Kelling, Northcross & Nobriga, Inc
NEW ISSUE- BOOK-ENTRY ONL.Y RATINCi.;, Standard & Poor's: AAA (See "BOND INSURANCE" and "MISCELLANEOUS - Rating" herein).
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and r1ssuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is not a specific preforence item for purposes of thti federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating federal corporate alternative minimum taxable income. Bond Counsel expresses no opinion reg,irding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. See "LEGAL MATTERS - Tax Matters" herein. $2,690,000 EMERY UNIFIED SCHOOL DISTRICT (Alameda County, California) General Obligation Bonds Election of 1995, Series 1997 (Bank Qualified)
Dated: February 1, 1997 Due: August 1, as shown below
The Bonds represent the general obligation of the Emery Unified School District (the "District"), and Alameda County is empowered and is obligated to annually levy ad valorem taxes, without limitation as to rate or amount, for the payment of interest on, and principal of, the Bonds upon all property subject to taxation within the District (except certain personal property which is taxable at limited rates), all as more fully described herein under "THE BONDS - Security and Sources of Payment" and "THE DISTRICT." Interest on the Bonds is payable semiannually on each February 1 and August 1, commencing February 1, 1998. The Bonds due on or before August 1, 2004, are not subject to optional redemption; the Bonds due on and after August 1, 2005 are subj�1ct to optional redemption as described herein; the Bonds due August 1, 2017 and August 1, 2021 are subject to mandato1y sinking fund redemption as described herein and on maturity schedule below.
Payment of principal of an interest on the Bonds will be insured by a municipal bond insurance policy to be issued by Financial Guaranty Insurance Company ("Financial Guaranty") simultaneously with the delivery of the bonds. See "BOND INSURANCE" herein. FGIC� Financial Guaranty Insurance Company Servicemark used by Financial Guaranty Insurance l:ompan�. a privalP company not alliliated with any U.S. government agency.
The following firm, serving as financial advisor to the District, has structured this financing: KELLING, NORTHCROSS & NOBRIGA, INC. ------MATURITY SCHEDULE
Maturity Principal Interest Price Maturity Principal Interest Price .u;ygy§l 1 l Amoynt Rate or Yield {Aygust 11 Am2Y.nt .B.!Wl or Yield 2000 $ 60,000 6.25% 4.10% 2008 $100,000 5.00% 100% 2001 65,000 6.25 4.20 2009 105,000 5.10 100 2002 70,000 6.25 4.35 2010 115,000 5.20 100 2003 75,000 6.10 4.50 2011 120,000 5.25 100 2004 85,000 5.00 4.60 2012 125,000 5.30 100 2005 90,000 5.00 4.70 2013 130,000 5.35 100 2006 90,000 4.80 100 2014 140,000 5.40 100 2007 95,000 4.90 100
$465,000 5.55% Term Bond due August 1, 2017 at 100% $760,000 5.60% Term Bond due August 1, 2021 at 100%
(Plus accrued interest from February 1, 1 997)
The Bonds were awarded to the Underwriter pursuant to the terms of a public sale on February 2 7, 199 7 at a true interest cost of 5.4396%. The Bonds wJ1/ be offered when, as and if issued by the District and received by the Underwriter, subject to the approval of legality by Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel. It is anticipated that the Bonds, in book-entry form, willbe availabfe for delivery in New York, New York, on or about March 13, 1997.
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.
Offic:ial Statement Date: Februarv 27, 1997
ALAMEDA COUNTY
County Board of Supervisors
Keith Carson President, Supervisor, District 5
Wilm.a Chan Gail Steele Vice President, Supervisor, District 3 Supervisor, District 2
Scott Haggerty Mary King Supervisor, District 1 Supervisor, District 4
EMERY UNIFIED SCHOOL DISTRICT
Board of Trustees
Donald Dorsey President
Barbara Krczywicki Gladys Vance Vice President Clerk
Ronald Mooney Giselle Wolfe Member Member
Clayton Bell Student Representative
District Administration
Dr. J. L. Handy District Superintendent of Schools
Gina Peters Business Manager
PROFESSIONAL SERVICES
Financial Advisor
Kelling, Northcross & Nobriga, Inc. Oakland, California
Bond Counsel
Orrick, Herrington & Sutcliffe LLP San Francisco, California
Paying Agent
First Trust of California, National Association Los Angeles, California (TIIIS :PAGE INTENTIONALLYLEFr BLANK) -----·------·------�------·-----
TABLE OF CONTENTS
� INTRODUCTION ...... 1 The District ...... 1 Authority for lss:uance of the Bonds ...... 1 Sources of Payment for the Bonds ...... 1 Purpose of the Bonds ...... • . • . . . . . • . • • . • . . 2 Description of the Bonds . . . . • . . . . . • ...... • ...... • ...... 2 Tax Matters ...... 2 Professionals Involved in the Offering ...... 2 Offering and Delivery of the Bonds ...... 3 Continuing Discrlosure ...... 3 Other Information ...... 3
THE BONDS ...... 4 Authority for Issuance ...... 4 Purpose of lssuE� . • • . . • ...... • • . . .. . 4 Estimated Sourc:es and Uses of Funds ...... • ...... • ...... • . . . . . 4 Investment of Bond Proceeds ...... 4 Security and Sources of Payment ...... 5 Description of the Bonds ...... 6 Redemption ...... 7 Form, Denomination and Payment ...... 8 Book-Entry System ...... • ...... 8 Discontinuation of Book-Entry System; Payment to Beneficial Owners ...... 10
BOND INSURANCE ...... 10
CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS ...... 11 Article XIIIA ...... • ...... 12 Legislation lmpl,ementing Article XIIIA ...... 12 Unitary Property ...... 12 Proposition 62 ...... • 13 Article XIIIB . , ...... 13 Propositions 98 and 111 ...... • ...... 14 Applications of Constitutional and Statutory Provisions ...... 15 Proposition 187 ...... 15 Proposition 218 ...... 16 Future Initiatives ...... 16
GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION ...... 17 State Funding of Education ...... 1 7 State Budget ...... • ...... 17 State Lottery ...... 1 8 Ad Valorem Property Taxation ...... 18 Assessed Valuation ...... 18 Tax Levies, Colliections and Delinquencies ...... 19 Budget Process ...... • .. . • ...... 1 9 Accounting Prai::tices ...... 20
THE DISTRICT ...... 20 General Information ...... 20 Average Daily Attendance and Revenue Limit ...... 21 Appropriations Limit ...... 21 Lottery Income ...... 21 Labor Relations ...... 22 Retirement Programs ...... :22 Assessed Valuation . . • ...... 23 Tax Levies, Collections and Delinquencies ...... 23 Tax Rates ...... 24 Major Taxpayers ...... 25 Comparative Financial Sta1tements ...... 26 District Debt Structure ...... 27 Statement of Direct and Overlapping Debt ...... 28 Investment of District Funds ...... 29 ECONOMIC PROFILE ...... :30 Introduction ...... :30 ...... Population ...... 31 Employment ...... 31 Largest Employers ...... 33 Construction Activity ...... :34 Commercial Activity ...... 35 Median Household Income ...... :35 LEGAL MATTERS ...... :36 Tax Matters ...... 36 Bank Qualification ...... 37 No Litigation ...... :37 Legality for Investment in California ...... :37 Legal Opinion ...... :37 MISCELLANEOUS ...... :37 Rating ...... :37 Underwriting ...... 38 Closing Papers ...... 38 Continuing Disclosure ...... :39 Additional Information ...... 39
APPENDIX A - FORM OF LEGAL OPINION ...... A-1 APPENDIX B - EXCERPTS FROM 1995/96 AUDITED FINANCIAL STATEMENTS ...... B-1 APPENDIX C - FORM OF CONTINUING DISCLOSURE CERTIFICATE ...... C-1 APPENDIX D - SPECIMEN OF BOND INSURANCE POLICY ...... D··1 ------.-..------·------�------
OFFICIAL STA TEMENT
$2,690,000 EMERY UNIFIED SCHOOL DISTRICT (Alameda County, California) General Obligation Bonds Election of 1995, Series 1997 (Bank Qualified)
INTRODUCTION
This introduction is not a summary of this official statement (the ''Official Statement"). It is only a brief description of ,find guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarizecf or described herein. A full review should be made of the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement.
The Official Statement, which includes the cover page and appendices hereto, is provided to furnish information in 1:onnection with the sale of $2,690,000 principal amount of Emery Unified School District (Alameda County, California), General Obligation Bonds, Election of 1995, Series 1997 (the "Bonds"), as described more fully herein.
The District
The Emery Unified School District (the "District"} is located in the City of Emeryville (the "City"), Alameda County (the "County"), in the State of California (the "State"), six miles east of San Francisco. The District encompasses a total area of approximately 1.2 square miles and has an estimated population of 6,450. The District provides educational services to the residents of the City of Emeryville. The District's budgeted average daily attendance for fiscal year 1996/97 is 684 and the District's 1996/97 general fund budget is approximately $4.2 million. The District has a 1996/97 assessed valuation of approximately $1.264 billion. See "THE DISTRICT" herein.
Authority for Issuance ,of the Bonds
The Bonds are issued pursuant to certain provisions of the State of California Education Code (the "Education Code") and pursuant to resolutions adopted by the Board of Trustees of the District and the Board of Supervisors of the County. See "THE BONDS - Authority for Issuance" herein.
Sources of Payment for the Bonds
The Bonds repmsent the general obligation of the District, and the County is empowered and is obligated to annually levy ad valorem taxes, without limitation as to rate or amount, for the payment of the interest on and principal of the Bonds, upon all property subject to taxation within the District (except certain personal property which is taxable at limited rates) . See "THE BONDS - Security and Sources of Payment," and "THE DISTRICT" herein. Purpose of the Bonds
The proceeds of the Bonds may be used to provide needed health and safety improvements, to provide classroom access to technology and computers, to renovate, modernize, construct, acquire or replace school facilities, to improve school grounds, finance sewer and drainage projects for school property, and to provide for long term capital improvements District-wide.
Description of the Bonds
The Bonds will be issued as fully-registered current interest bonds without coupons in denominations of $5,000 each, or any integral multiple thereof, and will be registered initially in the name of Cede & Co., as nominee of the Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. See "THE BONDS - Form, Denomination and Payment; Book-Entry System" and "- Discontinuation of Book-Entry System; Payment to Beneficial Owners" herein. So long as DTC,. or Cede & Co., as its nominee, is the registered owner of all the Bonds, principal and interest payments on the Bonds will be made directly to DTC, and disbursememt of such payments to the DTC Participants (defined below) will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners (defined below) will be the responsibility of the DTC Participants, as more fully described hereinafter.
The Bonds maturing on and after August 1, 2005, may be redeemed prior to maturity at the option of the District beginning on August 1, 2004. See "THE BONDS - Redemption" herein.
Interest on the Bonds is payable semiannually each February 1 and August 1, commencing February 1, 1998. Principal of the Bonds is payable on August 1 in each year due, as set forth on the cover page hereof.
Tax Matters
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings aind court decisions, and assuming, among other matters, compliance with certain covenants, interest 01:1 the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is niot a specific preference item for purpo,ses of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating federal corporate alternative minimum taxable income. Bond Counsel expresses no opini,on regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. See "LEGAL MATTERS -Tax Matters" herein.
Professionals Involved in the Offering
Kelling, Northcross & Nobriga, Inc., Oakland, California, is the District's financial advisor wiith respect to the Bonds. Orrick, Herrington & Sutcliffe LLP, San Francisco, California, is the District's bond counsel with respect to the Bonds. First Trust of California, National Association, Los Angeles, California, will act as the District's !Paying agent, registrar and transfer agent (the "Paying Agent") with respect to the Bonds. Kelling, Northcross & Nobriga, Inc. and Orrick, Herrington & Sutcliffe LLP will receive compensation from the District contingent upon the sale and delivery of the Bonds.
2 _ ...... ,...... - ...... ----.---- ...... ---- .....----.-...... --· -.....------·------
Offering and Delivery of the Bonds
The Bonds will be offered when, as and if issued by the District and received by the Underwriter, subject to approval as to their legality by Bond Counsel. It is anticipated that the Bonds, in book-entry form, wm be available for delivery through OTC in New York, New York on or about March 13, 1997.
Continuing Disclosure
The District has covenanted for the benefit of the holders and beneficial owners of the Bonds to provide certain financial information and operating data relating to the District and to provide notices of the occurrence of ciartain enumerated events, if material. See MISCELLANEOUS - Continuing Disclosure" and "APPENDIX C - Form of Continuing Disclosure Certificate" herein.
Other Information
This Official St.atement speaks only as of its date, and the information contained herein is subject to change.
Copies of documents referred to herein and information concerning the Bonds are available from the Business Manager, !Emery Unified School District, 4727 San Pablo Avenue, Emeryville, California 94608 telephone: (510) 655-6936. The District may impose a charge for copying, mailing and handling.
No dealer, broker, salesperson or other person has been authorized by the District to give any information or to make any representations other than as contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the District. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or no1t expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The summaries and descriptions of documents, statutes and constitutional provisions referred to herein do not purport to be comprehensive or definitive, and are qualified in their entireti1es by reference to each such document, statute and constitutional provision.
The information set forth herein has been obtained from sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the District. The information and expressions of opinions herein are subject to change without notice cind 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 District since the date hereof. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS 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 BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.
END OF INTRODUCTION
3 THE BONDS
Authority for Issuance
The Bonds are issued under the provisions of Chapter 2 of Part 10 of Division 1 of Title 1 of the Education Code of the State (the "Act") and pursuant to resolutions adopted by the Board of Trustees of the District on January 27, 1997 and by the Board of Supervisors of the County on February 4, 1997 (collectively the1 "Resolution").
The District received authorization to issue $8.07 million of bonds at an election held on November 7, 1995, by an affirmative vote of more than two-thirds of the votes cast (the "Authorization"). The Bonds represent the second series issued under such authorization. The District previously issued $2,690,000 Emery Unified School District, General Obligation Bonds, Election of 1995, Series 1996, dated Februa1y 1, 1996.
Purpose of Issue
The proceeds of the Bonds may be used to provide needed health and safety improvements, to provide classroom access to technology and computers, to renovate, modernize, construct, acquire or replace school facilities, to improve school grounds, finance sewer and drainage projects for school property, and .to provide for long term capital improvements District-wide.
Estimated Sources and Uses of Fu1nds
The proceeds of the Bonds are expected to be applied as follows:
E:MERY UNIFIED SCHOOL DISTRICT Ei;timated Sources and Uses of Funds
Sources of Funds Principal Amount of Bonds $2,690,000.00 Original Issue Premium 26,172.30 Accrued Interest 17.106.83 Total Sources $2 733 279.13
Uses of Funds Estimated Project Costs Funded from Proceeds $2,632,000.00 Underwriter's Compensation 18,297.10 Insurance 7,500.00 Estimated Costs of lssu1ance111 58,000.00 Deposit to Debt ServicEi Fund121 17.482.03 Tot11I Uses $2 733.279.1 3
(1) Includes estimated fees for rating agency, bond counsel, financial advisor, paying agent, printing and distribution of the Official Statement, and miscellaneous costs of issuance. (2) Includes $375.20 in underwriter's bid premium and $17, 106.83 of accrued interest.
Investment of Bond Proceeds
The proceeds from the salei of the Bonds, to the extent of the principal amount thereof, shall be paid to the County to the credi1t of the Emery Unified School District General Obligation Bonds
4 Election of 1995, Building Fund (the "Building Fund") and shall be accounted for separately from all other District and County funds. Such proceeds shall be applied solely for purposes described in the Authorization and for authorized costs of issuance. The accrued interest and any premium received from the sale of the Bonds shall be paid to the County to the credit of the Emery Unified School District General Obligation Bonds Election of 1995, Interest and Sinking Fund (the "Debt Service Fund"). Such proceeds shall be applied solely for the payment of principal and interest on the Bonds.
Interest earned on the investment of monies held in the Building Fund shall be retained in the Building Fund. Interest earned on the investment of monies held in the Debt Service Fund shall be retained in the Debt Service Fund and used to pay the principal and interest on the Bonds when due.
Monies in the Building Fund and the Debt Service Fund shall be invested in any one or more investments generally permitted to school districts under the laws of the State including those authorized under Section 53600 et seq. of the Government Code and any other investments specifically authorized in the Resolution. The Resolution expressly permits the District to direct investment of the Building Fund in investment agreements with a financial entity whose debt is rated by Standard and Poor's no lower than the rating on the Bonds. See "THE DISTRICT - Investment of District Funds" herein.
Security and Sources o1f Payment
The Bonds represent the general obligation of the District, and the County is empowered and is obligated to annually levy ad valorem taxes, without limitation as to rate or amount, for the payment of interest on and principal of the Bonds, upon all property within the District subject to taxation by the District (except certain personal property which is taxable at limited rates). Such taxes, when collected, will be placed in the Debt Service Fund of the District, which is maintained by the County and which is required to be applied for the payment of principal of and interest on the Bonds when due.
The annual tax levy will be based on the assessed value of taxable property in the District. The reduction of assessod values of taxable property in the District caused by economic factors beyond the District's control, such as economic recession, deflation of land values, a relocation out of the District or financial difficulty or bankruptcy by one or more major property tax payers, or the complete or partial destruction of taxable property due to earthquake, flood or other natural disaster, could cause a reduction in thc:l assessed value within the district and necessitate a corresponding increase in the annual tax levy.
For further information regarding the District's tax base, tax rates, overlapping debt and other matters concerning taxation see "THE DISTRICT" herein.
5 Description of the Bonds
The Bonds in the aggregate principal amount of $2,690,000 will be dated February 1, 1997 and will bear interest payable semiannually each February 1 and August 1, commencing February 1, 1998. The Bonds will mature in each of the years and in the principal amounts shown on the cover page hereof. Semiannual debt smvice obligations for the Bonds and for the Emery Unified School District General Obligation Bonds Election of 1995, Series 1996, assuming no optional redemptions are made, are as follows.
