schaol District Cerhficates of Panc~ipation 69.841 52,593,765 City of Santa Moruca Library Irnprovement Generai ~bligation Bonds 100 000 4,430,000 Ciry af Santa Mamca Redevelopment Agency 1Q0 0[}~ 11,b35,000 Gty of Santa Moruca Parkuig Authority Refunding Lease Revenue Bonds 100 OUO 14,{?85,000 City o# Santa Monica Airport Cert~f~cates af Panc~~pation 100.0(}O 4,U40,Q00 Los Angeles County West Masquit~ Abatement District Cerkificates of Participation 6.049 75Sb4 Total Gross Dire~t and averlapping Bonded Debt $160,221,424 Less I.os Angeles County Certificates of Panc~epahon {100% self-supporhng fram leasehold revenues on propernes ~n Marula Del Rey) 2•7~~7 Tota~ Net Direc~ and Qverlapping Bonded Debt $157,461,Q27 Rahas to 1991-92 Assessed Valuatian DireCt Debt ($34,190,000) 0 3$% Tatal Gross Debt 1.77% Total Ne# Debt 1.74% Share of Authonzed anci Unsold Bonds: Metropolitan Water Distri~t $573,500 Los Angeles Flood Control District $394,092 State School Building Aid Repayable as of 6/30/93 $ ~ Source: Califorrua Murucipal Statist~cs, inc. of San Francisco, California (i) Excludes tax allocat~an bonds and non-bonded capital lease obligat~ons. C-18 Lease - Purchase Obligations The Ciry has seven lease-purchase obligations outstanding. All currently out~tanding lease-purchase obligations will be paid within six years. These short term obhgahons were incurred for the lease-purchase of the following items• an aerial ladder fire truck, iwo triple comb~nation fire trucks, computer equipment and ttivo Kodalc Ectaprint maclvnes. 'Fhe total principal amount outstandu~g for the lease-purchases is $847,380 General Fcu~d Financial5urnmary Tlte information cvntauied ~n the follawing tables of audited revenues, expenditures and changes ~n fund baiances, and assets, liabili#~es and fund equity has been derived from the Ciry's audited financial statements for the five Fiscal Years ended June 30,1992 A capy of the City's audited financial statements for the F~scal Year ended June 30, 1992 is attached as Appendix B hereto. Audited #inancial statements for priar years are available upon request frora the Futan~e Department of the City C-19 CITY O~' 3ANTA MONCG G~1~+SERAL PUNDBALANCE SHB~T FISCAI. YEARS 1987188 THROUGH 199~92 ~ 128~ 1~2 1224 1221 l~ ('asb aa~d Inveetmrnte 523,483,222 525,688„632 523,347,548 $30,407,379 526,32G,873 ilecdvebles (13ot, whct~ appl~cablQ of Aflowance for uncc~llewblee) Accaunh 2DR,342 342,635 824,999 903,353 1,304,797 Nata -- SOO,U00 500,000 SOO,C100 1,741,2?.~ AccruedInte:eat $i,031 121,527 111,590 259,150 381~38 HopatyTaxes $16,427 352,894 790,670 875,011 263a4S4 I~ory 612,769 581,38] i,Q63,046 948,194 673,$63 Dwc fram Otha~ Govemm~tal Umta 518,142 -- -- -- 1,.253,026 P~+aprnd 8xpenaee 6,973 7,751 '1,734 12,363 201,081 Advenoes to Otl~er Funde 19,487,62? 24,057,SOS 28,177,236 30,53a, l28 35,136.3 U R~ded A~~et~ 19,330,414 23,939,817 29,382,392 25,324,704 22,889,012 l.~nd ~ield for Reaale ~_ - 17.270.791 _ ,17 r270,791 21.241 ~25~ 7'OTAI. ASS~'1'S ~ 564~ 5~0~ ~7S 692142 S10L,476,106 5107 031 873 S 1 I 1,~ 1.IaMlitie~ Accaunta Paynble and Accavad liab~liuea ~4,i66,667 54905.004 S5A42,489 SS,S65,785 5,848,32a Dlata Payubla -- -. .. -- 1,2?.3.000 Contmcts PayaWe 12 i 929 840.2b2 824 730 92 2S0 212,223 (Itetazned Pes~e~-tage} Deferied Revenue I6,325,x04 28.422,398 32,048,968 31,258,857 29,527,573 (~ Payabke fmm Itatdcted Asede - De~osite 53,531 115A93 212,540 231,90i 235 012 o A~veinceu ttvm Qther Funds -- -- 11.310.p93 ~ R 11 ~$61,425 12.028, l 16 1'OTAE, C.IABII..1'I7ES S~1,677,531 534,283,162 549,489,280 $49,U10„219 549,044,?AB Puod ~encca: Reaerved Por. Ma111mp,pvane~te SIU,9f}3„273 54.466.870 51,923A18 S1,4d5,127 51,127,Z34 lnve~tory 412,T69 b81,381 1,063,046 948,944 673,8d3 Advances to Othrr Fundr 11,499,725 13,188,996 18,186,542 20,274,172 24,002,932 Fa-cwnbrmscca (GANl+ied} 1,153,327 1,875,203 1,75$,29G 1,833,710 1,718,946 CapdalGssprovemenb(GANNed) 3,118,744 948,279 948,279 