                .                              .        .                                                                                   .                                                               .  .                            .          .  .      .     .          .     .     .     .                .    .     .       .  .                                                                                                  . .   .          .         .    .   .   .   .    .           .    .          .          .       .      .       .  .   .     .  .     .      .    .              . .  .    .  .             .        .  .  .           .  .           .        .    . .        .            .                  . . .         .   .        .   .      .           .    .     .    .  .   .    .           

    .     .        .        .        .   .              .         .   .        .          .      .    .    .      .                                                                                      

         .    .          .               .   .   .           .                                           .                  .          . .                     . .                           .   . .  . .                                .  

No dealer, broker, salesperson or other person has been authorized by the City or the Authority to give any information or to make any representations with respect to the Certificates other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of the Certificates by any person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement shall not be construed as a contract with the purchasers of the Certificates. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of facts.

The information contained in this Official Statement has been furnished by the City, the Authority and other sources, which are believed to be reliable. Summaries and references to statutes and documents in this Official Statement do not purport to be comprehensive or definitive and are qualified in their entireties by reference to each such statute or document. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City, the Authority or any other parties described herein since the date hereof.

When used in this Official Statement and in any continuing disclosure by the City, in any press release and in any oral statement made with the approval of an authorized officer of the City, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,” “expect,” “intend” and similar expressions identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the City since the date hereof.

The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

Assured Guaranty Municipal Corp. (formerly known as Financial Security Assurance Inc.) (“AGM”) makes no representation regarding the Certificates or the advisability of investing in the Certificates. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading “MUNICIPAL CERTIFICATE INSURANCE” and “Appendix G — SPECIMEN MUNICIPAL BOND INSURANCE POLICY”.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE CERTIFICATES TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. THE CERTIFICATES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE CERTIFICATES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

The City maintains a website. However, the information presented there is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the Certificates. CITY OF SAN BUENAVENTURA

CITY COUNCIL MEMBERS

Bill Fulton, Mayor Mike Tracy, Deputy Mayor Neal Andrews, Council Member Brian Brennan, Council Member James L. Monahan, Council Member Carl E. Morehouse, Council Member Christy Weir, Council Member

CITY STAFF

Rick Cole, City Manager Mary Walsh, Deputy City Manager Jay Panzica, Chief Financial Officer Ariel Calonne, Esq., City Attorney Ronald J. Calkins, Public Works Director Mabi Covarrubias Plisky, City Clerk

SPECIAL COUNSEL

Jones Hall, A Professional Law Corporation San Francisco, California

DISCLOSURE COUNSEL

Stradling Yocca Carlson & Rauth, A Professional Corporation Newport Beach, California

TRUSTEE

The Bank of New York Mellon Trust Company, N.A. Los Angeles, California

ESCROW BANK

The Bank of New York Mellon Trust Company, N.A. Los Angeles, California

VERIFICATION AGENT

Grant Thornton LLP Minneapolis, Minnesota [THIS PAGE INTENTIONALLY LEFT BLANK] TABLE OF CONTENTS Page

INTRODUCTION ...... 1 Certificate Insurance ...... 2 CONTINUING DISCLOSURE...... 2 SOURCES AND USES OF FUNDS...... 3 Estimated Sources and Uses of Funds ...... 3 FINANCING PLAN...... 3 The Refunding Plan ...... 3 Verification of Mathematical Computations...... 4 Public Golf Course Project ...... 4 THE LEASED PROPERTY...... 4 Corporation Yard ...... 4 Arroyo Verde Park...... 5 Release/Substitution of Leased Property ...... 5 THE CERTIFICATES...... 5 General...... 5 Book-Entry Only System...... 5 Prepayment ...... 6 LEASE PAYMENT SCHEDULE...... 7 SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES...... 7 Nature of the Certificates ...... 7 Covenant to Appropriate Funds for Lease Payments...... 8 Abatement...... 8 Action on Default...... 8 Reserve Fund ...... 8 Lease Payments...... 9 Additional Payments ...... 9 Insurance...... 9 Substitution of Leased Property...... 11 Release of Leased Property...... 12 MUNICIPAL CERTIFICATE INSURANCE...... 12 Certificate Insurance Policy ...... 13 Assured Guaranty Municipal Corp. (Formerly Known as Financial Security Assurance Inc.) ...... 13 RISK FACTORS ...... 15 General Considerations – Security for the Certificates...... 15 Eminent Domain ...... 15 Abatement...... 16 Limited Recourse on Default; No Acceleration...... 16 Limitation on Remedies; Bankruptcy ...... 16 State Budget Information ...... 16 Seismic Considerations...... 20 Hazardous Substances...... 21 Substitution and Removal of Property ...... 21 Ability to Re-Let ...... 21 Investment of Funds...... 21 Secondary Market ...... 21 Loss of Tax Exemption ...... 22 No Liability of Authority to the Owners...... 22 CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS ...... 22 i Constitutional Limitation on Taxes and Expenditures ...... 22 Unitary Property...... 25 Future Initiatives ...... 25 THE AUTHORITY ...... 25 THE CITY ...... 25 CITY FINANCES...... 26 Accounting Policies and Financial Reporting...... 26 Revenue and Expenditure Trends ...... 26 General Fund Financial Summary ...... 27 Budgetary Process...... 30 Fiscal Year 2009-10; Fiscal Year 2010-2011 Budget...... 31 Tax Receipts...... 32 Property Taxes ...... 33 Sales and Use Taxes...... 35 State of California Motor Vehicle In-Lieu Payments ...... 37 Utility Tax...... 37 Golf Course Fund...... 37 Outstanding General Fund Debt and Lease Obligations ...... 40 Direct and Overlapping Debt ...... 41 Employee Relations and Collective Bargaining...... 42 Investment of City Funds...... 42 Retirement Contributions...... 43 Pending Claims & Risk Management ...... 44 FINANCIAL STATEMENTS...... 44 BANK QUALIFIED OBLIGATIONS ...... 45 TAX MATTERS...... 45 CERTAIN LEGAL MATTERS ...... 46 LITIGATION ...... 46 UNDERWRITING ...... 47 RATINGS...... 47 MISCELLANEOUS ...... 47

APPENDIX A SUMMARY OF PRINCIPAL LEGAL DOCUMENTS...... A-1 APPENDIX B GENERAL INFORMATION ABOUT THE CITY OF SAN BUENAVENTURA...... B-1 APPENDIX C INDEPENDENT AUDITOR’S REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2009 ...... C-1 APPENDIX D PROPOSED FORM OF SPECIAL COUNSEL OPINION ...... D-1 APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE ...... E-1 APPENDIX F BOOK-ENTRY ONLY SYSTEM ...... F-1 APPENDIX G SPECIMEN MUNICIPAL BOND INSURANCE POLICY ...... G-1

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THE CITY OF SAN BUENAVENTURA,

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Prepared For: Finance and Technology Department

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This map Is a product of the City of San Buenaventura, California. 24 JUN 2010 Although reasonable efforts have been made to ensure the accuracy of this map, the City of San Buenavemura cannot guarantee its accuracy. 1" =1 miles [THIS PAGE INTENTIONALLY LEFT BLANK] OFFICIAL STATEMENT

$20,615,000 2010 Certificates of Participation, Series F Evidencing Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments Made by the City of San Buenaventura, California to the City of San Buenaventura Public Facilities Financing Authority

INTRODUCTION

This Official Statement (which includes the cover page and Appendices hereto) (the “Official Statement”) provides certain information concerning the execution, sale and delivery of the 2010 Certificates of Participation, Series F (the “Certificates”) of the City of San Buenaventura (also known as “Ventura”), a charter city and municipal corporation organized and existing under the laws of the State of California (the “City”).

The Certificates are being executed and delivered in denominations of $5,000 or any integral multiple thereof. Interest will accrue on the principal components of each Certificate at the applicable interest rate (as set forth on the cover hereof) from its date of delivery until its date of maturity or prior prepayment, with interest becoming payable on each January 1 and July 1, commencing January 1, 2011. The Certificates are subject to prepayment as described herein. See “THE CERTIFICATES—Prepayment.”

The net proceeds of the sale of the Certificates will be used to (i) provide for the advance refunding and defeasance of a portion of the $2,925,000 2001 Refunding Certificates of Participation, Series A (the “Series A Certificates”) currently outstanding in the aggregate principal amount of $1,580,000, a portion of the $19,765,000 2002 Refunding Certificates of Participation, Series B (the “Series B Certificates”) which are currently outstanding in the aggregate principal amount of $11,345,000, a portion of the $16,345,000 2001 Certificates of Participation, Series C (the “Series C Certificates”) which are currently outstanding in the aggregate principal amount of $13,740,000, and a portion of the $15,930,000 2002 Certificates of Participation, Series D (the “Series D Certificates”) which are currently outstanding in the aggregate principal amount of $13,670,000, (ii) finance certain public golf course improvements, (iii) acquire a reserve fund surety policy, and (iv) pay certain costs incurred in connection with the execution and delivery of the Certificates. See “FINANCING PLAN” herein.

The Certificates evidence and represent the direct, undivided fractional interests of the registered owners (the “Owners”) thereof in Lease Payments (as defined herein) to be made by the City for the right to the use of certain real property and improvements consisting of the City’s existing Corporation Yard and Arroyo Verde Park (collectively, the “Leased Property”). See “THE LEASED PROPERTY” herein. The Leased Property is currently owned by the City and will be leased by it to the City of San Buenaventura Financing Authority (the “Authority”) under a Site Lease dated as of August 1, 2010 (the “Site Lease”). The Authority will concurrently lease the Leased Property back to the City pursuant to a Lease Agreement, dated as of August 1, 2010 (the “Lease Agreement”), between the City, as lessee, and the Authority, as lessor.

The Certificates will be executed and delivered pursuant to a Trust Agreement, dated as of August 1, 2010 (the “Trust Agreement”), by and among The Bank of New York Mellon Trust Company, N.A., Los Angeles, California, as trustee (the “Trustee”), the City and the Authority.

The Trustee and the Authority have entered into an Assignment Agreement, dated as of August 1, 2010 (the “Assignment Agreement”), pursuant to which the Authority has assigned to the Trustee for the benefit of the Owners of the Certificates substantially all of the Authority’s right, title and interest in and to the Lease Agreement, including its right to receive the Lease Payments scheduled to be paid by the City due under the Lease Agreement. The City covenants under the Lease Agreement to take such action as may be necessary to include all Lease Payments due under the Lease Agreement in the operating budget for each Fiscal Year and to make the necessary annual appropriations therefor, subject to abatement as described herein. The City has covenanted in the Lease Agreement to make such Lease Payments in full from any source of legally available funds of the City, subject to abatement of the Lease Payments under certain circumstances as described herein. See “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES—Lease Payments.”

Lease Payments are subject to complete or partial abatement in the event and to the extent that there is substantial interference with the City’s right to use and occupancy of the Leased Property or any portion thereof due to damage or destruction of the Leased Property, or the taking of the Leased Property in eminent domain proceedings. Abatement of Lease Payments under the Lease Agreement, to the extent payment is not made from alternative sources, would result in all Certificate Owners receiving less than the full amount of principal and interest represented by the Certificates. To the extent proceeds of hazard insurance or rental interruption insurance or amounts in the Reserve Fund or to a limited extent the Golf Course Fund (as defined below) are available with respect to the Certificates (as described below), Lease Payments (or a portion thereof) may be made during periods of abatement.

THE OBLIGATION OF THE CITY TO MAKE THE LEASE PAYMENTS DOES NOT CONSTITUTE A DEBT OF THE CITY OR THE STATE OF CALIFORNIA (THE “STATE”) OR OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR RESTRICTION, AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY OR THE STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.

The summaries or references to the Trust Agreement, the Site Lease, the Lease Agreement, the Assignment Agreement and other documents, agreements and statutes referred to herein, and the description of the Certificates included in this Official Statement, do not purport to be comprehensive or definitive, and such summaries, references and descriptions are qualified in their entireties by reference to each such document or statute. All capitalized terms used in this Official Statement (unless otherwise defined herein) which are defined in the Trust Agreement or the Lease Agreement shall have the meanings set forth therein, some of which are summarized in APPENDIX A—“SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”

Certificate Insurance

The scheduled payment of principal and interest evidenced by the Certificates when due will be guaranteed under a financial guaranty insurance policy (the “Insurance Policy”) to be issued concurrently with the execution and delivery of Certificates by Assured Guaranty Municipal Corp. (formerly known as Financial Security Assurance Inc.) (“AGM” or the “Insurer”) (see “MUNICIPAL CERTIFICATE INSURANCE” herein).

CONTINUING DISCLOSURE

The City has covenanted for the benefit of the holders and beneficial owners of the Certificates to provide certain financial information and operating data relating to the City by no later than 270 days following the end of the City’s fiscal year (which fiscal year currently ends on June 30) (the “Fiscal Year”), commencing with the report for the Fiscal Year ending June 30, 2010 (the “Annual Report”), and to provide notices of the occurrence of certain enumerated events, if material. The City will file, or cause to be filed, the Annual Report with the Municipal Securities Rulemaking Board. The City will file, or cause to be filed, the notices of material events with the Municipal Securities Rulemaking Board (and with the appropriate State information depository, if any). The specific nature of the information to be contained in the Annual Report or the notices of material events is set forth below in APPENDIX E—“FORM OF CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made in order to assist the Underwriter in

2 complying with Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission. The City has never failed to comply, in all material respects, with an undertaking pursuant to said Rule.

SOURCES AND USES OF FUNDS

Estimated Sources and Uses of Funds

The Trustee will receive the proceeds from the sale of the Certificates, upon delivery of the Certificates to the purchasers thereof, and will use such proceeds, as set forth in the following table.

Sources of Funds Par Amount of Certificates $ 20,615,000.00 Less Net Original Issue Discount 1,066,553.00 Total Sources $ 21,681,553.00

Uses of Funds Project Fund $ 600,000.00 Escrow Fund 20,558,126.84 Cost of Issuance Fund(1) 368,813.66 Underwriter’s Discount 154,612.50 Total Uses $ 21,681,553.00

(1) Includes legal, rating agency, printing costs, title insurance premium, Certificate insurance premium, reserve surety premium and other miscellaneous costs of issuance.

FINANCING PLAN

The Refunding Plan

The Certificates are being executed and delivered to provide for the advance refunding of up to $19,400,000 of the City’s lease payment obligations relating to (i) $1,380,000 principal amount of the Series A Certificates which are currently outstanding in the aggregate principal amount of $1,580,000, (ii) $8,505,000 principal amount of the City’s lease payment obligations relating to the Series B Certificates which are currently outstanding in the aggregate principal amount of $11,345,000, (iii) $6,760,000 principal amount of the City’s lease payment obligations relating to the Series C Certificates which are currently outstanding in the aggregate principal amount of $13,740,000 and (iv) $2,755,000 principal amount of the City’s lease payment obligations relating to the Series D Certificates which are currently outstanding in the aggregate principal amount of $13,670,000. A portion of the proceeds of the Certificates, together with funds deposited by the City and funds held by the prior trustee with respect to the refunded Series A Certificates, Series B Certificates, Series C Certificates and Series D Certificates (together, the “Refunded Certificates”), will be used to establish an irrevocable escrow (the “Escrow Fund”) to be held by The Bank of New York Mellon Trust Company, N.A. (the “Escrow Bank”). Moneys in the Escrow Fund will be invested pursuant to instructions of the City. Moneys on deposit in the Escrow Fund will be held as cash or invested solely in non- callable, direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America and State and Local Government Securities) (the “Escrowed Securities”). The cash and Escrowed Securities, and the interest accrued with respect thereto, will be held by the Escrow Bank on behalf of the City and for the benefit of the Owners and applied to: (i) pay principal and interest on the Series A Certificates due on January 1, 2011 and prepay the outstanding Series A Certificates maturing after January 1, 2011 in full on January 1, 2011, at a prepayment price equal to 101 percent of the principal amount thereof, plus accrued interest; (ii) pay principal and interest on the Series B Certificates due on January 1, 2011, July 1, 2011 and January 1, 2012 and prepay the outstanding Series B Certificates maturing after January 1, 2012 in full on January 1, 2012, at a prepayment price equal to 101 percent of the principal amount thereof, plus accrued interest; (iii) pay principal

3 and interest on the Series C Certificates due on February 1, 2011 and prepay the outstanding Series C Certificates maturing after February 1, 2011 in full on February 1, 2011, at a prepayment price equal to 101 percent of the principal amount thereof, plus accrued interest; and (iv) pay principal and interest on the Series D Certificates due on February 1, 2011, August 1, 2011 and February 1, 2012 and prepay the outstanding Series D Certificates maturing after February 1, 2012 in full on February 1, 2012, at a prepayment price equal to 100 percent of the principal amount thereof, plus accrued interest. Upon the establishment of the Escrow Fund as described above, the lien of the trust agreement pursuant to which the Refunded Certificates were executed and delivered and the proceedings pursuant to which the Refunded Certificates were authorized, executed and delivered will cease, terminate and become void with respect to the Refunded Certificates, except for the rights of the owners of the Refunded Certificates to payments from the Escrow Fund. Upon the delivery of the Certificates, Grant Thornton, LLP, will deliver a report verifying the sufficiency of the moneys deposited in the Escrow Fund. See “FINANCING PLAN—Verification of Mathematical Computations” herein.

Verification of Mathematical Computations

Upon delivery of the Certificates, Grant Thornton LLP, acting as verification agent, will deliver a report verifying the mathematical accuracy of certain computations concerning (i) the adequacy of the maturing principal amounts of and interest on the Escrowed Securities to defease and prepay all the outstanding Refunded Certificates in full on the dates, as described herein, and (ii) the yield on the Certificates and on such Escrowed Securities considered by Special Counsel in its determination that the portion of Lease Payments designated as and comprising interest and received by owners of the Certificates is excluded from gross income for federal income tax purposes.

Public Golf Course Project

A portion of the proceeds of the Certificates will be applied to the installation of utilities and acquisition of furniture, fixtures and equipment for a modular facility at the Olivas Links Golf Course located at 3750 Olivas Park Road, Ventura (the “Public Golf Course Project”).

The Olivas Links Golf Course, originally designed by William F. Bell and redesigned by Forrest Richardson, features 6,818 yards of rolling links-style design with Sea Isle Paspalum turf and natural habitat. Noted as one of the Southland's most unique and challenging courses, Olivas Links Golf Course features a large practice facility and has been rated as a Top Ten Municipal Course by Golfweek Magazine in 2009, was named one of the "Best Places to Play" by Golf Digest and one of the "Best New Courses 2008" by Golfweek Magazine. The course is adjacent to the historic Olivas Adobe, the Santa Clara River, and Pacific Ocean.

THE LEASED PROPERTY

At the time of the delivery of the Certificates, the Leased Property will consist of the City’s Corporation Yard and Arroyo Verde Park.

Corporation Yard

The City’s Corporation Yard is an approximately 6.68 acre site used for the storage and maintenance of the City’s equipment. Various facilities in the Corporation Yard support city services including parks and recreation, streets and similar city functions. It also acts as a main warehouse facility for parts and materials as well as a depot for specialized machinery such as tree trimming equipment, street sweepers and similar city mechanical requirements. The Corporation Yard takes care of all of the City’s 400 vehicles and some 200 pieces of small equipment. The facility is located off of San Jon Road in the central area of the City. It adjoins the Southern Pacific Railroad on the south and extends to Chrisman Avenue on the east. The Corporation Yard includes a number of structures including the following: administration building (9,800 square feet), garage and mechanical building (1,246 square feet), yards and carports (40,237 square feet), yard shops

4 (27,237 square feet), maintenance warehouse (25,204 square feet), and garage facility (2,296 square feet). The Corporation Yard’s garage facility contains six hydraulic lifts, two of which are for heavy duty equipment. Other site improvements include underground fuel tanks including a 20,000 gasoline tank facility, and 8,000 gallon diesel storage tank, 1,000 gallon 40 weight oil tank and a 1,000 gallon 30 weight oil tank and a 1,000 gallon waste oil tank. There are several pumps at a central pumping facility. There is also approximately 138,000 square feet of parking, security fences and gates, security facilities (including cameras) and miscellaneous landscaping. The insured value of the Corporation Yard improvements is $15,119,000.

Arroyo Verde Park

Arroyo Verde Park is one of the oldest regional parks in the City. It is located at 5005 Foothill Road in the hillside north of Poli Street in the eastern end of the City. Arroyo Verde Park has facilities for meetings and gatherings as well as outdoor barbecue facilities with covered meeting areas. It has two baseball fields with extensive parking, children’s playgrounds and lawn area for activities. There are restroom facilities and the entrance has a small caretaker’s residence. Although Arroyo Verde Park has a total of 129.27 acres, the actual park area for activities is approximately 25 acres. The balance of the area is hilly open space located at the north end of the property. The insured value of the improvements is approximately $1,084,000, which amount does not attribute any value to the land underlying the improvements.

Release/Substitution of Leased Property

The Leased Property is subject to change in whole or in part from time to time under the circumstances permitted in the Lease Agreement. See “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES—Substitution of Leased Property” and “—Release of Leased Property” herein.

THE CERTIFICATES

General

The Certificates evidence and represent the direct, undivided fractional interest of the Owners thereof in the principal and interest components of Lease Payments to be made by the City pursuant to the Lease Agreement.

The Certificates will be executed and delivered in principal amounts of $5,000 or integral multiples thereof. Interest represented by each Certificate will accrue on the principal components represented by such Certificate at the applicable interest rate from its date of execution until its date of maturity or prior prepayment, with interest becoming payable on each January 1 and July 1 (each, an “Interest Payment Date”), commencing January 1, 2011.

Interest evidenced by each Certificate will be computed on the basis of a 360-day year consisting of twelve 30-day months.

Book-Entry Only System

The Certificates will be executed and delivered as fully registered Certificates, registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to actual purchasers of the Certificates (the “Beneficial Owners”) in the denominations set forth above, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants (as defined herein) as described herein. Beneficial Owners will not be entitled to receive physical delivery of the Certificates. In the event that the book-entry-only system is no longer used with respect to the Certificates, the Certificates will be registered and transferred in accordance with the Trust Agreement. See APPENDIX F—“BOOK-ENTRY ONLY SYSTEM.”

5 Prepayment

Prepayment From Net Proceeds of Insurance or Condemnation. The Certificates are subject to mandatory prepayment, in whole, or in part on any date among maturities on a pro rata basis and by lot within a maturity, from the Net Proceeds of insurance or eminent domain proceedings credited towards the prepayment of the Lease Payments pursuant to the Lease and the Trust Agreement, at a prepayment price equal to one hundred percent (100%) of the principal amount to be prepaid, together with accrued interest represented thereby to the date fixed for prepayment, without premium.

Optional Prepayment. The Certificates maturing on or before July 1, 2020, are not subject to optional prepayment before their respective stated maturities. The Certificates maturing on or after July 1, 2021, are subject to prepayment prior to their respective stated maturities, at the option of the City, in whole, or in part among maturities on such basis as designated by the City and by lot within any one maturity, on July 1, 2020, or on any date thereafter, upon payment of a prepayment price equal to 100% of the principal amount to be prepaid, together with accrued interest to the date fixed for prepayment, without premium.

Notwithstanding the foregoing paragraph, the Certificates shall not be subject to optional prepayment unless all amounts then due and owing to the Insurer under the Policy and the Reserve Policy (hereinafter defined) have been paid in full.

Selection of Certificates for Prepayment. Whenever provision is made in the Trust Agreement for the prepayment of Certificates and less than all Outstanding Certificates of any maturity are called for prepayment, the Trustee shall select Certificates of such maturity for prepayment by lot. For the purposes of such selection, Certificates shall be deemed to be composed of $5,000 portions, and any such portion may be separately prepaid. The Trustee shall promptly notify the City and the Authority in writing of the Certificates or portions thereof so selected for prepayment.

Notice of Prepayment. When prepayment is authorized or required under the Trust Agreement, the Trustee shall give notice of the prepayment of the Certificates. Such notice shall state the prepayment date and prepayment price; state the numbers or maturities of the Certificates to be prepaid, if less than all of the Outstanding Certificates are to be called for prepayment; if a Certificate is to be prepaid only in part, identify the portions of the Certificate which is to be prepaid; and shall require that such Certificates be surrendered on the prepayment date at the corporate office of the Trustee in Los Angeles, California for prepayment at said prepayment price, giving notice also that further interest represented by the Certificates will not accrue after the prepayment date. Such notice shall further state that on the prepayment date there shall become due and payable, the principal and premium, if any, represented by each Certificate together with accrued interest represented thereby to said date, and that from and after such date interest represented thereby shall cease to accrue and be payable.

Notice of such prepayment shall be mailed by first class mail with postage prepaid, to the Information Services and the Securities Depositories, the Insurer and to DTC, as securities depository for the Certificates (or, if the DTC system is not in effect, to the Owners of Certificates designated for prepayment at their respective addresses appearing on the Registration Books), at least thirty (30) days but not more than sixty (60) days prior to the prepayment date, which notice shall, in addition to setting forth the above information, set forth, in the case of each Certificate called only in part, the portion of the principal represented thereby which is to be prepaid; provided, however, that neither failure to receive such notice so mailed nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the prepayment of such Certificates or the cessation of accrual of interest represented thereby from and after the date fixed for prepayment.

Effect of Prepayment. Moneys for the prepayment (including the interest to the applicable date of prepayment) of Certificates having been set aside in the Lease Payment Fund, the Certificates shall become due and payable on the date of such prepayment, and, upon presentation and surrender thereof at the corporate

6 office of the Trustee, said Certificates shall be paid at the unpaid principal amount (or applicable portion thereof) represented thereby and interest accrued and unpaid to said date of prepayment.

If, on said date of prepayment, moneys for the prepayment of all the Certificates to be prepaid, together with interest represented thereby to said date of prepayment and premium (if any), shall be held by the Trustee so as to be available therefor on such date of prepayment, then, from and after said date of prepayment, interest represented by the Certificates shall cease to accrue and become payable.

All Certificates paid at maturity or prepaid prior to maturity pursuant to the provisions of the Trust Agreement shall be canceled upon surrender thereof.

LEASE PAYMENT SCHEDULE

Following is the annual schedule of Lease Payments due with respect to the Certificates. Lease Payments are due five Business Day prior to each Interest Payment Date.

Period Ending Principal (July 1) Component Interest Component Annual Total 2011 400,000 $ 651,236.30 $1,051,236.30 2012 2,320,000 726,937.50 3,046,937.50 2013 2,925,000 657,337.50 3,582,337.50 2014 3,005,000 569,437.50 3,574,437.50 2015 3,125,000 471,812.50 3,596,812.50 2016 3,250,000 346,812.50 3,596,812.50 2017 1,155,000 216,812.50 1,371,812.50 2018 570,000 182,162.50 752,162.50 2019 595,000 159,362.50 754,362.50 2020 620,000 135,562.50 755,562.50 2021 645,000 110,762.50 755,762.50 2022 670,000 84,962.50 754,962.50 2023 700,000 58,162.50 758,162.50 2024 -- 30,162.50 30,162.50 2025 -- 30,162.50 30,162.50 2026 -- 30,162.50 30,162.50 2027 -- 30,162.50 30,162.50 2028 -- 30,162.50 30,162.50 2029 -- 30,162.50 30,162.50 2030 -- 30,162.50 30,162.50 2031 -- 30,162.50 30,162.50 2032 635,000 30,162.50 665,162.50 Total $20,615,000 $ 4,642,823.80 $25,257,823.80

SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES

Nature of the Certificates

Each Certificate evidences and represents a direct, undivided fractional interest in the principal component of the Lease Payments due under the Lease Agreement on the payment date or prepayment date of such Certificate, and the interest component of all Lease Payments (based on the stated interest rate with respect to such Certificate) to accrue from its date of delivery to its payment date or prepayment date, as the case may be.

7 The Authority, pursuant to the Assignment Agreement, has assigned to the Trustee for the benefit of the Owners of the Certificates, substantially all of the Authority’s right, title and interest in and to the Lease Agreement, including, without limitation, its right to receive Lease Payments to be paid by the City. The City will pay Lease Payments directly to the Trustee, as assignee of the Authority. See “—Lease Payments” below.

Covenant to Appropriate Funds for Lease Payments

The City has covenanted in the Lease Agreement to take such action as may be necessary to include all Lease Payments in each of its annual budgets and to make the necessary annual appropriations for all such Lease Payments and Additional Payments (as defined in the Lease Agreement). Repayments are expected to be derived from the General Fund and to a limited extent the Golf Course Fund. See “CITY FINANCES— Golf Course Fund.”

Abatement

Lease Payments are to be paid by the City in each rental period for and in consideration of the right to use and occupy the Leased Property during each such period. The amount of Lease Payments will be abated during any period in which by reason of damage or destruction (other than by eminent domain which is addressed as a separate abatement event) there is substantial interference with the use and occupancy by the City of the Leased Property or any portion thereof. See “RISK FACTORS—Eminent Domain” herein. The amount of such abatement will be determined by the City (with the prior written consent of the Insurer), such that the resulting Lease Payments represent fair consideration for the use and occupancy of the portions of the Leased Property not damaged or destroyed. Such abatement shall continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, the Lease Agreement shall continue in full force and effect and the City waives any right to terminate the Lease Agreement by virtue of any such damage and destruction.

To the extent proceeds of an eminent domain or insurance award, including self-insurance, are available to pay Lease Payments, or to the extent that moneys are available in the Lease Payment Fund or the Reserve Fund, Lease Payments (or a portion thereof) may be made during periods of abatement.

Action on Default

Should the City default under the Lease Agreement, the Trustee, as assignee of the Authority under the Lease Agreement, may exercise any and all remedies available pursuant to law or granted pursuant to the Lease Agreement; provided, however, that notwithstanding anything in the Lease Agreement or in the Trust Agreement to the contrary, there is no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be immediately due and payable. The Authority and the Trustee (as assignee of the Authority) have the right to re-enter or re-let the Leased Property and the right to terminate the Lease Agreement. See “RISK FACTORS—Limited Recourse on Default; No Acceleration” herein.

Reserve Fund

A reserve fund (the “Reserve Fund”) is established pursuant to the Trust Agreement and will be held by the Trustee in trust for the benefit of the Owners of the Certificates. The Trust Agreement provides that on the date of delivery of the Certificates, the Reserve Fund will be initially satisfied with a Municipal Bond Debt Service Reserve Insurance Policy (the “Reserve Policy”) issued by the Insurer in a principal amount equal to the Reserve Requirement, initially $1,442,571.48. The balance in the Reserve Fund is required to be maintained at the Reserve Requirement, which is defined to be, as of the date of calculation thereof, an amount equal to the maximum amount of Lease Payments (excluding Lease Payments with respect to which the City has posted a security deposit under the Lease) coming due in the current or any future Fiscal Year, provided

8 with respect to the Reserve Policy, the City shall have no obligation to replace the Reserve Policy or to fund the Reserve Fund with cash in the event of any downgrade of the credit rating of the Insurer.

If on any Interest Payment Date the moneys available in the Lease Payment Fund do not equal the amount of the principal and interest and prepayment premiums (if any) represented by the Certificates then coming due and payable, the Trustee will apply the moneys available in the Reserve Fund (including amounts available under the Reserve Policy) to make delinquent Lease Payments on behalf of the City by transferring the amount necessary for this purpose to the Lease Payment Fund. Upon receipt of any delinquent Lease Payment or portion thereof with respect to which moneys have been advanced from the Reserve Fund, such Lease Payment or portion thereof shall be deposited in the Reserve Fund to the extent of such advance.

Pursuant to the Trust Agreement, moneys, if any, held by the Trustee in the Reserve Fund will be invested by the Trustee upon the written request of the City only in Permitted Investments (as defined in the Trust Agreement and in Appendix A hereto). All amounts on deposit in the Reserve Fund at any time in excess of the Reserve Requirement, and all amounts derived from the investment of amounts in the Reserve Fund which are not required to be retained therein to maintain the Reserve Requirement, shall be transferred by the Trustee to the Project Fund prior to the completion of the Project, and thereafter to the Lease Payment Fund. Any recomputation of the Reserve Requirement shall be made by or on behalf of the City, and shall become effective upon the filing by the City with the Trustee of written notice thereof.

Lease Payments

For the right to the use and occupancy of the Leased Property, the Lease Agreement requires the City to make Lease Payments. Scheduled Lease Payments relating to the Certificates are set forth above under the heading “LEASE PAYMENT SCHEDULE.”

THE OBLIGATION OF THE CITY TO MAKE THE LEASE PAYMENTS DOES NOT CONSTITUTE A DEBT OF THE CITY OR THE STATE OR OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR RESTRICTION, AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY OR THE STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.

Additional Payments

The City is obligated under the Lease Agreement to pay when due, during the term of the Lease Agreement, in addition to the Lease Payments, Additional Payments, which consist of the following: (i) all Costs of Issuance (as defined in the Trust Agreement), to the extent not paid from amounts on deposit in the Costs of Issuance Fund, (ii) annual compensation due to the Trustee and all of its reasonable costs and expenses (including amounts payable to the Trustee by virtue of indemnification) payable as a result of the performance of and compliance with its duties under the Trust Agreement, and (iii) all reasonable costs and expenses of attorneys, auditors, engineers and accountants engaged by the Authority or the Trustee in connection with the Leased Property or the performance of their duties under the Lease Agreement or under the Trust Agreement.

Insurance

The City is self-insured for its primary general liability and workers’ compensation insurance coverages. These self-insured programs are administered by the City’s Risk Management Division. The City agrees in the Lease Agreement that for the term of such Lease Agreement it will maintain insurance with respect to the Leased Property against the risks described in the following paragraphs.

9 General Liability & Workers’ Compensation Insurance. The City is obligated under the Lease Agreement to maintain or cause to be maintained, throughout the term of the Lease Agreement, comprehensive general liability insurance in protection of the Authority, the City, and their respective members, officers, agents, employees and assigns. Such insurance shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Leased Property. Such insurance shall provide coverage in such liability limits and be subject to such deductibles as the City shall deem adequate and prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City. With the prior written consent of the Insurer, such insurance may be maintained in whole or in part in the form of a program of self-insurance by the City, or in the form of the participation by the City in a program which provides pooled insurance. The City will apply the proceeds of such insurance toward extinguishment or satisfaction of the liability with respect to which the net proceeds are paid.

The City’s Risk Management Division currently administers a Self-Insured Public Liability program with a primary loss retention limit of $1,000,000. Excess Liability Insurance layers are carried for the next $10,000,000 and $5,000,000, respectively. The City is self-insured for Statutory Workers’ Compensation Benefits Insurance, with an self-insured retention of $500,000 for each workers’ compensation claim. Excess Workers’ Compensation benefit insurance to a limit of $5,000,000 each accident, is purchased on the commercial market .

Property and Casualty Insurance. The City is obligated under the Lease Agreement to maintain throughout the Term of the Lease casualty insurance against loss or damage to the insured buildings, facilities and other improvements constituting any part of the Leased Property, in an amount at least equal to the replacement value of such buildings, facilities and improvements. Such insurance shall, as nearly as practicable, cover loss or damage by fire, explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance, and shall include earthquake coverage if such coverage is available at reasonable cost from reputable insurers in the reasonable determination of the City, whose determination will be final and conclusive. Such insurance will be subject to such deductibles as the City deems prudent. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program which provides pooled insurance; provided that such insurance may not be maintained by the City in the form of self-insurance.

The City currently maintains All-Risk Property Insurance for property damage, business interruption, rental income and expense with limits of $1,000,000,000. The Deductible Schedule includes $15,000 Vehicle Physical Damage; $25,000 All-Risk; $100,000 Wave-Wash and up to $250,000 for Scheduled Flood Zone Properties. Boiler and machinery insurance limits of $100,000 are maintained, with a $5,000 self-insured retention on all objects.

Rental Interruption Insurance. The City will maintain throughout the term of the Lease rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of the buildings, facilities and other improvements constituting any part of the Leased Property, as a result of any of the hazards covered by the insurance described in the previous paragraph, in an amount at least equal to the maximum Lease Payments coming due and payable during any two consecutive Fiscal Years during the remaining term of the Lease Agreement. Such insurance may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of the participation by the City in a joint powers authority or other program providing pooled insurance; provided that such insurance may not be maintained by the City in the form of self-insurance.

Title Insurance. The City will cause the Assignment Agreement, the Site Lease and the Lease Agreement to be recorded in the office of the Ventura County Recorder with respect to the Leased Property. Concurrent with the delivery of the Certificates, the City will obtain a CLTA title insurance policy, acceptable to the Insurer, insuring the City’s leasehold estate in the Leased Property under the Lease Agreement, in an

10 amount at least equal to the aggregate principal amount of the Outstanding Certificates. All Net Proceeds received under such title insurance policy are required to be deposited with the Trustee in the Lease Payment Fund and will be credited towards the prepayment of the Lease Payments.

Net Proceeds; Form of Insurance. All proceeds of such insurance must be payable to the Trustee as and to the extent required under the Lease Agreement. All policies of insurance required by the Lease Agreement must be in form satisfactory to the Trustee. All such policies must provide that the Trustee shall be given thirty days notice of each expiration, any intended cancellation thereof or reduction of the coverage provided thereby. The Trustee will not be responsible for the sufficiency of any required insurance and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the Trustee. The City will cause to be delivered to the Trustee annually evidence that the insurance policies required by the Lease Agreement are in full force and effect. Certain insurance may be maintained as self-insurance subject to the requirements set forth in the Lease Agreement.

Substitution of Leased Property

Pursuant to the Lease Agreement, the City has the option at any time to substitute other real property (the “Substitute Property”) for the Leased Property, or any portion thereof (the “Former Property”), provided that the City shall satisfy certain requirements, including the following:

(a) The Insurer has given its prior written consent to the substitution;

(b) The City must certify to the Authority and the Trustee that no event of default has occurred and is continuing under and as defined in the Lease Agreement;

(c) The City must file with the Authority and the Trustee, and cause to be recorded in the office of the Ventura County Recorder an amendment to the Lease Agreement which adds a description of the Substitute Property and deletes from the Lease Agreement the description of the Former Property;

(d) The City must obtain a CLTA policy of title insurance acceptable to the Insurer insuring the City’s leasehold estate under the Lease Agreement in the Substitute Property, subject only to Permitted Encumbrances, in an amount equal to the estimated value thereof;

(e) The City must certify in writing to the Authority and the Trustee that such Substitute Property serves the municipal purposes of the City and constitutes property which the City is permitted to lease under the laws of the State of California, and has been determined to be essential to the proper, efficient and economic operation of the City and to serve an essential governmental function of the City;

(f) The Substitute Property does not cause the City to violate any of its covenants, representations and warranties made in the Lease Agreement or in the Trust Agreement;

(g) The City must file with the Authority and the Trustee an appraisal or other written documentation which establishes that the estimated value of the Substitute Property is at least equal to the estimated value and the fair rental value, respectively, of the Former Property, and that the useful life of the Substitute Property at least equals the lesser of (i) the useful life of the Former Property, or (ii) the final Lease Payment Date of the Lease Payments allocable thereto; and

(h) The City must mail written notice of such substitution to each rating agency which then maintains a rating on the Certificates.

11 Upon the satisfaction of all such conditions precedent, the term of the Lease Agreement will thereupon end as to the Former Property and commence as to the Substitute Property. The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of the substitution.

Release of Leased Property

Release of Other Property. The City may, at any time and from time to time, release any portion the Leased Property (the “Released Property”) from the Lease upon satisfaction of all of the following requirements which are conditions precedent to such release:

(a) The Insurer has given its prior written consent to the release;

(b) The City must certify to the Authority and the Trustee that no event of default has occurred and is continuing under and as defined in the Lease Agreement;

(c) The City must file with the Authority and the Trustee, and cause to be recorded in the office of the Ventura County Recorder an amendment to the Lease Agreement which removes the Released Property from the Site and the Lease Agreement;

(d) The City must file with the Authority and the Trustee an appraisal or other written documentation which establishes that the estimated value of the real property which will remain leased under the Lease Agreement following such release is at least equal to the aggregate original principal amount of the Certificates, and the fair rental value of the property which remains subject to the Lease Agreement following such release is at least equal to the Lease Payments thereafter coming due and payable under the Lease Agreement; and

(e) The City must mail written notice of such substitution to each rating agency which then maintains a rating on the Certificates.

Upon the satisfaction of all such conditions precedent, the term of the Lease Agreement will thereupon end as to the Released Property. The City is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such release.

MUNICIPAL CERTIFICATE INSURANCE

There follows under this caption certain information concerning the terms of the Insurance Policy and the Insurer that has been supplied by the Insurer for inclusion in this Preliminary Official Statement. No representation is made by the City as to the accuracy, completeness or adequacy of such information, nor as to the absence of material adverse changes in such information subsequent to the date of this Preliminary Official Statement. The City has not made any independent investigation of the Insurer or the Insurance Policy, and reference is made to the information set forth below and in Appendix G hereto for a description thereof. Any such Certificates that are so insured are hereinafter referred to as the “Insured Certificates.” Among other things, the Insurer’s rights include the right to exercise all rights and remedies of Certificate holders under the Trust Agreement and the Lease Agreement, including any required consent to amendments or remedies, and to control the exercise of remedies following any default under the Lease Agreement or the Trust Agreement. See APPENDIX A—"SUMMARY OF PRINCIPAL LEGAL DOCUMENTS."

The following information and the specimen of the Insurance Policy attached as Appendix G hereto have been furnished by the Insurer for use in this Preliminary Official Statement.

12 Certificate Insurance Policy

Concurrently with the execution and delivery of the Certificates, AGM will issue its Municipal Bond Insurance Policy for the Insured Certificates (the “Insurance Policy”). The Insurance Policy guarantees the scheduled payment of principal of and interest on the Insured Certificates when due as set forth in the form of the Insurance Policy included as Appendix G to this Official Statement.

The Insurance Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law.

Assured Guaranty Municipal Corp. (Formerly Known as Financial Security Assurance Inc.)

AGM is a New York domiciled financial guaranty insurance company and a wholly owned subsidiary of Assured Guaranty Municipal Holdings Inc. (“Holdings”). Holdings is an indirect subsidiary of Assured Guaranty Ltd. (“AGL”), a Bermuda-based holding company whose shares are publicly traded and are listed on the New York Stock Exchange under the symbol “AGO”. AGL, through its operating subsidiaries, provides credit enhancement products to the U.S. and global public finance, infrastructure and structured finance markets. No shareholder of AGL, Holdings or AGM is liable for the obligations of AGM.

On July 1, 2009, AGL acquired the financial guaranty operations of Holdings from Dexia SA (“Dexia”). In connection with such acquisition, Holdings’ financial products operations were separated from its financial guaranty operations and retained by Dexia. For more information regarding the acquisition by AGL of the financial guaranty operations of Holdings, see Item 1.01 of the Current Report on Form 8-K filed by AGL with the Securities and Exchange Commission (the “SEC”) on July 8, 2009.

Effective November 9, 2009, Financial Security Assurance Inc. changed its name to Assured Guaranty Municipal Corp.

AGM’s financial strength is rated “AAA” (negative outlook) by Standard and Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business (“S&P”) and “Aa3” (negative outlook) by Moody’s Investors Service, Inc. (“Moody’s”). On February 24, 2010, Fitch, Inc. (“Fitch”), at the request of AGL, withdrew its “AA” (Negative Outlook) insurer financial strength rating of AGM at the then current rating level. Each rating of AGM should be evaluated independently. An explanation of the significance of the above ratings may be obtained from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such ratings are subject to revision or withdrawal at any time by the rating agencies, including withdrawal initiated at the request of AGM in its sole discretion. Any downward revision or withdrawal of any of the above ratings may have an adverse effect on the market price of any security guaranteed by AGM. AGM does not guarantee the market price of the securities it insures, nor does it guarantee that the ratings on such securities will not be revised or withdrawn.

Recent Developments

Ratings

On May 17, 2010, S&P published a Research Update in which it affirmed its “AAA” counterparty credit and financial strength ratings on AGM. At the same time, S&P continued its negative outlook on AGM. Reference is made to the Research Update, a copy of which is available at www.standardandpoors.com, for the complete text of S&P’s comments.

In a press release dated February 24, 2010, Fitch announced that, at the request of AGL, it had withdrawn the “AA” (Negative Outlook) insurer financial strength rating of AGM at the then current rating level. Reference is made to the press release, a copy of which is available at www.fitchratings.com, for the complete text of Fitch’s comments.

13 On December 18, 2009, Moody’s issued a press release stating that it had affirmed the “Aa3” insurance financial strength rating of AGM, with a negative outlook. Reference is made to the press release, a copy of which is available at www.moodys.com, for the complete text of Moody’s comments.

There can be no assurance as to any further ratings action that Moody’s or S&P may take with respect to AGM.

For more information regarding AGM’s financial strength ratings and the risks relating thereto, see AGL’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, which was filed by AGL with the SEC on March 1, 2010, and AGL’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2010, which was filed by AGL with the SEC on May 10, 2010. Effective July 31, 2009, Holdings is no longer subject to the reporting requirements of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).

Capitalization of AGM

At March 31, 2010, AGM’s consolidated policyholders’ surplus and contingency reserves were approximately $2,220,015,145 and its total net unearned premium reserve was approximately $2,228,912,193 in accordance with statutory accounting principles.

Incorporation of Certain Documents by Reference

Portions of the following documents filed by AGL with the SEC that relate to AGM are incorporated by reference into this Official Statement and shall be deemed to be a part hereof:

(i) The Annual Report on Form 10-K for the fiscal year ended December 31, 2009 (which was filed by AGL with the SEC on March 1, 2010); and

(ii) The Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2010 (which was filed by AGL with the SEC on May 10, 2010).

All information relating to AGM included in, or as exhibits to, documents filed by AGL pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the filing of the last document referred to above and before the termination of the offering of the Insured Certificates shall be deemed incorporated by reference into this Official Statement and to be a part hereof from the respective dates of filing such documents. Copies of materials incorporated by reference are available over the internet at the SEC’s website at http://www.sec.gov, at AGL’s website at http://www.assuredguaranty.com, or will be provided upon request to Assured Guaranty Municipal Corp. (formerly known as Financial Security Assurance Inc.): 31 West 52nd Street, New York, New York 10019, Attention: Communications Department (telephone (212) 826-0100).

Any information regarding AGM included herein under the caption “MUNICIPAL CERTIFICATE INSURANCE – Assured Guaranty Municipal Corp. (formerly known as Financial Security Assurance Inc.)” or included in a document incorporated by reference herein (collectively, the “AGM Information”) shall be modified or superseded to the extent that any subsequently included AGM Information (either directly or through incorporation by reference) modifies or supersedes such previously included AGM Information. Any AGM Information so modified or superseded shall not constitute a part of this Official Statement, except as so modified or superseded.

AGM makes no representation regarding the Insured Certificates or the advisability of investing in the Insured Certificates. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the

14 information regarding AGM supplied by AGM and presented under the heading “MUNICIPAL CERTIFICATE INSURANCE”.

RISK FACTORS

The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating a purchase of the Certificates. However, the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the Certificates. In addition, the order in which the following factors are presented is not intended to reflect the relative importance of any such risks.

General Considerations – Security for the Certificates

The obligation of the City to make the Lease Payments does not constitute a debt of the City or the State or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State is obligated to levy or pledge any form of taxation or for which the City or the State has levied or pledged any form of taxation.

Although the Lease Agreement does not create a pledge, lien or encumbrance upon the funds of the City, the City is obligated, subject to abatement, under the Lease Agreement to pay the Lease Payments from any source of legally available funds and the City has covenanted in the Lease Agreement that it will take such action as may be necessary to include all Lease Payments and Additional Payments due under the Lease Agreement in its annual budgets and to make necessary annual appropriations for all such rental payments. The City is currently liable and may become liable on other obligations payable from general revenues (and Golf Course Fund revenues), some of which may have a priority over the Lease Payments.

The City has the capacity to enter into other obligations which may constitute additional charges against its revenues. To the extent that additional obligations are incurred by the City, the funds available to make Lease Payments may be decreased. In the event the City’s revenue sources are less than its total obligations, the City could choose to fund other activities before making Lease Payments and other payments due under the Lease Agreement. See “CITY FINANCES—Outstanding General Fund Debt and Lease Obligations.”

The City’s ability to collect, budget and appropriate various revenues is subject to current and future State laws and constitutional provisions, and it is possible that the interpretation and application of these provisions could result in an inability of the City to pay the Lease Payments when due. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS” herein.

Eminent Domain

If the Leased Property is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the term of the Lease Agreement will cease as of the day possession is taken. In such event, the City is required to apply the Net Proceeds of any eminent domain award to the prepayment of Certificates. If less than all of the Leased Property is taken permanently, or if the Leased Property or any part thereof are taken temporarily, under the power of eminent domain, (1) the Lease Agreement will continue in full force and effect and will not be terminated by virtue of such taking, and (2) there will be a partial abatement of Lease Payments in an amount to be determined by the City and acceptable to the Insurer, such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portion of the Leased Property. Notwithstanding the foregoing, the Lease Payments will not be abated under the Lease Agreement to the extent that amounts in the Reserve Fund and, to a limited extent, the Golf Course Fund are available to pay Lease Payments which would otherwise be abated under the Lease Agreement, as such proceeds and amounts constitute a special fund for the payment of the Lease Payments.

15 Abatement

The Lease Agreement provides that the amount of Lease Payments will be subject to abatement during any period in which by reason of damage or destruction there is substantial interference with the use and occupancy by the City of the Leased Property. The amount of such abatement will be determined by the City (with the prior written consent of the Insurer), such that the resulting Lease Payments represent fair consideration for the use and occupancy of the portions of the Leased Property not damaged or destroyed. Such abatement will continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, the Lease Agreement will continue in full force and effect and the City, in the Lease Agreement, waives any right to terminate the Lease Agreement by virtue of any such damage and destruction.

However, there will be no abatement of Lease Payments to the extent that the proceeds of hazard insurance, rental interruption insurance or amounts in the Reserve Fund and, to a limited extent, the Golf Course Fund are available to pay Lease Payments, or to the extent that moneys are available in the Lease Payment Fund, it being declared in the Lease Agreement that such proceeds and amounts constitute special funds for the payment of the Lease Payments.

Limited Recourse on Default; No Acceleration

If the City defaults on its obligation to make Lease Payments, there is no available remedy of acceleration of the total Lease Payments due over the term of the Lease Agreement. The City will only be liable for Lease Payments on an annual basis, and the Trustee would be required to seek a separate judgment in each fiscal year for that fiscal year’s rental payments.

Limitation on Remedies; Bankruptcy

The rights of the Owners of the Certificates are subject to the limitations on legal remedies against cities in the State, including State constitutional limits on expenditures and limitations on the enforcement of judgments against funds needed to serve the public welfare and interest, by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other laws affecting the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial powers in appropriate cases and by the exercise by the federal and State governments of their sovereign powers. The opinions of counsel, including Special Counsel, delivered in connection with the Certificates will be so qualified. Under Chapter 9 of the Bankruptcy Code (Title 11, United States Code), which governs the bankruptcy proceedings for public agencies such as the City, there are no involuntary petitions in bankruptcy. Bankruptcy proceedings, if initiated, or the exercise of powers by the federal or State government, could subject the owners of the Certificates to judicial discretion and interpretation of their rights in bankruptcy proceedings or otherwise and consequently may entail risk of delay, limitation or modification of their rights.

State Budget Information

The following information concerning the State’s budgets has been obtained from publicly available information which the City believes to be reliable; however, the City does not guaranty the accuracy or completeness of this information and has not independently verified such information. Furthermore, it should not be inferred from the inclusion of this information in this Official Statement that the principal of or interest due with respect to the Certificates is payable from any funds of the State.

The Budget Process. Through the State budget process, the State can enact legislation that significantly impacts the source, amount and timing of the receipt of revenues by local agencies including the City. As in recent years, State budget deficits can result in legislation that adversely impacts local agency budgets.

16 The State’s fiscal year begins on July 1 and ends on June 30. The annual budget is proposed by the Governor by January 10 of each year for the next fiscal year (the “Governor’s Budget”). Under State law, the annual proposed Governor’s Budget cannot provide for projected expenditures in excess of projected revenues and balances available from prior fiscal years. Following the submission of the Governor’s Budget, the Legislature takes up the proposal.

Under the State Constitution, money may be drawn from the Treasury only through an appropriation made by law. The primary source of the annual expenditure authorizations is the Budget Act as approved by the Legislature and signed by the Governor. The Budget Act must be approved by a two-thirds majority vote of each House of the Legislature. The Governor may reduce or eliminate specific line items in the Budget Act or any other appropriations bill without vetoing the entire bill. Such individual line-item vetoes are subject to override by a two-thirds majority vote of each House of the Legislature.

Appropriations also may be included in legislation other than the Budget Act. Bills containing appropriations (except for K-14 education) must be approved by a two-thirds majority vote in each House of the Legislature and be signed by the Governor. Bills containing K-14 education appropriations only require a simple majority vote. Continuing appropriations, available without regard to fiscal year may also be provided by statute or the State Constitution.

Funds necessary to meet an appropriation need not be in the State Treasury at the time such appropriation is enacted; revenues may be appropriated in anticipation of their receipt.