J�ggregate Semiannual Debt Service
Psi�m§nl Oat� Series 1996 Series 1997
TutA! Prini.i12al l.!l.tfilm I2W Aggr�sii!l� TQlii!I February 1, 1997 $ 148,408.75 $ 148,408.75 August 1, 1997 74,204.:38 74,204.38 February 1 , 1998 74,204.:38 $ 146,630.00 $ 146,630.00 220,834.:38 August 1, 1998 134,204.:38 73,315.00 73,31 5.00 207,519.38 February 1 , 1999 71,991 .138 73,315 .00 73,31 5.00 145,306.88 August 1, 1999 136,991.88 73,31 5 .00 73,315.00 210,306.88 February 1 , 2000 69,595.00 73,315 .00 73,315.00 142,910.00 August 1 , 2000 139,595.00 $ 60,000 73,315 .00 133,315.00 272,910.00 February 1, 2001 67,013.75 71,440.00 71,440.00 138,453.75 August 1, 2001 142,01 3.75 65,000 71,440.00 136,440.00 278,453.75 February 1 , 2002 64,248,'13 69,408.75 69,408.75 133,656.138 August 1, 2002 139,248.'13 70,000 69,408.75 139,408.75 278,656.138 February 1, 2003 61,482.!>0 67,221.25 67,221.25 128,703.75 August 1, 2003 141 ,482.!;o 75,000 67,221 .25 142,221 .25 283,703.75 February 1 , 2004 58,532.!>0 64,933.75 64,933.75 123,466.25 August 1, 2004 143,532.!>0 85,000 64,933.75 149,933.75 293,466.25 February 1, 2005 56,620.00 62,808.75 62,808.75 119,428.75 August 1, 2005 146,620.00 90,000 62,808.75 152,808.75 299,428.75 February 1, 2006 54,550.00 60,558.75 60,558.75 115,108.75 August 1 , 2006 149,550.00 90,000 60,558.75 150,558.75 300, 1 08.75 February 1, 2007 52,31 7.fiO 58,398.75 58,398.75 110,716.25 August 1, 2007 152,317.£10 95,000 58,398.75 153,398.75 305,716.25 February 1 , 2008 49,917.fiO 56,071 .25 56,071.25 105,988.75 August 1 , 2008 154,917.fiO 100,000 56,071.25 156,071.25 310,988.75 February 1 , 2009 47,345.00 53,571 .25 53,571 .25 100,916.25 August 1, 2009 157,345.00 105,000 53,571 .25 158,571.25 315,916.25 February 1, 2010 44,595.00 50,893.75 50,893.75 95,488.75 August, 2010 159,595.00 115,000 50,893.75 165,893.75 325,488.75 February 1, 201 1 41,662.fiO 47,903.75 47,903. 75 89,566.25 August, 201 1 161 ,662.fiO 120,000 47,903.75 167,903.75 329,566.25 February 1, 201 2 38,602.fiO 44,753.75 44,753.75 83,356.25 August, 2012 168,602.50 125,000 44,753.75 169,753.75 338,356.25 February 1, 2013 35,222.fiO 41 ,441 .25 41 ,441 .25 76,663.75 August, 2013 170,222.fiO 130,000 41 ,441 .25 171 ,441 .25 341,663.75 February 1 , 2014 31,712.fiO 37,963.75 37,963.75 69,676.25 August, 2014 176, 712.fiO 140,000 37,963.75 177,963.75 354,676.25 February 1, 2015 27,870.00 34, 183.75 34,183.75 62,053.75 August, 201 5 177,870.CIO 145,000 34, 1 83.75 179,1 83.75 357,053.75 February 1, 201 6 23,895.CIO 30, 1 60.00 30, 1 60.00 54,055.00 August, 201 6 183,895.00 155,000 30, 1 60.00 1 85, 160.00 369,055.00 February 1, 201 7 19,575.00 25,858.75 25,858.75 45,433.75 August, 2017 189,575.00 165,000 25,858.75 190,858.75 380,433.75 February 1, 201 8 14,985.CIO 21 ,280.00 21,280.00 36,265.00 August, 201 8 189,985.00 175,000 21,280.00 196,280.00 386,265.00 February 1, 2019 10,260.00 16,380.00 16,380.00 26,640.00 August, 2019 195,260.00 185,000 16,380.00 201,380.00 396,640.00 February 1 , 2020 5,265.00 11,200.00 11,200.00 16,465.00 August, 2020 200,265.0,0 195,000 11,200.00 206,200.00 406,465.00 February 1 , 21 21 5,740.00 5,740.00 5,740.00 August 1, 202 1 205,000 5,740.00 210,740.00 210,740.00
TOTAL $4,955.539.41 $2,69Q,OOO $2,377,547.50 $!;! Q67 547.50 $10 023,086 .91
6 _ ...... ,...... ------�------�---
Redemption
Op tional Redemption. The Bonds maturing on or before August 1, 2004, are not subject to redemption prior to their stated maturity dates. The Bonds maturing on and after August 1, 2005, are subject to redemption prior to their respective stated maturity dates at the option of the District, from any source of available funds, in whole or in part, on any date on or after August 1, 2004, among such maturity dates as are seh!cted by the District and by lot within any one maturity if less than all of the Bonds of one maturity are redeemed, at the following redemption prices (expressed as a percentage of the principal amounts, of the Bonds called for redemption), together with interest accrued on the Bonds to the date of redemption.
Redemption Date Redemption Price
August 1, 2004, through July 31, 2005 101% August 1, 2005, and thereafter 100
Mandatory Sinking Fund Redemption. The Bonds maturing on August 1, 201 7 are subject to mandatory sinking fund redemption in part by lot on August 1 of each year beginning August 1, 201 5 at the principal amount to be redeemed together with accrued interest thereon to the redemption date, without premium, in the amount and at the times, as follows:
Redemption Date (August l > Redemption Amount
201 5 $145,000 201 6 155,000 201 7 (maturity) 165,000
The Bonds maturing on August 1, 2021 are subject to mandatory sinking fund redemption in part by lot on August 1 of each year beginning August 1, 201 8 at the principal amount to be redeemed together with accrued interest thereon to the redemption date, without premium, in the amount and at the times, as follows:
Redemption Date {August 1 > Redemption Amount
201 8 $175,000 2019 185,000 2020 195,000 2021 (maturity) 205,000
Notice of Redemption. Notice of redemption of any Bonds shall be given by the Paying Agent upon written request of the District. Notice of any redemption of Bonds shall be mailed by first class mail, postage prepaid, not less than thirty (30) nor more than sixty (60) days prior to the redemption date (i) to the respective Owners thereof at the addresses appearing on the bond registration books, (ii) to all organization:; registered with the Securities and Exchange Commission as securities depositories, (iii) to at least two information services of national recognition which disseminate redemption information with respect to municipal securities, and (iv) as may be further required in accordance with the Continuing Disclosure Certificate of the District .
Each notice of iredemption shall contain all of the following information: (a) the date of such notice; (b) the name of the Bonds and the date of issue of the Bonds; (c) the redemption date; (d) the redemption price; (e) the dates of maturity of the Bonds to be redeemed; (fl (if less than all of the Bonds of any maturity jare to be redeemed) the distinctive numbers of the Bonds of each maturity to
7 be redeemed; (g) (in the case of Bonds redeemed in part only) the respective portions of the principal amount of the Bonds of each maturity to be redeemed; (h) the CUSIP number, if any, of each maturity of Bonds to be redeemed; (i) a statement that such Bonds must be surrendered by the Owners at the principal corporate trust office of the Paying Agent in St.Paul, Minnesota or at such other place or places designated by the Paying Agent; and (j) notice that further interest on such Bonds will not accrue after the designated redemption date .
Form, Denomination and Payment
The Bonds will be issued as fully-registered current interest bonds, without coupons, in denominations of $5,000 each or any integral multiple thereof, provided that no Bond shall have principal maturing on more than one principal maturity date.
The Bonds, when issued, will be registered initially in the name of Cede & Co., as nominee of DTC. So long as DTC, or Cede & Co., as its nominee, is the registered owner of all the Bonds, principal and interest payments on the Bonds will be made directly to DTC, disbursement of such payments to the OTC Participants (defined be:low) will be the responsibility of OTC, and disbursement of such payments to the Beneficial Owners (defined below) will be the responsibility of the OTC Participants, as more fully described hereinafter. See "THE BONDS - Book-Entry System" and " - Discontinuation of Book-Entry System; Payment t,o Beneficial Owners" below.
The Bonds shall bear interest at the rates shown on the cover hereof. Interest on the Bonds will be computed on the basis of a 360-day year of twelve ( 12) 30-day months. Each Bond shall bear interest from the interest payment date next preceding the date of authentication thereof unless it is authenticated as of the day during the period from the 15th day of the month next preceding any interest payment date (the "Record Date") to the interest payment date, in which event it shall bear interest from such interest payment date, or unless it is authenticated on or before January 15, 1998, in which event it shall bear interest from February 1, 1997.
Book-Entry System
The information in this section concerning DTC and DTC 's book-entry system has been obtained from sources that the District believes to be reliable, but the Distric t takes no responsibility for the accuracy or completeness hereof. The District cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representin g ownership interest in or other confirmation of ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co. , its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis or that DTC, DTC Participants or DTC In direct Pa rticipants will act in the manner described in this Official Statemimt. The current "Rules " applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures " of DTC to be followed in dealing with DTC Participants are on file with DTC.
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered initially in the name of Cede & Co. (OTC's partnership nominee). One fully registered Bond certificate for eac:h maturity will be issued for the Bonds in the aggregate principal amount of each maturity, and will be deposited with OTC.
DTC is a limited-purpose tru1st 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. OTC holds securities that its participants ("Participants") deposit with OTC. DTC al:so facilitates the settlement among Participants of securities transactions, such as transfers and pledges,
8 ------,-----·------�------���-
in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. OTC is ,owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the OTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to OTC and its Participants are on file with the Securities and Exchange Commission.
Purchases of Bc1nds under the OTC system must be made by or through Direct Participants, which will receive a cre:dit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from OTC of their purchase, but Beneficial Owners are 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 Bene·ficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be acGomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Benuficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Participants with OTC are registered in the name of DTC's 1>artnership nominee, Cede & Co. The deposit of Bonds with OTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. OTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by OTC 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 bo in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither OTC nor Cede & Co. will consent or vote with respect to Bonds. Under its usual procedures, OTC mails ,:in Omnibus Proxy to the District 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 the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal and in1terest payments on the Bonds will be made to OTC. DTC's practice is to credit Direct Participants' acc,ounts on a payable date in accordance with their respective holdings shown on DTC's records unless OTC has reason to believe that it will not receive payment on a payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the casH 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 OTC, the Paying Agent, the District or the County, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to OTC is the responsibility of the County or the Paying Agent, disbursement of such payments to Direct Participants shall be the responsibility of OTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.
9 DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the County or the Paying Agent, or the District may decide to discontinue use of the system o,f book-entry transfers through OTC. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered.
Discontinuation of Book-Entry System; Payment to Beneficial Owners
In the event that the book-entry system described above is no longer used with respect to the Bonds, the following provisions will govern the payment, registration, transfer, exchange ,md replacement of the Bonds.
The principal of the Bonds and any premium upon the redemption thereof prior to the maturity will be payable in lawful money o1f the United States of America upon presentation and surrender of the Bonds at the principal corporate trust office of the Paying Agent or such other location as the Paying Agent may specify. Interest on the Bonds will be paid by the Paying Agent by check mailed to the person whose name appears on the registration books of the Paying Agent as the registered owner, at that person's address appearing on the registration books as of the close of business on the applicable Record Date. At the option of the registered owner of at least $1,000,000 in aggregate principal amount, upon written request given no later than the applicable Record Date, interest will be transmitted by wire transfer to an account in the United States designated by such owner.
Any Bond may be exchanged for Bonds of any authorized denomination upon presentation and surrender at the principal corporate, trust office of the Paying Agent, in St. Paul, Minnesota, together with a request for exchange signed by the registered owner or by a person legally empowered to do so in a form satisfactory to the Payiing Agent. A Bond may be transferred only on the Bond registration books upon presentation and surrender of the Bond at the principal corporate trust office of the Paying Agent together with an assignment executed by the registered owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent. Upon exchange or transfer, the Paying Agent shall complete, authenticate and deliver a new Bond or Bonds of any authorized denomination or denominations requested by the renistered owner or by a person legally empowered to do so, equal in the aggregate to the unmatured principal amount of the Bond surrendered and bearing interest at the same rate and maturing on the same date.
Neither the District, the County nor the Paying Agent will be required to exchange or transfer any Bond during the period from (1) the close of business on the applicable Record Date to and including the succeeding interest payment date, or (2) the close of business on the date on which notice of redemption is given to and including the redemption date.
BOND INSURANCE
Th e following in formation htts been furnished by Financial Guaranty In surance Company for use in this Official Statement. The Distric t takes no responsibility for the accuracy or completeness thereof.
Concurrently with the issuance of the Bonds, Financial Guaranty Insurance Company, doing business in California as FGIC Insurance Company ("Financial Guaranty"), will issue its Municipal Bond New Issue Insurance Policy for thei Bonds (the "Policy"). The Policy unconditionally guarantees the payment of that portion of the priincipal of and interest on the Bonds which has become due for payment, but shall be unpaid by reason of nonpayment by the issuer of the Bonds (the "Issuer"'). Financial Guaranty will make such payments to State Street Bank and Trust Company, N.A., or its successor as its agent (the "Fiscal Agent"), on the later of the date on which such principal and interest
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is due or on the business day next following the day on which Financial Guaranty shall have received telephonic or telegraphic notice, subsequently confirmed in writing, or written notice by registered or certified mail, from an owner of Bonds or the Paying Agent of the nonpayment of such amount by the Issuer. The Fiscal Agent will disburse such amount due on any Bond to its owner upon receipt by the Fiscal Agent of evidence: satisfactory to the Fiscal Agent of the owner's right to receive payment of the principal and interest due for payment and evidence, including any appropriate instruments of assignment, that all of such owner's rights to payment of such principal and interest shall be vested in Financial Guaranty. The term "nonpayment" in respect of a Bond includes any payment of principal or interest made to an owner of a Bond which has been recovered from such owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with a final, nonappealable order of a court having c:ompetent jurisdiction.
The Policy is non-cancelable and the premium will be fully paid at the time of delivery of the Bonds. The Policy covem failure to pay principal of the Bonds on their respective stated maturity dates, or dates on which the same shall have been duly called for mandatory sinking fund redemption, and not on any other date on which the Bonds may have been otherwise called for redemption, accelerated or advanced in maturity, and covers the failure to pay an installment of interest on the stated date for its payment.
This Official Statement contains a section regarding the ratings assigned to the Bonds and reference should be m21de to such section for a discussion of such ratings and the basis for their assignment to the Bonds. See "MISCELLANEOUS - Rating" herein.
The Policy is n,ot covered by the Property/Casualty Insurance Security Fund specified in Article 76 of the New York Insurance Law.
Financial Guaranty is a wholly-owned subsidiary of FGIC Corporation (the "Corporation"), a Delaware holding company. The Corporation is a subsidiary of General Electric Capital Corporation ("GE Capital"). Neither the Corporation nor GE Capital is obligated to pay the debts of or the claims against Financial Guaranty. Fina1ncial Guaranty is a monoline financial guaranty insurer domiciled in the State of New York and subjoct to regulation by the State of New York Insurance Department. As of December 31, 1996, the total capital and surplus of Financial Guaranty was approximately $1,093,256,057. Financial Guaranty prepares financial statements on the basis of both statutory accounting principles and generally accepted accounting principles. Copies of such financial statements may be obtained by writing to Financial Guaranty at 115 Broadway, New York, New York 10006, Attention: Communications Department (telephone number: (21 2) 312-3000) or to the New York State Insurance O,epartment at 160 West Broadway, 18th Floor, New York, New York 1001 3, Attention: Financial Condition Property/Casualty Bureau (telephone number (212) 602-0389).
CONSTITUTIONAL AND STATUTORY PROVISIONS AFFEC"rlNG DISTRICT REVENUES AND APPROPRIATIONS
Principal of and in terest on the Bonds are payable from the proceeds of an ad valorem tax required to be levied by the County for the payment thereof. (See ''THE BONDS - Security and Sources of Payment" hc�rein.) Articles XII/A and X/118 of the Constitution, Propositions 62, 98, 111, 187, and 218, and certain other provisions of law discussed below, are included in this section to describe the potential effect of these Constitutional and statutory measures on the abilit y of the District to levy taxes and spend tax proceeds for operating and other purposes, and it should not be inferred from the inclusion of such materials that these laws impose any limitation on the ability of the District to levy taxes for payment of the Bonds. The tax levied by the County for payment of the Bonds wa s approved by the District 's voters in compliance with Article XII/A and allapp licable laws.
11 Article XIIIA
Article XIIIA of the Constitution of the State of California (the "State") limits the amount of ad valorem taxes on real property to 1 % of "full cash value" as determined by the county assessor. Article XIIIA defines "full cash value" to mean "the county assessor's valuation of real property as shown on the 1975/76 tax bill u1nder • full cash value' or, thereafter, the appraised value of r,eal property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment," subject to exemptions in certain circumstances of property transfer or reconstruction. The "full cash value" is subject to annual adjustment to reflect increases, not to exceed 2% for any year, or decreases in the consum,�r price index or comparable local data; or to reflect reductions in property value caused by damage,, destruction or other factors.
Article XIIIA requires a vote, of two-thirds of those voting in an election in a city, county, special district or other public agency to impose special taxes, and except for ad valorem taxes described in the next sentence, prohibits the imposition of any additional ad valorem, sales or transaction taxes on real property. Article XIIIA exempts from the 1 % tax limitation any taxes above that level required to pay debt service (a) on any indebtedness approved by the voters prior to July 1, 1978, and (b) as the result of an amendment approved by State voters on June 3, 1986, on any bonded indebtedness approved by two-thirds of the votes cast by the voters for the acquisition or improvement of rnal property on or after July 1, 1978. In addition, Article XIIIA requires the approval of two-thirds of all members of the State Legislature to change any State taxes for the purpose of increasing tax revenues, while prohibiting the imposition by the State Legislature of any new ad valorem, sales or transaction taxes on real property.
Legislation Implementing Article XUIA
Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The 1 % property tax is automatically levied by the county and distributed according tci a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relativ,e shares of taxes levied prior to 1989.
That portion of annual property tax revenues generated by increases in assessed valuations within each tax rate area within Et county, subject to redevelopment agency, if any, claims on tax increment and subject to changes in organization, if any, of affected jurisdictions, is allocated to each jurisdiction within the tax rate area in the same proportion that the total property tax revenue from the tax rate area for the prior year was allocated to such jurisdictions.
Beginning in the 1981 /82 fiscal year, assessors in the State no longer record property values on tax rolls at the assessed value of 25% of market value. All taxable property is now shown at "full cash value" on the tax rolls. The tax rate is expressed as $1 per $100 of taxable value.
Unitary Property
AB 454 (Chapter 921, Statutes of 1987) provides that revenues derived from most utility property assessed by the State Board of Equalization ("Unitary Property"), commencing with the 1988/89 fiscal year, are allocated as follows: (a) each jurisdiction will receive up to 102% of its prior year State-assessed revenue; and (bl if county-wide revenues generated from Unitary Property are less than the previous year's revenues or greater than 102% of the previous year's revenues, each jurisdiction will share the burden of the shortfall or the benefit of the excess revenues by a specifo�d formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas.