948,Z79 948,279 Caeh Liquidity (QANNad) 3~346,996 3~34G.996 3~346~996 3~546~996 3~546,496 C~vsc Area L)evdapment (GAMde~) 9R6,953 1,i50.86$ 1,041,]34 1,540,590 ],543,419 }{otnc~as Prugram~ -- - -- -- 3U0.006 Low aad Madeiate Inmme liauung -- - -- -- l,232,D29 Pico ~Teaghborhood (GANNcd) 1 AO,OUO -- -- -- -- Mal! Aasesament I~ehid (GA1VNed) 588,066 548~53 527,774 693,206 9Q4,7l5 PierReatoret~,on -- 2,415,36'] 2,685,045 2,2bS,967 -- Prcp~id Expassra 6.973 7,751 7.734 12,363 201A81 librsry G.O. Bonds -- -- 1,339,101 1,316,876 1,264.717 Land I{eld for Raate -- -- G,U37.500 5,17i,000 7.990,138 Aitpa~t I.oan (O,AN1VeA) -- -- 900,00() 30D,tlW 981~999 Amencao Youth I-Y~tel -- -- -- SOU,000 SOOA00 PER5 .- -- -- 66,83Q 2,689,707 Speaflc Coahnutng Gpltel Ptty~ecte (GANNed) '1,118,905 5,866,737 3,75.5,998 7,950,740 6,Od9,003 UnreBerved (GANNed) 4,155,824 ~959 , 5,000 6,215,963 9,x82,804 6,b41534 TUTAL FUND BAi.ANCES 543,871.5U6 ~ ,,, S41 A08 980 S198G 826 _ S58 0,~25,(~54 , ~52.338.592 mOTAL L1ABQ.rI'IES AND Fl3NDBALAI3CP.S S64i49437 ~.~.~~~~ 1~.~ S75,G9Z~142 S101~4'I6,106 __5107,031,873- 111,432.840 ..~..~ Source: City of Santa Monica Finance Department GEN$RAL FUND 5UMMARY OF REVENUE AND EXPENDTT[JRES FISCAT. YEAItS ]987/88 THROUGH 1997/92 F~~[ Year Ended J~me 30• Ravenues and Traz-~fers Prapoxty Taxea Selea and Oiher Taxea I~oep,ses at~d Perituts Fu~ea, Forfe~t~u~es and Pep~ltus Ueet of Money and Propcrty Intesrgov~emmeoW Charges for C~urent SwiGes Other Reveaue ~ansfe~s to Othar Funde Subtotal Expendtltm~s snd 'ItanBfera. Pnbkc Safety n Rahrement-Sslants ~ Patire~ Rec~eatioa and Iabrnry Ge~ SerV~~e6 (~anera! Oove~ument s Hou~ing and Commundy pcvelopment Mjaoellaaaous TYruafen to Other Fund~ Subtotal Ex~xss (Det"tcieac~7') Reven~ce over Expct~dituree Proceede finm Long-3"erm be6t Land Deposit~a aM Developmertt Agr~ament Eqwty Fund 7Yansfera From (to) Funds F~nd Balancca eud Reserva ~ sio,tc~,sio 31.,8Q7,$09 lO,SSb,093 4,897,045 5,285,650 23~,~so b,198,038 723,782 ~ S47.U87 14$Q S 10,065.614 35,691,458 L4,537,850 4,390,446 a.9os,oag I 10,791 7,015,282 2,054,627 ~ 1,253,624 1~ S 11.645,203 41,147,4I7 14,743,073 S,Q78,704 5,144,4'15 ?40,286 7,082,891 1,56G,881 ~ 558.0?2 1241 a13,437,959 42,99b,276 Z 8,08I,155 4,642,389 7,329,460 225, ! 95 8,036,678 g,s~lssx 4.514,591 122~ S 14,934,923 44,603,389 18,86 ~.317 4,045.552 fr,485,294 164.275 8,560.657 9,542,48b ^ 4,S 15,113 _ „ 570.377~066~ . , ~581,22~t,700 ~ 588,212~Op2 ^_^. $107,b35,?S7 S11 f.91S~041' 519,9a4,931 6,884,$57 8,654,578 8,16I,476 5,973,158 G,127,0'77 9.929,921 1 247 91 S6G,423399 ~3,453,66T 522,7$5,164 6,973,272 12.093,213 8,835,380 7,99Q,348 15,527,926 8,220,929 _ ~ , 1.260,994 $83,689,226 ~(2,462,526) 525,795,754 fi,568,798 12,095,475 tQ,249.755 9,?.SI),244 t 2,8$fi.318 11,05 t,299 1 136 13 SS89.034,1 S6 S(822,154) 1 I,4aD,ODO ~zs.~~~,aaa 8,~42,29b 11,374.318 13,389,1 ~4 l0,fJ41,047 16.314,748 12,148,578 L S69 042 S 101,511,002 S6,o2a,255 533,129,001 '1.838,5'~~ 12,8'T5,6~98 13.3204~5 1 L,369,859 1 B.7SS.b97 1 i,l72,915 1426181 Si tU,29i~TSl 51.623,260 2,74'I,4G2 - -. _ _10~5T3 53 784 543,$7i,506 S41,4(?8,980 SS1 486 826 SSA 021 f,54 562,338,542 Source: City of San~ Moruca Finanoe Department (1) dnduder S12,T14,613 from sal~e of Mall Cee'lificabea of Panc~~pat~on August ], 298G CITY dF SANTA MOI+fICA GFi+~E1~AL FUND REVE[YUE5 AND EXPENDITUR~S/APPROPRIATIONS FI5CAL YEAR51992193 and 1993194 ~facal Year Ende,~ , ~~~~,~Q; ~~ 1~ ~~N~ (actual-pet, unnudiled) (budgele~f) ~YT+~~ $ [4,119,492 S 11,3$3.045 Dther Tua 46,697,572 904 49 994 Lieenaes and Pernuta ! 