Recent State Budgets. Certain information about the State budgeting process and the State Budget is available through several State of California sources. A convenient source of information is the State’s website, where recent official statements for State bonds are posted. The references to internet websites shown below are shown for reference and convenience only; the information contained within the websites has not been reviewed by the City and is not incorporated herein by reference.

The California State Treasurer’s Internet home page at www.treasurer.ca.gov, under the heading

Statements, many of which contain a summary of the current State Budget, past State Budgets, and the impact of those budgets on school districts in the State.

The California State Treasurer’s Internet home page at www.treasurer.ca.gov, under the heading “Financial Information,” posts the State’s audited financial statements. In addition, the “Financial Information” section includes the State’s Rule 15c2-12 filings for State bond issues. The “Financial Information” section also includes the “Overview of the State Economy and Government, State Finances, State Indebtedness, Litigation” from the State’s most current Official Statement, which discusses the State budget and its impact on school districts.

The California Department of Finance’s Internet home page at www.dof.ca.gov, under the heading “California Budget,” includes the text of proposed and adopted State Budgets.

The State Legislative Analyst’s Office prepares analyses of the proposed and adopted State budgets. The analyses are accessible on the Legislative Analyst’s Internet home page at www.lao.ca.gov under the heading “Products.”

Proposition 1A. On November 2, 2004, California voters approved Proposition 1A, which amended the State Constitution to significantly reduce the State’s authority over major local government revenue sources. Under Proposition 1A, the State may not (i) reduce local sales tax rates or alter the method of allocating the revenue generated by such taxes, (ii) shift property taxes from local governments to schools or community colleges, (iii) change how property tax revenues are shared among local governments without two- third approval of both houses of the State Legislature, or (iv) decrease Vehicle License Fees revenues without

17 providing local governments with equal replacement funding. Under Proposition 1A, the State may shift to schools and community colleges a limited amount of local government property tax revenue if certain conditions are met, including (a) a proclamation by the Governor that the shift is needed due to a severe financial hardship of the State, and (b) approval of the shift by the State Legislature with a two-thirds vote of both houses. Under such a shift, the State must repay local governments for their property tax losses, with interest, within three years. Proposition 1A does allow the State to approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county.

2009-10 State Budget. The State of California is experiencing significant financial and budgetary stress. State budgets are affected by national and state economic conditions and other factors over which the City has no control. The State’s financial condition and budget policies affect communities and local public agencies throughout California. To the extent that the State budget process results in reduced revenues to the City, the City will be required to make adjustments to its budget. Each State budget, and notably the State’s 2009-10 budget, contains a number of measures which impact the City’s finances.

The State Budget Act for Fiscal Year 2008-09 was signed by the Governor on September 23, 2008— the latest in State history. Thereafter, on-going weak economic conditions resulted in significant revenue shortfalls and the Governor declared a fiscal emergency and called special sessions of the Legislature to consider budget actions to address the problems. The Governor’s proposed budget for Fiscal Year 2009-10, released December 31, 2008, estimated there would be a budget gap of more than $40 billion for the 18-month period ending June 30, 2010. Following lengthy budget negotiations, on February 19, 2009, the State Legislature passed revisions to the State Budget Act for the remainder of Fiscal Year 2008-09, as well as the State Budget Act for Fiscal Year 2009-10 and related legislation, which the Governor signed on February 20, 2009 after making additional line-item vetoes. On July 28, 2009, the Governor signed into law a series of amendments to the 2009-10 State Budget (the “2009-10 Budget Amendments”).

The State’s financial difficulties may affect the amount and timing of payments to or for the benefit of cities of funds provided by the State. From time to time, some of the State’s budget solutions may increase the financial stress of cities and other local governments because they (1) decrease local revenues (particularly the property tax, road improvement funding, public safety or other categorical funded initiatives) or (2) directly or indirectly increase demand for local programs (such as public safety or indigent health programs). There can be no assurances that the State’s financial difficulties will not materially adversely affect the financial condition of the City.

The 2009-10 Budget Amendments were designed to address the State’s budget deficit. The 2009-10 Budget Amendments projected $89.5 billion of General Fund revenues and authorized $84.6 billion of expenditures. Since many of the actions taken to balance the State’s Fiscal Year 2009-10 Budget were either one-time actions, or involve loans which have to be repaid, or are based on temporary revenue increases or the limited receipt of federal stimulus funds, budget gaps of several billions of dollars a year are expected to recur in 2010-11 and subsequent years. The State Department of Finance has projected that, using expenditure obligations under existing law and various assumptions concerning revenues in future years, the State would, in the absence of taking additional steps to balance its budget, face an “operating deficit” (expenditures exceeding revenues in the same fiscal year) of $7.4 billion in Fiscal Year 2010-11, $15.5 billion in 2011-12 and $15.1 billion in 2012-13. These projections in turn are based on a number of assumptions.

The financial condition of the State is subject to a number of other risks in the future, including particularly potential significant increases in required state contributions to the Public Employees’ Retirement System, increased financial obligations related to other post-employment benefits, and increased debt service.

City Impact. The State’s 2009-10 Budget includes an approximately $2 billion borrowing of property tax funds from local government under the provisions of Proposition 1A. As a result of the Proposition 1A borrowing, the State withheld approximately $2,718,041 of property tax revenues in Fiscal Year 2010, which the City would otherwise have expected the State to repay within 3 years. However, the City and other local

18 governments elected to participate in a securitization financing offered by a joint powers authority in which they received, up front, property tax revenues being borrowed by the State. California Communities, the joint powers authority, has issued bonds securitizing the future payments by the State remitted the proceeds of the bonds to the local governments, including the City, which opted to participate in the securitization. The State will then repay the bondholders to pay off the outstanding bonds, including interest costs. As a participant in the financing, the City received the full amount of its property tax reduction. Payments to all participating agencies occurred in two equal installments on or about January 15, 2010 and May 3, 2010. The City received both installment payments on a timely basis.

The 2009-10 Budget Amendments include a total of $2.05 billion to be taken from local redevelopment agencies through a seizure of $1.7 billion in Fiscal Year 2009-10, and then an additional $350 million in Fiscal Year 2010-11. These funds are to be deposited in county “Supplemental” Educational Revenue Augmentation Funds (“SERAF”) to be distributed to meet the State’s constitutional minimum funding obligation to schools. The SERAF shift is similar to prior educational augmentation fund shifts which most recently have been invalidated by a local California Superior Court. While the legislative formulation of the SERAF shift is different from prior shifts in certain respects, the California Redevelopment Association believes the shift represents an unconstitutional diversion of redevelopment funds which are dedicated to redevelopment, and filed suit to invalidate the provisions, but in May of 2010 a trial court rejected the City claims, declining to give injunctive relief. The matter is currently on appeal. The share of this diversion assessed against the City’s redevelopment agency is $1,150,000 for Fiscal Year 2009-10. The City estimates the share of the diversion against the City’s redevelopment agency for Fiscal Year 2010-11 is $237,000. The 2009-10 Budget Amendments allow these funds to be paid by a redevelopment agency through the use of any available funds, and does not require the City to make the payments. However, significant penalties are imposed upon redevelopment agencies which do not make the payments. The City cannot predict the outcome of the currently pending or any future challenge to the SERAF shift or other legislative changes which may affect the City’s redevelopment agency, or the impact of such changes on the City’s General Fund.

The SERAF shift of redevelopment property tax increment funds is significant and, if upheld by the courts and repeated in future fiscal years by the Legislature, could affect the finances of the City’s redevelopment agency for years to come. Nevertheless, the City expects that, if ultimately required to be paid, the City’s redevelopment agency funded its SERAF payment for Fiscal Year 2009-10 from its own property tax increment and without direct impact on the City’s General Fund and the City expects that the redevelopment agency will fund its 2010-11 SERAF payment from its own funds as well.

The State’s Fiscal Year 2009-10 Budget also deferred payments during the fiscal year of certain gas tax revenues payable to the City in the total amount of $1,746,259. If additional gas tax transfer deferrals are included in future state budgets the City would expect to defer projects or allocate available special fund revenues, if any, to supplement general fund activities funded from these sources.

2010-11 Budget. On November 18, 2009, the State Legislative Analyst’s Office estimated the State could face a budget deficit in excess of $20 billion through Fiscal Year 2010-11. To the extent that the State’s annual budget process results in reduced revenues or increased expenses to the City, the City will be required to make adjustments to its budget.

On January 8, 2010 the Governor released his proposed State Budget for Fiscal Year 2010-11 and called for an emergency legislative session to enact budget changes for the remainder of the current fiscal year. His budget estimated an immediate $6.6 billion gap in the State Budget for the 2009-10 fiscal year. Although the proposed budget does not contemplate any further SERAF or Proposition 1A shifts, it anticipates sizable budget shortfall absent federal budget support and other solutions. The City cannot predict whether the final budget solution will impose further adverse impact on the City’s General Fund.

With the Governor’s release of the May Budget Revise on May 14, 2010, the state’s deficit is currently estimated at $19.1 billion (comprised of a $7.7 billion shortfall in the current year, a $10.2 billion

19 projected deficit in the budget year beginning July 1, and a reserve of $1.2 billion). Tax receipts are less than projected and the State has not received even half of the $7 billion in federal assistance requested by the Governor.

Redevelopment agencies are required to give the state an additional $350 million in SERAF payments in Fiscal Year 2010-11, unless the appellate court rules otherwise. While additional impacts to cities are indirect, county programs suffered severely. The May Revise drastically cuts social service programs, with the CalWORKS program proposed for elimination. State workers are facing a salary reduction of 5 percent, a monthly day of personal leave (unpaid), and increased employee retirement contributions. However, funding for education, including K-12, state universities and Cal-Grants, is protected.

The Legislative Analyst’s Office (LAO) issued its overview of Gov. Arnold Schwarzenegger’s May Revise on May 21, 2010 and addressed a number of alternatives to drastic cuts available to legislators as budget negotiations begin.

Triple Flip. Currently, a significant portion of City revenues which are treated as sales tax in fact represent State diversion of property taxes in replacement of lost sales tax revenues because of legislation, commonly referred to as the “Triple Flip,” which was submitted to the voters on March 2, 2004, as part of a bond proposition formally known as the “Economic Bond Recovery Act.” This act authorized the issuance of $15 billion in bonds to finance the 2002/03 and 2003/04 State budget deficits, which are payable from a fund established by the redirection of tax revenues through the Triple Flip.

Under the “Triple Flip” one-quarter of local governments’ one percent share of the sales tax imposed on taxable transactions within their jurisdiction is redirected to the State. In an effort to eliminate the adverse impact of the sales tax revenue redirection on local government, the legislation provides for property taxes in the ERAF to be redirected to local government. Because the ERAF moneys were previously earmarked for schools, the legislation provides for schools to receive other state general fund revenues. It is expected that the swap of sales taxes for property taxes would terminate once the deficit financing bonds were repaid. The “Triple Flip” legislation was approved by voters at the election on March 2, 2004 and the bonds were sold in May 2004. See “CITY FINANCES—Tax Receipts” herein.

Future State Budgets. The City cannot predict what actions will be taken in the future by the State Legislature and the Governor to address the State’s current and future budget deficits. Future State budgets could be affected by national economic conditions and other factors over which the City will have no control. To the extent that the State’s annual budget process results in reduced revenues or increased expenses to the City, the City will be required to make adjustments to its budget.

Seismic Considerations

The City, like much of California, is subject to seismic activity that could result in interference with its right to use and possession of the Leased Property. Four known active or potentially active faults (Ventura, Oak Ridge, Red Mountain, and Country Club faults) are located within the City. To date, only the Ventura fault has been designated active by the California Department of Mining and Geology within the City limits. Seismic hazards encompass potential surface rupture, ground shaking, landslides and liquefaction. Elements of the Corporation Yard may be subject to a high risk of liquefaction in the event of seismic activity. The City is not obligated by the Lease Agreement or otherwise to maintain earthquake insurance with respect to the Leased Property, unless such insurance is available at reasonable cost from reputable insurers in the judgment of the City. Based on current market conditions, the City does not expect to maintain earthquake insurance on the Leased Property.

20 Hazardous Substances

The City knows of no existing hazardous substances which require remedial action on or near the Leased Property. However, it is possible that such substances do currently or potentially exist and that the City is not aware of them. The City does not currently carry insurance covering the risks of hazardous substances. Owners and operators of real property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly and adversely affect the operations and finances of the City and/or the value of the Leased Property.

Substitution and Removal of Property

The Authority and the City may, under the terms of the Lease Agreement, substitute alternate real property for any portion of the Leased Property or release a portion of the Leased Property from the Lease Agreement, upon compliance with all of the conditions set forth in the Lease Agreement. After a substitution or release, the portion of the Leased Property for which the substitution or release has been effected shall be released from the leasehold encumbrance of the Lease Agreement. See “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES—Substitution of Leased Property” and “—Release of Leased Property.”

Ability to Re-Let

If the City defaults on its obligations to make Lease Payments, the Trustee may have limited ability to re-let the Leased Property to provide a source of payments sufficient to meet the principal and interest with respect to the Leased Property and preserve the tax-exempt nature of the interest component of the Lease Payments and the Leased Property. The re-letting or sale of the Leased Property is subject to market conditions and applicable City zoning requirements. See “THE LEASED PROPERTY.”

Investment of Funds

All the funds held under the Trust Agreement are required to be invested in Permitted Investments as provided under the Trust Agreement. See Appendix A attached hereto for a summary of the definition of Permitted Investments. All investments, including the Permitted Investments and those authorized by law from time to time for investments by municipalities, contain a certain degree of risk. Such risks include, but are not limited to, a lower rate of return than expected, decline in market value and loss or delayed receipt of principal. The occurrence of these events with respect to amounts held under the Trust Agreement or the funds and accounts held by the City could have a material adverse affect on the security for the Certificates, and/or the financial condition of the City. See “CITY FINANCES—Investment of City Funds” herein, and the audited financial statements of the City for the year ended June 30, 2009 attached hereto as Appendix C for information concerning the City’s investment policy and portfolio of investments.

Secondary Market

There can be no assurance that there will be a secondary market for the Certificates or, if a secondary market exists, that such Certificates can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally,

21 prices of issues for which a market is being made will depend upon the then prevailing circumstances. Such prices could be substantially different from the original purchase price.

Loss of Tax Exemption

As discussed under the caption “TAX MATTERS” below, interest represented by the Certificates could become includable in gross income for purposes of federal income taxation retroactive to the date the Certificates were issued as a result of future acts or omissions of the Authority or the City in violation of their respective covenants in the Lease Agreement and the Trust Agreement. Should such an event of taxability occur, the Certificates are not subject to a special redemption and will remain outstanding until maturity or until prepaid under the prepayment provisions contained in the Trust Agreement.

The Internal Revenue Service (the “IRS”) has initiated an expanded program for the auditing of tax- exempt bond issues, including both random and targeted audits. It is possible that the Certificates will be selected for audit by the IRS. It is also possible that the market value of the Certificates might be affected as a result of such an audit of the Certificates (or by an audit of similar obligations).

No Liability of Authority to the Owners

Except as expressly provided in the Trust Agreement, the Authority will not have any obligation or liability to the Owners of the Certificates with respect to the payment when due of the Lease Payments by the City, or with respect to the performance by the City of other agreements and covenants required to be performed by it contained in the Lease Agreement or the Trust Agreement, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained in the Trust Agreement.

CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS

Constitutional Limitation on Taxes and Expenditures

State Initiative Measures Generally. Under the California Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutional amendments. For more than 25 years, the voters have exercised this power to place limitations on the ability of local governments to levy taxes and make expenditures, including through the adoption of Proposition 13 (“Article XIIIA”) and similar measures, the most recent of which was approved as Proposition 218 in the general election held on November 5, 1996.

Any such initiative may affect the collection of fees, taxes and other types of revenue by local agencies such as the City. Subject to overriding federal constitutional principles, such collection may be materially and adversely affected by voter-approved initiatives, possibly to the extent of creating cash-flow problems in the payment of outstanding obligations such as the Lease.

Article XIIIA. Article XIIIA of the California Constitution limits the taxing powers of California public agencies. Article XIIIA provides that the maximum ad valorem tax on real property cannot exceed one percent of the “full cash value” of the property, and effectively prohibits the levying of any other ad valorem property tax except for taxes above that level required to pay debt service on voter-approved general obligation bonds. “Full cash value” is defined as “the County assessor’s valuation of real property as shown on the 1975/76 tax bill under ‘full cash value’ or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” The “full cash value” is subject to annual adjustment to reflect inflation at a rate not to exceed two percent or a reduction in the consumer price index or comparable local data. Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the event of declining property values caused by substantial damage, destruction or other factors, and to provide that there could be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster and in other special circumstances.

22 The foregoing limitation does not apply to ad valorem taxes or special assessments to pay the interest and redemption charges on any indebtedness approved by the voters before July 1, 1978 or any bonded indebtedness for the acquisition or improvement of real property approved by two-thirds of votes cast by the voters voting on the proposition.

In the general election held November 4, 1986, voters of the State of California approved two measures, Propositions 58 and 60, which further amend the terms “purchase” and “change of ownership”, for purposes of determining full cash value of property under Article XIIIA, to not include the purchase or transfer of (1) real property between spouses and (2) the principal residence and the first $1,000,000 of other property between parents and children. Proposition 60 amends Article XIIIA to permit the Legislature to allow persons over age 55 who sell their residence and buy or build another of equal or lesser value within two years in the same city, to transfer the old residence’s assessed value to the new residence. In the March 26, 1996 general election, voters approved Proposition 193, which extends the parents-children exception to the reappraisal of assessed value. Proposition 193 amended Article XIIIA so that grandparents may transfer to their grandchildren whose parents are deceased, their principal residences, and the first $1,000,000 of other property without a re-appraisal of assessed value. From time to time the electorate has made other minor exceptions to the reassessment provisions of Article XIIIA.

Article XIIIB. On October 6, 1979, California voters approved Proposition 4, or the Gann Initiative, which added Article XIIIB to the California Constitution. The principal thrust of Article XIIIB is to limit the annual appropriations of the State and any city, county, city and county, school district, authority or other political subdivision of the State. The “base year” for establishing such appropriations limit is the 1978/79 fiscal year, and the limit is to be adjusted annually to reflect changes in population, consumer prices and certain increases in the cost of services provided by public agencies.

Proposition 62 and Proposition 218. A statutory initiative (“Proposition 62”) was adopted by the voters of the State at the November 4, 1986 General Election which (a) requires that any tax for general governmental purposes imposed by local governmental entities be approved by resolution or ordinance adopted by two-thirds vote of the governmental agency’s legislative body and by a majority of the electorate of the governmental entity, (b) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two-thirds vote of the voters within the jurisdiction, (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax is imposed, (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA, (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities and (f) requires that any tax imposed by a local governmental entity on or after August 1, 1985 be ratified by a majority vote of the electorate within two years of the adoption of the initiative or be terminated by November 15, 1988. The requirements imposed by Proposition 62 were upheld by the California Supreme Court in Santa Clara County Local Transportation Authority v. Guardino, 11 Ca1.4th 220; 45 Cal.Rptr.2d 207 (1995).

Proposition 62 applies to the imposition of any taxes or the effecting of any tax increases after its enactment in 1986, but the requirements of Proposition 62 are largely subsumed by the requirements of Proposition 218 for the imposition of any taxes or the effecting of any tax increases after November 5, 1996.

The City has not effected certain tax increases after the enactment of Proposition 62 in 1986 but prior to the effective date of Proposition 218 on November 5, 1996. The City has not otherwise effected tax increases, except in accordance with the voter approval requirement of Proposition 218.

The Guardino decision did not decide, and the California Supreme Court has not otherwise decided, whether Proposition 62 applies to charter cities. The City is a charter city. Cases decided by the California Court of Appeals have indicated that the voter approval requirements of Proposition 62 do not apply to certain taxes imposed by charter cities. See Fielder v City of Los Angeles, 14 Cal. App. 4th 137 (1993), Fisher

23 v County of Alameda, 20 Cal. App. 4th 120 (1993), and Trader Sports, Inc. v. City of San Leandro, 93 Cal. App. 4th 37, 112 Cal. Rptr. 2d 677 (2001).

As of the date of the Official Statement, the City Attorney believes that the provisions of Proposition 62 do not apply to charter cities. However, the City Attorney cannot opine on whether this position may be the subject of future litigation and can give no assurance that this position will be upheld if properly challenged.

If ultimately found applicable to charter cities, however, Proposition 62 could affect the ability of the City to continue the imposition of certain taxes, such as business license taxes, and may further restrict the City’s ability to raise revenue.

On November 5, 1996, California voters approved Proposition 218 - Voter Approval for Local Government Taxes - Limitation on Fees, Assessments, and Charges - Initiative Constitutional Amendment. Proposition 218 added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property- related fees and charges. Proposition 218 states that all taxes imposed by local governments shall be deemed to be either general taxes or special taxes. Special purpose districts, including school districts, have no power to levy general taxes. No local government may impose, extend or increase any general tax unless and until such tax is submitted to the electorate and approved by a majority vote. No local government may impose, extend or increase any special tax unless and until such tax is submitted to the electorate and approved by a two-thirds vote.

Proposition 218 also provides that no tax, assessment, fee or charge shall be assessed by any agency upon any parcel of property or upon any person as an incident of property ownership except: (i) the ad valorem property tax imposed pursuant to Article XIII and Article XIIIA of the California Constitution, (ii) any special tax receiving a two-thirds vote pursuant to the California Constitution, and (iii) assessments, fees, and charges for property related services as provided in Proposition 218. Proposition 218 then goes on to add voter requirements for assessments and fees and charges imposed as an incident of property ownership, other than fees and charges for sewer, water, and refuse collection services. In addition, all assessments and fees and charges imposed as an incident of property ownership, including sewer, water, and refuse collection services, are subjected to various additional procedures, such as hearings and stricter and more individualized benefit requirements and findings. The effect of such new provisions will presumably be to increase the difficulty a local agency will have in imposing, increasing or extending such assessments, fees and charges.

Proposition 218 also extended the initiative power to reducing or repealing any local taxes, assessments, fees and charges. This extension of the initiative power is not limited to taxes imposed on or after November 6, 1996, the effective date of Proposition 218, and could result in retroactive repeal or reduction in any existing taxes, assessments, fees and charges, subject to overriding federal constitutional principles relating to the impairments of contracts.

Although a portion of the City’s general fund revenues are derived from general taxes purported to be governed by Proposition 218, all of such taxes (or increases thereof) were either adopted prior to the effective dates of such propositions or were approved (or ratified) by majority vote of the electorate.

Proposition 218 provides that, effective July 1, 1997, fees that are charged “as an incident of property ownership” may not “exceed the funds required to provide the property related services” and may only be charged for services that are “immediately available to the owner of the property.”

The foregoing discussion of Proposition 62 and Proposition 218 should not be considered an exhaustive or authoritative treatment of the issues. The City does not expect to be in a position to control the consideration or disposition of these issues and cannot predict the timing or outcome of any judicial or legislative activity in this regard. Interim rulings, final decisions, legislative proposals and legislative

24 enactments may all affect the impact of Proposition 218 on the Lease Payments as well as the market for the Certificates. Legislative and court calendar delays and other factors may prolong any uncertainty regarding the effects of Proposition 218.

Like its antecedents, Proposition 218 is likely to continue to undergo both judicial and legislative scrutiny before its ultimate impact on the City and its obligations can be determined. Certain provisions of Proposition 218 may be examined by the courts for their constitutionality under both State and federal constitutional law. The City is not able to predict the outcome of any such examination.

Unitary Property

Some amount of property tax revenue of the City is derived from utility property which is considered part of a utility system with components located in many taxing jurisdictions (“unitary property”). Under the State Constitution, such property is assessed by the State Board of Equalization (“SBE”) as part of a “going concern” rather than as individual pieces of real or personal property. State-assessed unitary and certain other property is allocated to the counties by SBE, taxed at special county-wide rates, and the tax revenues distributed to taxing jurisdictions (including the City) according to statutory formula generally based on the distribution of taxes in the prior year.

Future Initiatives

Article XIIIA, Article XIIIB, Proposition 62, Proposition 218 and Proposition 1A were each adopted as measures that qualified for the ballot through California’s initiative process. From time to time other initiative measures could be adopted, further affecting the City’s revenues.

THE AUTHORITY

The Authority was established by Ordinance No. 85-17, adopted by the City Council on May 28, 1985 pursuant to the City Charter and the Constitution of the State of California, as a public body corporate and politic acting to facilitate the financing of the acquisition, construction and improvement of facilities serving the public purposes of the City. The governing body of the Authority consists of the existing members of the City Council.

Pursuant to Ordinance No. 85-17, the Authority is empowered to construct, acquire, maintain and improve public facilities and improvements within the City and to sell, lease, exchange, transfer, encumber or otherwise dispose of any interest in property. The Authority does not have the power to levy taxes.

THE CITY

The City of San Buenaventura, generally referred to as the City of Ventura, is located on the southern California coastline approximately 62 miles northwest of the City of Los Angeles and 364 miles south of the City of San Francisco. City limits cover approximately 35.7 square miles, including 14.0 square miles of water.

The City was incorporated in 1866 and has been the seat of the County since 1873. The City is a charter city with a council-manager form of government. A seven-member City Council is elected at large for four-year alternating terms at elections held every two years. The Mayor of the City is the presiding officer of the City Council and is selected by the City Council from among its members to serve a two-year term. The City Manager, appointed by the City Council for an indeterminate term, acts as chief executive officer in carrying out the policies of the City Council.

25 The City’s first charter was adopted in 1932. The present charter was adopted by election on November 6, 1973 and approved by the California legislature in January of 1974, and was amended on November 7, 1995. As of June 30, 2010, the City has approximately 597.35 full-time employees and 415 part-time or temporary employees. City services include police and fire protection, public works, community recreational services, water/wastewater services and community development.

For additional information concerning the City, see APPENDIX B—“GENERAL INFORMATION ABOUT THE CITY OF SAN BUENAVENTURA” herein.

CITY FINANCES

The following selected financial information provides a brief overview of the City’s finances. This financial information has been extracted from the City’s audited financial statements. The most recent audited financial statements of the City with an unqualified auditor’s opinion is included as Appendix C hereto. See APPENDIX C—“INDEPENDENT AUDITOR’S REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2009.”

Accounting Policies and Financial Reporting

The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate entity. The operations of each fund are accounted for with a separate set of self- balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which the spending activities are controlled. The basis of accounting for all funds is more fully explained in the “Notes to Financial Statements” contained in Appendix C.

The City Council employs, at the beginning of each fiscal year, an independent certified public accountant who, at such time or times as specified by the City Council, at least annually, and at such other times as he or she determines, examines the combined financial statements of the City in accordance with generally accepted auditing standards, including such tests of the accounting records and such other auditing procedures as such accountant considers necessary. As soon as practicable after the end of the City’s fiscal year ending June 30 (the “Fiscal Year”), a final audit and report is submitted by such accountant to the City Council and a copy of the financial statements as of the close of the fiscal year is published. The City’s Independent Auditor’s Report for Fiscal Year ending June 30, 2009 was prepared by Macias Gini & O’Connell LLP, Los Angeles, California.

A Finance, Audit and Budget Committee was appointed by the Council and serves as a formal body among staff, the City’s outside Auditor and the Council. The Committee functions as a working committee to vet budgetary and financial ideas, review staff proposals on controversial and political issues and provide a forum whereby the outside Auditor can present updates, issues or concerns prior to being presented to the full Council.

Revenue and Expenditure Trends

The General Fund City Budget includes programs and services which are provided on a largely City- wide basis. The programs and services are financed primarily by the City’s share of property taxes, sales tax, local taxes, revenues from the State and charges for services provided.

26 The table below compares the City’s General Fund Budget adopted for Fiscal Year 2009 with the City’s audited revenues and expenditures for Fiscal Year 2009.

TABLE 1 CITY OF SAN BUENAVENTURA Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund For the Fiscal Year Ended June 30, 2009

General Variance Favorable Final Budget Actual (Unfavorable) Revenues: Taxes $ 63,560,859 $ 59,715,852 $ (3,845,007) Licenses and Permits 1,470,816 1,004,297 (466,519) Intergovernmental(1) 9,352,280 8,941,003 (411,277) Charges for Services 11,803,569 10,124,934 (1,678,635) Fine and Forfeitures 2,404,797 2,226,912 (177,885) Use of Money and Property 3,362,208 3,427,865 65,657 Other Revenue 3,498,564 2,669,648 (828,916) Total Revenues 95,453,093 88,110,511 (7,342,582)

Expenditures: Current: General Government 6,155,665 4,701,884 1,453,781 Human Resources 2,176,510 1,952,090 224,420 Finance & Technology 7,156,325 6,499,052 657,273 Community Development 4,863,824 4,432,927 430,897 Community Services 7,063,090 6,608,893 454,197 Public Safety - Police 31,310,608 29,952,775 1,357,833 Public Safety - Fire 19,975,596 19,398,973 576,623 Public Works 18,076,425 15,504,207 2,572,218 Capital Outlay 578,694 586,294 (7,600) Total Expenditures 97,356,737 89,637,095 7,719,642

Revenues Over (Under) Expenditures (1,903,644) (1,526,584) 377,060

Other Financing Sources (Uses): Operating Transfers In 4,447,958 4,104,486 (343,472) Operating Transfers Out(2) (5,349,294) (7,444,669)(3) (2,095,375) Total Other Financing Sources (Uses) (901,336) (3,340,183) (2,438,847)

Net Change in Fund Balance $ (2,804,980) $ (4,866,767) $ (2,061,787)

Fund Balances: Beginning of Year 38,100,741 Equity Transfers -- End of Year $ 33,233,974

(1) Includes Motor Vehicle License Fee In-Lieu Payments. (2) Debt service is a component transfers out to related financing funds, capital projects or other operations. (3) In Fiscal Year 2009 this line item included one-time losses on investments. Source: City of San Buenaventura

General Fund Financial Summary

The Lease Agreement provides that the City will make Lease Payments in full from any source of legally available funds of the City which are generally expected to be derived from money in the General Fund and to a limited extent, the Golf Course Fund. See “—Golf Course Fund” below. The following provides

27 financial information taken primarily from the City’s audited financial statements for Fiscal Years 2005 through 2009. See APPENDIX C—“INDEPENDENT AUDITOR’S REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2009” for the City’s audited financial statements for Fiscal Year 2009.

28 Table 2 below presents the City’s audited General Fund Statement of Revenues, Expenditures and Fund Balances for Fiscal Years 2005 through 2009.

TABLE 2 CITY OF SAN BUENAVENTURA General Fund - Audited Revenues, Expenditures and Fund Balances For Fiscal Years Ending June 30

2005 2006 2007 2008 2009 Revenues: Taxes $ 53,545,428 $ 56,967,585 $ 60,634,346 $ 61,035,839 $ 59,715,852 Licenses and Permits 1,579,719 1,780,881 1,880,019 1,429,502 1,004,297 Intergovernmental(1) 8,373,813 8,833,110 9,088,638 8,728,421 8,941,003 Charges for Services 6,402,412 8,144,073 8,107,233 8,764,388 10,124,934 Fine and Forfeitures 1,820,848 1,802,109 1,865,739 1,945,958 2,226,912 Use of Money and Property 2,492,807 4,108,451 4,040,933 4,002,037 3,427,865 Other(2) 3,998,861 2,025,470 3,442,823 2,823,121 2,669,648 Total Revenues 78,213,888 83,661,679 89,059,731 88,729,266 88,110,511

Expenditures: Current: General Government 5,706,403 6,707,261 8,276104 7,698,414 4,701,884 Human Resources 2,402,167 2,597,156 1,867,800 1,923,705 1,952,090 Finance & Technology 4,308,317 4,039,047 4,357,976 4,741,342 6,499,052 Community Development 3,360,216 3,249,855 4,284,899 4,106,905 4,432,927 Community Services 5,825,207 5,780,510 6,066,137 6,612,536 6,608,893 Public Safety – Police 25,248,757 26,966,469 26,816,977 28,657,300 29,952,775 Public Safety – Fire 15,828,561 15,816,543 16,505,456 18,391,152 19,398,973 Public Works 12,920,959 13,579,127 14,239,645 15,864,637 15,504,207 Nondepartmental ------Capital Outlay 179,838 315,643 957,625 396,744 586,294 Other 65,722 65,722 ------Total Expenditures 75,846,147 79,117,333 83,372,619 88,392,735 89,637,095

Revenues Over (Under) Expenditures 2,367,741 4,544,346 5,687,112 336,531 (1,526,584)

Other Financing Sources (Uses): Operating Transfers In 5,093,048 612,099 1,822,152 1,886,762 4,104,486 Operating Transfers Out(3) (5,914,493) (6,235,917) (12,262,313) (7,449,821) (7,444,669) Total Other Financing Sources (Uses) (821,445) (5,623,818) (10,440,161) (5,563,059) (3,340,183)

Net Change in Fund Balance 1,546,296 (1,079,472) (4,753,049) (5,226,528) (4,866,767)

Fund Balances: Beginning of Year 47,099,898 48,646,194 47,566,722 43,327,269 38,100,741 Equity Transfers ------End of Year $ 48,646,194 $ 47,566,722 $ 42,813,673 $ 38,100,741 $ 33,233,974

(1) Includes Motor Vehicle License Fee In-Lieu Payments. (2) Includes a variety of sources which include developer fee deposits and recoveries, which can change from year to year. (3) Debt service is a component of transfers out to related financing funds as well as one-time capital funding transfers. Source: City of San Buenaventura Comprehensive Annual Financial Reports.

29 Table 3 below presents the City’s audited General Fund Balance Sheets for Fiscal Years 2005 through 2009. The City’s current financial policy is to maintain approximately $12,000,000 in operating costs reserves.

TABLE 3 CITY OF SAN BUENAVENTURA General Fund Balance Sheet For Fiscal Years Ending June 30

2005 2006 2007 2008 2009 Cash and investments $ 38,743,818 $ 36,295,099 $ 34,344,559 $ 30,376,561 $ 34,153,592 Investments in bonds 1,255,000 1,095,000 935,000 775,000 590,000 Accounts receivable, net 80,163 28,233 143,677 183,032 154,252 Interest receivable 991,650 1,382,520 1,503,489 1,602,465 733,374 Due from other funds -- -- 99,682 4,427 882,907 Due from other governments 4,296,784 6,657,028 3,753,829 4,019,746 3,395,490 Due from others 1,770,208 1,822,275 2,075,288 2,127,192 3,032,312 Prepaid items 8,940 11,394 44,759 756 6,359 Inventory, at cost 549,334 530,546 589,851 473,174 405,825 Loans and notes receivable 507,804 1,022,446 1,240,412 1,235,004 1,206,172 Advances to Redevelopment Agency 13,773,439 14,019,085 14,115,040 14,069,892 5,994,297 Total assets $ 61,977,140 $ 62,863,626 $ 58,845,586 $ 54,867,249 $ 50,554,580

Liabilities and Fund Balances Liabilities: Accounts payable $ 1,045,438 $ 968,785 $ 990,577 $ 1,420,731 $ 1,928,341 Contracts payable -- -- 2,418 115,325 -- Due to other funds -- 6,000 2,796,413(1) 2,596,413 2,396,413 Due to other governments 11,984 13,764 17,405 10,556 6,063 Deposits held for others 10,670,869 11,318,881 11,415,843 11,828,586 11,879,071 Deferred revenue 1,602,655 2,989,474 809,257 794,897 1,110,718 Total Liabilities $ 13,330,946 $ 15,296,904 $ 16,031,913 $ 16,766,508 $ 17,320,606

Fund Balances: Reserved: Encumbrances $ 1,251,192 $ 2,151,565 $ 1,845,402 $ 1,408,874 $ 1,641,197 Petty cash 6,435 7,470 12,570 12,545 12,745 Advances to Redevelopment Agency 13,773,439 14,019,085 14,115,040 14,069,892 5,994,297 Prepaid items 8,940 11,394 44,759 756 6,359 Inventories 549,333 530,546 589,851 473,174 405,825 Loan and notes receivable 507,804 1,022,446 1,240,412 1,235,004 1,206,172 Investment in Portobello bonds 1,255,000 1,095,000 935,000 775,000 590,000 Total reserved $ 17,352,143 $ 18,837,506) $ 18,783,034 $ 17,975,245 $ 9,856,595 Unreserved: Designated for anticipated projects 28,907,664 24,763,519 24,013,323 19,925,883 19,002,989 Undesignated 2,386,387 3,965,697 17,316 199,613 4,374,390 Total Fund Balances 48,646,194 47,566,722 42,813,673 38,100,741 33,233,974 Total Liabilities, Equity and Other Credits $ 61,977,140 $ 62,863,626 $ 58,845,586 $ 54,867,249 $ 50,554,580

(1) Includes a variety of trust deposits, the most material of which are developer impact fees held for specific future application. Source: City of San Buenaventura Comprehensive Annual Financial Reports.

Budgetary Process

Budgets are legally adopted and formal budgetary integration is employed as a management control device during the fiscal year for all governmental fund types. Reported budgeted amounts shown in the table below represent the original legally adopted budget as amended. The City Council may amend the budget only by motion passed by the affirmative vote of at least four of its seven members at a regular or special meeting, providing that sufficient moneys are available and that expenditures of proceeds of taxes will not be increased beyond the constitutional appropriation limit as imposed by Article XIIIB of the State Constitution.

30 Set forth below is the City’s adopted General Fund operating budget for the Fiscal Year 2009-10, and for Fiscal Year 2010-11, together with the revised budget and unaudited estimates for Fiscal Year 2009-10. The City Council adopted the Fiscal Year 2010-11 operating budget on June 21, 2010.

TABLE 4 CITY OF SAN BUENAVENTURA Adopted General Fund Budget Revenues and Expenditures For Fiscal Years 2010 and 2011

Fiscal Year 2010 Fiscal Year 2010 Fiscal Year 2010 Fiscal Year 2011 Adopted Budget Revised Budget Unaudited Actuals(3) Adopted Budget Revenues: Taxes $ 60,318,021 $ 57,510,408 $ 48,804,972 $ 58,589,958 Licenses and Permits 1,028,647 1,028,647 1,441,443 1,069,489

Intergovernmental(1) 8,543,221 9,881,012 8,639,877 8,470,796 Charges for Services 8,337,344 8,733,994 7,153,630 8,334,404 Fine and Forfeitures 1,936,989 1,936,989 1,566,918 1,968,801 Use of Money and Property 3,012,229 3,003,146 1,392,451 1,843,387 Other 2,687,291 2,857,944 2,336,112 2,581,457 Total Revenues $ 85,863,742 $ 84,952,140 $ 71,335,403 $ 82,858,292

Expenditures: Current: General Government $ 3,974,214 $ 4,389,378 $ 3,459,816 $ 3,055,601 Human Resources 1,058,178 1,121,693 934,932 1,006,014 Finance & Technology 7,543,577 6,799,121 6,233,395 7,817,371 Community Development 3,385,618 3,862,906 3,684,407 6,288,128 Community Services 6,728,088 7,137,139 6,108,467 5,832,367 Public Safety – Police 28,566,703 28,661,496 25,895,392 27,187,398 Public Safety – Fire 17,685,487 17,672,386 14,685,653 14,388,133 Public Works 15,410,633 16,203,195 11,286,199 14,499,506 Capital Outlay -- 648,611 21,381 248,000 Total Expenditures $ 84,400,498 $ 86,495,925 $ 72,309,642 $ 80,322,518

Excess (Deficiency) of Revenues Over (Under) Expenditures $ 1,463,244 $ (1,543,785) $ (974,239) $ 2,535,774

Other Financing Sources (Uses): Operating Transfers In $ 2,349,763 $ 2,982,343 $ 1,832,711 $ 2,236,743 Operating Transfers Out(2) 4,771,145 4,840,025 3,143,128 5,089,150 Total Other Financing Sources (Uses) $ (2,421,382) $ (1,857,682) $ (1,310,417) $ (2,852,407)

Net Change in Fund Balance $ (958,138)(1) $ (3,401,467) $ (2,284,658) $ (316,633)

(1) The Fiscal Year 2010 Budget anticipates the use of prior year reserves totaling $958,138. (2) Includes debt service payment transfers and capital transfers. (3) As of June 28, 2010. Source: City of San Buenaventura

Fiscal Year 2009-10; Fiscal Year 2010-2011 Budget

The unaudited revenues and expenses as of June 28, 2010 do not include any revenue or expense accruals that will occur during the months of July and August to complete the actual Fiscal Year 2010 final numbers. However, as a result of the savings plan implemented earlier in the fiscal year by which budgetary

31 cost was reduced by not filling positions and cutting costs for supplies and services, the City expects that Fiscal Year 2009-10 expenses will be significantly lower than the revised budget and that revenues will come in slightly under the revised budget.

Like government at all levels, the national recession has deeply reduced revenues to the City. The City has rejected temporary measures such as borrowing funds or using one-time money for ongoing expenses. Instead, the City has focused on living within its means. In developing recent budgets, staff and community leaders analyzed and prioritized every City service and function. Out of that process a Redesign Plan was developed for a two-year budget that recommended changing the way the City does business and reducing or eliminating lower-priority services.

The Redesign Plan for Fiscal Year 2009-10 adopted by the City Council involved the most significant changes in the City’s government in nearly 20 years. However, the continued deterioration of the economy reduced revenues by another $4,000,000 during the course of Fiscal Year 2010. Additional temporary measures were put into place (including holding an additional 40 budgeted jobs vacant throughout most of the Fiscal Year) to ensure spending did not exceed actual revenue.

The Adopted Fiscal Year 2010-11 Budget is balanced based upon revised projections of $80.4 million in General Fund revenues. It is designed to safeguards the key services that keep the streets safe, maintains quality of life and protects the environment. In following the City Council’s policy of living within the City’s means, the Adopted Budget includes no borrowing or funding of ongoing operating expenses with one-time money. In addition, it assumes no employee concessions even though the City has reopened negotiations relative to all union contracts for this purpose.

Tax Receipts

The impact of the global economic downturn has and continues to adversely affect the performance of many of the City’s General Fund revenues. Most notable were the declines in both property tax and sales tax revenues during Fiscal Year 2010 and as projected for Fiscal Year 2011.

Earlier in Fiscal Year 2009-10, revised estimates were presented to the City Council for both property tax and sales tax revenues as part of the City’s mid-year General Fund budget review. Specifically, property tax revenue was projected to be down approximately $2.290 million ($26.291 million vs. $24.002 million) while sales tax revenues were projected to be down an estimated $1.618 ($14.340 million vs. $12.722 million) from the original budget.

For Fiscal Year 2010-11 the City’s property tax estimate declined a modest 2.7% or $0.703 million from Fiscal Year 2008-09 ($26.460 million vs. $25.756 million).

With respect to sales tax, the Fiscal Year 2010-11 estimate is still 7.6% below the Fiscal Year 2008-09 year-to-date actuals ($14.598 million vs. $13.484 million).

Taxes received by the City include property taxes, sales and use taxes, franchise taxes, utility users taxes and others. Of such taxes, property taxes (approximately 44% of the City’s Fiscal Year 2009 tax revenues), sales and use taxes (approximately 25% of Fiscal Year 2009 tax revenues), and utility user’s taxes (approximately 15% of Fiscal Year 2009 local tax revenues) constitute major sources of General Fund revenues. The City believes that the general taxes currently imposed by or for the benefit of the City are in compliance with Proposition 218. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS—Proposition 218” herein.

32 The following table sets forth tax revenues received by the City for Fiscal Years 2005 through 2009 by source:

TABLE 5 CITY OF SAN BUENAVENTURA General Fund Tax Revenues by Source(1) For Fiscal Years Ending June 30

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 Source: Property Tax(2) $ 20,909,444 $ 21,893,475 $ 24,829,049 $ 25,890,611 $26,459,567 Sales Tax(2) 16,648,106 17,680,869 17,660,066 16,784,328 14,598,479 Utility Tax 7,681,191 8,398,047 8,676,992 8,796,097 9,019,829 Franchise Tax 2,452,413 2,573,741 2,878,263 2,770,318 3,713,057 Business License Tax 1,389,202 1,488,318 1,479,714 1,519,461 1,535,109 Other Taxes(3) 4,465,072 4,933,135 5,110,263 5,275,024 4,389,811 Total General Fund Taxes $ 53,545,428 $ 56,967,585 $ 60,634,347 $ 61,035,839 $59,715,852

(1) Includes tax revenues received by the General Fund of the City. (2) Property tax revenues and sales and use tax revenues are affected by the “Triple Flip.” See “RISK FACTORS—State Budget Information—Triple Flip” above. (3) Includes Transient Occupancy Tax. Source: City of San Buenaventura Comprehensive Annual Financial Reports.

Property Taxes

Property tax receipts provided the largest tax revenue source of the City, contributing approximately 44% of General Fund tax revenues and approximately 30% of total General Fund revenues during Fiscal Year 2009. In California, property which is subject to ad valorem taxes is classified as “secured” or “unsecured”. The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens, arising pursuant to State Law, on the secured property, regardless of the time of the creation of other liens. The valuation of property is determined as of January 1 each year, and installments of taxes levied upon secured property become delinquent on April 10th and December 10th. Taxes on unsecured property are due July 1, and become delinquent August 31.

Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The exclusive means of forcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the property securing the taxes of the State for the amount of taxes that are delinquent. The taxing authority has four methods of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Recorder’s Office in order to obtain a lien on certain property of the taxpayer, and (4) seizure and sale of personal property, improvement or possessory interest belonging or taxable to the assessee.

A ten percent penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, beginning on the July 1 following a delinquency, interest begins accruing at the rate of 1½% per month on the amount delinquent. Such property may thereafter be redeemed by the payment of the delinquent taxes and the ten percent penalty, plus interest at the rate of 1½% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the county tax collector. A ten percent penalty also applies to the delinquent taxes or

33 property on the unsecured roll, and further, an additional penalty of 1½% per month accrues with respect to such taxes beginning on the varying dates related to the tax billing date.

Legislation enacted in 1984 (Section 25 et seq. of the Revenue and Taxation Code of the State of California), provides for the supplemental assignment and taxation of property as of the occurrence of a change in ownership or completion of new construction. Collection of taxes based on supplemental assessments occurs throughout the year. Taxes due are prorated according to the amount of time remaining in the tax year, with the exception of tax bills dated January 1 through May 31, which are calculated on the basis of the remainder of the current fiscal year and the full 12 months of the next fiscal year.

In many recent years, the State Legislature has shifted property taxes from cities, counties and special districts to the Educational Revenue Augmentation Fund. The term “ERAF” is often used as a shorthand reference for this shift of property taxes. In 1992-93 and 1993-94, in response to serious budgetary shortfalls, the State Legislature and administration permanently redirected over $3 billion of property taxes from cities, counties, and special districts to schools and community college districts. The 2004-05 California State Budget included an additional $1.3 billion shift of property taxes from certain local agencies, including the City, to occur in Fiscal Years 2004-05 and 2005-06. The City’s portion of such property tax shift for each of these two Fiscal Years was $2,716,305. To date, over $45 million has been shifted under ERAF, excluding the SERAF shift for Fiscal Year 2009-10. The 2009-10 California State Budget included an additional $1.7 billion shift of property taxes from certain local agencies, including the City.

On November 2, 2004, California voters approved Proposition 1A, which amends the State Constitution to significantly reduce the State’s authority over major local government revenue sources. Under Proposition 1A, the State may not (i) reduce local sales tax rates or alter the method of allocating the revenue generated by such taxes, (ii) shift property taxes from local governments to schools or community colleges, (iii) change how property tax revenues are shared among local governments without two-third approval of both houses of the State Legislature, or (iv) decrease Vehicle License Fees revenues without providing local governments with equal replacement funding. Beginning in Fiscal Year 2008-09, the State may shift to schools and community colleges a limited amount of local government property tax revenue if certain conditions are met, including (a) a proclamation by the Governor that the shift is needed due to a severe financial hardship of the State, and (b) approval of the shift by the State Legislature with a two-thirds vote of both houses. Under such a shift, the State must repay local governments for their property tax losses, with interest, within three years. The Governor and the State implemented these provisions in Fiscal Year 2009-10. See “RISK FACTORS—State Budget Information.” Proposition 1A does allow the State to approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county.

The following table shows assessed valuations and tax levies for Fiscal Years 2006 through 2010.

TABLE 6 CITY OF SAN BUENAVENTURA Assessed Value of Taxable Property and Total Current Tax Levy For Fiscal Years Ending June 30(1)

Total Before Total After Taxable Assessed Redevelopment Redevelopment Local Secured Utility Unsecured Value Increment Increment 2006 $ 9,576,759,414 $1,207,227 $546,405,819 $ 10,124,372,460 $ 10,124,372,460 $ 9,874,406,489 2007 10,631,829,726 1,078,448 571,736,291 11,204,644,465 11,204644,465 10,922,072,657 2008 11,475,208,604 659,229 596,099,280 12,071,967,113 12,071,967,113 11,742,732,417 2009 11,919,084,579 659,229 591,251,093 12,510,994,901 12,510,994,901 12,171,440,893 2010 11,530,310,044 659,229 613,346,934 12,144,316,207 12,144,316,207 11,803,611,398

(1) Data is stated at 100% of actual value as required under Section 135 of the Revenue and Tax Code. Exemptions are netted directly against the individual property categories. Source: Ventura County Auditor-Controller’s Office.

34 The ten largest taxpayers in the City shown on the Fiscal Year 2009-10 secured tax roll, type of business, the assessed valuation and the percentage of the City’s total property tax revenues attributable to each are shown on Table 7 below.

TABLE 7 CITY OF SAN BUENAVENTURA Top Ten Local Secured Taxpayers Fiscal Year 2010

2009-10 Property Owner Land Use Assessed Valuation % of Total(1) 1. ASN Ventura LLC Apartments $144,021,800 1.22% 2. Macerich Buenaventura LTD Shopping Center 79,766,386 0.68% 3. Jefferson at Pelican Point Apartments 63,051,500 0.53% 4. Ventura Pines Associates LLC Apartments 43,795,350 0.37% 5. Center Promenade LLC Business Park 37,699,200 0.32% 6. Target Corp Department Store 30,532,400 0.26% 7. MBL Golf Course LLC Industrial 30,515,325 0.26% 8. Lowe’s HIW Inc. Hardware Store 29,041,362 0.25% 9. Newport Beach North LLC Apartments 29,001,818 0.25% 10. Ventura Beach Ventures LLC Hotel 28,938,102 0.24%

(1) 2009-10 Local Secured Assessed Valuation: $11,811,901,618. Source: Ventura County Assessor’s Office.

Sales and Use Taxes

A sales tax is imposed on retail sales or consumption of personal property. The tax rate is established by the State Legislature. Effective April 1, 2009, the statewide tax rate is 8.250%. The City’s share of sales tax is approximately 1% when one considers the combined City share of 0.717% and the State’s 0.250% Fiscal Recovery Funding (Triple-Flip swap) explained below. With the enactment of the triple flip, the City now redeems the 0.250% as reclassified revenue through property tax as an in lieu remittance, the payment of which heretofore coincides with the County property tax calendar. The State collects and administers the tax, and makes distributions on taxes collected within the City as follows:

TABLE 8 CITY OF SAN BUENAVENTURA Sales Tax Rates

State General Fund...... 6.000% State Fiscal Recovery...... 0.250 State Local Public Safety Fund...... 0.500 State Local Revenue Fund ...... 0.500 Ventura County...... 0.283 City ...... 0.717 Total...... 8.250%

The State’s actual administrative costs with respect to the portion of sales taxes allocable to the City are deducted before distribution and are determined on a quarterly basis.

On March 2, 2004, voters approved a bond initiative formally known as the “California Economic Recovery Act.” This act authorized the issuance of $15 billion of Economic Recovery Bonds to finance ongoing State budget deficits, which are payable from a fund established by the redirection of tax revenues

35 known as the “Triple Flip.” The State issued $11.3 billion of Economic Recovery Bonds prior to June 30, 2004. Under the “Triple Flip,” one-quarter of local governments’ one percent share of the sales tax imposed on taxable transactions within their jurisdiction is being redirected to the State. In an effort to eliminate the adverse impact of the sales tax revenue redirection on local government, State legislation provides for certain property taxes to be redirected to local government. Because these property tax monies were previously earmarked for schools, the legislation provides for schools to receive other State general fund revenues. It is expected that the swap of sales taxes for property taxes will terminate once the Economic Recovery Bonds are repaid, which is currently expected to occur in approximately 9 to 13 years. See “RISK FACTORS – State Budget Information” herein.

During calendar year 2008, total taxable transactions in the City amounted to $1,877,036,000, a 9 percent decrease over the $2,063,622,000 of taxable transactions that occurred during calendar year 2007. Since then, City sales tax receipts reflect continuing weakness in sales tax revenues. See “—Fiscal Year 2009- 10; Fiscal Year 2010-11 Budget.” The following table shows taxable transactions in the City during calendar years 2003 through 2008.

TABLE 9 CITY OF SAN BUENAVENTURA Taxable Transactions by Type of Business For Calendar Years 2001 through 2008 (amounts in thousands)

Retail Sales Total Sales Permits Taxable Permits On Taxable Year On July 1 Transactions July 1 Transactions 2003 1,926 $1,505,464,000 5,683 $1,798,072,000 2004 1,953 1,641,053,000 5,710 1,944,290,000 2005 2,020 1,704,150,000 5,823 2,028,969,000 2006 N/A 1,707,140,000 N/A 2,088,774,000 2007 N/A 1,705,586,000 N/A 2,063,622,000 2008(1) N/A 1,505,336,000 N/A 1,877,036,000

(1) Most recent data available. Source: California State Board of Equalization.