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The provisions of AB 454 do not constitute an elimination of the assessment of any State assessed properties nor a revision of the methods of assessing utilities by the State Board of Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all jurisdictions in a ciounty.
Several major State-assessed utilities have challenged the legality of property valuation theories and the values assessed !oy the State Board of Equalization, which administers the assessment of public utilities for property taxation purposes. The challenge was precipitated by the superior court decision in AT&T Communications of California, et al. v. State Board of Eq ualization in which the valuation method used by the Stat,e Board of Equalization to value unitary utility property was declared illegal and a new method of valuation was imposed, resulting in significantly lower property taxes. Several counties and utility companies whose unitary property valuations could be affected by the principles announced in the superior court decision signed a settlement agreement in 1993.. The agreement's effectiveness, however, is dependent on the fulfillment of certain conditions. If effective, this settlement would have only prospective fiscal impact on utility assessments, which would be phased down gradually over the next several years.
Proposition 62
A statutory initiative ("Proposition 62") was adopted by the voters at the November 4, 1986, general election, which requires voter approval for new or higher taxes by local government entities.
The District dcies not receive tax revenue from any measure adopted in violation of Proposition 62.
Article XIIIB
Article XIIIB of tlhe State Constitution, as subsequently amended by Propositions 98 and 111, limits the annual approp1riations of the State and of any city, county, school district, authority or other political subdivision of the State, to the level of appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living and in population, for transfers in the financial responsibility for providing services, and for certain declared emergencies. As amended, Article XIIIB defines:
(a) "change in the cost of living" with respect to school districts to mean the percentage change in California per-capita income from the preceding year, and
(b) "change in population" with respect to a school district to mean the percentage change in the average daily attendance of the school district from the preceding fiscal year.
For fiscal years beginning on or after July 1, 1990, the appropriations limit of each entity of government shall be the appropriations limit for the 1986/87 fiscal year adjusted for the changes made from that fiscal year pursuant to the provisions of Article XIIIB, as amended.
The appropriatic1ns of an entity of local government subject to Article XIIIB limitations include the proceeds of taxes le:vied by or for that entity and the proceeds of certain State subventions to that entity. "Proceeds of ta1xes" include, but are not limited to, all tax revenues and the proceeds to the entity from (a) regulatory licenses, user charges and user fees (but only to the extent that these proceeds exceed the masonable costs in providing the regulation, product or service), and (b) the investment of tax revenues.
Appropriations :subject to limitation do not include (a) refunds of taxes, (b) appropriations for debt service, (cl appropriations required to comply with certain mandates of the courts or the federal government, (d) appropriations of certain special districts, (e) appropriations for all qualified capital
13 outlay projects as defined by the legislature, (f} appropriations derived from certain fuel and vehicle taxes and (g} appropriations derived from certain taxes on tobacco products.
ArticleXIIIB includes a requirement that all revenues received by an entity of government other than the State in a fiscal year and in the fiscal year immediately following it in excess of the amount permitted to be appropriated during that fiscal year and the fiscal year immediately following it shall be returned by a revision of tax rates or fee schedules within the next two subsequent fiscal yec1rs. If a school district receives any proceeds of taxes in excess of its appropriations limit, it may, by resolution of the school district's governing board, increase its appropriations limit to equal that amount, provided that the State has sufficient excess appropriations limit in that fiscal year.
Article XIIIB also includes a requirement that fifty percent of all revenues received by the State in a fiscal year and in the fiscal year immediately following it in excess of the amount permitted to be appropriated during that fiscal year and the fiscal year immediately following it shall be transferred and allocated to the State School Fund pursuant to Section 8.5 of Article XVI of the State Constitution. See "Propositions 98 and 111" bolow.
Propositions 98 and 111
On November 8, 1988 the voters approved Proposition 98, an initiative constitutional amendment and statute called "The Classroom Instructional Improvement and Accountability Act" ("Proposition 98"). In addition to adding certain provisions to the Education Code, Proposition 98 also amended Article XIIIB and Section 8 of Article XVI of the State Constitution and added Section 8.5 of Article XVI to the State Constitutiion, the effects of which are to establish a minimum level of State funding for school districts, to allocate to school districts, within limits, State revenues in excess of the State's appropriations limit and to exempt such excess funds from school district appropriations limits.
On June 5, 1990, the voters approved Proposition 111 (Senate Constitutional Amendment No. 1) called the "Traffic Congestion Belief and Spending Limit Act of 1990" ("Proposition 111"} which further modified Article XIIIB and Sections 8 and 8.5 of Article XVI of the State Constitution with respect to appropriations limitations and school funding priority and allocation.
Article XIIIB, as amended by both Proposition 98 and Proposition 111, is discussed above under "Article XIIIB."
The provisions of Sections 8 and 8.5 of Article XVI, as added to and/or amended by Propositions 98 and 111, may be summarized as follows:
a) State Funding of Schools (Section 8). Monies to be applied by the State for the support of school districts must be at a level equal to the greater of the following "tests":
(i) The amount which, as a percentage of the State general fund ("General Fund") revenues which mc1y be appropriated pursuant to Article XIIIB, equals the percentage of General Fund revenues appropriated for school districts in fiscal year 1986/87;
(ii) The amount ac:tually appropriated to school districts in the prior fiscal year from General Fund proceeds and from allocated local proceeds of taxes (excluding any excess state revenues allocated pursuant to Section 8.5), adjusted for changes in enrollment and for the change in the cost of living (operative only in a fiscal year in which the percentc1ge growth in California per capita personal income is less than or equal to the percentage growth in per capita General Fund revenues plus one-half of one percent);
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(iii} The amount actually appropriated to school districts in the prior fiscal year from General Fund proceeds and from allocated local proceeds of taxes (excluding any excess State revenues allocated pursuant to Section 8.5) adjusted for changes in enrollment and for the change in per capita General Fund revenues, and, in addition, an amount equal to one-half of one percent times the prior year appropriations (excluding any excess State revenues) adjusted for changes in enrollment (operative only in a fiscal year in which the percentage growth in California per capita personal income is greater than the percentage growth in per capita General Fund revenues plus one-half of one percent).
If the third test is used in any year the difference between the third test and the second test will become a "credit" to schools which will be paid in future years when the General !Fund revenue growth exceeds personal income growth.
The State legislature by a two-thirds vote of both houses, with the Governor's concurre:nce, may suspend for one year the minimum funding provisions for school districts as provided for in Section 8.
b) Allocatio ns to the State School fund {Section 8.5). In addition to the amounts applied to school districts under the tests discussed above, the State Controller is directed to allocate available excess State revenues (pursuant to Article XIIIB) to the State School Fund. However, no such allocation is required at any time that the Director of Finance and the Superintendent of Public Instruction mutually determine that current annual expenditures per student equal or exceed the average annual expenditures per student of the 10 states with the highest annual expenditures per student and the average class siz,e equals or is less than the average class size of the 10 states with the lowest class size.
Such allocations do not constitute appropriations subject to Article XIIIB limitations and are to be� made in an equal amount per enrollment.
Applications of Constitutional and Statutory Provisions
The application of Proposition 98 and other statutory regulations has become increasingly difficult to predict accurately in recent years. For a discussion of how these provisions of Proposition 98 have been applied to school funding see "GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION" herein.
Proposition 187
At the NovembEir 1994 general election, State voters approved Proposition 187. Proposition 187 makes persons with foreign citizenship who have entered the State illegally ineligible for public social services, public health care services (unless an emergency), and public school education at elementary, secondary,, and post-secondary levels. Further, Proposition 187 requires every school district to verify the status of every child enrolling for the first time on or after January 1, 1995. By January 1, 1996, every school district is required to have verified the legal status of every student enrolled in the school district as well as the legal status of the student's parents or guardian. If any student, parent, or guardian is not legally in the United States, the school district must report the student to the United States Immigration and Naturalization Service ("INS") and certain other parties. Proposition 187 also prohibits a school district from providing education to a student it does not verify as either a United Statns citizen or a person legally admitted to the United States.
Opponents of Prroposition 187 have filed at least eight lawsuits challenging the constitutionality and validity of the measure. On November 2, 1995, a United States District Court judge struck down
15 the central provisions of Proposition 187 by ruling that parts of Proposition 187 conflict with federal power over immigration. The ruling concluded that states may not enact their own schemes to "regulate immigration or devise immigration regulations which run parallel or purport to supplement federal immigration law." As a consequence of the ruling, students may not be denied public education and may not be asked about their immigration status when enrolling in public schools. Further, the ruling struck down the requireme1nts of Proposition 187 that teachers and district employees report information on the immigrant status of students, parents, and guardians. An appeal has been filed. It cannot be predicted what the nature or outcome of such appeal will be or the ultimate fiscal impact of Proposition 187.
If ultimately upheld, Proposition 187 could have a significant impact on funding for California school districts. For every stude1nt that the District excludes under Proposition 187 and for every student who does not attend scho,ol in the District as a result of Proposition 187, the District may lose a portion of the State revenue it re,ceives based on average daily attendance. In addition, to the extent that the exclusion of students and the verification and reporting requirements are found to be at odds with various federal laws, the District may lose all or a portion of any federal revenue it receives. Further, the cost of compliance with the verification and reporting requirements may prove significant.
Proposition 218
On November 5, 1996, thH voters of the State approved Proposition 218, the so-called "Right to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which contain a number of provisions aff,ecting the ability of local agencies, including school districts, to levy and collect both existing and futurntaxes, assessments, fees and charges. Among other things, Article XIIIC establishes that every tax is either a "general tax" (imposed for general governmental purposes) or a "special tax" (imposed for specific purposes); prohibits special purpose government agencies such as school districts from levying general taxes; and prohibits any local agency from imposing, extending or increasing any special tax beyond its maximum authorized rate without a two-thirds vote. Article XIIIC also provides that no tax may be assessed on property other than ad valarem property ta,ces imposed in accordance with Artic:les XIII and XIIIA of the California Constitution and special taxes approved by a two-thirds vote under Article XIIIA, Section 4.
Article XIIIC also provides that the initiative power shall not be limited in matters of reducing or repealing local taxes, assessments, fees and charges. The State Constitution and the laws of the State impose a mandatory, statutory duty on the County Treasurer-Tax Collector to levy a property tax sufficient to pay debt service on the Bonds coming due in each year. The initiative power cannot be used to reduce or repeal the authority and obligation to levy such taxes which are pledged as security for payment of the Bonds or to otherwise interfere with performance of the mandatory, statutory duty of the District and the County with respect to such taxes which are pledged as security for paymunt of the Bonds.
Article XIIID deals with ass,essments and property-related fees and charges and does not affect the District or the Bonds.
The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination.
Future Initiatives
Article XIIIA, Article XIIIB, Proposition 62, Proposition 98, Proposition 111, Proposition 187 and Proposition 218 were each adopted as measures that qualified for the ballot pursuant to the Statu's initiative process. From time to time other initiative measures could be adopted, further affecting
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District revenues or the District's ability to expend revenues. The nature and impact of these measures cannot be anticipated by the District.
GENER.�L SCHOOL DISTRICT FINANCIAL INFORMATION
The informatio n in this section concerning the state funding of public education is supplemental only, and it should not b1� inferred fr om the in clusion of this informatio n in this Official Statement that the principal of or in terest on the Bonds is payable fr om State revenues. Th e Bonds are payable from the proceeds of an ad valorem tax required to be levied by the County in an amount sufficient to make such payments.
State Funding of Education
As a whole, Stc1te school districts receive a significant portion of their funding from State appropriations. As a result, decreases in State revenues can significantly affect appropriations made by the legislature to school districts.
Annual State apportionments of basic and equalization aid to school districts for general purposes are computed up to a revenue limit per unit of average daily attendance (the "A.D.A. ") . Generally, these apportionments amount to the difference between the school district's revenue limit and its property tax alloc:ation. The revenue limit calculations are adjusted annually in accordance with a number of factors designed primarily to provide cost of living increases and to equalize revenues among all State school districts of the same type. See "THE DISTRICT -Average Daily Attendance and Revenue Limit" hereiin.
State Budget
The 1996/97 State Budget was signed by the Governor on July 15, 1996. Ongoing Proposition 98 funding for K-12 education totals $25.9 billion, an increase of $2.5 billion, or 11 %, from the funding level included in the 1995 Budget Act. This large increase includes an allocation of $1.2 billion to provide inflation and growth adjustments. (Specifically, the budget includes $800 million for a 3.21 % COLA and $400 million to accommodate a projected 2.6% increase in student population.) The budget directs the remaining $1.3 billion for other purposes, including new programs and existing categorical programs. The major programs include $771 million for class size reduction and $178 million in revenue limit increases. The class size reduction program is targeted for grades K-3. To participate, the district must reduce class size to a maximum of 20 students per teacher.
The 1996/97 State Budget also contains approximately $1.1 billion in one-time funding for education. The major expenditures for these funds include $387 million in block grants to individual school sites and $200 million in block grants to school districts, $200 million for facilities for class size reduction, and $167 million for a reading initiative.
As of January, 'I 997, the 1997/98 proposed Governor's Budget provides for a $1 .677 billion increase in ongoing Proposition 98 funding for K-12 education. This increase includes an allocation of $598 million for a 2.53% COLA, $530 million for enrollment growth, and $549 million in various Governor's initiatives. The major Governor's initiative is $488 million for the expansion of the class size reduction program to include a fourth grade level and to allow for a COLA and higher than projected costs of the program. The 1997/98 proposed budget also includes $308 million for revenue limit deficit reduction, 1�308 million for equalization aid, and $1 01 million in other one-time funds.
17 No additional funds were proposed for facilities for the Governor's class size reduction program. However, the Governor and seveiral legislators have proposed a roughly $2 billion statewide school bond to address schools' facilities needs. Without a special election, the earliest such election can take place is June 1998.
State Lottery
In the November 1984 general election, the voters of the State approved a constitutional amendment establishing a State lottery (the "State Lottery"), the net revenues of which are usedl to supplement money allocated to public education. The amendment stipulated that the funds derived from the State Lottery be used for the education of students and prohibited their use for n,on instructional purposes, such as the acquisition of real property, the construction of facilities, or the financing of research. School districts receive an amount equal to their total A.D.A. times a per A.D.A. figure. See "THE DISTRICT - Lottery Income" herein.
Ad Valorem Property Taxation
The District uses the services of the County for the assessment and collection of taxes for District purposes. District property taxes are assessed and collected by the County at the same time and on the same rolls as county, special district, and city property taxes.
The valuation of secured property and a statutory tax lien is established as of March 1 and is subsequently equalized in Augui;t. The resulting secured property tax is payable in two equal installments due November 1 and !February 1, and payments become delinquent on December 10 and April 10, respectively. The unseGured pro-perty tax (payable on personal and leasehold property) is payable in a single installment due on August 31, and payments become delinquent on October 31.
State law exempts from taxation $7,000 of the full cash value of an owner-occupied dwelling, provided that the owner files for such exemption. This exemption does not result in any loss of revenue to local agencies, since the State reimburses local agencies for the value of the exemptions.
Assessed Valuation
All property is assessed using full cash value as defined by Article XIIIA of the State Constitution. State law provides exemptions from ad va/orem property taxation for certain classes of property such as churches, colleg,�s, non-profit hospitals, and charitable institutions.
Future assessed valuation growth allowed under Article XIIIA (for new construction, certain changes of ownership, 2% per year inflation} will be allocated on the basis of "situs" among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and school districts will share the growth of "base" revenues from the tax rate area. Each year's growth allocation becomes part of each agency's allocation in the following year. The availability of revenue from growth in tax bases to such entities may be affected by the establishment of redevelopment agencies which, under certain circumstancei;, may be entitled to revenues resulting from the increase in certain property values.
For assessment and collection purposes, property is classified as either "secured" or "unsecured" and is listed accordin�Jly on separate parts of the assessment roll. The "secured roll" is that part of the assessment roll containing State-assessed property and real property having a tax lien which is sufficient, in the opinion o·f the assessor, to secure payment of the taxes. Unsecured property comprises all property not attached! to land such as personal property or business property. Boats and airplanes are examples of unsecured property. Unsecured property is assessed on the "unsecured roll."
18 ______, _ ------�------�------�-.,�-
The passage of AB 454 in 1987 changed the manner in which unitary and operating nonunitary property is assessed by the State Board of Equalization. The legislation deleted the formula for the allocation of assessed value attributed to such property, and imposed a State-mandated local program by requiring the assignment of the assessed value of all unitary and operating nonunitary property in each county for each State-assessed taxpayer other than a regulated railway company. The legislation established formulas for the computation of applicable county-wide tax rates for such property and for the allocation of property tax revenues attributable to such property among taxing jurisdictions in the county beginning in fiscal year 1988/89. The legislation requires each county to issue to each State assessed taxpayer, other than a regulated railway company, a single tax bill for all unitary and operating nonunitary property. See "THE DISTRICT -Assessed Valuationn herein.
Tax Levies, Collections nnd Delinquencies
A 10% penalty attaches to any delinquent payment for secured roll taxes. In addition, property on the secured roll with respect to which taxes are delinquent becomes tax-defaulted. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus interest of 1.5% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is subject to auction sale by the County Tax Collector.
In the case of unsecured property taxes, a 10% penalty attaches to delinquent taxes on property on the unsecureid roll, and interest of 1. 5% per month begins to accrue beginning November 1st of the fiscal year, and a lien is recorded against the assessee. The taxing authority has four ways of collecting unsecured personal property taxes: (al a civil action against the taxpayer; (b) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on specific property of the taxpayer; (c) filing a certificate of delinquency for record in the County Recorder's office in order to obtain a lien on specified property of the taxpayer; and (d) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee.
The County has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan"), as provided for in Section 4701 et seq. of the State Revenue and Taxation Code. Under the Teeter Plan, each participating local agency, including school districts, levying property taxes in a county receives the amount of uncollected taxes credited to its fund, in the same mannEir as if the amount credited had been collected. In return, the county receives and retains delinquent payments, penalties and interest as collected, that would have been due the local agency. However, although a local agency receives the total levy for its property taxes without regard to actual collectieins, funded from a reserve established and held by its county for this purpose, the basic legal liability for property tax deficiencies at all times remains with the local agency. The Teeter Plan is to remain in effect unless the county board of supervisors orders its discontinuance or unless, prior to the commencement of any fiscal year of the county, the board of supervisors receives a petition for its discontinuance from two-thirds of the participating revenue districts in the county. No county has ever received a petition from any governing board to discontinue the Teeter Plan. A board of supervisors may, after holding a public hearing on the matter, discontinue the procedures under the Teeter Plan with respect to any tax levying agency in its county. See "THE DISTRICT -Tax Levies, Collections and Delinquenciesn herein.
Budget Process
School districts .are required by provisions of the State Education Code to maintain a balanced budget each year, in which the sum of expenditures and the ending fund balance cannot exceed the sum of revenues and the carry-over fund balance from the previous year. The State Department of Education imposes a uniform budgeting and accounting format on school districts.