6,284,228 . , L7,606,806 Finae and Fafwt~uea 4,5l5,21U b,704,300 Uae nf Mo~tey ru~d Property 6,57l,200 4 699 259 ]etergovernmen~al 310,383 , , 500 399 Chergra fQ C~rrenl Se.rv~cra R,829~73} , 8,407,(i07 Other Revenuea 4 706 634 2 019 884 TOTAL REVENUES S 104,039 4~5~ , ~ S IOt 925 fi50 EXPENDITURFSlAPYROPRIATIONS n ~ Geuetu] Governmeot S 10,456,393 S]0,300 9l7 Resoeaca M~nagomen~ 1,745,202 , 1,678,373 Lend ~Jae and 7"ranspcxiaLOn Man~gemeni 4,SSQ,47S 4,516 714 Policc nnd Fire 'i4,117,989 , 34,750,OG5 Commumty snd (.lillarsl5erv~cea 12,239,59I 12,1 f4 839 ~~~7' 3,919.627 , 4,O1p,681 Generai Servicea B,CrT7,2$7 , 8~393,700 Depa~tn~en~ai Subtou~ S 75,7'i6,554 S 75.770,485 Nou-bepuimenial Progrsm~ 25.824.012 ~1 296 28G Fapend~turea/Appropnsuons Subtotel S 101,560,566 . . S 106,97b,T71 Noo-beparurkmal Tnnafers _ (10~414,336) 10 207 088 TolalOpera~ngExpeode~urea/Appropnsuons ~ S 41,141,230 S 96.7G9,fi83 C+pits! ExpenditurealApp[~opt~at~ona 5,55R,b22 8 395 574 TOTAL ~{PfNDITURESlAPPR07RlATfONS S 96 G99 R52 ~ 105 1 fi5 25? Tethntc~l Acllusvnenl(2) S-0~ 3 4,932,R04 F.xcwe Revenues Ova (llnder) Expend,~nrcalA~rc~xisuons ~ _S 7,339,598 S 1.09~.197 Souroe ~riy oF Santa Moron Finanae 6epartment (1) I)oes na reflecl conUnuing caqlal ~o,~ect.~ Gnanced by "Rescrve fa Spec~fic Conlmumg (.apilaT F'ro~e~tv " (2) Expendilurea fa vanous mul~-yeu caqlal pm~ecta, wluch are fnlly financeil by deferted revenues Lnld m halance shcel accounls, ure fiilty h~Edgeted m FY 1993-44 even ILiwgh hudgeled FY I~J3- 94 rev~nuea reflect nnly eapend~turea to be made in FY 1993-44 A"lechmcal ed~ustmeM' of 52,649,441 i+ tlierolix reqwre.d lu make reveaue and ex~emLmre trudget~ng ~.ssum~xwn ooosistent In acidd~on, 5110,000 of budgeted revenues not avs~lahle (nr regulu operauons havc hcen deleled, $i,100,000 of t~nd pr~~ceeds lo finana s capual expen~i~ture hae heen adJed, S 1,126,04$ nt' re~erve<i Mall Asaessment funda aod S8U5,507 of Transporla~on Rail Rescrves have been added In Fnanre rolaled budgeted operating expcnciitnrev, and Sb'~$,192 ha.s heen deleted lo rellect lraacfer to C~v~c Arta Rwerve Ikxa not re~lec~ vs[~ous budgeled balance sheel changes (mferFund ioans and re.4etve change for C'rv~c Ares 17evefopmenQ C~TY OF SANTA MONICA SUMMARY OF 5ELECi'ED ENTHRPRISB FUNDS REVENLJ65, BXPLNSES AN~ AETAIiYBD EARNING5 F15CAL 1'BARS 1987l88 ~'I~IROi1G1# 1991/92 = 1~ l~ 1224 1Q21 1~4? ~: (3ronRevenuea 52,664,144 S1,24G,737 S2,O15,162 52,298,OS3 $2,128,519 Opa~tiag aod Muntea~x Expaoee 1,622,313 1,875,1O1 2,222,220 2,p24,950 1,44~,2(!S Deproc~at~oa 99,812 92,G5$ 97,980 106,95i 91,~12 Tn~faa (lu) Qul. 555 444 - Net Iacame (L.aea) _ 406,573 ~ _ (721,D22] (305.038) 1G6.752 _, 595.902 Reeained Esnungs st Ye~r Pnd . SG,343,506 ~ S5.622,484 55,317,446 ~~ w5~484~~ ~0,~ ~ ;12,893,101 S13,147,827 S13,6.s7,839 514,587,~73 SU,320,397 OpeaungandMaiatenauoeExpen~e 12,893,101 13,147,827 13,657,304 14,587,675 U,32A,997 pap~tyon 2.979,562 3.2~5743 2 995 063 (! y 3~764,099 _ 3xi02.213 Netlncame(l.oae) (2,979,562) (3,255,743) (2,995,Ofi.S) (3,7(rt,0993 (3.~02,213) Deprociuwn on Aaeeu 2 9']9 562 3,Z35,"143_ 2.995.065 (1) 3.764,049 3.l 2~ 13 ltewaed 8anunrr a Yar End SG,919,593 56,914.593 56.919.593 SR,9i9,593 ~ ~R~evenua 56,188,201 56,201,766 57,696~441 58.69t,298 58,687,360 Op~rs4~pg rad Ma~ut~arnca Bxpense 5,156,38G 3,998,47d 6,571,187 7,764,559 f2) 8,828.833 pep~ea~oo 338,634 381,799 345.809 395.101 310,817 Net Ttwfue (ln) Dut - 392,199 CZ) C29.120) r} Net Wconw (Lasa) H93.181 (178.509) 724.~43 t49.441 f123,19~ N Relune8 P.~rnmga at Yar Pad $4,030,322 S3 851 813 34,581.258 y1,780,594_ ~ [~s g~ G~oa,e]tnvenuea 56,071~946 S7,862,651 SB,OI8,803 56,611,559 (z) S13,6E3,084 ppcrrt~ngaudMamtenaoceS~eme 7.277,762 7,103,898 7,965,329 7,107,597 (2) i,712,994 De~uuuoe 550,599 550,525 771,419 816,039 845,~04 Net 7tnnaFa~s an) Oul 1,259.384 (2) Z O14~036 Net Incame (I.oe~) 243,G45 206.228 (717~9b5~ ~ 371 361 S.d70.630 Retuued Fsramgs it Yerr F,ud ^ 522,288,555 _ -_ -_ 522,496,7R4 . 