Net sales tax revenues to the City are affected by a City agreement with Macerich Buenaventura Limited Partnership (Developer) for the development of Pacific View Mall (Mall), which is located within the City’s boundaries. The Developer agreed to make improvements to the Mall in exchange for sales tax rebates. The improvements include three projects on-site, off-site, and transit facility improvements. Upon completion of the projects, the on-site and transit facility assets will be the property of the Developer. The off-site improvements are public domain assets and will be donated to the City by the Developer. The agreement provides for 80 percent sales tax revenue rebates to the Developer over a base amount calculated as average sales tax revenue before the improvements are made. Payments are to be made for twenty years, beginning February 1, 2001, or until a maximum dollar amount of $32,300,000 (for all three projects) has been dispersed, whichever comes first. Total payments made by the City as of June 30, 2009, were $6,597,623. If the twenty years has elapsed and the maximum dollar amount has not been reached, the Developer has the right to appeal for further payments for an additional two years. The City does have the option to prepay the maximum dollar amount. There is no minimum amount due and if sales tax revenues do not exceed the base level, the City’s payments would be zero.

36 State of California Motor Vehicle In-Lieu Payments

The State imposes a vehicle license fee (“VLF”), which is the portion of the fees paid in lieu of personal property taxes on a vehicle. The vehicle license fee is based on vehicle value and declines as the vehicle ages. Prior to the adoption of the Fiscal Year 2004-05 State Budget, the fee was 2 percent of the value of a vehicle. Through legislation in prior fiscal years, the State enacted vehicle license fee reductions under which the State was required to “backfill” local governments for their revenue losses resulting from the lowered rates. The Fiscal Year 2004-05 State Budget permanently reduced the vehicle license fee from 2 percent to 0.65 percent and deleted the requirement for backfill payments, providing, instead, that the amount of the backfill requirement will be met by an increase in the property tax allocation to cities and counties. See “RISK FACTORS—State Budget Information.”

As set forth in Table 10 below, for Fiscal Year 2009, the City received approximately $8.5 million in total vehicle license fees of which $8.2 million was paid from property taxes.

TABLE 10 CITY OF SAN BUENAVENTURA State of California Motor Vehicle In-Lieu Payments

Source 2005 2006 2007 2008 2009 Motor Vehicle In-Lieu $7,905,430(1) $7,696,041 $7,887,568 $8,308,227 $8,480,754

(1) Includes one time receivable payback from prior year borrowings by State. Source: The City of San Buenaventura Comprehensive Annual Financial Reports.

Utility Tax

The City has two separate utility user taxes. One covers electricity and gas service at a 5% rate. Such tax previously included telephone and cable service until November 6, 2007, when the voters approved the Communication Services Tax, which applies to all types of modern communication services, including telephone and cable service, at a 4.5% rate. The City anticipates that application of the Communication Services Tax will be revenue neutral despite the lower tax rate because of the broader tax base. In Fiscal Year 2009, utility tax revenues were the third largest source of General Fund tax revenues and constituted approximately 15% of all General Fund tax revenues.

Golf Course Fund

The Lease Agreement provides that the City will make lease payments in full from any source of legally available funds, subject to abatement as provided in the Lease Agreement, provided, no such abatement will occur to the extent Lease Payments are made from amounts, if any, in the Golf Course Fund, from which the City expects that a varying amount (up to 18% in some years) of annual Lease Payments may be made. However, amounts in the Golf Course Fund are not pledged to and the City has not covenanted to produce or maintain revenues in the Golf Course Fund at a level sufficient to pay such portion of Lease Payments.

Set forth in Table 11 below is the comparative statement of Revenues and Expenses for the Golf Course Fund for the five most recent Fiscal Years and a projection of Revenues and Expenses for Fiscal Year 2010 as budgeted. Under the management agreement with Kemper Sports Management commencing February 15, 2010, the City receives 100% of Net Income from golf operations and Kemper Sports Management receives a fee for managing the golf courses. Kemper Sports Management will receive a Base Fee of $150,000 per month for the next five years plus an incentive fee of 5% of annual gross revenues over $4.8 million.

37 Table 11 CITY OF SAN BUENAVENTURA Golf Course Fund Comparative Statement of Revenues and Expenses Fiscal Years 2005 through 2009 And Projected Statement of Revenues and Estimated Expenses for Fiscal Year 2010

2005 2006 2007 2008 2009 2010(3) Operating Revenues: Charges for services: Greens Fees - Buena $ 554,290 $ 1,715,579 $ 1,811,017 $ 1,614,122 $ 1,474,056 $ 1,480,500 Electric Carts - Buena 54,358 421,151 442,144 407,240 360,710 346,800 Snackbar - Buena 13,624 60,239 92,136 116,870 116,000 116,000 Pro Shop - Buena 17,753 182,654 191,987 161,431 134,820 203,413 Greens Fees – Olivas(1) 1,179,281 469,294 402,278 1,829,224 1,754,540 1,669,500 Driving Range - Olivas 233,536 60,594 39,193 120,533 82,778 98,923 Electric Carts - Olivas 310,371 125,559 79,611 339,162 320,583 333,200 Snackbar - Olivas 262,851 105,658 1,024 100,878 22,097 184,000 Pro Shop - Olivas 138,276 61,103 21,440 253,094 324,495 287,587 Total charges for services 2,764,338 3,201,831 3,080,829 4,942,555 4,590,079 4,719,923

Other operating revenues - - -- - 215,763 23,359

Total Operating Revenues 2,764,338 3,201,831 3,080,829 4,942,555 4,805,842 4,743,282

Operating Expenses: Personal Services 143,794 189,322 202,040 168,445 202,617 199,557 Contractual Services 1,669,598 2,820,708 3,444,301 4,143,377 3,234,707 3,292,553 Materials and Supplies 348 2,398 625 4,199 25,302 12,793 General and Administrative 304,033 236,925 604,377 366,507 339,063 412,474 Depreciation 79,636 130,369 370,372 917,621 917,443 917,004

Total Operating Expenses 2,197,409 3,379,722 4,622,075 5,600,149 4,719,132 4,834,381

Operating Income (Loss) 566,929 (177,891) (1,541,246) (657,593) 86,710 (91,099)

Non-Operating Revenues (Expenses): Interest Income(2) 111,149 88,854 126,331 10,452 - - Interest expense - - (9,696) (23,436) (12,888) (6,459) Gain on sale of assets - - 8,007 - - -

Total Non-Operating Revenues (Expenses): 111,149 88,854 124,642 (12,985) (12,888) (6,459)

Net Income (Loss) $ 678,078 $ (89,037) $ (1,416,604) $ (670,578) $ 73,822 $ (97,558)

(1) Olivas Links Golf Course was closed for renovation from October 2005 to May 2007. (2) Interest income includes unrealized gain (loss) on investments. (3) Estimated. Source: Comprehensive Annual Financial Reports and Community Services Department Projections for Fiscal Year 2010

Table 12 below provides a projection of future Golf Course Fund operating results for Fiscal Years 2011 through 2015. The projections assume certain levels of green fees, management expenses and other matters which will require action by the City Council, and do not reflect any decisions or approvals that may or may not be made by the City Council in the future. No assurance can be made or given that any future management contract(s) or the discretionary approvals of the City Council assumed in such projections will be approved. Certain results, performance or achievements projected in Table 12 may differ materially from actual results, performance or achievements. In particular, no City Council decision has been made as to the assumed green fee increase and management fee as projected in Table 12.

38 Table 12 CITY OF SAN BUENAVENTURA Golf Course Fund Projected Operating Results Cash Flow Basis For the Projected Fiscal Years Ending June 30

2011 2012 2013 2014 2015 Operating Revenues: Charges for services: Greens Fees - Buena $ 1,652,839 $ 1,508,539 $ 1,585,848 $ 1,656,000 $ 1,711,200 Electric Carts - Buena 394,933 442,312 458,581 538,081 554,223 Snackbar - Buena 116,000 116,000 116,000 116,000 116,000 Pro Shop - Buena 161,440 207,516 213,741 208,143 214,388 Greens Fees – Olivas 2,159,986 2,262,808 2,378,771 2,484,000 2,566,800 Driving Range - Olivas 112,854 113,300 116,699 167,132 172,146 Electric Carts - Olivas 344,171 294,874 303,721 358,720 369,482 Snackbar - Olivas 191,441 195,700 201,571 207,618 213,847 Pro Shop - Olivas 113,851 311,273 320,611 312,215 321,581 Total charges for services $ 5,247,515 5,452,322 5,695,543 6,047,909 6,239,667

Other operating revenues - - - - -

Total Operating Revenues 5,247,515 5,452,322 5,695,543 6,047,909 6,239,667

Operating Expenses: Personal Services 204,913 207,619 211,771 216,007 220,327 Contractual Services 3,404,266 3,705,264 3,820,803 3,871,283 3,918,960 Materials and Supplies 300,650 13,049 13,310 13,576 13,848 General and Administrative 251,339 297,179 303,123 309,185 315,369 Depreciation 915,959 907,857 903,318 898,801 894,307

Total Operating Expenses 5,077,127 5,130,968 5,252,325 5,308,852 5,362,810

Operating Income (Loss) 170,388 321,354 443,218 739,057 876,856

Non-Operating Revenues (Expenses): Interest Income Interest expense (6,459) - - - - Gain on sale of assets - - - -

Total Non-Operating Revenues (Expenses): - - - - -

Net Income (Loss) $ 163,929 $ 321,354 $ 443,218 $ 739,057 $ 876,856

Source: City of San Buenaventura, Community Services Department

39 Outstanding General Fund Debt and Lease Obligations

The City had the following long-term obligations for the year ended June 30, 2009.

TABLE 13 CITY OF SAN BUENAVENTURA General Long-Term Debt Account Group

Balance Balance July 1, 2008 Debt Issued Debt Retired June 30, 2009 Governmental Activities: Cal HFA HELP Loan – 2008 $ 1,500,000 $ -- $ -- $ 1,500,000 Certificates of Participation – 2001 Series A 1,955,000 -- (185,000) 1,770,000 Certificates of Participation – 2001 Series C 14,485,000 -- (365,000) 14,120,000 Certificates of Participation – 2002 Series B 13,925,000 -- (1,260,000) 12,665,000 Certificates of Participation – 2002 Series D 14,390,000 -- (355,000) 14,035,000 Certificates of Participation – 2007 Series E 11,025,000 -- (425,000) 10,600,000 Tax Allocation Bonds – 2003 7,060,000 -- (255,000) 6,805,000 Tax Allocation Bonds – 2008 -- 8,785,000 -- 8,785,000 California Energy Commission 2004 174,740 -- (11,638) 163,102 California Energy Commission 2007 248,090 -- (66,986) 181,104

Subtotal governmental activities 64,762,830 8,785,000 (2,923,624) 70,624,206

Claims and judgments payable 6,308,809 3,244,365 (2,313,579) 7,219,595 Compensated absences payable 4,853,448 4,429,025 (3,991,209) 5,291,264

Total governmental activities $ 75,925,087 $ 16,438,390 $ (9,228,412) $ 83,135,065

Source: The City of San Buenaventura.

40 Direct and Overlapping Debt

Contained within the City are overlapping local agencies providing public services which have issued general obligation bonds and other types of indebtedness. Direct and overlapping bonded indebtedness as of June 30, 2010 is shown in the following table.

TABLE 14 CITY OF SAN BUENAVENTURA Statement of Direct and Overlapping Debt(1) As of June 30, 2010

2009-10 Assessed Valuation: $12,144,316,207 Redevelopment Incremental Valuation: 340,456,528 Adjusted Assessed Valuation: $11,803,859,679

Total Debt City’s Share of OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/10 % Applicable(2) Debt 6/30/10 Ventura County Community College District $315,947,814 12.463% $39,376,576 Ventura Unified School District 69,645,000 83.696 58,290,079 Oxnard Union High School District 56,120,142 0.015 8,418 Mesa Union School District 7,755,000 0.233 18,069 Oxnard School District 124,043,139 0.023 28,530 Rio School District 16,243,540 0.006 975 City of San Buenaventura 1915 Act Bonds 400,000 100. 400,000 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $98,122,647

DIRECT AND OVERLAPPING GENERAL FUND DEBT: Ventura County General Fund Obligations $108,610,000 12.460% $13,532,806 Ventura County Superintendent of Schools Certificates of Participation12,445,000 12.460 1,550,647 Ventura Unified School District Certificates of Participation 4,090,000 83.696 3,423,166 Oxnard Union High School District Certificates of Participation 10,045,000 0.015 1,507 Oxnard School District Certificates of Participation 5,715,000 0.023 1,314 Rio School District Certificates of Participation 8,125,000 0.006 488 City of San Buenaventura General Fund Obligations 50,500,000 100. 50,500,000 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $69,009,928

COMBINED TOTAL DEBT $167,132,575(3)

Ratios to 2009-10 Assessed Valuation: Total Overlapping Tax and Assessment Debt……….0.81%

Ratios to Adjusted Assessed Valuation: Combined Direct Debt ($50,500,000) ...... 0.43% Combined Total Debt...... 1.42%

STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/10: $0 (1) Excludes issue to be sold. (2) Percentage of overlapping agency’s assessed valuation located within the boundaries of the city. (3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc.

41 Employee Relations and Collective Bargaining

In its Fiscal Year 2010-11 Budget, the City has assumed no increases in compensation for City employees and no concessions for employee contracts under review. However, all employee contracts not under review are being reopened to consider cost reduction provisions. City employees are divided into thirteen (13) separate salary schedules (excluding temporary support staff) for the purpose of salary and benefit administration, (8) eight of which are represented by a bargaining union/association. These salary schedule groups are listed below:

Approximate Number of Regular Salary Schedule Employees Covered Term of MOU Maintenance Unit (Non-Supervisory Maintenance, Operations and Laboratory Employees) 118.50 Jul. 1, 2008 – Jun. 30, 2010 General Unit (Non-Supervisory Clerical, Technical, Para-professional, Inspectors and Civilian Public Safety Employees) 125.75 Jul. 1, 2008 – Jun. 30, 2010 Supervisor Unit (Supervisory Employees) 71.75 Mar. 1, 2009 – Feb. 29, 2012 Professional Unit (Professional Employees) 27.5 Mar. 1, 2009 – Feb. 29, 2012 Police Unit (Police Officers, Corporals and Sergeants) 115 Apr. 1, 2009 – Jun. 30, 2010 Fire Unit (Basic Unit: Firefighter Trainee, Firefighter/Paramedic Trainees/ Firefighter, Firefighters/Paramedics and Fire Engineers) and (Fire Captain’s Unit: Fire Captain) 63 Apr. 1, 2009 – Dec. 31, 2010 Police and Fire Recruits (Police Officer Trainee, Firefighter-Paramedic Recruit and Firefighter Recruit. Trainees in unit for less than six months) 0 No MOU Police Management Unit (Police Commander and Assistant Police Chiefs) 6 Mar. 1, 2009 – Jun. 30, 2010 Fire Management Unit (Fire Battalion Chiefs, Assistant Fire Chiefs) 5 Apr. 1, 2009 – Dec. 31, 2010 Executive (Department Heads, City Attorney, City Manager) 10 No MOU - Unrepresented Management (Division Heads and other managers) 30.1 No MOU - Unrepresented Administrative Professional 5.75 No MOU - Unrepresented Confidential (Administrative Secretaries, Human Resources non-analyst staff, Legal Administrative Secretaries) 19 No MOU - Unrepresented Totals 597.35

(1) The positions within this unit are non-safety trainee positions that upon completion of required training are promoted to either Police or Fire Unit represented positions.

Investment of City Funds

The City invests its funds in accordance with the City’s Investment Policy, most recently amended on June 26, 2009. On June 21, 2010, City Council approved an annual update to the Investment Policy. In accordance with Section 53600 et seq. of the California Government Code, idle cash management and investment transactions are the responsibility of the City Treasurer. The City’s Investment Policy sets forth the policies and procedures applicable to the investment of City funds, and designates eligible investments. The Investment Policy sets forth a stated objective, among others, of insuring the safety of invested funds by limiting credit and interest rate risks. Eligible investments are limited to the Local Agency Investment Fund which is operated by the California State Treasurer, U.S. Treasury Bills, Notes and Bonds having maturities

42 not greater than 5 years, U.S. Government Agency issues having maturities not greater than 5 years, FDIC insured or fully collateralized certificates of deposit, repurchase agreements, banker’s acceptances and commercial paper rated A1/P1 or better, and mutual funds investing in specified securities and obligations. Funds are invested in the following order of priority:

Safety of Principal. Liquidity Return of Investment

The City Treasurer is required to provide a quarterly report to the City Manager and the City Council showing the type of investment, date of maturity, amount invested, current market value, rate of interest, and other such information as may be required by the City Council.

Retirement Contributions

The City provides retirement benefits for its employees through a contractual agreement with the California Public Employees’ Retirement System (“CalPERS”). In addition to the required employer contribution, the City currently contributes the employee share of 7% for the Miscellaneous Plan and 9% for the Safety Plan covering police and fire personnel of the annual covered salary for active members of such Plans. The City is also required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration.

The required employer contribution rate for the City’s Miscellaneous Plan and Safety Plan for Fiscal Year 2007-08 was 9.278% and 28.224%, respectively, for Fiscal Year 2008-09 is 9.419% and 28.661%, respectively, for Fiscal Year 2009-10 is projected to be 9.268% and 29.306%, respectively and for Fiscal Year 2010-11 is projected to be 10.309% and 31.295%, respectively. The contribution requirements of the plan members are established by State statute, and the employer contribution rate is established and may be amended by CalPERS.

For Fiscal Year 2009, the City’s annual pension costs and actual contribution was $9,162,430, and for Fiscal Year 2010, the City’s required contribution was $13,264,242 (including the 7% and 9% employee contribution rate paid by the City), an approximate 31% increase from Fiscal Year 2009. The Fiscal Year 2011 contribution is estimated at $13,303,202, less than a 1% increase from Fiscal Year 2010. This increase, while slight, includes the 3% at 55 for Public Safety’s Fire Unit. However much of the increase is being offset by citywide staffing reductions of approximately 40 positions. The City has reopened negotiations with employee bargaining units to address the City's ongoing undertaking to pay the employee contribution to CalPERS.

The Miscellaneous Plan’s unfunded actuarial accrued liability as of June 30, 2008 was $10,308,468. As of June 30, 2008, the Miscellaneous Plan had a funded ratio of 93.9%, which was slightly down from 96.6% as of June 20, 2007. The Safety Plan’s unfunded actuarial accrued liability as of June 30, 2008 was $46,624,064. As of June 30, 2008, the Safety Plan had a funded ratio of 79.2%, which was slightly down from 79.3% as of June 30, 2007. Contribution rates to CalPERS depend on a variety of factors, including, but not limited to, number of covered employees, benefit levels, salary increases and investment gains and losses of CalPERS. The City makes no assurance as to future contribution rates established by CalPERS. Aggregate pension cost funding may increase significantly and may be material to the City’s future financial condition. To move towards a more sustainable pension program, the City has adopted a policy of negotiating cost reduction provisions such as a two tiered retirement benefit system and returning to employees paying their share of CalPERS pension contributions. See the caption “—Employee Relations and Collective Bargaining” above. Notwithstanding, this policy, negotiations with the City’s bargaining units could result in no decrease, or even increased pension costs and/or increase in the unfunded accrued liabilities and required contributions to the Safety Plan and the Miscellaneous Plan from those described above.

43 The City does not have a contractual obligation to fund post-retirement health benefits for any of its employees. The City agreed to pay a portion of the retirees’ health care premiums through December 31, 2008, after which the City has no further other post-employment benefit obligations. Health care premiums paid for retirees in Fiscal Year 2009 were $87,924.

Pending Claims & Risk Management

The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City is self-insured for the first $500,000 in loss for each workers’ compensation claim and the first $1,000,000 for each general liability claim and up to $25,000 for property damage claims. The City accounts for and finances its self - insured risks of loss in the Workers’ Compensation Fund and Public Liability Fund. Excess insurance is purchased from commercial carriers for each workers’ compensation and general liability claim losses in excess of the self-insured retention levels.

The outstanding claim liabilities in each of the self-insurance internal service funds are based on independent claims evaluation and also the results of separate actuarial studies and include amounts for claims incurred but not reported. Claims liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. The estimate of the claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether allocated to specific claims. General and workers’ compensation liabilities are carried at an actuarially determined rate. It is the City’s practice to obtain full actuarial studies biannually for general liability and workers’ compensation coverage. Premiums are charged by the internal service self-insurance funds using various allocation methods that include actual costs, trends in claims experience, claim severity and claims frequency. Revenues of the internal service self-insurance funds are expended to provide adequate resources to allay program administrative costs, preventative measures and to meet liabilities as they become due. Claims and judgments are generally liquidated by the internal service funds.

During the past three fiscal (claims) years, none of the above programs of protection have had settlements or judgments that exceeded pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage in the prior year. See “LITIGATION” below.

FINANCIAL STATEMENTS

The most recent audited financial statements (the “Financial Statements”) of the City, for the year ended June 30, 2009, included in Appendix C to this Official Statement, have been examined by Macias Gini & O’Connell LLP, Certified Public Accountants, Los Angeles, California, independent certified public accountants (the “Auditor”). Financial information with respect to the City has been derived in part by the City from the audited financial statements. Such audited financial statements have been included herein in reliance upon the report of the Auditor. The Auditor has not undertaken to update the audited financial statements of the City or its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by the Auditor with respect to any event subsequent to its report dated November 25, 2009.

Audited financial statements of the City for prior years are on file for public inspection with the City Clerk. The Auditor has not reviewed or expressed any opinion regarding any portion of this Official Statement other than the Financial Statements.

44 BANK QUALIFIED OBLIGATIONS

The City has designated the Certificates as “qualified tax exempt obligations,” thereby allowing certain financial institutions that are holders of such qualified tax-exempt obligations to deduct a portion of such institution’s interest expense allowable to such qualified tax-exempt obligations, all as determined in accordance with Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the “Tax Code”).

TAX MATTERS

Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Special Counsel, subject, however to the qualifications set forth below, under existing law, the portion of lease payments designated as and comprising interest and received by the owners of the Certificates is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings.

The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Tax Code that must be satisfied subsequent to the delivery of the Lease Agreement in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of delivery of the Lease Agreement.

Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public (excluding bond houses and brokers) at which a Certificate is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public (excluding bond houses and brokers) at which each Certificate is sold is greater than the amount payable at maturity thereof, then such difference constitutes “original issue premium” for purposes of federal income taxes and State of California personal income taxes. De minimus original issue discount is disregarded.

Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Certificate on the basis of a constant interest rate compounded on each interest or principal payment date (with straightline interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Certificates to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Certificate. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Certificates who purchase the Certificates after the initial offering of a substantial amount of such maturity. Owners of such Certificates should consult their own tax advisors with respect to the tax consequences of ownership of Certificates with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Certificates under federal individual and corporate alternative minimum taxes.

Under the Tax Code, original issue premium is amortized on an annual basis over the term of the Certificate (said term being the shorter of the Certificate’s maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Certificate for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Certificate is amortized each year over the term to maturity of the Certificate on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between

45 compounding dates). Amortized Certificate premium is not deductible for federal income tax purposes. Owners of premium Certificates, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Certificates.

California Tax Statutes. In the further opinion of Special Counsel, interest payable with respect to the Certificates is exempt from California personal income taxes.

Other Tax Consideration. Owners of the Certificates should also be aware that the ownership or disposition of, or the accrual or receipt of interest with respect to, the Certificates may have federal or state tax consequences other than as described above. Special Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Lease Agreement and the Certificates other than as expressly described above.

CERTAIN LEGAL MATTERS

The legal opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Special Counsel, substantially in the form of Appendix D hereto, will be made available to purchasers at the time of original delivery of the Certificates, and a copy thereof will accompany each Certificate. Stradling Yocca Carlson & Rauth, a Professional Corporation, is acting as Disclosure Counsel to the City. Certain legal matters will be passed upon for the Authority and the City by the City Attorney. Both Special Counsel and Disclosure Counsel represent the Underwriter from time to time on matters unrelated to the Certificates.

Payment of the fees and expenses of Special Counsel and Disclosure Counsel is contingent upon the execution and delivery of the Certificates.

LITIGATION

There is no litigation pending or, to the City’s knowledge, threatened in any way to restrain or enjoin the execution or delivery of the Certificates, the Lease Agreement or the Trust Agreement, to contest the validity of the Certificates, the Lease Agreement or the Trust Agreement, or any proceeding of the City with respect thereto. The City is involved in certain matters of litigation that have arisen in the normal course of City business. City management believes, based upon consultation with the City Attorney, that these cases, in the aggregate, are not expected to result in a material adverse financial impact on the City. Additionally, City management believes that the City's insurance programs are sufficient to cover any potential losses should an unfavorable outcome materialize.

The City is a named defendant in Wishtoyo Foundation/Ventura Coastkeeper vs. City of San Buenaventura, U.S. District Court Case No.: CV10-02072- K(PJWx), an action which seeks declaratory and injunctive relief and civil penalties against the City for alleged violations of multiple effluent limitations in the City's NPDES permit, and for alleged unlawful discharge of treated sewage effluent and raw sewage into waters of the United States in violation of the Clean Water Act and the City’s NPDES permit. Among the relief requested is an order declaring that the City has violated and is in continued violation of the Clean Water Act, enjoining the City from discharging raw sewage to waters of the United States, and ordering the City to pay civil penalties of up to $32,500 per day per violation for all Clean Water Act violations occurring between January 5, 2005 and January 12, 2009, and up to $37,500 per day per violation for all Clean Water Act violations occurring since January 12, 2009. If successful the cost to the City could be substantial. The City has not fully investigated the claim and cannot predict the outcome. However, the City expects that any costs associated with the case, including compliance with any judgment, would be borne by the City’s Wastewater Fund and not the General Fund. The City does not expect that the case will have a material adverse effect on the General Fund or on the City’s ability to pay obligations payable from the General Fund, including Lease Payments.

46 UNDERWRITING

The Certificates are being purchased by Stone & Youngberg, LLC (the “Underwriter”), at a purchase price of $21,526,940.50 (which represents the aggregate principal amount of the Certificates, plus a net original issue premium of $1,066,553.00 and less an underwriter’s discount of $154,612.50). The purchase agreement relating to the Certificates provides that the Underwriter will purchase all of the Certificates if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in such purchase agreement.

The Underwriter may offer and sell Certificates to certain dealers and others at prices lower than the offering price stated on the cover page hereof. The offering prices may be changed from time to time by the Underwriter.

RATINGS

Standard and Poor’s Ratings Services (“S&P”) is expected has assigned its municipal bond rating of “AAA” (negative outlook) based on the issuance of the Insurance Policy by the Insurer. See “MUNICIPAL CERTIFICATE INSURANCE” herein. In addition, S&P has assigned its municipal bond rating of “AA-” to the Certificates independent of the delivery of the Insurance Policy. Such ratings express only the views of S&P and is not a recommendation to buy, sell or hold the Certificates. Such rating of the rating agency reflect only the views of such organization, and any desired explanation of the significance of such ratings should be obtained from the rating agency furnishing the same, at the following address: Standard & Poor’s Ratings Services, 55 Water Street, New York, New York 10041. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance that such ratings will continue for any given period of time or that they will not be revised, either downward or upward, or withdrawn entirely by either rating agency, if in their judgment, circumstances so warrant. The Authority, the City and the Trustee undertake no responsibility to oppose any such revision or withdrawal. Any such downward revision or withdrawal may have an adverse effect on the market price of the Certificates.

MISCELLANEOUS

Insofar as any statements made in this Official Statement involve matters of opinion or of estimates, whether or not expressly stated, they are set forth as such and not as representations of fact. No representation is made that any of the statements will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the owners of the Certificates.

During the initial offering period for the Certificates, copies of the Lease Agreement, the Trust Agreement, the Assignment Agreement and the Site Lease may be obtained, upon written request, from the City. After delivery of the Certificates copies of such documents may be obtained from the Trustee.

47 The execution and delivery of this Official Statement have been duly authorized by the City Council of the City.

CITY OF SAN BUENAVENTURA

By: /s/ Rick Cole City Manager

S-1 APPENDIX A

SUMMARY OF PRINCIPAL LEGAL DOCUMENTS

The following are brief summaries of the provisions of the Site Lease, the Lease Agreement, the Trust Agreement and the Assignment Agreement. These summaries are not intended to be definitive. Reference is made to the actual documents (copies of which are available from the City) for the complete terms thereof.

DEFINED TERMS

The following terms have the following meanings, notwithstanding that any such terms may be elsewhere defined in this Official Statement. Any terms not expressly defined in this Summary but previously defined in this Official Statement have the respective meanings previously given.

“Bond Counsel” means (a) Jones Hall, A Professional Law Corporation, or (b) any other attorney or firm of attorneys of nationally recognized expertise with respect to legal matters relating to obligations the interest on which is excludable from gross income under Section 103 of the Tax Code.

“Business Day” means a day other than a Saturday, Sunday or legal holiday, on which banking institutions are not closed in the State of California or in any state in which the Office of the Trustee is located.

“Certificate Insurance Policy” means the policy of municipal bond insurance issued by the Certificate Insurer which insures the payment when due of principal and interest represented by the Certificates.

“Certificate Insurer” means Assured Guaranty Municipal Corp. (formerly known as Financial Security Assurance Inc.), a New York stock insurance company, or any successor thereto or assignee thereof, as issuer of the Certificate Insurance Policy and the Reserve Insurance Policy.

“Closing Date” means the day when the Certificates, duly executed by the Trustee, are delivered to the original purchaser thereof.

“Federal Securities” means: (a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), for which the full faith and credit of the United States of America are pledged; (b) obligations of any agency, department or instrumentality of the United States of America, the timely payment of principal and interest on which are directly or indirectly secured or guaranteed by the full faith and credit of the United States of America.

“Fiscal Year” means the twelve-month period beginning on July 1 of any year and ending on June 30 of the next succeeding year, or any other twelve-month period by the City as its fiscal year under written notice filed with the Trustee.

A-1 “Golf Course Fund” means the existing fund of the City held for the deposit and expenditure of revenues derived from the operation of public golf course facilities by the City.

“Golf Course Project” means the construction of certain improvements to the Olivas Links Golf Course of the City, as such improvements shall be identified by the City from time to time in its sole discretion.

“Lease Payment Date” means, with respect to any Interest Payment Date, the 5th Business Day preceding such Interest Payment Date.

“Leased Property” means all of the land which is more particularly described in Appendix A to the Lease Agreement, consisting generally of the land and improvements constituting the Corporation Yard of the City and Arroyo Grande Park. If the City exercises its option under the Lease Agreement with respect to the substitution of property or with respect to the release of property, the term “Leased Property” will thereupon be modified accordingly.

“Net Proceeds” means any insurance proceeds or eminent domain award (including any proceeds of sale to a governmental entity under threat of the exercise of eminent domain powers), paid with respect to the Leased Property, to the extent remaining after payment therefrom of all expenses incurred in the collection thereof.

“Office” means the corporate trust office of the Trustee in Los Angeles, California, or such other or additional offices as the Trustee may designate in writing to the Authority and the City from time to time as the corporate trust office for purposes of the Trust Agreement.

“Owner”, when used with respect to a Certificate, means the person in whose name the ownership of such Certificate is registered on the registration books maintained by the Trustee.

“Permitted Encumbrances” means, as of any time: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may permit to remain unpaid under Article IV of the Lease; (b) the Lease and the Assignment Agreement; (c) any right or claim of any mechanic, laborer, materialman, supplier or vendor which is secured by a lien on the Leased Property; (d) the exceptions disclosed in the title insurance policy with respect to the Leased Property issued as of the Closing Date by First American Title Company, which exceptions are acceptable to the Certificate Insurer; and (e) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record and which the City certifies in writing will not materially impair the use of the Leased Property for its intended purposes.

“Permitted Investments” means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein:

(a) Federal Securities.

A-2 (b) Federal Housing Administration debentures.

(c) The listed obligations of government-sponsored agencies which are not backed by the full faith and credit of the United States of America:

(i) Federal Home Loan Mortgage Corporation participation certificates (excluding stripped mortgage securities which are purchased at prices exceeding their principal amounts) or senior debt obligations;

(ii) Farm Credit Banks (formerly: Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives) consolidated system-wide bonds and notes;

(iii) Federal Home Loan Banks consolidated debt obligations; and

(iv) Federal National Mortgage Association senior debt obligations or mortgage-backed securities (excluding stripped mortgage securities which are purchased at prices exceeding their principal amounts);

(d) Unsecured certificates of deposit, time deposits, and bankers’ acceptances (having maturities of not more than 30 days) of any bank, including the Trustee or its affiliates, the short-term obligations of which are rated “A-1” or better by S&P and "Prime- 1" by Moody's.

(e) Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance Corporation (FDIC), in banks, including the Trustee or its affiliates, which have capital and surplus of at least $15 million.

(f) Commercial paper (having original maturities of not more than 270 days) rated “A-1+” by S&P and “Prime-1” by Moody’s.

(g) Money market funds rated “AAm” or “AAm-G” by S&P, or better, including funds for which the Trustee or its affiliates or subsidiaries provide investment or other advisory services.

(h) “State Obligations”, which means:

(i) Direct general obligations of any state of the United States of America or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated “A3” by Moody’s and “A” by S&P, or better, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated;

(ii) Direct general short-term obligations of any state agency or subdivision or agency thereof described in (i) above and rated “A- 1+” by S&P and “Prime-1” by Moody’s; and

(iii) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state, state agency or subdivision described in (i)

A-3 above and rated “AA” or better by S&P and “Aa” or better by Moody’s.

(i) Pre-refunded municipal obligations rated “AAA” by S&P and “Aaa” by Moody’s meeting the following requirements:

(i) the municipal obligations are (1) not subject to redemption prior to maturity or (2) the trustee for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions;

(ii) the municipal obligations are secured by cash or Federal Securities described in clause (a) of the definition thereof (“United States Treasury Obligations”) which may be applied only to payment of the principal of, interest and premium on such municipal obligations;

(iii) the principal of and interest on the United States Treasury Obligations (plus any cash in the escrow) has been verified by the report of independent certified public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on the municipal obligations (“Verification”);

(iv) the cash or United States Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations;

(v) no substitution of a United States Treasury Obligations shall be permitted except with another United States Treasury Obligation and upon delivery of a new Verification; and

(vi) the cash or United States Treasury Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent.

(j) Investment agreements with a domestic or foreign bank or corporation the long- term debt of which, or, in the case of a guaranteed corporation the long-term debt, or, in the case of a monoline financial guaranty insurance company, claims paying ability, of the guarantor is rated at least "AA-" by S&P and "Aa3" by Moody's, and acceptable to the Certificate Insurer, the form and substance of which investment agreement shall be acceptable to the Certificate Insurer.

(k) The Local Agency Investment Fund which is administered by the California Treasurer for the investment of funds belonging to local agencies within the State of California.

(l) Any other investment approved in writing by the Certificate Insurer in its sole discretion.

A-4 “Prior Certificates” means the portions of the following certificates of participation which are refunded from the proceeds of the Certificates, as identified more particularly in the Refunding Instructions:

2001 Refunding Certificates of Participation, Series A, executed and delivered in the aggregate principal amount of $2,925,000;

2002 Refunding Certificates of Participation, Series B, executed and delivered in the aggregate principal amount of $19,765,000;

2001 Certificates of Participation, Series C, executed and delivered in the aggregate principal amount of $16,345,000; and

2002 Certificates of Participation, Series D, executed and delivered in the aggregate principal amount of $15,930,000.

“Prior Trustee” means The Bank of New York Mellon Trust Company, N.A., as trustee for the Prior Certificates.

“Project Costs” means all costs of the construction of the Golf Course Project thereof that are paid from moneys on deposit in the Project Fund, including the portion of the Lease Payments allocable to the Golf Course Project during the period of construction thereof.

“Refunding Instructions” means the Irrevocable Refunding Instructions dated as of the Closing Date, given by the Authority to the Prior Trustee, relating to the refunding of the Prior Certificates.

“Reserve Insurance Policy” means the Municipal Bond Debt Service Reserve Insurance Policy issued by the Certificate Insurer on the Closing Date for the credit of the Reserve Fund.

“Reserve Requirement” means, as of the date of calculation thereof, an amount equal to the lesser of (a) $1,442,571.48, or (b) the maximum amount of Lease Payments (excluding Lease Payments with respect to which the City has posted a security deposit under the Lease Agreement) coming due in the current or any future Fiscal Year.

“S&P” means Standard & Poor’s Corporation, a division of the McGraw Hill Companies, of New York, New York, its successors and assigns.

“Tax Code” means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced in the Trust Agreement) as it may be amended to apply to obligations issued on the Closing Date, together with applicable temporary and final regulations promulgated, and applicable official public guidance published, under said Code.

A-5 SITE LEASE

Under the Site Lease, the City leases the Leased Property to the Authority for the purpose of enabling the Authority to refinance the Prior Certificates and finance the Golf Course Project through the execution and delivery of the Certificates. The Site Lease is for a term commencing on the Closing Date and extending to the date on which no Certificates remain outstanding under the Trust Agreement, but not later than ten years following the final stated maturity date of the Certificates. The Authority agrees to pay an amount to the City as rental of the Leased Property thereunder, to be funded on the Closing Date from the proceeds of the Certificates. The City will apply the amount of such rental payment to refinance the Prior Certificates in accordance with the Refunding Instructions and to finance the construction of the Golf Course Project in accordance with the Lease and the Trust Agreement. Upon the termination of the Site Lease, the Authority will surrender the Leased Property to the City in the same good order and condition as the Leased Property was in at the time of commencement of the Site Lease, reasonable wear and tear excepted, and all buildings, improvements and structures then existing upon the Leased Property will remain thereon and title thereto will vest in the City for no additional consideration.

LEASE AGREEMENT

Lease of Leased Property

Under the Lease Agreement, the Authority leases the Leased Property back to the City. The Lease Agreement commences on the Closing Date and terminates on the date on which the Certificates are paid or deemed to have been paid in full, except under certain circumstances such as the taking of all or any portion of the Leased Property in eminent domain proceedings. Under any circumstances, the Lease Agreement terminates ten years following the final stated maturity date of the Certificates.

Lease Payments

The City agrees to pay semiannual Lease Payments, subject to abatement as described below, as the rental for the use and occupancy of the Leased Property under the Lease Agreement. On each Lease Payment Date, the City is required to deposit with the Trustee the full amount of the Lease Payments coming due and payable on the next Interest Payment Date, to the extent required to be paid by the City under the Lease Agreement. Any amount on deposit in the Lease Payment Fund on any Lease Payment Date will be credited towards the payment then required to be deposited by the City with the Trustee.

The City is required to pay the Lease Payments from any source of available funds, subject to the provisions of the Lease Agreement relating to abatement due to damage or eminent domain with respect to the Leased Property. The City agrees to take such actions as may be necessary to include all Lease Payments required to be paid by it under the Lease Agreement in its annual budgets and to appropriate such Lease Payments in each Fiscal Year during the term of the Lease Agreement. The portion of the Lease Payments which is attributable to the refunding of the 2002 Certificates of Participation, Series D, and the portion of the Lease Payments which is

A-6 attributable to the Golf Course Project, are also payable from amounts held by the City in the Golf Course Fund.

Amounts paid by the Certificate Insurer under the Certificate Insurance Policy and the Reserve Insurance Policy will not relieve the City from its obligations under the Lease Agreement to pay the Lease Payments when due and payable.

Abatement of Lease Payments

The Lease Payments are subject to abatement under the Lease Agreement during any period in which due to damage or destruction of the Leased Property in whole or in part, due to material title defect in any portion of the Leased Property or due to taking in eminent domain proceedings of the Leased Property in whole or in part, there is substantial interference with the City’s use and occupancy of all or any portion of the Leased Property. The amount of such abatement will be determined by the City, which determination is acceptable to the Certificate Insurer, such that the resulting Lease Payments represent fair consideration for the use and occupancy of the portions of the Leased Property not damaged or destroyed. In the event of such abatement, the City will have no obligation to pay abated Lease Payments and there is no remedy available to Certificate Owners arising from such abatement. Notwithstanding the foregoing, the Lease Payments will not be abated to the extent that amounts in the Reserve Fund or the Golf Course Fund are available to pay Lease Payments which would otherwise be abated, it being hereby declared that such proceeds and amounts constitute a special fund for the payment of the Lease Payments.

Additional Rent

In addition to the Lease Payments, the City agrees to pay when due, as additional rental for the Leased Property, all costs and expenses incurred by the Authority to comply with the provisions of the Trust Agreement and amounts due and owing to the Trustee and the Certificate Insurer.

Title

At all times during the term of the Lease Agreement, the City will hold title to the Leased Property, subject to the provisions of the Site Lease, the Lease Agreement and other Permitted Encumbrances.

Maintenance, Utilities, Taxes and Modifications

The City, at its own expense, has agreed to maintain or cause to be maintained the Leased Property in good repair; the Authority has no responsibility for such maintenance. The City is also obligated to pay all taxes and assessments charged to the Leased Property. The City has the right under the Lease Agreement to remodel the Leased Property and to make additions, modifications and improvements to the Leased Property, so long as those additions, modifications and improvements are of a value which is not substantially less than such value of the Leased Property immediately prior to making the additions, modifications and improvements. The City will not permit any mechanic’s or other lien to be established or to remain against the Leased Property, except that the City has the right in good faith to contest any such lien, subject to the consent and direction of the Certificate Insurer.

A-7 Option to Prepay

The City has the option to prepay the Lease Payments or post a security deposit to pay the Lease Payments, in whole or in part, in the amounts and on the dates set forth in the Lease Agreement. The optional prepayment dates and prices have been determined to correspond to the optional prepayment dates and prices applicable to the Certificates under the Trust Agreement. Any security deposit must be in an amount which, together the earnings thereon derived from investment in Federal Securities, is sufficient to pay the Lease Payments (or portion thereof) when due, and must be verified by an independent accountant.

Assignment; Subleases

The Authority has assigned certain of its rights under the Lease Agreement to the Trustee under the Assignment Agreement, including but not limited to its rights to receive the Lease Payments. The City may not assign any of its rights in the Lease Agreement. The City may sublease all or a portion of the Leased Property only with the prior written consent of the Certificate Insurer and the Authority, and only under the conditions contained in the Lease Agreement, including the condition that such sublease does not cause the interest component of the Lease Payments to become subject to federal or State of California personal income taxes.

Amendment of Lease Agreement

The Authority and the City may at any time amend or modify any of the provisions of the Lease Agreement, but only: (a) with the prior written consents of the Certificate Insurer and the Owners of a majority in aggregate principal amount of the outstanding Certificates; or (b) with the prior written consent of the Certificate Insurer but without the consent of any of the Certificate Owners, if such amendment or modification is for any one or more of the following purposes:

to incorporate additional covenants and agreements of the City or to limit or surrender any rights or power therein reserved to or conferred upon the City;

to cure any ambiguity, or cure, correct or supplement any defective provision contained in the Lease Agreement, to conform to the original intention of the City and the Authority;

to amend any provision thereof relating to the Tax Code, if in the opinion of Bond Counsel such amendment will not adversely affect the exclusion from gross income of interest represented by any of the Certificates under the Tax Code

to amend the description of the Leased Property to reflect accurately the property originally intended to be included therein, or to effectuate any substitution of property or any release or property as permitted by the Lease Agreement;

A-8 to obligate the City to pay additional amounts of rental for the use and occupancy of the Leased Property or any portion thereof, but only if (1) such additional amounts of rental are pledged or assigned for the payment of any bonds, notes, leases or other obligations the proceeds of which are applied to finance the completion of the Project or improvements to the Leased Property, and (2) the City has filed with the Trustee written evidence that the amendments made under this paragraph will not of themselves cause a reduction or withdrawal of any rating then assigned to the Certificates, or

in any respect whatsoever as the Authority and the City may deem necessary or desirable, if in the opinion of Bond Counsel such modifications or amendments do not materially adversely affect the interests of the Owners of the Certificates.

Events of Default

Each of the following constitutes an event of default under the Lease Agreement:

(a) Failure by the City to pay any Lease Payment or other payment required to be paid under the Lease Agreement or the Trust Agreement at the time specified in the Lease Agreement or the Trust Agreement.

(b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed in the Lease Agreement or the Trust Agreement, other than as referred to in the preceding clause (a), for a period of 30 days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority, the Trustee or the Certificate Insurer. If the City notifies the Authority, the Trustee or the Certificate Insurer that in its reasonable opinion the failure stated in the notice can be corrected, but not within such 30-day period, such failure will not constitute an event of default if the City commences to cure such failure within such 30-day period and thereafter diligently and in good faith cures such failure in a reasonable period of time. Notwithstanding the foregoing, the period during which the City has the right to cure any such failure shall not be extended beyond 60 days without the prior written consent of the Certificate Insurer.

(c) Certain events relating to the bankruptcy of the City.

For purposes of determining whether any Event of Default has occurred under and as described in the preceding clause (a), no effect will be given to payments made by the Certificate Insurer under the Certificate Insurance Policy or the Reserve Insurance Policy.

A-9 Remedies

Upon the occurrence and continuance of any event of default described above, the Authority has the right to terminate the Lease Agreement or, with or without such termination, re-enter, take possession of and re-let the Leased Property. When the Authority does not elect to terminate the Lease Agreement, the City remains liable to pay all Lease Payments as they come due and liable for damages resulting from such event of default. Any amounts collected by the Authority from the reletting of the Leased Property will be credited towards the City’s unpaid Lease Payments. Any net proceeds of re-leasing or other disposition of the Leased Property are required to be deposited in the Lease Payment Fund and applied to Lease Payments in order of payment date.

Under the Assignment Agreement, the Authority assigns all of its rights with respect to remedies in an event of default to the Trustee, so that all such remedies will be exercised by the Trustee, the Certificate Insurer and the Certificate Owners as provided in the Trust Agreement.

The Trustee has no right to accelerate Lease Payments and, due to the governmental purposes which are served by the use of the Leased Property, it is unlikely that a court would permit the exercise of the remedies of re-entry, repossession or re- letting.

TRUST AGREEMENT

Trustee

The Trustee is appointed under the Trust Agreement and is authorized to prepare, execute and deliver the Certificates thereunder, and to act as a depository of amounts held thereunder. The Trustee is required to make deposits into and withdrawals from funds, and invest amounts held under the Trust Agreement in accordance with the City’s instructions.

Use of Certificate Proceeds

The Trust Agreement creates the Lease Payment Fund, the Reserve Fund, the Costs of Issuance Fund, the Project Fund and the Insurance and Condemnation Fund to be held in trust by the Trustee for the benefit of the Certificate Owners and the Certificate Insurer.

Lease Payment Fund. There will be deposited in the Lease Payment Fund, when received by the Trustee, all Lease Payments and prepayments thereof (except reimbursement for funds drawn from the Reserve Fund, as described below). Moneys on deposit in the Lease Payment Fund will be used to pay principal, interest and premium (if any) represented by the Certificates. Any earnings on investment of moneys in the Lease Payment Fund will remain therein and will be credited towards payment of the next Lease Payments. Any surplus remaining in the Lease Payment Fund after the payment of all Certificates and after payment of all amounts due to the Certificate Insurer under the Certificate Insurance Policy or the Reserve Insurance Policy, or after provision for their payment has been made, will be paid to the City.

A-10 Costs of Issuance Fund. The Trustee will deposit a portion of the proceeds of the Certificates in the Costs of Issuance Fund, to be expended to pay costs of issuance relating to the Certificates. All amounts remaining on deposit in the Costs of Issuance Fund and not required to pay costs of issuing the Certificates will be transferred to the City for deposit in the Project Fund.

Reserve Fund. The Trustee will establish a special fund designated as the “Reserve Fund” to be held by the Trustee in trust for the benefit of the City, the Owners of the Certificates and the Certificate Insurer, as a reserve for the payment when due of the Lease Payments on behalf of the City. The Reserve Fund will be maintained by the City in an amount equal to the Reserve Requirement. All amounts on deposit in the Reserve Fund in excess of the Reserve Requirement, and all amounts derived from the investment of amounts in the Reserve Fund which are not required to be retained therein to maintain the Reserve Requirement, will be transferred by the Trustee to the Lease Payment Fund semiannually on or before each Lease Payment Date.

If on any Interest Payment Date the moneys available in the Lease Payment Fund do not equal the amount of the Lease Payment then coming due and payable, the Trustee will apply the moneys available in the Reserve Fund to make such payments on behalf of the City by transferring the amount necessary for this purpose to the Lease Payment Fund. Upon receipt of any delinquent Lease Payment with respect to which moneys have been advanced from the Reserve Fund, such Lease Payment shall be deposited in the Reserve Fund to the extent of such advance.

Reserve Insurance Policy. The Reserve Requirement will be initially maintained in the form of the issuance of the Reserve Insurance Policy. Under the terms and conditions of the Reserve Insurance Policy, the Trustee shall deliver to the Certificate Insurer a demand for payment under the Reserve Insurance Policy in the required form at least three Business Days prior to the date on which funds are required for the purposes set forth in this subsection. The Trustee shall comply with all of the terms and provisions of the Reserve Insurance Policy for the purpose of assuring that funds are available thereunder when required for the purposes of the Reserve Fund, within the limits of the coverage amount provided by the Reserve Insurance Policy. All amounts drawn by the Trustee under the Reserve Insurance Policy shall be deposited into the Reserve Fund and applied for the purposes thereof.

If the Reserve Requirement is at any time maintained in the Reserve Fund in the form of a combination of cash (whether or not invested) and the Reserve Insurance Policy, the Trustee shall apply the amount of such cash to make any payment required to be made from the Reserve Fund before the Trustee draws any moneys under the Reserve Insurance Policy for such purpose. If the Trustee at any time draws funds under the Reserve Insurance Policy to make any payment then required to be made from the Reserve Fund, the Lease Payments thereafter received by the Trustee, to the extent remaining after making provision for payment of principal or interest represented by the Certificates then due and payable, and any other funds legally available to the City for such purpose, shall be used first to reinstate the Reserve Insurance Policy and second, to replenish the amount of cash in the Reserve Fund.

Project Fund. The Trustee will establish, maintain and hold in trust a separate fund to be known as the “Project Fund.” The Trustee will disburse moneys in the Project

A-11 Fund from time to time to pay or reimburse the payment of Project Costs in accordance with written requisitions filed by the City with the Trustee. Each such written requisition shall be signed by a City Representative and shall state, with respect to each payment to be made thereby, the name and address of the firm or Corporation to whom such payment is to be made, the amount and purpose of such payment and that such constitutes payment of Project Costs, and must be accompanied by an invoice or statement evidencing such payment. The City will maintain accurate records showing all disbursements from the Project Fund, including records which show the name and address of each firm or corporation to whom payment is made and the amount and purpose of each payment.

Upon the determination by the City that the acquisition of the Golf Course Project has been completed, the City shall file a written certificate of a City Representative to that effect with the Trustee and the Certificate Insurer, and the Trustee will thereupon (a) withdraw from the Project Fund and deposit in the Lease Payment Fund all amounts remaining on deposit in the Project Fund, and (b) close the Project Fund.

Application of Insurance and Eminent Domain Proceeds

Any Net Proceeds of insurance collected by the City in the event of accident to or destruction of the Leased Property will be paid to the Trustee under the Lease Agreement and deposited by the Trustee promptly upon receipt thereof in the Insurance and Condemnation Fund which is held by the Trustee.

If the City determines and notifies the Trustee and the Certificate Insurer in writing of its determination, within 90 days following the date of such deposit, that the replacement, repair, restoration, modification or improvement of such improvements is not economically feasible or in the best interests of the City, then such Net Proceeds will be promptly transferred by the Trustee to the Lease Payment Fund and applied to the prepayment of Lease Payments and the corresponding prepayment of Certificates. In the event of damage or destruction of the Leased Property in full, such Net Proceeds may be transferred to the Lease Payment Fund to be used to prepay outstanding Certificates only if such Net Proceeds, together with other available moneys, are sufficient to cause the corresponding prepayment of all Lease Payments.

Any Net Proceeds deposited in the Insurance and Condemnation Fund and not applied to prepay the Lease Payments and the Certificates will be applied to replace, repair, restore, modify or improve the Leased Property. Payments will be made by the Trustee for such purpose upon receipt of written requisitions of the City filed with the Trustee. Any balance of the Net Proceeds remaining after the City files a written certificate with the Trustee and the Certificate Insurer stating that such work has been completed will be paid to the City.

If all or any part of the Leased Property is taken by eminent domain proceedings (or sold to a government threatening to exercise the power of eminent domain) the Net Proceeds therefrom will be deposited with the Trustee in the Insurance and Condemnation Fund and will be applied and disbursed by the Trustee either to replace the Leased Property or prepay the Lease Payments and the Certificates, as set forth in the Trust Agreement.