School districts must adopt a budget on or before July 1 of each year. The budget must be submitted to the count'( superintendent within five days of adoption or by July 1, whichever occurs
19 first. A district may be on either a dual or single budget cycle. The dual budget option requires a revised and readopted budget by September 1 that is subject to State mandated standards and criteria. The revised budget must reflect changes in projected income and expenses subsequent to July 1 . lrhe single budget is only readopted if it is disapproved by the county office of education, or as needed.
For both dual and single budgets submitted on July 1, the county superintendent will examine the adopted budget for compliance with the standards and criteria adopted by the State Board of Education and identify technical corrections necessary to bring the budget into compliance, will determine if the budget allows the district to meet its current obligations and will determine if the budget is consistent with a finani:::ial plan that will enable the district to meet its multi-year financial commitments. On or before August 15, the county superintendent will approve or disapprove 1the adopted budget for each school district. Pursuant to State law, the county superintendent has available various remedies by which to impose and enforce a budget that complies with State criteria, depending on the circumstances, if a budget is disapproved.
Subsequent to approval, e;:ich county superintendent of schools throughout the fiscal year will monitor each school district pursuant to its adopted budget to determine on an ongoing basis if the district can meet its current or s:ubsequent year financial obligations. If a county superintendent determines that a district cannot meet its current or subsequent year obligations, the superintendcmt will notify the district's governing board of the determination and the superintendent may do either or both of the following: (a) assign a fiscal advisor to enable the district to meet those obligations or, if a study and recommendations are made and a district fails to take appropriate action to meet its financial obligations, notify the State Superintendent of Public Instruction, and then (b} do any or all of the following for the remainder of the fiscal year: (i) request additional information regarding the district's budget and operations; (ii) develop and impose, after also consulting with the district's board, revisions to the budget that will enable the district to meet its financial obligations; and (iii) stay or rescind any action inconsistent with such revisions. However, the county superintendent may not abrogate any provision of any colle,ctive bargaining agreement that was entered into prior to the date upon which the county superintendent assumed authority.
Accounting Practices
The accounting policies of the District conform to generally accepted accounting principles in accordance with policies and procedures of the California School Accounting Manual. This manual, according to Section 41010 of the California Education Code, is to be followed by all California school districts. Revenues are recognized in the period in which they become both measurable and available to finance expenditures of the curmnt fiscal period . Expenditures are recognized in the period in which the liability is incurred.
THE DISTRICT
The information in this section concerning the operatio ns of the District and the District's finances is provided as supplementary information only, and it should not be inferred fr om the inclusion of this informationin this Official Statement that the principal of or in terest on the Bonds is payable fr om the General Fund of the District. The Bonds are payable from the proceeds of an ad valorem tax levied by the County for the paymem thereof. See "THE BONDS - Security and Sources of Payment" herein.
General Information
The District includes approximately 1 .2 square miles in the northwestern part of Alameda County. The District provides educational (K-12} services to the residents of the City of Emeryville (the
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"City"). The District operates 2 elementary schools, 1 middle school, and 1 high school. The District's pupil-teacher ratio is 20.6:1 for grades K-3; 28 .1 :1 for grades 4-5; 22:1 for grades 6-8 ; and 22.6: 1 for grades 9- 12.
The District is g1overned by a Board of Trustees consisting of five members. Members are elected to four-year terms in staggered years. The day-to-day operations are managed by a board appointed Superintendent of Schools. Dr. J. L. Handy has served in this capacity since 1993 .
Average Daily Attendan,ce and Revenue Limit
The following is a table summarizing the historical and current year estimated average daily attendance for the District.
EMERY UNIFIED SCHOOL DISTRICT Average Daily Attendance Second Period
121 Academic Year Average Daily Attendance
1992/93 559 1993/94 587 1994/95 646 1995/96 673 111 1996/97 684
( 1) Estimated as of October 31 , 1996 (2) Includes K- 12, special e1ducation, and continuation students; excludes Adult education and ROP.
Source: The District.
The District's undeficited annual revenue limit per A.D.A. was $4,897 .19, for 1995/96, of which $4,401.59 was funded, and is budgeted at $5,032. 16, for 1996/97, of which $4,530.60 is expected to be funded. See "GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION - State Funding of Education" herein.
Appropriations Limit
The District had an Article XIIIB appropriations limit of $2,438,401 and had appropriations subject to the limit o,f $2,438,401 in 1995/96. The District has projected for 1996/97 an appropriations limit of n,644,667 and it estimates it will have appropriations subject to the limit of $2,644,667. See "C:ONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPRl)PRIATIONS -Article XIIIB" herein.
Lottery Income
The District's State lottery revenue was $86,259.39 for 1995/96 and is projected to be $83, 760 for 1996/97. See "GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION -State Lottery" herein.
21 Labor Relations
Currently the District employs 42.2 FTE certificated, 12.99 FTE classified employees and 10 management and confidential employees. There are 2 formal bargaining units operating in the District which are described in the table below.
l:MERY UNIFIED SCHOOL DISTRICT Labor Organizations
Labor Organization Number of Employees Co ntract Expiration
Emery Teachers Association 43 June 30, 1997 1 California Schools Employees Association (CSEA) 16 June 30, 19961 1
( 1) Contract is still in place while new contract is negotiated.
Source: The District.
Retirement Programs
The District participates in the State of California Teachers Retirement System ("STRS"). This plan covers basically all full-time certificated employees. The contribution to STRS for fiscal year 1995/96 was $153,931 and in fis,cal year 1996/97 is estimated to be $204,289. In order to receive STRS benefits, an employee must be at least 55 years old and have provided five years of service to California public schools.
The District also participates in the State of California Public Employees Retirement Syst,em ("PERS"). This plan covers all classified personnel who are employed more than four hours per day. The contribution to PERS for fiscal year 1995/96 was $31, 163 and for fiscal year 1996/97 is projected to be $46, 114. In order to receive PERS benefits, an employee must be at least 50 years old and have provided five years of service to California public schools.
Contribution rates to these two retirement systems vary annually depending on changes in actuarial assumptions and other fa,ctors, such as changes in benefits. The STRS contribution rates are based on State-wide rates set by law. The PERS contribution rates are also State-wide rates and are actuarially determined each year. STRS has a substantial State-wide unfunded liability. Since this liability has not been broken down by each school district, it is impossible to determine the District's share.
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Assessed Valuation
The following table summarizes the historical and current assessed valuation of the District.
EMERY UNIFIED SCHOOL DISTRICT Assessed Valuation
Fiscal Year �1 Secured Unsecured
1991/92 $841 , 110, 182 $1,574,540 $172,453,461 $1,015,138,183 1992/93 890,009,625 1,067,539 1 79,366, 188 1,070,443,352 1993/94 912,034,866 2,903,496 190, 780,906 1,105,719,268 1994/95 932, 1 65,001 3, 1 52,769 248,854, 158 1 , 1 84, 1 71,928 1995/96 992,461 ,222 3,089,169 281 ,985,420 1,277,535,81 1 1996/97 982,034, 702 1,245,268 280,976,533 1,264,256,533
Source: California Municipal Statistics, Inc.
Tax Levies, Collections and Delinquencies
The following table summarizes the historical tax charges and delinquencies of the District.
EMERY UNIFIED SCHOOL DISTRICT Secured Tax Charges and Delinquencies
1 Fiscal Year Secured Tax Charge1 1 Amount Delinquent June 30 "elinguent June 30
1990/9 1 $ 8,543,842. 75 $296,366.26 3.47% 1991/92 8,866,870.63 438,103.27 4.94 1992/93 9,543, 175.83 397,994.02 4.1 7 1993/94 9,533,438. 79 259,422.28 2.72 1994/95 9,667 ,282.07 294,259.54 3.04 1995/96 1 0,430,028. 14 363,599.61 3.49
(11 All taxes collected by the County within the District .
Source: California Municipal Statistics, Inc.
The County has elected to follow the procedures of Section 4701-4717 of the California Revenue and Taxation Code, also known as the "Teeter Plan". Under the Teeter Plan, the County funds the District its full tax levy allocation, rather than only funding actual collections (levy less delinquencies). In exchange, the County receives the interest and penalties that accrue on delinquent payments, when the late taxes are collected. The Teeter Plan remains in effect unless the County Board orders its discontinuance. See "GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION -Tax Levies, Collections and Delinquencies".
23 Tax Rates
For taxing purposes, the State Board of Equalization has divided the area served by the District into five separate tax rate areas. The largest tax rate area in the District is Tax Rate Area 14003. TRA 14003 has a total 1996/97 assessed valuation of $738,448,481, approximately 58.4% of the District's total assessed valuation. The components of the 1996/97 property tax rate levied in Tax Rate Area 14003 are set forth in the following table:
l:MERY UNIFIED SCHOOL DISTRICT Tax Rate Components - TRA 14003
1996/97 Tax Rates per $1 oo of Assessed Valu�
County-wide Rate11l 1.0000% Emery Unified School District Bonds 0.0236 Peralta Community College Bonds 0.0041 Bay Area Rapid Transit (BART} 0.0225 East Bay Regional Park District 1 0.0080 East Bay Municipal Utilities District Special District 1 0.0108
TOTAL 1.0690%
(1) Maximum rate for purposes other than paying debt service in accordance with Article XIIIA of the State Constitution.
Source: Alameda County Auditor-Controller's Office.
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Major Taxpayers
The following table summarizes the major taxpayers in the District in terms of their 1996/97 secured assessed valuation.
EMERY UNIFIED SCHOOL DISTRICT Major Taxpayers
1996/97 Land Use Assessed Valuation % of Tot a112,
Watergate Tower Associates Office Building $47,589,250 4.85% Bay Center Associates Office Building 43,530,463 4.43 Christie Avenue Partners Shopping Center 39, 161,450 3.99 Chiron Corporation Light Industrial 37,927,622 3.86 Aetna Real Estate Associates Shopping Center 33,974,814 3.46 Catellus Development Corporation Shopping Center 33,247,765 3.39 Bay Center Apartment Associates Condominiums 31.434,654 3.20 Tower II Office Building 26.420,095 2.69 Emerybay Plaza-JS Office Building 18,000,000 1.83 Harcros Pigments, Inc. Heavy Industrial 15,883,579' 1.62 HSP, Ltd. Commercial 11,853,783 1.21 BGR Associates Light Industrial 11,844,364 1.21 Sherwin Williams Company Heavy Industrial 11,379, 146 1.16 Grove Valve & Regulator Company Heavy Industrial 10,636,974 1.08 Russell A. Robbins Commercial 9,952,678 1.01 Hollis R&D Associates Office Building 8,584,650 0.87 Emeryville Days Limited Partne,rship Hotel 7,850, 121 0.80 JQH Hotels Hotel 7,545,041 0.77 Del Monte Corporation Vacant Land 7,535,430 0.77 Cetus Corporation Light Industrial 6 874 822 _Q.lQ
TOTAL $421 ,226, 701 42.89%
(11 As of December 1, 1996. £21 Total Local Secured Assessed Valuation for 1996/97 as of lien date, March 1, 1996: $982,034,702
Source: California Municipal :Statistics, Inc.
25 Comparative Financial Statements
The following is a table summarizing the District's historical and current General Fund revenue, expenditures, and fund balances from fiscal year 1992/93 through 1996/97:
EMERY UNIFIED SCHOOL DISTRICT General Fund Revenue, Expenditures and Fund Balances 1992/93 through 1996/97
Actual Actual Actual Actual Budget !;! £!;!;3111 !;!!;! 111 1 l;!l;! £ 11 1 121 19 2 1 3£94 1 l;!l;!4£!iH2'1 1 § 96 1�9§£97
REVENUE: Revenue Limit Sources: State Apportionment $2,000,210 $1,786,603 $1,831 ,925 $1,91 3,603 $1,949,606 Local Sources 589,057 812,207 923, 104 951 ,922 1,068,000 Federal 129,591 146,238 114,206 61 ,633 134,5!57 Other State 278, 117 243,780 651,11 4 880,221 961,318 Other Local 1 §3,4fHj 1 QJ §Q§ 112,Q1a 2!;!§,7§1 4Q 000 TOT AL REVENUE $;3 §Q,1 47Q $3,Ql;!2 �33 $3 632,422 $4,094, 160 $4,l §� 4ia1
EXPENDITURES: Salaries: Certificated $1,511,13 6 $1,662, 159 $1 ,947, 165 $1,992,361 $2,379,8:34 Classified 508,268 557,894 637,945 405,293 418,5150 Employee Benefits 422,331 568, 164 589,283 538,956 575,883 Books and Supplies 206,210 220.400 142,992 153,685 164,5!>7 Contract Services and Other 795,805 778,236 643,827 616,284 654,641 Operating Expenses Capital Outlay 87,735 29,801 46,009 127,01 6 95,879 Other 10.433 34,226 49,694 12,768 26,902 Direct Support/Indirect Costs Q {�Q 1 !HH 117 73§1 0 {1 �.Q9..Ql. TOTAL EXPENDITURES $� 541 l;!1 8 13 82Q,§�§ $4,0�!il,1 ZZ $3,fl!§,3§3 $4,JQ3 2Ei6
OTHER FINANCING SOURCES (USES) Operating Transfers In 2,416 0 18,867 22,622 0 Operating Transfers Out (25,000) (25,000) (32,867) 0 (11 ,000) Prior Year's Ad.iustments (15,396) 0 0 0 0 Other 11� 5521 Q Q 0 .Q TOTAL OTHER FINANCING SOURCES !57,5J2l 12§,000} (14,000l 22,622 !1 1 ,QQOl
EXCESS REVENUE OVER (448,980) (753,362) (420,750) 270,419 (160,775) (UNDER) EXPENDITURES
FUND BALANCE, JULY 1 l.E�2!;l 121 1 ,380, 141 6212,na 2Q§ Q2l;! 47§ 44,a
FUND BALANCE, JUNE 30 $1,38Q,141 $ 62§ 779 $ 2Q6,029 $ 476 448 $ �1 §,67.3.
Sources:
(11 Audited Financial Statements. (21 District Budget as of December 31, 1996.
26 District Debt Structure
Short-Term. In July 1996, the District participated in the Alameda County Office of Education's (ACOE) issue of tax and revenue anticipation notes (TRAN) dated July 2, 1996, maturing on July 1, 1997. The District received the principal amount of $550,000 from the ACOE TRAN. In exchange, the District has assigned tax receipts received by the County on behalf of the District sufficient to repay princi�,al and interest thereon. This constitutes a general obligation of the District secured by and payable only from general fund revenues received during or allocable to the 1996/97 fiscal year.
Long-Term. In February, 1996, the District issued the first series of bonds under the Authorization: $2,690,000 General Obligation Bonds, Election of 1995, Series 1996 (the "Series 1996 Bonds"). The Series 19fl6 Bonds mature through August 1, 2020, as follows:
AGGREGATE ANNUAL DEBT SERVICE
Year Ending August 1 Principal
1997 $ 222,613.13 $ 222,613.13 1998 $ 60,000.00 148,408.76 208,408.76 1999 65,000.00 143, 983.76 208,983.76 2000 70,000.00 1 39, 1 90.00 209, 1 90.00 2001 75,000.00 134,027.50 209,027.50 2002 75,000.00 128,496.26 203,496.26 Thereafter 2 345 000.00 l 571 433. 1 3 3 91 6,433.13
Total: $2.690.000.00 $2.265 539.41 $4 955. 539.41
The District also includes post-employment benefit obligations as long-term debt. The approximate accumulated future liability for the District at June 30, 1996, amounts to $52,968. This amount was calculated based upon the number of retirees receiving benefits multiplied by the yearly District payment per employee in effect at June 30, 1996, multiplied by the number of years of payments remaining.
During the 1993/94 year, the District entered into agreements with two individuals retiring from the District whereby the District would pay for health benefits. One person will receive the benefits for life while the other will only receive the benefits to age 65.
27 Statement of Direct and OverlapJting Debt
Contained within the District are numerous overlapping local agencies providing public servi<:es. These local agencies have outstanding bonds issued in the form of general obligation, lease revenue and special assessment bonds and outstanding certificates of participation. The following represents the total assessed valuation and the direct and overlapping "bonded" debt of the District as of February 1, 1997, according to California Municipal Statistics, Inc. The District makes no assurance as to the accuracy of the following table, and inquiries concerning the scope and methodology of procedures carried out to complet13 the information presented should be directed to California Municipal Statistics, Inc.
The first column in the table names the public agencies which have outstanding debt as of the date of the report and whose territories overlap the District. The second column shows the District's assessed valuation as a percentag1e of the total assessed value of each overlapping agency identified in column 1 . This percentage, multiplied by the total outstanding debt of each overlapping agency (which is not shown in the table) produces the amount shown in column 3, which is the apportionment of each overlapping agency's outstanding debt to property in the District.
IEMERY UNIFIED SCHOOL DISTRICT Sta1tement of Direct and Overlapping Debt lli§/97 Assessed Valuation: $1,264,256,533 (before deduction of redevelopment incremental valuation)
T LAPPING T M T BT DIREC AND OVER AX AND ASSESS EN DE : % Applicable Debt 211 {97 San Francisco Bay Area Rapid Transit Dis1:rict 0.240% $ 304,680 Peralta Community College District 1.73 298,339 Emery Unified School District 100 2,690,000111 East Bay Municipal Utility District 0.623 56,506 East Bay Municipal Utility District, Special District No. 1 1.575 748,519 East Bay Regional Park District 0.345 536,665 City of Emeryville 1915 Act Bonds 89.583-100 14.55 1 ,97 1 TOTAL GROSS DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $19, 1 86,680 Less: East Bay Municipal Utility District ,[1 00% self-supporting) (56,506) East Bay Municipal Utility District, Special District No. 1 ( 100% self-supporting) (748,519) TOTAL NET DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $18,381,655
OVERLAPPING GENERAL FUND OBLIGATIION DEBT: Alameda County General Fund Obligations; 0.599% $ 2,941,279 Alameda County Pension Obligations 0.599 1,690,528 Alameda County Superintendent of Schools Certificates of Participation 0.599 42,080 Alameda-Contra Costa County Transit Authority 0.663 171 717 TOTAL OVERLAPPING GENERAL FUND OIBLIGATION DEBT $ 4,845,604
GROSS COMBINED TOTAL DEBT $24 032.28412) NET COMBINED TOTAL DEBT $23.227,259 ( 1) Excludes general obligation bonds to be sold. (2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations
Ratios to Assessed Valuation: Direct Debt ($2,690,000) ...... 0.21 % Total Gross Direct and Overlapping Tax and Assessment Debt ...... 1.52% Total Net Direct and Overlapping Tax and Assessment Debt ...... 1.45% Gross Combined Total Debt ...... 1.90% Net Combined Total Debt ...... • • ...... 1.84%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/96: $0.