521.778,834 (1) 521.147.309 S2~ (3rnse~X S'124,064 S803,8L6 S1,029,498 51,125,135 5859,237 pper~og aud Mawtnnaoce Expeoee 605,133 65d,G31 792,995 1,742,295 (2) 674,1 SS L)era~ac~woe 2d3,047 3dS,104 270,83d 260,646 226,I17 Net Tranefaa (!n} Out -- •- - 144i3 68 fl) S~01 Net lncao~e (I.aa:) 144 1 Z6 (117,9l7) ~~ 3 733 (l,038,194Z S67 !letawed F.arwag~ ~t Yeu~ Pnd 12,434,241 512,316,324 12,2B2,571 _ 511,244,377 S1~ ~ (3rore Itereauer 54,672,064 55,432,581 510,7l3.613 57,264.533 Cl) 58,870,075 OpeisLU~ ~od Mamten~nca Expeoee 3,761,941 4,125,258 4,743,2bG 6,2 [ 4, l53 (2) 7,7b3,794 Aeprodat~on 348,556 366,4G8 420,834 477,781 483,771 NaTraosfeo(In)O~ - (1,272.244) f2) (1.939,1~ Nat Iaconb (l.au) 341 567 940 855 5.549,S1S 1.844.841 T 2,581~34 ReWped Earms-~e at Year End ____ 515,478,457 S1G 419 312 _ S2i,968,827 (I ) S23 2l9 492 S~ Saurce• C~ty at S~uu Maaica F'ia~aae Dapntmaai (1) Re~latad u 1990V91. (2) Roslaied sa 199l192 y 24194-OA ~F#~'GFi !w eac ~ ' _ _" 1 I Y fl/141'43 12IQ3143 _ _ _ l 1 " " _' _' 1 4 ~ 1 _ . 1 . . _ . . .. i. . . _ ESC~~~ AGREE~IENT by a~d bet~veet~ ~l~e C~T~' ~F ~.A~TA MC~N~~A a~d BANK UF ~M~~~CA NAT~ONA~ TRUST ~ND S.AV~N~S ASS~CxAT~()1~, AS ESCR~~V BAN~ Dated as of 1, ~ 993 E5CROW AGREEMENT THIS ESCROW AGREEMENT, is entere~ into as of 1, 1993, by and between the CITY OF SANTA MONICA (the "City") and BANK OF AMERICA NATIDNAL TRLIST AND SAVINGS ASSOCIATION, as esscrow bank, (the "Escrow Bank"}. WITNESSETH: WI3EREAS, the City owns and operates facilities for the collection af sewage, waste and storm water, includmg drainage, and has certain rights in facilities for the treatanent and disposal of sewage, waste and storm watex; WHEREAS, in ordez to finance eertain unprovements to saud facilities, the City issued its Wastewater Enterprise Revenue Bonds {Hyperion Prvject), ]991 Sezies A~the "~991 Series A Bonds"), ui the aggregate principal amount of $34,200,000; WHEREAS, the 1991 Series A Bonds were issued pursuant to an Indenture, dated as of No~ember ~, ~991 (the "Inder~ture"}, bq and between the Baril~ af Arnerica National Trust and Sa~ings Association, as Trustee {the "Trustee"), and the Gity; WHEREAS, the City has ~etermined that debt service savings can be achieved by advance refunding the 1991 Series A Bonds currently outstanding in the aggregate principal amount of $33,915,400 (the "Prioz Bonds"); WHEREAS, in urder ta provitie the moneys required to advanee iefund the Pnor Bonds, the City has autharized ~he issuance of its Wastewater Enterprise Revenue Bonds {Hypenon Project} 1993 Refunding Senes {the "1993 Series Bonds"}, in an aggregate principal amount of $ ; WHEREAS, the CYty has deternvned that a sa~ings will be realized by applying a portion of the proceeds of the 1993 Series Bonds for the p~rpose of providing the funds necessary to pay, when due, the interest on the Prior Bonds ta and including January 1, 2~U2 and ta redeem the Prior Bonds on January 1, 2Q02 {the "Redemgtion Date"} at a redemption price (the "Redemption Pnce") equal to the prir~cxpal amount of such Prior Bonds, plus a premi~m of 2% of such principal amount; and WHEREAS, the Prior Bonds are subject to redemption on the Redemption Date and the C~ty has determined to provide far the call for redemption an the Redemption Date of the Prior Bonds outstanduig an the Redemption Date; NOW THEREFORE, in consic3eratian af the mutual co~enants and agreements herein contained, the City and the Escrow Bank agree as f4llows: Section 1. Defini~ions. Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Indenture. Section 2. The,~;scrog F~nd. (a) There is hereby established a fund (the "Esero~v Fund") to be held as an izrevocab~y pledged escrow by the Escrow Bank, which the Escrow Bank shall keep separate and apart from all other ~unds of the City and the Escraw Bank and to be agpi~ed solely as provided in this Agree~nt Pending applicaaon as pravided in this Agreement, amounts on deposit in the Escrow Fund are hereby p~edged and assigned solely to the payment of (i} the accrued interest on the Priar -1- Bonds coming due on and prior to the Redemption Date, (u) the principal of the Priar Bonds comzng due on and prior to the Redemption Date, and (ui) the Redemption Price on the Redemption Date, which amounts shall be held in tivst by the Escrow Bank for the Owners of the Prior