A-12 Investment of Funds

The Trustee is required to invest and reinvest all moneys held under the Trust Agreement, at the written direction of the City, in Permitted Investments maturing not later than the date moneys are expected to be required for expenditure. All income or profit on any investments of funds held by the Trustee under the Trust Agreement will be deposited in the respective funds from which such investments were made, except that investment earnings resulting from the investment of amounts on deposit in the Reserve Fund, to the extent not required to be retained therein to maintain the Reserve Requirement, will be (a) transferred to the Project Fund prior to the date on which the Project Fund is closed, and (b) thereafter, transferred to the Lease Payment Fund.

Remedies Upon Event of Default

Exercise of Remedies. Upon the occurrence of an event of default by the City under the Lease Agreement, with the prior written consent of the Certificate Insurer the Trustee may, and if requested by the Certificate Insurer or (with the prior written consent of the Certificate Insurer) if requested by the Owners of a majority in aggregate principal amount of the Certificates then outstanding the Trustee shall, exercise any and all remedies available at law or under the Lease Agreement.

Limitation on Certificate Owners’ Rights. The Trustee is granted the power to control the proceedings in the event of a default for the equal benefit of the Certificate insurer and the Certificate Owners. No Certificate Owner has the right to institute any suit, action or proceeding at law or in equity, unless (a) such Owner has previously notified the Trustee of the occurrence of an event of default, (b) the Owners of a majority in aggregate principal amount of the outstanding Certificates have requested the Trustee in writing to exercise its powers, (c) the Owners have tendered the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in complying with such request, (d) the Trustee has failed to comply with such request for 60 days after receipt of such request and tender of such indemnity, and (e) the Certificate Insurer has failed to honor its payment obligations under the Certificate Insurance Policy or the Reserve Insurance Policy.

Application of Amounts Collected. Any amounts collected by the Trustee in an event of default are required to be applied as follows:

First, to the payment of the fees, costs and expenses of the Trustee in declaring such Event of Default and in taking any remedial action with respect thereto, including reasonable compensation to its agents, attorneys and counsel, and including such other necessary costs relating to the administration of the foregoing and to events leading up thereto;

Second, to the payment of the whole amount then owing and unpaid with respect to the Certificates for principal and interest, with interest on the overdue principal and installments of interest at the rate set forth in Section 3.4(c) of the Lease (but such interest on overdue installments of interest shall be paid only to the extent funds are available therefor following payment of principal and interest and interest on overdue principal, as aforesaid), and in case such moneys shall be

A-13 insufficient to pay in full the whole amount so owing and unpaid with respect to the Certificates, then to the payment of such principal and interest without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest.

Third, to the Certificate Insurer for any amounts due and owing to the Certificate Insurer under the Certificate Insurance Policy or the Reserve Insurance Policy.

Rights of Certificate Insurer

Upon the occurrence and continuation of an event of default, the Certificate Insurer is entitled to control and direct the enforcement of all rights and remedies granted under the Trust Agreement to the Certificate Owners, or to the Trustee for the benefit of the Certificate Owners, including but not limited to the right to approve all waivers of any Events of Default.

Amendment of Trust Agreement

The Trust Agreement may be amended by agreement among the parties thereto, with the prior written consent of the Certificate Insurer but without the consent of the Owners of the Certificates, for any one or more of the following purposes:

to add to the covenants and agreements of any party, other covenants to be observed, or to surrender any right or power reserved to the Authority or the City,

to cure, correct or supplement any ambiguous or defective provision,

in regard to questions arising under the Trust Agreement, as the parties may deem necessary or desirable and which amendment does not, in the opinion of Bond Counsel, materially adversely affect the interests of the Owners of the Certificates,

if and to the extent permitted in the opinion of Bond Counsel filed with the Trustee, the City and the Authority, to delete or modify any provisions relating to the exclusion from gross income of interest represented by the Certificates under the Tax Code, or

to conform to any amendments of the Lease Agreement which are permitted to be made under the terms of the Lease Agreement as described above.

Any other amendment requires the prior written consent of the Certificate Insurer and the approval of the Owners of a majority in aggregate principal amount of the Certificates then outstanding, provided that no such amendment may (a) extend the maturity or time of interest payment, or reduce the interest rate, amount of principal or

A-14 premium payable on, any Certificate without such Owner’s consent; (b) reduce the percentage of Owners of Certificates required to consent to any amendment or modification; or (c) modify any of the Trustee’s rights or obligations without its consent.

Defeasance

Upon payment of the outstanding Certificates in whole, or upon the deposit of cash or non-callable Federal Securities with the Trustee sufficient with other available funds to retire the obligations represented by such Certificates at or before maturity, all rights thereunder of the Owners of such Certificates and all obligations of the Authority, the Trustee and the City with respect to the Certificates ceases and terminates, except only the obligation of the Trustee to pay or cause to be paid, from Lease Payments paid by or on behalf of the City from funds so deposited, all sums represented thereby when due.

Notwithstanding the foregoing provisions, if the principal and interest represented by the Certificates are paid by the Certificate Insurer under the Certificate Insurance Policy, (a) the Certificates will remain Outstanding and will not be deemed to have been paid and discharged under the Trust Agreement, (b) the obligations of the Trustee and the City will continue in full force and effect with respect to such Certificates, and (c) the Certificate Insurer will be fully subrogated to the rights of all Owners of the Certificates so paid.

ASSIGNMENT AGREEMENT

The Authority and the Trustee will enter into the Assignment Agreement under which the Authority assigns and sets over to the Trustee, for the benefit of the Certificate Insurer and the Owners of the Certificates, substantially all of the Authority’s rights under the Lease Agreement (subject to certain exceptions), including the right of the Authority to receive and collect Lease Payments, its right to receive and collect proceeds of condemnation and insurance awards and the right to exercise rights and remedies of the Authority in the Lease Agreement to enforce payments of amounts thereunder. The Trustee accepts such assignment for the purpose of securing the Lease Payments, subject to the provisions of the Trust Agreement.

A-15 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX B

GENERAL INFORMATION ABOUT THE CITY OF SAN BUENAVENTURA

This appendix sets forth general information about the City of San Buenaventura (the “City”). The following information concerning the City, the County of Ventura (the “County”) and the State of California (the “State”) is included only for general background purposes. The Certificates are an obligation of the City but are not an obligation of the State, the County or any governmental agency. It is not intended to suggest that the Certificates are payable from any source other than Lease Payments.

General

The City is one of the oldest settlements on the Pacific Coast. It is the site of the San Buenaventura Mission founded in 1782, and incorporated as a town by the California Legislature on March 10, 1866.

The first Charter of the City was prepared and proposed by a Board of Freeholders elected October 13, 1931. The Charter was ratified and adopted by the electors on January 7, 1932, and approved by the State Legislature on January 26, 1933 and has been amended several times thereafter.

The City is located in south-central Ventura County along the California coastline, approximately 62 miles northwest of the City of Los Angeles and 25 miles south of the City of Santa Barbara. The City is the County seat with a population estimated of 108,787 in 2009, accounting for over 13 percent of the County’s population. The City’s economy revolves chiefly around the County government facilities, financial services, retail operations, the nearby oil fields and a well developed food processing industry.

Population

Table B-1 sets forth total population for the City, the County and the State for each of the last ten years.

Table B-1 CITY OF SAN BUENAVENTURA, COUNTY OF VENTURA AND STATE OF CALIFORNIA Population

City of Year San Buenaventura County of Ventura State of California

2001 101,598 765,557 34,430,970 2002 102,619 779,702 35,063,959 2003 104,236 792,731 35,652,700 2004 104,876 802,421 36,199,342 2005 105,443 809,159 36,676,931 2006 106,309 814,853 37,087,005 2007 106,837 820,470 37,463,609 2008 107,696 827,191 37,871,509 2009 108,687 835,298 38,255,508 2010 109,946 844,713 38,648,090

Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties and the State, 2001-2010, with 2000 Benchmark, Sacramento, California, May 2010.

B-1 Employment

Table B-2 summarizes the labor force, employment and unemployment figures over the period 2005 through 2009 for the City, the County, the State and United States.

Table B-2 CITY OF SAN BUENAVENTURA, COUNTY OF VENTURA, STATE OF CALIFORNIA AND UNITED STATES Labor Force, Employment and Unemployment Yearly Average

Civilian Civilian Civilian Civilian Year and Area Labor Force Employment Unemployment Unemployment Rate 2005 Ventura 59,400 56,900 2,600 4.3% Ventura County 420,900 400,900 20,000 4.8 California 17,544,800 16,592,200 952,600 5.4 United States 149,320,000 141,730,000 7,591,000 5.1 2006 Ventura 60,200 57,900 2,300 3.9% Ventura County 425,400 407,100 18,300 4.3 California 17,718,500 16,851,600 866,900 4.9 United States 151,428,000 144,427,000 7,001,000 4.6 2007 Ventura 60,700 58,000 2,700 4.4% Ventura County 427,500 406,600 20,900 4.9 California 17,970,800 17,011,000 959,800 5.3 United States 153,124,000 146,047,000 7,078,000 4.6 2008 Ventura 61,400 58,000 3,400 5.6% Ventura County 431,400 404,400 26,900 6.2 California 18,251,600 16,938,300 1,313,200 7.2 United States 154,287,000 145,362,000 8,924,000 5.8 2009 Ventura 61,200 55,600 5,500 9.1% Ventura County 431,300 388,200 43,600 10.0 California 18,250,200 16,163,900 2,086,200 11.4 United States 154,142,000 139,871,000 14,265,000 9.3

Source: California Employment Development Department, based on March 2008 benchmark and U.S. Department of Labor, Bureau of Labor Statistics.

Table B-3 summarizes employment by Industry in the Oxnard-Thousand Oaks-Ventura MSA (“MSA”) from 2005 to 2009. Manufacturing, Retail Trade, Services and Government are the largest employment sectors in the Oxnard-Thousand Oaks-Ventura MSA.

B-2 Table B-3 OXNARD-THOUSAND OAKS-VENTURA MSA VENTURA COUNTY Industry Employment & Labor Force - By Annual Average

TITLE 2005 2006 2007 2008 2009 Total Farm 22,500 22,900 24,000 25,100 24,000 Total Nonfarm 291,200 297,700 296,800 291,300 275,000 Total Private 249,000 255,200 253,800 248,200 232,100 Goods Producing 57,300 59,900 57,900 53,800 47,100 Natural Resources & Mining 800 1,100 1,100 1,200 1,200 Construction 18,800 20,500 18,800 16,700 13,300 Manufacturing 37,700 38,400 38,000 35,900 32,600 Durable Goods 23,900 24,100 23,900 23,200 20,500 Nondurable Goods 13,900 14,300 14,100 12,700 12,200 Service Providing 233,900 237,800 239,000 237,500 227,900 Private Service Providing 191,700 195,300 195,900 194,400 184,900 Trade, Transportation & Utilities 54,800 56,400 56,800 56,100 52,100 Wholesale Trade 12,500 12,600 13,000 12,800 12,100 Retail Trade 36,500 37,600 37,600 37,300 34,700 Transportation, Warehousing & Utilities 5,800 6,100 6,100 6,000 5,300 Information 6,200 6,000 5,800 5,600 5,200 Financial Activities 24,500 24,000 22,700 21,100 20,500 Professional & Business Services 38,300 39,300 38,300 38,300 36,100 Educational & Health Services 28,300 28,900 30,500 31,800 32,200 Leisure & Hospitality 29,200 30,500 32,000 31,500 29,500 Other Services 10,400 10,200 9,900 10,000 9,400 Government 42,200 42,500 43,000 43,100 42,900 Total, All Industries 313,700 320,700 320,800 316,400 299,000

Note: Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households and person involved in labor/management trade disputes. Employment reported by place of work. Items may not add to total due to independent rounding. The “Total, All Industries” data is not directly comparable to the employment data found herein. Source: State of California, Employment Development Department, Oxnard-Thousand Oaks-Ventura MSA Industry Employment & Labor Force - By Annual Average, March 2010 Benchmark.

Major Employers

Table B-4 sets forth the largest employers in the City of San Buenaventura as of 2009.

Table B-4 CITY OF SAN BUENAVENTURA Major Employers

Employer Business Employees County of Ventura Government 8,121 Ventura County Health Care Agency Health Care 2,430 Ventura Unified School District Education 2,197 Community Memorial Hospital Health Care 2,000 Ventura Community College District Education 1,974 City of San Buenaventura Government 1,047

Source: City of San Buenaventura, Comprehensive Annual Financial Report for fiscal year ended June 30, 2009.

B-3 Commercial Activity

Trade outlet and retail sales activity for the City are summarized based on reports of the State Board of Equalization. The following tables shows the City’s taxable transactions between 2004 through 2008.

Table B-5 CITY OF SAN BUENAVENTURA Taxable Retail Sales, 2004-2008 ($ 000’s)

Type of Business 2004 2005 2006 2007 2008 Apparel Stores $ 92,964 $ 99,212 $ 104,618 $ 108,886 $ 100,894 General Merchandise Stores 251,977 252,605 244,223 243,118 233,410 Food Stores 64,729 68,958 69,677 70,927 73,560 Eating/Drinking Places 188,439 197,019 203,163 213,151 212,142 Home Furnishing 48,408 53,353 47,191 43,974 42,644 Building Materials 207,652 215,486 197,820 178,818 130,812 Auto Dealers 429,263 430,130 437,115 458,226 317,305 Service Stations 111,458 125,647 145,288 160,540 181,979 Other Retail Stores 246,163 262,040 258,045 227,946 212,590 Retail Stores Totals $ 1,641,053 $ 1,704,450 $ 1,707,140 $ 1,705,586 $ 1,505,336 All Other Outlets 303,237 324,519 381,634 358,036 371,700 Total All Outlets $ 1,944,290 $ 2,028,969 $ 2,088,774 $ 2,063,622 $ 1,877,036

Source: State Board of Equalization, Taxable Sales in California.

Construction

Table B-6 summarizes building activity in the City from 2005 through 2009.

Table B-6 CITY OF SAN BUENAVENTURA Building Permit Valuations

2005 2006 2007 2008 2009 Residential Single Family $ 59,518,235 $19,933,413 $ 41,048,610 $20,272,773 $ 2,280,680 Multi-Family 44,662,300 5,312,050 45,894,040 21,049,532 0 Alteration/Additions 15,337,045 16,766,772 13,382,855 10,679,966 8,924,585 Total $119,517,580 $42,012,235 $ 100,325,505 $52,002,271 $11,205,265

Non-Residential New Commercial $ 13,052,220 $ 2,352,000 $ 9,748,000 $ 0 $ 2,608,827 New Industry 691,400 5,024,300 0 0 0 Other(1) 12,800,292 3,427,626 3,105,492 4,673,530 1,870,786 Alteration/Additions 10,746,248 19,839,908 25,281,383 17,586,035 7,536,600 Total $ 37,290,160 $30,643,834 $ 38,134,875 $22,259,565 $12,016,213

Total Single Family Units 275 86 150 65 9 Multi-Family Units 297 35 255 61 0 Total 572 121 405 126 9

(1) Includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings, residential garages, public works and utilities buildings and non-residential alterations and additions. Source: Construction Industry Research Board.

B-4 Agriculture

Agricultural data is compiled for the County rather than for the City alone. The County consistently ranks among the top ten counties in California and among the top fifteen nationwide in terms of the value of its agricultural production, and is one of the state’s top producers of lemons, strawberries, celery, lettuce and oranges. Table B-7 indicates the value of agricultural production for the County for 2004 through 2008.

Table B-7 COUNTY OF VENTURA Value of Agricultural Products (in thousands of dollars)

Crop 2004 2005 2006 2007 2008 Fruit & Nut $ 740,039 $ 652,777 $ 755,700 $ 752,138 $ 823,464 Vegetable Crops 354,514 330,269 426,659 442,220 427,742 Livestock & Poultry 1,942 2,150 4,775 9,006 6,853 Apiary Products 362 509 431 640 463 (Beekeeping Products) Nursery Stock 222,514 213,661 263,890 292,989 298,690 Cut Flowers 65,663 51,751 52,456 48,646 51,297 Field Crops 2,270 1,193 1,677 1,624 2,580 Timber 71 62 16 17 10 Biological Control 2,337 1,999 2,570 2,718 2,148 Total $ 1,389,452 $ 1,225,109 $ 1,508,174 $ 1,549,998 $ 1,613,247

Source: County of Ventura, Department of Agriculture, Agricultural Crop Reports, 2004, 2005, 2006, 2007 and 2008.

Transportation

The City is served by all major modes of transportation. Both U.S. Highway 101 and State Highways 126 and 33 pass through the City, linking it with the Los Angeles metropolitan area and Santa Barbara County. Rail passenger services are provided by AMTRAK and Metrolink, which has a station in the City. Two trains daily pass through each direction and stop at the Ventura station. Southern Pacific Railroad provides freight rail service to the City. Bus services are provided by South Coast Area Transit and Ventura Intercity Transit Authority.

Utilities

The City is a full service City, providing sewer and water services. Southern California Edison provides electricity. The Gas Company of Southern California provides natural gas. Verizon provides local telephone services. Cable Television services are provided by Adelphia and Verizon Americast. Refuse service is provided by E.J. Harrison & Sons and Ventura Rubbish.

Education

The Ventura Planning Area has 17 elementary, four middle schools and five senior high schools, plus several parochial and private schools. Ventura Community College has an enrollment of over 12,300 students. The 99.7-acre campus is located on Telegraph Road between Day Road and Ashwood Avenue. Ventura College currently offers degree and certificate programs. In addition, two campuses of the University of California, Santa Barbara (UCSB) and Los Angeles (UCLA), two campuses of the California State University, Channel Islands (CSUCI) and Northridge (CSUN) and two private universities, Pepperdine University and California Lutheran University, are within a fifty minute drive.

B-5 Recreation

Ventura offers its residents a wide range of recreation facilities. The City boasts several beach parks such as Seaside Park Beachfront which enjoys a reputation as one of the area’s most popular surfing and windsurfing beaches and it is connected with the Ventura Pier by a scenic landscaped Promenade walkway and the Omer Rains Bike Trail. Marina Park is 15 acres of beachfront located next to the Ventura Harbor. Harbor Cove Beach, just across the harbor from Marina Park, is considered to be the City’s safest swimming beach, protected from strong currents by a jetty and the marina. Next to Harbor Cove Beach is the Channel Islands National Park Headquarters. The City has several historical sites such as the Olivas Adobe Park, the Ortega Adobe Historic Residence and the San Buenaventura Mission. In addition, the City is home to the Albinger Archaeological Museum and the Ventura County Museum of History and Art. The City has several scenic parks including Arroyo Verde Park, Grant Park and Figueroa Mall Historical Rose Garden. The City also offers several sports oriented parks which include facilities tennis courts, softball/baseball fields, basketball courts, sand volleyball courts, soccer/football field space children’s play areas, concessions and picnic facilities. The City has established miles of on and off-street bicycle paths while maintaining trails that stretch along the coastline for bicyclists, runners and joggers as part of the Pacific Coast Bike Trail.

The City owns two golf courses: Buenaventura Golf Course and Olivas Links Golf Course. Buenaventura Golf Course is an 18-hole, championship course (Par 72) with a scenic mixture of tree-lined fairways, eight lakes and an abundance of challenging sand bunkers. Olivas Links Golf Course is conveniently located near the Ventura Harbor and appeals to the player who appreciates a traditional 18-hole, championship course with a beautifully landscaped layout featuring broad fairways and expansive greens. This 6,500-yard course (Par 72) is accented by a combination of well-placed holes and sand bunkers and seven lakes.

B-6 APPENDIX C

INDEPENDENT AUDITOR’S REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2009

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     City of San Buenaventura Comprehensive Annual Financial Report For the year ended June 30, 2009

Table of Contents

INTRODUCTORY SECTION Page

Title Page Table of Contents...... i Letter of Transmittal ...... v GFOA Certificate of Achievement for Excellence in Financial Reporting...... viii Directory of City Officials ...... x Organizational Structure ...... xi

FINANCIAL SECTION

Independent Auditor’s Report...... 1

Management’s Discussion and Analysis (unaudited)...... 3

Basic Financial Statements:

Government-Wide Financial Statements: Statement of Net Assets...... 16 Statement of Activities...... 17

Fund Financial Statements: Governmental Fund Financial Statements: Balance Sheet ...... 19

Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets...... 21

Statement of Revenues, Expenditures and Changes in Fund Balances ...... 22

Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities ...... 24

Proprietary Fund Financial Statements: Statement of Net Assets ...... 25 Statement of Revenues, Expenses and Changes in Net Assets ...... 26 Statement of Cash Flows...... 27

Fiduciary Fund Financial Statements: Statement of Fiduciary Assets and Liabilities...... 28

i City of San Buenaventura Comprehensive Annual Financial Report For the year ended June 30, 2009

Table of Contents

FINANCIAL SECTION, Continued Page

Basic Financial Statements, Continued:

Index to Notes to Basic Financial Statements ...... 29 Notes to Basic Financial Statements...... 31

Required Supplementary Information (unaudited):

Budgetary Information...... 75 General Fund...... 76 Gas Tax Special Revenue Fund ...... 77 Park and Recreation Special Revenue Fund...... 78 Defined Benefit Pension Plan...... 79

Supplementary Information:

Major Governmental Funds: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: Certificates of Participation Debt Obligation Debt Service Fund...... 80

Non-Major Governmental Funds: Combining Balance Sheet...... 81 Combining Statement of Revenues, Expenditures and Changes in Fund Balances...... 83

Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual:

Supplemental Law Enforcement Services Special Revenue Fund...... 85 Law Enforcement Special Revenue Fund...... 86 Public Art Special Revenue Fund ...... 87 Downtown Parking Special Revenue Fund ...... 88 Maintenance Assessment District Special Revenue Fund ...... 89 Street Lighting Special Revenue Fund...... 90 Municipal Improvement Revenue Bonds Debt Service Fund ...... 91 Redevelopment Agency Debt Service Fund ...... 92

Internal Service Funds: Combining Statement of Net Assets...... 93 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets ...... 95 Combining Statement of Cash Flows ...... 97

ii City of San Buenaventura Comprehensive Annual Financial Report For the year ended June 30, 2009

Table of Contents, Continued

FINANCIAL SECTION, Continued Page

Basic Financial Statements, Continued:

Fiduciary Funds: Statement of Fiduciary Assets and Liabilities ...... 99 Statement of Changes in Assets and Liabilities ...... 100

STATISTICAL SECTION (unaudited)

Index to Statistical Section ...... 101

Statistical Section:

Financial Trends A. Net Assets by Component – Last Eight Fiscal Years...... 103 B. Changes in Net Assets – Last Eight Fiscal Years ...... 105 C. Fund Balances of Governmental Funds – Last Eight Fiscal Years...... 109 D. Changes in Fund Balances of Governmental Funds – Last Eight Fiscal Years...... 111

Revenue Capacity A. Assessed Value and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years . 113 B. Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years...... 114 C. Principal Property Taxpayers – Current Year and Ten Years Ago...... 116 D. Property Tax Levies and Collections – Last Ten Fiscal Years ...... 117

Debt Capacity A. Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ...... 118 B. Ratio of General Bonded Debt Outstanding – Last Ten Fiscal Years ...... 120 C. Direct and Overlapping Debt – June 30, 2009...... 121 D. Legal Debt Margin Information – Last Ten Fiscal Years ...... 122 E. Pledged Wastewater Revenue Coverage – Last Ten Fiscal Years...... 123 F. Pledged Water Revenue Coverage – Last Ten Fiscal Years ...... 124

iii City of San Buenaventura Comprehensive Annual Financial Report For the year ended June 30, 2009

Table of Contents

STATISTICAL SECTION (unaudited) Page

Statistical Section, Continued:

Demographic and Economic Information A. Demographic and Economic Statistics – Last Ten Calendar Years ...... 125 B. Full-Time City Employees by Function – Last Ten Fiscal Years ...... 126 C. Principal Employers – Current Year and Ten Years Ago ...... 127 D. Investment Portfolio Statistics – Last Ten Fiscal Years ...... 128

Operating Information A. Operating Indicators by Function – Last Ten Fiscal Years ...... 129 B. Capital Assets Statistics by Function – Last Ten Fiscal Years...... 130 C. Wastewater Service Rates – Last Ten Fiscal Years...... 131 D. Wastewater Customers – Current Year and Six Years Ago ...... 132 E. Water Sold by Type of Customer – Last Ten Fiscal Years...... 133 F. Water Rates – Last Ten Fiscal Years ...... 134 G. Water Customers – Current Year and Six Years Ago...... 135

Annual Continuing Disclosure Requirements:

A. Public Facilities Financing Authority – Summary of Certificates of Participation ...... 136 B. 2002 COP, Series D – Buenaventura and Olivas Links Historic Operating Results ...... 137 C. 2004 COP, Wastewater Revenue – Historic Operating Results ...... 139 D. 2004 COP, Wastewater Revenue – Historic Usage, Connections, and Flow Charges...... 140 E. 2004 COP, Wastewater Revenue – Top Ten Customers...... 141 F. 2004 COP, Water Revenue – Historic Operating Results ...... 142 G. 2004 COP, Water Revenue – Historic and Projected Water Supply...... 143 F. 2004 COP, Water Revenue – Historic Service Charges and Sales Revenues ...... 144 G. 2004 COP, Water Revenue – Top Ten Customers...... 145 H. 2004 COPs, Water and Wastewater – Utility Rates ...... 146

iv November 25, 2009

Honorable Mayor and City Councilmembers, and the Citizens of the City of San Buenaventura:

City policy requires the annual publication of a complete set of audited financial statements. This Comprehensive Annual Financial Report (CAFR) is published to fulfill that requirement for the fiscal year ended June 30, 2009.

Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements by reviewing each of the following categories: Achievement of business objectives and goals Effectiveness and efficiency of operations Reliability of financial reporting Compliance with applicable laws and regulations Safeguarding of assets

Macias Gini & O’Connell, LLP, has issued an unqualified (“clean”) opinion on the City’s financial statements for the year ended June 30, 2009. The independent auditor’s report is located at the front of the financial section of this report.

The Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it.

Profile of the Government

The City of San Buenaventura, generally referred to as the City of Ventura, is located on the southern California coastline, approximately 62 miles northwest of the City of Los Angeles and 364 miles south of the City of San Francisco. The city limits cover approximately 36 square miles.

The City was incorporated in 1866 and has been the County seat since 1873. The City is a charter city with a council-manager form of government. A seven-member City Council is elected at large for four-year alternating terms at elections held every two years. The Mayor of the City is the presiding officer of the City Council and is selected by the City Council from its members to serve a two-year term. The City Manager, appointed by the City Council for an indeterminate term, acts as chief executive officer in carrying out the policies of the City Council.

The City’s first charter was adopted in 1932. The present charter was adopted by election on November 6, 1973, and approved by the California legislature in January 1974 and was amended on November 7, 1995. The City has approximately 676 full time employee positions authorized in the fiscal year 2008-09 budget. City services include police and fire protection, public works, community development, community recreational services, and water/wastewater services.

v                .       The Council is required to adopt a final budget by no later than the close of the fiscal year. The annual budget serves as the foundation for the City’s financial planning and control. The budget is prepared by fund, department and project. City department heads may make transfers within their department. All transfers between departments require approval of the City Council.

Local Economy

The City’s ongoing commitment to an economic development strategy continues to achieve results with an emphasis on generating both private and public sector value, both of which build community stability and wealth. The City’s revenue base is a blend of business and commercial, light and heavy industrial, and residential uses. The City’s economy revolves chiefly around the County government facilities, financial services, retail operations, and a well-developed food processing industry. Government services employ over 12,450 workers, providing relative stability to the City's employment base.

The University of California Santa Barbara (UCSB) Economic Forecast Project recently published a study on the City’s economic outlook. The study indicates that the San Buenaventura metro area is experiencing economic difficulties that are typical for the time. There appears to be nothing that sets aside the City of Ventura, either in a positive or negative direction, compared to other Coastal California Cities. The economy’s decline is projected to be at –3.9 percent during 2010.

The City’s job growth is projected to be negative at –1.8 percent. Salary growth is expected to be negative as well at –4.0 percent in 2009.

For 2009, unemployment in the City was at 9.0 percent. The annual average 2009 countywide unemployment rate was 9.9 percent. The countywide rate is below the California average of 11.4 percent.

City of Ventura retail sales declined in 2008 by 4.6 percent. The projected decline in retail sales for 2009 is 6.6 percent and a decline of .4 percent is projected for 2010 which, although not positive is at least headed in the right direction.

Median home prices decreased in both the City and County. The 2009 median home price in the City was $373,300. Demand for housing continues and comes from both local and external sources; internally from natural population growth and externally from Santa Barbara workers who find Santa Barbara unaffordable, and Los Angeles County workers who desire to live in upscale East Ventura County. City real median home prices decreased 33.1 percent in 2008. These prices are projected to continue to decline in 2009 with a slight increase anticipated in 2010. The projected decrease in median home prices for 2009 is 7.9 percent.

The 2008 residential vacancy rate is 3.2 percent for both owner and rental units. Over two-thirds of the City's housing was built in the last 35 years with the remaining one-third built before 1960. Many of the older neighborhoods have homes in the Victorian, California Craftsman, and Mission Revival architectural styles, with unique characteristics fostering reinvestment and revitalization. The City continues to actively pursue strategies to enhance established neighborhoods and renovate the housing stock.

The level of taxes, fees, and charges for services (including development-related mitigation fees) will have a bearing on the City's competitive ability to encourage retail, office, residential, and industrial development to locate within the jurisdiction. The City places significant emphasis on encouraging economic development with higher paying jobs.

In addition to community-related economics, i.e., business, employment, and real estate indices, the City’s finances and operations are directly impacted by national and regional economic trends. The return on interest earnings was 3.62 percent for the fiscal year ended June 30, 2009, which is a decrease from prior year by a percentage point.

vi Long-Term Financial Planning

The City will continue with the projects identified in the six-year Capital Improvement Projects Plan. Major projects include the following: Olivas Adobe Restoration $ 2.2M Promenade Beach Improvements $ 3.6M Saticoy Well $ 3.9M Wasterwater Plant Upgrades $21.4M

Relevant Financial Policies

The general fund maintains $12 million designated for contingencies per the City’s financial policies.

In addition, it is the City’s policy to ensure that adequate sustainable long-term revenues are available to support any new debt issues.

Awards and Acknowledgements

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its CAFR for the fiscal year ended June 30, 2008. The following is the suggested language published by the GFOA:

“The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a governmental unit must have published an easily readable and efficiently organized CAFR, whose contents conform to program standards. The Comprehensive Annual Financial Report must satisfy both generally accepted accounting principles and applicable legal requirements.”

The Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to program requirements and will be submitted to the GFOA.

I would like to thank the management and staff of the Finance and Technology Department for their contributions to the preparation of this year’s CAFR in accordance with the GASB 34 and 44 financial reporting models. In addition, I would like to thank the staff of Macias Gini & O’Connell, LLP, the City’s independent auditors, for their proactive assistance and advice. The City Manager is to be commended for his interest in the Finance and Technology Department’s progress in building the City’s financial systems to support daily operations and allow for new opportunities.

The CAFR is available in the City Council’s reading file.

Respectfully submitted,

Jay Panzica Chief Financial Officer

vii .         

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 

 

     viii a o l 11t e g e n 111 r e e v evi Officers e i hi adh c g. a o t Ach i11 ance 1 of ed 1111il Fin por e 11t r ate 11t e e judg e ia/ r c rtifi c m111 a e v s vem111 Ce go A ji11a11 Go port ir 111 e e e r e g. th th tin ial by m111 in c d e epo,· f? gove nt ntaf e finan e s in e ia/ c pr tr11111 s s i a111111af i11 award nt Fi11a11 e t e as es m i11 ~/.~ ACHIEVEMENT h d e e v e g whos t e hi nc s hi e e c fl 1/J A unit s t xce designa ~ 111 l e (:,~ for porting m111 e 2009 11/ l? represen e , California l 111 gove af nd e 2 ci a individ11a/ 11 tor ose e hiev c Officer Association th c i11a th ards F A o o t t Dire this md of of 11 ed e stc o t September nt ti to ca utive ram award e Panzica t rtifi e prese og s REPORTING Da Exec i Th Ce pr Associa presents Financial Officers Buenaventura, Canada Jay San Chief and of Finance City States FINANCIAL United Government OF the of The WARD ® A

ix   .      

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          

     .  .      . .               

  . 

.  . . 

 . .   . .  .    .  

      . .   .        

  . .

x   .      

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 .           

 

     . 

. .

. 

. .           .       

xi   .      

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 

     The Honorable City Council of the City of San Buenaventura, California

  

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of San Buenaventura, California as of and for the year ended June 30, 2009, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of City of San Buenaventura’s management. Our responsibility is to express opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of San Buenaventura, California as of June 30, 2009, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated November 25, 2009 on our consideration of the City of San Buenaventura internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

1 The management’s discussion and analysis and other required supplementary information identified in the accompanying table of contents are not a not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying introductory section, the major fund budgetary comparison schedules and the combining and individual non-major fund financial statements and schedules listed as supplementary information in the table of contents, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The major fund budgetary comparison schedules and the combining and individual non-major fund financial statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.

Certified Public Accountants Los Angeles, California

November 25, 2009

2    . 

  .      

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 

         CITY OF SAN BUENAVENTURA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2009

As management of the City of San Buenaventura (City), we offer readers of the City’s basic financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2009. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our transmittal letter, which can be found on pages iv-vi of this report. All amounts, unless otherwise indicated, are expressed in thousands of dollars.

FINANCIAL HIGHLIGHTS

Government-Wide

The net assets of the City exceeded the liabilities at the close of fiscal year 2008-09 by $386.8 million. Of this amount, $122.4 million may be used to meet the City’s ongoing general fund, grant funds, capital project funds, and business-type activities.

The City’s total net assets, including all funds, decreased by $8.1 million compared to last fiscal year.

The City’s total net long-term liabilities increased by $5.7 million or 4.1 percent during fiscal year 2008-09.

Fund Basis

The General Fund reported a decrease of $4.9 million in fund balance because total revenues and transfers in (inflows) of $92.2 million were less than total expenditures and transfers out (outflows) of $97.1 million.

As of June 30, 2009, the unreserved fund balance for the General Fund was $23.4 million. This balance includes designated General Fund emergency reserves of $12 million as designated by the City’s Financial Policies, $7 million for operating purposes and $4.4 million of undesignated reserves. Additional information on the City’s General Fund balances is located in note 11A on page 68 of this report.

As of June 30, 2009, the City’s other governmental funds, excluding the General Fund, reported combined ending fund balances of $31.2 million of net unreserved fund balance.

3 OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: government- wide financial statements, fund financial statements, and notes to the basic financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Government-Wide Financial Statements

The Government-Wide Financial Statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business.

The Statement of Net Assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The Statement of Activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (such as, revenues pertaining to uncollected taxes, or expenses pertaining to earned, but unused, vacation and sick leave).

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities), from other functions that are intended to recover all or a significant portion of the costs through user fees and charges (business-type activities). The governmental activities of the City include those related to general government, finance and technology, human resource management, community development, community services, public safety (police and fire), and public works. Business-type activities of the City include those related to water, sewer and sanitation (wastewater), and golf course management operations.

The government-wide financial statements include not only the City of San Buenaventura (known as the primary government), but also a legally separate Public Facilities Financing Authority and a legally separate Redevelopment Agency. The governing board of each of these entities is comprised entirely of members of the City Council, and their financial activity has been included as an integral part of the primary government.

The government-wide financial statements are located on pages 16-18 of this report.

4 Fund Financial Statements

A fund is a grouping of related accounts used to maintain control over resources segregated for specific activities or objectives. The City, as other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the City’s funds may be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements; however, unlike the government- wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements.

Since the focus of governmental funds is narrower than that of government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing this comparison, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances, provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City maintains several individual governmental funds and information is presented separately in the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances for the following: the General Fund, Gas Tax Special Revenue Fund, Park and Recreation Special Revenue Fund, Certificates of Participation Debt Obligation Debt Service Fund, Capital Improvements Capital Projects Fund, and Redevelopment Agency Capital Projects Fund. Each of these funds is considered a major fund. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the non-major governmental funds is provided in the form of combining statements, located in the supplementary information section of this report.

The City adopts an annual appropriated budget for its funds. A budgetary comparison is provided for the City’s General Fund, Gas Tax Fund and Park and Recreation Special Revenue Funds to demonstrate compliance with this budget.

Proprietary funds - The City maintains two different types of proprietary funds: Enterprise and Internal Service.

Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its Water, Wastewater and Golf Course. Water and Wastewater are classified as major funds. The Golf Course is classified as a non-major fund.

The basic proprietary fund financial statements are located on pages 25-27 of this report.

Internal Service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City of San Buenaventura uses internal service funds to account for information technology services, fleet services, building maintenance, reproduction services, workers’ compensation, employee fringe benefits and risk management.

5 Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements in the supplementary information section of this report on pages 93-98.

Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the accompanying government-wide financial statements since the resources of those funds are not available to support the City’s programs. The accounting system used for the fiduciary funds is similar to what is used for the proprietary funds. The fiduciary fund financial statements are located in the basic financial statements section – page 28 of this report.

Notes to the Basic Financial Statements

The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements are located on pages 31-74 of this report.

Other Information

In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s progress in funding the obligation to provide pension benefits to City employees. Required supplementary information is located on pages 75-79 of this report.

The combining statements, referred to earlier in connection with non-major governmental funds and internal service funds, are presented following the required supplementary information on pensions. Combining statements are located on pages 81-84 of this report.

6 GOVERNMENT-WIDE FINANCIAL ANALYSIS

Analysis of Net Assets

As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets exceeded liabilities by $386.8 million at the close of the most recent fiscal year.

The largest portion of the City’s net assets (57.2 percent) reflects its investment in capital assets (e.g., land, buildings, infrastructure, machinery, and equipment), less any related debt used to acquire those assets that is outstanding. The City uses these capital assets to provide services to citizens and consequently, these assets are not available for future spending. Although the City’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since capital assets alone may not be used to liquidate these liabilities.

CITY OF SAN BUENAVENTURA-Net Assets (In Thousands)

Business-Type Governmental Activities Activities Total 2009 2008 2009 2008 2009 2008 Assets: Current and Other Assets $ 137,105 $ 137,587 $ 90,338 $ 90,708 $ 227,443 $ 228,295 Capital Assets 142,906 141,518 194,969 196,275 337,875 337,793 Total Assets 280,011 279,105 285,307 286,983 565,318 566,088

Liabilities: Current Liabilities 31,701 29,757 6,298 6,543 37,999 36,300 Long-Term Liabilities 77,545 70,264 63,007 64,721 140,552 134,985 Total Liabilities 109,246 100,021 69,305 71,264 178,551 171,285

Net Assets:

Invested In Capital Assets, Net of related Debt 73,302 80,360 148,065 129,658 221,367 210,018 Restricted 35,093 38,634 7,864 58,902 42,957 97,536 Unrestricted 62,370 60,090 60,073 27,159 122,443 87,249 Total Net Assets $ 170,765 $ 179,084 $ 216,002 $ 215,719 $ 386,767 $ 394,803

The unrestricted net assets in all City funds are $122.4 million and may be used to meet the government’s ongoing obligations to citizens and creditors.

At June 30, 2009, the City was able to report positive balances in all three categories of net assets, for the government as a whole and for business-type activities. The same situation held true for the prior fiscal year.

7 The City’s net assets decreased $8.1 million during the fiscal year concluded June 30, 2009. This decrease was due to operations in the governmental and business-type funds. Last fiscal year, net assets grew by $2.4 million.

CITY OF SAN BUENAVENTURA-Change In Net Assets (In Thousands)

Governmental Activities Business Activities Total 2009 2008 2009 2008 2009 2008 Revenues: Program Revenues Charges for Service $ 17,092 $ 15,779 $ 42,105 $ 41,722 $ 59,197 $ 57,501 Operating Grants 11,704 12,397 21 32 11,725 12,429 Capital Grants 826 2,847 - - 826 2,847 General Revenue -- - - Taxes -- - - Property 21,207 23,784 - - 21,207 23,784 Sales 20,133 22,613 - - 20,133 22,613 Motor Vehicle License 8,481 8,308 - - 8,481 8,308 Other 18,566 18,397 - - 18,566 18,397 Investment Earnings/ (loss) (3,332) 3,329 2,678 2,574 (654) 5,903 Other (38) 4 - - (38) 4 Total Revenue $ 94,639 $$ 107,458 $$ 44,804 $$ 44,328 $$ 139,443 $$ 151,786

Expenses: General Government $ 5,385 $ 8,326 $ 5,385 $ 8,326 Human Resources 2,105 817 2,105 817 Administrative Services 7,785 5,708 7,785 5,708 Community Development 6,671 8,294 6,671 8,294 Community Services 7,593 7,913 7,593 7,913 Public Safety - Police 31,303 28,193 31,303 28,193 Public Safety - Fire 19,799 18,633 19,799 18,633 Public Works 20,290 20,916 20,290 20,916 Interest on Long Term Debt 3,996 8,984 3,996 8,984 Wastewater - - 16,135 15,512 16,135 15,512 Water - - 21,686 20,433 21,686 20,433 Golf Course Operations - - 4,732 5,624 4,732 5,624 Total Expenses $ 104,927 $ 107,784 $ 42,553 $ 41,569 $ 147,480 $ 149,353

Increase (Decrease) In Net Assets$ (10,288) $ (326) $ 2,251 $ 2,759 $ (8,037) $ 2,433

Transfers 1,969 1,038 (1,968) (1,038) - - Change In Net Assets $ (8,319) $ 712 $ 283 $ 1,721 $ (8,037) $ 2,433

Net Assets - Beginning 179,084 177,589 215,719 213,998 394,803 391,587 Prior Period Adjustment - 783 - - - 783 Net Assets - Ending $ 170,765 $ 179,084 $ 216,002 $ 215,719 $ 386,766 $ 394,803

8 Changes in the City’s Investment Portfolio

At June 30, 2009, Ventura’s total portfolio held a par value of $168.6 million, of which $142.5 million is the City’s portion and $26.1 million is the trustees held monies related to debt portions. In September 2008, the financial markets went into crisis mode and for the first time in history, Ventura and many other local agencies became a victim of Wall Street mismanagement. Specifically, Ventura holds two corporate notes issued by corporations that were highly rated and considered investment quality when acquired. They are as follows: a $5 million Medium Term Note in Lehman Brothers Holdings, Inc. and a $5 million Medium Term Note in Washington Mutual. On September 15, 2008 Lehman Brothers Holdings, Inc. declared bankruptcy and shortly afterwards Washington Mutual followed suit.

The City has since filed suit against Lehman and Washington Mutual and its principals, and has hired a bankruptcy counsel to represent the city’s interest in both cases through the bankruptcy courts. Furthermore, the City has joined forces with other cities, districts, states and agencies in a nation-wide effort to actively pursue relief from the “Troubled Assets” identified in Section 3 (9) of the Emergency Economic Stabilization Act of 2008.

These two securities were earmarked for the capital improvement program and other uses in the future and were not immediately needed for daily operations. The City decided to retain the securities, but to substantially mark down their value to following amounts: Lehman Brothers: $753,150 and Washington Mutual: $500.. These values are expected to increase in the future as the lawsuits proceed, however this expected worse-case valuation is being used at this time.

In the discussions that follow, it is noted in several instances that the fund balances were affected by the write down of these securities.

Governmental Activities

Public Safety/Police is the largest department at 29.8 percent of total governmental expense, followed by Public Works – 19.3 percent, Public Safety/Fire – 18.9 percent, Finance and Technology – 7.4 percent, Community Services – 7.2 percent, Community Development – 6.4 percent, General Government – 5.1 percent, Interest on Long Term Debt – 3.8 percent, and Human Resources – 2.0 percent.

The governmental activities’ chart below illustrates operating revenues by source.

Revenues by Source - Governmental Activities ($94.6 Million)

Investment Earnings Charges for Service 3% Other Taxes 17% 18% Operating and Capital Grants 12% Motor Vehicle License 8%

Sales Tax Property Taxes 20% 22%

9 Sales, property, motor vehicle license, and other taxes are general revenues used to support overall government functions. These sources account for $68.3 million or 72.3 percent of total governmental revenue. Operating and capital grants make up 13.2 percent and charges for services amount to 18.1 percent.

The City’s net assets for governmental activities reflected a decrease of approximately $8.3 million. Some key factors include the following:

Investment earnings decreased approximately $6.6 million due to lower investment earnings and the substantially marked down value of the Lehman and Washington Mutual medium term notes held in the investment portfolio.

Sales, property, and other tax revenues decreased approximately $4.7 million from the previous year due to slow down in new home construction, housing turnover and slow down in the economy as a whole.

Remaining revenues decreased approximately $1.5 million from the previous year due to the downturn in the economy.

Expenses decreased approximately $2.9 million from the previous year due in part to salary reductions in last three months of the fiscal year.

Business-Type Activities

The business-type chart below shows revenues by source. The City’s Water Enterprise is the largest business-type operation, followed by Wastewater with fees for services mainly funding the two utilities.

Business-type activities increased the City’s overall net assets by $300 thousand. Key element is an increase in operations in the Water and Wastewater Funds.

Revenues by Source - Business-Type Activities ($44.8 Million)

Interest Earnings & Golf Course Operating Grants 11% 6%

Wastewater 36% Water 47%

10 GOVERNMENT FUNDS FINANCIAL ANALYSIS

As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements.

Governmental Funds

The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

At June 30, 2009, the City’s governmental funds reported a combined ending fund balance of $80 million, an increase of $1.4 million in comparison with the prior year. The increase was mainly due to the RDA bond issuance. Of the total fund balance of $80 million, $54.6 million is the net unreserved fund balance.

The following are the major funds the City considered important to financial statement users.

General Fund

The General Fund is the City’s chief operating fund. It showed a decrease of $4.9 million in fund balance for fiscal year 2008-09. At June 30, 2009, the unreserved fund balance of the General Fund was $23.4 million, while total fund balance reached $33.2 million. As a measure of the general fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total expenditures. Unreserved fund balance represents 26.1 percent of total general fund expenditures, excluding transfers and loss on investments, while total fund balance represents 37.1 percent of that same amount. This decrease was due to 1) lower investment earnings and the substantially marked down value of the Lehman and Washington Mutual medium term notes held in the investment portfolio, 2) imbalance in operating expenditures versus revenues of $1.5 million and 3) decrease in RDA interest earnings due to an accelerated payback of the line of credit which improved our total outstanding debt, however reduced interest earnings transferred to General Fund of $400 thousand.

Gas Tax Special Revenue

The Gas Tax Special Revenue Fund showed a decrease of $919 thousand in fund balance for fiscal year 2008-09. This decrease was due to lower investment earnings and the substantially marked down value of the Lehman and Washington Mutual medium term notes held in the investment portfolio.

Park and Recreation Special Revenue Fund

The Park and Recreation Special Revenue Fund experienced a decrease of $925 thousand in fund balance for fiscal year 2008-09. This decrease was mainly due to lower investment earnings and the substantially marked down value of the Lehman and Washington Mutual medium term notes held in the investment portfolio and the expenditures for the Community Park Sports field.

Certificates of Participation Debt Service

This fund experienced a decrease of $333 thousand in fund balance for fiscal year 2008-09. This decrease was mainly due to the transfer of funds to other funds for capital projects.

11 Capital Improvements Capital Projects Fund

The Capital Improvements Capital Projects Fund showed a decrease of $973 thousand in fund balance for fiscal year 2008-09. This decrease was mainly due to lower investment earnings and the substantially marked down value of the Lehman and Washington Mutual medium term notes held in the investment portfolio.

Redevelopment Agency Capital Projects

The Redevelopment Agency Capital Projects Fund experienced an increase of $8.7 million in fund balance for fiscal year 2008-09. This increase was due mainly to proceeds from a bond issuance.

Proprietary Funds

The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.

The net assets of the Water, Wastewater and Golf Funds were $110.7 million, $88.7 million and $16.6 million, respectively. The total growth in net assets for Water and Wastewater funds was $1.1 million and $376 thousand, with a decline in net assets for the Golf fund of $1.2 million.

Internal Service Funds

The internal service funds, which are used to finance and account for goods and services provided internally among City departments, were in a positive position at the close of the fiscal year.

Fiduciary Funds

The City maintains fiduciary funds for the assets of the Portobello Assessment District Fund in which the assets are $20 thousand.

GENERAL FUND BUDGETARY HIGHLIGHTS

During the year, there was a $6.5 million increase in appropriations between the original and final amended budget for services and supplies. Following are the main components:

Revenue $2.8 million increase in transfers from other funds

Expenditures $2.9 million increase due to rollover of prior year encumbrances and council approved projects $600 thousand increase due to VTA business incubator project

Significant budgetary variances between final amended budget and actual results were as follows: Revenues for taxes were less than anticipated by $3.8 million; charges for services were $1.7 million less than anticipated and licenses and permit revenues were $467 thousand less than anticipated.

12 Expenditures for Public Works were $2.6 million less due to a combination of salary savings and deferred mobility plan and storm water compliance projects. Expenditures for Public Safety – Police were $1.4 million less due to salary savings. Finally, expenditures for General Government were $1.5 million less due to less than anticipated outside professional services.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2009, amounts to $337.9 million (net of accumulated depreciation). This investment in capital assets includes land, buildings and related systems, improvements, machinery and equipment, park facilities, roads, highways, and bridges.

Major capital asset events during the current fiscal year included the following capital expenditures: CI TY OF SAN BUENAVENTURA - Capi tal Assets (Gross) (In Thousands)

Governmental Business-Type Activities Activities Total

2009 2008 2009 2008 2009 2008 Land $ 19,102 $ 19,102 $ 497 $ 484 $ 19,599 $ 19,586 Water Rights - - 1,222 1,222 1,222 1,222 Buildings & improvements 64,873 64,089 70,179 69,412 135,052 133,501 Improvements other than buildings 18,579 17,197 62,139 62,138 80,718 79,335 Machinery and equipment 48,324 44,181 131,001 129,550 179,325 173,731 Infrastructure 101,318 93,286 1,615 1,496 102,933 94,782 Construction in progress 5,731 11,965 12,554 7,739 18,285 19,704 Total $ 257,927 $ 249,820 $ 279,207 $ 272,041 $ 537,134 $ 521,861

$3.5 million for the Upgrade VTA Wastewater Facility

$939 thousand for Downtown Waterline Replacement

$889 thousand for Community Park Sports Fields

$560 thousand for ASM – Island Neighborhoods

Additional information on the City’s capital assets is located in Note 6A to the basic financial statements on pages 52-54 of this report.

13 Long-Term Debt

At the end of the current fiscal year, the City had total net long-term outstanding obligations of $148.2 million. Of this amount, $65.1 million relates to revenue bonds and other obligations of the City’s business enterprises. The balance relates to revenue bonds, tax allocation bonds, notes payable, self-insurance, and employee benefit obligations for the City’s governmental activities.

CITY OF SAN BUENAVENTURA-Outstanding Debt (In Thousands)

Governmental Business-Type Activities Activities Total 2009 2008 2009 2008 2009 2008

Governmental Long Term Debt $ 83,135 $ 75,925 $- $- $ 83,135 $ 75,925 Revenue Bonds, Net - - 46,284 47,408 46,284 47,408 Safe Drinking Water Loan, net - - 18,807 19,209 18,807 19,209 Total $ 83,135 $ 75,925 $ 65,091 $ 66,617 $ 148,226 $ 142,542

The table does not include the capital leases of $852 thousand.

The City’s total debt increased by $5.7 million (excluding capital leases of $852 thousand) during the current fiscal year. Additional information on the City of San Buenaventura’s long-term debt is located in Note 9 to the basic financial statements on pages 57-66 of this report.

The City Charter states that the City shall not incur an indebtedness evidenced by general obligation bonds greater than 15 percent of the total assessed valuation of all real and personal property within the City. The level of debt is significantly below Charter requirements.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES

The poor economy was the main issue affecting the development of the fiscal year 2009-10 budget. The impact of the global economic downturn is affecting Ventura families, businesses and city government, most significantly in the generation of sales and property tax revenue. Instead of proceeding with a budget that relied on spending money the City does not have, the City Council directed staff to prepare a two-year plan to deal with the downturn in revenue, and reduce the spending level by more than $11 million, or 12 percent of the budget, to eliminate the projected gap between revenue and expenses. Using a long-range approach called “Budgeting for Outcomes”, all City-provided services were prioritized, with the highest priority going to public safety and rebuilding prosperity by promoting high-wage, high value jobs in the private sector. Lower-priority expenses and programs were reduced and/or eliminated, decreasing the General Fund workforce by 10 percent. In addition, all City staff agreed to at least a 5 percent reduction in compensation for a 15 month period. The budget effort produced a spending plan of approximately $85 million for a leaner and greener city organization redesigned to succeed despite these difficult economic times. The City remains committed to provide the very best municipal services within its means.

Charges for services and rates in general have increased to meet utility operating and maintenance expenses. Both the Water and Wastewater rates increased for the 2009-10 budget.

14 REQUESTS FOR INFORMATION

This financial report is designed to provide a general overview of the City of San Buenaventura’s finances for all those with an interest in the government’s finances. Questions concerning any of the information contained herein should be addressed to Jay Panzica, Chief Financial Officer, P.O. Box 99 - Room 101, Ventura, California 93002-0099, (805) 654-7812, or via E-mail at [email protected].