Source: California Municipal Statistics, Inc.
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The direct debt of the District, including general obligation bonds and state school building loan obligations, after issuance of the Bonds, will be equal to 0.43 % of the $1.264 billion 1996/97 assessed valuation of ta:icable property within the District.
After issuance of the Bonds, the District's total amount of general obligation bonds outstanding will be $5.38 million. The District's general obligation bonding capacity is limited under State law to an amount equal to 2.5% of the assessed valuation of taxable property within the District, or approximately $3 1 .6 million for fiscal year 1996/97.
Investment of District Funds
In accordance with Education Code Section 41 001, each school district in the State maintains substantially all operating funds in the treasury of the county in which the school district is located. Each county is required 10 invest such funds in accordance with Government Code Section 53601, et seq. and Section 53630 et seq. Each county treasurer is required to develop an investment policy describing the securitiei; in which surplus funds will be invested from among the legally permitted investments, and any limitations placed thereon. State law provides that the investment objectives for such funds shall be safety of principal, liquidity, and return, in that order of priority.
This section provides a general description of the county's investment policy, current portfolio holdings, and valuation procedures. The information has been adapted from material prepared by the County for inclusion in this Official Statement. The District makes no representation as to the accuracy or completeness of such information. Further in formation may be obtained from the office of the Treasurer- Tax Collector of the County of Alameda, 1221 Oak Street, Oakland, CA 94612.
Substantially all ,operating funds of the District are invested in the Alameda County Investment Pool. Upon closing of the Bonds, proceeds of the Bonds (as well as the taxes collected to pay the Bonds) will be deposited by the Alameda County Treasurer in the Alameda County Investment Pool, unless and until investment of Bond proceeds in other instruments is directed by the District in accordance with the Re,solution. The Alameda County Treasurer accepts funds only from agencies located within Alameda1 County for investment in the Alameda County Investment Pool. There are currently 33 participants in the Alameda County Investment Pool. The County reports that all funds are held for mandatory participants. As of December 31, 1996, the cost value of the Alameda County Investment Pool was $1, 116,228, 710 and the market value was $1, 124,91 0, 742.
As of Decembeir 31, 1996, the Alameda County Investment Pool had 34.85% of its assets invested in U.S. Treasury and U.S. Agency Securities, 42.54% of its assets invested in other money market instruments (including bankers acceptances, certificates of deposit, commercial paper, repurchase agreements, and time deposits), 12.35% of its assets invested in corporate securities rated "A" or better and 10.2B% of its assets in cash or other accounts. The Alameda County Investment Pool had none of its as:sets invested in inverse floaters (a form of derivative), nor did the Alameda County Investment Po,:,I have any reverse repurchase agreements in its portfolio position. The following table summarizes the composition of the Alameda County Investment Pool as of December 31, 1996.
29 ALAMEDA COUNTY INVESTMENT POOL PORTFOLIO COMPOSITION {as of December 31 , 1996)
Percent of Total Typ e of lnvestm.!ml Cost Value tcost Value!
U.S. Treasury S13curities $ 41 ,867,408 3.75% U.S. Agency Securities 347, 1 37,306 31 .1 Other Money Market Instruments 474,845,826 42.54 Corporate Securities 137 ,846,828 12.35 LAIF and Other 55,601 ,077 4.98 Cash 58 930.265 � TOTAL $1,1 16228 710 100 00%
As of December 31, 1996,. the weighted average maturity of the Alameda County Investment Pool was 320 days. As of such date, the Alameda County Investment Pool had 59.86% of its assets invested in securities maturing within three months.
The County reports no portion of the County Pool consists of leveraged funds. The County reports that it is current practice for the County Treasurer to mark the portfolio to market on an annual basis. Such evaluations are performed by the County. The County reports that it follows a "buy and hold" investment strategy and was not required to liquidate securities at a loss to meet disbursement requirements of Investment Pool participants during the past fiscal year. The County reports thait it expects the County Pool will have :sufficient liquid funds to meet disbursement requirements of County Pool participants through the next six months and beyond.
ECONOMIC PROFILE
Introduction
The District is located in the City of Emeryville in Alameda County.
Alameda County is locatecl on the east side of the San Francisco Bay and extends from the Cities of Berkeley and Albany in tlhe north to the City of Fremont in the south. It is the sixth most populous county in the State, with most of its population concentrated in a highly urbanized ar,ea between the San Francisco Bay and the East Bay Hills.
The northern part of Alameda County has direct access to San Francisco Bay and the city of San Francisco. It is highly diversified with residential areas as well as traditional heavy industry, the University of California at Berkeley, the Port of Oakland, and sophisticated manufacturing, computer services and biotechnology firms. The middle of Alameda County is also highly developed, including older established residential and industrial areas. The southeastern corner of Alameda County has seen strong growth in residential development and manufacturing. Many high-tech firms have moved from neighboring Silicon Valley in Santa Clara County into this area. The southwestern corner of Alameda County has seen the most development in recent years due to land availability. Agriculture and the rural characteristics of this area are disappearing as the region maintains its position as the fastest growing residential, commercial and industrial part of Alameda County.
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Population
The following table summarizes population figures for the City and for the County.
CITY OF EMERYVILLE AND ALAMEDA COUNTY Population
City of Emeryville Alameda county
1970 2,681 1,071 ,446 1980 3,714 1,1 05,379 1990 5,740 1,279,182 1994 6,400 1,338,400 1995 6,400 1,344,200 1996 6,450 1 ,356, 100
Source: The 1970, 1980, ,:ind 1990 totals are U.S. Census figures. The figures for the years 1 994, 1995, and 1996 are based upon adjustEid January 1 estimates provided by the State .
Employment
The following table summarizes historical employment and unemployment in Alameda County.
ALAMEDA COUNTY Civilian Labor Force, Employment and Unemployment Annual Averages
Civilian Labor Force'1' Employment 633,500 631 ,300 629,400 644,000 642,300 Unemployment � � � .4U.QQ 40 400 Total 669,700 675,600 674,400 686,600 682,700
121 Unemployment Rate 5.4% 6.6% 6.7% 6.2% 5.9%
Notes: 111 Based on place of rnsidence; 1991 through 1994 are based on a 1994 benchmark while 1995 is based on a 1995 benchmark and is not comparable to the earlier years. 121 The unemployment rate is calculated using unrounded data.
Source: California Employment Development Department, Labor Market Information Division
31 The following table summarizes the historical numbers of workers in Alameda County by industry.
ALAMEDA COUNTY Estimated Number of Wage and Salary Workers by Industry
1m .wl � 1 994 �
Agricultural 2,600 2,500 2,700 2,500 2,200 Mining & Construction 45,500 44,000 44,000 43,500 45,300 Manufacturing 109,700 1 09, 100 102,700 102,300 106,300 Transportation & Public Utilities 57,800 54,800 56,800 57,300 58,900 Wholesale Trade 54,500 52,600 51,10 0 51,700 53,700 Retail Trade 159,600 152,000 152,800 151,800 151 ,700 Finance, Insurance & Real Estate 54,700 5,780 58,700 56,500 53,400 Services 229, 100 230,000 237,800 244,400 256,500 Government 168 700 l§�,8QO 1 §a,eoQ 1 §!l,llOO 11.Q,.QQJ:l
Total All Industries 882.3QQ 872,f2QO fP2 OlQ 87�U3QQ 897,BOQ
Note: Does not include proprietors, si�lf-employed, unpaid volunteers or family workers, domestic workers in households, and personsinvolved in labor/management trade disputes. Employment reported by place of work. Items may not add to totals due to independent rounding. March 1995 Bench.
Source: California Employment Development Department
32 _ ...... ,...... __ ... ______...... --.------· ------�
Largest Employers
The following table summarizes the largest employers in the City:
CITY OF EMERYVILLE Largest Employers
Compa ny Product/Service Employees
Chiron Corporation Pharmaceuticals 2,000 Sybase, Inc. Software Development 1,15 2 The VNA and Hospice of Northern California Home Healthcare 400 + Oaks Card Club Entertainment 330 Holiday Inn Baybridge Hotel 200 I.A. Corporation Computer Software 175 Diamond Janitorial Services Cleaning Supplies 150 Kmart Retail 130 City of Emeryville Government Services 120 Levine-Fricke Engineering 110
Source: Emeryville Chambur of Commerce, Individual Employers.
The following table summarizes the largest employers in Alameda County.
ALAMEDA COUNTY Largest Employers
Employer Product/Service Number of Employees
Alameda County County Government 10,81 7 Lawrence Livermore National Labs Research & Development 8,000 1 Alameda Naval Air Station Government (Defense) 6,5221 1 Oakland Public Schools Education 6,000 Kaiser Permanente Medical Centers Health Care 6,000 New United Motor Manufacturing Auto & Truck Manufacturing 4,840 Vanstar Computer Networking 4,200 Lawrence Berkeley National Labs Research & Development 3,500 City of Oakland City Government 3,500 Golden West Financial Corporation Savings Institution 3,000 Kaiser Foundation Health Plan Health Care Administration 3,000 Bay Area Rapid Transit Public Transportation 2,800 Children's Hospital of Oaklaind Health Care 2,000 Lam Research Corporation Semiconductor Processing 2,000 Sybase Corporation Software Development 2,000 East Bay Municipal Utilities District Utilities 1,800 OHM Remediation Services Hazardous Waste Services 1,700 University of California, Berkeley Education 1,700 California State University, Hayward Education 1,500 MEDIACOPY Video Duplication 1,500 Summit Medical Center Hospital 1,500 Alameda-Contra Costa Transit District (AC Transit) Public Transportation 1,500
11) Includes 4,460 military personnel and 2,062 civilian employees as of March 1996.
Sources: "1996 Alameda County Commerce & Industry Directory," Oakland Chamber of Commerce.
33 Construction Activity
The following table summarizes historical building permit valuation for the City.
CITY OF EMERYVILLE Building Permit Valuation ($ in Thousands)
Residential Residential Non-Residential Total 12> Xlic �'. Valuation Valuation Ys1lus1tion
1991 57 $ 5,321 $1 1 ,974 $17,294 1992 263 17,730 10,591 28,321 1993 22 2,034 22,902 24,936 1994 4 647 15,943 16,589 1995 6 1,061 9,327 10,387
{1 ) Does not include alterations and additions. {2) Includes all residential building activity.
Source: "California Building Permit Activity," Economic Sciences Corporation.
The following table summarizes historical building permit valuation for the County.
ALAMEDA COUNTY Building Permit Valuation I$ in Thousands)
Residential Residential Non-Residential Total 121 � Valuation Valuation Vsiluation
1991 2,828: $455, 131 $408,21 1 $863,342 1992 2,071 545,700 407,596 953,296 1993 2,465 468,202 317,625 785,827 1994 3,050 591 ,140 379,822 970,963 1995 2,805 573,963 459,024 1,032,987
(1 ) Does not include alterations and additions. (2) Includes all residential building activity.
Source: "California Building Permit Activity," Economic Sciences Corporation.
34
______, ___ ...... --._, __ _
Commercial Activity
The following table summarizes historical taxable transactions in the City and the County.
CITY OF EMERYVILLE AND ALAMEDA COUNTY Taxable Transactions ($ in Thousands)
City of Emeryville Alameda County � Taxable Transactions � Taxable Transactions
1990 665 $287,663 39,642 $13,093,613 1991 637 271,462 39,301 1 2,939, 199 1992 690 292,563 40,027 13,407,832 1993 686 292,284 40,491 13,414,41 1 1994 693 354,698 41 ,206 14, 1 64, 148 1995 772 457,224 41 ,828 15,476,364
Source: State Board of Equalization.
Median Household Income
Effective Buying Income (EBI) is defined as personal income (for 1995 and prior) or money income (for 1996) less 1personal income tax and non-tax payments, .such as fines, fees or penalties. The following table summarizes historical median household EBI for the County (no data available at the City level).
ALAMEDA COUNTY Median Household Effective Buying Income
Alameda County
1991 $34,211 1992 39,329 1993 40,289 1994 42,284 1995 44,381 21 19961 38,437
(11 As of January 1. (2) 1996 not directly compmable to prior years because of change in definition of EBI.
Source: "Survey of Buying Power", Sales and Marketing Management Magazine.
35 LEGAL MATTERS
Tax Matters
In the opinion of Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating federal corporate alternative minimum taxable income. A complete copy of the proposed form of Opinion of Bond Counsel is set forth in APPENDIX A hereto.
The difference, if any, between the issue price of any maturity of the Bonds, and the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Bonds) constitutes "original issue discount," the accrual of which, to the extent properly allocable to 13ach owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and which is exempt from State of California personal income taxes. IFor this purpose, the issue price of a particular maturity of the Bonds is the first price at which a subs·,tantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers., or similar persons, or organizations acting in the capacity of underwriters, placement agents, or wholesalers). The original issue discount with respect to ,my maturity of the Bonds accrues dailv over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Owners of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to tlhe public.
The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The District has covenanted to complv with certain restrictions designed to ensure that interest on the Bonds will not be included in federal gross income. Failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on the Bonds. Further, no assurance can be given that pending or future legislation or amendments to the Code, if enacted into law, or any proposed legislation or amendments to the Code, will not adversely affect the value of, or the tax status of interest on, the Bonds. Prospective Bondholders are urged to consult their own tax advisors with respect to proposals to restructure the federal income tax.
Certain requirements and procedures contained or referred to in the Resolution, the tax certificate to be entered into on the date of issuance of the Bonds (the "Tax Certificate"), and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of bond counsel other than Orrick, Herrington & Sutcliffe LLP.
36 ____.....,, ______._.. ______, ______
Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal incomH tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect a Bondholder's federal or state tax liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the Bondholder or the Bondholder's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.
Bank Qualification
The Bonds are "qualified tax-exempt obligations" within the meaning of section 265(b)(3) of the Code such that, in th13 case of certain financial institutions (within the meaning of section 265(b)(3) of the Code), a deduction for federal income tax purposes is allowed for 80 percent of that portion of such financial institution's interest expense allocable to interest payable on such Bonds.
No Litigation
No litigation is pe,nding concerning the validity of the Bonds, and a certificate or certificates to that effect will be furnished to the Purchaser at the time of the original delivery of the Bonds. The District is not aware of e1ny litigation pending or threatened questioning the political existence of the District or contesting thEi District's ability to receive ad valorem taxes or to collect other revenues or contesting the District's ability to issue and retire the Bonds.
Legality for Investment in California
Under provision,s of the California Financial Code, the Bonds are legal investments for commercial banks in California to the extent that the Bonds, in the informed opinion of the bank, are prudent for the investment of funds of depositors, and under provisions of the California Government Code, are eligible for security for deposits of public moneys in California.
Legal Opinion
The validity of the Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel. Bond Counsel undertakes no responsibility for the accuracy, completeness, or fairness of this Official Statement.
MISCELLANEOUS
Rating
Standard & Poor's has assigned its municipal bond rating of "AAA" to the Bonds based upon the issuance of the Policy simultaneously with the delivery of the Bonds. Such rating reflects only the views of such organization and any desired explanation of the significance of such rating should be obtained from the rating agency at the following address: Standard & Poor's, 25 Broadway, New York, New York 10004.
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 such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgement of such rating agency, circumstances so warrant. Any such
37 downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.
Underwriting
Pursuant to the terms of a public bid dated February 27, 1997, BancAmerica Securities, Inc., as Underwriter, has agreed to purchase the Bonds from the District at the purchase price of $2,690,375.20 plus accrued inter,est from February 1, 1997, to the date of delivery of the Bonds, and to reoffer the Bonds pursuant to the terms and conditions set forth on the cover page of this Official Statement. The Underwriter willl be obligated to take and pay for all of the Bonds, if any Bond is purchased.
Closing Papers
The District will furnish to the Underwriter, without charge, concurrently with payment for and delivery of the Bonds, the following closing papers, each dated the date of such delivery:
(a} The opinion of Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel, substantially in the form attached as APPENDIX A hereto;
(b) The Certificate of the District certifying that on the basis of the facts, estimates and circumstances in existence on the date of issue, it is not expected that the proceeds of the Bonds will be used in a manner that would cause the Bonds to be arbitrage bonds:;
(c) The certificate on behalf of the District certifying that there is no litigation pending affecting the validity of the Bonds;
(d) The Certificate of a1n appropriate District official, acting on behalf of the District solely in his or her official and not in his or her personal capacity, certifying that at the time of the f;ale of the Bonds and at all times subsequent thereto up to and including the time of delivery of the bonds to the initial purchasers thereof, to the best knowledge and belief of said Official, the Official Statement of the District pertaining to said Bonds (excluding the description of the OTC and its book-entry system, information relating to a municipal bond insurance policy, if any, and the provider thereof, and the description of the County's investment policy, current portfolio holdings, and valuation procedures), did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
(e) The certificate of ain appropriate County official, acting on behalf of the County solely in his or her official and not in his or her personal capacity, certifying that at the time of the s.ale of the Bonds and at all times subsequent thereto up to and including the time of delivery of the Bonds to the initial purchaser thereof, to the best knowledge and belief of said official, the description of the County's investment policy, current portfolio holdings, and valuation procedures contained in the section "THE DISTRICT - Investment of District Funds" of the Official Statement did not contain any untrue statement of a material fact or omiit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
38 _____.. ___ ,______�------
(f) The sigm1ture certificate of the officials of the County certifying that said officials have signed the Bonds, whether by facsimile or manual signature, and that they were respectively duly authorized to execute the same; and
(g) The receipt of the Treasurer-Tax Collector of the County for the purchase price of the Bonds, including interest accrued to the date of delivery thereof.
(h) The Continuing Disclosure Certificate of the District in substantially the form shown in APPENDIX C attached hereto.
Continuing Disclosure
The District has covenanted for the benefit of the holders and beneficial owners of the Bonds to provide certain financial information and operating data relating to the District (the "Annual Report") by not later than nine months following the end of the District's fiscal year (currently ending June 30), commencing with the report for the 1996-97 Fiscal Year, and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be made available to any person upon written request made to the Business Manager of the District at 4727 San Pablo Avenue, Emeryville, California, 94608, (51 OJ, 655-6936. The notices of material events will be filed by the District with the Nationally Recognized Municipal Securities Information Repositories or with the Municipal Securities Rulemaking Board, and with State information repository, if any. The specific nature of the information to be contained in the Annual Report or the notices of material events is summarized below under the caption "APPENDIX C - Form of Continuing Disclosure Certificate". These covenants have been made in order to assist the Underwriters in complying with S.E.C. Rule 15c2-12(b)(5). The District has never failed to comply in all material respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material events.