Bonds. (b} Upon the issuance and dehvery of the 1993 Senes Bonds, there shall be deposited in the Escrow Fan~ $ recei~ed from the proceeds of the sale af the 1993 Senes Bonds and $ received from the City, for a total of $ . {c} LTpon ihe deposit of moneys pursuant to Se~tion 2(b), the moneys vn deposit in the Escrow Fund will be at ieast equal to an amount sufficient to purchase the aggregate pnncipal amaunt of the Federal Securities set forth in Exhihit 1~-ereto {the "Exhibit L 5ecurities"}, wh~ch principal, tagether with all interest due or to become dne on such E~ibit 1 Securities, and any unin~ested cash heid by the Escrow Bank in the Escrow Fund, will be sufficient to make the payments reqt~'ed by Section 4 hereof. Sec~ian 3. Use and Investment of Monevs. (a) The Escrow Bank hereby acknowiedges reeeipt of the moneys described in Secdan 2{b) and agrees to in~est $ of such mvneys in the Exhibit i Securities upon receipt of certification by a nationally recognized fum of independent certified public accountants that the Eachibit i Securities will mature in such principal amounts and earn interest in such amounts and, in each case, at such times, sa that sufficient money5 will be available from maturing pnncipal and interest on the Exhibit 1 Secunties, together with any uninvested moneys then held by the Escrow Bank irt the Escrow Fund, to make all payments required by Se~tion 4 hereof. Except as provided in Sectian 3(b) or Section 3(c), the balance of the moneys desenbed in Section Z or otherwise held by the Escrow Bank under this Agreement shall be heid uninvested in the Escrow Fund, (b) Upon the Written Request of the City, but subject w the canditions and limitatians herein set farth, the Escrow Bank shall purchase substitute ~ederal Securitics for the Federal Securities then held hereunder with ~he proceeds derived from the sale, transfer, redemption or other disposit~on of Fedezal Securities then an depasit in the Escrow F~nd and any uninvested money then held by the Escrow Bank hereunder in accordance with the provisions af this Section 3{b}. Such sale, transfer, redemption or other disposition of Federal Securities then on deposit in the Escrow Fun~ and s~bstitutian of other Federal Securities shali be effected by the Escrow Bank ugon the Written Request ~f the City but anly by a simultaneous transactian and only upon receipt of: (i) certification by a natipnally recognized firm of independent certiffed public accountants that the Federal Securities to be substituted, together with tl~e Federal Securities which will continue to be held in the Escrow Fund, will mature in such principal amounts and earn interest in such amounts ar~d, in each case, at such times so that sufficient moneys will be ava~able from mat~ring principal and interest an such Federal Securities held in ihe Escrow Fund, together with a~y uninvested moneys, to make all payments require~ by Section 4 hereof which have not previously ~een made; and {n) receipt by the Escrow Bank af an opinion of counsel of recognized standing in the field af law r~iat~ng to municipal bands to the effect that ~he saie, transfer, redemption oi other dispositian and substitution of Federa~ Securities will ~ot adversely affect the exclusion of interest on any Prior Bands ar any 1993 Series Bonds from gross income for purposes af federal income taxation. (c} Upon the Written Request of the City, but subject to the conditions and limitations herein set forth, the Escrow Bank will apply any moneys received from the maturing principal of or interest or other in~estment iricome an any Federal Securities heid ir~ the Escrow Fund, or the proceeds frQm any sale, transfer, redemption or other disposinon of Federal Sccurifies pursuant ta Sect~on 3(b} not required for the purposes of said Section, as fallows: (i} to the exteni such moneys will not be required at any time for the purpose of ma~~ng a payment required by Section 4 hereof, as certified by