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     City of San Buenaventura Statement of Net Assets June 30, 2009

Governmental Business-Type Activities Activities Total ASSETS Current assets: Cash and investments $ 99,590,103 $ 39,891,003 $ 139,481,106 Investment in bonds 590,000 - 590,000 Accounts receivable, net 430,689 5,821,597 6,252,286 Interest receivable 733,374 - 733,374 Due from others 3,051,089 1,036,799 4,087,888 Due from other governments 4,840,365 - 4,840,365 Internal balances 882,907 (882,907) - Prepaid items 25,059 9,377 34,436 Inventory 405,825 - 405,825 Land and buildings held for resale 540,880 - 540,880 Total current assets 111,090,291 45,875,869 156,966,160 Noncurrent assets: Restricted cash and investments 6,207,579 19,918,914 26,126,493 Loans and notes receivable 10,796,981 - 10,796,981 Deferred charges - 1,119,289 1,119,289 State water line construction project - 23,424,266 23,424,266 Equity interest in SCAT 9,010,021 - 9,010,021 Capital assets Non-depreciable 24,833,341 14,273,812 39,107,153 Depreciable, net 118,072,753 180,694,992 298,767,745 Total capital assets 142,906,094 194,968,804 337,874,898 Total noncurrent assets 168,920,675 239,431,273 408,351,948 Total assets 280,010,966 285,307,142 565,318,108

LIABILITIES Current liabilities: Accounts payable 5,368,513 2,673,711 8,042,224 Accrued payroll liabilities 2,999,059 - 2,999,059 Interest payable 1,344,530 628,589 1,973,119 Due to other governments 3,011,723 481 3,012,204 Deposits held for others 11,879,071 767,521 12,646,592 Unearned revenue 799,405 - 799,405 Capital leases payable 177,192 143,531 320,723 Claims and judgments payable 2,356,251 - 2,356,251 Compensated absences payable 448,028 - 448,028 Long-term debt - due within one year 3,317,137 2,084,195 5,401,332 Total current liabilities 31,700,909 6,298,028 37,998,937 Noncurrent liabilities: Capital leases payable 531,577 - 531,577 Claims and judgments payable 4,863,344 - 4,863,344 Compensated absences payable 4,843,236 - 4,843,236 Long-term debt - due in more than one year 67,307,069 63,007,080 130,314,149 Total noncurrent liabilities 77,545,226 63,007,080 140,552,306 Total liabilities 109,246,135 69,305,108 178,551,243

NET ASSETS Invested in capital assets, net of related debt 73,301,931 148,065,102 221,367,033 Restricted for: Capital projects 28,388,944 6,132,770 34,521,714 Debt service 2,350,690 1,731,296 4,081,986 Community development 2,948,293 - 2,948,293 Special projects 1,404,844 - 1,404,844 Total restricted 35,092,771 7,864,066 42,956,837 Unrestricted 62,370,129 60,072,866 122,442,995 Total net assets $ 170,764,831 $ 216,002,034 $ 386,766,865

See Accompanying Notes to Basic Financial Statements. 16 City of San Buenaventura Statement of Activities For the year ended June 30, 2009

Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Total

Primary government: Governmental activities: General government $ 5,384,838 $ 864,588 $ - $ - $ 864,588 Human resources 2,104,947 147,832 - - 147,832 Finance and technology 7,784,466 2,002,324 198,239 - 2,200,563 Community development 6,671,042 946,668 4,480,449 - 5,427,117 Community services 7,593,435 2,422,566 305,943 - 2,728,509 Public safety - police 31,303,086 4,388,325 381,869 - 4,770,194 Public safety - fire 19,799,105 3,237,931 135,002 - 3,372,933 Public works 20,289,629 3,082,181 6,202,374 825,577 10,110,132 Interest on long-term debt 3,996,201 - - - -

Total governmental activities 104,926,749 17,092,415 11,703,876 825,577 29,621,868

Business-type activities: Wastewater 16,135,143 16,015,727 - - 16,015,727 Water 21,685,740 21,283,447 21,433 - 21,304,880 Golf course 4,732,020 4,805,842 - - 4,805,842

Total business-type activities 42,552,903 42,105,016 21,433 - 42,126,449

Total primary government $ 147,479,652 $ 59,197,431 $ 11,725,309 $ 825,577 $ 71,748,317

General Revenues: Taxes: Property taxes Sales taxes Utility users taxes Motor vehicle license - intergovernmental unrestricted Transient lodging taxes Franchise taxes Other taxes Total taxes

Investment earnings (loss) Gain (Loss) on sale of assets Miscellaneous Transfers:

Total general revenues and transfers

Change in net assets

Net assets - beginning of year

Net assets - end of year

See Accompanying Notes to Basic Financial Statements. 17 Net (Expense) Revenue and Changes in Net Assets

Governmental Business-Type Activities Activities Total

$ (4,520,250) $ - $ (4,520,250) (1,957,115) - (1,957,115) (5,583,903) - (5,583,903) (1,243,925) - (1,243,925) (4,864,926) - (4,864,926) (26,532,892) - (26,532,892) (16,426,172) - (16,426,172) (10,179,497) - (10,179,497) (3,996,201) - (3,996,201)

(75,304,881) - (75,304,881)

- (119,416) (119,416) - (380,860) (380,860) - 73,822 73,822

- (426,454) (426,454)

(75,304,881) (426,454) (75,731,335)

21,207,266 - 21,207,266 20,132,921 - 20,132,921 9,019,829 - 9,019,829 8,480,754 - 8,480,754 3,707,592 - 3,707,592 3,713,057 - 3,713,057 2,125,750 - 2,125,750 68,387,169 - 68,387,169

(3,332,065) 2,678,368 (653,697) (38,505) - (38,505) 206 - 206 1,968,407 (1,968,407) -

66,985,212 709,961 67,695,173

(8,319,669) 283,507 (8,036,162)

179,084,500 215,718,527 394,803,027

$ 170,764,831 $ 216,002,034 $ 386,766,865

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     City of San Buenaventura Balance Sheet Governmental Funds June 30, 2009

Major Funds Certificates of Gas Tax Park and Participation Capital General Special Recreation Debt Obligation Improvement Fund Revenue Special Revenue Debt Service Capital Projects ASSETS Cash and investments $ 34,153,592 $ 19,759,652 $ 5,455,301 $ - $ 7,117,723 Restricted cash and investments - - - 2,265,843 - Investment in bonds 590,000 - - - - Accounts receivable, net 154,252 3,393 - - - Interest receivable 733,374 - - - - Due from other funds 882,907 13,022 - - 62,116 Due from others 3,032,312 14,643 - - - Due from other governments 3,395,490 323,237 169,167 - 112,954 Prepaid items 6,359 - - - - Inventory 405,825 - - - - Loans and notes receivable 1,206,172 - - - - Land and buildings held for resale - - - - - Advances to other funds 5,994,297 - - - - Total assets $ 50,554,580 $ 20,113,947 $ 5,624,468 $ 2,265,843 $ 7,292,793

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 1,928,341 $ 852,705 $ 34,368 $ - $ 60,224 Due to other funds 2,396,413 - - 178,327 - Due to other governments 6,063 - - - - Deposits held for others 11,879,071 - - - - Advances from other funds - - - - - Deferred revenue 1,110,718 104,010 - - 53,120 Total liabilities 17,320,606 956,715 34,368 178,327 113,344 Fund balances (deficit): Reserved: Encumbrances 1,641,197 - - - 795,567 Petty cash 12,745 - - - - Advances to other funds 5,994,297 - - - - Prepaid items 6,359 - - - - Inventory 405,825 - - - - Assets held for resale - - - - - Loans and notes receivable 1,206,172 - - - - Investment in Portobello bonds 590,000 - - - - Debt service - - - 2,087,516 - Total reserved 9,856,595 - - 2,087,516 795,567 Unreserved, designated: Contingencies 12,000,000 - - - - Special revenue funds - 3,411,925 1,288,799 - - Capital projects funds - - - - 1,350,390 Other 7,002,989 - - - - Total unreserved, designated 19,002,989 3,411,925 1,288,799 - 1,350,390 Unreserved, undesignated: General fund 4,374,390 - - - - Special revenue funds - 15,745,307 4,301,301 - - Capital projects funds - - - - 5,033,492 Total fund balances (deficit) 33,233,974 19,157,232 5,590,100 2,087,516 7,179,449 Total liabilities and fund balances $ 50,554,580 $ 20,113,947 $ 5,624,468 $ 2,265,843 $ 7,292,793

See Accompanying Notes to Basic Financial Statements.

19 Major Funds

Redevelopment Other Total Agency Governmental Governmental Capital Projects Funds Funds

$ 3,297,228 $ 6,317,277 $ 76,100,773 - 3,941,736 6,207,579 - - 590,000 - 62,916 220,561 - - 733,374 283,758 - 1,241,803 29 - 3,046,984 95,897 198,836 4,295,581 - - 6,359 - - 405,825 4,041,414 3,977,240 9,224,826 540,880 - 540,880 - 1,071,875 7,066,172 $ 8,259,206 $ 15,569,880 $ 109,680,717

$ 355,079 $ 213,304 $ 3,444,021 - 357,673 2,932,413 136,622 2,867,310 3,009,995 - - 11,879,071 7,066,172 - 7,066,172 - 6,855 1,274,703 7,557,873 3,445,142 29,606,375

176,626 - 2,613,390 - 12,500 25,245 - 1,071,875 7,066,172 - - 6,359 - - 405,825 540,880 - 540,880 4,041,414 845,156 6,092,742 - - 590,000 - 6,082,347 8,169,863 4,758,920 8,011,878 25,510,476

- - 12,000,000 - 361,973 5,062,697 - - 1,350,390 - - 7,002,989 - 361,973 25,416,076

- - 4,374,390 - 1,915,386 21,961,994 (4,057,587) 1,835,501 2,811,406 701,333 12,124,738 80,074,342 $ 8,259,206 $ 15,569,880 $ 109,680,717

20 City of San Buenaventura Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets For the year ended June 30, 2009

Total Fund Balances - Total Governmental Funds $ 80,074,342

Amounts reported for governmental activities in the Statement of Net Assets were different because:

Equity interest in SCAT is not a current financial resource and not reported in the Governmental Funds Balance Sheet. 9,010,021

Capital assets used in governmental activities are not current financial resources. Therefore, they are not reported in the Governmental Funds Balance Sheet. Except for the internal service funds reported below, the capital assets are adjusted as follows: Non-depreciable 24,833,341 Depreciable 213,415,809 Accumulated depreciation (104,953,395)

Total capital assets 133,295,755

Interest payable on long-term debt does not require current financial resources. Therefore, interest payable is not reported as a liability in Governmental Funds Balance Sheet. (1,344,530)

Deferred revenue is reported on the accrual basis in the Government-Wide Statement of Net Assets. 475,298

Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Government-Wide Statement of Net Assets. Information Technology Fund 1,523,711 Fleet Maintenance Fund 11,168,167 Facilities Maintenance Fund 1,281,181 Reproduction Services Fund 169,770 Workers' Compensation Fund 4,812,205 Employee Fringe Benefits Fund (2,336,516) Risk Management Fund 2,915,427

Total internal service funds 19,533,945

Long-term liabilities are not due and payable in the current period. Therefore, they are not reported in the Governmental Funds Balance Sheet. Long-term debt reported in the Internal Service Funds is included in the adjustment above. Long-term liabilities - due within one year (3,235,000) Long-term liabilities - due in more than one year (67,045,000)

Total long-term liabilities (70,280,000)

Net Assets of Governmental Activities $ 170,764,831

See Accompanying Notes to Basic Financial Statements.

21 .         

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     City of San Buenaventura Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2009

Major Funds Certificates of Park and Participation Capital General Gas Tax Recreation Debt Obligation Improvement Fund Special Revenue Special Revenue Debt Service Capital Projects

REVENUES:

Taxes $ 59,715,852 $ 205,597 $ 10,707 $ - $ 5,645 Licenses and permits 1,004,297 - - - - Intergovernmental 8,941,003 3,762,864 728,369 - 115,582 Charges for services 10,124,934 - - - 260,149 Fines and forfeitures 2,226,912 - - - - Use of money and property 3,427,865 1,008,505 288,965 62,703 137,519 Other revenue 2,669,648 343,480 - - - Total revenues 88,110,511 5,320,446 1,028,041 62,703 518,895

EXPENDITURES: Current: General government 4,701,884 - - - - Human resources 1,952,090 - - - - Finance and technology 6,499,052 - - - - Community development 4,432,927 - - - - Community services 6,608,893 - - - - Public safety - police 29,952,775 - - - - Public safety - fire 19,398,973 - - - - Public works 15,504,207 - - - - Capital outlays 586,294 4,742,966 1,411,248 6,941 1,721,648 Debt service: Principal retirement - - - 2,165,000 - Interest and other charges - - - 2,200,909 - Total expenditures 89,637,095 4,742,966 1,411,248 4,372,850 1,721,648

REVENUES OVER (UNDER) EXPENDITURES (1,526,584) 577,480 (383,207) (4,310,147) (1,202,753)

OTHER FINANCING SOURCES (USES): Issuance of tax allocation bonds - - - - - Transfers in 4,104,486 168,053 4,076 4,335,533 1,498,793 Loss on investments (2,488,375) (1,416,354) (392,615) - (511,387) Transfers out (4,956,294) (248,553) (153,563) (358,362) (757,292) Total other financing sources (uses) (3,340,183) (1,496,854) (542,102) 3,977,171 230,114

Net change in fund balances (4,866,767) (919,374) (925,309) (332,976) (972,639)

FUND BALANCES (DEFICIT): Beginning of year 38,100,741 20,076,606 6,515,409 2,420,492 8,152,088 End of year $ 33,233,974 $ 19,157,232 $ 5,590,100 $ 2,087,516 $ 7,179,449

See Accompanying Notes to Basic Financial Statements.

22 Major Funds

Redevelopment Other Total Agency Governmental Governmental Capital Projects Funds Funds

$ 3,584,809 $ 131,246 $ 63,653,856 - - 1,004,297 8,267 977,109 14,533,194 - 1,484,761 11,869,844 - - 2,226,912 85,978 420,918 5,432,453 - 3,729 3,016,857 3,679,054 3,017,763 101,737,413

- - 4,701,884 - - 1,952,090 - - 6,499,052 - - 4,432,927 - - 6,608,893 - 624,062 30,576,837 - - 19,398,973 - 1,463,222 16,967,429 1,647,767 1,040,042 11,156,906

- 680,000 2,845,000 395,652 1,191,220 3,787,781 2,043,419 4,998,546 108,927,772

1,635,635 (1,980,783) (7,190,359)

- 8,785,000 8,785,000 7,595,676 1,807,117 19,513,734 - (134,475) (4,943,206) (567,453) (7,734,052) (14,775,569) 7,028,223 2,723,590 8,579,959

8,663,858 742,807 1,389,600

(7,962,525) 11,381,931 78,684,742 $ 701,333 $ 12,124,738 $ 80,074,342

23 City of San Buenaventura Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities For the year ended June 30, 2009

Net Change in Fund Balances - Total Governmental Funds $ 1,389,600

Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlay as expenditures. However, in the Government-Wide Statement of Activities, the cost of these assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceed depreciation in the current period.

Capital outlay $ 6,255,131 Depreciation expense (6,145,979) Net of deletions ( 39,600) 69,552

The net gain in the equity interest in SCAT is reported in the Government-Wide Statement of Activities, but does not provide current financial resources. Therefore, the net gain is not reported as revenue in Governmental Funds. 2,354,809

Deferred revenue is reported on the accrual basis in the Government-Wide Statement of Activities. The following amount represents the change in accrued deferred revenue from the prior year. (806,319)

Repayment of bond principal is an expenditure in governmental funds, but the repayment reduces long-term liabilities in the Government-Wide Statement of Net Assets. 2,845,000

Bond and loan proceeds provided current financial resources to governmental funds, but issuing debt increased long-term liabilities in the Government-Wide Statement of Net Assets. (8,785,000)

Accrued interest expense on long-term debt is reported in the Government-Wide Statement of Activities, but does not require the use of current financial resources. Therefore, accrued interest expense is not reported as an expenditure in Governmental Funds. The following amount represents the change in accrued interest from the prior year. (208,420)

Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The net expense of the internal service funds is reported with governmental activities. (5,178,891)

Change in Net Assets of Governmental Activities $ (8,319,669)

See Accompanying Notes to Basic Financial Statements.

24   . . 

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     City of San Buenaventura Statement of Net Assets Proprietary Funds June 30, 2009

Non-Major Governmental Major Enterprise Funds Enterprise Fund Activities Internal Wastewater Water Golf Course Total Service Funds ASSETS Current assets: Cash and investments $ 20,662,743 $ 19,228,260 $ - $ 39,891,003 $ 23,489,330 Accounts receivable, net 2,383,566 3,345,592 92,439 5,821,597 210,128 Due from other funds - - - - 2,573,517 Due from others - 578,926 457,873 1,036,799 4,105 Due from other governments - - - - 544,784 Prepaid items 9,377 - - 9,377 18,700 Notes receivable - - - - 1,572,155 Total current assets 23,055,686 23,152,778 550,312 46,758,776 28,412,719 Noncurrent assets: Restricted cash and investments 19,097,382 821,532 - 19,918,914 - Deferred charges 565,016 554,273 - 1,119,289 - State water line construction project - 23,424,266 - 23,424,266 - Capital assets: Non-depreciable 8,021,155 5,633,012 619,645 14,273,812 - Depreciable, net 62,003,680 101,909,564 16,781,748 180,694,992 9,610,339 Total capital assets 70,024,835 107,542,576 17,401,393 194,968,804 9,610,339 Total noncurrent assets 89,687,233 132,342,647 17,401,393 239,431,273 9,610,339 Total assets 112,742,919 155,495,425 17,951,705 286,190,049 38,023,058

LIABILITIES Current liabilities: Accounts payable $ 1,449,548 $ 861,938 $ 362,225 $ 2,673,711 $ 1,924,492 Accrued payroll liabilities - - - - 2,999,059 Interest payable 346,533 282,056 - 628,589 - Due to other funds - - 882,907 882,907 - Due to other governments 130 351 - 481 1,728 Deposits held for others - 767,521 - 767,521 - Capital leases payable - - 143,531 143,531 177,192 Claims and judgments payable - - - - 2,356,251 Compensated absences payable - - - - 448,028 Long-term debt - due within one year 695,000 1,389,195 - 2,084,195 82,137 Total current liabilities 2,491,211 3,301,061 1,388,663 7,180,935 7,988,887 Noncurrent liabilities: Capital leases payable - - - - 531,577 Claims and judgments payable - - - - 4,863,344 Compensated absences payable - - - - 4,843,236 Long-term debt - due in more than one year 21,559,376 41,447,704 - 63,007,080 262,069 Total noncurrent liabilities 21,559,376 41,447,704 - 63,007,080 10,500,226 Total liabilities 24,050,587 44,748,765 1,388,663 70,188,015 18,489,113

NET ASSETS Invested in capital assets, net of related debt 65,958,029 64,705,677 17,401,396 148,065,102 8,557,364 Restricted for: Capital projects 5,477,250 655,520 - 6,132,770 - Debt service 909,812 821,484 - 1,731,296 - Unrestricted 16,347,241 44,563,979 (838,354) 60,072,866 10,976,581 Total net assets $ 88,692,332 $ 110,746,660 $ 16,563,042 $ 216,002,034 $ 19,533,945

See Accompanying Notes to Basic Financial Statements.

25 City of San Buenaventura Statement of Revenues, Expenses and Changes in Net Assets Proprietary Funds For the year ended June 30, 2009

Non-Major Governmental Major Enterprise Funds Enterprise Fund Activities Internal Wastewater Water Golf Course Total Service Funds

OPERATING REVENUES:

Utility service charges $ 16,015,727 $ 21,283,447 $ - $ 37,299,174 $ - Golf fee charges - - 4,805,842 4,805,842 - Internal service charges - - - - 36,915,295 Other operating revenues - 21,433 - 21,433 668,683

Total operating revenues 16,015,727 21,304,880 4,805,842 42,126,449 37,583,978

OPERATING EXPENSES:

Salaries and benefits 3,706,339 4,695,158 202,617 8,604,114 4,564,010 Contractual services 1,030,726 692,309 3,234,707 4,957,742 2,757,529 Materials and supplies 1,743,130 1,977,554 25,302 3,745,986 2,123,946 General and administrative 3,909,774 7,235,398 339,063 11,484,235 18,468,791 Insurance premiums and settlements - - - - 8,994,979 Depreciation 3,208,772 4,346,028 917,443 8,472,243 1,695,041

Total operating expenses 13,598,741 18,946,447 4,719,132 37,264,320 38,604,296

OPERATING INCOME (LOSS) 2,416,986 2,358,433 86,710 4,862,129 (1,020,318)

NONOPERATING REVENUES (EXPENSES):

Investment income 1,771,660 906,708 - 2,678,368 396,779 Loss on disposal of assets - - - - (81,432) Loss on investments (1,483,202) (1,377,390) - (2,860,592) (1,686,952) Interest expense (1,053,200) (1,361,903) (12,888) (2,427,991) (17,210)

Total nonoperating revenues (expenses) (764,742) (1,832,585) (12,888) (2,610,215) (1,388,815) Income (loss) before transfers 1,652,244 525,848 73,822 2,251,914 (2,409,133) Transfers in 109,519 916,459 18,277 1,044,255 354,479 Transfers out (1,385,888) (381,737) (1,245,037) (3,012,662) (3,124,237)

Change in net assets 375,875 1,060,570 (1,152,938) 283,507 (5,178,891)

NET ASSETS:

Beginning of year 88,316,457 109,686,090 17,715,980 215,718,527 24,712,836

End of year $ 88,692,332 $ 110,746,660 $ 16,563,042 $ 216,002,034 $ 19,533,945

See Accompanying Notes to Basic Financial Statements. 26 City of San Buenaventura Statement of Cash Flows Proprietary Funds For the year ended June 30, 2009

Non-Major Governmental Major Enterprise Funds Enterprise Fund Activities Internal Wastewater Water Golf Course Total Service Funds CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers/other funds $ 15,883,679 $ 20,588,179 $ 4,730,314 $ 41,202,172 $ 37,424,834 Cash payments to suppliers for goods and services (6,094,462) (10,402,750) (2,879,114) (19,376,326) $ (22,128,763) Cash payments to employees for services (3,706,339) (4,695,158) (202,617) (8,604,114) $ (4,564,010) Insurance premiums and settlements - - - - $ (7,750,506) Other operating revenues - 21,433 - 21,433 668,683 Net cash provided (used) by operating activities 6,082,878 5,511,704 1,648,583 13,243,165 3,650,238

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Employee housing loans made - - - - $ (488,895) Payment of employee housing loans - - - - $ 32,764 Payment of noncapital loans - - - - $ (78,624) Transfers to other funds (1,385,888) (381,737) (1,245,037) (3,012,662) $ (3,124,237) Transfers from other funds 109,519 916,459 18,277 1,044,255 $ 354,479 Net cash provided (used) by noncapital (1,276,369) 534,722 (1,226,760) (1,968,407) (3,304,513) financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets (5,627,307) (1,324,524) (214,375) (7,166,206) $ (2,209,217) Repayment of capital leases - - (194,560) (194,560) $ (177,192) Repayment of state water loan - (402,356) - (402,356) Repayment of revenue bonds (680,000) (550,000) - (1,230,000) Investment in state water line project - (584,252) - (584,252) Interest paid on revenue bonds and contracts (1,060,000) (1,366,028) (12,888) (2,438,916) Net cash provided (used) by capital and related financing activities (7,367,307) (4,227,160) (421,823) (12,016,290) (2,386,409) CASH FLOWS FROM INVESTING ACTIVITIES: Investment income (loss) 1,771,660 906,708 - 2,678,368 (1,307,384) Loss on investments (1,483,202) (1,377,390) (2,860,592) Net cash provided (used) by investing activities 288,458 (470,682) - (182,224) (1,307,384) Net increase (decrease) in cash and cash equivalents (2,272,340) 1,348,584 - (923,756) (3,348,068)

CASH AND INVESTMENTS: Beginning of year 42,032,465 18,701,208 - 60,733,673 26,837,398 End of year $ 39,760,125 $ 20,049,792 $ - $ 59,809,917 $ 23,489,330

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $ 2,416,986 $ 2,358,433 $ 86,710 $ 4,862,129 $ (1,020,318) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation 3,208,772 4,346,028 917,443 8,472,243 1,695,041 Changes in assets and liabilities: Accounts receivable (132,048) (176,537) (92,439) (401,024) 285 Due from other funds - - - - 33,250 Due from other governments - - - - 291,566 Due from others - (518,731) 16,911 (501,820) 184,438 Prepaid items 9,377 - - 9,377 6,600 Deferred charges 97,582 53,858 - 151,440 Accounts payable 860,980 149,712 (158,522) 852,170 1,213,175 Contracts payable (378,901) (552,114) - (931,015) Accrued payroll liabilities - - - - (104,129) Due to other funds - - 878,480 878,480 Due to other governments 130 351 481 1,728 Deposits held for others - (149,296) - (149,296) Claims and judgments payable - - - - 910,786 Compensated absences payable - - - - 437,816 Total adjustments 3,665,892 3,153,271 1,561,873 8,381,036 4,670,556 Net cash provided (used) by operating activities $ 6,082,878 $ 5,511,704 $ 1,648,583 $ 13,243,165 $ 3,650,238

Noncash capital and related financing activities: Equipment acquired by capital leases $ - $ - $ - $ - $ 708,769

See accompanying Notes to Basic Financial Statements. 27       .        .

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         City of San Buenaventura Statement of Fiduciary Assets and Liabilities Fiduciary Funds June 30, 2009

Agency Funds ASSETS

Cash and cash equivalents $ 20,221

LIABILITIES

Deposits held for others $ 20,221

See Accompanying Notes to Basic Financial Statements.

28 .         

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            City of San Buenaventura Index to Notes to Basic Financial Statements For the year ended June 30, 2009

Page

Note 1 - Summary of Significant Accounting Policies...... 31

A. Description of the Reporting Entity ...... 31 B. Basis of Accounting and Measurement Focus ...... 32 C. Use of Restricted/Unrestricted Net Assets ...... 35 D. Cash, Cash Equivalents and Investments...... 36 E. Restricted Cash and Investments ...... 36 F. Inventory and Prepaid Items...... 36 G. Assets Held for Resale...... 36 H. Interfund Transactions...... 36 I. Capital Assets ...... 37 J. Compensated Absences ...... 38 K. Long-Term Debt...... 38 L. Interest Payable ...... 38 M. Property Taxes...... 38 N. Net Assets ...... 39 O. Fund Balances - Reservations and Designations...... 39 P. Use of Estimates ...... 39

Note 2 – Cash and Investments...... 39

A. Cash and Investments ...... 39 B. Investments Authorized by the California Government Code and the City’s Investment Policy ...... 40 C. Investments Authorized by Debt Agreements...... 41 D. Disclosures Relating to Interest Rate Risk...... 41 E. Disclosures Relating to Credit Risk ...... 42 F. Concentration of Credit Risk...... 42 G. Custodial Credit Risk ...... 43 H. Investment in State Investment Pool...... 43

Note 3 – Loans and Notes Receivable...... 44

A. City Home...... 44 B. Chapel Lane Senior Housing Project ... .. 44 C. Business Assistance Program...... 44 D. City Officials ...... 45 E. Redevelopment Agency...... 46 F. Homebuyer Assistance Program (City)...... 46 G. Housing Preservation Program ...... 46

Note 4 - Interfund Transactions...... 47

A. Fund Financial Statements...... 47

Note 5 – Land and Buildings Held for Resale...... 52

29 City of San Buenaventura Index to Notes to Basic Financial Statements For the year ended June 30, 2009

Page

Note 6 – Capital Assets ...... 52

A. Government-Wide Financial Statements...... 52

Note 7 – Leases ...... 55

A. Capital Leases ...... 55

Note 8 – State Water Project ...... 56

Note 9 – Long-Term Debt...... 57

A. Governmental Activities Long-Term Debt...... 57 B. Long-Term Debt of Business-Type Activities and Proprietary Funds...... 64

Note 10 – Deferred Revenues...... 67

Note 11 – Fund Balances for Governmental Funds...... 68

A. Reservation and Designation of Fund Balances ...... 68

Note 12 – Self-Insurance Accrued Liabilities...... 69

Note 13 – Pension Plans and Other Post Employment Benefits (OPEB) ...... 70

A. California Public Employees’ Retirement Plan (PERS) ...... 70 B. Other Post Employment Benefits (OPEB) 72

Note 14 – Joint Venture Transactions ...... 72

A. South Coast Area Transit...... 72

Note 15 – Commitments and Contingencies ...... 72

A. Lawsuits in the Normal Course of Business ...... 72 B. Agreement with Macerich Buenaventura Limited Partnership...... 72 C. Federal and State Grant Programs ...... 73

Note 16 – Jobs Investment Fund ...... 73

Note 17 – Deferred Fees ...... 73

Note 18 – Subsequent Events ...... 74

A. SERAF ...... 74

30 City of San Buenaventura Notes to the Basic Financial Statements For the year ended June 30, 2009

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The basic financial statements of the City of San Buenaventura, California (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below.

A. Description of the Reporting Entity

The City, incorporated as a town on March 10, 1866, was recognized as a city in the State of California by election on December 4, 1905, and was certified on January 5, 1906. The initial City Charter was adopted January 7, 1932, and was revised most recently on November 7, 1995. The City operates under an elected Council and appointed City Manager form of government and provides the following services as authorized by its charter: public safety (police and fire), public works (maintenance services and utilities), community services, and general administrative services.

As required by GAAP, these basic financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities are, in substance, part of the City’s operations and data from these units are combined with data of the City. Each blended component unit has a June 30 year-end. The City had no discretely presented component units. The following entities are reported as blended component units:

The Redevelopment Agency of the City of San Buenaventura (Agency) was created by the City of San Buenaventura City Council (City Council) in August 1961. The Agency was formed for the purpose of preparing and carrying out plans for improvement, rehabilitation and redevelopment of blighted areas within the territorial limits of the City. The City Council acts as the Agency’s governing board and exerts significant influence over its operations. The funds of the Agency have been included in the governmental activities of the financial statements.

Complete financial statements for the Redevelopment Agency may be obtained from the City of San Buenaventura, P.O. Box 99, Ventura, California 93002-0099.

San Buenaventura Public Facilities Financing Authority (Authority) was established by ordinance, pursuant to the City Charter and Constitution of the State of California, as a public body, corporate and politic, acting to facilitate serving the public purposes of the City. The ordinance was adopted on May 28, 1985, and became effective July 1, 1985. The governing body of the Authority is comprised of the consenting members of the City Council. The Authority is empowered to construct, acquire, maintain and improve public facilities and improvements within the City and to sell, lease, exchange, transfer, encumber or otherwise dispose of any interest in property. The Authority's activities presently consist of providing financial assistance to the City through the issuance of certificates of participation and the leasing of assets to the City. At the end of the lease term, all assets revert to the City. The funds of the Authority have been included in the governmental activities of the financial statements.

31 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

B. Basis of Accounting and Measurement Focus

The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

Government - Wide Financial Statements

The City’s government-wide financial statements include a Statement of Net Assets and a Statement of Activities. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements.

The basic financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets, as well as infrastructure assets and long-term liabilities, are included in the accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Grant revenues are recognized when all eligibility requirements have been met. Property taxes are recognized in the year for which they are levied.

Certain types of transactions are reported as program revenues for the City in three categories:

Charges for services Operating grants and contributions Capital grants and contributions

Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Assets have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated:

Due to/from other funds Advances to/from other funds Transfers in/out

The City applies all applicable GASB pronouncements (including all NCGA Statements and Interpretations currently in effect), as well as the following pronouncements issued on or before November 30, 1989, to the business-type activities, unless those pronouncements conflict with or contradict GASB pronouncements: Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (ARB) of the Committee on Accounting Procedure. The government has elected not to follow subsequent private-sector guidance.

32 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

B. Basis of Accounting and Measurement Focus, Continued

Governmental Fund Financial Statements

Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in fund balances and change in fund balances as presented in these statements to the net assets and change in net assets presented in the government-wide financial statements. The City has presented all major funds that met the applicable criteria. In addition, the City has presented certain funds as major funds because the City believes the financial position and activities of these funds are significant to the City as a whole. The following is a list of these major funds:

General Fund - The general fund was established to account for sources and uses of financial resources traditionally associated with governments, which are not required to be accounted for in another fund.

Gas Tax Special Revenue Fund - To account for revenue received from the State of California and other sources to be used for street maintenance and improvements only.

Park and Recreation Special Revenue Fund - To account for park and recreation facilities tax and intergovernmental revenue to be used for planning, acquisition, improvements, or expansion of public parks, playgrounds, or other recreational facilities.

Certificates of Participation (COP) Debt Obligations Debt Service Fund - To account for the accumulation of resources and payment of long-term debt principal and interest for COP issues by the Public Facilities Financing Authority.

Capital Improvement Capital Projects Fund - To account for financial resources to be used for the purchase or construction of major capital improvements (other than those funded through proprietary or special revenue funds).

Redevelopment Agency Capital Projects Fund - To account for the economic revitalization and redevelopment of the City through acquisition and development of City property determined to be in declining condition.

All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period.

Revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, sales tax, intergovernmental revenues and other taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred.

33 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

B. Basis of Accounting and Measurement Focus, Continued

Deferred revenues arise when potential revenues do not meet both the “measurable” and “available” criteria for recognition in the current period. Deferred revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met or when the government has a legal claim to the resources, the deferred revenue is removed from the Balance Sheet and revenue is recognized.

The reconciliation of the governmental fund financial statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34.

Proprietary Fund Financial Statements

Proprietary fund financial statements include a Statement of Net Assets, a Statement of Revenues, Expenses and Changes in Net Assets, and a Statement of Cash Flows for each major proprietary fund. The following is a list of the proprietary funds:

Wastewater Fund – To account for all sewer activities and treatment services provided to the City of San Buenaventura, including, but not limited to administration, operations, maintenance, laboratory, and debt service.

Water Fund – To account for all water activities and water treatment services provided to the City of San Buenaventura and some residents of the County. Such activities include but are not limited to administration, maintenance, distribution, customer service, production, purification, and debt service.

Golf Course Fund – To account for revenue and costs related to the operation of two municipal golf courses for use by the general public.

A separate column representing internal service funds is also presented in these statements; however, internal service balances and activities have been combined with the governmental activities in the government-wide financial statements. The following is a list of the internal service funds:

Information Technology Fund - To account for costs related to the replacement and maintenance of the City’s computer infrastructure. Costs are recovered through a monthly user fee charged to City departments.

Fleet Maintenance Fund - To account for costs related to operations of the central fleet maintenance system which provide vehicles for all City departments. Costs are recovered through a monthly user fee charged to City departments.

Facilities Maintenance Fund - To account for costs related to providing building maintenance services to all City departments. A monthly fee, based on square footage, is charged to City departments to recover these costs.

34 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

B. Basis of Accounting and Measurement Focus, Continued

Reproduction Services Fund - To account for costs related to printing and reproduction of materials by all City departments. Costs are recovered through a monthly fee charged to City departments using the service.

Workers’ Compensation Fund - To account for costs and liabilities related to the Workers’ Compensation Program. Costs are recovered through a monthly fee based on employee-type charges to City departments.

Employee Fringe Benefits Fund - To account for costs and liabilities related to health, life, dental and disability insurances, public employees’ retirement system, federal and state taxes, association dues, leave time benefits and miscellaneous deductions paid by the City on behalf of the employees. A bi- weekly employee benefit charge, based on a percentage of gross payroll, is charged to City departments to recover these costs.

Risk Management Fund - To account for costs of providing public liability insurance coverage to operating funds. Costs are recovered from those funds that benefit from the insurance coverage.

Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or non-current) are included on the Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Net Assets presents increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.

Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses.

Fiduciary Fund Financial Statements

Fiduciary fund financial statements include a Statement of Fiduciary Assets and Liabilities. The City's fiduciary funds represent agency funds, which are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Agency funds are reported using the accrual basis of accounting. The City currently reports one fiduciary fund detailed below:

Portobello Assessment District Fund - To account for the funds held in trust by the City as collected from property assessments to be used for payment of debt service on special assessment bonds issued to fund improvements and maintenance of the Portobello Canal.

C. Use of Restricted/Unrestricted Net Assets

When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, the City’s policy is to apply restricted net assets first.

35 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

D. Cash, Cash Equivalents and Investments

The City pools its available cash for investment purposes. The City’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. Cash and cash equivalents are combined with investments and displayed as Cash and Investments.

In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. Guaranteed investment contracts are stated at cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available.

For purposes of reporting cash flows, the City considers each fund’s share in the cash and investments pool to be cash and cash equivalents.

E. Restricted Cash and Investments

Certain restricted cash and investments are held by fiscal agents for the redemption of bonded debt and for acquisition and construction of capital projects. Cash and investments are also restricted for deposits held for others within the enterprise funds. The restricted cash and investments are separated from unrestricted cash and investments and displayed as Restricted Cash and Investments.

F. Inventory and Prepaid Items

Inventory is valued at cost using the first in, first out method. Inventory in the governmental funds consists of expendable supplies held for future consumption or capitalization. The cost is recorded as an expense as inventory items are consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items.

G. Assets Held for Resale

Land and buildings held for resale are recorded at the lower of cost or estimated net realizable value, only determined upon the execution of a disposition and development agreement. Fund balances are reserved in amounts equal to the carrying value of land and buildings held for resale, because such assets are not available to finance the City’s current operations.

H. Interfund Transactions

Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”

Advances to other funds, reported in the governmental fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources.

36 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

I. Capital Assets

The City’s assets are capitalized at historical cost or estimated historical cost. City policy has set the capitalization threshold for reporting capital assets, including infrastructure assets, at $10,000. Gifts or contributions of capital assets are recorded at fair market value when received.

Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows:

Buildings and Improvements 10 – 76 years Improvements other than buildings 10 – 75 years Machinery and Equipment 2 – 75 years Infrastructure 5 – 50 years

In June 1999, the Governmental Accounting Standards Board (GASB) issued Statement No. 34, which requires the inclusion of infrastructure capital assets in local governments’ basic financial statements. In accordance with Statement No. 34, the City has included the value of all infrastructure in the basic financial statements.

The City defines infrastructure as the basic physical assets that allow the City to function. These assets include the streets, water purification and distribution system, sewer collection and treatment system, park and recreation lands and improvement system, storm water conveyance system, and buildings combined with site amenities such as parking and landscaped areas used by the City in the conduct of its business. Each major infrastructure system can be divided into subsystems. For example, the street system can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, traffic control devices (signs, signals and pavement markings), landscaping and land.

These subsystems are not delineated in the basic financial statements. The appropriate operating department maintains information regarding the subsystems.

Interest accrued during capital assets construction, if any, is capitalized for the business-type and proprietary funds as part of the asset cost.

37 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

J. Compensated Absences

The City accrues the cost of annual vacation leave as earned for all eligible employees.

The City accrues the cost of sick leave for all employees following ten (10) years of continuous City service, when employees become eligible for a payout of the balance of unused sick leave upon separation (resignation or retirement). The amount of payout varies by employee group as follows:

All police and fire unit employees are eligible to receive a sick leave payout based on the number of “credits” earned after ten years of service. Credits are earned by using less sick leave hours annually than the negotiated standard. Police unit employees with 1-19 credits receive a 25 percent payout, employees with 20 credits receive a 50 percent payout up to a maximum of 1,440 hours upon retirement. Fire unit employees with 1-19 credits receive a 25 percent payout, employees with 20 credits receive a 50 percent payout up to a maximum of 2,016 hours.

Fire unit employees shall contribute to the retirement health savings plan an amount equal to seventy- five percent (75%) of their leave payouts, which occur upon termination of employment. Employees will receive a cash payment for the remaining 25% of the leave payout.

Vacation and sick leave benefits are accrued and recorded in the Employee Fringe Benefits Internal Service Fund. Compensated absences are generally liquidated by the Internal Service Fund.

K. Long-Term Debt

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental and business type activities. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

L. Interest Payable

In the government-wide financial statements, interest payable on long-term debt is recognized as the liability is incurred for governmental and business type activities.

In the fund financial statements, proprietary fund types recognize the interest payable when the liability is incurred.

M. Property Taxes

Property taxes are levied based on a fiscal year (July 1 – June 30). The property tax assessments are formally due on November 1 and February 1, and become delinquent after December 10 and April 10, respectively. Taxes become a lien on the property effective January 1 of the preceding year.

38 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

N. Net Assets

In the government-wide financial statements, net assets are classified in the following categories:

Invested in Capital Assets, net of Related Debt – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt attributed to the acquisition, construction, or improvement of the assets.

Restricted Net Assets – This amount is restricted by external creditors, grantors, contributors, laws or regulations of other governments, enabling legislation, constitutional provisions.

Unrestricted Net Assets – This amount is all net assets that do not meet the definition of “invested in capital assets, net of related debt” or “restricted net assets.”

O. Fund Balances - Reservations and Designations

In the fund financial statements, governmental funds report reservations of fund balances for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change.

P. Use of Estimates

The preparation of the basic financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In addition, estimates affect the reported amount of expenses. Actual results could differ from these estimates and assumptions.

2. CASH AND INVESTMENTS

A. Cash and Investments

Cash and investments as of June 30, 2009, are classified in the accompanying financial statements as follows: Government-Wide Statement of net assets: Cash and investments $ 139,481,106 Investment in bonds 590,000 Restricted cash and investments (held by bond trustee) 26,126,493

Fiduciary funds: Cash and investments 20,221

Total cash and investments $ 166,217,820

39 2. CASH AND INVESTMENTS, Continued

A. Cash and Investments, Continued

Cash and investments as of June 30, 2009, consist of the following:

Cash on hand $ 62,910 Deposits with financial institutions 6,477,004 Investments 159,677,906

Total cash and investments $ 166,217,820

B. Investments Authorized by the California Government Code and the City’s Investment Policy

The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy. Maximum Maximum Authorized Maximum Percentage Investment Investment Type Maturity of Portfolio* in One Issuer U.S. Treasury Obligations 5 years N/A N/A U.S. Agency Securities 5 years N/A N/A Banker’s Acceptances 180 days 40% 30% Commercial Paper 270 days 25% 10% Negotiable Certificates of Deposit 5 years 30% N/A Certificates of Deposit 5 Years N/A N/A Repurchase Agreements 90 days N/A N/A Medium-Term Notes 5 years 30% N/A Money Market Mutual Funds N/A 20% 10% Municipal Debt 30 years N/A N/A Local Agency Investment Fund (LAIF) N/A N/A $40 million**

* Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.

** Maximum investment is per component.

40 2. CASH AND INVESTMENTS, Continued

C. Investments Authorized by Debt Agreements

Investment of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy. The table below identifies the investment types that are authorized for investments held by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk. Maximum Maximum Authorized Maximum Percentage Investment Investment Type Maturity Allowed in One Issuer

U.S. Treasury Obligations 30 years N/A N/A Money Market Mutual Funds N/A N/A N/A Guaranteed Investment Contract 30 years N/A N/A Local Agency Investment Fund N/A N/A N/A

D. Disclosures Relating to Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair market value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time, as necessary to provide the cash flow and liquidity needed for operations.

Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:

Remaining Maturity (in Months) 12 Months 13 to 24 25-59 > 60 Investment Type or Less Months Months Months

Federal Agency Securities $ 75,912,287 $ - $ - $ 45,574,550$ 30,337,737 Local Agency Investment Fund 51,435,276 51,435,276 - - - Medium Term Notes In Default 753,650 - 500 753,150 - Medium Term Notes 4,860,200 - 4,860,200 - - Municipal Debt 590,000 - - 590,000 - Held by bond trustee: Money Market Funds 23,355,431 23,355,431 - - - Investment Contracts 880,988 - - - 880,988 Local Agency Investment Fund 1,890,074 1,890,074 - - -

Total $ 159,677,906 $ 76,680,781 $ 4,860,700 $ 46,917,700 $ 31,218,725

41 2. CASH AND INVESTMENTS, Continued

E. Disclosures Relating to Credit Risk

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The following presentation is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type:

Minimum Ratings as of year-end Investment Type Rating Aaa/AAA 1 Not Rated

Federal Agency Securities $ 75,912,287 N/A $ 75,912,287 Municipal Debt 590,000 N/A $ 590,000 Medium Term Notes In Default 753,650 753,650 Medium Term Notes 4,860,200 A 4,860,200 Local Agency Investment Fund 51,435,276 N/A 51,435,276 Held by bond trustee: Money Market Funds 23,355,431 A 23,355,431 Investment Contracts 880,988 N/A 880,988 Local Agency Investment Fund 1,890,074 N/A 1,890,074 Total $ 159,677,906 $ 104,127,918 $ 55,549,988

1. The ratings were with Moody's and S&P.

See note 2F below for Federal Agency Securities by institution.

F. Concentration of Credit Risk

The investment policy of the City contains limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. Investments in any one issuer that represent 5 percent or more of total City’s investments are as follows:

Reported Issuer Investment Type Amount Federal Home Loan Bank Federal Agency Securities $ 10,450,987 Federal Home Loan Mortgage Corp (FHLMC) Federal Agency Securities 24,991,600 Federal Farm Credit Bank Federal Agency Securities 40,469,700 Total $75,912,287

42 2. CASH AND INVESTMENTS, Continued

G. Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits.

As of June 30, 2009, City investments in the following investment types were held by the safekeeping department of Bank of New York and the City uses other broker-dealers to buy the securities:

Reported Investment Type Amount

Federal Agency Securities $ 75,912,287

H. Investment in State Investment Pool

The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.

LAIF management has indicated that as of June 30, 2009, the amortized cost of the pool was $50,784,427,116 and the estimated fair value of the pool was $50,853,707,566. Included in the LAIF’s investment portfolio are certain derivative securities or similar products in the form of structures notes, total $5,169.332 million and asset backed securities totaling $2,296.565 million.

43 3. LOANS AND NOTES RECEIVABLE

At June 30, 2009, loans and notes receivable consisted of the following:

July 1, 2008 Additions Deletions June 30,2009 City Home $ 104,256 $ - $ (22,600) $ 81,656 Chapel Lane Senior Housing Project 657,500 - - 657,500 Business Assistance Program: Micro Loan 698,775 168,955 (131,688) 736,042 Code Compliance Assistance 170,988 32,784 (24,366) 179,406 Commercial Rehabilitation Loan 367,990 63,395 (50,099) 381,286 Economic Development Loan 574,887 18,003 (47,273) 545,617 City Officials 1,116,024 474,000 (17,869) 1,572,155 Redevelopment Agency: Disposition and Development Agreement - 1997 500,000 - - 500,000 Homebuyer Assistance Program (RDA) 2,500 22,600 (2,500) 22,600 Working Artists Community 3,500,000 - - 3,500,000 CHFA HELP Program Loan 21,180 - (2,366) 18,814 Homebuyer Assistance Program (City) 630,589 19,375 - 649,964 Housing Preservation Program 2,011,650 122,801 (182,512) 1,951,939 Total $ 10,356,339 $ 921,913$ (481,273) $ 10,796,979

A. City Home

The general purpose of the City Home program is to promote neighborhood stabilization, stimulate private reinvestment, and broaden affordable housing opportunities.

The Program is administered by the Housing Authority of San Buenaventura and provides deferred loans, to low-income residents who are first-time homebuyers, for down-payment assistance.

B. Chapel Lane Senior Housing Project

The project includes 38 one and two-bedroom units for senior low and very low-income households. The project has commercial space dedicated to the City’s Housing Authority for office use.

C. Business Assistance Program

The interest rate will be fixed at the cost of City funds, plus two points. The borrower is responsible for repaying the entire loan, plus interest in a timely manner. The maximum term of the loan will not exceed 10 years. All loan programs must adhere to adopted Design Guidelines and Design Review Requirements where applicable.

There are four components to the Business Assistance Program:

Micro Loan Program - The primary goal of this program is to create jobs and support the growth and success of small businesses in San Buenaventura. This is a flexible program designed for existing and new small businesses. The minimum loan to any business is $10,000 with a maximum of $50,000.

44 3. LOANS AND NOTES RECEIVABLE, Continued

C. Business Assistance Program, Continued

Code Compliance Assistance Program - The Code Compliance Assistance Program is to support businesses with building code compliance requirements on existing commercial properties. This program is designed to encourage code compliance and public safety in conjunction with Inspection Services.

Commercial Rehabilitation Loan Program - The Commercial Rehabilitation Loan Program is designed to encourage revitalization and renovation of older commercial districts while promoting physical enhancement of commercial property. The program goal is to foster business growth or retention through a more conducive and marketable physical environment. Qualified property owners and businesses may be eligible to receive below market rate loans for façade, construction, or building renovation. This program is targeted to the Downtown Redevelopment Area and the Westside Revitalization Area.

Economic Development Loan Program – The Economic Development Loan Program is designed to encourage and facilitate business in Ventura in that the business will generate significant sales tax revenues for the City that can be applied to fund the many City facilities and services that benefit the Ventura community.

D. City Officials

The City Council has established mortgage assistance benefits by resolution because such benefits are recognized as an important tool to encourage key officials to live in the City. It also provides an added incentive to generate the most qualified pool of applicants for statewide and out-of-state recruitments.

The City has eight loans outstanding for the purpose of mortgage assistance in the purchase of a home. The loans are secured by a deed of trust on the properties.

The following table summarizes the loan activity:

Original Date Amount Term of Balance Balance Issued of Loan Loan July 1, 2008 Additions Deletions June 30, 2009 2003$ 325,000 * $ 325,000 $ - $ - $ 325,000 2007 280,000 * 280,000 - - 280,000 2008 538,035 * 511,024 - (17,869) 493,155 2009 474,000 * - 474,000 - 474,000 Total $ 1,116,024 $ 474,000 $ (17,869) $ 1,572,155

* The City’s share of its equity interest in the Ventura Residences shall be due and payable in full: (1) immediately upon the sale of or other transfer of title to the Ventura Residence by Employee; (2) within 120 days of the Employee’s termination for any reason whatsoever, or; (3) within 120 days of the termination of Employee’s use of the Ventura Residence as a principal residence.

45 3. LOANS AND NOTES RECEIVABLE, Continued

E. Redevelopment Agency

Disposition and Development Agreement – 1997 - The Agency entered into a disposition and development agreement in October 1997 to loan $500,000 to a limited liability company to construct certain improvements on property within the Agency’s Downtown Redevelopment Project Area. The loan is secured by a deed of trust and bears no interest. The total amount is due in October of 2012; however, the note can be forgiven upon the occurrence of certain events. The outstanding amount due to the Agency as of June 30, 2009, was $500,000.

Homebuyer Assistance Program (RDA) - The Agency entered into an agreement annually for the Homebuyer Assistance Program. The outstanding amount due to the Agency as of June 30, 2009, was $22,600.

Working Artists Community In January 2008, the Agency loaned $1.5 million in proceeds from a CalHFA HELP loan to the WAV (Working Artists of Ventura) Apartments Partners at 3 percent simple interest for a term of 30 years. On February 1, 2008, the Agency entered into a construction agreement with WAV Apartments Partners to acquire property and build affordable housing designed for artists. As part of this agreement, the Agency loaned $2,000,000 at 5% simple interest to the WAV Apartments Partners for construction to be repaid the earlier of March 1, 2012 or thirty days after the sale or transfer of the last unit. The outstanding amount due to the Agency as of June 30, 2009, was $3.5 million.

CHFA HELP Loans The primary goal of this program is for rental rehabilitation or seismic improvements of multifamily housing units in designated target areas. The City provided a 3 percent interest rate, fully amortizing loans for property rehabilitation to landlords for 15 to 30 years. Participating landlords agreed to fix maximum rents at fair market rates established for the HUD Section 8 Program during the term of the HELP Loan. Eligible developments must be occupied by a minimum of 51 percent low-income households, adjusted for family size, as defined by HUD, at the initiation of negotiations between the Landlord and the City. The outstanding balance as of June 30, 2009, was $18,814. The program is no longer active except for one existing loan.

F. Homebuyer Assistance Program (City) - The City entered into an agreement on September 13, 1999. The outstanding amount due to the City as of June 30, 2009, was $649,964.

G. Housing Preservation Program

Under the Housing Preservation Program (HPP), low interest loans are available to qualifying low and moderate-income households to rehabilitate single-family owner-occupied properties. Special hardship grants are also available on an urgent need basis to address immediate threats to health and safety. The outstanding amount as of June 30, 2009, was $1,951,939.

46 4. INTERFUND TRANSACTIONS

A. Fund Financial Statements

Advances to/from Other Funds

As of June 30, 2009, balances of advances to/from other funds were as follows:

Advances to other funds

Advances from other funds General Public Art Fund Fund Total

Redevelopment Agency Capital Projects Fund $ 5,994,297 $ 1,071,875 $ 7,066,172

The long-term advances consisted of the following:

Balance Balance 7/1/2008 Additions Deletions 6/30/2009 Line of credit $ 14,069,892 $ - $ (8,075,595) $ 5,994,297 Public Art Loan to Agency 1,000,000 71,875 - 1,071,875 $ 15,069,892 $ 71,875 $ (8,075,595) $ 7,066,172

The advances between the Agency and the City have been established through a cooperation agreement, first approved in 1980, describing the operation support provided to the Agency, and the terms and conditions for repayment of City loans or advances. In June 1992 and May 1997, a restated and amended cooperation agreement was adopted for the purpose of restructuring the financial aspects of the relationship. In 2004, an amended cooperation agreement was adopted to establish predictable revenue stream into the General Fund and accumulation of project funds for the Agency.

The 2004 amended agreement calls for: (1) the Agency to reimburse the City with interest payments of $500,000 to $707,765 through May 15, 2009, beginning May 15, 2005 with interest accruing at five percent on the total amount of principal owed by the agency to the City beginning July 1, 2004; (2) the Agency to reimburse the City with principal installments of $23,530 to $554,315 through May 15, 2028, beginning May 15, 2009, and to reimburse the City with a principal installment of $7,250,000 on June 30, 2009 through a new issuance of Tax Allocation Bonds; (3) in the event there is insufficient tax increment to make a debt payment, the Agency may request to defer that portion that cannot be paid in the current year to an upcoming year, any request shall be presented to City Council at a regular meeting, on or before June 30 of that year, and; (4) in the event the tax increments exceeds expenditures, including debt service and interest, the City and Agency agree to reconsider the debt schedule during the budget development to ensure that the accumulation of project funds does not adversely impact the General Fund.

The City may elect to reloan funds to the Agency, on an as-needed basis, through a line of credit, as described in the agreement. Currently, the City supports the Agency by making advances for project costs and administrative expenses and fully reserves the potential line of credit available in the City’s General Fund. The outstanding line of credit balance at June 30, 2009, was $5,994,297. The Agency’s liability with respect to the line of credit is also included in the City’s General Fund in the basic fund financial statements.

47 4. INTERFUND TRANSACTIONS, Continued

A. Fund Financial Statements, Continued

The City’s Public Art fund on January 26, 2008 loaned the Agency $1,000,000 at 5% compound interest for a term of 2 years for the WAV (Working Artists of Ventura) project. Payment of principal and all interest is due on January 26, 2010.

Due to/from Other Funds

As of June 30, 2009, balances of due to/from other funds were as follows:

Due from other funds

Captial Projects Internal Services

Gas Tax General Special Capital Redevelopment Facilities Workers Due to other funds Fund Revenue Improvement Agency Maintenance Compensation Total $ 2,396,413

178,327 357,673 882,907 Total $ 882,907 $ 13,022 $ 62,116 $ 283,758 $ 177,104 $ 2,396,413 $ 3,815,320

General Fund Workers Compensation loan used for capital improvement projects. Certificates of Participation Debt Obligation Capital Improvement construction expenditures to be reimbursed next year with debt financing funds. Other Governmental Funds General Fund and Redevelopment Agency revenues used to fund the Home Match Program, for regular traffic mitigation, and to cover negative cash in Other Governmental Funds. Golf Course Enterprise Fund To cover negative cash in Golf Course Enterprise Fund.

48 4. INTERFUND TRANSACTIONS, Continued

A. Fund Financial Statements, Continued

Transfers

Transfers for the year ended June 30, 2009, were as follows:

49 4. INTERFUND TRANSACTIONS, Continued

A. Fund Financial Statements, Continued

Transfers, Continued The transfers were for the following purposes:

General Fund transfers to: Gas Tax $ 136,266 To provide funding for annual street maintenance projects. Certificate of Participation Debt 3,305,496 For payment of the annual debt service requirements. Obligation Capital Improvement 589,890 To provide funding for the purchase of the Management Information System project. Internal Service Funds 76,500 To provide for purchases of new vehicles to add to City's Fleet inventory Other Governmental Funds 848,142 To provide funding for future annual debt service requirements and reimbursement of expenditures. $ 4,956,294 Gas Tax transfers to: General Fund $ 160,425 For reimbursement of Gas Tax eligible expenditures. Capital Improvement 88,128 For reimbursement of Construction In Progress expenditures. $ 248,553 Park and Recreation transfers to: General Fund $ 150,000 For reimbursement of funding provided for improvement projects financed through prior debt financing. Other Governmental Funds 3,563 For funding of future public art projects. $ 153,563 Certificate of Participation Debt Obligation transfers to: Capital Improvement $ 159,882 To provide coverage of Capital projects Internal Service Funds 198,480 To provide for maintenance of Capital projects $ 358,362 CIP General transfers to: General Fund $ 743,000 To reimburse unused Capital projects funds Other Governmental Funds 14,292 For funding of future public art projects. $ 757,292 Redevelopment Agency transfers to: Other Governmental Funds $ 567,453 To provide for RDA project for Debt issued $ 567,453 Public Arts transfers to: General Fund $ 5,957 To reimburse unused Quinby related projects Parks and Recreation 4,076 To reimuburse Public Art's portion of National Education Act Grant activities $ 10,033 Maintenance Assessment District transfers to: General Fund $ 98,568 To provide for City Overhead expenses $ 98,568

50 4. INTERFUND TRANSACTIONS, Continued

A. Fund Financial Statements, Continued

Transfers, Continued

Munipal Improvement Revenue Bonds transfers to: Capital Improvement $ 60,893 To provide for Parking Garage project $ 60,893

Redevelopment Agency Debt Service transfers to: Redevelopment Agency Capital Projects $ 7,564,558 To provide the RDA Capital Project fund to paydown advance from City $ 7,564,558

Wastewater transfers to: General Fund $ 223,451 Annual utility right-of-way payment Gas Tax 12,152 To provide for Contruction In Progress street resurfacing Water Fund 807,991 For reimbursement of the Utility Billing Office expenditures shared by Wastewater. Other Governmental Funds 342,294 For funding of future public art projects. $ 1,385,888 Water transfers to: General Fund $ 349,382 Annual utility right-of-way payment, web services, and storm drain impacts Gas Tax 19,635 For reimbursement of Water improvements completed in Gas Tax projects. Other Governmental Funds 12,720 For funding of future public art projects. $ 381,737 Golf Course transfers to: General Fund $ 215,000 Annual land lease payment. Certificate of Participation Debt 1,030,037 For payment of the annual debt service requirements. Obligation $ 1,245,037 Information Technology transfers to: General Fund $ 2,783 For reimbursement for use of PD grant purchases $ 2,783 Facilities Maintenance transfers to: Capital Improvement $ 600,000 For future City Hall West and First floor remodel $ 600,000 Employee Fringe Benefits transfers to: General Fund $ 728,183 Payment per MOU Agreements for vacation hour relinguishments Redevelopment Agency Capital Projects 31,118 Payment per MOU Agreements for vacation hour relinguishments Water Fund 236,264 Payment per MOU Agreements for vacation hour relinguishments Internal Service Funds 79,499 Payment per MOU Agreements for vacation hour relinguishments Other Governmental Funds 18,653 Payment per MOU Agreements for vacation hour relinguishments $ 1,093,717 Risk Management transfers to: General Fund $ 1,427,737 To provide for a settlement, liability for outside counsel, and cover Fire staffing costs $ 1,427,737

51 5. LAND AND BUILDINGS HELD FOR RESALE

Land and buildings held for resale are recorded at the lower of cost or estimated net realizable value, only determined upon the execution of a disposition and development agreement. The available fund balance is reserved in an amount equal to the carrying value of land and buildings held for resale because such assets are not available to finance the City’s current operations. The amount recorded as assets held for resale and the corresponding fund balance reserved as of June 30, 2009, was $540,880.

6. CAPITAL ASSETS

A. Government-Wide Financial Statements

At June 30, 2009, the City’s capital assets consisted of the following:

Government Business-Type Activities Activities Total

Non-depreciable assets: Land $ 19,102,058 $ 497,497 $ 19,599,555 Water rights - 1,221,838 1,221,838 Construction in progress 5,731,283 12,554,477 18,285,760 Total non-depreciable assets 24,833,341 14,273,812 39,107,153

Depreciable assets: Buildings and improvements 64,872,450 70,179,257 135,051,707 Improvements other than buildings 18,579,217 62,138,898 80,718,115 Machinery and equipment 48,323,733 131,000,798 179,324,531 Infrastructure 101,317,902 1,614,700 102,932,602 Total depreciable assets 233,093,302 264,933,653 498,026,955

Less accumulated depreciation for: Buildings and improvements (24,507,407) (20,635,453) (45,142,860) Improvements other than buildings (5,407,137) (29,733,515) (35,140,652) Machinery and equipment (20,327,465) (33,717,460) (54,044,925) Infrastructure (64,778,540) (152,233) (64,930,773) Total accumulated depreciation (115,020,549) (84,238,661) (199,259,210)

Total depreciable assets, net 118,072,753 180,694,992 298,767,745

Total capital assets $ 142,906,094 $ 194,968,804 $ 337,874,898

52 6. CAPITAL ASSETS, Continued

A. Government-Wide Financial Statements, Continued

The following is a summary of capital assets for governmental activities:

Balance Balance July 1, 2008 Additions Deletions June 30, 2009 Governmental Activities: Capital assets, not being depreciated: Land $ 19,102,058 $ - $ - $ 19,102,058 Construction in progress 11,965,076 3,832,692 (10,066,485) 5,731,283 Total capital assets, not being depreciated 31,067,134 3,832,692 (10,066,485) 24,833,341 Capital assets, being depreciated: Buildings and improvements 64,088,935 820,937 (37,422) 64,872,450 Improvements other than buildings 17,197,544 1,381,673 - 18,579,217 Machinery and equipment 44,180,566 5,441,982 (1,298,815) 48,323,733 Infrastructure 93,286,034 8,031,868 - 101,317,902 Total capital assets, being depreciated 218,753,079 15,676,460 (1,336,237) 233,093,302 Less accumulated depreciation for: Buildings and improvements (23,104,242) (1,403,165) - (24,507,407) Improvements other than buildings (4,687,786) (719,351) - (5,407,137) Machinery and equipment (17,676,681) (3,773,632) 1,122,848 (20,327,465) Infrastructure (62,833,668) (1,944,872) - (64,778,540) Total accumulated depreciation (108,302,377) (7,841,020) 1,122,848 (115,020,549) Total capital assets, being depreciated, net 110,450,702 7,835,440 (213,389) 118,072,753 Total governmental activities $ 141,517,836 $ 11,668,132 $ (10,279,874) $ 142,906,094

Depreciation expense in governmental activities for capital assets for the year ended June 30, 2009, was $7,841,020 and was allocated as follows:

General Government $ 636,301 Human Resources 2,161 Finance and Technology 679,743 Community Development 104,838 Community Services 800,997 Police 369,829 Fire 195,404 Public Works 5,051,747 $ 7,841,020

53 6. CAPITAL ASSETS, Continued

A. Government-Wide Financial Statements, Continued

The following is a summary of capital assets for business-type activities:

Balance Balance July 1, 2008 Additions Deletions June 30, 2009 Business-Type Activities: Capital assets, not being depreciated: Land $ 483,478 $ 14,019 $ - $ 497,497 Water rights 1,221,838 - - 1,221,838 Construction in progress 7,738,737 7,049,858 (2,234,118) 12,554,477 Total capital assets, not being depreciated 9,444,053 7,063,877 (2,234,118) 14,273,812

Capital assets, being depreciated: Buildings and improvements 69,412,459 766,798 - 70,179,257 Improvements other than buildings 62,138,075 822 - 62,138,897 Machinery and equipment 129,550,327 1,450,470 - 131,000,797 Infrastructure 1,496,345 118,355 - 1,614,700 Total capital assets, being depreciated 262,597,206 2,336,445 - 264,933,651

Less accumulated depreciation for: Buildings and improvements (19,135,019) (1,500,434) - (20,635,453) Improvements other than buildings (28,392,733) (1,340,781) - (29,733,514) Machinery and equipment (28,165,507) (5,551,952) - (33,717,459) Infrastructure (73,157) (79,076) - (152,233) Total accumulated depreciation (75,766,416) (8,472,243) - (84,238,659)

Total capital assets, being depreciated, net 186,830,790 (6,135,798) - 180,694,992 Total business-type activities $ 196,274,843 $ 928,079 $ (2,234,118) $ 194,968,804

Depreciation expense in business-type activities for capital assets for the year ended June 30, 2009, is composed of the following:

Wastewater $ 3,208,772 Water 4,346,028 Golf Course 917,443 Total depreciation expense $ 8,472,243

54 7. LEASES

A. Capital Leases

The City entered into lease agreements in October 2004 and July 2006 as lessee for financing the acquisition of golf course maintenance equipment with a down payment of $26,595. In fiscal year 2008-09, there was a new capital lease in the amount of $885,961 for the lease purchase of Computer Aided Dispatch and Mobile System upgrade to the existing system. There are five annual payments of $177,192 starting on January 1, 2009, ending on January 1, 2013. These lease agreements qualify as capital leases for accounting purposes and therefore, have been recorded at the present value of the future minimum lease payments as of the inception date. The assets acquired through capital leases are as follows: Governmental Business-Type Activities Activities Asset: Machinery and equipment $ 885,961 $ 992,066 Less: Accumulated depreciation - (215,129) Total $ 885,961 $ 776,937

Increases to Capital Leases Payable were as follows:

Classification Amounts Amounts Balance Balance Due Within Due in More July 1, 2008 Additions Deletions June 30, 2009 One Year than One Year Machinery and Equipment Governmental Activities: 2009 Lease Agreement $ - $ 885,961 $ (177,192) $ 708,769 $ 177,192 $ 531,577 Business-Type Activities: 2004 Lease Agreement 57,209 - (57,209) - - - 2006 Lease Agreement 280,882 - (137,351) 143,531 143,531 - Total Capital Leases Payable $ 338,091 $ 885,961 $ (371,752) $ 852,300 $ 320,723 $ 531,577

55 7. LEASES, Continued

A. Capital Leases, Continued

The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2009, are as follows:

Governmental Business-Type Year Ending June 30 Activities Activities 2010 $ 177,192 $ 143,531 2011 177,192 - 2012 177,192 - 2013 177,193 - Total minimum payments 708,769 143,531

8. STATE WATER PROJECT

On July 6, 1971, the City executed a contract with the Casitas Municipal Water District (CMWD) for the allocation of fifty (50) percent of CMWD’s annual entitlement of available water from the State of California Water Project. In turn, the City assumed the burden of costs, both past and future, in the same proportion. The City’s share of existing costs as of the inception of the contract was covered by a contract payable over a twenty (20) year period at four (4) percent interest, and was paid as of June 30, 1990.

The agreement currently in effect runs through the fiscal year ending June 30, 2035, with the right to extend the agreement for continued service. Under this agreement, the City’s share of current project costs is paid on an annual basis. This agreement allows the City the option to maintain its right to beneficial use of water from the State Water Line Project. The costs for this project are adjusted semiannually by the State and have been increasing annually. The City’s investment (at cost) in the State Water Line Project at June 30, 2009, was $23,424,266, which excludes the actual cost of water from the project.

The City will depreciate these costs when it begins using water from the State of California Water Project.

56 9. LONG-TERM DEBT

A. Governmental Activities Long-Term Debt

The Summary of Changes in Long-Term Debt for Governmental Activities for the year ended June 30, 2009, is as follows:

Classification Amounts Amounts Balance Balance Due Within Due in More July 1, 2008 Additions Deletions June 30, 2009 One Year than One Year

Governmental Activities: CalHFA HELP Loan - 2008 $ 1,500,000 $ - $ - $ 1,500,000 $ - $ 1,500,000 Certificates of Participation - 2001 Series A 1,955,000 - (185,000) 1,770,000 190,000 1,580,000 Certificates of Participation - 2001 Series C 14,485,000 - (365,000) 14,120,000 380,000 13,740,000 Certificates of Participation - 2002 Series B 13,925,000 - (1,260,000) 12,665,000 1,320,000 11,345,000 Certificates of Participation - 2002 Series D 14,390,000 - (355,000) 14,035,000 365,000 13,670,000 Certificates of Participation - 2007 Series E 11,025,000 - (425,000) 10,600,000 435,000 10,165,000 Tax Allocation Bonds - 2003 7,060,000 - (255,000) 6,805,000 260,000 6,545,000 Tax Allocation Bonds - 2008 - 8,785,000 - 8,785,000 285,000 8,500,000 California Energy Commission 2004 Loan 174,740 - (11,638) 163,102 12,103 150,999 California Energy Commission 2007 Loan 248,090 - (66,986) 181,104 70,034 111,070

Subtotal governmental activities 64,762,830 8,785,000 (2,923,624) 70,624,206 3,317,137 $ 67,307,069

Claims and judgments payable (Note 12) 6,308,809 3,224,365 (2,313,579) 7,219,595 2,356,251 4,863,344 Compensated absences payable (Note 1J ) 4,853,448 4,429,025 (3,991,209) 5,291,264 448,028 4,843,236

Total governmental activities $ 75,925,087 $ 16,438,390 $ (9,228,412) $ 83,135,065 $ 6,121,416 $ 77,013,649

CalHFA HELP Loan - 2008

The Agency entered into a loan agreement on December 21, 2007 with the California Housing Finance Agency (CALHFA) to borrow $1.5 million at a 3.5 percent interest rate for a term of 10 years for the WAV (Working Artists of Ventura) project. Payment of principal and all simple interest is due on the tenth anniversary of the agreement.

Certificates of Participation – 2001 Series A

Certificates of Participation in the amount of $2,925,000 were issued on December 1, 2001. The Certificates were issued to provide for: (1) the defeasance of $2,960,000 of the City of San Buenaventura 1987 Refunding Certificates of Participation (Capital Improvement Project); (2) to acquire debt service reserve surety bond for the Series A Certificates; and (3) to pay costs in connection with the execution and delivery of the Series A Certificates. The Certificates are due in annual principal installments of $145,000 to $255,000 through 2017. Interest rates range from 3.00 percent to 4.625 percent and is payable semi-annually on January 1 and July 1. Funding sources for the repayment are lease payments made by the City to the Public Facilities Financing Authority. The total amount outstanding as of June 30, 2009, was $ 1,770,000.

57 9. LONG-TERM DEBT, Continued

A. Governmental Activities Long-Term Debt, Continued

The annual debt service requirements for the 2001 Series A Certificates of Participation outstanding at June 30, 2009, were as follows:

Year Ending June 30 Principal Interest Total 2010 $ 190,000 $ 75,850 $ 265,850 2011 200,000 68,012 268,012 2012 205,000 68,013 273,013 2013 215,000 51,813 266,813 2014 225,000 42,944 267,944 2015-2017 735,000 67,713 802,713 Total $ 1,770,000 $ 374,345 $ 2,144,345

Certificates of Participation – 2001 Series C

Certificates of Participation in the amount of $16,345,000 were issued on December 1, 2001. The Certificates were issued to provide for: (1) improvements to the Ventura Community Park, the City Hall Terra Cotta Restoration Project, heating and ventilation improvements to City Hall and city-wide street median improvement programs; (2) to acquire debt service reserve surety bond for the Certificates; and (3) to pay costs in connection with the execution and delivery of the Series C Certificates. The Certificates are due in annual principal installments of $210,000 to $1,025,000 through 2030. Interest rates range from 3.00 percent to 4.725 percent and is payable semi-annually on February 1 and August 1. Funding sources for the repayment are lease payments made by the City to the Public Facilities Financing Authority. The total amount outstanding as of June 30, 2009, was $14,120,000.

The annual debt service requirements for the 2001 Series C Certificates of Participation outstanding at June 30, 2009, were as follows:

Year Ending June 30 Principal Interest Total 2010 $ 380,000 $ 696,344 $ 1,076,344 2011 395,000 680,669 1,075,669 2012 410,000 664,869 1,074,869 2013 430,000 646,419 1,076,419 2014 450,000 627,069 1,077,069 2015-2019 2,600,000 2,781,287 5,381,287 2020-2024 3,280,000 2,103,062 5,383,062 2025-2029 4,180,000 1,204,350 5,384,350 2030-2031 1,995,000 158,550 2,153,550 Total$ 14,120,000 $ 9,562,619 $ 23,682,619

58 9. LONG-TERM DEBT, Continued

A. Governmental Activities Long-Term Debt, Continued

Certificates of Participation – 2002 Series B

Certificates of Participation in the amount of $19,765,000 were issued on October 3, 2002. The Certificates were issued to provide funds for: (1) the defeasance of 1993 Refunding Certificates of Participation and related city lease payment obligations; (2) to acquire debt service reserve surety bond for the Series B Certificates; and (4) to pay certain costs incurred in connection with the execution and delivery of the Series B Certificates. The Certificates are due in annual principal installments of $255,000 to $1,885,000 through 2017. Interest rates range from 3.25 percent to 5.50 percent and is payable semi-annually on January 1 and July 1. Funding sources for the repayment are lease payments made by the City to the Public Facilities Financing Authority. The total amount outstanding as of June 30, 2009, was $12,665,000.

The annual debt service requirements for the 2002 Series B Certificates of Participation outstanding at June 30, 2009, were as follows:

Year Ending June 30 Principal Interest Total 2010 $ 1,320,000 $ 671,856 $ 1,991,856 2011 1,385,000 605,856 1,990,856 2012 1,455,000 536,606 1,991,606 2013 1,525,000 463,856 1,988,856 2014 1,610,000 381,888 1,991,888 2015-2017 5,370,000 601,150 5,971,150 Total $ 12,665,000 $ 3,261,212 $ 15,926,212

Certificates of Participation – 2002 Series D

Certificates of Participation in the amount of $15,930,000 were issued on December 1, 2002. The Certificates were issued to provide funds for: (1) improvements to the Buenaventura Golf Course and the Olivas Park Golf Course; (2) to acquire debt service reserve surety bond for the Certificates; (3) to fund capitalized interest; and (4) to pay certain costs incurred in connection with the execution and delivery of the Certificates. The Certificates are due in annual principal installments of $215,000 to $980,000 through 2032. Interest rates range from 1.65 percent to 5.00 percent and is payable semi-annually on February 1 and August 1. Funding sources for the repayment are lease payments made by the City to the Public Facilities Financing Authority. The total amount outstanding as of June 30, 2009, was $14,035,000.

59 9. LONG-TERM DEBT, Continued

A. Governmental Activities Long-Term Debt, Continued

Certificates of Participation – 2002 Series D, Continued

The annual debt service requirements for the 2002 Series D Certificates of Participation outstanding at June 30, 2009, were as follows:

Year Ending June 30 Principal Interest Total 2010 $ 365,000 $ 663,293 $ 1,028,293 2011 380,000 650,519 1,030,519 2012 390,000 636,269 1,026,269 2013 405,000 621,156 1,026,156 2014 425,000 604,957 1,029,957 2015-2019 2,405,000 2,735,625 5,140,625 2020-2024 3,020,000 2,119,750 5,139,750 2025-2029 3,840,000 1,296,000 5,136,000 2030-2032 2,805,000 285,000 3,090,000 Total $ 14,035,000 $ 9,612,569 $ 23,647,569

Certificates of Participation – 2007 Series E

On December 1, 2007, the City issued $11,420,000 in Certificates of Participation (Series E) with an average interest rate ranging from 3 percent to 4.5 percent to: (1) provide for the advance refunding of the $7,090,000 City of San Buenaventura Public Facilities Financing Authority 1995 Refunding Lease Revenue Bonds with an interest rate ranging from 4.55 percent to 5.75 percent and a principal balance of $3,455,000, (2) finance the acquisition of unencumbered fee title to a public parking structure, (3) finance certain public park improvements, (4) fund the Reserve Fund, and (5) pay certain costs incurred in connection with the execution and delivery of the Certificates. The net proceeds of $10.9 million (after payment of $436,000 in Original Issue Discount and Issuance Fees) were used to fund items 1-4 above. The Certificates were executed and delivered by and among the Bank of New York Trust Company, N.A. as Trustee. As a result, the 1995 Refunding Lease Revenue Bonds discussed in (1) above are considered to be defeased, and the liability for those bonds has been removed from the financial statements. The total amount outstanding as of June 30, 2009, was $10,600,000.

60 9. LONG-TERM DEBT, Continued

A. Governmental Activities Long-Term Debt, Continued

Certificates of Participation – 2007 Series E, Continued

The annual debt service requirements for the 2007 Series E Certificates of Participation outstanding at June 30, 2009, were as follows:

Year Ending June 30 Principal Interest Total 2010 $ 435,000 $ 469,431 $ 904,431 2011 450,000 452,031 902,031 2012 470,000 434,031 904,031 2013 485,000 415,231 900,231 2014 510,000 395,831 905,831 2015-2019 1,175,000 1,787,156 2,962,156 2020-2024 1,425,000 1,526,163 2,951,163 2025-2029 1,785,000 1,176,900 2,961,900 2030-2034 2,245,000 713,925 2,958,925 2035-2038 1,620,000 156,275 1,776,275 Total $ 10,600,000 $ 7,526,975 $ 18,126,975

Tax Allocation Bonds – 2003

Tax Allocation Bonds in the amount of $8,000,000 were issued on June 1, 2003. The Bonds were issued to provide funds to (1) repay certain advances made by the City of San Buenaventura to the Agency; (2) fund a Reserve Account for the Bonds; and (3) pay costs of issuance of the Bonds. The Bonds are due in annual principal installments of $205,000 to $495,000 through 2028. Interest rates range from 2.00 percent to 4.25 percent and is payable semi-annually on February 1 and August 1. Funding sources for the repayment are tax revenue allocated to the Agency from the project area. The total amount outstanding as of June 30, 2009, was $6,805,000.

The 2003 Tax allocation bonds are special obligations of the Agency, which are secured by an irrevocable pledge of tax revenues payable to the City of San Buenaventura. The principal and interest remaining on the bonds is $9,704,531, payable through August 2028. For the current year, principal and interest and total incremental property tax revenues were $514,714, and $3,854,809 respectively.

61 9. LONG-TERM DEBT, Continued

A. Governmental Activities Long-Term Debt, Continued

The annual debt service requirements for the 2003 Tax Allocation Bonds outstanding at June 30, 2009, were as follows: Year Ending June 30 Principal Interest Total 2010 $ 260,000 $ 253,595 $ 513,595 2011 270,000 246,464 516,464 2012 275,000 238,457 513,457 2013 285,000 230,058 515,058 2014 290,000 221,070 511,070 2015-2019 1,610,000 944,766 2,554,766 2020-2024 1,950,000 602,666 2,552,666 2025-2028 1,865,000 162,456 2,027,456

Total $ 6,805,000 $ 2,899,531 $ 9,704,531

Tax Allocation Bonds – 2008

Tax Allocation Bonds in the amount of $8,785,000 were issued on December 18, 2008. The Bonds were issued to provide funds to (1) repay certain advances made by the City of San Buenaventura to the Agency; (2) fund a Reserve Account for the Bonds; and (3) pay costs of issuance of the Bonds. The Bonds are due in annual principal installments of $35,000 to $695,000 through 2039. Interest rates range from 3.00 percent to 8.00 percent and is payable semi-annually on February 1 and August 1. Funding sources for the repayment are tax revenue allocated to the Agency from the project area. The total amount outstanding as of June 30, 2009, was $8,785,000.

The 2008 Tax allocation bonds are special obligations of the Agency, which are secured by an irrevocable pledge of tax revenues payable to the City of San Buenaventura. The principal and interest remaining on the bonds is $20,075,035, payable through August 2039. For the current year, principal payments have not started, only interest of $74,988.

The annual debt service requirements for the 2008 Tax Allocation Bonds outstanding at June 30, 2009, were as follows: Year Ending June 30 Principal Interest Total

2010 $ 285,000 $ 623,531 $ 908,531 2011 35,000 618,513 653,513 2012 60,000 616,419 676,419 2013 90,000 612,931 702,931 2014 165,000 606,669 771,669 2015-2019 1,620,000 2,811,669 4,431,669 2020-2024 1,550,000 2,258,572 3,808,572 2025-2029 1,775,000 1,699,531 3,474,531 2030-2034 1,300,000 1,038,000 2,338,000 2035-2039 1,905,000 404,200 2,309,200 Total $ 8,785,000 $ 11,290,035 $ 20,075,035

62 9. LONG-TERM DEBT, Continued

A. Governmental Activities Long-Term Debt, Continued

California Energy Commission – 2004 Loan

On August 19, 2004, a low-interest loan was made with the California Energy Commission to install solar panels at the City’s Sanjon Yard facility to reduce energy use. The loan has an interest rate of 3.95 percent and a thirteen-year repayment schedule with 27 equal payments of $9,457 and a final payment of $27,286.

The annual debt service requirements for the August 19, 2004, California Energy Commission loan outstanding at June 30, 2009, were as follows:

Year Ending June 30 Principal Interest Total 2010 $ 12,103 $ 6,325 $ 18,428

2011 12,586 5,842 18,428

2012 13,074 5,354 18,428 2013 13,609 4,818 18,428 2014 14,152 4,275 18,428 2015-2019 79,684 12,455 92,139

2020 17,894 18,961 36,855

Total $ 163,102 $ 58,030 $ 221,132

California Energy Commission – 2007 Loan

On October 13, 2006, a low-interest loan was made with the California Energy Commission to install energy efficient lights at various City facilities and energy efficient pumps and motors on the heating and cooling systems at City Hall and Police/Fire Headquarters. The loan has an interest rate of 4.5 percent and a six-year repayment schedule with 11 equal payments of $38,703.

The annual debt service requirements for the October 13, 2006, California Energy Commission loan outstanding at June 30, 2009, were as follows:

Year Ending June 30 Principal Interest Total 2010 $ 70,034 $ 7,373 $ 77,407 2011 73,221 4,186 77,407 2012 37,849 854 38,703 Total $ 181,104 $ 12,413 $ 193,517

63 9. LONG-TERM DEBT, Continued

B. Long-Term Debt of Business-Type Activities and Proprietary Funds

The summary of changes in long-term debt of business-type activities for the year ended June 30, 2009, is as follows:

Classification Amounts Amounts Balance Balance Due Within Due in More July 1, 2008 Additions Deletions June 30, 2009 One Year than One Year Business-Type Activities: Wastewater Revenue Refunding Bonds $ 23,140,000 $ - $ (680,000) $ 22,460,000 $ 695,000 $ 21,765,000 Less unamortized : Bond premium 220,075 - (8,465) 211,610 - 211,610 Deferral on refunding (500,680) - 83,446 (417,234) - (417,234) Wastewater Revenue Refunding Bonds, net 22,859,395 - (605,019) 22,254,376 695,000 21,559,376

Water Revenue Refunding Bonds 24,960,000 - (550,000) 24,410,000 570,000 23,840,000 Less unamortized : Bond premium 439,536 - (33,809) 405,727 - 405,727 Deferral on refunding (851,452) - 65,496 (785,956) - (785,956) Water Revenue Refunding Bonds, net 24,548,084 - (518,313) 24,029,771 570,000 23,459,771

Safe Drinking Water Loan 19,209,485 - (402,357) 18,807,128 819,195 17,987,933

Total business-type activities $ 66,616,964 $ - $ (1,525,689) $ 65,091,275 $ 2,084,195 $ 63,007,080

Wastewater Refunding 2004 Bonds

Certificates of Participation in the amount of $25,075,000 were issued on December 16, 2004. The Certificates were issued to provide for: (1) the defeasance of $7,125,000 million of the City of San Buenaventura 1996 Wastewater Revenue Refunding Bonds; (2) finance improvements to the City’s water reclamation facility upgrade; (3) fund a reserve fund for the Certificates; and (4) pay costs in connection with the execution and delivery of the Certificates. The Certificates are due in annual principal installments of $625,000 to $1,405,000 through 2034. Interest rates range from 2.50 percent to 5.00 percent and is payable semi-annually on September 1 and March 1. Funding sources for the repayment are lease payments made by the City to the Public Facilities Financing Authority. The total amount outstanding as of June 30, 2009, was $22,460,000.

Total Wastewater Revenue Refunding Bonds outstanding as of June 30, 2009, net of unamortized bond premium were as follows:

Principal outstanding at June 30, 2009 $ 22,460,000 Add unamortized bond premium 211,610 Less unamortized deferral on refunding (417,234) Net Bonds outstanding at June 30, 2009 $ 22,254,376

64 9. LONG-TERM DEBT, Continued

B. Long-Term Debt of Business-Type Activities and Proprietary Funds, Continued

Wastewater Refunding 2004 Bonds, Continued

The annual debt service requirements for the 2004 Wastewater Revenue Refunding Bonds outstanding at June 30, 2009, were as follows:

Year Ending June 30 Principal Interest Total 2010 $ 695,000 $ 1,039,600 $ 1,734,600 2011 720,000 1,018,750 1,738,750 2012 745,000 993,550 1,738,550 2013 775,000 965,612 1,740,612 2014 800,000 936,550 1,736,550 2015-2019 3,405,000 4,236,738 7,641,738 2020-2024 3,930,000 3,454,725 7,384,725 2025-2029 5,000,000 2,371,750 7,371,750 2030-2034 6,390,000 989,750 7,379,750 Total $ 22,460,000 $ 16,007,025 $ 38,467,025

Water Revenue Refunding Bonds

Certificates of Participation in the amount of $27,410,000 were issued on March 1, 2004. The Certificates were issued to provide for: (1) the defeasance of $12,615,000 of the City of San Buenaventura 1993 Water Revenue Refunding Bonds; (2) finance improvements to the City’s water system; (3) fund a reserve fund for the Certificates; and (4) pay costs in connection with the execution and delivery of the Certificates. The Certificates are due in annual principal installments of $505,000 to $1,610,000 through 2033. Interest rates range from 3.00 percent to 5.00 percent and is payable semi-annually on October 1 and April 1. Funding sources for the repayment are lease payments made by the City to the Public Facilities Financing Authority. The total amount outstanding as of June 30, 2009, was $24,410,000.

Total Water Revenue Refunding Bonds outstanding as of June 30, 2009, net of unamortized bond premium and deferral on refunding were as follows:

Principal outstanding at June 30, 2009 $ 24,410,000 Add unamortized bond premium 405,727 Less unamortized deferral on refunding (785,956)

Net Bonds outstanding at June 30, 2009 $ 24,029,771

65 9. LONG-TERM DEBT, Continued

B. Long-Term Debt of Business-Type Activities and Proprietary Funds, Continued

Water Revenue Refunding Bonds, Continued

The annual debt service requirements for the Water Revenue Refunding Bonds outstanding at June 30, 2009, were as follows:

Year Ending

June 30 Principal Interest Total 2010 $ 570,000 $ 1,118,963 $ 1,688,963 2011 590,000 1,099,375 1,689,375 2012 610,000 1,078,375 1,688,375

2013 630,000 1,055,888 1,685,888

2014 655,000 1,030,975 1,685,975

2015-2019 3,690,000 4,722,887 8,412,887

2020-2024 4,525,000 3,834,900 8,359,900 2025-2029 5,795,000 2,589,625 8,384,625 2030-2034 7,345,000 951,625 8,296,625 Total $ 24,410,000 $ 17,482,613 $ 41,892,613

Safe Drinking Water Loan

The City has entered into a funding agreement with the State of California Department of Water Resources for a construction loan under the Safe Drinking Water State Revolving Fund Law of 1997. The project is still under construction and the repayment schedule started January 1, 2008. The loan has an interest rate of 2.39 percent and a 20-year repayment schedule with 40 equal payments of $631,910. The City has drawn $18,000,000 to date.

Year Ending June 30 Principal Interest Total

2010 $ 819,195 $ 444,625 $ 1,263,820

2011 838,891 424,929 1,263,820

2012 859,060 404,760 1,263,820

2013 879,714 384,106 1,263,820

2014 900,865 362,955 1,263,820 2015-2019 4,839,820 1,479,279 6,319,099 2020-2024 5,450,292 868,807 6,319,099 2025-2027 4,219,291 204,078 4,423,369 Total $ 18,807,128 $ 4,573,538 $ 23,380,666

66 10. DEFERRED REVENUES

Deferred revenues at June 30, 2009, are reported as follows:

General Fund: Business license tax $ 431,145 Recreational activities 397,114 Grants 282,459 Total General Fund 1,110,718

Special Revenue Funds: Gas Tax: Department of Transportation 104,010 Law Enforcement 6,855 Total Special Revenue Funds 110,865

Capital Projects Funds: Capital Improvement: Olivas Adobe 53,120 Total Capital Projects Funds 53,120

Total deferred revenues $ 1,274,703

67 11. FUND BALANCES FOR GOVERNMENTAL FUNDS

A. Reservation and Designation of Fund Balances

Fund balances at June 30, 2009, for the governmental funds have been reserved and designated for the following purposes:

Major Funds Certificates of Park and Participation Redevelopment Gas Tax Recreation Debt Capital Agency Other Total General Special Special Obligation Improvement Capital Governmental Governmental Fund Revenue Revenue Debt Service Projects Projects Funds Funds Reserved: Encumbrances $ 1,641,197 $ - $ - $ - $ 795,567 $ 176,626 $ - $ 2,613,390 Petty cash 12,745 - - - - - 12,500 25,245 Advances to other funds 5,994,297 - - - - - 1,071,875 7,066,172 Prepaid items 6,359 ------6,359 Inventories 405,825 ------405,825 Assets held for resale - - - - - 540,880 - 540,880 Loans and notes receivable 1,206,172 - - - - 4,041,414 845,156 6,092,742 Investment in Portobello bonds 590,000 ------590,000 Debt service - - - 2,087,516 - - 6,082,347 8,169,863

Total reserved 9,856,595 - - 2,087,516 795,567 4,758,920 8,011,878 25,510,476

Unreserved, designated: Contingencies 12,000,000 ------12,000,000 Special revenue funds - 3,411,925 1,288,799 - - - 361,973 5,062,697 Capital projects funds - - - - 1,350,390 - - 1,350,390 Other* 7,002,989 ------7,002,989

Total unreserved, designated 19,002,989 3,411,925 1,288,799 - 1,350,390 - 361,973 25,416,076

Unreserved, undesignated: General fund 4,374,390 - - - 4,374,390 Special revenue funds - 15,745,307 4,301,301 - - - 1,915,386 21,961,994 Capital projects funds - - - - 5,033,492 (4,057,587) 1,835,501 2,811,406

Total fund balances $ 33,233,974 $ 19,157,232 $ 5,590,100 $ 2,087,516 $ 7,179,449 $ 701,333 $ 12,124,738 $ 80,074,342

*Other Police K-9 $ 31,820 $ - $ - $ - $ - $ - $ - $ 31,820 Available RDA 52,395 ------52,395 Downtown commercial rehab 444,081 ------444,081 Code compliance 117,718 ------117,718 RDA formation 200,000 ------200,000 Parking Lot Improvements 47,878 ------47,878 Housing preservation 579,458 ------579,458 Special Projects 215,260 ------215,260 Paramedics Program 336,011 ------336,011 Revenue Enhancement 628,577 ------628,577 Jobs Investment 4,349,791 ------4,349,791 Total other $ 7,002,989 $ - $ - $ - $ - $ - $ - $ 7,002,989

68 12. SELF-INSURANCE ACCRUED LIABILITIES

The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City is self-insured for the first $500,000 in loss for each workers’ compensation claim and the first $1,000,000 for each general liability claim and up to $25,000 for property damage claims. The City accounts for and finances its self-insured risks of loss in the Workers’ Compensation Fund and Public Liability Fund. Excess insurance is purchased from commercial carriers for each workers’ compensation and general liability claim losses in excess of the self-insured retention levels.

The outstanding claim liabilities in each of the self-insurance internal service funds are based on independent claims evaluation and also the results of separate actuarial studies and include amounts for claims incurred but not reported. Claims liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. The estimate of the claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether allocated to specific claims. General and workers’ compensation liabilities are carried at an actuarially determined rate. It is the City’s practice to obtain full actuarial studies biannually for general liability and workers’ compensation coverage. Premiums are charged by the internal service self-insurance funds using various allocation methods that include actual costs, trends in claims experience, claim severity and claims frequency. Revenues of the internal service self-insurance funds are expended to provide adequate resources to allay program administrative costs, preventative measures and to meet liabilities as they become due. Claims and judgments are generally liquidated by the internal service funds.

During the past three fiscal (claims) years, none of the above programs of protection have had settlements or judgments that exceeded pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage in the prior year.

69 12. SELF-INSURANCE ACCRUED LIABILITIES, Continued

The aggregate change in the balance of claims liabilities for the internal service self-insurance funds were as follows: June 30 2009 2008 Unpaid claims, beginning of year $ 6,308,809 $ 8,716,325 Incurred claims and changes in estimates 3,224,365 530,257 Claim payments (2,313,579) (2,937,773) Unpaid claims, end of year $ 7,219,595 $ 6,308,809

Current portion $ 2,356,251 $ 2,327,156 Noncurrent portion 4,863,344 3,981,653

Total claims and judgements payable $ 7,219,595 $ 6,308,809

At June 30, 2009, total estimated claims payable were as follows:

General Liability $ 1,575,666 Workers' Compensation 5,643,929 Total $ 7,219,595

13. PENSION PLANS AND OTHER POST EMPLOYMENT BENEFITS (OPEB)

A. California Public Employees’ Retirement Plan (PERS)

Plan Description - The City contributes to the California Public Employees’ Retirement System (PERS), an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS’ annual financial report may be obtained from their Executive Office located at 400 P Street, Sacramento, California 95814.

Funding Policy - Active members are required by State statute to contribute 7 percent of their annual salary if a Miscellaneous member, and 9 percent if a Safety member. The City makes the required employee contributions for all Miscellaneous employees and Safety employees in the Fire, Police, Police Management and for the Fire Chief and Police Chief, which amounted to $3,967,333 for the year ended June 30, 2009 (Fire Management Unit employees pay their own 9 percent). The City’s employer required contributions rate for Safety employees was 28.661 percent and Miscellaneous was 9.419 percent for the fiscal year.

70 13. PENSION PLANS AND OTHER POST EMPLOYMENT BENEFITS (OPEB), Continued

A. California Public Employees’ Retirement Plan (PERS), Continued

Annual Pension Cost - For 2008-2009, the City’s annual pension cost of $9,162,430 for PERS was equal to the City’s required and actual contributions. The required contribution was determined as part of the June 30, 2006, actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included: (a) 7.75 percent investment rate of return (net of administrative expenses), (b) projected salary increases range from 3.25 percent to 14.45 percent for miscellaneous employees and 3.25 percent to 13.15 percent for safety employees depending on age, service, and type of employment, and (c) 2 percent per year cost-of-living adjustments. Both (a) and (b) included an inflation component of 3.0 percent. The actuarial value of PERS assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a three-year period. PERS unfunded actuarial accrued liability (or surplus) is being amortized as a level percentage of projected payroll on a closed basis. These assumptions are the same that were used in computing the schedule of funding progress below in 2007. The amortization period at June 30, 2007, was 30 years for miscellaneous employees and 30 years for safety employees for prior and current service unfunded liability.

THREE-YEAR TREND INFORMATION FOR PERS

Miscellaneous Safety Total Pension Cost Pension Cost Pension Cost APC Net Pension Fiscal Year (APC) (APC) (APC) Contributed Obligation

$ 6/30/2007 $ 2,478,133 $ 4,909,273 7,387,406 100% $ -

6/30/2008 2,816,585 5,394,680 8,211,264 100% -

6/30/2009 2,843,559 6,318,871 9,162,430 100% -

A schedule of funding progress is presented below: Underfunded (Overfunded) Underfunded Actuarial Entry Age (Overfunded) Liability as Actuarial Actuarial Actuarial Actuarial Percentage of Valuation Asset Accrued Accrued Funded Covered Covered Date Value Liability Liability Ratio Payroll Payroll

Miscellaneous 06/30/07 146,995,928 152,172,649 5,176,721 96.6% 28,321,428 18.3% Employees Group

Safety 06/30/07 166,852,027 210,348,900 43,496,873 79.3% 18,093,464 240.4% Employees Group

The required schedule of funding progress immediately following the Notes to the financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. 71 13. PENSION PLANS AND OTHER POST EMPLOYMENT BENEFITS (OPEB), Continued

B. Other Post Employment Benefits (OPEB)

The City agreed to pay a portion of the retirees’ health care premiums through December 31, 2008, after which the City has no further OPEB obligations. Health care premiums paid for retirees for fiscal year 2008-09 were $87,924.

14. JOINT VENTURE TRANSACTIONS

A. South Coast Area Transit

The City is a participant in a joint venture agreement with the cities of Port Hueneme, Ojai, Oxnard, and the County of Ventura for investment in a public bus transportation system, South Coast Area Transit (SCAT). As of June 30, 2009, the City held a 36.20 percent interest in SCAT based upon the number of service miles in the City. The City’s net equity in SCAT accounted for under the equity method was $9,010,021 or 37.63 percent at June 30, 2009. The City’s share of SCAT’s net operating loss was $657,786 for the fiscal year ended June 30, 2009, and the City’s share of SCAT’s capital grants was $3,012,595 resulting in a net increase in equity in fiscal year 2008-2009 of $2,354,809. Complete separate financial statements are available from the SCAT office at 301 East Third Street, Oxnard, CA 93030.

15. COMMITMENTS AND CONTINGENCIES

A. Lawsuits in the Normal Course of Business

The City is presently involved in certain matters of litigation that have arisen in the normal course of conducting City business. City management believes, based upon consultation with the City Attorney, that these cases, in the aggregate, are not expected to result in a material adverse financial impact on the City. Additionally, City management believes that the City’s insurance programs are sufficient to cover any potential losses should an unfavorable outcome materialize.

B. Agreement with Macerich Buenaventura Limited Partnership

The City entered into an agreement with Macerich Buenaventura Limited Partnership (Developer) for the development of Pacific View Mall (Mall), which is located within the City’s boundaries. The Developer agreed to make improvements to the Mall in exchange for sales tax rebates. The improvements include three projects on-site, off-site, and transit facility improvements. Upon completion of the projects, the on- site and transit facility assets will be the property of the Developer. The off-site improvements are public domain assets and will be donated to the City by the Developer. The agreement provides for 80 percent sales tax revenue rebates to the Developer over a base amount calculated as average sales tax revenue before the improvements are made. Payments are to be made for twenty years, beginning February 1, 2001, or until a maximum dollar amount of $32,300,000 (for all three projects) has been dispersed, whichever comes first. Total payments made by the City as of June 30, 2009, were $6,597,623. If the twenty years has elapsed and the maximum dollar amount has not been reached, the Developer has the right to appeal for further payments for an additional two years. The City does have the option to prepay the maximum dollar amount. There is no minimum amount due and if sales tax revenues do not exceed the base level, the City’s payments would be zero.

72 15. COMMITMENTS AND CONTINGENCIES, Continued

C. Federal and State Grant Programs

The City participates in several federal and state grant programs. These programs have been audited by the City's independent auditors in accordance with the provisions of the federal Single Audit Act, as amended, and applicable state requirements. No cost disallowances were proposed as a result of these audits; however, these programs are still subject to further examination by the grantors and the amount, if any, of expenditures, which may be disallowed by the granting agencies, cannot be determined at this time. The City expects such amounts, if any, to be immaterial.

As of June 30, 2009, in the opinion of City management, there were no additional outstanding matters that would have a significant effect on the financial position of the funds of the City.

16. JOBS INVESTMENT FUND

During fiscal year 2007-08, the City entered into an agreement with DFJ Frontier Fund as a limited liability partner to invest $3 million over time in high-tech, start-up companies with potential throughout the state of California, excluding Silicon Valley. The purpose of this venture capital arrangement is to promote economic growth within the State. When these start-up companies sell after maturing, investors will receive a percentage of the equity based upon their investment. During fiscal year 2007-08 and 2008-09, the City expended $450,000 respectively for a total of $900,000 of the $3 million set-aside for this purpose. The City has treated this as an expenditure rather than an investment.

In addition, the City set-aside $1.6 million for the Ventura Jobs Coinvestment Account with DFJ Frontier Fund to invest in high-tech, start-up companies within the City of Ventura. DFJ Frontier has agreed to match the City’s contributions in funding these companies. No money has been invested in this account to date.

Finally, $400,000 has been expended to establish and provide start-up funding for the Ventura Technology Center incubator in partnership with the Chamber of Commerce.

These initiatives were citied by Fortune Magazine in naming Ventura one of the top 100 places in the nation to launch a new company.

The City displays the money set-aside for the Jobs Investment Fund as unreserved, designated within the General Fund (see Note 11).

17. DEFERRED FEES

Due to the slowing California economy, the City entered into three agreements during fiscal year 2007-08 to defer approximately $2.4 million in planning and permitting fees for the following developer projects that would revitalize the downtown community:

Working Artists of Ventura (WAV) Apartments Partners – 69 units of rental housing restricted to low and very low income households ($1.4 million) The Olson Company – 172 residential condominium units ($826 thousand) Stajen Investments – 10 residential condominium units and 5,165 square feet of commercial space ($195 thousand)

73 17. DEFERRED FEES, continued

The agreement with WAV consists of a repayment schedule of 55 years beginning in 2010. The agreements with Olson and Stajen expire December 31, 2008, if construction does not begin by then. Because of the long-term repayment schedule with WAV and the probability that Olson and Stajen will not go forward with their development projects due to the downturn in the economy, no receivables have been booked for these deferred fees.

18. SUBSEQUENT EVENTS

A. SERAF

On July 24, 2009, the State Legislature passed Assembly Bill (AB) 26 4x, which requires redevelopment agencies statewide to deposit a total of $2.05 billion of property tax increment in county “Supplemental” Educational Revenue Augmentation Funds (SERAF) to be distributed to meet the State’s Proposition 98 obligations to schools. The SERAF revenue shift of $2.05 billion will be made over two years, $1.7 billion in fiscal year 2009-2010 and $350 million in fiscal year 2010-2011. The SERAF would then be paid to school districts and the county offices of education which have students residing in redevelopment project areas, or residing in affordable housing projects financially assisted by a redevelopment agency, thereby relieving the State of payments to those schools. The Agency’s share of this revenue shift is approximately $1.15 million in fiscal year 2009-2010 and $ 237 thousand in fiscal year 2010-2011. Payments are to be made by May 10 of each respective fiscal year. In response to AB 26 4x, the Agency intends to fund the SERAF payment due in May 2010 with the Low/Mod Housing Fund; and in May 2011 with tax increment.

The California Redevelopment Association (CRA) is the lead petitioner on a lawsuit to invalidate AB 26 4x, similar to last year’s successful lawsuit challenging the constitutionality of AB 1389. CRA filed the lawsuit on October 20, 2009. The lawsuit asserted that the transfer of property tax increment to the SERAF is not permitted under Article XVI, Section 16 of the California Constitution. The complaint also asserted impairment of contract and gift of public funds arguments. While the State made adjustments in AB 26 4x to address the constitutional issues raised by the Superior Court over last year’s lawsuit challenging AB 1389, the Agency, along with the CRA and other California redevelopment agencies, believe that the SERAF remains unconstitutional.

74  . .  

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     City of San Buenaventura Required Supplementary Information For the year ended June 30, 2009

1. BUDGETARY INFORMATION

Through the budget, the City Council sets the direction of the City, allocates its resources and establishes its priorities. The Annual Budget assures the efficient and effective use of the City's economic resources, as well as establishing that the highest priority objectives are accomplished.

The Annual Budget serves the fiscal period July 1 to June 30 and is a vehicle that accurately and openly communicates these priorities to the community, businesses, vendors, employees, and other public agencies. Additionally, it establishes the foundation of effective financial planning by providing resource planning and controls that permit the evaluation and adjustment of the City's performance.

The City prepares a one-year budget. The annual budgets are adopted on a basis consistent with generally accepted accounting principles for the General, special revenue, and debt service funds. All annual appropriations expire at the end of the year. Capital projects funds adopt project-length plans.

The Finance and Technology Department, working with all operating departments and the City Manager, develops a preliminary budget. On or before May 1 each year, the City Manager transmits the proposed budget to the City Council. The proposed budget includes both the sources and types of funds for the proposed expenditures. The City Council conducts public hearings on the proposed budget prior to June 30. On or before July 1, the budget is adopted and enacted by the City Council.

The appropriated budget is prepared by fund, department and division. City department heads may make transfers of appropriations within their department. All transfers between departments require approval of the City Council. The legal level of budgetary control is at the department level for the General Fund and at the fund level for all other governmental funds. Appropriation revisions made during the year ended June 30, 2009, were not significant.

Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase orders, contracts) outstanding at year-end are reported as reservations of fund balances and do not constitute expenditures or liabilities. The commitments will be re-appropriated and honored in the subsequent year.

75 City of San Buenaventura Required Supplementary Information For the year ended June 30, 2009

1. BUDGETARY INFORMATION, Continued

Following are the budget comparison schedules for the General Fund and all major special revenue funds.

Budget Comparison Schedule, General Fund Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative)

Fund balance, July 1 $ 38,100,741 $ 38,100,741 $ 38,100,741 $ -

Resources (inflows): Taxes 63,560,859 63,560,859 59,715,852 (3,845,007) Licenses and permits 1,470,816 1,470,816 1,004,297 (466,519) Intergovernmental 8,840,130 9,352,280 8,941,003 (411,277) Charges for services 11,494,916 11,803,569 10,124,934 (1,678,635) Fine and forfeitures 2,083,797 2,404,797 2,226,912 (177,885) Use of money and property 3,362,208 3,362,208 3,427,865 65,657 Other revenue 3,181,515 3,498,564 2,669,648 (828,916) Transfers from other funds 1,603,753 4,447,958 4,104,486 (343,472) Amount available for appropriations 95,597,994 99,901,051 92,214,997 (7,686,054)

Charges to appropriations (outflows): General government 4,836,939 6,155,665 4,701,884 1,453,781 Human resources 2,142,307 2,176,510 1,952,090 224,420 Finance and technology 6,992,337 7,156,325 6,499,052 657,273 Community development 3,677,297 4,863,824 4,432,927 430,897 Community services 6,957,281 7,063,090 6,608,893 454,197 Public safety - police 30,720,625 31,310,608 29,952,775 1,357,833 Public safety - fire 19,059,971 19,975,596 19,398,973 576,623 Public works 17,107,106 18,076,425 15,504,207 2,572,218 Capital outlays 200,000 578,694 586,294 (7,600) Loss on investment - - 2,488,375 (2,488,375) Transfers to other funds 4,522,551 5,349,294 4,956,294 393,000

Total charges to appropriations 96,216,414 102,706,031 97,081,764 5,624,267

Excess of resources over (under) charges to appropriations (618,420) (2,804,980) (4,866,767) (2,061,787)

Fund balance, June 30 $ 37,482,321 $ 35,295,761 $ 33,233,974 $ (2,061,787)

76 City of San Buenaventura Required Supplementary Information For the year ended June 30, 2009

1. BUDGETARY INFORMATION, Continued

Budget Comparison Schedule, Gas Tax Special Revenue Fund

Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative)

Fund balance, July 1 $ 20,076,606 $ 20,076,606 $ 20,076,606 $ -

Resources (inflows): Taxes - - 205,597 205,597 Intergovernmental 4,562,913 7,010,369 3,762,864 (3,247,505) Use of money and property 754,537 745,100 1,008,505 263,405 Other revenue - 343,480 343,480 - Transfers from other funds 136,266 404,968 168,053 (236,915) Amount available for appropriations 5,453,716 8,503,917 5,488,499 (3,015,418)

Charges to appropriations (outflows): Capital outlays 20,515,339 24,057,812 4,742,966 19,314,846 Loss on investments - - 1,416,354 (1,416,354) Transfers to other funds 566,472 609,852 248,553 361,299

Total charges to appropriations 21,081,811 24,667,664 6,407,873 18,259,791

Excess of resources over (under) charges to appropriations (15,628,095) (16,163,747) (919,374) 15,244,373

Fund balance, June 30 $ 4,448,511 $ 3,912,859 $ 19,157,232 $ 15,244,373

77 City of San Buenaventura Required Supplementary Information For the year ended June 30, 2009

1. BUDGETARY INFORMATION, Continued

Budget Comparison Schedule, Park and Recreation Special Revenue Fund

Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative)

Fund balance, July 1 $ 6,515,409 $ 6,515,409 $ 6,515,409 $ -

Resources (inflows): Taxes - - 10,707 10,707 Intergovernmental 728,369 728,369 - (728,369) Use of money and property 228,672 228,672 728,369 499,697 Other revenue 3,828,724 3,818,695 288,965 (3,529,730) Transfers from other funds - 4,076 4,076 - Amount available for appropriations 4,785,765 4,779,812 1,032,117 (3,747,695)

Charges to appropriations (outflows): General government 5,292,725 5,200,000 - 5,200,000 Capital outlays 1,513,584 3,149,689 1,411,248 1,738,441 Loss on investments - - 392,615 (392,615) Transfers to other funds 150,000 153,563 153,563 -

Total charges to appropriations 6,956,309 8,503,252 1,957,426 6,545,826

Excess of resources over (under) charges to appropriations (2,170,544) (3,723,440) (925,309) 2,798,131

Fund balance, June 30 $ 4,344,865 $ 2,791,969 $ 5,590,100 $ 2,798,131

78 City of San Buenaventura Required Supplementary Information For the year ended June 30, 2009

2. DEFINED BENEFIT PENSION PLAN

A schedule of funding progress for the most recent years available, three actuarial valuations are presented below.

Underfunded (Overfunded) Underfunded Actuarial Entry Age (Overfunded) Liability as Actuarial Actuarial Actuarial Actuarial Percentage of Valuation Asset Accrued Accrued Funded Covered Covered Date Value Liability Liability Ratio Payroll Payroll

Miscellaneous 06/30/05 $125,279,173 $130,494,845 $ 5,215,672 96.0% $ 26,050,824 20.0% Employees Group 06/30/06 135,278,920 140,835,180 5,556,260 96.1% 25,720,303 21.6% 06/30/07 146,995,928 152,172,649 5,176,721 96.6% 28,321,428 18.3%

Safety 06/30/05 144,323,263 182,825,796 38,502,533 78.9% 16,244,667 237.0% Employees Group 06/30/06 155,610,705 195,725,315 40,114,610 79.5% 17,228,418 232.8% 06/30/07 166,852,027 210,348,900 43,496,873 79.3% 18,093,464 240.4%

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     City of San Buenaventura Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Certificates of Participation Debt Obligation Debt Service Fund For the year ended June 30, 2009

Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative)

Fund balance, July 1 $ 2,420,492 $ 2,420,492 $ 2,420,492 $ -

Resources (inflows): Use of money and property 89,064 89,064 62,703 (26,361) Transfers from other funds 4,378,910 4,378,910 4,335,533 (43,377)

Amount available for appropriation 4,467,974 4,467,974 4,398,236 (69,738)

Charges to appropriations (outflows): Capital Outlays - - 6,941 (6,941) Principal retirement 2,165,000 2,165,000 2,165,000 - Interest and fiscal charges 2,213,910 2,213,910 2,200,909 13,001 Transfers to other funds 1,662,087 1,830,977 358,362 1,472,615

Total charges to appropriations 6,040,997 6,209,887 4,731,212 1,478,675

Excess of resources over (under) charges to appropriations (1,573,023) (1,741,913) (332,976) 1,408,937

Fund balance, June 30 $ 847,469 $ 678,579 $ 2,087,516 $ 1,408,937

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     City of San Buenaventura Combining Balance Sheet Non-Major Governmental Funds June 30, 2009

Special Revenue Supplemental Law Downtown Enforcement Law Public Parking Services Enforcement Art District

ASSETS

Assets: Cash and investments $ - $ 47,836 $ 1,877,736 $ - Restricted cash and investments - - - - Accounts receivable, net - - - - Due from other governments 18,983 13,880 - - Loans and notes receivable - - - - Advances to other funds - - 1,071,875 -

Total assets $ 18,983 $ 61,716 $ 2,949,611 $ -

LIABILITIES AND FUND BALANCES

Liabilities: Accounts payable $ - $ - $ 1,318 $ - Due to other funds - - - 13,022 Due to other governments 18,983 - - - Deferred revenue - 6,855 - -

Total liabilities 18,983 6,855 1,318 13,022

Fund Balances: Reserved: Advances from other funds - - 1,071,875 - Loans and notes receivable - - - - Debt service - - - - Unreserved, designated: Petty Cash - 12,500 - - Special revenue funds - - 361,973 - Unreserved, undesignated Special revenue funds - 42,361 1,514,445 (13,022) Capital projects funds - - - -

Total fund balances - 54,861 2,948,293 (13,022)

Total liabilities and fund balances $ 18,983 $ 61,716 $ 2,949,611 $ -

81

Special Revenue Debt Service Capital Projects Housing and Total Maintenance Municipal Community Other Assessment Street Improvement Redevelopment Development Portobello Governmental District Lighting Revenue Bonds Agency Block Grant Dredging Funds

$ 419,817 $ - $ 2,201,504 $ - $ 453,029 $ 1,317,355 $ 6,317,277 - - 2,561,968 1,379,768 - - 3,941,736 21,106 41,810 - - - - 62,916 160 648 - - 165,165 - 198,836 - - - - 3,977,240 - 3,977,240 ------1,071,875

$ 441,083 $ 42,458 $ 4,763,472 $ 1,379,768 $ 4,595,434 $ 1,317,355 $ 15,569,880

$ 8,859 $ 103,080 $ - $ - $ 100,047 $ - $ 213,304 - - 60,893 - 283,758 - 357,673 - - - - 2,848,327 - 2,867,310 ------6,855

8,859 103,080 60,893 - 3,232,132 - 3,445,142

------1,071,875 - - - - 845,156 - 845,156 - - 4,702,579 1,379,768 - - 6,082,347

------12,500 ------361,973

432,224 (60,622) - - - - 1,915,386 - - - - 518,146 1,317,355 1,835,501

432,224 (60,622) 4,702,579 1,379,768 1,363,302 1,317,355 12,124,738

$ 441,083 $ 42,458 $ 4,763,472 $ 1,379,768 $ 4,595,434 $ 1,317,355 $ 15,569,880

82 City of San Buenaventura Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2009

Special Revenue Supplemental Law Downtown Enforcement Law Public Parking Services Enforcement Art District

REVENUES:

Taxes $ 125,258 $ - $ - $ - Intergovernmental - 101,863 - - Charges for services - - - - Use of money and property - - 159,467 - Other revenue - 3,729 - -

Total revenues 125,258 105,592 159,467 -

EXPENDITURES:

Current: Public works - - - 13,022 Public safety - police 400,363 223,699 - - Capital outlays - - 156,043 - Debt service: Principal retirement - - - - Interest and other charges - - - -

Total expenditures 400,363 223,699 156,043 13,022

REVENUES OVER (UNDER) EXPENDITURES (275,105) (118,107) 3,424 (13,022)

OTHER FINANCING SOURCES (USES): Issuance of tax allocation bonds - - - - Transfers in 275,105 94,433 434,183 - Loss on investments - - (134,475) - Transfers out - - (10,033) -

Total other financing sources (uses) 275,105 94,433 289,675 -

Net change in fund balances - (23,674) 293,099 (13,022)

FUND BALANCES:

Beginning of year - 78,535 2,655,194 -

End of year $ - $ 54,861 $ 2,948,293 $ (13,022)

83 Special Revenue Debt Service Capital Projects Housing and Total Maintenance Municipal Community Other Assessment Street Improvement Redevelopment Development Portobello Governmental District Lighting Revenue Bonds Agency Block Grant Dredging Funds

$ 2,490 $ 3,498 $ - $ - $ - $ - $ 131,246 - 8,425 - - 866,821 - 977,109 614,911 869,850 - - - - 1,484,761 11,721 2,386 133,136 18,057 22,733 73,418 420,918 ------3,729

629,122 884,159 133,136 18,057 889,554 73,418 3,017,763

310,370 1,139,830 - - - - 1,463,222 ------624,062 - - - - 883,445 554 1,040,042

- - 425,000 255,000 - - 680,000 - - 489,344 701,876 - - 1,191,220

310,370 1,139,830 914,344 956,876 883,445 554 4,998,546

318,752 (255,671) (781,208) (938,819) 6,109 72,864 (1,980,783)

- - - 8,785,000 - - 8,785,000 74,270 195,049 150,000 567,453 16,624 - 1,807,117 ------(134,475) (98,568) - (60,893) (7,564,558) - - (7,734,052)

(24,298) 195,049 89,107 1,787,895 16,624 - 2,723,590

294,454 (60,622) (692,101) 849,076 22,733 72,864 742,807

137,770 - 5,394,680 530,692 1,340,569 1,244,491 11,381,931

$ 432,224 $ (60,622) $ 4,702,579 $ 1,379,768 $ 1,363,302 $ 1,317,355 $ 12,124,738

84 City of San Buenaventura Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Supplemental Law Enforcement Services Special Revenue Fund For the year ended June 30, 2009

Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative)

Fund balance, July 1 $ - $ - $ - $ -

Resources (inflows): Taxes - - 125,258 125,258 Intergovernmental 200,000 200,000 - (200,000) Use of money and property 1,682 1,682 - (1,682) Transfer from other funds 240,946 314,047 275,105 (38,942)

Amount available for appropriation 442,628 515,729 400,363 (115,366)

Charges to appropriations (outflows): Public safety - police 442,628 515,729 400,363 115,366

Total charges to appropriations 442,628 515,729 400,363 115,366

Excess of resources over (under) charges to appropriations - - - -

Fund balance, June 30 $ - $ - $ - $ -

85 City of San Buenaventura Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Law Enforcement Special Revenue Fund For the year ended June 30, 2009

Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative)

Fund balance, July 1 $ 78,535 $ 78,535 $ 78,535 $ -

Resources (inflows): Intergovernmental 90,000 150,951 101,863 (49,088) Use of money and property 26 26 - (26) Other revenue - - 3,729 3,729 Transfers from other funds 225,700 160,353 94,433 (65,920)

Amount available for appropriation 315,726 311,330 200,025 (111,305)

Charges to appropriations (outflows): Public safety - police 315,726 260,953 223,699 37,254 Transfers to other funds - 11,260 - 11,260

Total charges to appropriations 315,726 272,213 223,699 48,514

Excess of resources over (under) charges to appropriations - 39,117 (23,674) (62,791)

Fund balance, June 30 $ 78,535 $ 117,652 $ 54,861 $ (62,791)

86 City of San Buenaventura Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Public Art Special Revenue Fund For the year ended June 30, 2009

Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative)

Fund balance, July 1 $ 2,655,194 $ 2,655,194 $ 2,655,194 $ -

Resources (inflows): Use of money and property - - 159,467 159,467 Transfers from other funds - 434,183 434,183 -

Amount available for appropriation - 434,183 593,650 159,467

Charges to appropriations (outflows): Capital outlays 1,305,459 1,244,856 156,043 1,088,813 Loss on investments - - 134,475 (134,475) Transfers to other funds - - 10,033 (10,033)

Total charges to appropriations 1,305,459 1,244,856 300,551 944,305

Excess of resources over (under) charges to appropriations (1,305,459) (810,673) 293,099 1,103,772

Fund balance, June 30 $ 1,349,735 $ 1,844,521 $ 2,948,293 $ 1,103,772

87 City of San Buenaventura Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Downtown Parking Special Revenue Fund For the year ended June 30, 2009

Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative)

Fund balance, July 1 $ - $ - $ - $ -

Charges to appropriations (outflows): Public works - - 13,022 (13,022)

Total charges to appropriations - - 13,022 (13,022)

Excess of resources over (under) charges to appropriations - - (13,022) (13,022)

Fund balance, June 30 $ - $ - $ (13,022) $ (13,022)

88 City of San Buenaventura Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Maintenance Assessment District Special Revenue Fund For the year ended June 30, 2009

Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative)

Fund balance, July 1 $ 137,770 $ 137,770 $ 137,770 $ -

Resources (inflows): Taxes - - 2,490 2,490 Charges for services 604,591 627,206 614,911 (12,295) Use of money and property 1,529 1,529 11,721 10,192 Transfers from other funds - 74,270 74,270 -

Amount available for appropriation 606,120 703,005 703,392 387

Charges to appropriations (outflows): Public works 513,105 606,221 310,370 295,851 Transfers to other funds 94,799 98,568 98,568 -

Total charges to appropriations 607,904 704,789 408,938 295,851

Excess of resources over (under) charges to appropriations (1,784) (1,784) 294,454 296,238

Fund balance, June 30 $ 135,986 $ 135,986 $ 432,224 $ 296,238

89 City of San Buenaventura Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Street Lighting Special Revenue Fund For the year ended June 30, 2009

Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative)

Fund balance, July 1 $ - $ - $ - $ -

Resources (inflows): Taxes - - 3,498 3,498 Intergovernmental 275 275 8,425 8,150 Charges for services 874,899 874,899 869,850 (5,049) Use of money and property 4,000 4,000 2,386 (1,614) Transfers from other funds 256,248 256,248 195,049 (61,199) Amount available for appropriation 1,135,422 1,135,422 1,079,208 (56,214)

Charges to appropriations (outflows): Public works 1,135,422 1,135,422 1,139,830 (4,408) Total charges to appropriations 1,135,422 1,135,422 1,139,830 (4,408)

Excess of resources over (under) charges to appropriations - - (60,622) (60,622)

Fund balance, June 30 $ - $ - $ (60,622) $ (60,622)

90 City of San Buenaventura Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Municipal Improvement Revenue Bonds Debt Service Fund For the year ended June 30, 2009

Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative)

Fund balance, July 1 $ 5,394,680 $ 5,394,680 $ 5,394,680 $ -

Resources (inflows): Use of money and property 132,269 132,269 133,136 867 Transfers In 150,000 150,000 150,000 -

Amount available for appropriation 282,269 282,269 283,136 867

Charges to appropriations (outflows): Principal retirement 425,000 425,000 425,000 - Interest and other charges 490,344 490,344 489,344 1,000 Transfers to other funds 1,652,488 1,652,488 60,893 1,591,595

Total charges to appropriations 2,567,832 2,567,832 975,237 1,592,595

Excess of resources over (under) charges to appropriations (2,285,563) (2,285,563) (692,101) 1,593,462

Fund balance, June 30 $ 3,109,117 $ 3,109,117 $ 4,702,579 $ 1,593,462

91 City of San Buenaventura Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Redevelopment Agency Debt Service Fund For the year ended June 30, 2009

Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative)

Fund balance, July 1 $ 530,692 $ 530,692 $ 530,692 $ -

Resources (inflows): Use of money and property 20,100 20,100 18,057 (2,043) Issuance of tax allocation bonds - - 8,785,000 (8,785,000) Transfers from other funds 499,114 499,114 567,453 68,339

Amount available for appropriation 519,214 519,214 9,370,510 8,851,296

Charges to appropriations (outflows): Principal retirement 255,000 255,000 - 255,000 - Interest and other charges 264,214 264,214 701,876 (437,662) Transfers to other funds - - 7,564,558 (7,564,558)

Total charges to appropriations 519,214 519,214 8,521,434 (8,002,220)

Excess of resources over (under) charges to appropriations - - 849,076 849,076

Fund balance, June 30 $ 530,692 $ 530,692 $ 1,379,768 $ 849,076

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     City of San Buenaventura Combining Statement of Net Assets Internal Service Funds June 30, 2009

Information Fleet Facilities Technology Maintenance Maintenance

ASSETS

Current assets: Cash and investments $ 1,226,889 $ 3,228,858 $ 1,357,916 Accounts receivable, net 9,622 29,151 12,605 Due from other funds - - 177,104 Due from others - 3,929 - Due from other governments - - - Prepaid items 18,700 - - Notes receivable - - -

Total current assets 1,255,211 3,261,938 1,547,625

Noncurrent assets: Capital assets: Depreciable, net 1,056,317 7,973,663 516,802

Total assets 2,311,528 11,235,601 2,064,427

LIABILITIES

Current liabilities: Accounts payable $ 79,021 $ 65,862 $ 439,040 Accrued payroll liabilities - - - Capital leases payble 177,192 Due to other governments 27 1,572 - Claims and judgments payable - - - Compensated absences payable - - - Long term debt - due within one year - - 82,137

Total current liabilities 256,240 67,434 521,177

Noncurrent liabilities: Capital leases payble 531,577 Claims and judgments payable - - - Compensated absences payable - - - Long term debt - due in more than one year - - 262,069

Total noncurrent liabilities 531,577 - 262,069

Total liabilities 787,817 67,434 783,246

NET ASSETS

Invested in capital assets 347,548 7,973,663 172,596 Unrestricted 1,176,163 3,194,504 1,108,585

Total net assets $ 1,523,711 $ 11,168,167 $ 1,281,181

93 Reproduction Workers' Employee Risk Services Compensation Fringe Benefits Management Total

$ 128,179 $ 8,101,822 $ 5,405,994 $ 4,039,672 $ 23,489,330 1,464 - 157,286 - 210,128 - 2,396,413 - - 2,573,517 - - - 176 4,105 - - - 544,784 544,784 - - - - 18,700 - - 1,572,155 - 1,572,155

129,643 10,498,235 7,135,435 4,584,632 28,412,719

45,180 - 3,427 14,950 9,610,339

174,823 10,498,235 7,138,862 4,599,582 38,023,058

$ 5,034 $ 42,053 $ 1,184,997 $ 108,485 $ 1,924,492 - - 2,999,059 - 2,999,059 177,192 19 48 58 4 1,728 - 2,036,185 - 320,066 2,356,251 - - 448,028 - 448,028 - - - - 82,137

5,053 2,078,286 4,632,142 428,555 7,988,887

531,577 - 3,607,744 - 1,255,600 4,863,344 - - 4,843,236 - 4,843,236 - - - - 262,069

- 3,607,744 4,843,236 1,255,600 10,500,226

5,053 5,686,030 9,475,378 1,684,155 18,489,113

45,180 - 3,427 14,950 8,557,364 124,590 4,812,205 (2,339,943) 2,900,477 10,976,581

$ 169,770 $ 4,812,205 $ (2,336,516) $ 2,915,427 $ 19,533,945

94 City of San Buenaventura Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Internal Service Funds For the year ended June 30, 2009

Information Fleet Facilities Technology Maintenance Maintenance

OPERATING REVENUES:

Internal service charges $ 1,739,641 $ 4,474,905 $ 3,711,455 Other operating revenues 229 53,994 7,162

Total operating revenues 1,739,870 4,528,899 3,718,617

OPERATING EXPENSES:

Salaries and benefits 549,875 986,629 770,233 Contractual services 298,526 54,794 1,521,914 Materials and supplies 260,883 1,485,943 251,947 General and administrative 359,176 246,550 1,081,223 Insurance premiums and settlements - - - Depreciation 143,702 1,490,948 40,502 Total operating expenses 1,612,162 4,264,864 3,665,819

OPERATING INCOME (LOSS) 127,708 264,035 52,798

NONOPERATING REVENUES (EXPENSES): Investment income 17,387 45,720 19,348 Loss on disposal of assets - (81,432) - Loss on investment (88,085) (231,632) (98,021) Interest expense - - (17,210) put through this administration account (70,698) (267,344) (95,883) Income (loss) before transfers 57,010 (3,309) (43,085) Transfers in 23,386 113,695 214,412 Transfers out (2,783) - (600,000)

Change in net assets 77,613 110,386 (428,673)

NET ASSETS:

Beginning of year 1,446,098 11,057,781 1,709,854

End of year $ 1,523,711 $ 11,168,167 $ 1,281,181

95 Reproduction Workers' Employee Risk Services Compensation Fringe Benefits Management Total

$ 347,866 $ 3,488,245 $ 21,651,851 $ 1,501,332 $ 36,915,295 - 200,168 27,119 380,011 668,683

347,866 3,688,413 21,678,970 1,881,343 37,583,978

206,230 218,638 1,601,226 231,179 4,564,010 48,315 398,691 113,365 321,924 2,757,529 68,250 1,310 - 55,613 2,123,946 21,062 933,472 15,438,498 388,810 18,468,791 - 2,036,675 5,975,469 982,835 8,994,979 17,727 - 566 1,596 1,695,041 361,584 3,588,786 23,129,124 1,981,957 38,604,296

(13,718) 99,627 (1,450,154) (100,614) (1,020,318)

1,814 114,613 140,560 57,337 396,779 - - - - (81,432) (9,192) (580,661) (388,878) (290,483) (1,686,952) - - - - (17,210) (7,378) (466,048) (248,318) (233,146) (1,388,815) (21,096) (366,421) (1,698,472) (333,760) (2,409,133) 2,986 - - - 354,479 - - (1,093,717) (1,427,737) (3,124,237)

(18,110) (366,421) (2,792,189) (1,761,497) (5,178,891)

187,880 5,178,626 455,673 4,676,924 24,712,836

$ 169,770 $ 4,812,205 $ (2,336,516) $ 2,915,427 $ 19,533,945

96 City of San Buenaventura Combining Statement of Cash Flows Internal Service Funds For the year ended June 30, 2009

Information Fleet Facilities Reproduction Technology Maintenance Maintenance Services CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers/other funds $ 1,730,019 $ 4,469,225 $ 3,533,616 $ 346,402 Cash payments to suppliers for goods and services (924,231) (1,971,937) (2,652,137) (136,342) Cash payments to employees for services (549,875) (986,629) (770,233) (206,230) Insurance premiums and settlements - - - - Other operating revenues 229 53,994 7,162 - Net cash provided (used) by operating activities 256,142 1,564,653 118,408 3,830

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Employee housing loans made - - - - Payment of employee housing loans - - - - Payment of noncapital loans - - (78,624) - Transfers to other funds (2,783) - (600,000) - Transfers from other funds 23,386 113,695 214,412 2,986 Net cash provided (used) by noncapital 20,603 113,695 (464,212) 2,986 financing activities

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets (167,470) (1,654,784) (386,963) - Repayment of capital leases (177,192) - - - Net cash (used) by capital and related financing activities (344,662) (1,654,784) (386,963) -

CASH FLOWS FROM INVESTING ACTIVITIES: Investment income (loss) (70,698) (185,912) (95,882) (7,378) Net cash provided (used) by investing activities (70,698) (185,912) (95,882) (7,378)

Net increase (decrease) in cash and cash equivalents (138,615) (162,348) (828,649) (562)

CASH AND INVESTMENTS: Beginning of year 1,365,504 3,391,206 2,186,565 128,741 End of year $ 1,226,889 $ 3,228,858 $ 1,357,916 $ 128,179

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $ 127,708 $ 264,035 $ 52,798 $ (13,718) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation 143,702 1,490,948 40,502 17,727 Changes in assets and liabilities: Accounts receivable (9,622) (1,751) (11,089) (1,464) Due from other funds - - (166,750) - Due from others - (3,929) - - Due from other governments - - - - Prepaid items 6,600 - - - Accounts payable (12,273) (186,222) 202,947 1,266 Capital Lease Payable Accrued payroll liabilities - - - - Claims and judgments payable - - - - Compensated absences payable - - - - Due to other Gov't 27 1,572 - 19 Total adjustments 128,434 1,300,618 65,610 17,548 Net cash provided (used) by operating activities $ 256,142 $ 1,564,653 $ 118,408 $ 3,830

Noncash capital and related financing activities: Equipment acquired by capital leases $ 708,769 $ - $ - $ -

97 Workers' Employee Risk Compensation Fringe Benefits Management Total

$ 3,688,245 $ 21,863,282 $ 1,794,045 $ 37,424,834 (1,334,546) (14,416,996) (692,574) (22,128,763) (218,638) (1,601,226) (231,179) (4,564,010) (1,486,072) (5,641,782) (622,652) (7,750,506) 200,168 27,119 380,011 668,683 849,157 230,397 627,651 3,650,238

- (488,895) - (488,895) - 32,764 - 32,764 - - - (78,624) (1,093,717) (1,427,737) (3,124,237) - - 354,479 - (1,549,848) (1,427,737) (3,304,513)

-- - (2,209,217) - - - (177,192)

- - - (2,386,409)

(466,048) (248,319) (233,147) (1,307,384) (466,048) (248,319) (233,147) (1,307,384)

383,109 (1,567,770) (1,033,233) (3,348,068)

7,718,713 6,973,764 5,072,905 26,837,398 $ 8,101,822 $ 5,405,994 $ 4,039,672 $ 23,489,330

$ 99,627 $ (1,450,154) $ (100,614) $ (1,020,318)

- 566 1,596 1,695,041

- 24,211 - 285 200,000 - - 33,250 - 187,220 1,147 184,438 - - 291,566 291,566 - - - 6,600 (1,121) 1,134,809 73,769 1,213,175

- (104,129) - (104,129) 550,603 - 360,183 910,786 - 437,816 - 437,816 48 58 4 1,728 749,530 1,680,551 728,265 4,670,556 $ 849,157 $ 230,397 $ 627,651 $ 3,650,238

$ - $ - $ - $ 708,769

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     City of San Buenaventura Statement of Fiduciary Assets and Liabilities Fiduciary Funds June 30, 2009

Agency Funds

Portobello Dredging ASSETS

Cash and investments $ 20,221

LIABILITIES

Deposits held for others $ 20,221

99 City of San Buenaventura Statement of Changes in Assets and Liabilities Fiduciary Funds For the year ended June 30, 2009

Balance Balance July 1, 2008 Additions Deductions June 30, 2009

Portobello Dredging

Assets: Cash and investments $ 97,803 $ - $ 77,582 $ 20,221

Liabilities: Deposits held for others $ 97,803 $ - $ 77,582 $ 20,221

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      City of San Buenaventura Index to the Statistical Section For the year ended June 30, 2009

STATISTICAL SECTION Page

Financial Trends These schedules contain trend information to help the reader understand how the government’s financial performance and well-being have changed over time. A. Net Assets by Component – Last Eight Fiscal Years ...... 103 B. Changes in Net Assets – Last Eight Fiscal Years...... 105 C. Fund Balances of Governmental Funds – Last Eight Fiscal Years ...... 109 D. Changes in Fund Balances of Governmental Funds – Last Eight Fiscal Years ...... 111 Revenue Capacity These schedules contain information to help the reader assess the government’s most significant local revenue source, the property tax. A. Assessed Value and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years....113 B. Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years ...... 114 C. Principal Property Taxpayers – Current Year and Ten Years Ago ...... 116 D. Property Tax Levies and Collections – Last Ten Fiscal Years...... 117 Debt Capacity These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future. A. Ratios of Outstanding Debt by Type – Last Ten Fiscal Years...... 118 B. Ratio of General Bonded Debt Outstanding – Last Ten Fiscal Years...... 120 C. Direct and Overlapping Debt – June 30, 2009 ...... 121 D. Legal Debt Margin Information – Last Ten Fiscal Years...... 122 E. Pledged Wastewater Revenue Coverage – Last Ten Fiscal Years ...... 123 F. Pledged Water Revenue Coverage – Last Ten Fiscal Years...... 124 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within the government’s financial activities take place. A. Demographic and Economic Statistics – Last Ten Calendar Years...... 125 B. Full-Time City Employees by Function – Last Ten Fiscal Years...... 126 C. Principal Employers – Current Year and Ten Years Ago...... 127 D. Investment Portfolio Statistics – Last Ten Fiscal Years ...... 128

101 City of San Buenaventura Index to the Statistical Section For the year ended June 30, 2009

Operating Information These schedules contain service and infrastructure data to help the reader understand how information in the government’s financial report relates to the services the government provides and the activities it performs.

A. Operating Indicators by Function – Last Ten Fiscal Years...... 129 B. Capital Assets Statistics by Function – Last Ten Fiscal Years ...... 130 C. Wastewater Service Rates – Last Ten Fiscal Years ...... 131 D. Wastewater Customers – Current Year and Six Years Ago...... 132 E. Water Sold by Type of Customer – Last Ten Fiscal Years ...... 133 F. Water Rates – Last Ten Fiscal Years...... 134 G. Water Customers – Current Year and Six Years Ago ...... 135

Annual Continuing Disclosure Requirements On November 10, 1994, the Securities and Exchange Commission adopted a regulation requiring annual disclosure for most municipal securities issued on and after July 3, 1995. The schedules in this section contain the Annual Continuing Disclosure Requirements for all outstanding obligations issued since that time. The specific requirements are identified in each of the financing documents specific to each outstanding issue.

A. Public Facilities Financing Authority – Summary of Certificates of Participation ...... 136 B. 2002 COP, Series D – Buenaventura and Olivas Links Historic Operating Results ...... 137 C. 2004 COP, Wastewater Revenue – Historic Operating Results ...... 139 D. 2004 COP, Wastewater Revenue – Historic Usage, Connections, and Flow Charges...... 140 E. 2004 COP, Wastewater Revenue – Top Ten Customers ...... 141 F. 2004 COP, Water Revenue – Historic Operating Results ...... 142 G. 2004 COP, Water Revenue – Historic and Projected Water Supply...... 143 H. 2004 COP, Water Revenue – Historic Service Charges and Sales Revenues ...... 144 I. 2004 COP, Water Revenue – Top Ten Customers...... 145 J. 2004 COPs, Water and Wastewater – Utility Rates ...... 146

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     City of San Buenaventura Net Assets by Component Last Eight Fiscal Years (accrual basis of accounting)

Fiscal Year

2009 2008 2007 Governmental activities: Invested in capital assets, net of related debt $ 73,301,931 $ 80,359,775 $ 72,471,553 Restricted 35,092,771 38,634,489 43,023,154 Unrestricted 62,370,129 60,090,236 62,093,970 Total governmental activities net assets 170,764,831 179,084,500 177,588,677

Business-type activities: Invested in capital assets, net of related debt 148,065,102 128,436,041 127,477,656 Restricted 7,864,066 58,901,995 58,695,479 Unrestricted 60,072,866 28,380,491 28,607,819 Total business-type activities net assets 216,002,034 215,718,527 214,780,954

Primary government: Invested in capital assets, net of related debt 221,367,033 208,795,816 199,949,209 Restricted 42,956,837 97,536,484 101,718,633 Unrestricted 122,442,995 88,470,727 90,701,789 Total primary government net assets $ 386,766,865 $ 394,803,027 $ 392,369,631

The City of Ventura implemented GASB 34 for the fiscal year ended June 30, 2002. For comparison purposes, the City has elected to show the year beginning 2002.

Source: The Comprehensive Annual Financial Report.

103 Fiscal Year

2006 2005 2004 2003 2002

$ 61,243,588 $ 50,801,739 $ 34,465,491 $ 25,439,081 $ 39,576,758 37,975,503 42,284,534 54,603,313 69,157,207 64,424,511 72,493,990 68,406,238 69,085,204 61,914,134 53,562,024 171,713,081 161,492,511 158,154,008 156,510,422 157,563,293

111,965,178 102,241,593 42,586,428 58,294,483 59,941,904 61,527,419 67,471,175 27,709,014 15,195,286 9,021,624 33,995,113 26,305,567 113,413,435 102,739,490 101,213,751 207,487,710 196,018,335 183,708,877 176,229,259 170,177,279

173,208,766 153,043,332 77,051,919 83,733,564 99,518,662 99,502,922 109,755,709 82,312,327 84,352,493 73,446,135 106,489,103 94,711,805 182,498,639 164,653,624 154,775,775 $ 379,200,791 $ 357,510,846 $ 341,862,885 $ 332,739,681 $ 327,740,572

104 City of San Buenaventura Changes in Net Assets Last Eight Fiscal Years (accrual basis of accounting)

Fiscal Year

2009 2008 2007 2006 Expenses: Governmental activities: General government $ 5,384,838 $ 8,326,371 $ 8,886,145 $ 7,363,125 Human resources 2,104,947 816,553 3,301,372 1,794,494 Finance and Technology 7,784,466 5,707,691 4,491,565 4,214,527 Community development 6,671,042 8,294,180 7,441,301 5,843,104 Community services 7,593,435 7,913,144 6,342,292 5,914,499 Public safety - police 31,303,086 28,193,355 27,092,687 26,149,759 Public safety - fire 19,799,105 18,632,555 16,325,884 15,259,270 Public works 20,289,629 20,915,867 14,143,598 16,523,873 Depreciation expense - - - - Interest on long term debt 3,996,201 8,984,125 4,158,887 4,348,870 Total governmental activities expenses 104,926,749 107,783,841 92,183,731 87,411,521

Business-type activities: Wastewater 16,135,143 15,511,917 13,513,120 11,348,681 Water 21,685,740 20,433,068 16,959,117 15,400,319 Golf course 4,732,020 5,623,585 4,631,771 3,379,722 Paramedic services - 262,033 266,570 Total business-type activities expenses 42,552,903 41,568,570 35,366,041 30,395,292

Total primary government expenses 147,479,652 149,352,411 127,549,772 117,806,813

Program revenues: Governmental activities: Charges for services: General government 864,588 976,334 2,299,623 462,378 Human resources 147,832 143,389 135,020 144,571 Finance and Technology 2,002,324 1,833,833 1,334,412 1,114,838 Community development 946,668 1,116,341 965,890 911,326 Community services 2,422,566 2,497,263 2,622,700 2,196,637 Public safety - police 4,388,325 2,731,049 2,607,633 2,416,250 Public safety - fire 3,237,931 3,363,936 3,423,109 3,302,653 Public Works 3,082,181 3,117,158 2,727,787 2,449,364 Operating grants and contributions 11,703,876 12,396,400 11,424,010 13,773,429 Capital grants and contributions 825,577 2,847,047 2,827,598 1,445,341 Total governmental activities program revenues 29,621,868 31,022,750 30,367,782 28,216,787

Business-type activities: Charges for services: Sewer and sanitation 16,015,727 16,068,806 15,460,227 14,144,570 Water 21,283,447 20,710,539 20,533,851 17,838,573 Golf course 4,805,842 4,942,555 3,088,836 3,201,831 Paramedic services - - 513,823 450,002 Operating grants and contributions 21,433 32,284 16,079 - Total business-type activities program revenues 42,126,449 41,754,184 39,612,816 35,634,976

Total primary government program revenues 71,748,317 72,776,934 69,980,598 63,851,763

Net revenues (expenses): Governmental activities: (75,304,881) (76,761,091) (61,815,949) (59,194,734) Business-type activities: (426,454) 185,614 4,246,775 5,239,684 Total net revenues (expenses): (75,731,335) (76,575,477) (57,569,174) (53,955,050)

105 Fiscal Year

2005 2004 2003 2002

$ 6,328,043 $ 4,483,013 $ 2,440,653 $ 2,319,540 2,432,266 1,918,203 901,052 2,100,559 4,406,547 4,299,847 5,269,505 5,375,537 4,195,179 4,581,043 4,596,322 6,169,629 7,670,919 4,324,879 5,281,398 3,892,203 24,818,010 23,340,765 21,459,057 19,747,023 15,090,774 14,285,426 12,799,179 11,004,745 17,314,971 23,212,404 20,451,528 26,809,364 - - 5,347,724 4,998,848 4,142,812 4,138,041 5,780,698 4,329,074 86,399,521 84,583,621 84,327,116 86,746,522

11,087,744 10,230,723 11,053,245 9,649,642 14,909,543 12,644,461 13,674,156 12,520,860 2,197,409 2,817,574 849,715 1,213,525 186,185 169,527 232,667 205,814 28,380,881 25,862,285 25,809,783 23,589,841

114,780,402 110,445,906 110,136,899 110,336,363

1,068,960 402,116 410,111 328,632 132,194 127,726 124,711 117,373 966,173 1,425,317 1,414,906 949,973 585,546 822,509 672,508 402,356 1,703,281 1,745,879 1,835,602 1,724,189 2,479,415 2,155,053 2,119,463 1,835,344 2,943,316 2,584,789 2,022,572 2,506,212 2,695,192 2,933,850 3,197,619 2,836,329 12,862,868 14,185,310 13,151,737 17,755,622 2,278,540 178,520 112,223 232,977 27,715,485 26,561,069 25,061,452 28,689,007

14,042,047 13,430,212 12,677,123 11,162,655 17,642,997 16,924,727 16,103,697 15,353,505 2,764,339 3,380,562 1,492,267 1,544,656 321,190 192,384 193,253 184,580 - - - - 34,770,573 33,927,885 30,466,340 28,245,396

62,486,058 60,488,954 55,527,792 56,934,403

(58,684,036) (58,022,552) (59,265,664) (58,057,515) 6,389,692 8,065,600 4,656,557 4,655,555 (52,294,344) (49,956,952) (54,609,107) (53,401,960)

106 City of San Buenaventura Changes in Net Assets Last Eight Fiscal Years, Continued (accrual basis of accounting)

Fiscal Year

2009 2008 2007 2006

General revenues and other changes in net assets: Governmental activities: Taxes: Property taxes 21,207,266 23,783,852 22,182,764 20,216,123 Sales taxes 20,132,921 22,613,278 21,336,603 24,447,868 Utility users taxes 9,019,829 8,796,097 - - Transient lodging taxes 3,707,592 4,078,171 - - Franchise taxes 3,713,057 2,770,318 - - Other taxes 2,125,750 2,752,235 18,118,646 17,556,734 Grants & contributions not restricted to specific programs - - - - Motor vehicle license - intergovernmental unrestricted 8,480,754 8,308,227 7,887,568 7,697,659 Investment earnings (loss) (3,332,065) 3,329,387 3,976,243 2,568,014 Gain (loss) on sale of assets (38,505) 2,960 969 914,131 Other general revenues 206 885 2,580 62,058 Transfers 1,968,407 1,038,110 86,987 (4,047,284) Total govermental activities 66,985,212 77,473,520 73,592,360 69,415,303

Business-type activities: Investment income 2,678,368 2,573,463 3,133,456 2,182,407 Gain on sale of assets - - - - Transfers (1,968,407) (1,038,110) (86,987) 4,047,284 Total business-type activities 709,961 1,535,353 3,046,469 6,229,691

Total primary government 67,695,173 79,008,873 76,638,829 75,644,994

Changes in net assets Governmental activities: (8,319,669) 712,429 11,776,411 10,220,569 Business-type activities: 283,507 1,720,967 7,293,244 11,469,375 Total primary government $ (8,036,162) $ 2,433,396 $ 19,069,655 $ 21,689,944

The City of Ventura implemented GASB 34 for the fiscal year ended June 30, 2002. For comparison purposes, the City has elected to show the year beginning 2002.

Source: The Comprehensive Annual Financial Report.

107 Fiscal Year

2005 2004 2003 2002

18,800,820 16,732,650 15,240,502 13,814,149 21,413,725 20,407,600 19,714,453 18,755,394 ------16,107,077 15,288,753 14,452,401 13,938,590 - - 34,342 843,921 7,909,188 4,770,850 5,922,778 5,728,788 2,330,922 1,266,955 2,931,952 4,484,683 28,567 142,835 19,562 202,551 135,399 47,720 42,090 19,831 (4,703,159) 1,008,775 - - 62,022,539 59,666,138 58,358,080 57,787,907

1,216,607 422,793 1,393,503 2,530,652 - - 1,920 1,669 4,703,159 (1,008,775) - - 5,919,766 (585,982) 1,395,423 2,532,321

67,942,305 59,080,156 59,753,503 60,320,228

3,338,503 1,643,586 (907,584) (269,608) 12,309,458 7,479,618 6,051,980 7,187,876 $ 15,647,961 $ 9,123,204 $ 5,144,396 $ 6,918,268

108 City of San Buenaventura Fund Balances of Governmental Funds Last Eight Fiscal Years (modified accrual basis of accounting)

Fiscal Year

2009 2008 2007 2006 General fund: Reserved $ 9,856,595 $ 17,975,245 $ 18,783,034 $ 18,837,506 Unreserved, designated 19,002,989 19,925,883 24,013,323 24,763,519 Unreserved, undesignated 4,374,390 199,613 17,316 3,965,697

Total general fund 33,233,974 38,100,741 42,813,673 47,566,722

All other governmental funds: Reserved 15,653,881 16,213,150 15,000,171 19,812,878 Unreserved, designated Reported in special revenue funds 5,062,697 22,025,619 17,575,235 11,956,497 Reported in capital project funds 1,350,390 6,126,887 6,277,234 8,591,515 Unreserved, undesignated: Reported in special revenue funds 21,961,994 6,429,326 12,443,532 13,971,840 Reported in capital project funds 2,811,406 (10,210,981) (8,769,673) (11,026,685)

Total all other governmental funds$ 46,840,368 $ 40,584,001 $ 42,526,499 $ 43,306,045

The City of Ventura implemented GASB 34 for the fiscal year ended June 30, 2002. For comparison purposes, the City has elected to show the year beginning 2002.

Source: The Comprehensive Annual Financial Report.

109 Fiscal Year

2005 2004 2003 2002

$ 17,352,143 $ 17,004,738 $ 17,859,686 $ 40,574,782 28,907,664 26,009,715 32,025,719 11,715,924 2,386,387 4,085,445 174,963 644,613

48,646,194 47,099,898 50,060,368 52,935,319

25,881,240 35,734,823 44,459,376 31,888,154

15,385,351 20,801,758 22,981,747 28,854,043 6,128,690 8,643,217 9,504,999 8,043,479

9,416,759 7,741,802 7,751,988 1,011,279 (8,498,950) (8,998,681) (8,683,767) (17,002,907)

$ 48,313,090 $ 63,922,919 $ 76,014,343 $ 52,794,048

110 City of San Buenaventura Changes in Fund Balances of Governmental Funds Last Eight Fiscal Years (modified basis of accounting)

Fiscal Year

2009 2008 2007 2006 Revenues: Taxes $ 63,653,856 $ 66,216,070 $ 66,434,879 $ 63,438,858 Licenses and permits 1,004,297 1,429,502 1,880,019 1,780,881 Intergovernmental 14,533,194 17,710,064 16,011,106 14,339,327 Charges for services 11,869,844 9,896,330 8,987,034 9,029,969 Fines and forfeitures 2,226,912 1,945,958 1,865,739 1,802,109 Use of money and property 5,432,453 6,071,537 6,395,623 6,152,912 Other revenues 3,016,857 4,303,991 4,420,729 3,257,395 Total revenues 101,737,413 107,573,452 105,995,129 99,801,451

Expenditures: Current: General government 4,701,884 7,698,414 8,276,104 6,707,261 Human resources 1,952,090 1,923,705 1,867,800 2,597,156 Finance and Technology 6,499,052 4,741,342 4,357,976 4,039,047 Community development 4,432,927 7,302,655 4,284,899 3,249,855 Community services 6,608,893 6,612,536 6,066,137 5,780,510 Public safety - police 30,576,837 29,429,286 27,504,321 27,560,257 Public safety - fire 19,398,973 18,391,152 16,505,456 15,816,543 Public works 16,967,429 17,223,138 15,494,191 14,638,986 Capital outlays 11,156,906 18,305,935 18,894,966 14,167,948 Debt service: Principal retirement 2,845,000 4,573,857 2,885,689 2,864,960 Interest and other charges 3,787,781 9,048,333 4,199,188 4,382,321 Total expenditures 108,927,772 125,250,353 110,336,727 101,804,844

Revenues over (under) expenditures (7,190,359) (17,676,901) (4,341,598) (2,003,393)

Other financing sources (uses): Proceeds from long-term debt 8,785,000 9,413,899 - - Transfers in 19,513,734 11,892,935 18,084,380 10,686,822 Loss on investments (4,943,206) - - - Transfers out (14,775,569) (10,798,959) (19,275,377) (14,769,946) Total other financing sources (uses) 8,579,959 10,507,875 (1,190,997) (4,083,124)

Net change in fund balances $ 1,389,600 $ (7,169,026) $ (5,532,595) $ (6,086,517)

Debt service as a percentage of noncapital expenditures 6.5% 12.3% 8.4% 9.0%

The City of Ventura implemented GASB 34 for the fiscal year ended June 30, 2002. For comparison purposes, the City has elected to show the year beginning 2002.

Source: The Comprehensive Annual Financial Report.

111 Fiscal Year

2005 2004 2003 2002

$ 59,388,852 $ 55,517,938 $ 52,312,822 $ 50,028,459 1,579,719 1,337,911 1,124,381 1,376,203 15,485,211 10,541,690 13,496,819 17,297,587 7,287,355 7,736,141 7,073,747 6,191,081 1,820,848 1,734,950 1,568,361 1,396,161 4,127,490 3,355,993 5,065,327 7,069,728 4,844,575 3,672,874 2,733,981 2,255,820 94,534,050 83,897,497 83,375,438 85,615,039

5,706,403 3,964,093 2,458,220 2,310,890 2,402,167 2,163,885 2,365,650 2,109,414 4,308,317 4,117,355 5,674,665 5,479,850 3,360,216 2,953,387 2,942,465 6,203,649 5,825,207 5,575,664 5,195,320 5,108,660 26,243,467 24,352,859 21,698,793 20,926,224 15,828,561 14,878,097 12,913,181 11,430,213 13,964,871 13,205,851 12,636,440 12,172,611 21,175,816 22,230,168 14,605,554 16,837,363

2,748,074 2,371,232 21,221,361 4,340,689 4,174,214 4,130,575 5,013,445 3,868,494 105,737,313 99,943,166 106,725,094 90,788,057

(11,203,263) (16,045,669) (23,349,656) (5,173,018)

- - 43,695,000 19,512,872 16,914,994 13,465,071 31,800,410 13,256,029 - - - - (19,775,264) (12,471,296) (31,800,410) (13,256,029) (2,860,270) 993,775 43,695,000 19,512,872

$ (14,063,533) $ (15,051,894) $ 20,345,344 $ 14,339,854

8.9% 9.1% 39.8% 12.5%

112 City of San Buenaventura Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (in thousands of dollars)

City Redevelopment Agency

Fiscal Year Taxable Taxable Total Ended Assessed Less: Assessed Direct Tax June 30 Local Secured Utility Unsecured Value Secured Unsecured Exemptions Value Rate

2000 5,660,835 1,481 413,024 6,075,340 166,565 23,153 (573) 189,145 0.174%

2001 6,131,888 3,595 423,582 6,559,065 174,581 21,962 (566) 195,977 0.167%

2002 6,687,434 3,626 579,842 7,270,902 192,306 25,963 (630) 217,639 0.162%

2003 7,273,077 5,594 580,029 7,858,700 209,337 27,155 (630) 235,862 0.166%

2004 7,970,154 1,207 474,987 8,446,348 234,799 24,575 (707) 258,667 0.168%

2005 8,685,289 1,363 510,098 9,196,750 267,968 23,193 (795) 290,366 0.170%

2006 9,576,759 1,207 546,406 10,124,372 301,493 25,722 (805) 326,410 0.165%

2007 10,631,830 1,078 571,736 11,204,644 333,500 26,320 (790) 359,030 0.164%

2008 11,475,209 659 596,099 12,071,967 371,109 35,375 (809) 405,674 0.161%

2009 11,919,084 659 591,251 12,510,994 395,229 28,207 (790) 422,646 0.162%

Note: Data is stated at 100% of actual value as required under Section 135 of the Revenue and Tax Code. Exemptions are netted directly against the individual property categories.

Source: Ventura County Auditor-Controller's Office

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     City of San Buenaventura Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (Rate per $100 of assessed value)

2009 2008

City Direct Rates: City Basic Rate 0.0137 0.0127 Redevelopment Agency 0.0004 0.0003

Total City Direct Rate 0.0140 0.0130

Overlapping Rates: Ventura County Community College District 0.1252 0.1242 Ventura Unified School District 0.8363 0.8479 Oxnard Union High School District 0.0001 0.0001 Mesa Union School District 0.0023 0.0020 Oxnard School District 0.0002 0.0002 Rio School District 0.0000 0.0000 Ventura Port District 0.0000 0.0000 City of San Buenaventura 1915 Act Bonds 1.0000 1.0000 Ventura County General Fund Obligations 0.1252 0.1242 Ventura County Pension Obligations 0.0000 0.0000 Ventura County Superintendent of Schools Certificates of Participation 0.1252 0.1242 Ventura County Library Authority 0.0000 0.0000 Ventura County Community College District Certificates of Participation 0.0000 0.0000 Ventura Unified School District Certificates of Participation 0.8363 0.8479 Oxnard Union High School District Certificates of Participation 0.0001 0.0001 Oxnard School District Certificates of Participation 0.0002 0.0002 Rio School District Certificates of Participation 0.0000 0.0000 City of San Buenaventura General Fund Obligations 1.0000 1.0000

Total Direct Rate 4.0652 4.0842

Source: California Municipal Statistics, Inc.

114 2007 2006 2005 2004 2003 2002 2001 2000

0.0136 0.0161 0.0171 0.0192 0.0221 0.0197 0.0166 0.0187 0.0003 0.0004 0.0004 0.0004 0.0004 0.0004 0.0003 0.0003

0.0140 0.0165 0.0175 0.0196 0.0225 0.0200 0.0168 0.0191

0.1242 0.1246 0.1245 0.1252 0.1255 0.0000 0.0000 0.0000 0.8448 0.8449 0.8435 0.8528 0.8507 0.8493 0.8336 0.8366 0.0002 0.0002 0.0002 0.0002 0.0002 0.0003 0.0003 0.0004 0.0021 0.0022 0.0024 0.0027 0.0000 0.0000 0.0000 0.0000 0.0003 0.0028 0.0004 0.0005 0.0005 0.0008 0.0008 0.0010 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.9992 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 0.1241 0.1246 0.1245 0.1252 0.1254 0.1252 0.1228 0.1247 0.1241 0.1246 0.1245 0.1252 0.1254 0.1252 0.1228 0.1247 0.1241 0.1246 0.1245 0.1252 0.0000 0.1252 0.1228 0.1247 0.0000 0.0000 0.0000 0.0000 0.0000 0.2037 0.1993 0.2010 0.0000 0.0000 0.1245 0.1252 0.1255 0.1253 0.1228 0.1248 0.8448 0.8449 0.8435 0.8528 0.8507 0.8493 0.8336 0.8366 0.0002 0.0002 0.0002 0.0002 0.0002 0.0003 0.0003 0.0004 0.0003 0.0003 0.0004 0.0005 0.0005 0.0008 0.0008 0.0010 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000

4.2031 4.2104 4.3308 4.3554 4.2274 4.4258 4.3771 5.3946

115 City of San Buenaventura Principal Property Taxpayers Current Year and Ten Years Ago

2009 1999

Taxable Percent of Total Taxable Percent of Total Assessed City Taxable Assessed City Taxable Taxpayer Value (1) Assessed Value (2) Value (3) Assessed Value (4)

Jefferson at Pelican Point $ 81,139,752 0.68% $ - 0.00%

ASN Ventura Colony 1031, LLC 58,000,000 0.49% - 0.00%

Macerich Buenaventura, LTD 55,954,501 0.47% 96,087,405 1.79%

Ventura Pines Associates, LLC 52,530,357 0.44% 16,800,000 0.31%

ASN Ventura, LLC 40,982,287 0.34% - 0.00%

Center Promenade, LLC 40,800,000 0.34% - 0.00%

Intergrated Captl-Ven Bch, LLC 35,013,776 0.29% - 0.00%

Target Corp 34,217,200 0.29% - 0.00%

MBL Golf Course, LLC 29,916,988 0.25% - 0.00%

Lowe's HIW, Inc. 28,803,062 0.24% - 0.00%

$ 457,357,923 3.84% $ 112,887,405 2.10%

(1) Source: Ventura County Assessor's Office (2) 2008-09 Local Secured Assessed Valuation: $11,919,084,579 (3) Source: Ventura County Assessor's Office (4) 1998-99 Local Secured Assessed Valuation: $5,378,633,083

116 City of San Buenaventura Property Tax Levies and Collections Last Ten Fiscal Years

Collected within the Fiscal Year Taxes Levied Fiscal Year of Levy Collections in Total Collections To-Date Ended for the Percent Subsequent Percent June 30 Fiscal Year (1) Amount of Levy Years (2) Amount (2) of Levy

2000 10,952,936 10,789,287 98.51% 82,460 10,871,747 99.26%

2001 11,429,609 11,226,858 98.23% 54,016 11,280,874 98.70%

2002 12,491,663 12,114,098 96.98% 38,967 12,153,065 97.29%

2003 13,607,563 13,353,034 98.13% 57,854 13,410,888 98.55%

2004 14,679,933 14,549,118 99.11% 55,629 14,604,747 99.49%

2005 16,188,791 16,103,883 99.48% 39,942 16,143,825 99.72%

2006 17,598,566 17,226,875 97.89% 46,130 17,273,005 98.15%

2007 19,687,798 18,946,723 96.24% 59,258 19,005,981 96.54%

2008 20,806,443 19,969,645 95.98% 92,015 20,061,660 96.42%

2009 21,360,643 20,751,346 97.15% 174,888 20,926,234 97.97%

Source: (1) Ventura County Assessor's Office (2) Finance and Technology Department, City of San Buenaventura

117 City of San Buenaventura Ratios of Outstanding Debt by Type Last Ten Fiscal Years

Governmental Activities Fiscal Year Tax Total Wastewater Ended Certificates of Allocation Governmental Revenue June 30 Participation Bonds Loans Activities Bonds

2000 24,630,000 - 30,824,989 55,454,989 8,374,621

2001 23,760,000 - 30,740,468 54,500,468 7,998,646

2002 39,250,000 - 8,449,886 47,699,886 7,602,671

2003 54,355,000 8,000,000 7,963,812 70,318,812 7,186,696

2004 52,635,000 8,000,000 7,312,580 67,947,580 6,750,721

2005 50,760,000 7,795,000 6,852,506 65,407,506 24,569,447

2006 48,825,000 7,555,000 6,151,224 62,531,224 24,019,430

2007 46,830,000 7,310,000 5,806,898 59,946,898 23,444,413

2008 55,780,000 7,060,000 1,922,830 64,762,830 22,859,395

2009 53,190,000 15,590,000 1,844,206 70,624,206 22,254,376

Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

Source: The Comprehensive Annual Financial Report.

** Data not available

118 Business-Type Activities Water Safe Total Total Percentage Debt Revenue Drinking Business-Type Primary of Personal Per Bonds Water Loan Activities Government Income Capita

15,035,000 - 23,409,621 78,864,610 2.91% 781

14,305,000 - 22,303,646 76,804,114 ** **

13,535,000 - 21,137,671 68,837,557 2.26% 669

13,085,000 - 20,271,696 90,590,508 ** **

26,871,342 - 33,622,063 101,569,643 3.46% 966

26,023,027 - 50,592,474 115,999,980 3.84% 1099

25,549,712 13,156,599 62,725,741 125,256,965 4.10% 1194

25,056,399 20,000,000 68,500,812 128,447,710 4.04% 1213

24,548,084 19,209,485 66,616,964 131,379,794 3.88% 1235

24,029,771 18,807,128 65,091,275 135,715,481 4.08% 1290

119 City of San Buenaventura Ratio of General Bonded Debt Outstanding Last Ten Fiscal Years ( In Thousands, except Per Capita )

Outstanding General Bonded Debt Fiscal Year Total Taxable Percent of Ended Certificates of Tax Allocation Assessed Assessed Per June 30 Participation Bonds Total Value Value (1) Capita

2000 24,630 - 24,630 6,264,485 0.39% 244

2001 23,760 - 23,760 6,755,042 0.35% **

2002 39,250 - 39,250 7,488,541 0.52% 381

2003 54,355 8,000 62,355 8,094,562 0.77% **

2004 52,635 8,000 60,635 8,705,015 0.70% 501

2005 50,760 7,795 58,555 9,487,116 0.62% 481

2006 48,825 7,555 56,380 10,450,782 0.54% 465

2007 46,830 7,310 54,140 11,563,674 0.47% 442

2008 55,780 7,060 62,840 12,477,641 0.50% 524

2009 53,190 15,590 68,780 12,933,640 0.53% 505

(1) Assessed value has been used because the actual value of taxable property is not readily available in the State of California.

Source: The Comprehensive Annual Financial Report.

** Data not available

120 City of San Buenaventura Direct and Overlapping Debt June 30, 2009

2008-09 Assessed Valuation: $ 12,510,994,901 Redevelopment Incremental Valuation: 338,316,851 Adjusted Assessed Valuation: $ 12,172,678,050

Total Debt Percentage City's Share of (1) 6/30/2009 Applicable Debt 6/30/2009 OVERLAPPING TAX AND ASSESSMENT DEBT Ventura County Community College District $ 317,212,814 12.518% $ 39,708,700 Ventura Unified School District $ 71,615,000 83.630% 59,891,625 Oxnard Union High School District $ 57,550,142 0.014% 8,057 Mesa Union School District $ 7,800,000 0.234% 18,252 Oxnard School District $ 128,413,139 0.021% 26,967 Rio School District $ 16,794,925 0.004% 672 City of San Buenaventura 1915 Act Bonds $ 590,000 100.000% 590,000

Total Overlapping Tax and Assessment Debt 100,244,273

DIRECT AND OVERLAPPING GENERAL FUND DEBT: Ventura County General Fund Obligations $ 62,125,000 12.515% $ 7,774,944 Ventura County Superintendent of Schools Certificates of Participation $ 12,740,000 12.515% 1,594,411 Ventura Unified School District Certificates of Participation $ 4,330,000 83.630% 3,621,179 Oxnard Union High School District Certificates of Participation $ 9,395,000 0.014% 1,315 Oxnard School District Certificates of Participation $ 5,890,000 0.021% 1,237 Rio School District Certificates of Participation $ 8,245,000 0.004% 330 City of San Buenaventura General Fund Obligations $ 53,190,000 100.000% 53,190,000

Total Direct and Overlapping General Fund Debt 66,183,416

Combined Total Debt $ 166,427,689 (2)

(1) Percentage of overlapping agency's assessed valuation located within the boundaries of the city. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations.

Source: California Municipal Statistics, Inc.

121 City of San Buenaventura Legal Debt Margin Information Last Ten Fiscal Years

(1) Total Net Debt Total Debt Applicable Fiscal Year (2) Adjusted Applicable to Limit: to the Limit as a Ended Assessed Conversion Assessed Debt Limit General Obli- Legal Percentage of June 30 Valuation Precentage Valuation Percentage Debt Limit gation Bonds Debt Margin Debt Limit

2000 6,878,001,695 25% 1,719,500,424 15% 257,925,064 - 257,925,064 0%

2001 7,488,509,526 25% 1,872,127,382 15% 280,819,107 - 280,819,107 0%

2002 8,078,385,165 25% 2,019,596,291 15% 302,939,444 - 302,939,444 0%

2003 8,817,820,626 25% 2,204,455,157 15% 330,668,273 - 330,668,273 0%

2004 9,579,866,892 25% 2,394,966,723 15% 359,245,008 - 359,245,008 0%

2005 10,514,075,917 25% 2,628,518,979 15% 394,277,847 - 394,277,847 0%

2006 11,616,549,581 25% 2,904,137,395 15% 435,620,609 - 435,620,609 0%

2007 11,204,644,465 25% 2,801,161,116 15% 420,174,167 - 420,174,167 0%

2008 12,071,967,113 25% 3,017,991,778 15% 452,698,767 - 452,698,767 0%

2009 12,510,994,901 25% 3,127,748,725 15% 469,162,309 - 469,162,309 0%

The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was enacted when assessed valuation was based upon 25% of market value. Each parcel is assessed at 100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted by the State of California for local governments located within the state.

Source: (1) Finance and Technology Department, City of San Buenaventura (2) Ventura County Tax Assessor's Office

122 City of San Buenaventura Pledged Wastewater Revenue Coverage Last Ten Fiscal Years

Wastewater Fund Revenue Bonds Governmental Tax Allocation Bonds Fiscal Year Less Net Ended Operating Operating Available Debt Service Tax Debt Service June 30 Revenue Expenses Revenue Principal Interest Coverage Increment Principal Interest Coverage

2000 10,863,380 6,971,060 3,892,320 390,000 486,392 4.44 1,355,666 - - -

2001 11,499,505 7,138,994 4,360,511 410,000 469,232 4.96 1,237,305 - - -

2002 11,162,654 7,884,657 3,277,997 430,000 416,553 3.87 1,229,838 - - -

2003 12,677,123 9,184,042 3,493,081 450,000 396,343 4.13 1,636,510 - - -

2004 13,430,212 8,563,847 4,866,365 470,000 408,768 5.54 1,935,314 - 173,519 11.15

2005 14,042,047 8,725,668 5,316,379 495,000 1,042,147 3.46 2,463,949 205,000 279,332 5.09

2006 14,144,570 9,882,656 4,261,914 625,000 1,108,375 2.46 2,686,766 240,000 274,882 5.22

2007 15,460,227 12,425,787 3,034,440 650,000 1,092,750 1.74 2,988,728 245,000 270,032 5.80

2008 16,068,806 14,440,917 1,627,889 660,000 1,076,500 0.94 3,527,287 250,000 265,082 6.85

2009 16,015,727 13,598,741 2,416,986 680,000 1,060,000 1.39 3,584,809 255,000 334,702 6.08

Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest or depreciation expenses.

Source: Finance and Technology Department, City of San Buenaventura

123 City of San Buenaventura Pledged Water Revenue Coverage Last Ten Fiscal Years

Water Fund Revenue Bonds Fiscal Year Less Net Ended Operating Operating Available Debt Service June 30 Revenue Expenses Revenue Principal Interest Coverage

2000 15,729,318 9,005,448 6,723,870 695,000 733,587 4.71

2001 16,302,818 10,102,166 6,200,652 730,000 700,782 4.33

2002 16,174,010 11,210,864 4,963,146 770,000 667,448 3.45

2003 16,494,638 11,437,328 5,057,310 450,000 628,343 4.69

2004 17,640,075 11,015,003 6,625,072 880,000 1,202,325 3.18

2005 17,642,997 13,561,877 4,081,120 880,000 1,347,666 1.83

2006 17,838,573 14,176,287 3,662,286 505,000 1,181,550 2.17

2007 20,549,930 15,418,196 5,131,734 525,000 1,166,100 3.03

2008 20,742,823 18,804,452 1,938,371 540,000 1,151,475 1.15

2009 21,304,880 18,946,447 2,358,433 550,000 1,136,475 1.40

Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest or depreciation expenses.

Source: Finance and Technology Department, City of San Buenaventura

124 City of San Buenaventura Demographic and Economic Statistics Last Ten Calendar Years

Per Capita Calendar Personal Income Personal Unemployment Year Population (1) (in thousands) Income (1) Rate (2)

2000 100,916 $ 2,711,310 $ 26,867 5.7%

2001 ** ** ** 4.5%

2002 102,938 3,041,200 29,544 4.5%

2003 ** ** ** 4.8%

2004 105,145 2,938,698 27,949 5.8%

2005 105,558 3,016,953 28,581 5.2%

2006 104,912 3,056,401 29,133 4.8%

2007 105,919 3,178,417 30,008 4.3%

2008 106,360 3,385,439 31,830 5.2%

2009 105,226 3,325,036 31,599 5.2%

(1) Source: Ventura City Economic Outlook by the UCSB Economic Forecast Project For 1999, 2001 and 2003, data was not available. (2) Source: State Employment Development Department

** Data not abailable

125 City of San Buenaventura Full-time City Employees by Function Last Ten Fiscal Years

Full-Time (FTE) Employees as of June 30

Function 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

General Government 26 25 25 23 17 17 17 17 17 18

Human resources 13 13 13 13 12 11 12 10 10 9

Finance and Technology 48 51 51 51 50 50 51 49 47 47

Community Development 34 35 35 34 34 30 30 30 26 20

Community Services 32 33 32 32 37 36 36 36 36 33

Public safety - police 185 181 176 179 184 182 183 193 194 189

Public safety - fire 112 111 108 106 105 103 102 101 101 100

Public Works 227 224 218 224 229 228 227 227 220 224

Total 676 673 657 660 667 657 657 662 650 639

Source: City Budget Office

126 City of San Buenaventura Principal Employers Current Year and Ten Years Ago

2009 1999 Percent of Percent of Number of Total Number of Total Employer (1) Employees Employment (2) Employees Employment (3)

County of Ventura 8,121 14.22% 7,100 **

Ventura County Health Care Agency 2,430 4.26% 2,000 **

Ventura Unified School District 2,197 3.85% 2,228 **

Community Memorial Hospital 2,000 3.50% 1,300 **

Ventura County Community College 1,974 3.46% 705 **

City of San Buenaventura 1,047 1.83% 625 **

(1) Only six principal employers located within City limits were identified. (2) "Total Employment" as used above represents the total employment of all employers located within City limits. (3) Data not available for the year 1999.

Source: Ventura City Economic Outlook by the UCSB Economic Forecast Project

127 City of San Buenaventura Investment Portfolio Statistics Last Ten Fiscal Years

City Trustee - Debt Financing Reserves

Year ended Average Average Effective Average Average Effective June 30, Portfolio Rate of Return Portfolio Rate of Return

2000 134,205,841 5.98% 6,887,522 6.18%

2001 135,395,522 5.96% 6,809,625 6.36%

2002 143,093,161 4.40% 15,385,789 4.08%

2003 145,180,617 3.15% 32,710,919 3.00%

2004 140,789,775 2.61% 42,722,911 2.54%

2005 137,034,504 2.56% 53,012,582 2.62%

2006 138,953,579 3.30% 52,508,444 2.91%

2007 141,555,410 4.11% 37,076,372 3.90%

2008 140,351,262 4.63% 30,318,080 3.85%

2009 135,394,186 3.62% 26,498,280 3.70%

Source: Finance and Technology Department, City of San Buenaventura

128 City of San Buenaventura Operating Indicators by Function Last Ten Fiscal Years

Fiscal Years 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Police: Arrests 6,009 5,772 5,633 5,400 5,314 5,483 4,750 ** ** ** Parking citations issued 12,768 12,981 12,597 9,690 13,478 10,624 7,480 9,196 8,395 1,712

Fire: Number of emergency calls 11,607 11,343 10,655 9,990 9,986 9,213 9,167 9,020 8,402 8,021 Inspections 15,638 17,999 21,697 25,083 25,440 20,209 20,518 11,699 15,797 16,199

Public works: Street resurfacing (lane miles) 63 60 36 45 109 51 94 71 62 50

Parks and recreation: Number of recreation classes 1,163 1,481 1,449 1,631 1,308 1,193 1,366 1,284 1,216 1,181 Number of facility rentals per event 1,259 1,312 1,282 1,255 947 19 26 24 29 27 Number of park rental reservations per attendees (in thousands) 537 537 777 1,256 1,445 585 ** ** ** **

Water: Total system connections 30,279 30,222 30,199 29,929 29,420 29,420 29,420 29,591 28,818 27,756 Average daily consumption (million gallons per day) 13.9 15.0 15.9 14.1 15.2 14.8 15.1 14.7 14.7 14.8

Wastewater: Total system connections 25,163 25,131 25,115 24,865 24,475 24,475 24,475 24,317 23,987 23,270 Average daily sewage treatment (million gallons per day) 8.6 8.5 9.4 9.4 9.3 9.4 9.1 9.1 9.5 9.4

Golf courses: Buenaventura golf rounds played 65,254 67,895 77,507 77,650 65,929 23,086 (1) 78,637 81,227 85,210 85,078 Olivas Park golf rounds played 61,422 54,078 11,670 - (2) 57,656 88,902 81,602 84,383 87,799 87,071

(1) Buenaventura Golf Course was closed for renovation from May 16, 2004 to March 17, 2005. (2) Olivas Park Golf Course was closed for renovation from October 2005 to May 17, 2007.

Source: City of Ventura

** Data not available due to system conversion.

129 City of San Buenaventura Capital Assets Statistics by Function Last Ten Fiscal Years

Fiscal Years 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Police: Stations 1 1 11 1 1 1 1 1 1

Fire: Fire stations 6 6 66 6 6 6 6 6 6

Public works: Street (miles) 297 294 294 294 294 294 294 294 294 284 Streetlights 1,058 1,058 1,058 1,058 1,058 1,058 1,058 1,050 635 557 Traffic signals 133 132 132 132 132 132 132 129 129 127

Parks and recreation: Parks 33 33 33 33 26 26 26 26 26 26 Community centers 4 3 33 3 3 3 3 3 3

Water: Water mains (miles) 380 500 500 500 500 400 400 400 400 400 Maximum daily capacity (million gallons per day) 30 30 30 30 30 30 30 30 30 30

Wastewater: Sanitary sewers (miles) 290 475 475 475 475 475 475 475 475 375 Storm sewers (miles) 100 310 310 310 310 310 310 310 310 310 Maximum daily treatment capacity (million gallons per day) 14 14 14 14 14 14 14 14 14 14

Golf course: Municipal golf courses 2 2 22 2 2 2 2 2 2

Source: City of Ventura

130 City of San Buenaventura Wastewater Service Rates Last Ten Fiscal Years

Wastewater Volume Rates Per Hundred Cubic Feet (HCF) Fiscal Residential (1) Year Ended Tier Tier Tier Tier Tier Tier Non- June 30 1 2 3 4 5 6 Residential

2000 20.95 25.70 30.44 35.18 39.93 44.67 13.46

2001 20.95 25.70 30.44 35.18 39.93 44.67 13.46

2002 20.95 25.70 30.44 35.18 39.93 44.67 13.46

2003 23.67 29.04 34.40 39.76 45.12 50.48 15.20

2004 24.14 29.62 35.09 40.56 46.02 51.49 17.63

2005 25.11 30.81 36.49 42.18 47.86 53.55 16.12

2006 26.49 32.50 38.50 44.50 50.49 56.50 17.01

2007 27.55 33.80 40.04 46.28 52.51 58.76 17.70

2008 30.00 36.98 43.78 50.57 57.36 64.16 13.95

2009 32.04 39.50 46.75 54.01 61.26 68.52 14.90

NOTE: 1 HCF = 748 gallons The City bills bi-monthly and by hundred cubic feet (HCF). Rates are based on 3/4" meter, which is the standard household meter size. The tier structure is in place to encourage wastewater conservation by customers.

(1) Commercial Group 1 (1-8 HCF)

Source: Ventura Water Division

131 City of San Buenaventura Wastewater Customers Current Year and Six Years Ago

2009 2003 (1) Percent of Total Percent of Total Wastewater Wastewater Wastewater Wastewater Wastewater Customer Charges Revenues Charges Revenues

Ventura County $ 147,910 0.92%$ 129,276 1.02%

CPM-Peppertree HOA 138,426 0.86% ** **

Ventura County Medical Center 97,812 0.61% 56,772 0.45%

Community Memorial Hospital 96,157 0.60% 70,452 0.56%

Buenaventura Gardens HOA 89,445 0.56% 51,984 0.41%

Archstone Smith 86,761 0.54% ** **

Vedder Community Management - Lemon Wood MHP 83,166 0.52% ** **

Crown Plaza VTA 77,611 0.48% ** **

Imperial VTA MHP 76,456 0.48% ** **

Pacific View Mall 76,010 0.47% ** **

$ 969,754 6.06%$ 308,484 2.44%

(1) 2003 was the earliest year this data was available.

Source: Ventura Water Division

** Data not available

132 City of San Buenaventura Water Sold by Type of Customer Last Ten Fiscal Years (in Hundred Cubic Feet)

Fiscal Year Type of Customer Total Direct Ended Rate per June 30 Residential Commercial Industrial Municipal Other Total HCF HCF

2000 4,666,207 1,544,704 104,360 169,038 744,138 7,228,447 1.94

2001 4,606,633 1,547,131 120,094 157,066 722,491 7,153,415 1.88

2002 4,684,036 1,575,168 104,660 152,269 673,707 7,189,840 1.99

2003 4,712,158 1,593,584 128,434 212,437 739,117 7,385,730 2.05

2004 4,757,729 1,602,611 101,379 188,047 900,914 7,550,680 2.17

2005 4,800,912 1,701,385 70,985 178,051 968,369 7,719,702 2.15

2006 4,510,956 1,508,515 63,691 201,674 797,963 7,082,799 2.40

2007 5,157,275 1,676,746 83,423 251,689 849,979 8,019,112 2.40

2008 4,918,824 1,584,420 73,926 270,013 772,258 7,619,441 2.67

2009 4,688,698 1,518,433 50,373 262,832 423,340 6,943,676 3.07

Note: 1 HCF (hundred cubic feet) = 748 gallons

Source: Ventura Water Division

133 City of San Buenaventura Water Rates Last Ten Fiscal Years

Water Volume Rates Per Hundred Cubic Feet (HCF)

Residential Fiscal Bi-Monthly Single Family Single Family Single Family Year Service HCF 1-16 HCF 17-42 HCF 43+ Ended Charge Multiple Family Multiple Family Multiple Family Non-Residential June 30 Base Rate HCF 1-10 HCF 11-24 HCF 25+

2000 7.97 1.29 1.72 2.75 1.72

2001 7.97 1.29 1.72 2.75 1.72

2002 7.97 1.29 1.72 2.75 1.72

2003 8.69 1.41 1.87 3.00 1.87

2004 8.69 1.41 1.87 3.00 1.87

2005 9.40 1.53 2.02 3.24 2.02

2006 9.82 1.60 2.11 3.39 2.11

2007 10.22 1.67 2.20 3.53 2.20

2008 11.14 1.82 2.40 3.85 2.40

2009 12.94 1.91 2.52 4.04 2.52

NOTE: 1 HCF = 748 gallons The City bills bi-monthly and by hundred cubic feet (HCF). Rates are based on 3/4" meter, which is the standard household meter size. The tier structure is in place to encourage water conservation by customers.

Source: Ventura Water Division

134 City of San Buenaventura Water Customers Current Year and Six Years Ago

(1) 2009 2003 Percent of Percent of Water Total Water Water Total Water Water Customer Charges Revenues Charges Revenues

Aera Energy LLC $ 232,038 1.09% ** **

Dairy Farmers of America 208,767 0.98% ** **

Ventura County 161,446 0.76% 127,235 0.79%

Ventura College 136,357 0.64% ** **

Evergreen Alliance Golf 133,997 0.63% ** **

Calif. Mushroom Farm 128,769 0.60% ** **

Ventura County Medical Center 106,421 0.50% 55,876 0.35%

Community Memorial Hospital 103,814 0.49% 69,340 0.43%

Harris Water Conditioning 88,789 0.42% ** **

CPM-Peppertree HOA 88,286 0.41% ** **

$ 1,388,684 6.52%$ 252,451 1.57%

(1) 2003 was the earliest year this data was available

Source: Ventura Water Division

** Data not available

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     City of San Buenaventura Annual Continuing Disclosure Requirements Summary of All Certificates of Participations For the year ended June 30, 2009

San Buenaventura Public Facilities Financing Authority Summary of All Issues:

Amount Outstanding General Fund

$1,770,000 2001 Refunding Certificates of Participation, Series A, $2,925,000

$14,120,000 2001 Certificates of Participation, Series C, $16,345,000

$12,665,000 2002 Refunding Certificates of Participation, Series B, $19,765,000

$14,035,000 2002 Refunding Certificates of Participation, Series D, $15,930,000

$10,600,000 2007 Refunding Certificates of Participation, Series E, $11,420,000

Wastewater Fund

$22,460,000 2004 Revenue Certificates of Participation, $25,075,000

Water Fund

$24,410,000 2004 Revenue Certificates of Participation, $27,410,000

· No significant or material events to report for the above financings.

Source: Finance and Technology Department, City of San Buenaventura

136 City of San Buenaventura Annual Continuing Disclosure Requirements San Buenaventura Public Facilities Financing Authority For the year ended June 30, 2009

Buenaventura & Olivas Links Golf Courses $15,930,000 2002 Certificates of Participation, Series D

Actuals 2009 2008 2007 2006 2005 2004 Operating Revenues: Charges for Services: Greens Fees - Buena $ 1,474,056 $ 1,614,122 $ 1,811,017 $ 1,715,579 $ 554,290 $ 806,148 Electric Carts - Buena 360,710 407,240 442,144 421,151 54,358 218,737 Coffee Shop - Buena 116,000 116,870 92,136 60,239 13,624 38,751 Pro Shop - Buena 134,820 161,431 191,987 182,654 17,753 71,549 (3) Greens Fees - Olivas 1,754,540 1,829,224 402,278 469,294 1,179,281 1,290,011 Driving Range - Olivas 82,778 120,533 39,193 60,594 233,536 212,288 Electric Carts - Olivas 320,583 339,162 79,611 125,559 310,371 336,533 Coffee Shop - Olivas 22,097 100,878 1,024 105,658 262,851 262,522 Pro Shop - Olivas 324,495 253,094 21,440 61,103 138,276 144,023 Total charges for services 4,590,079 4,942,555 3,080,829 3,201,831 2,764,338 3,380,562

Other Operating Revenues 215,763 - - - - - Total Operating Revenues 4,805,842 4,942,555 3,080,829 3,201,831 2,764,338 3,380,562

Operating Expenses: Personal Services 202,617 168,445 202,040 189,322 143,794 177,652 (1) Contractual Services 3,234,707 4,143,377 3,444,301 2,820,708 1,669,598 2,202,983 Materials & Supplies 25,302 4,199 625 2,398 348 344 General & Administrative 339,063 366,507 604,377 236,925 304,033 373,100 Depreciation 917,443 917,621 370,732 130,369 79,636 63,495 Total Operating Expenses 4,719,132 5,600,149 4,622,075 3,379,722 2,197,409 2,817,574 Operating Income (Loss) 86,710 (657,593) (1,541,246) (177,891) 566,929 562,988

Non-Operating Revenues (Expenses): (2) Interest Income - 10,452 126,331 88,854 111,149 53,461 Interest Expense (12,888) (23,436) (9,696) - - - Gain on Sale of Assets - - 8,007 - - - Total Non-Operating Revenues (Expenses): (12,888) (12,985) 124,642 88,854 111,149 53,461

Net Income (Loss) $ 73,822 $ (670,578) $ (1,416,604) $ (89,037) $ 678,078 $ 616,449

Notes: (1) Fiscal year 2002 includes $335,836 in preliminary golf course renovation design. (2) Interest income includes unrealized gain (loss) on investments. (3) Olivas Park Golf Course was closed for renovation from October 2005 to May 2007.

Source: The Comprehensive Annual Financial Report.

137 Actuals 2003 2002 2001 2000

$ 490,485 $ 506,195 $ 507,726 $ 448,075 135,399 137,278 131,990 108,448 54,772 55,268 52,943 - - - - - 565,499 586,017 585,569 521,591 89,216 88,472 90,147 68,492 138,553 148,825 148,799 122,663 18,343 22,601 22,700 - - - - - 1,492,267 1,544,656 1,539,874 1,269,269

- - - 255 1,492,267 1,544,656 1,539,874 1,269,524

167,161 172,740 152,934 142,991 236,471 591,890 239,933 276,585 329 583 302 1,705 371,379 391,471 404,961 432,609 74,375 56,841 58,543 58,352 849,715 1,213,525 856,673 912,242 642,552 331,131 683,201 357,282

184,467 296,288 391,375 200,488 ------(18,097)

184,467 296,288 391,375 182,391

$ 827,019 $ 627,419 $ 1,074,576 $ 539,673

138 City of San Buenaventura Annual Continuing Disclosure Requirements, Continued Wastewater Fund - $25,075,000-2004 Wastewater Revenue Certificates of Participation For the year ended June 30, 2009

WASTEWATER SYSTEM EIGHT-YEAR HISTORIC OPERATING RESULTS FISCAL YEAR ENDED JUNE 30

2009 2008 2007 2006 2005 2004 2003 2002 REVENUES Service Charges and Sale Revenues $ 16,015,727 $ 16,068,806 $ 15,460,227 $ 14,144,570 $ 14,042,047 $ 13,430,212 $ 12,677,123 $ 11,162,655 Transfers In 109,519 - - 7,003 56,789 - - - Gain on Sale of Assets ------373 496 Investment Income 1,771,660 1,734,356 1,797,241 1,513,379 574,053 262,306 817,907 1,412,544 TOTAL REVENUE 17,896,906 17,803,162 17,257,468 15,664,952 14,672,889 13,692,518 13,495,403 12,575,695

OPERATION AND MAINTENANCE 13,598,741 14,440,917 12,425,787 9,882,656 10,045,597 9,893,922 10,630,077 9,205,801 EXPENSE

NET REVENUES 4,298,165 3,362,245 4,831,681 5,782,296 4,627,292 3,798,596 2,865,326 3,369,894

DEBT SERVICE 1993 Bonds (1) - - - - 880,738 878,768 880,368 880,578 2004 COP 1,740,000 1,736,500 1,742,750 1,733,375 230,911 - - - TOTAL DEBT SERVICE 1,740,000 1,736,500 1,742,750 1,733,375 1,111,649 878,768 880,368 880,578

DEBT SERVICE COVERAGE 2.47 1.94 2.77 3.34 4.16 4.32 3.25 3.83

NET REVENUES AVAILABLE FOR SUBORDINATE DEBT SERVICE $ 2,558,165 $ 1,625,745 $ 3,088,931 $ 4,048,921 $ 3,515,643 $ 2,919,828 $ 1,984,958 $ 2,489,317

(1) 1996 Sewer Revenue Refunding Bonds were refinanced into 2004 Wastewater Revenue Certificates Of Participation on Dec. 1, 2004.

Source: The Comprehensive Annual Financial Report.

139 City of San Buenaventura Annual Continuing Disclosure Requirements, Continued Wastewater Fund - $25,075,000-2004 Wastewater Revenue Certificates of Participation For the year ended June 30, 2009

HISTORIC WASTEWATER SYSTEM USAGE

Daily Average Flow Fiscal Year Ended June 30 (Million Gallons per Daily) Increase (Decrease) 2000 9.36 0.00% 2001 9.52 1.71% 2002 9.20 -3.36% 2003 9.11 -0.98% 2004 9.26 1.65% 2005 9.31 0.54% 2006 9.40 0.97% 2007 8.98 -4.47% 2008 8.73 -2.78% 2009 8.56 -1.95%

HISTORIC WASTEWATER SYSTEM SERVICE CONNECTIONS

Fiscal Year Ended June 30 Service Connections Increase (Decrease) 2000 23,270 0.00% 2001 23,987 3.08% 2002 24,317 1.38% 2003 24,475 0.65% 2004 24,475 0.00% 2005 24,475 0.00% 2006 24,865 1.59% 2007 25,155 1.17% 2008 25,131 -0.10% 2009 25,163 0.13%

HISTORIC WASTEWATER SYSTEM SERVICE AND FLOW CHARGE REVENUES

Service and Flow Charge Fiscal Year Ended June 30 Revenues Increase (Decrease) 2000 10,863,380 0.00% 2001 11,499,505 5.86% 2002 11,162,655 -2.93% 2003 12,677,123 13.57% 2004 13,430,212 5.94% 2005 14,042,047 4.56% 2006 14,144,570 0.73% 2007 15,460,227 9.30% 2008 16,068,806 3.94% 2009 16,015,727 -0.33%

Source: Water Division, City of San Buenaventura, and the Comprehensive Annual Financial Report.

140 City of San Buenaventura Annual Continuing Disclosure Requirements, Continued Wastewater Fund - $25,075,000-2004 Wastewater Revenue Certificates of Participation For the year ended June 30, 2009

Top 10 Wastewater Customers for 2008-2009 (1)

Percent of Classification Average HCF Total Wastewate Customer Name Per Day Revenues

Ventura County Commercial 173.0 0.92%

Ventura County Medical Center Commercial 116.0 0.61%

Community Memorial Hospital Commercial 112.0 0.60%

Peppertree HOA Residential 105.0 0.86%

Archstone Smith Residential 77.0 0.54%

Buenaventura Gardens HOA Residential 74.0 0.56%

Vedder Community Mgmt-Lemonwood MHP Residential 69.0 0.52%

Imperial VTA MHP Residential 60.0 0.48%

Crown Plaza VTA Commercial 44.0 0.48%

Pacific View Mall Commercial 35.0 0.47%

(1) Customer ranking is based on volume.

Source: Water Division, City of San Buenaventura, and the Comprehensive Annual Financial Report.

141 City of San Buenaventura Annual Continuing Disclosure Requirements, Continued Water Fund - $27,410,000-2004 Water Revenue Certificates of Participation For the year ended June 30, 2009

WATER SYSTEM EIGHT-YEAR HISTORIC OPERATING RESULTS FISCAL YEAR ENDED JUNE 30

2009 2008 2007 2006 2005 2004 2003 2002 REVENUES Service Charges & Sale Revenues $ 21,304,880 $ 20,742,823 $ 20,549,930 $ 17,838,573 $ 17,642,997 $ 16,924,727 $ 16,103,697 $ 15,353,505

Transfers In 916,459 840,954 675,517 619,089 854,927 901,249 - - Gain on Sale of Assets ------1,547 1,173 Investment Income 906,708 828,655 1,193,564 573,009 529,375 106,757 390,941 820,503 TOTAL REVENUE 23,128,047 22,412,432 22,419,011 19,030,671 19,027,299 17,932,733 16,496,185 16,175,181

OPERATION AND 18,946,447 18,804,452 15,418,196 14,176,287 13,561,877 12,128,513 13,050,651 11,865,861 MAINTENANCE EXPENSE

NET REVENUES 4,181,600 3,607,980 7,000,815 4,854,384 5,465,422 5,804,220 3,445,534 4,309,320

DEBT SERVICE 1970 Bonds (1) ------358,700 1993 Bonds (2) - - - - - 1,078,328 1,078,343 1,077,048 2004 COP 1,686,475 1,691,475 1,691,100 1,686,550 2,082,325 209,340 - - TOTAL DEBT SERVICE 1,686,475 1,691,475 1,691,100 1,686,550 2,082,325 1,287,668 1,078,343 1,435,748

DEBT SERVICE COVERAGE 2.48 2.13 4.14 2.88 2.62 4.51 3.20 3.00

NET REVENUES AVAILABLE FOR SUBORDINATE DEBT $ 2,495,125 $ 1,916,505 $ 5,309,715 $ 3,167,834 $ 3,383,097 $ 4,516,552 $ 2,367,191 $ 2,873,572 SERVICE

(1) 1970 Bonds were retired in fiscal year 2002. (2) 1993 Water Revenue Refunding Bonds were refinanced into 2004 Water Revenue Certificates Of Participation on January 1, 2004.

Source: The Comprehensive Annual Financial Report.

142 City of San Buenaventura Annual Continuing Disclosure Requirements, Continued Water Fund - $27,410,000-2004 Water Revenue Certificates of Participation For the year ended June 30, 2009

HISTORIC WATER SUPPLY (in Acre-feet per year)

Fiscal Year Purchased Ended June 30 Pumped Water Water (1) Total

1999 13,969 6,030 19,999 2000 15,228 6,263 21,491 2001 14,238 6,816 21,054 2002 13,330 6,043 19,373 2003 13,020 6,178 19,198 2004 16,030 5,964 22,003 2005 12,337 7,867 20,204 2006 11,657 6,658 18,315 2007 12,818 6,120 18,938 2008 12,923 6,079 19,002 2009 12,211 5,364 17,575

(1) Reflects Casitas Municipal Water District certification letters

PROJECTED WATER SUPPLY (in Acre-feet per year)

Fiscal Year Purchased Ended June 30 Pumped Water Water Total

2004 18,500 8,000 26,500 2005 18,300 8,000 26,300 2006 18,300 8,000 26,300 2007 18,300 8,000 26,300 2008 18,300 8,000 26,300 2009 20,562 8,000 28,562 2010 21,900 8,000 29,900 2011 21,900 8,000 29,900 2012 21,900 8,000 29,900 2013 21,900 8,000 29,900 2014 21,900 8,000 29,900

Source: Water Division, City of San Buenaventura, and the Comprehensive Annual Financial Report.

143 City of San Buenaventura Annual Continuing Disclosure Requirements, Continued Water Fund - $27,410,000-2004 Water Revenue Certificates of Participation For the year ended June 30, 2009

HISTORIC WATER SYSTEM SERVICE CHARGES AND SALES REVENUES

Fiscal Year Service Charges Ended June 30 and Sales Revenues Increase

2000 $14,894,769 0.00%

2001 $15,034,897 0.94%

2002 $15,353,505 2.12%

2003 $16,103,697 4.89%

2004 $16,924,727 5.10%

2005 $17,642,997 4.24%

2006 $17,838,573 1.11%

2007 $20,549,930 15.20%

2008 $20,742,823 0.94%

2009 $21,304,880 2.71%

Source: The Comprehensive Annual Financial Report.

144 City of San Buenaventura Annual Continuing Disclosure Requirements, Continued Water Fund - $27,410,000-2004 Water Revenue Certificates of Participation For the year ended June 30, 2009

Top 10 Water Customers for 2008-2009 (1) Percent of Classification Average HCF Total Water Customer Name Per Day Revenues

Evergreen Alliance Golf Reclaimed 694.0 0.63%

Aera Energy LLC Ground 469.0 1.09%

Ventura County Commercial 173.0 0.76%

Ventura College School 145.0 0.64%

Calif. Mushroom Farm Commercial 139.0 0.60%

Dairy Farmers of America Commercial 135.0 0.98%

Ventura County Medical Center Commercial 116.0 0.50%

Community Memorial Hospital Commercial 112.0 0.49%

CHM-Peppertree HOA Residential 105.0 0.41%

Harris Water Conditioning Commercial 97.0 0.42%

(1) Customer ranking is based on volume.

Source: Water Division, City of San Buenaventura, and the Comprehensive Annual Financial Report.

145 City of San Buenaventura Annual Continuing Disclosure Requirements, Continued Water Fund - $27,410,000-2004 Water Revenue Certificates of Participation Wastewater Fund - $25,075,000-2004 Wastewater Revenue Certificates of Participation For the year ended June 30, 2009

FY 2008-2009 Water Rates FY 2008-2009 Wastewater Service Rates Water Volume Rates Bimonthly Service Charge Customer Classification Customer Classification Bimonthly Single Family Residential Residential & Non-Residentia # HCF Bimonthly Commercial # HCF Rate $ Meter Size City County ** Rate $ Group 1: Water Usage City County $ $ Single Family & HCF $ $ Multiple Dwelling A. B. C. D. E. Multiple Family Residentia F. G. Water Usage City County H. HCF $ $ I. J. K. Fire Line Bimonthly Charge Schools*** L. 146 Meter Size City County M. Non-Residential $ $ Churches*** N. O. Water Usage City County *** Per Single Family Dwelling Unit HCF $ $ Group 2

A . Raw Water*, Irrigation*, B. & Municipal Parks Industrial (Billed Monthly) Group 3 Water Usage City County HCF $ $ City Reclaim Meter Charge A. Meter Size Bi-Mo Monthly $ Group 4 Reclaimed Water A. Water Usage City County B . HCF $ $ Group 5 Misc. User Fees (As of 7/1/2008) Temporary Meter Charge 30.00 A. 36.00 B. 72.00 48.00 C. 36.00 48.00 72.00 Group 6 474.00 A.

Source: Water Division, City of San Buenaventura .         

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     [THIS PAGE INTENTIONALLY LEFT BLANK] .

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PROPOSED FORM OF SPECIAL COUNSEL OPINION

August __, 2010

City Council City of San Buenaventura 501 Poli Street Ventura, California 93002

OPINION: $20,615,000 2010 Certificates of Participation, Series F Evidencing the Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments Made by the City of San Buenaventura, California to the City of San Buenaventura Public Facilities Financing Authority

Members of the City Council:

Wehaveacted as special counsel to the City of San Buenaventura, California (the “City”), in connection with the execution and delivery by the City of a Lease Agreement dated as of August 1, 2010 (the “Lease Agreement”), between the City of San Buenaventura Public Facilities Financing Authority (the “Authority”) as lessor and the City as lessee. Under a Trust Agreement dated as of August 1, 2010 (the “Trust Agreement”), among the City, the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee thereunder (the “Trustee”), the Trustee has executed and delivered $20,615,000 aggregate principal amount of 2010 Certificates of Participation, Series F (the “Certificates”) evidencing the direct, undivided fractional interests of the owners thereof in lease payments to be made by the City under the Lease Agreement (the “Lease Payments”), which have been assigned by the Authority to the Trustee under an Assignment Agreement dated as of August 1, 2010 (the “Assignment Agreement”) between the Authority and the Trustee. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Lease Agreement and the Trust Agreement, and in certified proceedings and other certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation.

Based upon the foregoing, we are of the opinion, under existing law, as follows:

1. The City is a charter city and municipal corporation duly organized and validly existing under the Constitution and laws of the State of California with the full power to enter into the Lease Agreement and the Trust Agreement and to perform the agreements on its part contained therein.

2. The Lease Agreement and the Trust Agreement have been duly approved by the City and constitute valid and binding obligations of the City enforceable against the City in accordance with their respective terms.

3. The Certificates have been validly executed and delivered by the Trustee under the Trust Agreement and, by virtue of the assignment made under the Assignment Agreement, the owners of the Certificates are entitled to the benefits of the Lease Agreement.

D-1 4. The portion of the Lease Payments designated as and comprising interest and received by the owners of the Certificates is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The Lease Payments are “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986 (the “Tax Code”) and, in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Tax Code), a deduction is allowed for 80% of that portion of such financial institutions’ interest expense allocable to interest payable with respect to the Certificates.

The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Tax Code that must be satisfied subsequent to the delivery of the Lease Agreement in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of delivery of the Lease Agreement, or may cause the Lease Payments not to be “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Tax Code. We express no opinion regarding other federal tax consequences arising with respect to the Lease Agreement and the Certificates.

5. The portion of the Lease Payments designated as and comprising interest and received by the owners of the Certificates is exempt from personal income taxation imposed by the State of California.

The rights of the owners of the Certificates and the enforceability of the Lease Agreement, the Trust Agreement and the Assignment Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in accordance with principles of equity or otherwise in appropriate cases.

Respectfully submitted,

A Professional Law Corporation

D-2 APPENDIX E

FORM OF CONTINUING DISCLOSURE CERTIFICATE

This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the City of San Buenaventura (the “City”) in connection with the execution and delivery of $20,615,000 2010 Certificates of Participation, Series F (the “Certificates”). The Certificates are being executed and delivered pursuant to a Trust Agreement, dated as of August 1, 2010 (the “Trust Agreement”), by and among the City, the City of San Buenaventura Public Facilities Financing Authority (the “Authority”) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). The City covenants and agrees as follows:

SECTION 1 Purpose of this Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the Holders and Beneficial Owners of the Certificates and in order to assist the Participating Underwriter in complying with the Rule.

SECTION 2 Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

“Annual Report” shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.

“Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Certificates (including persons holding Certificates through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Certificates for federal income tax purposes.

“Fiscal Year” shall mean the one year period ending on the last day of June of each year.

“Holder” means a registered owner of the Certificates.

“Lease Agreement” shall mean that certain Lease Agreement executed and entered into as of August 1, 2010, by and between the City and the Authority.

“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Certificate.

“Participating Underwriter” shall mean any of the original underwriters of the Certificates required to comply with the Rule in connection with offering of the Certificates.

“Repository” shall mean the Municipal Securities Rulemaking Board, which can be found at http://emma.msrb.org.

“Rule” shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

“State” shall mean the State of California.

SECTION 3 Provision of Annual Reports.

(a) The City shall provide not later than 270 days following the end of its Fiscal Year (commencing with the Fiscal Year 2009-10) to each Repository an Annual Report relating to the immediately preceding Fiscal Year which is consistent with the requirements of Section 4 of this Disclosure Certificate,

E-1 which Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate.

(b) If the City is unable to provide to each Repository an Annual Report by the date required in subsection (a), the City shall send to each Repository a notice in substantially the form attached hereto as Exhibit A.

SECTION 4 Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following:

(a) The audited financial statements of the City for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financing statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they come available.

(b) Any or all of the items listed above may be included by specific reference to other documents, including Official Statements of debt issues of the City or related public entities, which have been submitted to each of the Repositories; provided, that if any document included by reference is a final Official Statement, it must be available from the Municipal Securities Rulemaking Board; and provided further, that the City shall clearly identify each such document so included by reference.

SECTION 5 Reporting of Significant Events.

(a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Certificates, if material:

(i) principal and interest payment delinquencies.

(ii) non-payment related defaults.

(iii) modifications to rights of Certificateholders.

(iv) optional, contingent or unscheduled Certificate calls.

(v) defeasances.

(vi) rating changes.

(vii) adverse tax opinions or events affecting the tax-exempt status of the Certificates.

(viii) unscheduled draws on the debt service reserves reflecting financial difficulties.

(ix) unscheduled draws on the credit enhancements reflecting financial difficulties.

(x) substitution of the credit or liquidity providers or their failure to perform.

(xi) release, substitution or sale of property securing repayment of the Certificates.

(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall as soon as possible determine if such event would be material under applicable federal securities laws.

E-2 (c) If the City determines that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the City shall promptly file a notice of such occurrence with the Repositories. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and (5) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Certificates pursuant to the Trust Agreement.

SECTION 6 Customarily Prepared and Public Information. Upon request, the City shall provide to any person financial information and operating data regarding the City which is customarily prepared by the City and is publicly available.

SECTION 7 Termination of Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior prepayment or payment in full of all of the Certificates. If such termination occurs prior to the final maturity of the Certificates, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).

SECTION 8 Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that, in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted by the Rule.

SECTION 9 Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall not thereby have any obligation under this Disclosure Certificate to update such information or include it in any future notice of occurrence of a Listed Event.

SECTION 10 Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Certificates may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.

No Holder or Beneficial Owner of the Certificates may institute such action, suit or proceeding to compel performance unless they shall have first delivered to the City satisfactory written evidence of their status as such, and a written notice of and request to cure such failure, and the City shall have refused to comply therewith within a reasonable time.

SECTION 11 Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Certificates, and shall create no rights in any other person or entity.

Dated: ______, 2010 CITY OF SAN BUENAVENTURA

By: Its: City Manager

E-3 EXHIBIT A

NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: CITY OF SAN BUENAVENTURA

Name of Issue: $20,615,000 2010 Certificates of Participation, Series F

Date of Issuance August 12, 2010

NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with respect to the above-named Certificates as required by the Continuing Disclosure Certificate approved pursuant to a Resolution adopted by the City Council of the City on ______, 2010. The City anticipates that the Annual Report will be filed by ______.

Dated: ______CITY OF SAN BUENAVENTURA

By

E-4 APPENDIX F

BOOK-ENTRY ONLY SYSTEM

The information in this section concerning DTC and DTC’s book-entry only system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, premium, if any, accreted value and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Certificates. The Certificates will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Certificates, each in the aggregate principal amount of such maturity, and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

Purchases of Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for the Certificates on DTC’s records. The ownership interest of each actual purchaser of each Certificate (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Certificates are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Certificates, except in the event that use of the book-entry system for the Certificates is discontinued.

To facilitate subsequent transfers, all Certificates deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by

F-1 an authorized representative of DTC. The deposit of Certificates with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Certificates are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holding on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Certificates may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Certificates, such as prepayments, tenders, defaults, and proposed amendments to the Certificate documents. For example, Beneficial Owners of Certificates may wish to ascertain that the nominee holding the Certificates for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Prepayment notices shall be sent to DTC. If less than all of the Certificates within a maturity are being prepaid, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be prepaid.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Certificates unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Certificates are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Prepayment proceeds, distributions, and dividend payments with respect to the Certificates will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or the Trustee, on a payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of prepayment proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

A Beneficial Owner shall give notice to elect to have its Certificates purchased or tendered, through its participant, to the Tender Agent, and shall effect delivery of such securities by causing the Direct Participant to transfer the Participant’s interest in the Certificates, on DTC’s records, to the Tender Agent. The requirement for physical delivery of Certificates in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Certificates are transferred by Direct Participants or DTC’s records and followed by book-entry credit of tendered Certificates to the Tender Agent’s DTC account.

DTC may discontinue providing its services as depository with respect to the Certificates at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Certificates are required to be printed and delivered.

The City may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, Certificates will be printed and delivered.

F-2 The information in this Appendix concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.

F-3 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX G

SPECIMEN MUNICIPAL BOND INSURANCE POLICY

G-1 [THIS PAGE INTENTIONALLY LEFT BLANK] f\sSURED MUNICIPAL BOND GUARANTY. INSURANCE POLICY MUNICIPAL

ISSUER: Policy No.: -N

BONDS: $ in aggregate principal amount of Effective Date: Premium: $

ASSURED GUARANTY MUNICIPAL CORP. (FORMERLY KNOWN AS FINANCIAL SECURITY ASSURANCE INC.) ("AGM"), for consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the "Trustee") or paying agent (the "Paying Agent") (as set forth in the documentation providing for the issuance of and securing the Bonds) for the Bonds, for the benefit of the Owners or, at the election of AGM, directly to each Owner, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer.

On the later of the day on which such principal and interest becomes Due for Payment or the Business Day next following the Business Day on which AGM shall have received Notice of Nonpayment, AGM will disburse to or for the benefit of each Owner of a Bond the face amount of principal of and interest on the Bond that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by AGM, in a form reasonably satisfactory to it, of (a) evidence of the Owner's right to receive payment of the principal or interest then Due for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the Owner's rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in AGM. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by AGM is incomplete, it shall be deemed not to have been received by AGM for purposes of the preceding sentence and AGM shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, who may submit an amended Notice of Nonpayment. Upon disbursement in respect of a Bond, AGM shall become the owner of the Bond, any appurtenant coupon to the Bond or right to receipt of payment of principal of or interest on the Bond and shall be fully subrogated to the rights of the Owner, including the Owner's right to receive payments under the Bond, to the extent of any payment by AGM hereunder. Payment by AGM to the Trustee or Paying Agent for the benefit of the Owners shall, to the extent thereof, discharge the obligation of AGM under this Policy.

Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. "Business Day" means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer's Fiscal Agent are authorized or required by law or executive order to remain closed. "Due for Payment" means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity unless AGM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. "Nonpayment" means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. "Nonpayment" shall also include, in respect of a Bond, any payment of principal or interest that is Due for Payment made to an Owner by or on behalf of the Issuer which has been recovered from such Owner pursuant to the Page 2 of 2 Policy No. -N

United States Bankruptcy Code by a trustee in bankruptcy in accordance with a final, nonappealable order of a court having competent jurisdiction. "Notice" means telephonic or telecopied notice, subsequently confirmed in a signed writing, or written notice by registered or certified mail, from an Owner, the Trustee or the Paying Agent to AGM which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount and (d) the date such claimed amount became Due for Payment. "Owner" means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that "Owner" shall not include the Issuer or any person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds.

AGM may appoint a fiscal agent (the "Insurer's Fiscal Agent") for purposes of this Policy by giving written notice to the Trustee and the Paying Agent specifying the name and notice address of the Insurer's Fiscal Agent. From and after the date of receipt of such notice by the Trustee and the Paying Agent, (a) copies of all notices required to be delivered to AGM pursuant to this Policy shall be simultaneously delivered to the Insurer's Fiscal Agent and to AGM and shall not be deemed received until received by both and (b) all payments required to be made by AGM under this Policy may be made directly by AGM or by the Insurer's Fiscal Agent on behalf of AGM. The Insurer's Fiscal Agent is the agent of AGM only and the Insurer's Fiscal Agent shall in no event be liable to any Owner for any act of the Insurer's Fiscal Agent or any failure of AGM to deposit or cause to be deposited sufficient funds to make payments due under this Policy.

To the fullest extent permitted by applicable law, AGM agrees not to assert, and hereby waives, only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses (including, without limitation, the defense of fraud), whether acquired by subrogation, assignment or otherwise, to the extent that such rights and defenses may be available to AGM to avoid payment of its obligations under this Policy in accordance with the express provisions of this Policy.

This Policy sets forth in full the undertaking of AGM, and shall not be modified, altered or affected by any other agreement or instrument, including any modification or amendment thereto. Except to the extent expressly modified by an endorsement hereto, (a) any premium paid in respect of this Policy is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the Bonds prior to maturity and (b) this Policy may not be canceled or revoked. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.

In witness whereof, ASSURED GUARANTY MUNICIPAL CORP. (FORMERLY KNOWN AS FINANCIAL SECURITY ASSURANCE INC.) has caused this Policy to be executed on its behalf by its Authorized Officer.

ASSURED GUARANTY MUNICIPAL CORP. (FORMERLY KNOWN AS FINANCIAL SECURITY ASSURANCE INC.)

By Authorized Officer

(212) 826-0100

Form 500NY (5/90)