Additional Information
The purpose of this Official Statement is to supply information to prospective buyers of the Bonds. Quotations from and summaries and explanations of the Bonds, the Resolution providing for issuance of the Bonds, ,:ind the documents, statutes and constitutional provisions referenced herein, do not purport to be complete, and reference is made to said documents, statutes, and constitutional provisions for full and complete statements of their provisions.
All data contained herein has been taken or constructed from District, City and County records. Appropriate District offi,cials, acting in their official capacities, have reviewed this Official Statement and have determined that, as of the date hereof, the information contained herein (excluding the description of the OTC a1nd its book-entry system, information relating to a municipal bond insurance policy, if any, and the provider thereof and the description of the County's investment policy, current portfolio holdings, and valuation procedures) is, to the best of their knowledge and belief, true and correct in all material rnspects and does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made herein, in light of the circumstances under which they were made, not misleading. This Official Statement has been reviewed and approved by the District.
EMERY UNIFIED SCHOOL DISTRICT
By: /s/ Dr. J.L. Handy Superintendent
39 (THIS,PA GE INTENTIONALLY LEFI'BLANK)
...... -- ...... ------·------·------�
APPENDIX A
FORM OF LEGAL OPINION
A-1 ('IBISPA GE INTENTIONALLY LEFT BLANK) -----·,------·------·------..------.------���
APPENDIX A
FORM OFOPINION OF BOND COUNSEL
_____ ,1997
Emery Unified School District Emeryville, California Emery Unified School District !:ieneral ObligationBonds, Electionof 1995, Series 1997 (Final Opinion) Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the County of Alameda, California (the "County"), on behalf of theEmery Unified School District (the "District"), which is locatedin theCounty , of $2,690,000aggregate principal amountof bonds designatedas "Emery Unified School Distric1t General Obligation Bonds, Election of 1995, Series 1997" (the "Bonds''), representing part of an issue in the aggregate principal amount of $8,070,000 authorized at an election held in the District on November 7, 1995. The Bonds are issued under and pursuant to a resolution of the Board of Supervisors of the County adopted on February 4, 1997 (the "County Resolution"), at the request of the District pursuant to a resolution of the Governing Board of the District adopted on January 27, 1997 (the "DistrictResolutio n"). In such connection, we have reviewedthe District Resolution , theCounty Resolution, the Tax Certificate of the Districtdated the date hereof (the "Tax Certificate"), certificates of the District, the County, and others, and such other documents and matters to the extent we deemed necessary to render theopinions set forth herein.
Certain agreements, requirements andprocedures containedor referredto in theDistrict Resolution, theCounty Resoluti on, theTax Certificate andother rel evant documents may be changed and certain actions (includilt1g, withoutlimitation, the defeasance of Bonds) may be taken or omitted under the circumstances and .subject to the terms and conditions set forth in such documents. No opinion is expressed herein as to any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advic,e or approval of counsel other than ourselves. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affectt:dby actionstaken or omittedor events occurring afterthe date hereof. We have not undertaken to determine, or to inform anyperson, whether any such actions are takenor omittedor events do occur. Our engagement with respectto the Bonds has concluded with their issuance, and we disclaim any obligatio11 to update this letter. We have assumedthe genuineness of all documents and signatures presented to us (whether as originals or ascop ies) and thedue and legalexecution and delivery thereof by, and validity against, any parties other than the District and the County. We have not undertaken to verify independently, and have assumed, the accuracy of the factualmatters represented,
SF2-691SS.2 A-1 warranted or certified in the documents referred to in the second paragraph hereof. Furthermori,, we have assumed compliance with sn covenants and agreements contained in the District Resolution, the County Resolution, and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necesE,ary to ensure that future actions, omissions or events will not cause interest on theBonds to be included in gross income forfed eral income tax purposes. We call attention to thefact that therights and obligations under theBonds , the DistrictResolution, the County Resolution, and theTax Certificateand their einforceabilitymay be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable pr:inciples, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against school districts and counties in the State of California. We express no opinion with respect to any indemnification, contribution, choice of law, choice of forum or waiver provisions contained in the documents described in the second paragraph hereof. Finally, we undertake no responsibilityfor the accuracy, completeness or fairness of the Official Statement or other offering materials relating to the :Bonds and express no opinion with respect thereto.
Based on and su�ject to the foregoing and in reliance thereon, as of the datehereof, we are of the following opinions:
1. TheBonds constitute valid and binding obligations of the District.
2. The DistrictResolution has beenduly and legally adopted and constitutes a valid and binding obligation of the District.
3. The CountyResolution has been duly and legally adopted and constitutes a valid and binding obligation of the County.
4. The Board of Supervisors of the County has power and is obligated to levy ad valorem taxes without limitation as to rate or amount upon all property within the District'sboundaries subj ect to taxation by the District (except certain personal property which is taxable at limited rates) for the payment of the Bonds and the interest thereon.
5. Interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of theInternal Revenue Code of 1986 and is exempt fromSta te of California personal income taxes. Interest on theBonds is not a specific preference item for purposes of thefed eral individual or corporate alternative minimum taxes, although we observe that interest on the Bonds is included in adjusted current earnings in calculating corporate alternative minimum taxable income. We express no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds.
Faithfully yours,
ORRICK, HERRINGTON & SUTCLIFFE LLP
per
SF2-6915S.2 A-2 APPENDIX B
EXCERPTS FROM 1995/96 AUDITED FINANCIAL STATEMENTS
B-1 (TillS PA GE INTENTIONALLY LEFI'BLANK) Gary T. Ci<"h1·lla. C.P.,. Vavrinek. Trine, Day & Co. 1Linda S. Tot ld. c.P..,. Dorn1id .\. lJriftr11i1·r. , .P..,. !c. Tom :-,.di,.1 >11. t:.P..,.
INDEPENDENT AUDITORS' REPORTON FINANCIAL STATEMENTS
Bc,ardof Education EmeryUni fiedSchool District Emeryville, Californi�
We have audited the combined financial statements, as listed in the table of contents, and the combining balance sheets, and statementsof revenues, expenditures andchanges in fund balance - budget and actual, of the Emery UnifiedSchool Districtas of and forthe year ended June 30, 1996. These financialsta tements are the re:iponsibilityof theDistrict's management. Our responsibilityis to express an opinion on these financial statements based onour audit.
We conducted our audit in ac,:ordance with generally accepted auditing standards; and GovernmentAuditi ng: St:andards, issued by the Comptro ller General of the United States; and the provisions of the Office of Management and Budget (OMB) CircularA- 128, "Audits of State andLocal Governments." Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements arce free of materialmiss tatement. An audit includes examining, on a test basis, evidence supportingthe amounts an.ddisclos ures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made by management, aswell asevaluating the overallfinancial stat ement presentation. We believe that our audit provides a reasonable basis forour opinion.
In common with other school districts, the District has not maintained a complete historical cost record of its ge:neral fixedassets and. accor dingly, the financialstatements do not include the general fixedassets group of accountsrequired by generally accepted accounting principles. Theamount that should be recorded in the gemeral fixed assets account group relates to historical data that is not currentlyavailable.
In our opinion. except forthe effect on the financial statementsof the omission of the general fixed assetgroup of accounts. thecomb ined financial statements referred to above present fairly, in all material respects, the financial positionof the Emery UnifiedSchool District at June 30, 1996, and the results of its operations ferthe ye:iarthen ended. in conformity with generallyaccepted accounting principles. Also, in our opinion, the combining financialstate mer.:ts referred to above present fairly, in all material respects, the financial position of each individual fundof the EmeryUnified School Districtat June 30, 1996, and the results of operations of such fonds forthe ye� then ended, in conformity with generally accepted accounting principles.
In accordance with GovernmentAuditing Standards, we have also issued a reportdated November 15, 1996 on our consideration of the District's internal controlstructure and a reportdated November 15, 1996 on its compliance with laws and regulations.
Pleasanton, California November 15. 1996
·""":_!';"{ ) .\-....f H"ll �il'l 't "( • l{;\t)("!l(J ( :t 11 'ill1l«Jl l'....:,c \. ( ·.\ 1 1J '7'" �{ } '.,( l( M, ll11j >\ .llc l I {d :-" .,1< · T:."": 1 1 I:., .....!: ,> • ., • • ;7: ( l t• <,.I�t >°' -+-+c •:-' • H..HH IU> ( :1 u·t111H•1 1�d. < '.. \ �•17:2 • t--4< >7' Plcit�tu1Hut. < .\ q....i._-;,...... :.";.:-,. ·�)I)< l1 ....,, ,, ,� ..-1. lll . I-'.\� :« \( �h ...i.., -.c; ...... i.·• : 1 :°i J()I ";":i-+·l )t)(,C)• 1:. \;\ · -� . 1 It '7':1-+·• " l.l EMERYUNIFIED SC HOOL l>ISTRICT
ALLFUND TYPES AND ACCOUNTGRO UPS COMBINED BALA.J.�CE'SHE1�T JUNE 30, 1996
Governmental Fund T�es Special Debt Capital General Revenue Service Proiects ASSETS Cash $ 1,080,284 $ 121,520 $ 2,344 $ 140,2:33 Investments 2,412,5:25 Accounts receivable 126,289 15,801 347 36,065 Due from other funds 165,154 113,344 Stores inventory 6,589 2,190 Amount available forthe retirement of general long-term debt Amount to be provided forthe .retirc:ment of general long-term debt Total Assets $ 1.378.3 16 $ 252.855 S 2.691 $ 2.588.823
LIABILITIESAND FUND EQUITY
LIABILITIES Accounts payable 45,286 152 Due to other funds 113,344 163,334 1,820 Deferredrevenue l:?l,537 Due to student groups Other current liabilities 621,701 General long-term debt TotalLiabil ities 901.868 163.486 l.820
FUND EQLlTY Fund balances Reserved 195,3 12 2, 190 Unreserved Designated 100,000 Undesignated 181.136 87.179 2.691 2.587.003 Total Fund Equity 476.448 89.369 2.691 2.587.003 TotalLiabil ities and Fund Equity $ l.378.3 16 $ 252.855 $ 2.691 $ 2.588.823
The accompanying notes are an integral partof thesefinancial statements. I.2 Account Fiduciary Group ��und TyPes General Total Long-Tenn (Memorandum ,_A__g..._ e_n....cy ______D_ e_b _t _ Onlv)
$ 29,669 $ 1.374,050 2,412,525 178�502 278,498 8,779
$ 2,69 [ 2,691
______2_ .7_4 _0._2_7'� 2.740.277 $ 29.669 $ 2.742.96:� $ 6.995.322·
45,438 278,498 121,537 29,669 29,669 62 1,70 1 2,742.96t 2.742.968 29.669 2.742.96.g 3.839.811
19i,502
100.000 2.858.009 3.155.511 l. 29.669 S 2.742.96! $ 6.995.322
I.2 (TiilSPA GE INTENTIONALLY LEFTBLANK) EMERY UNIFIEDSCHOOL DISTRICT
ALL GOVERNMENTAL FUND TYPES COMBINED STAT1lMENT OF REVENUES, EXPENDITURESAND CHANGESFUND IN BALANCE FOR THE YEAR ENDED JUNE 30, 1996
Governmental Fund T�s Total Special Debt Capital (Memorandum General Revenue Service Projects Onlv2 REVENUES Revenue Limit Sourct!S State apportionments $ 1,913,603 $ 23,712 $ 1,937,315 Local sources 951.922 107.170 1.059.092 TotalReve111ue Limit Sources 2,865.525 130.882 2.,996,407 Federalrevenues 61,633 80,984 142,617 Other state revenues 880,221 15,028 895,249 Otherlocal revenues 286.781 43.653 $ 2.691 $ 54.345 387.470 TotalReve nues 4.094. 160 270.547 2.691 54.345 4.421.743
EXPENDITURES Current Expenditures Certificated salaries 1,992,361 12,620 2,004,981 Classifiedsalar ie!: 405,293 105.265 510,558 Employee benefits 538,956 39,934 578,890 Books and supplies 153,685 70,462 224,147 Servicesand other operating expenditures 616,284 7,734 149,122 773,140 Other outgo 12,768 13.771 26,539 Capital outlay . 127.016 1.345 8.220 136.581 Total Expe:nditures 3.846.363 25 1.131 157.342 4.254.836
EXCESS OF REVENUES OVER/ (UNDER) EXPENDITURES 247.797 19.416 2.691 �102.997) 166.907
OTHERFINANCING S:OURCES/(USES) Operating transfers i:r1 22,622 22,622 Operating transfers c1ut (22,622) (22,622) Other sources 2.690.000 2.690.000 TotalOthe:r FinancingSources/(Uses) 22.622 {22,6222 2.690.000 2.690.000
EXCESS OF REVENUJES AND OTHER FINANCING SOURCES OVER/(UNDER) EXPENDITURES AND OTHERUSES 270,419 19,416 (19,931) 2,587,003 2,856.907 FUND BALANCE, JULY l, 1995 206.029 69.953 22.622 298.604 FUND BALANCE,JUNE 30, 1996 $ 476.448 $ 89.369 $ 2.691 $ 2.587.003 $ 3.155.511
The accompanying notes are anintegral partof these financial statements.
I.3 EMERY UNIFIED SCHOOL DISTRICT
ALL GOVERl"fMENTALFUND TYPES COMBINED STATEMENTOF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND.ACTUAL FOR THE YEARENDED JUNE 30, 1996 General Variance Favorable Budget Actual {Unfavorable) REVENUES Revenue Limit Sources State apponionments $ 1,825,771 $ 1,913,603 $ 87,832 Local sources 1,015.812 951.922 (63.890) Total Revenue Limit Sources 2,841,583 2,865,525 23,942 Federal. revenues 80,827 61,633 (19,194) Otherstate revenues 83 1,116 880,221 49,105 Otherlocal revenues 240.789 286.78 1 45.992 Total Revenues 3.994.3 15 4.094.160 99.845
EXPENDITURES Current Expenditures Cenificated salaries 2,003,216 1,992,361 10,855 Classifiedsalaries 387,120 405,293 (18,173) Employee benefits 520,000 538,956 (18,956) Books and supplies 171, 178 153,685 17,493 Services andother operatingexp enditures 670,584 616,284 54,300 Otheroutgo 15,482 12,768 2,714 Capital outlay 127.673 127.016 657 Total Expenditures 3,895.253 3.846.363 48.890
EXCESS OF REVENUESOVER/ (UNDER) EXPENDITURES 99.062 247.797 148.735
OTHERFINANCING SOURCES/ (USES) Operating transfers in 22.622 22.622 Operating tr::insfers out Othersources Total OtherFinanc:ing Sources/(U ses) 22.622 22.62::?
EXCESS OF REVENUESAND OTHER FINANCING SOURCESOVER/(UNDER) EXPENDITlJRES Ai'\l D OTIIERUSES 99,062 270,419 171,357 FUND BALANCE, JULY1, 1995 206.029 206.029 FUND BAL.A!'iCE.JUNE 30� 1996 s 305.091 $ 476.448 $ 17�
The accompanying notes are an integralpart of these financial statements
1.4 _ ...... ______
SJ:1!=ial Revenue Debt Service �italProjects Total !Memorandwn On!l) Variance Variance Variance Variance Favorable Favorable Favorable Favorable ___fu!!l:W._ Actual (Unfavorable) Budget Actual (Unfavorable) Bude:et Actual (Unfavorable) Bude:et Actual (Unfavorable)
$ 6,245 $ 23.712 $ 17,467 $ 1,832,016 $ 1.937,315 $ 105,299 70.270 107.170 36.900 1.086.082 1.059.092 (26.990) :76,515 130,882 54,367 2.918.098 2,996,407 78,309 11:>9,000 80,984 (28,016) 189,827 142,617 (47,210) 14,564 15,028 464 845.680 895.249 49,569 78.870 43.653 (35.217) $ :.691 s 2.691 $ 54.345 $ 54.345 319.659 387.470 67.811 2:78.949 270.547 18.402) 2.691 2.691 54.345 54.345 4.273.264 4.421.743 148.479
9,300 12.620 (3,320) 2.012,516 2.004,981 7,535 89,596 105,265 (15,669) 476,716 510,558 (33,842) 34.455 39,934 (5,479) 554.455 578,890 (24,435) 87,500 70,462 17,038 258,678 224, 147 34,531 42.900 7,734 35,166 149,122 (149,122) 713,484 773,140 (59,656) 16.000 13,771 2,229 31.482 26,539 4,943 l.345 (1.345) 8.220 (8.220) 127.673 136.581 (8.908) 279.751 251.131 28.620 157342 1157.342) 4.175.004 4.254.836 (79.832)
(802) 19.416 20.218 2.691 2.691 1102.997) (102.997) 98.260 166.907 68.647
22.622 22,622 (22,622) (22,622) (22,622) (22,622) 2.690.000 2.690.000 2.690.000 2.690.000 (22.622) (22.622) 2.690.000 2.690.000 2.690.000 2.690.000
(802) 19,416 20.218 (19,93 1) (19.931) 2,587,003 2,587,003 98,260 :.856,907 2,758,647 69.953 69.953 ;s "'"' 622 22.622 298.604 298.604 s 69.151 $ 89369 $ 20.218 :s 22.622 $ 2.691 $ (19.93 1) $ 2.587.003 $ 2.587.003 $ 396.864 $ 3.155.511 $ :2.758.647
l.4 (TillS PAGE INTENTIONALLY LEFTBLANK) EMERY UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIALSTA TEMENTS JUNE30, 1996
NOTE #1 - SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES . Theaccounting policies of the EmeryUnified SchoolDistrict conform to generallyaccepted accounting principles as prescribed by the GovernmentalAccounting Standards Board (GASB) and the AmericanInstitute of Certified Public Accountants,except that a complete historical cost record of fixedassets has not been maintained. The Emery Unified School Districtaccounts forits financialtransactions in accordancewith the policies andprocedures of the California School Accounting Manual.
A. Financial ReportingEntitv
The District includes all fundsand account groups that are controlled by or dependent on the District's governing boardfor financial repo rting purposes. The Districthas considered all potential component units in determining how to definethe reportingentity using criteria set forth in generallyaccepted accounting principles. The basic ,:riterion forincluding a potential component unit is whether the governing board is financiallyaccountabli:� forthe other entity. TheDistrict det erminedthat there are no potential component unitsthat meet the criteriafor inclusion within the reporting entity.
B. Fund Accounting
Theaccounts of the EmeryUnified School District areorgan ized on the basis of fundsor account groups. each of which is considered to be a separate accounting entity. Theoperations of each fundare accounted for with a separate set of self-balancing accountsthat comprise its assets, liabilities, fundbala nce, revenues, and expenditures. District resources are allocated to andaccounted forin individual fundsbased uponthe purposefor which they areto be spent andthe means by which spending activities are contro lled. The Emery Unified School District accounts are organized into fund types and account groups as follows:
Governmental Funds
• General Fund is th1:general operat ing fund of the District. It is used to account for all financialresources except those required to be accounted for in another fund.