a natianally recognized furr- of independent ~uf'~ed public accauntants -2- de~i~ered to the Escrow Bank, such moneys s~all ba paid over to the Clty upon ti~e Written Reqnest of the Ciry as recerved by the Escrow Bank, free and clear of any ~ust, lien, pledge or assignment securing the Psiar Bands or otherwise existing hereunder~, and (ii) ta the extent such maneys will be required for such purpose at a later date, shall, ta thc extent pracdcable, be invested ar reinvested in Federal Securit~es maturing at times and ir- arnounts sufficient to make such payment req~ired by Section 4 hereof (provided that the amount of the funds to be realized from time to time from such invescment or reinvesm~ent shall be certif'ied by a naaonally recogruzed fum of independent certified public accountants delivered to the Escrow Bank by the City and pravided that the City shall deliver Lo the Escrow Bank an opiruon of counse2 of recogniaed stand~ng in the fielc~ of law relating to mvnicipal bonds to the effect that such investment ar reinvestment will not adversely affect the exclusion of interest on any Pnar Bonds or any 1993 Series Bonds from gross income for purposes of ~ederal income taxation) and interest earned from such investments or reinvestments shall be paid over to the City upon the Writte~ Request of the City as received by the Escrow Bank, free and clear of any trust, lien, pledge or assigriment sec~ring the Priar Bonds or atherwise existing hereunder. (d) All Federal Se~curities purchased pursuant to this Agreemer~t shall be deposited in and held for the credit af the Escrow Fund. Except as provided in t.his Section 3, no moneys or Federal Securities deposited with the Escrow Bank pursuant to this Agreement nor principal af, or interest payments or other investment income on, any such Federal Securities shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment vf the interest and Redemptinn Price with respect to the Frior Bonds as provided by Section 4 hereof. (e} The owners af the Prior Bonds shall have a lien on the maneys and Federal Securities in the Escrow Fund until such moneys and Federal Securities are used and applied as provided in this Agreement. (f} The Escrow Bank shall not be held liable far u~vest~r~ent losses resu~ting from compliance with the provisions o# this Agreernent. Section 4. Favment of Prior Bor~ds. (a) From the maturing principal of the Federal Securities held in the Escrow Fund and the invesmient income and other earnings thercan and any w~invested money then heid iz~ the Escrow Fund, the Escrow Bank shall apply such amounts, as follows: (i} pn each interest payment date for the Prior Bonds occumng on or before the Prepayment Date, commencing 3ar~uary ~,1994, the Escrow Bank shall pay interest on the Prior Bonds in accordarice with the terms of the Indenture. (ii) On each principal payment date for the Prior Bonds occurring on or before the Prepayment Date, commencing January 1, 1994, th~ Escrov~ Bank shall pay principal of the Pnar Bonds in accvrdance with the tern~s of the Indenture. (~iii) On the Reciempuon Date, the Escrow Bank shall pay the Redemption Price of the Prior Bvnds in accordance with the t~~s~s csf the Ir~dent~re. To the extent that the amount on depQSit in the Escrovv Fund on the Redemptian Date is in excess of the amount necessary to make the required payments with respect to the Prior Bonds, as sf~own in the then applicable escrow verification of the natianally re~cognized fum of independent certif'ied public accountants, snch excess shall be transferred to the Trustee for deposit in the Interest Fund established ander the indenture. Section 5. Yrrevaeahle Instructions to Publish and MaiE Natices. The City hereby urevocably designates the Frior Bonds for prior redemption on the Redemption Date as -3- indicated in Section 4 hereof and hereby irrevocably instructs the Escrow Bank to mail notice of rederrsption, not less than 30 days prior to the Redemption Date, as pravided in Secnon 4.03 af the Indenture. Section G. Perf~rmance of Duties, The Escrow Bank agrees to perforrr~ oniy the duues set farth ~erein and no impl~ed duties or obligations shall be read inta this Agreement against the Escrow Bank. The Escrow Bank agrees that the irre~ocable instructions herein provided are in a form sausfactory to i~. Sectian 7. Escrow Ran~'s Authoritv to MaKe Tnvest~ner~ts. The Escrow Bank shall have no power ar dury to invest any funds held under this Agreement except as pravided in Section 3 hereof. The Escrow Bank shall have no power or daty to transfer or otherwise dispose af the m~neys held hereunder except as provided in this Agreement~ Section 8. Indemnitv. To the extent permitted by law, the City hereby assumes liabylity for, and hereby agrees {whether or not any of the transactions contemplated hereby are consummated) to indernnify, protect~ save and keep harmtess the Escrow Bank and its respective successors, assigns, agents, employees and servants, from and against any and all liabilities, obligarians, losses, damages, penalties, claims, actions, seuts, costs, expenses and disbursements (~cluding reasonabte legal fees, expenses and disbeusements) of vvhatsoever kind and nature which may be imposed an, inceured by, or asserted against, the Escraw Bank at any time (whether ar not also indemnified ~gainst the samE by the City or any other person under any other agreement ar instrument, but withoat doubie indemr~ity) in any way rela#ing to or arising out of the executian, delivery and performance of this Agreement, the establishrnent here~nder of the Escrow Fund, the acceptance of the funds and securities deposited therein, the purchase of any securities to be purchase~ pursuant thereto, the retentior~ of such securities or the proceeds thereof and any payment, transfer or other application af moneys or securities by the Escrow Bank i~ accordance with the provisians of this Agreement; provided, however, that the City shall not be required to indemnify tl~e Escrow Bank against the Esrrow Bank's own negligence or willful misconduct or the negligence or willful misconduct of the Escrow Bank's respective successors, assigns, agents and empioyees or the material breach by the Escrow Bank of the terms of this Agreemen~ In no event shall the Ciry or the Escrow Bank be liable to any person by reason of the transactions contemplated hereby otha than ta each other as set forth in this S~tion. The indEmnities contained in this Section shall s~uvive the tem~ination of this Agreemeat~ Section 9. Recnonsi6~lities af Escrow Bank. The Escraw Bank and its respective successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in tort, cantract, or otherwise, in cannection wi~h the execut~on and delivery of this Agreement, the establishment of the Escrow Fund, the acceptance of the moneys or any securities deposited therein, the purchase of the securities to be pe~rchased pursuant hereto, the retentian af svch securities or the proceec3s thereof, the sufficiency af the securit~es or any uninvested moneys held hereunder ta accomplish the redemption of the Priar Bonds, flr any payment, transfer or other application of moneys or securities by the Escrow Bank in accordance with the pro~isions of this Agreement or by reason of any non-negligent act, non-negl~gent omission or non-negligent error of the Escrovv Bank mac~e in good faith in the conduct af its duties. Tl~e recitals of fact contained in the "Whersas" clauses herein shall lae taken as the statements of the Ciry, and the Escrow Banlc assumes no responsibiliry for the correcmess thereof. The Escrow Bank makes no representation as to the sufficiency af the securities to be purchased pursuant hereto and any u~invested ~noneys to accomplish the redemption of the Prior Bonds pursuant to the Indenture or to the validiry af this Agreement as to the G~ty and, except as othe~wise provided herein, the Escrow