• Special Revenue Funds are used to accountfor sp�c ificrev enue sources that are legally restricted to expenditures forspecific pu rposes.
• Debt ServiceFunds are used to account forthe accumulation of resources forand the payment of general long-termdebt principal, interest, andrelated costs.
• Capital Proj ects Funds are usedto account forthe acquisition and/orconstruc tion of all major governmentalgem:ral fixed assets.
FiduciarvFunds
• Agency Funds are used to account forassets of others forwhi ch the Districtacts asagent.
I.5 . EMERY UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS JUNE30, 1996
Account Grou�
• General Long-term Debt Account Group accounts forlon g-term liabilities expected to be financedfrom governmental fundtypes.
C. Basisof Accounting
Basis of accounting refersto when revenues and expenditures or expenses are recognized in the accounts and reported in the financialstate ments.. Basisof accounting relates to the timing of measurement made, regardlessof the measurementfocus applied.
Governmental funds are generallya1ccoun ted for using the modified accrual basis of accounting. Their revenues arere cognized in the accounting period in which they become both measurable andava ilable to financeexpenditures of the current fiscal period. Expendituresare recognized in the accounting period iri which theliabili ty is incurred(when goods arere ceived or services rendered).
Fiduciaryfund assets and liabilities are alsoaccounted foron the modified accrualbas is.
D. Budgets and Budgetarv Accounting
TheBoard of Education must adopt an operatingbudget no later thanJuly 1 in accordancewith state I.aw. A public hearing must be conducted tc, receive comments prior to adoption. The District'sBoa rd of Education satisfiedthese requirements. Thisbudget is revised by the Board of Education during the year to give consideration to unanticipated revenue and expenditures primarily resulting from events unknown at the time of budget adoption. It is this final r1?vised budget that is presented in these financialstate ments. TheDistrict employs budget control by minorob ject and by individual appropriation accounts. Expenditures cannot legally exceed appropriations by mi:�or object account.
E. Encumbrances
The Emery Unified School District 1.1tilizes an encumbranceaccoun ting system under which purchase ,orders. contracts and other commitmentsfor the expenditure of monies are recorded in order to reserve that pc>rtion of the applicable appropriation. Enc:umbrancesare liquid ated when the commitmentsare paidand all outstanding encumbranceswere liquidated at June 30 since they do not constituteex pendituresor liabilities.
F. Inventorv of Supplies
Inventory is valued at lower of average cost utilizing the first-in, first-outmethod. Inventory in the applicable Funds consists of expendable supplies held forconsumption. Thecost is recorded as an expenditureat the time individual inventory items are withdrawn from the stores inventoryfor consum ption. Reported inventories are equally offsetby a fundbalance reservewhich indicates that these amountsare not "available for appropriation and expenditure" even though they are a component of net current assets.
I.6 E:MERY UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS JlUNE 30, 1996
G. Compensated Absences
Accumulated unpaid employee vacation benefitsare recognizedas liabili ties of the District. Theamount of the liabilityexpected to be paid from currentre sources is not significant.
Accumulated sick leave benefitsare not recognizedas liabili ties of the District. The District's policy is to record sick leave asan operating expense in the periodtaken since such benefits do not vest nor is payment probable;however, unusedsick leave is added to the creditableservice period forcalcula tion of retirement benefitswhen the employee retires.
H. Fund Balance Reserves and Designations
Reservations of the ending fund balance indicate the portionsof fund balancenot appropriable for expenditure or amounts lc�gally segregated fora specific future use.
Designationsof the ending fund balance indicate tentative plans forfinancial resource utilization in a future period.
I. PropertvTa "{
Secured propertytaxes attach asan en forceablelien on propertyas of March 1. Taxes are payable in two . installmentson Novembe:r 15 and March 15. Unsecured propertyta"'{ eS are payable in one installment on or before August 31. The County of Alameda bills and collects the ta"'{es for the District. Tax revenues are recognized by the Districtwhen received.
J. DeferredRevenue
Deferred revenue arises when a potential revenue does not meet both the "measurable" and "available" criteria forrecognition in the current period or when resources arereceived by the Districtprior to the incurrence of qualifying,:xpenditures. In subsequent periods, whenboth revenue recognition criteria are met or when the District hasa legal claim to theres ources, the liability fordef erred revenue is removed fromthe combined balance sheet;md revenue is recognized.
K. Total (Memorandum Onilv) Columns on Combined Statements
TheDis trict haspresented these column totalsonly to satisfyvarious reporting requ irements and any conclusion drawn from this information shall take into consideration that it does not represent consolidated financial information.
I.7 EMERY UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIALSTATEMENTS JUNE30, 1996
NOTE #2 - CASH
Cashat June30 , 1996, consisted of the following:
Canying Amount . Deposits Cash onhand and inbanks $ 3.5,471 Cashin revolving fund .5,000 Total Deposits 40,471 Pooled funds Cash in countytreasury 1,33:3,.579 Total ======-======$1,374,050 Cash balances held in banks and inre volving funds are insured up to $100,000 by the Federal Depository Insurance Corporation. At June 30, 1996, the carryingamount of theDi strict'sdepos its was$40,471 andthe bank balance was $36,336. All cash held by financial institutions is fully insured ..
In accordancewith Education Code Sec"tion 4100 l, the Districtmaintains substantially all of itscash in the: Alameda County Treasury. The County pools these funds with those of other Districtsin the Countyand invests the cash. These pooled fundsare carried at cost which approximates market value. Any investment losses are proportionately shared by all funds in the pool.
NOTE #3 -ACCOUNTSRECEIV ABLE
Receivables at June 30, 1996, consist of the following:
Special Debt Capital General Revenue Service Projects Federal Government Categorical aid $ 2,531 $ 12,610 State Government Apportionment 80,171 Categorical aid 1,270 Other state 6,585 Local Government Interest 20,005 1,92 1 $ 347 $36,065 OtherLocal Sources 16,997 Total $126.289 $ 15,801 $ 347 $36,065
I.8 ---,----·
E:MERY UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS JUNE30, 1996
NOTE #4- INTERFUND TRANSACTIONS
A. lnterfundReceivable s/Pavables (DueTo/D ue From)
Individual fund interfund receivable andpay able balances at June 30, 1996, are asfollows:
Interfund Interfund Receivables Payables Funds General $ 165,154 $ 113,344 Adult 6, 174 8,479 Cafeteria 107,170 155,055 Building 1,820 Total $ 278,498 $ 278,498
B .. Ooerating Transfers
Interfundtransf ers consis:t of operating transfers from fundsrec eiving revenue to funds throughwhich the resources areto be expended. Interfundtransf ers forthe year ended June 30, 1996, are asfollows:
The BondInterest and Rt�demption fundtransf erred to the General fundfor cl ose-out of the previous bond. $ 22,622
NOTE #5 - ACCOUNTSPA YABLE
Accounts payable at June 30, 1996, consist of the following:
Special General Revenue
Vendor $45,286 $ 152
I.9 EMERY UNJFIED SCHOOL DISTRICT
NOTES TO FINA.J.'iCIAL STATEMENTS JUNE 30, 1996
NOTE #6- DEFERRED REVENUE Deferred revenueat June 30, 1996, consists of thefoll owing:
General Federal financialassistance $ 80,23�� State categorical aid 41,303 Total. $ 121,53i:-
NOTE #7 - F[JNDBAUNCES Fund balances are composed of the following elements:
Special Debt Capital General Revenue Service Projects Reserved Revolving cash $ 5,000 Stores inventory 6,589 $ 2, 190 General reserve I 53;854 Legally restricted 29,869 ---- Total Reserved 195,3 12 2,190 Unreserved --- Designated Economic uncertainties 100,000 U ndesignated 181.136 87, 179 $ 2,691 $2.587,003 Total Unreserved 28 1,136 87,179 2,691 2,587,003 Total $ 476.-148 $ 89,369 $ 2.691 $2.587,003
I.IO EMERY UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996
NOTE #8- GENERA L LONG-TERM DEBT
A. Lone-term Debt Summ.arv
A schedule of changes i:n long-term debt forthe year ended June 30, 1996, is shown below:
Balance Balance July l, 1995 Additions Deductions June 30, 1996 GeneralObl igation Bo111ds $ 2,690,000 $ 2,690,000 Postemployment benefits $ 32,796 20,Ii2 52,968 Total $ 32,796 $ 2,710,172 2,742,968
Amount available forr,etirement of general long-term debt Bond interest andre :demption 2,691 Amount to be provided for retirement of general long-termdebt $ 2.740.277
8. Bonded Debt
The outstanding generaloblig ation bonded debt is as follows:
Bonds Bonds ·issue Maturity Interest Original Outstanding Outstanding Date Date Rate Issue July I, 1995 Additions Redeemed June 30, 1996
1996 1017 4.5% - 9.0% $ 2,690,000 $2.690.000 $ 2,690,000
I.1 1 EMERY UNIFIED SCHOOL ])!STRICT
NOTE_S TO FINANCIALSTATEMENTS JUNE 30, 1996
Debt Service Requirement to Matul"itv
Interest to Fiscal Year Principal Maturity Total 1997 $ 111,307 $ 111,307 1998 185,511 185,511 1999 $ 60,000 146,196 206,196 2000 65,000 141,587 206.,587 200 1 70,000 136,609 206.,609 Thereafter 2,495,000 1,544,329 4,039.,329 Total $ 2,690,000 $ 2,265,539 $ 4,955.,539 c. Postemi2lovment Benefits
Theapprox imate accumulated future liabilicyfor the Districtat June 30, 1996, amounts to $52,968. This amount was calculated based upon the number of retirees receiving benefits multiplied by the yearly district payment per employee in affect at June 30, 1996, multiplied by the number of years of payments remaining.
During the 1993-94 year, the Distric:t entered into agreements with twoindividu als retiring from theDistrict whereby the District would pay forhealth benefits. One person will receive the benefits forlif e while the other will only receive the benefits to age 65.
NO TE #9 • Elv!PLO YE E RETIRElvf.EN1 ' SYSTE.\,/S
A. Descriorion of Plans
Qualified employees are covered under multiple-employer contributory retirement plans maintained by agencies of the State of California. Certificated employees are members of the State Teachers' Retirement System (STRS) and classifiedemplo yees are members of the Public Employees' Retirement System (PERS).
State Teachers' Retirement Svstems (STRS)
All full-timecertifica ted employees participate in the STRS, a cost-sharing multiple-employer contributor public employee retirement system. At June 30, l 996, the Districtemplo yed 43 certificated employees with a total payroll of $2,004,98 1.
Employees attaining the age of 60 with 5 years of credited California Service (service) are eligible fornormal retirement and are entitled to a monthly benefitof 2 percent of their final compensation foreach year of service. Final compensation is defi111ed asthe average salary earnable forthe highest three consecutive: years of service. The plan permits early r�:tirement options at age 55 or as early as age 50 with 30 years of service. Disability benefitsof up to 90 percent of final compensation areavai lable to members \vith 5 years of service. A fam ily benefit is available if the deceased member had atleast one year of service. After 5 years of
I.12 ------·------
E1\1ERY UNIFIED SCHOOL DISTRICT
NOTES TO FINAL�CIAL STATEMENTS JUNE 30, 1996 '
credited service,mem bers become 100 percent vested in retirement benefitsearned to date. If a member's employment is terminated, the accumulated member contributionsare refundable. Thecurrent rate of interest credited to members'acco llnts is 4.5 percent per annum.
Benefit provisions for STRS are established by the State Teachers' Retirement Law (Part 13 of the California Education Code, Section 22000 et seq.).
California Public Emplovees Retirement Svstem (PERS)
All full-time classifiedemp loyees participate in the PERS, an agent multiple-employer contributorypublic retirement system that acts as acommon investmentand adm inistrative agent forparticipating public entities within the State of California. TheEmery Unified School District is part of a "cost sharing" pool within PERS. One actuarial valuation is performedfor those employers participating in the pool, and the same contribution rate applies to each. At June 30, 1996, the Districtemplo yed 27 classifiedemplo yees with a total payroli of $51 0,558.
Employees are eligible forre tirement at the age of 60 and are entitled to a monthly benefitof2 percent of finalcom pensation foreac:h year of service credit. Retirement compensation is reduced if the plan is coordinated with Social S1:curity. Retirement may begin at age 50 with a reduced benefitrate, or afterage 60 to 63 with an increasedra1:e . Theplan also provides death and disability benefits. Retirement benefitsfully vest after 5 years of credited service. Upon separationfrom theDis trict, members1 accumulated contributions are refundable with interest credited through the date of separation.
Benefitprovisions forPE RS are established by the Public Employees' Retirement Law (Part 3 of the CaliforniaGovernment Cc >de, Section 20000 et seq.).
B. Funding: Statusand Pro!m�ss of the Retirement Plans
The "pension benefitobl igation" reported below is a standardized disclosure of the present value of the pension benefitsad justed forthe effects of projected salary increases and anystep- rate benefitsestima ted to be payable in the future as a result of employee serviceto date. The measure is the actuarial present value of credited projected benefitsand is intended to help users assessthe retirement plans' fundingstatus on a going concern basis. assessprogress made in the accumulating sufficient assets to pay benefits when due, and make comparisons amongre tirement systems and employers. The measure is independent of the funding method used to determinecontributions to the retirement systems.
The pension benefitobl igation forSTRS wascompu ted aspart of the actuarial valuation performedat June 30, 1995. The significant actuarial assumptionsused by STRS to compute the June 30, 1995, actuarial valuation are different from those applied in prior years. The assumed long-term investment yield is 8.0 percent. and the assumedlong-term salary increase assumption forinfla tion is 5.5 percent. The normal cost rate is 16.0i percent of covered payroll and the 18-year amortization rate forthe unfundedactua rial obligation is .i.53percent of payroll. Member and employer contribution rates are set by law and are not affected by the changed assumptions.
I.13 EMERY UNIFIED SCHOOL ]DISTRICT
NOTES TO FINANCIAL STATEMENTS JUNE30, 1996
Under current law, the pension benefitobli gation forSTRS is not the responsibility of the District. The State: of Californiamakes annual contributionsto STR.S towardthe unfundedobl igation. The pension benefit obligation forSTRS is included in the financial statementsfor STRS andthe State of California.
Thepension benefitobl igation for:PERS was computed as partof actuarial valuationperformed June 30, 1995. Significantactuari al assumptions usedto compute thePERS pension obligation include an actuarially assumedinvestment return of 8.5 percent per annum.The salary scale used assumessalary increasesthat vary by length of service. Thetotal increase in any futureyear includes anassumed 4.5 percent inflationrate , a 0.0 percent a.crossthe board increase and merit increases that vary by length of service.
PERS does not make separate mea!iurementsof assets and pension benefitobligations forindividual school districts or countyoffices. Thetotal overfunded pension benefitoblig ation for local educational agencies as ;a whole, asof June 30, 1995, is as follows: (amounts in millions)
PENSION BENEFITOBL IGATION PERS Retirees and beneficiariescurri�ntly receivingbenefits andterminated employees not yet receiving benefits $ 7,033 Current employees Accumulated employee con1ributions including allocated investmentearnings 3,506 Employer-financed ( vested) 4,166 Employer-financed (nonvest:ed) 257 Total Pension BimefitObl igation il4,962 Net assetsavailable forbenefi ts at cost (market value is $17,3 15) 16,288 OverfundedPen:;ion BenefitOblig ations $ 1,326
Therewere no changes in the pension benefit obligation from last yearwhich resulted from changes in actuarial methods or as:sumptions.
C. Contributions Required and Contributions Ma.de
TheDistrict is requiredby statute to contribute 8.25 percent and 6.979 percent(6.599 percent as of January 1, 1996) of gross salary expenditures to STRS and PERS, respectively. Participantsare required to contribute 8 percent and 7 percent of gross salaiy to STRS and PERS, respectively.
l.14 E:MERY UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS JllJNE30, 1996
TheDis trict contribution information forthe yearended June 30, 1996, is:
District's Number of Total Total CurrentYear Employees Employee Employer Covered Covered Contributions Contributions Payroll STRS 41 $ 149,266 $ 153,93 1 $ 1,865,832 PERS 24 30,506 31,163 46 1,512 $ 179,772 $ 185,094 $ 2,327,344
Employee Contributions Employer Contributions Asa Percentage of As a Percentage of Covered Payroll Covered Payroll STRS 8.00% 8.25% PERS 6.6 1% 6.75%
The District's contribution represented less than one percent of the total contributions required of all panicipating employers in STRS and PERS, respectively.
The District's employer contributionsto STRSmet the required contribution rate established by law. Although the actuariallydlet ermined contribution rate exceeds the employer rate set in law, the District has no obligation forthe deficit.
TheDi strict'semployer contributions to PERS met the required contribution rate and satisfiedthe plan's fundingrequirements as determinedby the PERS actuary. The funded contribution included amortization of the unfundedactuarial lialbilitythrough the year20 1 1. Thesig nificantactua rial assumptions used to compute the acruarially determinedcon tribution requirement are the sameas those used to compute the pension benefit obligation. as previously described.
D. Trend Infonnation
Ten-year historicaltrend lnformation giving an indication of the STRS' and PERS' progress in accumulating sufficientassets to pay benefitswhen due is presented in the State Teachers' Retirement System's Comprehensive Annual Financial Reportfor the year ended June 30, 1995, and the CaliforniaPublic Employees' Retirement Systems' Annual Reportfor the yearended June 30, 1995.
1.15 EMERY UNIFIED SCHOOL.DISTRICT
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996
Three-yeartrend informationrequired to be reported forPERS is presented below:
PERS 1992-93 1993-94 1994-95 Net assets available forbenefits as percentages of the pension benefit obligation 101.2% 109.7% 109.8% Unfunded pension benefitobligaticm as percentages of annual covered payroll (3.7)% (3 1.5)% (.30.9)% Employer contributionsmade in accordance with actuarially detenninedrequirements, aspercentages of annual covered payroll 7.579% 7.376% 3.526%
E. Other Information
Under STRS law, certain early retir1:ment incentives require the employer to pay thepresent value of'the additional benefitwhich may be paid on either a currentor deferred basis. The Districthas no obligations to STRS forearly retirement incentives granted to terminated employees.
NO TE #10 - CO.'vL'vf/T}dENTSAND CONTINGENCIES
A. Litigation
The Districtis involved in various htigation. In the opinion of management andlegal counsel, the disposition of all litigation pending will not have a material effecton the District's financialstat ements.
B. Sick Leave
Sick leave is accumulated without limit foreach employee at the rate of one day foreach month worked. Leave with pay is provided when employees are absent forhealth reasons: however. the employees do not gain a vested right to accumulated sick leave. Employees, therefore, are never paid for anysick leave balance at termination of employment or any other time. It is, therefore, not appropriate to accruethe value of accumulated sick leave.
C. State and Federal Allowances. Awa1�ds and Grants
The Districthas received State and Federal funds forspecific purposes that aresub ject to review andaudit by the granteragenc ies. Although such auditscould generate expenditure disallowances under terms of the grants. it is bel.ievedthat any required reimbursementswill not be material.
1.16 EMERY UNIFIED SCHOOL DISTRICT
NOTES TO FINANCLA..L STATEMENTS JUNE 30, 1996
NOTE #II - PARTICIPA TION INPUB UC ENTITYRISK POOL
TiiLeDistrict is a memberof the AlamedaCounty Schools InsuranceGroup public entity risk pool. The District pays an annual premium fori'ts workers' compensation, dental, vision, and property liability coverage. The rel.ationship betweenthe Distlt"ict andthe JPAis such that theJPA isnot a component unit of the Districtfor fir.lancialreporting purposes.
Tiheseentities have budgeting; and financial reportingrequirements independent of member units and their fiIJLancial statements arenot p:resented in these financialsta tements; however, fundtransa ctions betweenthe entities andthe District are included in these statements.
ThieJP A had no long-term debts outstandingat June 30, 1995. The District's share of yearend assets,liabil ities or fundequity hasnot been calculated.
A. � Alameda CountySchoo ls Insurance Group B .. Purpose Provide workers' compensation, propertyand liability, dental and vision insurance
C.. Participants School Districts/County Offices
D. GoverningBoard Representative from each member district
E .. Condensed Audited Financial Infonnation Follows June 30, 1995 Assets $ 9,385,752 Liabilities 6,741,915 Fund Equity $ 2,643,837 Revenues 16,261,23 1 Expenses 16,902, 105 Net Decre::LSe in Fund Equity $ (640,87..J.)
F. Pavments forthe CurrentYear $ 168.947
I.17 EMERY UNIFIED SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS JUNE30, 1996
NOTE #12 - EXPENDITURES (B UD GET VERSUSACTU AL) Theexp enditures of three districtfunds exceeded the budgetedamounts in total as follows:
Expenditures andOther Uses Funds Budget Actual Exce� Adult $ 15,923 $ 18,910 $ (2,987) Cafeteria $ 223,828 $ 2:?9,236 $ (5.408) Building $ 15i,342 $ (157,,342) Debt Service $ (:2,622) $ (22,622)
NOTE # 13 - T.A.XAND REVENUE ANTICIPATION NOTES In July 1995, the District issued $595,000 of tax and revenue anticipation notes bearing interest at 4.50 percent. Interest and principal were due and payable on July 6, 1996. By May 1996, the Distrk:had placed I 00 percent of principal and interest in an irrevocable trust forthe sole purpose ofsatisfying the notes. The amount held in trust is recorded in thecash in county treasury and the related liabilityfor principal and interest totaling $621,70 1 is reflected in other current liabilities.
NOTE #14 - SCBSEQUENTEVENT TheDistrict issued $605,000 ofta.xand revenue anticipation notes dated July 2, 1996. Thenotes mature July 1, 1997, and yield 3 .85 percent interest. The notes were sold to supplement cash flow. R�payment requirements are that a percentage of principal and imerest be deposited with the fiscalagent each month beginning January 1997, until l 00 percent of principal and interest due is on account in May 1997.
I.18 ----·------�
APPENDIX C
FORM OF CONTINUING DISCLOSURE CERTIFICATE
C-1 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX C
FO:RM OF CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the Emery Unified School District (the "District") in connection with the issuance of $2,690,000 aggregate principal ammmtof Emery UnifiedSchool DistrictGeneral Obligation Bonds, Electionof 1995, Series 1997 (the "Bonds"). The Bonds are being issued pursuant to a resolution (the "Resolution") adopted by the Board of Supervisorsof the County of Alameda (the "County") on February 4, 1997, at the request of the Goveming Board of the Districtby its resolution adopted on January 27, 1997. The District covenants and agrees as follows:
SECTION 1. flwoseof theDisclosure Certifica te. ThisDisclosure Certificate is being executed and delivered by the District for thebenefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(d)(2).
The Dfatrict is not an obligated person with respect to more than $10,000,000 in aggregate principal amount of outstanding municipal securities, including theBonds . Theoffering of the Bonds is therefore exempt from S.E.C. Rule 15c2-12(b)(S) pursuant to Section(d)(2) of said Rule.
SECTION 2. Definitions, In addition to the definitions set forthin theResolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalizedterms shall have the followingmeanin gs:
"Annual Report" shall mean any Annual Report provided by theDistrict pursuant to, and as described in, Sections 3 and 4 of thisDisc losure Certificate.
"Beneficial Owner" shall meanany person which hasor shares thepower, directly or indirectly, to make investment dedsions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries) .
"Dissemination Agent" shall meanthe District, orany successorDisse mination Agent designated in writing by theDistriet and which has filed withthe District a written acceptance of such designation.
"Holder" shall meanthe person in whose name any Bond shall be registered.
"ListedEvents " shall mean any of the events listed in Section 5(a) of this Disclosure Certificate.
"National Repository" shall mean anyNationally Recognized Municipal Securities Information Repository forpurpo sesof theRu le. TheNational Repositories currently approved by the Securities and Exchange Commission are set forth in Exhibit A.
"Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply withthe Rufo in connection withoff ering of the Bonds.
"Repository" shall mean each National Repository and the State Repository.
"Rule" shall mean Rule 15c2-12(b)(S) adoptedby theSecurities andExchange Commission under the Securities Exchangf: Act of 1934, as the same may be amended from time to time.
SF2-691SS.2 C-1 "State Repository" shall mean anypubl ic or private repository or entity designatedby the State of California asthe statere pository forthe purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of'the date of this Certificate, there is no State Repository.
SECTION3. Provision of Annual Reports.
(a) The District shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the District's fiscal year (currently ending June 30), commencing withthe report for the 1996-97 Fiscal Year, provide to any person upon written request an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as asingle document or as separate documents comprising a package, andma y cross-refere1t1ce other information as provided in Section 4 of this Disclosure Certificate. If the District's fiscal year changes, it shall give notice of such change in the same manner as for aListed Event under Section 5(c).
Written request shall be made to :
Emery Unified SchoolDistrict 4727 SanPablo Avenue Emeryville, CA 94608 Attn: Superintend1ent Tel: (5 10) 655-45936
SECTION 4. Content of Annual Reports. TheDistric t's AnnualRe port shall contain or include by reference the following:
� Audited fm ancialstatements of theDistrict for thepreceding fiscal year, prepared in accordancewith the laws of the State of Californiaand including allstatements and information prescribed for inclusion thereinby the Controller of the State of California.
Any or allof the items listed above: may be included by specific reference to other documents, including official statements of debt issues oif the District or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statem,ent, it must be available fromthe Municipal Securities Rulemaking Board. The District shall clearly identify each such other document so included by reference.
SECTION 5. Reporting of Significant Events.
(a) Pursuant to the provisions of thisSection 5, theDistrict shall give, or cause to be given, notice of the occurrence of any of the following events withrespect to theBonds , if material:
1. principal and interest payment delinquencies.
2. non-payment related defaults.
3. modifications to rights of Holders. 4. optional, contingent or unscheduled bond calls. 5. defeasances.
SFZ-69155.2 C-2 6. rating changes.
7. adverse tax opinions or events affe cting the tax-exempt status of theBonds.
8. unscheduled draws on the debt service reserves reflecting :financial difficulties.
9. unscheduled draws on the credit enhancements reflecting financial difficulties.
10. substitution of thecredit or liquidityproviders or their failure to perform.
11. release, substitution or saleof property securing repayment of the Bonds.
(b) 1tVhenever theDistrict obtains knowledge of theoccurrence of a Listed Event, the District shall as soon as possible determine if such event would be material under applicable federal securities laws.
(c) If the District determines that knowledge of the occurrence of a Listed Event would be materialunder applicable federal securities laws, theDistrict shall promptly filea notice of such occurrence witheach National Repository or with the Municipal Securities Rulemaking Board, and the State Repository. Notwi1thstanding theforegoing , notice of Listed Events described in subsections (a)(4) and(5) need not be given under this subsectionany earlierthan the notice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Resolution.
SECTION 6. :rermination of Reporting Obligation. The District's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the District shall give notice of such termination in the same manner as for a Listed Event under Section 5(c) .
SECTION 7. Dissemination Agent. The Districtmay , fromtime to time, appoint or engage a Dissemination Agent to alSsistit in carrying out its obligationsunder thisDisclosure Certifi cate, andmay discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by theDistrict pursua nt to thisDisclosure Certificate. The initialDis semination Agent shallbe the District.
SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the followingconditions are satisfied:
(a) If the amendment· or waiver relates to the provisions of Sections 3(a), 4, or 5(a), it may only be made in connection with a changein circumstances that arises froma changein legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of natioIJtallyrecognized bond counsel, have complied withthe requirements of theRule at the time of th1e original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
SF2-69155.2 C-3 (c) The amendment or waiver either (i) is approved by the Holders of theBonds in the same manner as provided in the Resolution for amendments to theRe solution withthe consent of Holders, or (ii) does m>t, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds.
In the event of any amendment or waiver of a provision of thisDisclosure Certificate, theDist rict shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data be:ing presentedby theDi strict. In addition, if theamend ment relates to the accounting principlesto be followed in preparing fm ancial statements, i(i) notice of such change shall be given in the same manner as for a Listed Event under Section S(c), am.d (ii) the Annual Report for the year in which the change is made should present a comparison (m narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on. thebasis of thenew accounting principles and those prepared on the basis of the former accounting principles.
SECTION 9. Additionalfoformation. Nothing in thisDisclosure Certificate shallbe deemed to prevent theDistrict from disseminating any other information,using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including anyother information in am.y AnnualRe port or notice of 1occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Districtchooses to include am.y information in any Annual Report or notice of occurrence of a Listed Event in addition to thatwhich is specificallyrequired by thisDis closure Certificate, the District shall have no obligation under this Certificate to update such information or include it in am.y futureAnnual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. In the event of a failure of the District tocomply withany provision of this Disclosure Certificate am.y Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seekingmandate or specific performance by court order, to cause the Districtto comply withits oblig:ations under thisDisc losure Certificate; providedthat any such action may be institutedonly in Superior Court of the State of California in and for the County of Alameda or in U.S. District Court in or nearest to the County. A defaultunder thisDisclosure Certificate shall not be deemed an Event of Default under the Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the District to comply withthis Disclosure Certificate shall be an actionto compel performance.
SECTION 11. Duties. Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, am.d the District agrees to indemnify and save the Dissemination Agent, its officers, directors, employees :md agents, harmless against am.y loss, expense am.d liabilities which it may incur arising out of or in the exercise or performance ofits powers andduties hereunder, including thecosts and expenses (including attorneys fees) of defending against am.y claim of liability, but excluding liabilities due to the Dissemination Agent's gross negligence or wilful misconduct. The obligations of theDistrict under this Section shallsurvive resignation or removal ofthe Dissemination Agent am.d payment of the Bonds.
SECTION 12. Beneficiaries. ThisDisclosure Certificate shall inure solely to thebenefit of the District, the Dissemination Agent, the Participating Underwriters and Holders am.d Beneficial Owillers fromtime to time of the Bonds, and shall create no rights in am.y other person or entity.
Date: EMERY UNIFIED SCHOOL DISTRICT
SF2-69155.2 C-4 ------
EXIDBIT A
Nationally Recognized M1imicipal Securities Information Repositories approved by the Securities and Exchange Commission as of the date: of the ContinuingDisclosure Certificate:
Bloomberg MUDJlcipal Repository ThompsonNRMSIR P.O.Box 840 Secondary Market Disclosure Princeton, NJ 08S42-0840 395 HudsonStreet, 3rd Floor Internet address: [email protected] New York, NY 10014 (609) 279-3200 Intemetaddres.s:[email protected] (609)279-3204 10 order documents (212) 807-5001 (609) 279-3235 or (609) 279-5963 [FAX] (212) 989-2078 [FAX] Contact: Dave Campbell Contact: Carolyn Chin
Disclosure, Inc. Commercial Inde:ting 5161 River Road Bethesda, MD 20816 (301) 951-1450 (301) 718-2329 [FAX] Contact: Sherrie Sewalt (301) 718-2390
JJ KennyInfo m1ation Services The Repository 65 Broadway, 16th Floor New York, NY 10006 (212) 770-4568 (212) 797-7994 [FAX] Contact: Ms. Imm Horai, Repository
Moody's NRMS][R Public Finance Information Center 99 Church Street New York, NY 10007-2796 (800) 339-6306 (212) 553-1460 []8'AX] Contact: Donna Diotte (212) 553-4130
R.R. Donnelley :Financial Attn: Municipal Securities Disclosure Archive 559 Main Street Hudson, MA 01749 (800)580-3670 (508) 562-1969 [Jt<'AX] Contact: Susan Harvey
SFl-69155.2 C-5 (TiilSPA GE INTENTIONALLY LEFTBLANK) APPENDIX D
SPECIMEN OF BOND INSURANCE POLICY
D-1 (TiilS PAGE IN'IENTIONALLY LEFT BLANK) F.iiwlcialC1W'31lty losunnre Company 115Broadway NewYmk, N\'." 1000i& (212) 312�3000 (800)352-0001
A GE r.a,,it,IComparlJ
MunicipaJl Bond New Issue: Insuranre Policy
Control. Number.
Pnemium:
Finanr;ialCuarao1ty Imm.ma: CmipllDY( '"'fin&ncia.l(�IA 'l'81lty.... ), a. NewYigpli i!'fd� iwrur.lp:e �IIN"81.� incoosideotiol• of' toopa ymt.ntmthe premium and1n1bjm tu (heLerms O uocooditiooallyand irreYocahlyptty •groc6to I.()Street State TrollU:lmi:Jllnv. SIJCCC5SOI",as itt; .Qf!;ent ( thP.Ftscal .. Agmt"}, for thebeue and int.etest <111 th.:Ql,lwe abaYc-dc:icribcddobt " :$ti(IDlf"'l'llle
Ollilfil)al or interest on • F'n llln(2al ('.1 q1ranty shall willdisbu� ro theBonc.lhc,kk.- . r,... ,t h11t is unpaid by lWL'MXlof Afp,&, in r�mi\ n"a'lnl»d-Jy SA� 16 it, c,C I of theprincipal orinla'e:ll Due.fur Payment and �lffl)Vf>ll\lil'--ie!!!Dlllllieiof IISSignrncnl, that all nf CheBondholMl''s righmsao J:>uc fur P-y11-l � �vestinF"mancial Guaranty. Upon ty shal booumc._.,.er tlte ,)I' tht-: Bond, 8flf1Ut1t'.Dll.nlOOl.l(IOO or risfttto non·cancelbblcCor any n'.ll.';1 10. The ptt.m ium on this Policy i, not ft.fond."tble for anyn,aoon, '8 1ht:'pay1111C'AU of the Bond:;to prior their11111wnty. TI,iK Policy does ,... -... in.."IIJre a,;aialst lossany of JJR(M'yrni:nl pn-.rnium whir.h may at any time be payable with n.:51,i.:t.1. lo any 8iNKI. As used heron. tl1eel(:rfn "Buu,u •..a.·w·· ineans, asto a panicultu- B,,nd. the JINl;IIIIotlH� d1Hn tlir:·- ...... I.he *' ortime Nonpayment.is entitled Willer- tl1e tamsof t;111.i1&ww-1 topayment tlv.reof. "Due (or Payment" means, when n.faring to the j)l'Ulcipid ftf a Uond, thest.ated maturity date thm:oCw the date on wlaid1 I.he 6llffll': f!hollhave been dulyt calledfol-manda ory $ipki1is fond mlffllption anrldoes notrefer to any earlieron, date wt.ii.ii payment is bydue reD8CIII ofc:illfor redemption (odt<� th11n by 1narad1wry si,,lcing fut'ld ttdt.mptjol1). ar.oderation or otheradva11oc, na1t or �\QWrity and mean.o; . when refening to interest ona Form 9000(10/9a, ) Pai;c 1 ol 2 Fimur.ial Gllllffl11tyhl!iutance Companr 115'Bl"oadway FGIC. NewYwk, NY10006 (212) 312-3000 (800} 352-0001 AGE�Ompany ...... Municipal Bond New Issue Insurance Polk.-y Bond, 1M. IUJ.fJdf'IAy datefur dlt;nt ofintem. 1. "Noilpll)'DV.Jlt"' in R:5pl:d of R Bond11il mean;·�f 11reof the IIIRUerto haw. pm,,rid,,dsuffiat. 'flt ru nds tnpaying the 110••.nt far payment in foll ,"ti all pri11cipaland intettSt � ,w Payment on 1;11.il Bond. ••Nu6oe•• mranstelephonic o.- �ic notire., �1n1dy confirmed in writing.wriw- or .n noticeby �itere.dcer1ir or 11.:1l mail, from .1 Bondholdr.ror a payins �t forthe Hilllil"I!.'..._ an 1-...Cua.--nty l.lllllJICial .. . Busma.l; Day'' nlMJl5 any dayodwn tha a Saturday, Smw1ay ora daly_,IIICjj�� the F'"l!Sal l � isauthoriw.:d hy law toremain d,w. InW'lltDes s � Fi.o.lm:..-ial (!uarantyha:t thiscau&ed Policy tu beaffixed to besig.led byduly its aa,thomed oOiccr in facsimile tobecome� d hi,�n· nn ,,....,,a. Cuaraucy by virtue«.w olthe ntersignaturc cl it$dally autbo��QK1e9ell1'f;� c Fc'.Jr 1D 9000 (10/93) Poge2of 2 F'm.anclal Guaranty Jrn."Ul'811Ce Compttny 115 Broadway FGIC. New �NY 10006 (212) 312-9000 (800)352-0001 A GE Canpallyc,pifal Endorsetnent To Financial Guaranty Insurance Company lnsuranoo Policy It is rurthcr under.ilood tlsttt theterm "•Non payment" in m;pectBuncl ora indu orinll'ftst madeI(• a Bondholder by or onbd1t1lr nr ahe i)I'issulT 11ur.h - l3ondholJe.- pursuant to the United S.1111S Uankruptc.."YCode by a tn with •liraal., nonai:ipeultlhll!an1er ro11r1.or a havingwmfM*'JI! • � HERFJiNSI.IAU.. CONSTRUED IE 'IO W .IN,\NY OIHER ot'S� THEM.JCY. 1c.ir'UI.J1.._. Autboriud4;� Ofliicer SeateStreet TnutBank mid Company, N.A., - Flll w �t Fonn E-0002(10/93 ) Pagc1 ol 1 (TIIIS PAGE INlENTIONALLY LEFI'BLANK) ...... _ ...... -...... --- ,,._...... - ...... _. ____ .... _