Baz~k shall incur no liability in respect thereo£. The Escrow Bank shall not be liable in c~nnecrion with the performance of its duties under this Agreert~ent ea~cept for its own negligence, willfi~ misconduct or default, and the duties and obligations af the Escrow Bank shall be det~~;~ined by the express pravisions of this Agreement. The Escrow Bank may consult with counsel, who may or may not be caunsel to the -4 City, and in reliance upon the written opinion of such counsel shall have full and complete avthorization and protection in respect of any aetion taken, suffered a~ omitted by it in good faith sn accordanc~ therewith. Whenever the Escrow Bank shall deem it necessary or desirab~e that a matter be proved pr establish~d pnor to taking, suffering, or omittu-g any action ~nder this Agreement, such matter {except the matters set forth herein as specifically requiring a certif'cat~ of a nationally recognized firm af independent certified pubhc accountants or an opinion o€ counsel af recognixed stand~ng in the field of law relating to municipal bands) may be deemed to be canclusively established by a written certification of the City. Whenever the Eserow Bank shall deem it necessary or desirable that a matter spec~cally req~ring a certificate vf a nationally recognized fum of inciependent cerfi~'ied public accountants or an opinion of caunsel of recognized standing in the field of law relating to municipal bonds be pro~ed or established prior to tal~ng, suffering, or omitting any such action, such matter may be estab~ished oniy by a certificate signed by a nationally recognizec3 firm of certified public accountants or such opinion of counsel of recognized stancling in the field of law relating to municipal bonds. Section fU. ~ndmeats. The City and the Escrow Bank may (but only with the consent of the owners of a11 of the Friar Bonds) amend this Agreement or enter into agreements supplemental to this Agreement, Section 11. Term, This Agreemern shall commence upon its execution and delivery and shall terzninate on the date upon which the Prior Bonds ha~e been paid an accordance with this Agreement~ Seetion 12. Com en nsa~jo~. The City shall from time to time pay ar cause to be paid to the Escrow Bank the agreed upon campensation for its services to be rendered hereunder, and reimburse the Escrow Bank for all of its reasonable ad~ances in the exercise and performance of ~~s duties hereunder; provided, however, that under no circumstances shal~ the Escrow Bank be ent~tled to any lien whatsoe~er on any moneys or obl~gations in the Escrow Fund far the payrrtent of fees and expenses for services rendered ar expenses incurred by the Escrow Bank under this Agreement or otherwise. Section 13. Severa6ilitv. If any one or more of the co~enants ar agreements provided in this Agreemenc on the part of the Ciry or the Escrow Bank to be performed should be detennined by a court af competent jurisdiction to be canirary to law, such covenants or agreements shall be null and v~id and shall be ~i~med s~parate from the remaining covenants and agreements herein contained and shall in no way affe~t the validity of the remaining provisions of this Agreemen~ Section 14. Coureternar s, This Agreement may be executed in se~eral counterparts, all or any of which shall be regarded for all purposes as an original but all of which shall constitute and be but one and tha same instrument Seetion 15. roverning Law. This Agreement shall be constr~ed under the laws of t~e State of Califorrua. Section lb. . This Agreement shall not be assigned by the Escrow Bank or any saccessor thereto without the prior written consent of the Gity. -5- IN WITNESS WHEREOF, the pardies hereto have executed and attested this Escro~u Agreement by thelr officers thereunto duly authorized as of the day and yeaz first written above BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, AS ESCROW SANK By. , C1TY OF SANTA M~NICA By: [SEAL] A~t~1~ST: