$71,300,000 Anaheim Public Financing Authority Revenue

NEW ISSUE - BOOK-ENTRY ONLY In the opinion of Co-Bond Counsel, under existing law and assuming compliance with the tax covenant described herein, the interest received by the owners of the /993 Bonds is excluded from gross income forFederal income tax purposes and is�,.-: sr �fiepreference item for purposes of the Federal alternative minimum tax. In the further opinion of Co-Bond Counsel, the interest received by 1/-;, ,•wFten of the 1993 Bonds is exempt from personal income taxes of the State of California. See, however, "TAX EXEMPTION" herein for a descrfption of other taxes on corporations. Credit Ratings: Moody's: Aaa Standard & Poor's: AAA Duff & Phelps: AAA (see "Credit Ratings" herein) $71,300,000 Anaheim Public Financing Authority Revenue Bonds, Series 1993 (City of Anaheim Electric Utility Projects) Dated: June I, 1993 Due: October I, as shown herein The 1993 Bonds are being executed and delivered as fully registered bonds. The 1993 Bonds when initially executed and delivered will be registered in the name of Cede & Co., as registered owner and nominee for the Depository Trust Company, New York, New York ("OTC"), and will be available to ultimate purchasers in book-entry form only in denominations of $5,000or any integral multiple thereof. Interest on the 1993 Bonds is payable semi­ annually on April I and October I of each year, commencing October I, 1993. Payments of principal of and interest on the 1993 Bonds are to be made to purchasers by DTC through DTC Participants. Purchasers will not receive physical delivery of the 1993 Bonds purchased by them. See "DESCRIPTION OF THE 1993 BONDS-Book-Entry System." The 1993 Bonds are subject to optional and mandatory redemption prior to their stated maturities as described herein. The 1993 Bonds are secured by, among other things, Project Revenues, which consist of 1993 Purchase Payments to be made by the City under the Installment Purchase Agreements. The 1993 Purchase Payments and all other payments with respect to Qualified Obligations are payable from Surplus Revenues in the Qualified Obligations Account of the City's Electric System Surplus Revenue Fund, subject to application as provided in the Indenture and the Installment Purchase Agreements. The 1993 Purchase Payments will rank junior to the City's approximately $206, 179,000 outstanding electric revenue bonds and any additional electric revenue bonds which may be issued in the future on a parity with such bonds. As Qualified Obligations of the City, the 1993 Purchase Payments will rank on a parity with all other QualifiedObligations of the City, including the purchase payments with respect to the outstanding Electric System Certificates of Participation (Public Utilities Building) and Electric System Certificatesof Participation (Combustion Turbine Peaking Plant) (the "Prior Certificates"). See "SECURITY AND SOURCES OF PAYMENT FOR THE 1993 BONDS." THE OBLIGATIONS OF THE CITY TO MAKE 1993 PURCHASE PAYMENTS UNDER THE INSTALLMENT PURCHASE AGREEMENTS ARE PAYABLE SOLELY FROM SURPLUS REVENUES IN THE QUALIFIED OBLIGATIONS ACCOUNT UNLESS OTHERWISE PAID FROM OTHER SOURCES OF LEGALLY AVAILABLE FUNDS. THE 1993 BONDS SHALL NOT IN ANY WAY BE CONSTRUED TO BE A DEBT OF THE CITY, THE FINANCING AUTHORITY OR THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF, IN CONTRAVENTION OF ANY APPLICABLE CONSTITUTIONAL OR STATUTORY LIMI­ TATION OR REQUIREMENT CONCERNING THE CREATION OF INDEBTEDNESS BY THE CITY, THE FINANCING AUTHORITY, THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF, NOR WILL ANYTHING CONTAINED IN THE INSTALLMENT PURCHASE AGREEMENTS OR INDENTURE CONSTITUTE A PLEDGE OF GENERAL REVENUES, FUNDS OR MONEYS OF THE CITY OR THE FINANCING AUTHORITY OR AN OBLIGATION OF THE CITY OR THE FINANCING AUTHORITY FOR WHICH THE CITY OR THE FINANCING AUTHORITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY OR THE FINANCING AUTHORITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. Payment of the principal of and interest on the 1993 Bonds when due will be insured by an irrevocable municipal bond insurance policy more fully described herein to be issued simultaneously with the delivery of the 1993 Bonds by MBIA

Maturity Schedule $44, 760,000 Electric System Refenue Bonds Due Principal Interest Due Principal Interest October I Amount Rate Yield October I Amount Rate Yield 1994 $ 285,000 5.000% 2.75% 2004 $1,045,000 5.100% 5.15% 1995 300,000 5.000 3.50 2005 1,145,000 5.200 5.25 1996 315,000 5.000 3.80 2006 4,075,000 5.300 5.35 1997 335,000 5.000 4.10 2007 4,340,000 5.375 5.40 1998 345,000 5.000 4.30 2008 4,610,000 5.400 5.45 1999 2,825,000 5.000 4.50 2009 4,900,000 5.400 4.50 2000 2,965,000 5.000 4.70 2010 5,215,000 5.500 5.55 2001 760,000 5.000 4. 85 2011 5,555,000 5.500 5.55 2002 850,000 5.0 00 4.95 2012 1,900,000 5.550 5.60 2003 945,000 5.000 5.05 2013 2,050,000 5.550 5.60 $7,115,000 5.60% Term Bonds due October I, 2016 @ 99.25% $19,425,000 5.625% Term Bonds due October I, 2022 @ 98.928% (Accrued interest from June I, 1993 to be added)

The 1993 Bonds are offered when, as and if delivered to and received by the Underwriters, subject to approval of legality by Mudge Rose Guthrie Alexander & Ferdon, Los Angeles, California, and Rourke, Woodruff & Spradlin, a Professional Corporation, Orange, California, Co-Bond Counsel. Certain legal matters will be passed upon for the City and the Financing Authority by the City Attorney and Financing Authority Counsel. O'Brien Partners Inc. is serving as financial advisor to the City in connection with the issuance of the 1993 Bonds. It is expected that the 1993 Bonds will be available for delivery through the facilities of the DTC book-entry system on or about June 23, 1993. Merrill Lynch & Co. June 2, 1993 ANAHEIM PUBLIC FINANCING AUTHORITY MEMBERS ib.F 'i.1IE FINANCING AUTHORITY - CITY COUNCIL Tom Daly, Chairman of the Financing Authority - Mayor Bob D. Simpson, Vice-Chairman of the Financing Authority - Mayor Pro Tempore Frank Feldhaus, Director of the Financing Authority - Councilman Irv Pickler, Director of the Financing Authority - Councilman Fred Hunter, Director of the Financing Authority - Councilman

CITY PUBLIC UTILITIES BOARD Bob Kazarian, Chairman Richard J. McMillan, Member Joseph R. White, Member Maggie Carillo Mejia, Member S. Dale Stanton, Member Robert 0. Schmahl, Member Ward Wiseman, Member

FINANCING AUTHORITY OFFICIALS AND CITY OFFICIALS James D. Ruth, City Manager David Morgan, Assistant City Manager Tom Wood, Deputy City Manager George P. Ferrone, City Finance Director and Financing Authority Financial Advisor Jack L. White, City Attorney and Financing Authority Counsel Leonora N. Sohl, City Clerk Charlene Jung, City Treasurer and Financing Authority Treasurer

CITY PUBLIC UTILITIES DEPARTMENT 201 South Anaheim Boulevard Anaheim, California 92805 Edward K. Aghjayan, General Manager Edward G. Alario, Assistant General Manager - Water Services Brian J. Brady, Assistant General Manager - Electric Services and Operations Michael A. Bell, Financial Services Manager Darrell L. Ament, Consumer Services Manager Stephen E. Albright, Electric Field and Systems Operations Manager Antoinette D. Christovale, Financial Planning Manager John J. Hills, Environmental Services Manager Renee H. Hoffman, Financial Requirements Manager David X. Kolk, Integrated Resource Planning Manager Mariann S. Long, Efficiency Programs Manager Steven F. McKinney, Operations Analysis Manager Robert M. Mullen, Financial Accounting Manager Jafar T. Taghavi, Electrical Engineering Manager Steven H. Takahashi, Water Field and Operations Manager Felipe Tobilla, Information Services Manager Diem X. Vuong, Water Engineering Manager Bonnie A. Woodson, Customer Services Manager

CO-BOND COUNSEL Mudge Rose Guthrie Alexander & Ferdon Los Angeles, California Rourke, Woodruff & Spradlin, a Professional Corporation Orange, California FINANCIAL ADVISOR O'Brien Partners Inc. Los Angeles, California and New York, New York TRUSTEE The Bank of New York Trust Company of California Los Angeles, California No dealer, broker, salesman or other person has been authorized by the Anaheim Public Financing Authority, the City of Anaheim or the Public Utilities Department to give any information or to make any representations other than as contained in this Official Statement, and if given or made such other information or representations must not be relied upon as having been authorized by the Anaheim Public Financing Authority, the City of Anaheim or the Public Utilities Department. 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 1993 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been furnished by the Anaheim Public Financing Authority, the City of Anaheim and the Public Utilities Department and includes information obtained from sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness. The information and expressions of opinion contained herein are subject to change without notice and neither the 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 Anaheim Public Financing Authority, the City of Anaheim or the Public Utilities Department since the date hereof. IN CONNECTION WITH THE OFFERING OF THE 1993 BONDS, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH 1993 BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHER­ WISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. TABLE OF CONTENTS

Page INTRODUCTION ...... THE COMBUSTION TURBINE PROJECT...... 34 Purpose of the 1993 Bonds...... I Description ...... 34 Security for the I 993 Bonds...... 2 UTILITIES BUILDING FACILITIES ...... 35 Power Supply ...... 3 OTHER ELECTRIC RESOURCES ...... 35 THE CITY'S PUBLIC UTILITIES DEPARTMENT 4 Intermountain Power Project ...... 35 General Description ...... 4 Hoover Uprating Project...... 36 Management of the Public Utilities Department .. . . . 4 Deseret Power Purchase ...... 36 Public Utilities Board ...... 5 Bonneville Power Administration Agreement...... 36 THE FINANCING AUTHORITY...... 6 Power Sale Agreement with Edison ...... 36 DESCRIPTION OF THE 1993 BONDS...... 7 Other...... 36 General...... 7 Future Power Supply Resources ...... 37 Book-Entry System ...... 7 CERTAIN FACTORS AFFECTING THE UTILITY Optional Redemption ...... 9 INDUSTRY ...... 39 Mandatory Redemption ...... 9 SUMMARY OF THE INSTALLMENT PURCHASE AGREEMENTS ...... 40 Credits for Retired 1993 Bonds ...... IO Purchase of the Project...... 40 Selection of 1993 Bonds for Redemption ...... 10 Acquisition ...... 40 Notice...... 10 1993 Purchase Payments; Additional Purchase SECURITY AND SOURCES OF PAYMENT FOR Payments ...... 40 THE 1993 BONDS ...... II Covenants of the City and the Financing Authority . . 40 1993 Purchase Payments ...... 11 Events of Default; Remedies ...... 41 Electric System Flow of Funds ...... 12 Amendment ...... 41 Rate Covenant...... 14 SUMMARY OF THE INDENTURE ...... 42 Reserve Account...... 14 Funds and Accounts ...... 42 Electric Revenue Anticipation Notes ...... 15 Investment of Accounts ...... 43 Insurance ...... 15 The Trustee ...... 45 Additional Qualified Obligations ...... 16 Events of Default; Remedies ...... 45 Constitutional Limitation on GovernmentalSpending 16 Defeasance...... 46 Limited Recourse on Default...... 17 Unclaimed Moneys ...... 47 BOND INSURANCE ...... 17 Amendment ...... 47 ESTIMATED SOURCES AND USES OF FUNDS.. 19 LITIGATION...... 47 THE PLAN OF REFUNDING...... 19 VERIFICATION OF MATHEMATICAL Combustion Turbine Refunded Certificates...... 19 COMPUTATIONS ...... 47 Utilities Building Refunded Certificates...... 20 CREDIT RATINGS ...... 48 THE ELECTRIC SYSTEM...... 21 TAX EXEMPTION...... 48 History of the Electric System...... 21 UNDERWRITING ...... 49 Principal Existing Facilities ...... 21 CERTAIN LEGAL MATTERS ...... 50 Power Supply and Demand ...... 22 Appendix A - Electric Utility Fund Audited Financial Customers and Energy Sales ...... 24 Statements Years Ended June 30, 1992 and 1991 . . . A-1 Electric Rates and Charges ...... 25 Appendix B - City of Anaheim Electric Utility Fund Historical Financial Results ...... 28 Unaudited Financial Statements Six Months Ended December 31, 1992 and December 31, 1991 ...... B-1 Accounting Policies ...... 29 Appendix C - The City of Anaheim ...... C-1 Qualified Obligations Purchase Payments ...... 30 AppendixD - Form of Proposed Opinion of Co-Bond Senior Bond Debt Service Requirements ...... 31 Counsel ...... D-1 SummaryProjection of Operating Results of the Appendix E- Form of Municipal Bond Insurance Electric System ...... 32 Policy ...... E-1 Loads and Resources ...... 34 Labor Relations ...... 34 OFFICIAL STATEMENT relating to $71,300,000 Anaheim Public Financing Authority Revenue Bonds, Series 1993 (City of Anaheim Electric Utility Projects) INTRODUCTION This Official Statement, which includes the cover page and attached appendices, provides certain information in connection with the sale and delivery of the $71,300,000 aggregate principal amount of the Anaheim Public Financing Authority Revenue Bonds, Series 1993 (City of Anaheim Electric Utility Projects) (the "1993 Bonds"). The 1993 Bonds will be secured by, among other things, Project Revenues, which consist of purchase payments (the "1993 Purchase Payments") to be made by the City of Anaheim, California (the "City") pursuant to two separate Installment Purchase Agreements, each dated as of May 1, 1993 (together, the "Installment Purchase Agreements"), between the Anaheim Public Financing Authority (the "Financing Authority"), a joint powers authority organized and existing under the laws of the State of California,and the City relating to the acquisition of each of the Combustion Turbine Project and the Utilities Building Facilities ( each as definedherein). Pursuant to the Installment Purchase Agreements, the Financing Authority will appoint the City as its agent in connection with the acquisition of each of the Combustion Turbine Project and the Utilities Building Facilities.

Purpose of the 1993 Bonds The 1993 Bonds are being issued to provide moneys to refund certain of the City's outstanding Electric System Certificates of Participation (Combustion Turbine Peaking Plant) (the "Combustion Turbine Refunded Certificates"), to refund certain of the City's outstanding Electric System Certificates of Participa­ tion (Public Utilities Building) (the "Utilities Building Refunded Certificates"), to provide funds for the Reserve Account and to pay costs of issuance related thereto. See "ESTIMATED SOURCES AND USES OF FUNDS." The 1993 Bonds are to be executed and delivered pursuant to an Indenture of Trust, dated as of May 1, 1993 (the "Indenture"), by and between the Financing Authority and The Bank of New York Trust Company of California, as trustee ( the "Trustee"). Pursuant to the Indenture, the Financing Authority will assign and transfer in trust to the Trustee substantially all of its rights under the Installment Purchase Agreements, including the right to receive 1993 Purchase Payments and any and all other rights of the Financing Authority under the Installment Purchase Agreements as may be necessary to enforce the payment of 1993 Purchase Payments under the Installment Purchase Agreements. Under the Installment Purchase Agreements, the City is required to make 1993 Purchase Payments from Surplus Revenues in the Qualified Obligations Account ( as such terms are hereinafter defined). The 1993 Purchase Payments consist of the purchase payments paid in connection with the Combustion Turbine Project and the Utilities Building Facilities (respectively, the "Combustion Turbine Purchase Payments" and the "Utilities Building Purchase Payments"). The City is also required to pay, as additional purchase payments ("Additional Purchase Payments"), any taxes or assessments charged to the Financing Authority or to the Trustee affecting the amount available to the Financing Authority or the Trustee from payments to be received under the respective Installment Purchase Agreements or arising due to the transactions contem­ plated thereby, any taxes which may be imposed on the sale, resale, use, possession or ownership of the Combustion Turbine Project or the Utilities Building Facilities (collectively, the "Project") pursuant to the respective Installment Purchase Agreements, the reasonable fees, charges and expenses of the Trustee, the reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the Financing Authority or the Trustee to provide services required under the Installment Purchase Agreements or the Indenture, the reasonable costs and expenses of the Financing Authority incurred in connection with the Installment Purchase Agreements, the 1993 Bonds and the Indenture or any other documents contemplated thereby and amounts required to be rebated to the United States Treasury Department pursuant to the Installment Purchase Agreements. The City is obligated to make Additional Purchase Payments solely from Surplus Revenues in the Remaining Surplus Account (the "Remaining Surplus Account") of the Surplus Revenue Fund (the "Surplus Revenue Fund"). Brief descriptions of the 1993 Bonds and the City's Electric System ( the "Electric System") and summaries of the Installment Purchase Agreements, the Indenture and certain other documents are included in this Official Statement. Such descriptionsand summaries do not purport to be comprehensive or definitive. All references herein to the 1993 Bonds, the Installment Purchase Agreements, the Indenture and any other documents are qualified in their entirety by reference to such documents, copies of which are available for inspection at the principal corporate trust office of the Trustee. Terms capitalized but not definedherein have the meanings set forth in the respective documents.

Security for the 1993 Bonds The 1993 Bonds are secured by a pledge, charge and lien upon Project Revenues which consist of 1993 Purchase Payments to be made by the City under the Installment Purchase Agreements. The 1993 Bonds are also secured by (i) all moneys deposited and held from time to time by the Trustee in the fundsand accounts established under the Indenture, other than the Acquisition Account, and (ii) income and gains with respect to the investment of amounts on deposit in the funds and accounts established under the Indenture, other than the Acquisition Account. Pursuant to the Installment Purchase Agreements, the City is obligated to make 1993 Purchase Payments solely from Surplus Revenues in the Qualified Obligations Account ( the "Qualified Obligations Account") of the Surplus Revenue Fund. Notwithstanding the foregoing, the 1993 Purchase Payments shall be made fromthe proceeds of the sale of the 1993 Bonds deposited in the Purchase Payment Account, in the amount and at the times set forth in the Indenture, and other moneys transferred to or deposited in the Purchase Payment Account pursuant to the Indenture. The 1993 Purchase Payments are payable on a parity with the purchase payments with respect to the outstanding Electric System Certificates of Participation (Public Utilities Building) (the "1990 Certificates") executed and delivered in the aggregate principal amount of $41,605,000, and the outstanding Electric System Certificates of Participation (Combustion Turbine Peaking Plant) (the "1989 Certificates") executed and delivered in the aggregate initial amount of $44,336,145.10 (collectively, the "Prior Certificates"). 1993 Purchase Payments and Additional Purchase Payments and the purchase payments and additional purchase payments with respect to the Prior Certificates rank junior to the City's outstanding electric revenue bonds and any additional electric revenue bonds, notes or other evidences of indebtedness which may be issued in the future on a parity with such bonds. Additional Purchase Payments rank junior to the City's outstanding Electric Revenue Anticipation Notes ("ERANs") and any ERANs that may be issued in the future. See "SECURITY AND SOURCES OF PAYMENT FOR THE 1993 BONDS - Electric System Flow of Funds." The City has covenanted in the Installment Purchase Agreements to collect charges forthe services and facilities ofthe Electric System so that in each Fiscal Year moneys deposited in the Surplus Revenue Fund ("Surplus Revenues") shall equal at least the sum of (a) 1.25 times the amount of Qualified Obligation Service (as defined in "SECURITY AND SOURCES OF PAYMENT FOR THE 1993 BONDS­ Electric System Flow of Funds") with respect to such Fiscal Year, (b) 1.00 times the principal of and interest on the ERANs due and payable and to be paid fromSurplus Revenues in such Fiscal Year, and ( c) 1.00 times all other payments required to be made fromSurplus Revenues in such Fiscal Year. See "SECURITY AND SOURCES OF PAYMENT FOR THE 1993 BONDS - Rate Covenant." Under the Installment Purchase Agreements, the obligation of the City to make 1993 Purchase Payments from Surplus Revenues in the Qualified Obligations Account is absolute and unconditional, and is not to be abated, rebated, set-off, reduced, abrogated, terminated, waived, diminished, postponed or otherwise modified in any manner while any 1993 Purchase Payments remain unpaid, regardless of any contingency, act of God, event or cause whatsoever, including failure of consideration, eviction or constructive eviction, the taking by eminent domain, or destruction of or damage to the Project.

2 The 1993 Bonds are additionally secured by amounts on deposit in the Reserve Account established under the Indenture. The Reserve Account is to be funded out of the proceeds of the sale of the 1993 Bonds in an amount equal to the Reserve Requirement (as such term is hereinafter defined). If on any date on which 1993 Purchase Payments are required to be made as provided in the Installment Purchase Agreements, the amount available in the Purchase Payment Account established under the Indenture is less than the amount necessary to pay the principal or the interest to be paid on such date with respect to any 1993 Bond, the Trustee will transfermoneys from the Reserve Account to the Purchase Payment Account in an amount equal to the lesser of (i) an amount sufficient to enable the Trustee to pay such amounts, or (ii) all amounts on deposit in the Reserve Account. Any 1993 Purchase Payment or portion thereof made after the date on which it is due will be deposited in the Reserve Account in an amount equal to the amount transferred from the Reserve Account to the Purchase Payment Account on such date. See "SECURITY AND SOURCES OF PAYMENT FOR THE 1993 BONDS - Reserve Accounts." THE OBLIGATIONS OF THE CITY TO MAKE 1993 PURCHASE PAYMENTS UNDER THE INSTALLMENT PURCHASE AGREEMENTS ARE PAYABLE SOLELY FROM SURPLUS REVE­ NUES IN THE QUALIFIED OBLIGATIONS ACCOUNT UNLESS OTHERWISE PAID FROM OTHER SOURCES OF LEGALLY AVAILABLE FUNDS. THE 1993 BONDS ARE NOT A DEBT OF THE CITY, THE FINANCING AUTHORITY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF. NEITHER THE INSTALLMENT PURCHASE AGREEMENTS NOR THE INDENTURE CONSTITUTES A PLEDGE OF GENERAL REVENUES, FUNDS OR MONEYS OF THE CITY OR THE FINANCING AUTHORITY. SEE "SECURITY AND SOURCES OF PAY­ MENT FOR THE 1993 BONDS - 1993 PURCHASE PAYMENTS."

Power Supply The Electric System serves the entire area within the limits of the City ( an area of approximately 48.7 square miles). For the fiscal year ended June 30, 1992, the average number of customers of the Electric System was 102,762 and the total megawatt-hours sold was 2.6 million. The Electric System's peak load of 530 megawatts ("MW") occurred on August 17, 1992. The City has a 3.16% (67.9 MW) undivided ownership interest in Units 2 and 3 of the San Onofre Nuclear Generating Station ("SONGS") and owns 100% of a 48 MW natural gas fired combustion turbine peaking plant located in the northeast part of the City. In addition, the City purchases firm power from the Intermountain Power Agency ("IPA") under the City's 13.225% (211.6 MW) generation entitlement in IPA's Intermountain Power Project ("IPP") in Millard County in central Utah. The City also has an entitlement to purchase power (approximately 40 MW) from the Hoover Uprating Project, and contracts for firm system power purchases of 84 MW from Deseret Generation and Transmission Co-operative ("Deseret") and 24 MW from Bonneville Power Administration ("BPA") under a capacity/energy exchange agreement. In addition, the City purchases economy energy from various western utilities, and firm power fromSouthern California Edison Company ("Edison") under the terms of a Power Sale Agreement ("PSA") and at wholesale rates ("Partial Requirements Rate") filed with the Federal Energy Regulatory Commission ("FERC"). The City is a member of the Southern California Public Power Authority (the "Authority"), a joint powers agency created for planning, financing, developing, acquiring, constructing, operating and maintaining electric generating and transmission projects for participation by some or all of its members. The City is a participant in the Authority's financing of the IPP Southern Transmission System, a 490-mile transmission line from the IPP generating station to Adelanto, California, and the Hoover Uprating Project involving the 40 MW entitlement described in the preceding paragraph. The City, other members of the Authority and other western utilities have committed to undertake the construction of the Mead-Phoenix Transmission Project and the Mead-Adelanto Transmission Project. The Mead-Phoenix Transmission Project is a 256 mile, 500 kV AC transmission line to be constructed between a substation in the Boulder City, Nevada area and a substation in the Phoenix, Arizona area. The Mead-Adelanto Transmission Project is a 202 mile, 500 kV AC transmission line to be constructed from the same substation in the Boulder City, Nevada area to a substation near Adelanto, California.The estimated commercial operation date forthese projects is December 1995. The

3 City is not a participant in the Authority's purchase of a portion of the Palo Verde Nuclear Generating Station near Phoenix, Arizona. The City also is considering participation in certain other transmission and generation projects. Participation in such projects may be on a purchase or ownership basis, with the City's obligation for costs being payable, in certain instances, on a "take or pay" basis. For a discussion of SONGS, IPP and other transmission and generation projects, see "THE ELECTRIC SYSTEM" and "OTHER ELECTRIC RESOURCES."

THE CITY'S PUBLIC UTILITIES DEPARTMENT General Description Under the provisions of the California Constitution, the Charter and Title 10 of the Municipal Code of the City, the City owns and operates both the Electric System and the City's water system (the "Water System") for the citizens of the City. The Public Utilities Department ( the "Department") exercises jurisdiction over both the Electric System and the Water System and is under the supervision of the Public Utilities General Manager ( the "General Manager"). The General Manager is responsible for the supervision of the design, construction, maintenance and operation of both the Electric System and the Water System. The Finance Director of the City is charged with the accounting and the administration of the financialaffairs of the City. The General Manager and Finance Director are under the direction of the City Manager who is appointed by the City Council. The Department provides electricity as well as water to virtually all the residential, commercial and industrial customers within the City limits. During fiscal year 1992 the Water System distributed 19.2 billion gallons of water to approximately 56,275 customers. The City had $26,160,000 of water revenue bonds outstanding as of May 1, 1993. The funds and accounts of the Electric System and the Water System are held separately, and the funds and accounts of one System are not pledged to the other System's obligations.

Management of the Public Utilities Department EDWARD K. AGHJAYAN, Public Utilities General Manager, has been with the Department since July 1990. Mr. Aghjayan has 29 years of utility industry experience. He has full management responsibility to plan, direct and manage the day-to-day activities and operations of the Department. As Deputy City Manager in Pasadena from September of 1985 to July of 1990, Mr. Aghjayan was responsible for overseeing the major public enterprise activities of Pasadena, including the electric, water, and public works departments, the library system, the recreation department and the Rose Bowl. While in Pasadena, he developed an award­ winning water and electric conservation program. He was employed with the City of Austin, Texas, from 1982 to 1984, first as Director of the Electric Utility, and later as Director of Public Utilities. He was Director of Municipal Utilities for the City of Palo Alto from 1974 to 1982. Mr. Aghjayan began his career as an engineer with the New England Gas and Electric Association in 1964 and later worked for the Middleborough Gas and Electric Department in Massachusetts. He earned an M.B.A. from Boston University in 1974, graduating with honors. He also attended Harvard University's "Senior Executives in State and Local Government" program and the Massachusetts Institute for Technol­ ogy's "Energy for Energy Decision Makers" program. He holds a bachelor's degree in mechanical engineering from Tufts University. EDWARD G. ALARIO, Assistant General Manager - Water Services, has been employed with the Department since 1977. In the 15 years prior to his employment with the City, Mr. Alario served as the City Administrator of the City of Bellflower,and as City Manager, Assistant City Manager and Director of Finance for the City of South San Francisco. He also served as a Revenue Officer for the City of Sunnyvale. Mr. Alario is responsible for Water Services, which encompasses engineering, system operations, maintenance, construction of the water transmission and distribution systems, the production system and the water quality laboratory. He is a former member of the Board of Directors of the California Municipal

4 Utilities Association. Mr. Alario holds a bachelor's degree in business administration from California State University, San Jose. DARRELL L. AMENT, Consumer Services Manager, has been with the Department since 1967. He has held various positions within the Department, including Assistant General Manager, Finance and Administra­ tion. In his current position, Mr. Ament is responsible for the Department's electric and water conservation and demand management programs, customer services, environmental, safety, and training services. He is a former member of the Board of Directors of the California Municipal Utilities Association. Mr. Ament has a B.A. (1961) and an M.A. (1963) in government from Kent State University and has completed additional graduate work in government and public administration at UCLA. BRIAN J. BRADY, Assistant General Manager - Electric Services and Operations, joined the Depart­ ment in March 1992 after being chosen in a nationwide recruitment to fill the position of Assistant General Manager - Electric Services and Operations. Mr. Brady joined Edison in 1971, and most recently held the position of Vice President and General Manager of Energy Services, Inc., a wholly-owned subsidiary of Edison. During his career, he has had responsibility for the construction of wastewater treatment facilities, power station licensing, program and contract negotiations, EPA liaison at the Federal level, property accounting management, investor relations management, valuation management, energy demand side man­ agement and international sales of utilities related services. Mr. Brady is responsible for the Department's long-range electric system demand and energy forecast, and the planning, procurement and operation of the Department's power generation and transmission resources. His responsibilities also include electric system operations, and bulk power purchases and sales. Mr. Brady has a B.A. ( 1971) in engineering from Loyola Marymount University and an M.B.A. (1976) from the University of Southern California. He is a registered professional engineer. MICHAEL A. BELL, Financial Services Manager, has been with the Department since 1984. He is responsible for managing the financial affairs of the Electric and Water Systems, including formation of overall financialpolicies and long-range financial plans, long-term and short-term financing, budget coordina­ tion, electric and water cost of service studies and rate design, utility accounting, operations analysis, information services and administrative services. Mr. Bell has a B.A. (1979) in economics from St. Louis University and an M.B.A. ( 1988) from Pepperdine University. He also attended Harvard University's "Senior Executives in State and Local Government" program. Prior to his employment with the City, he spent five years with the City of Springfield, Illinois Utilities Department, first as a Financial Analyst and Economic Planner, then as the Manager of Finance.

Public Utilities Board The City Council, by Ordinance No. 3557 approved July 6, 1976, established a Public Utilities Board (the "Board") with the power and duty to make recommendations to the City Council concerning (i) the operation and conduct of the Electric System and the Water System, (ii) the establishment of rules and regulations and rates for the operation of the Electric System and the Water System, (iii) the duties and qualifications of the General Manager and other employees of the Department, (iv) the acquisition, construction, improvement, extension, enlargement, diminution or curtailment of all or any part of the Electric System and the Water System, (v) the annual budget of the Department, and (vi) financing, including the issuance of bonds for the Electric System and the Water System. The Board may also exercise such other powers and duties as may be prescribed by ordinance not inconsistent with the Charter. The Board consists of seven members, none of whom may hold any paid office or employment in the City government.The members of the Board are appointed by the City Council and may be removed by a majority vote of the City Council. Board members serve four-year overlapping terms. The present members of the Board and their terms of appointment are: Bos KAZARIAN, Chairman, term expires June 30, 1993. Mr. Kazarian is a registered petroleum engineer, consultant and businessman. He is active in community affairs and is past chairman and director of the

5 Anaheim Memorial Hospital Foundation. Mr. Kazarian is a member of the Anaheim Memorial Hospital Board and a member and past Chairman of the Board of Directors of the Anaheim YMCA. S. DALE STANTON, Vice Chairman, term expires June 30, 1993. Mr. Stanton is a registered professional electrical engineer and is currently Vice President and General Manager of a localengineer ing consulting firm. RICHARD J. McMILLAN, term expires June 30, 1994. Mr. McMillan is recently retired from the Electronic Systems Division of Northrop Corporation. He was responsible for the development and implementation of productivity improvement programs. MAGGIE CARILLO MEJIA, term expires June 30, 1995. Ms. Mejia is the principal at Savanna High School in the Anaheim Union High School District. She is also a doctoral student in Education at the University of Southern California. ROBERT 0. SCHMAHL, term expires June 30, 1994. Mr. Schmahl is the retired Deputy Director of Fire Services for the County of Orange where he was responsible for the County's Fire Protection Services, Emergency Management Division and Hazardous Materials Program. He also represents Orange County as a member of the Watershed Fire Council of Southern California. JOSEPH R. WHITE, term expires June 30, 1995. Mr. White is a realtor in the City and has been active in civic and community affairs, including 25 years as an active member of the Anaheim Chamber of Commerce. L. WARD WISEMAN, M.D., term expires June 30, 1993. Dr. Wiseman is an orthopedic surgeon and consultant. He is also chairman of R.A.P (Residents for Anaheim Plaza) and a longtime Anaheim resident.

THE FINANCING AUTHORITY The Anaheim Public Financing Authority is a joint powers authority, organized purusant to a Joint Exercise of Powers Agreement, dated January 28, 1992 (the "Joint Powers Agreement") by and between the Anaheim Redevelopment Agency (the "Agency") and the City. The Joint Powers Agreement was entered into pursuant to the provisions of Article 1 through 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code (the "Act"). The governing body of the Financing Authority consists of the same individuals who comprise the City Council of the City and the governing body of the Agency. The Financing Authority was created for the purpose of providing financingfor public capital improvements for the City, the Agency and other public agencies through the acquisition by the Financing Authority of such public capital improvements and/ or the purchase by the Financing Authority of local obligations within the meaning of the Act. Under the Act, the Financing Authority has the power to issue bonds to pay the cost of any public capital improvement.

6 DESCRIPTION OF THE 1993 BONDS General The 1993 Bonds are secured by, among other things, Project Revenues consisting of the 1993 Purchase Payments to be paid by the City pursuant to the respective Installment Purchase Agreements. The 1993 Bonds will be issued in the aggregate principal amount of $71,300,000. Interest on the 1993 Bonds will accrue at the respective rates per annum set forth on the cover page hereof, payable semiannually on October 1 and April 1 (each, an "Interest Payment Date") of each year, commencing October l, 1993. The 1993 Bonds will mature on October 1 in the respective years and in the respective principal amounts set forth on the cover page hereof. Interest on each 1993 Bond accrues from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is executed on an Interest Payment Date, in which event interest accrues from the date of execution thereof, (ii) it is authenticated on or before September 15, 1993, in which event interest accrues from June l, 1993, or (iii) it is authenticated after the fifteenth calendar day of the month immediately preceding an Interest Payment Date, in which case interest accrues from such Interest Payment Date. If, at the time of authentication of any 1993 Bond, interest thereon is in default, such 1993 Bond will bear interest from the Interest Payment Date to which such interest has previously been paid in full or made available for payment on such outstanding 1993 Bond. Interest on the 1993 Bonds will be computed on the basis of a 360-day year of twelve 30-day months.

Book-Entry System The 1993 Bonds will be available in book-entry form only in denominations of $5,000 or any integral multiple thereof and, when delivered, will initially be evidenced by one fully registered 1993 Bond for each maturity in the name of Cede & Co. ("Cede"), as nominee for The Depository Trust Company, New York, New York ("OTC"). As long as OTC, or its nominee, Cede is the registered owner of all 1993 Bonds, the principal of, premium, if any, and interest on the 1993 Bonds will be paid directly to OTC. Disbursement of such payments to the OTC Participants (as defined below) will be the responsibility of OTC, and disbursement of such payments to the actual purchasers of the 1993 Bonds (the "Beneficial Owners") will be the responsibility of the OTC Participants. OTC is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. OTC was created to hold securities on behalf of its participants ("OTC Participants") and to facilitate the clearance and settlement of securities transactions among OTC Participants through electronic book-entry changes in accounts of OTC Participants, thereby eliminating the need for physical movement of securities certificates. OTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of which (and/or their representatives) own OTC. Access to the OTC system is also available to others such as bankers, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a OTC Participant, either directly or indirectly ( the "Indirect Participants"). Purchases of 1993 Bonds under the book-entry system may be made only through brokers and dealers who are, or act through, OTC Participants. Each OTC Participant will receive a credit balance in the records of OTC in the amount of such OTC Participant's 1993 Bonds. The ownership interest of each Beneficial Owner is to be recorded through the records of a OTC Participant or Indirect Participant. Beneficial Owners will not receive written confirmation from OTC of their purchases, but each Beneficial Owner is expected to receive a written confirmationof their purchase providing certain details of the 1993 Bonds acquired. Transfers of ownership interests in the 1993 Bonds will be accomplished only by book entries made by OTC and, in tum, by OTC Participants who act on behalf of the Beneficial Owners and Indirect Participants. Beneficial Owners of the 1993 Bonds or interests therein will not receive or have the right to receive physical delivery of 1993 Bonds, and will not be or be considered to be owners thereof under the Indenture, except as specifically provided in the Indenture, in the event participation in the book-entry system is discontinued.

7 The Trustee may treat OTC ( or its nominee) as the sole and exclusive owner of the 1993 Bonds registered in its name for the purposes of payments of the principal of and interest on the 1993 Bonds, giving any notice permitted or required to be given to the owners of 1993 Bonds under the Indenture, registering the transferof 1993 Bonds, obtaining any consent or other action to be taken by owners of 1993 Bonds and for any other purpose; the Trustee will not be affected by any notice to the contrary. The Trustee shall not have any responsibility or obligation to any OTC Participant, any person claiming a beneficial ownership interest in the 1993 Bonds under or through OTC or any OTC Participant or any other person not shown on the registration books kept by the Trustee as being a registered owner of 1993 Bonds. Neither the Financing Authority, the City nor the Trustee shall have any responsibility with respect to the accuracy of any records maintained by OTC, Cede or any OTC Participant with respect to any ownership interest in the 1993 Bonds; the payment by OTC to any OTC Participant or the payment by any OTC Participant to any Beneficial Owner of any principal amount of or interest or redemption premiums payable with respect to the 1993 Bonds; the delivery to any OTC Participant or any Beneficial Owner of any notice which is permitted or required to be given to owners of 1993 Bonds under the Indenture; the selection by OTC or any OTC Participant of any person to receive payment in the event of a partial redemption of 1993 Bonds; or any consent given or other action taken by OTC as owner of 1993 Bonds. The Financing Authority, the City and the Trustee cannot give any assurances that OTC, OTC Participants, Indirect Participants or others will distribute payments of principal of, redemption premium, if any, and interest on 1993 Bonds paid to OTC or its nominee, as the registered owner, or any redemption or other notice, to the Beneficial Owners or that they will do so on a timely basis or that OTC will serve and act in a manner described in this OfficialStatement. As long as the book-entry system is used for the 1993 Bonds, the Trustee will give any notice of redemption or any other notices required to be given to owners of 1993 Bonds only to OTC or its nominee. Any failureof OTC to advise any OTC Participant, or of any OTC Participant or Indirect Participant to notify the BeneficialOwners, of any such notice and its content or effectwill not affect the validity of the redemption of the 1993 Bonds called for redemption or of any other action premised on such notice. Beneficial Owners may desire to make arrangements with a OTC Participant so that all communications to OTC which affect such Beneficial Owner will be forwarded in writing by such OTC Participant. The Trustee will pay the principal, interest and redemption premiums, if any, with respect to the 1993 Bonds to OTC or Cede, as nominee of OTC, and all such payments shall be valid and effective to fully satisfy and discharge the Financing Authority's obligations with respect to the 1993 Bonds to the extent of the sum or sums so paid. Disbursement of such payments to the OTC Participants is the responsibility of OTC and disbursements of such payments to the Beneficial Owners is the responsibility of the OTC Participants. Upon receipt of moneys, DTC's current practice is to credit immediately the accounts of OTC Participants in accordance with their respective holdings shown on the records of OTC forsubsequent disbursements to the Beneficial Owners. If appropriate, OTC Participants will forward such payments to Indirect Participants. Payments by OTC Participants or Indirect Participants to Beneficial Owners will be governed by standing instructions and customary practices, such as those which are now the case with municipal securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of OTC Participants and Indirect Participants and not of OTC, the Trustee, the City or the Financing Authority, subject to any statutory and regulatory requirements as may be in effect from time to time. Discontinuation of the Book-Entry System. In the event that OTC determines not to continue to act as securities depository by giving notice to the Financing Authority and the Trustee, and discharging its responsibilities with respect thereto under applicable law and there is no successor securities depository, or the Financing Authority determines that it is in the best interest of the BeneficialOwners of the 1993 Bonds that they be able to obtain certificates, the Trustee will execute, transferand exchange 1993 Bonds as requested by OTC and will deliver new 1993 Bonds in fully registered form in denominations of $5,000 principal amount or any integral multiple thereof in the names of Beneficial Owners or OTC Participants. In the event the book-entry system is discontinued, the principal amount of and redemption premiums, if any, payable with respect to the 1993 Bonds will be payable by check or draft upon surrender thereof at the

8 Corporate Trust Officeof the Trustee. The interest with respect to 1993 Bonds will be payable by check or draft mailed to the respective owners thereof at their addresses as they appear on the books maintained by the Trustee on the fifteenth day of the month immediately preceding the applicable Interest Payment Date. The registration of any 1993 Bond may be transferred upon the surrender of such 1993 Bond at the Corporate Trust Officeof the Trustee by the owner thereof or by such owner's duly authorized attorneywith a duly executed written instrument of transfer in a form satisfactory to such Trustee. The 1993 Bonds may be exchanged upon their surrender at the Corporate Trust Office of the Trustee for an equal aggregate principal amount of such 1993 Bonds of the same maturity of any other authorized denominations. The Trustee may charge the owner of a 1993 Bond surrendered for transfer or exchange a sum sufficient to cover any tax, feeor other governmental charge required to be paid with respect to such transfer or exchange. The Trustee is not required to transfer or exchange any 1993 Bond in the fifteen days prior to selection of 1993 Bonds for redemption (whether or not such 1993 Bond is thereafter selected forredemption) or any 1993 Bond selected for redemption in whole or in part. The foregoing description concerning DTC and DTC's book-entry system is based solely on information fu rnished by DTC. No representation is made herein by the City or the FinancingAuthority as to the accuracy or completeness of such information.

Optional Redemption The 1993 Bonds maturing on or after October 1, 2003 are subject to redemption at the option of the Financing Authority in whole at any time, or in part on any Interest Payment Date in integral multiples of $5,000 on or after April 1, 2003, at the redemption price ( expressed as a percentage of the total principal amount redeemed) and the related interest due with respect thereto on the date fixed for redemption, from any source of funds, upon notice as described below. The redemption price is set forth below: Period During Which Redeemed Redemption (both dates inclusive) Price April 1, 2003 through March 31, 2004 ...... 102% April 1, 2004 through March 31 , 2005 ...... 101 April 1, 2005 and thereafter ...... 100

Mandatory Redemption The 1993 Bonds maturing on October 1, 201 6 are subject to mandatory redemption at the principal amount thereof, without premium, from the principal components of the 1993 Purchase Payments to be made in the years and amounts as set forth below: Mandatory Redemption Date Principal October 1 Amount 2014 ...... $2,205,000 2015 ...... 2,370,000 2016 (final maturity) ...... 2,540,000 Giving effect to the mandatory redemption schedule set forth above, the average lives of the 1993 Bonds maturing on October 1, 201 6 would be approximately 23 years, 4 months as calculated from the deliverydate.

9 The 1993 Bonds maturing on October 1, 2022 are subject to mandatory redemption at the principal amount thereof, without premium, from the principal components of the 1993 Purchase Payments to be made in the years and amounts as set forth below: Mandatory Redemption Date Principal October 1 Amount 2017 ...... · .... · · · · · ·. · · · · $2,725,000 2018 ...... · · · · · · · · · · · · · · · · · · · 2,91 5,000 2019 ...... 3,115,000 2020 ...... · ..· ...· · ·.· · ..· · · · 3,325,000 2021 ...... 3,555,000 2022 (final maturity) ...... 3,790,000 Giving effectto the mandatory redemption schedule set forth above, the average lives of the 1993 Bonds maturing on October l, 2022 would be approximately 27 years as calculated from the delivery date.

Credits for Retired 1993 Bonds The Financing Authority shall have the right, at the direction of the City, to satisfy all or any part of any mandatory redemption obligation or 1993 Purchase Payment with respect to 1993 Bonds of any maturity, by crediting at their principal amount outstanding 1993 Bonds of such maturity purchased or optionally redeemed and delivered by the Financing Authority to the Trustee ( not less than 45 days in advance of the date on which such mandatory redemption obligation or 1993 Purchase Payment is due). The Trustee shall credit the Combustion Turbine Purchase Payments and the Utilities Building Purchase Payments, as directed by the Financing Authority, with an amount equal to the principal amount of the 1993 Bonds so delivered to the Trustee.

Selection of 1993 Bonds for Redemption In the case of redemption of less than all outstanding 1993 Bonds, the Trustee is required to select the 1993 Bonds to be redeemed to correspond to the principal components of the 1993 Purchase Payments prepaid by the City in accordance with the respective Installment Purchase Agreements; provided, however, that, in the case of any mandatory redemption of any 1993 Bond, or portion thereof, prior to its maturity, the Trustee shall first select those 1993 Bonds delivered to such Trustee by the Financing Authority previously redeemed or acquired by the Financing Authority in lieu of making such redemption and then shall select by lot within a maturity the other 1993 Bonds to be redeemed. Upon surrenderof a 1993 Bond to be redeemed in part only, the Financing Authority will execute and the Trustee will deliver to the owner thereof a new 1993 Bond or 1993 Bonds representing principal amounts equal to the unredeemed portion of the 1993 Bond to be redeemed.

Notice Notice of redemption is to be mailed by the Trustee by first-class mail not less than 30 days nor more than 60 days prior to the redemption date to the owners of the 1993 Bonds designated forredemption at their addresses appearing on the registration books of the Trustee and to each Securities Depository and Information Service ( each as defined in the Indenture). Each notice of redemption will state the date of the notice, the redemption date, the redemption price, the place or places of redemption, the CUSIP number, if any, of the maturity or maturities to be redeemed, and if less than all of the outstanding 1993 Bonds are to be redeemed, the distinctive numbers of the 1993 Bonds to be redeemed and the maturity or maturities in the event of redemption of all of the 1993 Bonds of such maturity or maturities in whole of the 1993 Bonds to be redeemed. Each notice shall also state that fromand after the redemption date interest will cease to accrue on such 1993 Bonds.

10 SECURITY AND SOURCES OF PAYMENT FOR THE 1993 BONDS 1993 Purchase Payments The 1993 Bonds are secured by, among other things, Project Revenues, which consist of 1993 Purchase Payments to be made by the City under the Installment Purchase Agreements. Pursuant to the Indenture, the Financing Authority assigns and transfers in trust to the Trustee substantially all of its rights in and to the respective Installment Purchase Agreements, including the right to receive the 1993 Purchase Payments and any and all of the other rights of the Financing Authority under the respective Installment Purchase Agreements as may be necessary to enforce the payment of 1993 Purchase Payments under such Installment Purchase Agreements. Pursuant to the Installment Purchase Agreements, the City is obligated to make 1993 Purchase Payments solely from Surplus Revenues in the QualifiedObligations Account. Notwithstanding the foregoing, the 1993 Purchase Payments shall be made from the proceeds of the sale of the 1993 Bonds deposited in the Purchase Payment Account, in the amounts and at the times set forth in the Indenture, and other moneys transferred to or deposited in the Purchase Payment Account pursuant to the Indenture. The City is obligated to make Additional Purchase Payments under the Installment Purchase Agreements solely from Surplus Revenues in the Remaining Surplus Account. Nothing in the Installment Purchase Agreements precludes the City from making 1993 Purchase Payments and Additional Purchase Payments from other lawfully available moneys of the City. Subject to the limitations set forth in the preceding paragraph, the obligation of the City to make the 1993 Purchase Payments and Additional Purchase Payments required by the Installment Purchase Agree­ ments is absolute and unconditional, and is not to be abated, rebated, set-off, reduced or otherwise modified in any manner or to any extent whatsoever while any 1993 Purchase Payments or Additional Purchase Payments remain unpaid, regardless of any contingency, act of God, event or cause whatsoever, including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, taking by eminent domain of or destruction of or damage to the Project, commercial frustration of purpose, any change in the laws of the United States or the State of California or any political subdivision of either or the rules or regulations of any governmentalauthority or any failureof the Financing Authority or the Trustee to perform and observe any agreement, duty, liability or obligation arising out of or connected with the Installment Purchase Agreements or the Indenture. The Installment Purchase Agreements are each deemed to constitute a "net contract" pursuant to which the City will pay absolutely net amounts of the 1993 Purchase Payments, Additional Purchase Payments and all other payments required thereunder, regardless of any rights of set-off, recoupment, abatement or counterclaim the City might otherwise have against the Financing Authority, the Trustee or any other party. The City has covenanted in the Installment Purchase Agreements to take such action as may be necessary to include and maintain the applicable 1993 Purchase Payments and Additional Purchase Payments due under the Installment Purchase Agreements in its budget for the appropriate fiscal year or pursuant to a separate resolution of the City Council and to make the appropriations necessary for the payment of all such 1993 Purchase Payments and Additional Purchase Payments required under the Installment Purchase Agreements. The performance of this covenant by the City is to be deemed and understood under the Installment Purchase Agreements to be a ministerial duty. THE OBLIGATIONS OF THE CITY TO MAKE 1993 PURCHASE PAYMENTS UNDER THE INSTALLMENT PURCHASE AGREEMENTS ARE PAYABLE SOLELY FROM SURPLUS REVE­ NUES IN THE QUALIFIED OBLIGATIONS ACCOUNT UNLESS OTHERWISE PAID FROM OTHER SOURCES OF LEGALLY AVAILABLE FUNDS. THE 1993 BONDS SHALL NOT IN ANY WAY BE CONSTRUED TO BE A DEBT OF THE CITY, THE FINANCING AUTHORITY OR THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF IN CONTRA VEN­ TION OF ANY APPLICABLE CONSTITUTIONAL OR STATUTORY LIMITATION OR RE­ QUIREMENT CONCERNING THE CREATION OF INDEBTEDNESS BY THE CITY, THE FINANCING AUTHORITY, THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION

11 THEREOF, NOR WILL ANYTHING CONTAINED IN THE INSTALLMENT PURCHASE AGREEMENTS OR THE INDENTURE CONSTITUTE A PLEDGE OF GENERAL REVENUES, FUNDS OR MONEYS OF THE CITY OR THE FINANCING AUTHORITY OR AN OBLIGATION OF THE CITY OR THE FINANCING AUTHORITY FOR WHICH THE CITY OR THE FINANC­ ING AUTHORITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY OR THE FINANCING AUTHORITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.

Electric System Flow of Funds 1993 Purchase Payments are to be made from theQualified Obligations Account of the Surplus Revenue Fund ( a special fund of the City held by the Treasurer of the City and created pursuant to Resolution No. 76R-276). The City is required by the Installment Purchase Agreements to pay, on or before each Purchase Payment Date (as hereinafter defined), from the Qualified Obligations Account to the Trustee for deposit in the Purchase Payment Account, the amount of the 1993 Purchase Payments due on the next succeeding April 1 and October 1. Additional Purchase Payments are to be made fromthe Remaining Surplus Account of the Surplus Revenue Fund. See "SUMMARY OF THE INSTALLMENT PURCHASE AGREEMENTS - 1993 Purchase Payments; Additional Purchase Payments." Electric System Funds and Accounts. Pursuant to the Installment Purchase Agreements, all rates, fees and charges forproviding electric service to persons and real property and all other fees,rents and charges and other income derived by the City from the ownership, operation, use or services of the Electric System ( the "Gross Revenues") are to be deposited as received by the City Treasurer to the Revenue Account in the Electric Revenue Fund held by the Treasurer. On or beforethe 20th day of each calendar month, the Finance Director of the City is required, so long as any 1993 Bonds are outstanding, to withdraw the entire amount on deposit in the Revenue Account and allocate and deposit such amount in the funds and accounts, in the order of priority listed below. Bond Service Account; Bond Sinking Account Maintenance and Operation Account Reserve Fund Renewal and Replacement Account Rebate Account Surplus Revenue Fund The amount to be deposited in each such account is set forth below. First, to the Bond Service Account, one-sixth of the interest which will become due and payable (less any interest which has already been provided for) on the outstanding Senior Bonds within the next six month period and one-twelfth of the principal amount which will mature and be payable on the outstanding Senior Bonds within the next twelve month period and, to the Bond Sinking Account, the amount required with respect to any term Senior Bonds to provide for mandatory sinking fund installments. "Senior Bonds " comprise the City's outstanding (i) Electric Revenue Bonds, Issue of 1976; (ii) Electric Revenue Bonds, Issues A, B and C of 1983; (iii) Electric Revenue Bonds, Issue of 1986; (iv) Electric Revenue Bonds, Second Issue of 1986; and (v) Electric Revenue Bonds, Issue of 1991 , together with any other revenue bonds, revenue notes or other similar evidences of indebtedness issued at any time in connection with the acquisition, construction or financing of extensions of, additions to, repairs and replacements to, renewals of, and improvements of, the Electric System, payable out of Gross Revenues. Simultaneously with the delivery of the 1993 Bonds, the City expects to issue Electric Revenue Bonds, Issue of 1993 (the "1993 Electric Revenue Bonds") to refund certain of the outstanding Senior Bonds. The 1993 Electric Revenue Bonds will be payable on a parity with the Senior Bonds. The aggregate principal amount of the Senior Bonds outstanding as of May 1, 1993 was $206,179,000.

12 Second, to the Maintenance and Operation Account, an amount sufficient for the payment of the Maintenance and Operation Expenses of the Electric System as said expenses become due and payable. "Maintenance and Operation Expenses " mean the reasonable and necessary current expenses of maintaining, repairing and operating the Electric System, including City administrative expenses directly attributable to Electric System functions, but excluding depreciation, interest and amortization, all computed in accordance with sound accounting principles and consistent with existing accounting practices of the City. Third, to the Reserve Fund, the amount required, if any, forsuch Fund to equal the Maximum Annual Debt Service as defined in the 1986 Bond Resolution. Fourth, to the Renewal and Replacement Account, an amount equal to one percent of the Gross Revenues received in the preceding calendar month until a balance is established or reestablished therein equal to two percent of the depreciated book value of the land, general plant and equipment which constitute the net utility plant of the Electric System. The moneys contained in the Renewal and Replacement Account may be used for extraordinary maintenance and repairs, renewals and replace­ ments to the Electric System, but not for additions to or extensions of the Electric System. Fifth, to the Rebate Account, the amount required with respect to Senior Bonds in accordance with the Internal Revenue Code of 1986, as amended. Sixth, to the Surplus Revenue Fund, all moneys in the Revenue Account remaining after the above transfers have been made and all covenants requiredby the resolutions relating to the Senior Bonds have been performed. The moneys in the Surplus Revenue Fund constitute the Surplus Revenues. Surplus Revenues. So long as any 1993 Bonds are Outstanding, promptly after the deposit in any month to the Surplus Revenue Fund, the entire amount of the Surplus Revenues in the Surplus Revenue Fund shall be transferred to the following accounts in the order of priority listed below. Qualified Obligations Account ERAN Account Remaining Surplus Account The amount to be deposited in each such account is set forth below. First, to the QualifiedObligations Account, the amount of QualifiedObligation Service with respect to such calendar month (to the extent not already transferred to such Account in such month) or, if less, the entire amount of Surplus Revenues then available for transfer to such Account. Second, to the ERAN Account, the amount required to be transferred thereto in such month forthe payment of the principal of and interest on the ERANs to the extent required by the ordinance(s) and resolution(s) pursuant to which the ERANs are issued (to the extent not already transferred to such Account in such month), or, if less, the entire amount of Surplus Revenues then available fortransfer to such Account. As of May 1, 1993, the City had outstanding $20,450,000 of ERANs issued forthe purpose of financing the acquisition, processing, enrichment, storage and disposal of nuclear fuel for use in connection with the City's ownership interest in SONGS, and plans to continue to renew such ERANs forthe life of SONGS to defray expenditures for nuclear fuel. The payment of the ERANs is currently supported, in addition to the security described above, by a revolving credit agreement with Bank of America National Trust and Savings Association ("Bank of America") and Morgan Guaranty Trust Company of New York ("Morgan Guar­ anty") scheduled to expire June 30, 1993. The City expects to enter into a liquidity facility with Bank of America and Morgan Guaranty to support the payment of the ERANs on and after June 30, 1993 in an amount not to exceed $28 million. The City also anticipates expanding the use of the ERANs to financefrom time to time improvements to the Electric System. Third, to the Remaining Surplus Account, all remaining Surplus Revenues, to be used for any lawful purpose of the City, provided, however, that in the event of any deficiency in the Qualified Obligations

13 Account or the ERAN Account, moneys in the Remaining Surplus Account shall be transferred to such Accounts in the order of priority indicated above to cover such deficiency. "QualifiedOb ligation Service" means, with respect to any period, the amount of principal and interest or other payments accrued or to accrue in such period with respect to all outstanding Qualified Obligations ( excluding the amount of proceeds of Qualified Obligations held in any fund or account forthe payment of Qualified Obligation Service accrued or to accrue during such period). For purposes of accrual under this definition, all payments with respect to QualifiedObligations due in a calendar month are to be deemed due on the first day of such calendar month. "Qualified Obligations" means, without duplication, (i) purchase payments with respect to the Prior Certificates, (ii) the 1993 Purchase Payments, and (iii) Bonds and Obligations which at the time of initial delivery thereof satisfy the issuance test set forth in the Installment Purchase Agreements (see "SECURITY AND SOURCES OF PAYMENT FOR THE 1993 BONDS ­ Additional Qualified Obligations"). "Bond" is defined to include any revenue bond, revenue note, warrant or other evidence of indebtedness issued, incurred or delivered forthe financing, or refinancing of extensions of, additions to, repairs and replacements to, renewals of, and improvements of, the Electric System, designated by the City at the initial delivery thereof as payable from Surplus Revenues in the Qualified Obligations Account, to the extent that the payments under such revenue bond, revenue note, warrant or other evidence of indebtedness are payable from Surplus Revenues in the Qualified Obligations Account, but does not include any Obligation. "Obligation " means any contract, instrument or other agreement forthe purchase, acquisition or lease of facilities, properties, structures or equipment for the Electric System, designated by the City at the initial delivery thereof as payable from Surplus Revenues in the Qualified Obligations Account to the extent that payments under such contract, instrument or agreement are payable from Surplus Revenues in the QualifiedObligations Account, and the finalpayments under which are due more than one year followingthe incurrence thereof. "Obligation " does not include any Bond. As described above, ( i) the payment of Qualified Obligations, including 199 3 Purchase Payments, ranks junior to payment of the Senior Bonds, (ii) the 1993 Purchase Payments rank on a parity with the payment of purchase payments and additional purchase payments with respect to the Prior Certificates, (iii) the payment of QualifiedObligations, including 1993 Purchase Payments, ranks senior to the payment of the ERANs, and (iv) the payment of Additional Purchase Payments ranks junior to the payment of the ERANs.

Rate Covenant The City has agreed pursuant to the Installment Purchase Agreements to prescribe, revise and collect such charges for the services and facilities of the Electric System so that, in each fiscal year, the Surplus Revenues shall at least equal the sum of (i) 1.25 times the amount of Qualified Obligation Service with respect to such fiscal year, (ii) 1.00 times the principal of and interest on the outstanding ERANs due and payable and to be paid from Surplus Revenues in such fiscal year, and (iii) 1.00 times all other payments required to be made from Surplus Revenues in such fiscal year. Pursuant to the City's Ordinance No. 5032, the principal amount of ERANs which may be outstanding at any time shall not exceed 25% of the gross revenue earned by the Electric System during the immediately preceding fiscalyear as set forthin the audited financialstatements of the Electric System forsuch year or the maximum aggregate amount of the revolving Electric System Credit available to the City as described in such a revolving credit agreement or other loan agreement, whichever is less.

Reserve Account A Reserve Account established under the Indenture is to be fundedout of the proceeds of the sale of the 1993 Bonds. The Reserve Account will be funded in an amount equal to the Reserve Requirement. The Reserve Requirement for the 1993 Bonds is defined as an amount equal to, at any date of determination, the least of (i) an amount equal to the maximum amount of the 1993 Purchase Payments due on any October 1 and the next succeeding April 1 of any year with respect to then Outstanding 1993 Bonds, (ii) an amount equal to 10% of the proceeds, within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, of all 1993 Bonds, and (iii) an amount equal to 125% of the average annual 1993 Purchase

14 Payments due on any October 1 and the next succeeding April 1 of any year with respect to then Outstanding 1993 Bonds; provided, however, that the Reserve Requirement or a portion thereof may be provided by one or more Reserve Account Policies or Credit Facilities, upon the filing by the Financing Authority with the Trustee of written evidence that the use of such Reserve Account Policies or Credit Facilities to satisfy the Reserve Requirement or any portion thereof will not by itself result in the downgrading or withdrawal of the credit ratings then in effect with respect to the 1993 Bonds. A "Reserve Account Policy " means a policy of insurance or surety bond issued by a municipal bond insurer, obligations insured by which have a rating by Moody's Investors Service ("Moody's") and Standard & Poor's Corporation ("S&P") which at the time of issuance is the highest rating then issued by Moody's and S&P, to satisfy all or a portion of the Reserve Requirement. "Credit Facility " means an irrevocable and unconditional letter of credit, a standby purchase agreement, a line of credit or other similar credit arrangement issued by a Qualified Bank to satisfy all or a portion of the Reserve Requirement. A "Qualified Bank" means a state or national bank or trust company or savings and loan association or a foreignbank with a domestic branch or agency which is organized and in good standing under the laws of the United States or any state thereof or any foreign country, which has a capital and surplus of $25,000,000 or more and which has a short-term debt rating of the highest ranking or of the highest letter and numerical rating as provided by Moody's or by S&P. If on any date on which 1993 Purchase Payments are required to be made as provided in the Installment Purchase Agreements, such dates being October 1 and April 1, commencing October 1, 1993 (each, a "Purchase Payment Date"), the amount available in the Purchase Payment Account is less than the amount necessary to pay the principal or the interest to be paid on such date with respect to the 1993 Bonds, the Trustee will transfer from the Reserve Account to the Purchase Payment Account the lesser of an amount sufficient to enable the Trustee to pay such amounts or all amounts on deposit in the Reserve Account. Any 1993 Purchase Payment or portion thereof made after the appropriate Purchase Payment Date will be deposited in the Reserve Account in an amount equal to the amount transferred fromthe Reserve Account to the Purchase Payment Account on such Purchase Payment Date. On each Purchase Payment Date moneys in the Reserve Account in excess of the Reserve Requirement will be transferred by the Trustee to the Utilities Building Purchase Payment Subaccount, to the extent that such moneys constitute investment income received since the immediately preceding Purchase Payment Date. Moneys in the Reserve Account in excess of the Reserve Requirement because of a reduction in the Reserve Requirement due to a refunding of 1993 Bonds or otherwise shall be released to the City to be used for any lawful purpose of the City, upon the direction of an Authorized City Representative and compliance with the requirements of the Indenture.

Electric Revenue Anticipation Notes In order to finance the acquisition, processing, enrichment, storage and disposal of nuclear fuel for use in connection with the City's ownership interest in SONGS, the City has issued $20,450,000 of ERANs and plans to continue to renew such ERANs for the life of SONGS to defrayexpenditures for nuclear fuel. The ERANs are secured by a lien upon moneys in the ERAN Account of the Surplus Revenue Fund. The payment of the ERANs is additionally supported by a revolving credit agreement with Bank of America and Morgan Guaranty scheduled to expire June 30, 1993. The City expects to enter into a liquidity facility with Bank of America and Morgan Guaranty to support the payment of the ERANs on and after June 30, 1993 in an amount not to exceed $28 million. The City also anticipates expanding the use of the ERANs fromtime to time to finance improvements to the Electric System.

Insurance The City agrees in the Installment Purchase Agreements to maintain at all times with responsible insurers all such insurance on the Electric System as is customarily maintained by similar utilities systems with respect to works and properties of like character against accident to, loss of, or damage to, such works or properties and against loss of revenues.

15 The City furtheragrees that any useful parts of the Electric System that are damaged or destroyed shall be restored to use. Proceeds of insurance against accident, loss or damage shall be used for repairing or rebuilding the lost, damaged or destroyed works and properties, and, to the extent not so used, shall be applied to the retirement of outstanding Senior Bonds and Qualified Obligations. Moneys collected from any loss of revenue insurance shall be deposited in the Revenue Account. The City is permitted under the Installment Purchase Agreements to satisfy the foregoing covenant through a self-insurance program or to provide such insurance as part of any blanket coverages maintained by the City.

Additional Qualified Obligations The City has agreed pursuant to the Installment Purchase Agreements, after the date on which the 1993 Bonds are delivered by the Trustee pursuant to the Indenture to the original purchasers thereof, not to issue, incur or deliver any Bonds or Obligations payable from the Surplus Revenues in the Qualified Obligations Account unless, at the initial delivery thereof, the Surplus Revenues, calculated on sound accounting principles, as shown by the books of the City for each of the last two completed fiscal years prior to the adoption of the resolution approving the delivery of such Bonds or Obligations ( as shown by an audit certificate or opinion of an independent certified public accountant or firm of certified public accountants employed by the City), plus, at the option of the City, the allowance for earnings described in the following paragraph, shall have amounted to at least 1.25 times the Maximum Annual Qualified Obligation Service on all Qualified Obligations to be outstanding immediately subsequent to the initial delivery of such Bonds or Obligations. Notwithstanding the foregoing, the City may issue Bonds or Obligations to refund outstanding Qualified Obligations if, after giving effectto the application of the proceeds thereof, either (i) total Qualified Obligation Service will not be increased in any fiscalyear in which Qualified Obligations ( outstanding on the date of issuance or incurrence of such refunding Bonds or Obligations, but excluding such refunding Bonds or Obligations) not being refunded are outstanding, or (ii) the Surplus Revenues, calculated on sound accounting principles, as shown by the books of the City foreach of the last two completed fiscal years prior to the adoption of the resolution approving the delivery of such Bonds or Obligations (as shown by an audit certificate or opinion of an independent certified public accountant or firm of certified public accountants employed by the City), plus, at the option of the City, the allowance for earnings described in the following paragraph, shall have amounted to at least 1.25 times total QualifiedObligation Service in the fiscalyear next succeeding the fiscal year in which such Bond or Obligation is initially delivered. For the purpose of applying the restrictions set forth in the preceding paragraph, the following allowance may be added to the Surplus Revenues: an allowance for earnings arising from any increase in the charges made for service from the Electric System which has become effective prior to the initial delivery of such Bonds or Obligations but which, during all or any part of said last two completed fiscal years, was not in effect, in an amount equal to 95% of the amount by which the Surplus Revenues would have been increased if such increase in charges had been in effect during the whole of said last two completed fiscalyears, as shown by the certificateor opinion of an independent certified accountant or firm of certified public accountants employed by the City. The City has also agreed pursuant to the Installment Purchase Agreements that the Surplus Revenues will not be mortgaged, encumbered, sold, leased, pledged, any charge placed thereon, or disposed of or used except as permitted by the Installment Purchase Agreements.

Constitutional Limitation on Governmental Spending Article XIIIB of the California Constitution (adopted by a vote of the people on November 6, 1979) limits the annual appropriations of state and local governmentalentities to the amount of appropriations of the entity forthe prior fiscalyear, as adjusted forchanges in the cost of living, changes in population and changes in services rendered by the entity. Article XIIIB remains subject to review and clarification by the courts and the California Legislature. The City believes, however, that to the extent moneys in the Electric Revenue Fund are used to pay the costs

16 of maintaining and operating the Electric System, debt service on the Senior Bonds and payments with respect to Qualified Obligations, such moneys should not, under the terms of Article XIIIB as supplemented by legislation and based upon the officialballot argument supporting the measure at the November 1979 election, be held to be subject to the appropriation limit. See "Constitutional Amendments Affecting City Revenues" in Appendix C.

Limited Recourse on Default If the City defaultsunder any Installment Purchase Agreement, the Trustee, as assignee of the Financing Authority pursuant to the Indenture, may exercise any right to enforce such Installment Purchase Agreement provided therein or by law. In the event of such default, the Installment Purchase Agreements do not provide any remedy of acceleration of the 1993 Purchase Payments due over the term of the Installment Purchase Agreements, and the Trustee is not empowered to sell the Project or any portion thereof and use the proceeds of such sale to prepay any obligations in respect of the 1993 Bonds. The City will only be liable for 1993 Purchase Payments on a semiannual basis, and the Trustee would be required to seek a separate judgment for each period's defaulted 1993 Purchase Payments. Any such suit for money damages would be subject to limitations on legal remedies against cities in California, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest.

BOND INSURANCE The following informationhas been furnishedby Municipal Bond Investors Assurance Corporation (the "Insurer") foruse in this Official Statement. Reference is made to Appendix E for a specimen of the Insurer's policy. The Insurer's policy unconditionally and irrevocably guarantees the full and complete payment required to be made by or on behalf of the Financing Authority to the Trustee or its successor of an amount equal to ( i) the principal of (either at the stated maturity or by an advancement of maturity pursuant to a mandatory sinking fundpayment) and interest on, the 1993 Bonds as such payments shall become due but shall not be so paid ( except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fundpayment, the payments guaranteed by the Insurer's policy shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner of the 1993 Bonds pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law (a "Preference"). The Insurer's policy does not insure against loss of any redemption premium which may at any time be payable with respect to any 1993 Bond. The Insurer's policy does not, under any circumstances, insure against loss relating to: (i) optional or mandatory redemptions (other than mandatory sinking fund redemptions); (ii) any payments to be made on an accelerated basis; or (iii) any Preference relating to (i) and (ii) above. The Insurer's policy also does not insure against nonpayment of principal of or interest on the 1993 Bonds resulting from the insolvency, negligence or any other act or omission of the Trustee or any other paying agent for the 1993 Bonds. Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certifiedmail, or upon receipt of written notice by registered or certifiedmail, by the Insurer from the Trustee or any owner of a 1993 Bond the payment of an insured amount forwhich is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds,in an account with Citibank, N.A., in New York, New York, or its successor, sufficient for the payment of any such insured amounts which are then due. Upon presentment and surrender of such 1993 Bonds or presentment of such other proof of ownership of the 1993 Bonds, together with any appropriate instruments of assignment to evidence the assignment of the insured amounts due on the 1993 Bonds as are paid by the Insurer, and

17 appropriate instruments to effectthe appointment of the Insurer as agent for such owners of the 1993 Bonds in any legal proceeding related to payment of insured amounts on the 1993 Bonds, such instruments being in a form satisfactory to Citibank, N.A., Citibank, N.A. shall disburse to such owners or the Trustee payment of the insured amounts due on such 1993 Bonds, less any amount held by the Trustee for the payment of such insured amounts and legally available therefor. The Insurer is the principal operating subsidiary of MBIA Inc., a New York Stock Exchange listed company. MBIA Inc. is not obligated to pay the debts of or claims against the Insurer. The Insurer is a limited liability corporation rather than a several liability association. The Insurer is domiciled in the State of New York and licensed to do business in all 50 states, the District of Columbia and the Commonwealth of Puerto Rico. As of December 31, 1992, the Insurer had admitted assets of $2.6 billion (audited), total liabilities of $1.7 billion (audited), and total capital and surplus of $896 million (audited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. As of March 31, 1993 the Insurer had admitted assets of $2.7 billion (unaudited), total liabilities of $1.8 billion (unaudited), and total capital and surplus of $712 million (unaudited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. Copies of the Insurer's year end financial statements prepared in accordance with statutory accounting practices are available from the Insurer. The address of the Insurer is 113 King Street, Armonk, New York 10504. Moody's Investors Service rates all bond issues insured by the Insurer "Aaa" and short term loans "MIG l," both designated to be of the highest quality. Standard & Poor's Corporation rates all new issues insured by the Insurer "AAA" Prime Grade. The Moody's Investors Service rating of the Insurer should be evaluated independently of the Standard & Poor's Corporation rating of the Insurer. The ratings reflect the respective rating agency's current assessment of the creditworthiness of the Insurer and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above ratings may be obtained only from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold the 1993 Bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of either or both ratings may have an adverse effect on the market price of the 1993 Bonds. In the event the Insurer were to become insolvent, any claims arising under a policy of financial guaranty insurance are excluded from coverage by the California Insurance Guaranty Association, established pursuant to Article 14.2 (commencing with Section 1063) of Chapter 1 of Part 2 of Division 1 of the California Insurance Code.

18 ESTIMATED SOURCES AND USES OF FUNDS The sources and uses of funds ( excluding accrued interest) in connection with the issuance of the 1993 Bonds are estimated to be applied as follows: SOURCES: Principal Amount of 1993 Bonds ...... $71,300,000.00 Less: Underwriters' Discount ...... (921, 196.00) Less: Original Issue Discount ...... (118,487.95) Transfer from Reserve Accounts ...... 5,016,625.00 Transfer from Purchase Payment Accounts ...... 1,107,783.13 Total Sources(! )(2) ...... $76,384,724.18 USES: Deposit to Combustion Turbine Escrow Account( 1) ...... $27,771,563.36 Deposit to Utilities Building Escrow Account(2) ...... 44,289,471.42 Deposit to Reserve Account ...... 4,003,187.50 Costs of Issuance ...... 320,501.90 Total Uses ...... $76,384, 724.18

(1) Excludes approximately $123,000 to be received under forward purchase contracts for Combustion Turbine Escrow Securities for the Combustion Turbine Escrow Account. (2) Excludes approximately $657,000 to be received under forward purchase contracts for Utilities Building Escrow Securities for the Utilities Building Escrow Account.

THE PLAN OF REFUNDING Combustion Turbine Refunded Certificates A portion of the proceeds of the 1993 Bonds will be used to refund the Combustion Turbine Refunded Certificates described in the chart below. See also "ESTIMATED SOURCES AND USES OF FUNDS." Principal Principal Prepayment Due Amount Amount Interest Date Prepayment October 1 Refunded Outstanding Rate April 1 Price 1999 $ 2,485,000 $ 2,485,000 6.90% 1999 102% 2000 2,660,000 2,660,000 7.00 1999 102 2009 6,000,000 6,000,000 7.20 1999 102 2011 14,250,000 14,250,000 6.50 1999 102 The refunding of the Combustion Turbine Refunded Certificates will be effected by depositing a portion of the proceeds of the 1993 Bonds and transferring certain excess moneys on deposit in the Reserve Account for the Combustion Turbine Refunded Certificates and certain moneys on deposit in the Purchase Payment Account for the Combustion Turbine Refunded Certificates to the Escrow Account (the "Combustion Turbine Escrow Account") created and established pursuant to an Escrow Agreement ( the "Combustion Turbine Escrow Agreement"), dated as of May 1, 1993, by and between the City and The Bank of New York Trust Company of California, as escrow agent ( the "Combustion Turbine Escrow Agent"). Such proceeds and moneys will be used to purchase certain non-callable bonds or other obligations which, as to principal and interest, constitute direct obligations of, or are unconditionally guaranteed by, the United States of America ( collectively, the "Combustion Turbine Escrow Securities"). The Combustion Turbine Escrow Securities will bear interest at such rates and will be scheduled to mature at such times and in such amounts so that, when paid in accordance with their respective terms, sufficient moneys will be available to pay the principal of, and any premium on, the Combustion Turbine Refunded Certificates on their respective prepayment or maturity dates set and interest on the Combustion Turbine Refunded Certificates to become due on or prior to their respective prepayment or maturity dates ( the "Combustion Turbine Escrow Requirement"). The Combustion Turbine Escrow Agent may substitute other Combustion Turbine Escrow Securities for those originally purchased at the request of the City or the Financing Authority and upon receipt of an opinion or certification

19 of a nationally recognized firm of certified public accountants confirming that the principal and interest to be paid when due on the Combustion Turbine Escrow Securities then to be held in the Combustion Turbine Escrow Account will satisfy the Combustion Turbine Escrow Requirement. The Combustion Turbine Escrow Account shall be held by the Combustion Turbine Escrow Agent in irrevocable trust and used solely for the payment of the prepayment price of and interest on the Combustion Turbine Refunded Certificates, subject only to the payment to the City in accordance with the Combustion Turbine Escrow Agreement of any cash not required for such purpose. The establishment of the Combustion Turbine Escrow Account and compliance with certain other requirements will discharge the pledge and assignment of amounts securing the Combustion Turbine Refunded Certificates. The accuracy of the mathematical computations of the adequacy of the principal and interest on the Combustion Turbine Escrow Securities to provide forthe payment of the prepayment price of and interest on the Combustion Turbine Refunded Certificates will be verified at the time of delivery of the 1993 Bonds by Ernst & Young, independent certified public accountants. See "VERIFICATION OF MATHEMATICAL COMPUTATIONS".

Utilities Building Refunded Certificates The 1993 Bonds are also being issued for the purpose of refunding the Utilities Building Refunded Certificates described in the chart below. See also "ESTIMATED SOURCES AND USES OF FUNDS." Principal Principal Prepayment Due Amount Amount Interest Date Prepayment October 1 Refunded Outstanding Rate October 1 Price 2001 $ 470,000 $ 470,000 6.60% 2000 102% 2002 555,000 555,000 6.70 2000 102 2003 640,000 640,000 6.75 2000 102 2004 735,000 735,000 6.75 2000 102 2005 835,000 835,000 6.75 2000 102 2010 5,870,000 5,870,000 6.75 2000 102 2022 31,135,000 31,135,000 6.75 2000 102 The refunding of the Utilities Building Refunded Certificates will be effected by depositing a portion of the proceeds of the 1993 Bonds and transferringcertain excess moneys on deposit in the Reserve Account for the Utilities Building RefundedCertifi cates and certain moneys on deposit in the Purchase Payment Account for the Utilities Building Refunded Certificates to the Escrow Account (the "Utilities Building Escrow Account") created and established pursuant to an Escrow Agreement (the "Utilities Building Escrow Agreement"), dated as of May 1, 1993, by and between the City and First Trust of California, National Association, as escrow agent ( the "Utilities Building Escrow Agent"). Such proceeds and moneys will be used to purchase certain non-callable bonds or other obligations which, as to principal and interest, constitute direct obligations of, or are unconditionally guaranteed by, the United States of America (collectively, the "Utilities Building Escrow Securities"). The Utilities Building Escrow Securities will bear interest at such rates and will be scheduled to mature at such times and in such amounts so that, when paid in accordance with their respective terms, sufficient moneys will be available to pay the principal of, and any premium on, the Utilities Building Refunded Certificates on their respective prepayment or maturity dates and interest on the Utilities Building Refunded Certificates to become due on or prior to their respective prepayment or maturity dates (the "Utilities Building Escrow Requirement"). The Utilities Building Escrow Agent may substitute other eligible Utilities Building Escrow Securities for those originally purchased at the request of the City or the Financing Authority and upon receipt of an opinion or certification of a nationally recognized firm of certified public accountants confirming that the principal and interest to be paid when due on the Utilities Building Escrow Securities then to be held in the Utilities Building Escrow Account will satisfy the Utilities Building Escrow Requirement. The Utilities Building Escrow Account shall be held by the Utilities Building Escrow Agent in irrevocable trust and used solely for the payment of the prepayment price of and interest on the

20 Utilities Building Refunded Certificates, subject only to the payment to the City in accordance with the Utilities Building Escrow Agreement of any cash not required for such purpose. The establishment of the Utilities Building Escrow Account and compliance with certain other requirements will discharge the pledge and assignment of amounts securing the Utilities Building Refunded Certificates. The accuracy of the mathematical computations for the adequacy of the principal and interest on the Utilities Building Escrow Securities to provide for the payment of the prepayment price of and interest on the Utilities Building Refunded Certificates will be verified at the time of delivery of the 1993 Bonds by Ernst & Young, independent certified public accountants. See "VERIFICATION OF MATHEMATICAL COMPUTATIONS".

THE ELECTRIC SYSTEM

Historyof the Electric System The Electric System was established in 1894. The original City-owned generating plant was placed in service in 1895 and consisted of a steam-driven generator of 500 lights capacity. By 1896, the maximum capacity of the original generating plant had been reached and Anaheim voters authorized bonds for the combined rebuilding of both the electric light plant and the City water system. In 1916, the City entered into an agreement to purchase electricity at wholesale rates from Edison rather than generate its own power. In 1934, the City, working with the Federal Public Works Administration, rebuilt and expanded the distribution system sufficiently to serve the needs of its citizens until the end of World War II. The City has since continued to expand its distribution system to meet the growing demands of its customers. From 1916 through 1982, the City met substantially all of its electric capacity and energy requirements by purchases from Edison. In the mid-1970s, the City instituted a program to meet its electric capacity and energy requirements from its own resources and by long-term purchases from sources other than Edison, taking the first capacity and energy fromsuch resources in 1983. As a result of this program, in the fiscalyear ended June 30, 1992, the City purchased only four percent of its energy requirements from Edison. Unless otherwise noted, all statistical and financial information herein has been provided by the City or the Department.

Principal Existing Facilities As of March 31, 1993, the principal facilities of the Electric System consisted of transmission and distribution lines, both overhead and underground, aggregating approximately 1,392 circuit miles, 10 distribution substations, the City's 3.16% (67.9 MW) ownership interest in Units 2 and 3 of SONGS, and a 48 MW combustion turbine generating unit. SONGS Units 2 and 3 are jointly owned by the City, Edison, San Diego Gas & Electric Company and the City of Riverside. In late 1980 the City purchased a 1.66% interest in SONGS Units 2 and 3 from Edison, effective November l, 1977. The City purchased an additional 1.5% interest in SONGS Units 2 and 3, effective September 1, 1981. SONGS Units 2 and 3 are currently rated at 1,070 MW and 1,080 MW, respectively, and have been in commercial operation since October 1983 and April 1984, respectively. The principal owner and operating agent for SONGS Units 2 and 3 is Edison. The capacity available to the City from SONGS Units 2 and 3 is currently 33.8 MW and 34.1 MW, respectively. Federal regulations and state statutes require the City to provide its share of the futurecosts of decommissioning SONGS Units 2 and 3. To meet the requirements of such federal regulations, the City is making periodic deposits to a decommissioning trust fund. The City owns and operates a 48 MW natural-gas fired Combustion Turbine Peaking Plant (the "CT") within the City limits directly adjacent to the City's Dowling Substation. The CT is equipped with a state of the art, effective emission reduction system which is expected to allow the CT to be operated as planned by

21 the Department and in compliance with any currently proposed air quality standards. The CT has been in operation since May 1991. The City has entered into an agreement with Public Service Company of New Mexico ("PNM") to purchase from PNM a 10.04% undivided ownership interest in San Juan Generating Station Unit 4 ("Unit 4"). See "OTHER ELECTRIC RESOURCES - Future Power Supply Resources." The following table sets forth statistical information relating to the facilitiesof the Electric System forthe five fiscal years shown.

ELECTRIC SYSTEM STATISTICS ($000) Fiscal Year Ended June 30 1992 1991 1990 1989 1988 Investment in Utility Plant: Production ...... $ 217,667 $ 209,797 $ 175,529 $ 172,914 $ 171,198 Transmission ...... 13,052 15,357 12,370 12,315 12,313 Distribution ...... 118,712 106,286 103,685 94,691 89,323 General ...... 11,740 12,198 11,581 11,288 10,380 361,171 343,638 303,165 29 1,208 283,214 Less - accumulated depreciation ...... (95,052) (84,136) (74,441) ( 65,838) (58,433) 266,119 259,502 228,724 225,370 224,781 Construction work in progress ...... 40,568 21,239 27,919 8,419 7,013 Nuclear fuel, at amortized cost ...... 8,098 7,519 8,543 9,213 10,199 Total utility plant ...... $ 314,785 $ 288,260 $ 265,186 $ 243,002 $ 241,993 Transmission-69 kV Circuit Miles ...... 59 60 60 59 59 Distribution Overhead Circuit Miles ...... 884 887 888 888 888 Underground Circuit Miles ...... 440 425 410 404 398 Transformer Capacity (in kVA) 220 kV to 69 kV ...... 840,000 840,000 840,000 840,000 840,000 69 kV to 12 kV ...... 662,000 632,000 632,000 592,000 592,000 12 kV to Customer ...... 1,100,290 1,079,000 1,034,000 1,02 1,000 974,000

Power Supply and Demand The electric resources of the City currently consist of power from the City's ownership interest in SONGS Units 2 and 3, ownership of the CT, firm power purchases under an entitlement in IPP and the Hoover Uprating Project, firm power purchases from Deseret, a capacity/energy exchange with BPA, other short-term and non-firm energy purchases from other utilities and firmpower purchases from Edison at the Partial Requirements Rate and under the terms of the PSA. See "OTHER ELECTRIC RESOURCES." In the fiscalyear ended June 30, 1992, the Electric System generated or purchased a total of 2.8 million MWh of electricity. About 55% was provided by IPP and 15% was generated by the City's interest in SONGS Units 2 and 3. Approximately 2% was provided by the City's interest in the Hoover Uprating Project; 16.5% was provided under firm power contracts; 7% was obtained through non-firm purchases from other western utilities; and approximately 0.5% was provided by the CT. Purchases from Edison were 4% of total Electric System generation and production. On August 17, 1992, combined customer electric requirements created the historic distribution system peak demand of 530 MW. The following table sets forth the total Electric System energy generated and purchased and electric distribution system peak demand during the five fiscal years shown.

22 TOTAL MEGAWATT-HOURS GENERATED AND PURCHASED AND PEAK DEMAND (000) Fiscal Year Ended June 30 1992 1991 1990 1989 1988 Own Generation: San Onofre Nuclear Generating Station ...... 419 480 418 493 427 Combustion Turbine ...... 11 0 0 0 0 Firm Purchases: Intermountain Power Project ...... 1,556 1,495 1,694 1,434 1,585 Hoover ...... 44 47 48 46 53 Power Contracts ...... 486 701 702 690 634 Southern California Edison Company (includes PSA) .. 121 77 55 73 59 Non-Firm Purchases ...... 198 25 37 108 87 System Total ( 1) ...... 2,835 2,825 2,954 2,844 2,845 Distribution System Peak Demand, MW ...... 491 497 523 493 471

( 1) Includes energy generated or purchased that was ultimately sold to other utilities. The City and Edison entered into a settlement agreement in August 1972 (the "1972 Settlement Agreement"). The 1972 Settlement Agreement addressed certain principles for the integrated operations of the Electric System. The City and Edison, pursuant to the 1972 Settlement Agreement, entered into an Integrated Operations Agreement (the "IOA'') in November 1977, which provided for the integrated operations of the City's electric resources and Edison's electric resources. In 1984, Edison revised its Partial Requirements Rate to permit the City, upon notice, to acquire non-integrated resources and operate those resources so as to reduce purchases from Edison pursuant to its applicable Partial Requirements Rate. The City entered into firmpower purchase agreements with Deseret, Pacific Gas & Electric Company ("PG&E"), and the California Department of Water Resources ("CDWR") and operated those resources as non­ integrated resources. In 1987, a dispute arose between the City and Edison over the method of operating both the integrated and non-integrated resources. In March 1990, the City and Edison entered into a settlement agreement ( the "1990 Settlement Agreement") in order to resolve this dispute and other disputes regarding the IOA which werelitigated in FERC Docket No. ER 81-177. The cities of Azusa, Banning, Colton and Riverside, which had similar disputes with Edison, are also parties to the 1990 Settlement Agreement. The 1990 Settlement Agreement provides for a new Integrated Operations Agreement (the "1990 IOA'') expiring June 30, 2028 unless otherwise terminated in accordance with its terms and for a PSA between the City and Edison terminating December 31 , 1998. The 1990 Settlement Agreement provides for the City to integrate all of its existing resources for as long as the 1990 IOA remains in effect. The PSA provides for Edison to sell, and the City to purchase, certain amounts of capacity and energy at rates that are lower than Edison's Partial Requirements Rate. Such purchases are separate and apart from purchases under Edison's Partial Requirements Rate. On December 17, 1992, the City along with the cities of Azusa, Banning, Colton and Riverside entered into a settlement agreement with Edison (the "1992 Settlement Agreement") to resolve outstanding issues in FERC Docket Nos. ER76-205, ER79-150, ER82-427, ER84-75, ER86-271, ER87-483 and FA85-67 concerning Edison's Partial Requirements Rates. As part of the 1992 Settlement Agreement, the City expects to receive $2.2 million in cash refunds and $2.6 million in reduced power purchase costs under the PSA. In addition, Edison agreed to a moratorium to seeking any changes in the current Partial Requirements Rate until January 1, 1998 unless requested to do so by the City or one of the other cities. The 1992 Settlement Agreement also clarifies procedures for the City to integrate capacity resources under the 1990 IOA and provides mechanisms for a more timely resolution of disputes between the City and Edison regarding the terms and conditions of integrating resources under the 1990 IOA should they arise. In addition, the City

23 expects to release approximately $6.5 million plus accumulated interest which has been set aside in a restricted account, pending the completion of the 1992 Settlement Agreement. A decision from FERC on the 1992 Settlement Agreement is expected by the third quarter of 1993. The City believes that the 1990 JOA, the 1990 Settlement Agreement and the 1992 Settlement Agreement will enable the City to integrate resources to better meet its own electrical requirements and will provide for more economical operation of the City's resources than was possible under the previous IOA. In the event the City's resources are not adequate to supply its electrical needs, Edison is required, under the 1990 IOA, to supply those electrical needs to the City.

Customers and EnergySales The Electric System serves the entire area within the City limits (an area of approximately 48.7 square miles). The following tables set forth the average number of customers and total electrical energy sold during the five fiscal years shown.

AVERAGE NUMBER OF CUSTOMERS Fiscal Year Ended June 30 1992 1991 1990 1989 1988 Residential ...... 86,854 86,220 84,540 83,131 82,030 Commercial ...... 15,118 14,957 14,674 14,337 13,942 Industrial ...... 601 607 606 589 559 Other ...... 188 199 178 169 167 Other Utilities ...... 1 1 6 2 Total - all classes ...... 102,762 101,984 100,004 98,228 96,699

TOTAL MEGAWATT-HOURS SOLD (000) Fiscal Year Ended June 30 1992 1991 1990 1989 1988 Residential ...... 500 521 499 499 484 Commercial ...... 535 536 524 519 510 Industrial ...... 1,142 1,144 1,160 1,139 1,122 Other ...... 38 34 36 37 35 Other Utilities ...... 370 401 588 225 510 Total(l) ...... 2,585 2,636 2,807 2,419 2,661

( 1) The difference between the total megawatt-hours generated and purchased and total megawatt-hours sold is due principally to transmission and distribution system losses.

24 The following table sets forth the ten largest commercial and industrial customers and the two largest public agency customers of the Electric System in terms of total energy sales for the fiscalyear ended June 30, 1992. The Electric System's ten largest commercial and industrial customers together accounted for approximately 17% of total energy sales and 14% of total annual billings of the Electric System; the largest five accounted forapproximately 14% of total energy sales and 12% of total annual billings of the Electric System. The largest customer accounted for 5% of total energy sales and 4% of total annual billings of the Electric System. The two public agencies noted below accounted for 4% of total energy sales and total annual billings.

MAJOR ELECTRIC CUSTOMERS Customer Type of Business Rockwell International Corporation Aerospace Electronics Disney Corporation Recreation, Entertainment and Hotels Pacific Telephone Telephone Service Delco-Remy Division, General Motors Corporation Batteries Anaheim Hilton and Towers Hotels and Restaurants Interstate Electronics Corporation Electronic Equipment Minute Maid Company, Division of Coca Cola Corporation Beverages Kwikset Corporation, Division of Black and Decker Locks Carl Karcher Enterprises Restaurants BASF Structural Materials

Public Agencies City of Anaheim Anaheim Elementary School District Electric Rates and Charges The City is obligated by its Charter and by certain resolutions of the City Council to establish rates and collect charges in an amount sufficient to service the Electric System's indebtedness, to meet the Electric System's operation and maintenance expenses and to pay other obligations payable fromGross Revenues, with specified requirements as to priority and coverage. See "SECURITY AND SOURCES OF PAYMENT FOR THE 1993 BONDS - Rate Covenant." Electric rates for the City are recommended by the Board and are established by the City Council and are not subject to regulation by the California Public Utilities Commission (the "CPUC") or by any other state or federal agency; however, the City is subject to certain ratemaking provisions of the Public Utility Regulatory Policies Act of 1978. The City is operating in compliance with such Act. Subject to certain exceptions, the Charter requires that electric rates be based upon the cost of service to the various customer classes. The City Council most recently approved changes to the Electric Rates, Rules and Regulations effective March 24, 1993. The Electric System now has 29 rate schedules, including the Power Cost Adjustment. Generally, all costs of the Electric System, including power supply costs, are recovered through application of the base rates. In the event that substantial changes in projected power supply costs occur, either as an increase or decrease, the Power Cost Adjustment Billing Factor (the "PCABF") will be activated to ensure that the Electric System charges appropriately for electric service. When activated, the PCABF will remain in effect until the next base rate change or until a revision to the PCABF is necessary. At the time of a base rate change, the power supply costs recovered through the PCABF will be included in base rates and the PCABF will be deactivated and returned to zero. Continuation of this mechanism will enable the Department, with City Council approval, to take rapid rate action in order to protect the financial stability of the Electric System.

25 PRIMARY RA TE SCHEDULES FOR RESIDENTIAL, COMMERCIAL AND INDUSTRIAL CUSTOMERS (Effective March 24, 1993)

Per Meter Per Month Type and Description of Service Charge Domestic Services Single Family Customers (Basic): Customer Charge ...... $ 2.85 Energy Charge (to be added to Customer Charge): First 240 kWh, per kWh ...... 6.77¢ All Excess kWh, per kWh ...... 11.15¢ General Service Small Commercial and Industrial Customers: Customer Charge ...... $ 10.50 Energy Charge (to be added to Customer Charge): All kWh, per kWh ...... 10.96¢ General Service Large Commercial and Industrial Customers: Customer Charge: ...... $ 300.00 Demand Charge ( added to Customer Charge): First 200 kW or less of billing demand ...... $1,400.00 All excess kW of billing demand, per kW ...... $ 8.50 Energy Charge ( added to Demand Charge): For the first 540 kWh per kW of billing demand, per kWh ...... 6.809¢ All excess kWh, per kWh ...... 4.000¢ Electric System rates have been changed 10 times over the period beginning July 1, 1985. The following table sets forth the percentage changes in rates for the indicated customer classes.

AVERAGE PERCENTAGE INCREASE (OR DECREASE) IN ELECTRIC RATES Overall Effective Date System Residential Commercial Industrial July 17, 1985* ...... 3.4% 3.1% 3.3% 3.6% August 1, 1986* ...... (5.0) (4.6) (4.9) (5.3) November l, 1986* ...... (4.6) (4.1) (4.5) (4.9) October 12, 1988* ...... (3.5) (3.5) (2.9) (3.7) April l, 1989* ...... 3.6 3.8 3.0 3.1 October 1, 1989 ...... 7.0 9.0 7.2 6.0 August 1, 1990 ...... 3.7 8.0 4.5 1.0 January 1, 1992 ...... 3.5 2.8 3.6 3.8 April 1, 1992 ...... (0.3) 0.0 0.0 (0.7) March 24, 1993 ...... 1.0 0.0 1.4 1.3 * Due to PCABF adjustment only. Charges the City pays Edison for power purchases pursuant to the Partial Requirements Rate are based upon rates filedwith FERC and collected, subject to refund, until such time as the rates are determined to be "just and reasonable" by FERC. As a result of the City's challenges to previous Edison rate filings,and as a result of subsequent FERC decisions, the City has received significant refunds, plus interest, from Edison for wholesale rate overcharges. On January 28, 1986, the City Council established a Rate Stabilization Account ("RSA") and adopted a Wholesale Rate Refund Policy (the "Policy") under which wholesale rate refunds would be placed in the RSA. The RSA was initially funded with approximately $11.4 million of refunds (including interest) received

26 from Edison for previous wholesale electric rate overcharges, as ordered by FERC. The Policy establishes a rate, in cents per kilowatt-hour of sales, by which funds are transferred from RSA to the Electric Utility Revenue Fund. This transfer is made on a monthly basis. Since initial funding of the RSA, the City has received $102 million in refunds from Edison which have been deposited to the RSA. During fiscal year 1991-92, the City received total refunds of $67.2 million from Edison as partial payment for FERC cases. Of the $67.2 million received, $60.7 million was transferredto the RSA for use in stabilizing rates. The remaining $6.5 million was placed in a restricted account within the RSA pending the Department's appeal of an appellate court ruling favorableto Edison. The City estimates that it will receive $31.3 million in remaining refunds from Edison upon FERC approval of Edison's compliance filings in previously decided wholesale rate cases. The following table sets forth electric billings in seven cities in Southern California, three of which are served directly as retail customers of Edison.

ELECTRIC RATE COMPARISON BY MONTHLY BILL (As of April 1, 1993) Residential Commercial Industrial 100kW(2) 200kW(3) 5,000kW (4) 500 1100 500 3000 43,200 86,400 2,555,000 kWh kWh kWh kWh(l) kWb(l) kWh kWh kWh Anaheim(5) ...... $16.39 $48.09 $114.99 $65.30 $339.30 $3,890.43 $7,269.22 $207, 191.55 Santa Ana(6) ...... 22.19 62.05 146.16 70.37 357.69 4,109.71 7,474.60 201,114.80 Fullerton ( 6) ...... 22.19 62.05 146.16 70.37 357.69 4,109.71 7,474.60 201,114.80 Orange(6) ...... 22.19 62.05 146.16 70.37 357.69 4,109.71 7,474.60 201,114.80 Riverside(5) ...... 18.82 51.96 122.01 57.42 309.52 4,262.28 8,299.90 219,933.25 Los Angeles (DWP)(5) ...... 19.49 48.28 105.82 58.49 285.97 3,449.95 6,668.19 171,187.5 1 Pasadena(5) ...... 15.74 45.86 106.10 50.70 281.45 3,878.15 6,877.28 191,056.75

(1) General Service - Single Phase less than 20 kW demand. (2) Assumes 60% load factor. (3) Assumes 60% load factor and seasonal energy consumption. (4) Assumes 70% load factor and seasonal energy consumption. (5) Served by municipal electric system. (6) Adjacent cities served by Edison at retail.

The table below sets forth the average billing price per kilowatt-hour for the various customer classes during the five fiscal years shown.

AVERAGE BILLING PRICE (MILLS) PER KIWWATT-HOUR Fiscal Year Ended June 30 1992 1991 1990 1989 1988 Residential ...... 92.1 90.5 81.9 76.1 76.9 Commercial ...... 100.0 97.6 91.9 86.3 87.9 Industrial ...... 84.3 83.1 80.6 76.1 76.8 Other ...... 78.3 76.4 75.0 72.1 78.0 Other Utilities ...... 17.2 16.1 14.5 16.3 15.5 Average All Classes Combined(!) ...... 79.4 77.3 69.0 72.7 67.2

( 1 ) Weighted average.

27 Historical Financial Results The following table shows a summary of the financial results of the Electric System, together with calculation of debt service coverage of outstanding Senior Bonds and QualifiedObligations, forthe five fiscal years shown.

FINANCIAL RESULTS OF THE ELECTRIC SYSTEM (000)

Fiscal Year Ended June 30 1992 1991 1990 1989 1988 Revenues: Sale of electricity: Residential ...... $ 46,106 $ 47,117 $ 40,845 $ 37,970 $ 37,2 11 Commercial ...... 53,464 52,294 48,174 44,767 44,874 Industrial ...... 96,300 95,122 93,430 86,746 86,172 Other ...... 3,057 2,716 2,708 2,693 2,730 Other utilities ...... 6,449 6,452 8,520 3,655 7,882 Billed revenue from sale ofelectricity ...... 205,376 203,701 193,677 175,831 178,869 Change in unbilled electric revenue ...... 1,161 2,443 2, 192 p69) (667) Total revenue from sale of electricity ...... 206,537 206,144 195,869 175,462 178,202 Provision for power cost adjustment ...... 0 0 (9,090) 15,936 3,416 Provision forrate stabilization ...... 11,355 5,115 4,952 12,288 9,427

Other ( including interest income) ••I I I•a•••• o 7,483 8,612 8,363 8,009 6,499 Total gross revenues ...... $225,375 $219,871 $200,094 $211,695 $197,544 Operating expenses ( excluding depreciation and amortization): Cost of purchased power ...... 132,962 127,730 124,439 136,570 124,936 Fuel used forgeneration ...... 3,343 3,941 3,549 4,023 4,399 Operations ...... 22,518 22,094 20,673 18,956 17,174 Maintenance ...... 19,847 12,175 11,534 10,719 8,937 Total operating expenses ...... $178,670 $165,940 $160,195 $170,268 $155,446 Net revenues ...... $ 46,705 $ 53,931 $ 39,899 $ 41,427 $ 42,098 Senior Bond debt service requirements ...... $ 20,930 $ 21,381 $ 21,387 $ 21,370 $ 21,394 Times Senior Bond debt servicecovered by net revenues ...... 2.2 2.5 1.9 1.9 2.0 Deposits to Renewal and Replacement Account ... 132 616 67 12 51 Surplus Revenues ...... $ 25,643 $ 31,934 $ 18,445 $ 20,045 $ 20,653 QualifiedObligations Purchase Payments ( 1) ..... 1,301 0 0 0 0 Times Qualified Obligations Purchase Payments covered by surplus revenues ...... 19.7 ERANs interest and related expenses ...... 798 1,160 1,172 1,270 965 Net revenues after debt service payments ...... $ 23,544 $ 30,774 $ 17,273 $ 18,775 $ 19,688 Transfers to City General Fund ...... 8,695 7,749 7,937 7,511 7,333 Balance available for other purposes ...... $ 14,849 $ 23,025 $ 9,336 $ 11,264 $ 12,355

( 1) Interest for 1989 Certificates was capitalized through October l, 1991, and interest for 1990 Certificates was capitalized through October 31, 1992.

28 The above results reflect moderate growth in electric demand by all principal classes of customers over the past five years. As discussed under "Electric Rates and Charges," the City has used the PCABF to increase or decrease rates to provide for substantial changes in power supply costs. Increases in "Provision for power cost adjustment" from 1988 to 1989 reflect use of the PCABF, together with use of certain internal funds to achieve a planned pattern of rate increases. In 1990, the PCABF was reduced to zero. Negative amounts shown in "Provision for power cost adjustment" for 1990 reflectrepayment of certain internal funds as planned rate increases were implemented. Variations in "Provision for rate stabilization" are due to periodic changes in the rate of transfers from the RSA. See "Electric Rates and Charges". The increase in "Cost of purchased power" in the fiscalyear ended June 30, 1989 was the result of several factors. The expiration of the Interim Operating Procedures Agreement with Edison in October 1988 resulted in the Department purchasing additional capacity and higher priced energy from Edison. The result was a $3.1 million increase in power costs. Other increases in "Cost of purchased power" were caused by planned increases in debt service for the Intermountain Generating Station and Northernand Southern Transmission Systems totalling $8.5 million. The decrease in "Cost of purchased power" in 1990 principally reflects the favorable impact of the 1990 Settlement Agreement with Edison. Transfers of Electric System funds to the City's General Fund are made annually in January. Under the Charter, annual transfers are limited to 4% of gross revenues of the Electric Revenue Fund of the prior fiscal year. Such transfers may be further limited by Article XIIIB of the California Constitution. See "SECUR­ ITY AND SOURCES OF PAYMENT FOR THE 1993 BONDS - Constitutional Limitation on Govern­ mental Spending" and "Constitutional Amendments Affecting City Revenues" in Appendix C.

Accounting Policies The Electric System's accounting records, financial transactions and billing are computerized. Annual audits of the Electric System are made by the City's independent auditors. The Electric System audit is made simultaneously with the audits of the other City financial activities. Prior to July 1971, the Electric System was treated, for accounting purposes, as an account in the City's General Fund. Since July 1971, funds of the Electric System have been separated from the General Fund of the City and the books and records are maintained separate and apart fromall other fundsand accounts of the City. For further information concerning the Electric System's financial position, see the audited financial statements for the fiscalyears ended June 30, 1992 and June 30, 1991 attached hereto as Appendix A and the unaudited financial statementsfor the six months ended December 31, 1992 and December 31, 1991 attached hereto as Appendix B. At present, and prior to fiscalyear 1991-92, KPMG Peat Marwick served as the City's independent auditors. In fiscal year 1991-92, Deloitte & Touche served as the City's independent auditors.

29 Qualified Obligations Purchase Payments The schedule of 1993 Purchase Payments and purchase payments with respect to QualifiedObligations is set forth below. Principal Interest Total Total Component Component Total Purchase 1993 Purchase Fiscal 1993 1993 1993 Payments Payments and Year Ending Purchase Purchase Purchase Prior Purchase Payments June 30 Payments Payments Payments Certiftcates(l) Prior Certificates 1993 ...... $ 0 $ 0.00 $ 0.00 $ 5,320,052.87(2) $ 5,320,052.87 1994 ...... 0 3,228,788.54 3,228, 788.54 2,520,020.00 5,748,808.54 1995 ...... 285,000 3,867,421.25 4,1 52,421.25 2,542,832.50 6,695,253.75 1996 ...... 300,000 3,852,796.25 4,152,796.25 2,569,832.50 6, 722,628. 75 1997 ...... 315,000 3,837,421.25 4,152,421.25 2,619,172.50 6,771,593.75 1998 ...... 335,000 3,821,171.25 4,156,171.25 2,664,110.00 6,820,281.25 1999 ...... 345,000 3,804, l 7 l .25 4,149,171.25 2, 713,250.00 6,862,421.25 2000 ...... 2,825,000 3,724,921.25 6,549,921.25 355,915.00 6,905,836.25 2001 ...... 2,965,000 3,580, 171.25 6,545, l 7 l .25 407,837.50 6,953,008.75 2002 ...... 760,000 3,487 ,046.25 4,247,046.25 2,845,000.00 7 ,092,046.25 2003 ...... 850,000 3,446, 796.25 4,296, 796.25 2,845,000.00 7,141,796.25 2004 ...... 945,000 3,401,921.25 4,346,921.25 2,845,000.00 7,191,921 .25 2005 ...... 1,045,000 3,351,648.75 4,396,648. 7 5 2,845,000.00 7,241,648.75 2006 ...... 1,145,000 3,295,231.25 4,440,231.25 2,840,000.10 7,280,231.35 2007 ...... 4,075,000 3,157,473.75 7,232,473.75 0.00 7,232,473.75 2008 ...... 4,340,000 2,932,848.75 7,272,848.75 0.00 7,272,848.75 2009 ...... 4,610,000 2,691,741.25 7,301,741.25 0.00 7,301,741 .25 2010 ...... 4,900,000 2,434,971.25 7,334,971.25 0.00 7,334,971.25 2011 ...... 5,215,000 2, 1 59,258.75 7,374,258.75 0.00 7,374,258.75 2012 ...... 5,555,000 1,863,083.75 7,418,083.75 0.00 7,41 8,083.75 2013 ...... 1,900,000 1,657,596.25 3,557,596.25 0.00 3,557,596.25 2014 ...... 2,050,000 1,547,983.75 3,597,983.75 0.00 3,597,983.75 20 15 ...... 2,205,000 l,429,356.25 3,634,356.25 0.00 3,634,356.25 20 16 ...... 2,370,000 1,301,256.25 3,671,256.25 0.00 3,671 ,256.25 20 17 ...... 2,540,000 1,163,776.25 3,703, 776.25 0.00 3,703,776.25 2018 ...... 2,725,000 1,016,015.63 3,741,015.63 0.00 3,741,015.63 2019 ...... 2,915,000 857,390.63 3, 772,390.63 0.00 3,772,390.63 2020 ...... 3,115,000 687,796.88 3,802,796.88 0.00 3,802,796.88 2021 ...... 3,325,000 506,671.88 3,831,671.88 0.00 3,831,671.88 2022 ...... 3,555,000 313,171.88 3,868,171.88 0.00 3,868, l 71.88 2023 ...... 3,790,000 106,593.75 3,896,593.75 0.00 3,896,593.75 Totals ...... $7 1,300,000.00 $72,526,492.92 $143,826,492.92 $35,933,022.97 $179,759,515.89

(l) Excludes purchase payments forthe Refunded Certificates with the exception of the fiscal year ending June 30, 1993. (2) Net of capitalized interest on 1990 Certificates.

30 Senior Bond Debt Service Requirements The following table indicates the debt service on the outstanding Senior Bonds and the estimated debt service on the 1993 Electric Revenue Bonds. See "Qualified Obligations Purchase Payments" for payments with respect to outstanding Qualified Obligations.

ELECTRIC SYSTEM SENIOR BOND DEBT SERVICE REQUIREMENTS ( Cash Basis) Outstanding Senior Bonds(}) Fiscal Year Principal and Estimated 1993 Total Ending Sinking Fund Electric Revenue Debt June 30 Installments Interest Total Bonds Debt Service Service 1993(2) ...... $ 7,705,000 $13,315,647.50 $ 21,020,647.50 $ 0.00 $ 21,020,647.50 1994 ...... 8,145,000 9,027, 185.00 17,172,185.00 2,558,877 .08 19,731,062.08 1995 ...... 4,515,000 8,612,075.00 13,127,075.00 7,602,237.50 20,729 ,312.50 1996 ...... 9,160,000 8,191,590.00 17 ,351,590.00 3,397,905.00 20,749,495.00 1997 ...... 9,720,000 7,594,190.00 17,314,190.00 3,411,622.50 20,725,812.50 1998 ...... 10,420,000 6,945,065.00 17,365,065.00 3,418,512.50 20,783,577.50 1999 ...... 11,110,000 6,240,270.00 17,350,270.00 3,428,575.00 20,778,845.00 2000 ...... 8,400,000 5,589,332.50 13,989,332.50 7,428,910.00 21,418,242.50 2001 ...... 8,990,000 4,998,105.00 13,988,1 05.00 7,427,712.50 21,415,817.50 2002...... 9,685,000 4,358,732.50 14,043,732.50 7,370,333.75 21,414,066.25 2003 ...... 10,325,000 3, 726,460.00 14,051,460.00 7,366,960.00 21,418,420.00 2004...... 10,340,500 3,129,043.75 13,469,543.75 7,341,930.00 20,811,473.75 2005 ...... 11,298,500 2,504,807.50 13,803,307 .50 7,322,880.00 21,126,187.50 2006 ...... 11,550,000 1,846,325.00 13,396,325.00 7,259,287.50 20,655,612.50 2007 ...... 12,735,000 1,148,131.25 13,883, 131.25 6,828,780.00 20,711,911.25 2008 ...... 13,600,000 391,000.00 13,991,000.00 6, 783,682.50 20, 774,682.50 TOTALS .... $157,699,000(2) $87,617,960.00 $245,316,960.00 $88,948,205.83 $334,265, 165.83

(1) Excludes the Senior Bonds to be refunded by the 1993 Electric Revenue Bonds with the exception of fiscal year ending June 30, 1993. Interest, any premium and principal payments on the Senior Bonds to be refunded by the 1993 Electric Revenue Bonds are not deducted from the 1993 total due to the timing of the payment dates for such refunded bonds and 1993 Electric Revenue Bonds payment dates. ( 2) As of the date of this OfficialStatement, the City has made principal payments of $7,705,000 in the fiscal year ending June 30, 1993, leaving a principal balance of outstanding Senior Bonds (excluding the Senior Bonds to be refunded by the 1993 Electric Revenue Bonds) of $149,994,000.

31 SummaryPro jection of Operating Results of the Electric System The City has prepared a projection of operating results of the Electric System for the fiscal years ending June 30, 1993 through 1997. These projections show increases in revenue requirements beyond the revenues generated by the City's existing rates and the use of funds from the PCABF and RSA based on policies and procedures established by the City. See "THE ELECTRIC SYSTEM - Electric Rates and Charges." Revenue requirements are based on paying projected operating expenses, 1993 Purchase Payments, purchase payments with respect to the Prior Certificates and debt service on Senior Bonds previously issued by the City, and on meeting the Electric System's projected capital improvement program and other non-operating financial commitments. The projected amounts set forthbelow are based on certain assumptions made by the City. To the extent that actual future conditions vary from those assumed in preparing the projections, the actual results will vary from those projected. A 3.8% compound annual increase is indicated in revenue requirements for the five-year forecast period over the 1992 average charge level. PROJECTED OPERATING RESULTS (000) Fiscal Year Ending June 30 1993 1994 1995 1996 1997 Total Revenues From Sales (l) ...... $229,241 $238,019 $254,071 $271,380 $291,079 Other Operating Revenues ...... 536 442 441 444 447 Surplus Sales Revenue(2) ...... 6,328 8,097 5,807 1,000 959 Other Income ( 3) ...... 5,550 5,801 5,430 5,739 5,699 Total Gross Revenues ...... $241 ,655 $252,359 $265,749 $278,563 $298,184 Operating Expenses: Power Supply(4) San Juan Unit 4 ...... $ 1,612 $ 7,428 $ 10,105 $ 10,965 $ 11,933 Combustion Turbine ...... 1,137 1,186 1,475 1,493 1,511 San Onofre ...... 15,933 15,861 16,918 17,508 18,121 Intermountain Power ...... 81,800 88,360 91,172 92,510 94,114 Hoover ...... 848 1,057 961 990 1,019 Deseret ...... 21,889 22,197 18,384 14,083 14,900 BPA ...... 572 572 641 663 698 Power Contracts ...... 6,700 7,105 7,573 9,205 8,787 Other Power Supply ...... 28,835 26,806 31,299 35,929 44,456 Other O&M(5) ...... 26,873 20,776 24,432 24,152 25,309 Total Operating Expenses ...... $186,199 $191,348 $202,960 $207,498 $220,848 Total Net Revenues Excluding Depreciation and Amortization ...... $ 55,456 $ 61,011 $ 62,789 $ 71,065 $ 77,366 Senior Bond Debt Service(6)(7) ...... 21,020 19,731 20,729 20,750 20,726 Senior Bond Debt Service Coverage ...... 2.64 3.09 3.03 3.42 3.73 Renewal and Replacement Transfers(8) ..... 915 1,460 187 220 198 Net Surplus Revenue (9) ...... $ 33,521 $ 39,820 $ 41,873 $ 50,095 $ 56,442 Purchase Payments for Prior Certificates(lO) 5,320 2,520 2,543 2,570 2,619 1993 Purchase Payments(ll) ...... 0 3,229 4,152 4,153 4,152 Estimated Purchase Payments for San Juan Project(12) ...... 0 2,699 4,591 4,586 4,588 Total Purchase Payments ...... 5,320 8,448 11,286 11,309 11,359 Total Purchase Payments Coverage ...... 6.30 4.71 3.71 4.43 4.97 Balance forOther Purposes (13 ) ...... $ 28,201 $ 31,372 $ 30,587 $ 38,786 $ 45,083 (footnotes on fo llowing page)

32 ( 1) Includes rate increases of 1% effective in 1993 and assumes projected rate increases of 2% in 1994, 6% in 1995, 5% in 1996 and 5% in 1997. Includes refunds from Edison which the City disburses through the RSA. (2) Revenue from sales of surplus energy available from integrated resources and resulting from contract minimums for certain purchases. ( 3) Includes unrestricted interest income and miscellaneous income. ( 4) Power Supply costs as forecastby the Department. Includes credits pursuant to the Plan forDisposition of Surplus Funds from IPP as elected by the City. Power Contracts include contracts with Deseret, a capacity I energy exchange with BPA, and a Power Sales Agreement with Edison. Other Power Supply includes transmission expenses, nonfirm energy purchases, and purchases from Edison under wholesale rates. (5) Includes other operating expenses and equipment purchases. Excludes overhead expenses applied to capital projects. ( 6) Amounts shown on a cash basis. (7) Includes debt service on the 1993 Electric Revenue Bonds which the City expects to be delivered June 23, 1993. Excludes debt service on Senior Bonds to be refunded by the 1993 Electric Revenue Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE 1993 BONDS - Electric System Flow of Funds." (8) Payments to the Renewal and Replacement Account for the Electric System. (9) Surplus revenue available for application to Qualified Obligations or other purposes designated by the City. ( 10) Excludes purchase payments with respect to the Combustion Turbine Refunded Certificates and the Utilities Building Refunded Certificates. ( 11) Shown on a cash basis, based on the 1993 Purchase Payment schedule. The first principal payment is due October 1, 1994. (12) Estimated debt service on bonds to be issued to financethe purchase of an interest in San Juan Unit 4; estimated issue date in the first quarter of the fiscal year ending 1994. (13) Includes, among other things, transfers to the City's General Fund, ERANs, funds for Electric System capital improvements, working capital changes and developer's contribution.

33 Loads and Resources The following table sets forth historical and projected Electric System loads and resources.

HISTORICAL AND PROJECTED LOADS AND RESOURCES (MW) (1) Historical Projected Fiscal Year Ending June 30 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Peak loads ...... 470.9 493.0 522.7 496.8 511.2 530.0 531.5 544.8 571.6 591.8 ------Resources: BPA ...... 0.0 0.0 0.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 Combustion Turbine ...... 0.0 0.0 0.0 46.6 46.6 48.2 48.2 48.2 48.2 48.2 CDWR ...... 30.0 30.0 30.0 30.0 0.0 0.0 0.0 0.0 0.0 0.0 Deseret ...... 83.2 83.2 83.2 84.0 84.0 84.0 84.0 84.0 40.0 40.0 Edison PSA ...... 0.0 0.0 0.0 125.0 150.0 150.0 121.0 88.0 35.0 35.0 Hoover ...... 9.9 16.4 29.1 33.8 33.5 40.0 40.0 40.0 40.0 40.0 Intermountain Power Project ...... 211.6 211.6 21 1.6 21 1.6 211.6 211.6 211.6 211.6 21 1.6 211.6 PG&E ...... 20.0 20.0 20.0 20.0 20.0 0.0 0.0 0.0 0.0 0.0 San Juan Unit 4(2) ...... 0.0 0.0 0.0 0.0 0.0 0.0 45.0 50.0 50.0 50.0 SONGS ...... 67.9 67.9 67.9 67.9 67.9 67.9 67.9 67.9 67.9 67.9 Subtotal ...... 422.6 429. 1 441.8 642.9 637.6 625.7 641.7 613.7 516.7 516.7 Less Reserves and Losses ( 3) ...... 79.0 90.2 87.4 113.2 116.7 106.5 105.6 110.7 95.3 95.3 Net Resources ...... 343.6 --338.9 --354.4 529.7 520.9-- 519.2 536.l --503.0 421.4 421--.4

(1) Maximum resource capacity shown which may not coincide with City's peak demand. (2) Assumes integration for capacity credit under the 1990 IOA of 45 MW in the first quarter of the fiscal year ending 1994 and City's entire entitlement of 50 MW on January 1, 1995. (3) Reserves and transmission losses associated with integrated capacity resources. Beginning August 1, 1990, the City's reserve obligation to Edison is fixed at 15.25% of the resources' rated capacity delivered to the Edison system. Prior to August 1, 1990, the CDWR, Deseret, and PG&E resources were non- integrated resources and therefore, not subject to the reserve requirements of the IOA.

Labor Relations City employees are represented by various unions. See "Labor Relations" in Appendix C.

THE COMBUSTION TURBINE PROJECT

Description The CT is a natural-gas fired combustion turbine-generator unit owned by the City with a nominal power output of 48 MW and a heat recovery steam generator for emissions control and power augmentation. Construction of the combustion turbine-generator unit (the "Unit") was completed and the Unit was placed in commercial operation in May 1991. The CT is integrated under the 1990 IOA as a capacity resource. Under the 1990 IOA, the City receives a credit on its Partial Requirements Rate bill from Edison forcapacity and energy associated with the CT. The CT is integrated with Edison to be available for operation approximately six hours per day, five days per week for 50 weeks per year. The City performs all operation and maintenance with respect to the Unit. The "Combustion Turbine Project" under the Indenture and Installment Purchase Agreements consists of a 47 .7% interest in the CT.

34 UTILITIES BUILDING FACILITIES City Hall West consists of an eleven story office buildingof approximately 222,000 gross square feet. City Hall West is located at Anaheim Boulevard and West Harbor Place in the City, across Anaheim Boulevard from the City's existing civic center facilities. Construction of the officebuilding was completed in October 1992. Approximately 142,500 gross square feet of City Hall West is currently occupied by the Department and approximately 60,000gross square feet is occupied by other departments of the City and public entities related to the City, including the Agency. Approximately 19,500 gross square feet of space is currently unoccupied. The City may, from time to time, lease space in City Hall West to others. The "Utilities Building Facilities" under the Indenture and Installment Purchase Agreements consists of a 96. 7% interest in City Hall West.

OTHER ELECTRIC RESOURCES The City is a participant in a number of projects with other utilities. Construction and/ or operation of these projects is dependent upon, among other things, such other utilities timely meeting their respective payment obligations with respect to such projects. The capability of such utilities to provide such payment is dependent upon their continued ability to generate the necessary funds from internal or external sources. If a utility defaults in the performance of its obligations with respect to a project, the non-defaulting utilities may be required to expend additional funds or undertake additional activities.

Intermountain Power Project The City has a 13.225% (211.6 MW) entitlement in the coal-fired IPP Units 1 and 2 located near Lynndyl, Utah. Units 1 and 2 are rated at 800 MW net each, were declared in commercial operation in June 1986 and May 1987, respectively, and are integrated under the 1990 IOA with Edison. The City has entered into a power sales agreement with the IPA which obligates the City to its share of capacity and energy on a "take or pay" basis. IPA has issued bonds for the generating station of which there were approximately $5,279,496,333 principal amount outstanding as of April 30, 1993. Transmission of the output of IPP to the City and fiveother Southern Californiamunic ipalities is provided by a ± 500 kV DC transmission line rated at 1,920 MW from the generation station to Adelanto, California with an AC/DC converter at each end (the "Southern Transmission System"), which was placed in operation in May 1987. The Authority has provided payments-in-aid of construction with respect to the Southern Transmission System. The City's entitlement in the Southern Transmission System is 17.647% (338.8 MW). The Authority has issued bonds to fund such payments-in-aid of construction of which approximately $1 .2 billion principal amount was outstanding as of July 1, 1992. The City's entitlement in the Southern Transmission System is on a "take or pay" contract basis. Transmission service from Adelanto to the City is provided under agreements with the Los Angeles Department of Water and Power and Edison. On May 23, 1988, the IPP Coordinating Committee approved the Plan for Disposition of Surplus Funds (the "Plan") which set forth the manner in which about $370 million in surplus IPP construction funds were to be returnedto the IPP participants by IPA. The Plan provided that each participant receive a portion of the surplus construction fundsbased upon each respective participant's debt service obligation to IPA. The City is entitled to 13.225% of the surplus funds or about $49 million. In fiscal year 1987-88, the Electric System received about $13 million in the form of reduced bills for power purchased from IPA. The Electric System used $12 million of the remaining $36 million to offset the cost of power purchased from IPA in fiscal year 1988-89. The Electric System used $10 million of the remaining $24 million to offset the cost of power purchased in fiscal year 1989-90. The Electric System used $10 million of the remaining $14 million to offset the cost of power purchased in fiscal year 1990-91. In fiscal year 1991-92, the Electric System received an additional $4.8 million, which was added to the remaining $4 million. The Electric System used $8 million to offset the cost of power purchased in fiscal year 1991-92. The remaining $0.8 million, plus interest earnings, was used to offset portions of future power bills from IPA.

35 Hoover Uprating Project On August 17, 1984 the Hoover Power Plant Act of 1984 was signed into law. Pursuant to the Hoover Power Plant Act, the City was allocated 40 MW of capacity and approximately 52,000 MWh of associated energy annually by the Western Area Power Administration ("Western"). The City entered into contracts with the United States Bureau of Reclamation (the "Bureau") for the advancement of fundsfor construction and with Western for the purchase of power from the Hoover Uprating Project. Subsequently, the City entered into an assignment agreement with the Authority to assign its entitlement in returnfor the Authority's agreement to provide funds to the Bureau. As of March 31, 1993, the Authority had outstanding approxi­ mately $41.3 million principal amount of its bonds (including refunding bonds) to fund the City's share, as well as fiveother municipalities' shares, of funds to be advanced to the Bureau. Additionally, the City and the Authority have executed a power sales contract under which the City is entitled to its share of capacity and associated energy as it becomes available and has agreed to make monthly payments on a "take or pay" basis. A portion of the City's entitlement has been available since June 1987 at the Mead Substation. Transmission from Mead Substation to the City is provided by Edison. The City's entitlement varies from time to time as each of the seventeen Hoover units is uprated. As of December 31, 1992, 16 units had been uprated. The City's full entitlement, which is integrated under the 1990 JOA, will be available starting the second quarter of 1993.

Deseret Power Purchase The City entered into a power sales agreement with Deseret pursuant to which the City is entitled to purchase up to 90 MW, plus losses, of firm capacity and associated energy. Service began in May 1987 and will extend through December 1994. The City integrated 84 MW of capacity purchased from Deseret under provisions of the 1990 IOA. Power from Deseret is transmitted to the IPP plant and then via the Southern Transmission System and other transmission facilities to the City. The City is currently studying a new 40 MW power sale agreement with Deseret that would begin on the expiration of the existing contract and extend through 2004.

Bonneville Power Administration Agreement The City entered into a 20 year capacity sale/exchange agreement with BPA. Under the agreement, the City purchases from BPA 16 MW of capacity from November through April and 24 MW during May. From June through October, BPA provides 24 MW of capacity in exchange for the City providing 28.8 gigawatt hours of energy between October 1 and April 15 of each year. Energy associated with the capacity acquired from BPA that is used is returned to BPA during off-peak hours on the following day. The City has also entered into a 20 year firm transmission service agreement with the cities of Pasadena and Burbank for transmission of energy associated with the BPA agreement between the Nevada/Oregon border and the Edison control area at Sylmar Substation. The remaining firm transmission service fromSylmar to the City is provided by Edison. The City started receiving capacity and energy benefits from the BPA agreement under the provisions of the 1990 IOA in February 1991.

Power Sale Agreement with Edison As part of the 1990 Settlement Agreement, the City and Edison negotiated a power sales agreement which terminates December 31, 1998. Under the terms of the PSA the City purchases varying amounts of capacity and associated energy monthly. Capacity purchases range from zero to 150 MW at costs significantly below Edison's Partial Requirements Rate.

Other In addition to the City's integrated firm resources, the City purchases very small amounts of capacity and energy from Edison under the Partial Requirements Rate. The City has executed agreements with a number of other utilities to provide economy energy to the City as such energy is available at an economically attractive price and the City is able to use such energy. Recent operations have resulted in the overall

36 reduction of energy purchases from Edison under the Partial Requirements Rate to a level of less than 1 % of the City's total energy requirements.

Future Power Supply Resources The City is continually in the process of evaluating its existing power supply resources in combination with new power supply alternatives which consist of proposed resources and transmission facilities currently under study. San Juan Unit 4. The San Juan Generating Station ( the "Station") consists of a 4-unit, baseload coal­ firedelectric generating station located in northwesternNew Mexico, approximately 15 miles northwest of the City of Farmington, in San Juan County. The four units, which were put into operation between 1976 and 1982, have a combined net generating capacity of 1,614 MW, with Unit 4 rated at 498 MW. On April 26, 1991, the City and PNM entered into the San Juan Unit 4 Purchase and Participation Agreement (as amended, the "Purchase Agreement"). Under the Purchase Agreement, PNM agreed to sell to the City and the City agreed to purchase from PNM a 10.04 percent undivided ownership interest (providing approximately 50 MW) in Unit 4. In addition, the City agreed to purchase from PNM a 5.07 percent undivided ownership interest in facilities common to Units 3 and 4 and a 3.10 percent undivided ownership interest in facilities common to all four units of the Station. The purchase price to be paid by the City is $55,000,000, plus the City's proportionate share of the prepaid items (insurance, coal inventory, etc.), currently estimated to be approximately $600,000 to $700,000. The closing date is currently scheduled to be no later than August 31, 1993. The City anticipates that it will finance this purchase using a portion of the proceeds of bonds to be issued in the fiscal year ending June 30, 1994. Upon transfer of Unit 4 and the Station common facilities to the City, Unit 4 will be jointly owned by PNM (45.485%), the City of Farmington, New Mexico (8.475%), M-S-R Public Power Agency (28.8%), The County of Los Alamos, New Mexico (7.20%) and the City (10.04%). PNM and Utah Associated Municipal Power Systems ("UAMPS") are currently negotiating the purchase by UAMPS from PNM of an undivided ownership interest in Unit 4. PNM and Tucson Electric Power Company ("TEP") are equal owners of Units 1 and 2, whereas other entities, known as "unit participants," along with PNM, own undivided interests in Units 3 or 4. Unit 4 commenced commercial operation in April 1982. For the calendar year ended 1992, the average operational availability for Unit 4 was 89.64%, the average capacity factor for Unit 4 was 63.16% and the net generation of Unit 4 was 2,715,000 MWh. Mead-Phoenix Transmission Project. The Mead-Phoenix Transmission Project consists of a 256-mile, 500 kV AC transmission line that will extend between a southern terminus at the existing Westwing Substation (in the vicinity of Phoenix, Arizona) and a northern terminus at Marketplace Substation, a new substation to be located approximately 17 miles southwest of Boulder City, Nevada. The new line will be looped through the new 500 kV switchyard to be constructed in the existing Mead Substation in southern Nevada and will have an estimated initial transfer capability of 1,300 MW. By connecting to Marketplace Substation, the Mead-Phoenix Transmission Project will interconnect with the Mead-Adelanto Transmission Project and with the existing McCullough Substation. The Authority has executed an ownership agreement providing it with an 18.3077% member-related ownership share in the Westwing-Mead project component, a 17.7563% member-related ownership share in the Mead Substation project component, and a 22.4082% member-related ownership share in the Mead-Marketplace project component. The Authority has sold, on a "take-or-pay" basis, the entire capability of its member-related ownership interest through transmission service contracts with the City and eight other members of the Authority. The City's entitlement shares in the three components are 3.6154%, 8.8781 % and 5.9395%, respectively. The Authority will have two separate and independent ownership interests in this project: one interest forthe Authority's members participating in the project, and one interest for Western which will provide the funding for that interest. The construction manager has estimated the construction costs for the project at $330 million, of which $63.5 million would be the Authority's member-related share. The Authority has set aside approximately $96 million of the proceeds of its Multiple Project Revenue Bonds, issued January 1990, for capital costs, reserves, interest during

37 construction and other owner costs for this project. The schedule for the project indicates that construction will begin in the first quarter of 1994 for the transmission line and the second quarter of 1994 for the substations and switchyards. The estimated commercial operation date for the project is December 1995. See "Multiple Project Revenue Bonds." Mead-Adelanto Transmission Project. In connection with the Mead-Phoenix Transmission Project, the City, certain members of the Authority and other utilities have undertaken the Mead-Adelanto Transmission Project. The Mead-Adelanto Transmission Project consists of a 202-mile, 500 kV AC transmission line that will extend between a southwest terminus at the existing Adelanto Substation in southern California and a northeast terminus at Marketplace Substation, a new substation to be located approximately 17 miles southwest of Boulder City, Nevada. By connecting to Marketplace Substation, the new line will interconnect with the Mead-Phoenix Transmission Project and the Mead-Adelanto Transmission Project will interconnect with the existing McCullough Substation in southern Nevada. The new line will have an estimated initial transfer capability of 1,200 MW. The Authority has executed an ownership agreement providing it with a total of a 67.9167% member-related ownership share in the project. The other owners of the line are M-S-R Public Power Agency and the City of Vernon. The Authority has sold the entire capability of its member-related ownership interest, on a "take-or-pay" basis, through transmission service contracts with the City and eight other members of the Authority. The City's entitlement share is 9.1666%. The Authority will have two separate and independent ownership interests in this project: one interest for the Authority's members participating in the project, and one interest for Western which will provide the funding for that interest. The construction manager has estimated the construction costs forthe project at $274.4 million, of which $186.3 million would be the Authority's member-related share. The Authority has set aside approximately $264.0 million of the proceeds of its Multiple Project Revenue Bonds, issued January 1990, for capital costs, reserves, interest during construction and other owner costs for this project. The transmission line construction contract was awarded April 28, 1993; modifications to the Adelanto Substation are scheduled to begin in November 1993 and construction of the Marketplace Substation is scheduled to begin in February 1994. The estimated commercial operation date for the project is December 1995, which coincides with the scheduled completion of the Mead-Phoenix Transmission Project. See "Multiple Project Revenue Bonds." Adelanto-Lugo Transmission Project. The City, together with the cities of Azusa, Banning, Burbank, Colton, Glendale, Pasadena, Riverside and Vernon (all members of the Authority) are participating with other entities in studying alternatives for securing additional transmission capability between the existing Adelanto Switching Station owned by the Los Angeles Department of Water and Power and the existing Lugo Substation owned by Edison. These entities have executed the Adelanto-Lugo Transmisson Project Planning Agreement to study the alternatives, which include a new transmission line and various long-term transmission service arrangements with Edison and the Los Angeles Department of Water and Power that would address transmission capability between Adelanto Switching Station and the point of delivery of each of such entities. If constructed, it is presently envisioned that the new transmission line would be 15 to 20 miles in length, and would operate at 500 kV. It is also expected that, to the extent its members participate in this project, the Authority will own and finance a portion of the project on behalf of its participating members, who would purchase transmission service from the Authority.

38 Multiple Project Revenue Bonds. In January19 90, the Authority issued $647,750,000principal amount of Multiple Project Revenue Bonds forthe purpose of fundingelectric generation and/ or transmission projects undertaken by the Authority. The Authority intends that as a project progresses and Authority members indicate their interest in the transmission project, the requisite contracts will be executed to permit a portion of the proceeds of the bonds to be used forthe project, with take-or-pay contracts forthe interested Authority members. In October 1992, the Authority transferredapproximately $96 million of proceeds to fund costs of the Authority's interest in the Mead-Phoenix Transmission Project. In October 1992, the Authority transferredapproximately $264 million of such proceeds to fund costs of the Authority's interest in the Mead­ Adelanto Transmission Project. Other. The City, along with the cities of Azusa, Banning, Colton and Riverside, is evaluating the potential feasibility of the Lake Elsinore Pumped Storage Project and has received a FERC preliminary permit on behalf of itself and Azusa, Banning, Colton, and Riverside.

CERTAIN FACTORS AFFECTING THE UTILITY INDUSTRY The electric utility industry generally has experienced and is experiencing various problems, including increased competition, both in selling electricity and purchasing resources, increased attention focused on environmental protection issues, including increasing concern regarding potential health effects from electric and magnetic fields associated with appliances, computers, power lines and other electrical sources, and regulatory agencies that have restricted cost recovery from rates, thereby affecting the planning process of many utilities. The industry continues to face problems related to licensing procedures, litigation and other factors which may delay the construction and increase the cost of new facilities or limit the use of, or necessitate costly modification to, existing facilities. Although the City is generally not affected by the regulatory approval process associated with investor-owned utilities, it can be affected by these activities to the extent that it participates in business arrangements with such utilities. It can be expected that these influences will continue to affect the City and its planning and that their overall effect will be to increase the cost of business for all utility companies.

39 SUMMARY OF THE INSTALLMENT PURCHASE AGREEMENTS Purchase of the Project Pursuant to the Installment Purchase Agreements, the Financing Authority agrees to sell the Project to the City and the City agrees to purchase the Project from the Financing Authority. Title to all or any portion of the Project will pass to the City on the Delivery Date.

Acquisition The Financing Authority agrees to acquire the Project pursuant to the Installment Purchase Agreements and appoints the City as its agent for the purposes of acquisition of the Project. The City, as agent of the Financing Authority, shall cause the acquisition of the Project to be diligently completed. The City, as agent for the Financing Authority, shall have the right to make any changes to the composition and description of the Project, or of any component thereof, whenever the City deems such changes to be necessary and appropriate. The City is not, however, permitted to make any changes which alter the essential nature of the Project or impair the ability of the City to make 1993 Purchase Payments.

1993 Purchase Payments; Additional Purchase Payments The 1993 Bonds are secured by, among other things, Project Revenues, which consist of 1993 Purchase Payments to be made by the City under the Installment Purchase Agreements. The Installment Purchase Agreements provide that the City shall make the 1993 Purchase Payments which, in the aggregate, shall be in an amount sufficient for the payment in full of all obligations to the owners of the 1993 Bonds from time to time Outstanding under the Indenture, including the interest components and principal components payable with respect to such 1993 Purchase Payments, less the aggregate amount of other moneys available for such payment pursuant to the Indenture. The 1993 Purchase Payments shall be paid to the Trustee, as assignee of the Financing Authority, from Surplus Revenues in the Qualified Obligations Account ( described in "SECURITY AND SOURCES OF PAYMENT FOR THE 1993 BONDS - Electric System Flow of Funds") and deposited by the Trustee in the Purchase Payment Account. For the purpose of determining the amount to be deposited into the QualifiedObligations Account with respect to the 1993 Bonds in any month, each principal component of 1993 Purchase Payments shall accrue ratably over the 12 months immediately preceding the October 1 on which such principal component is due and each interest component of 1993 Purchase Payments shall accrue ratably over the six months immediately preceding the Interest Payment Date on which such interest component is due. The Installment Purchase Agreements also provide that the City shall, in addition to the 1993 Purchase Payments, make Additional Purchase Payments, which are to be paid to the Trustee, the Financing Authority or the United States Treasury Department upon demand by the Trustee or the Financing Authority, as the case may be.

Covenants of the City and the Financing Authority Certain other covenants by the City and the Financing Authority in the Installment Purchase Agree­ ments are summarized below: (i) The City will not create, assume or suffer to exist any mortgage, deed of trust, pledge, security interest, encumbrance, lien or charge of any kind upon the Electric System which impairs the City's ability to comply with the rate covenant set forth in the Installment Purchase Agreements. (ii) The City will operate and maintain the Electric System in accordance with all governmental laws, ordinances, approvals, rules, regulations and requirements and to keep the Electric System in good repair, working order and condition. (iii) The City and the Financing Authority will not invest the proceeds of the 1993 Bonds in a manner which would result in a loss of the exclusion fromgross income for Federal income tax purposes of the interest on the 1993 Bonds.

40 (iv) The City and the Financing Authority will comply with the applicable requirements of the Internal Revenue Code of 1986, as amended, necessary to maintain the exclusion from gross income for Federal income tax purposes of the interest on the 1993 Bonds. (v) The City will keep, or cause to be kept, proper books of record and account, prepared in accordance with generally accepted accounting principles, in which complete and accurate entries shall be made of all transactions of or in relation to the business, properties and operations of the Electric System.

Events of Default; Remedies Each of the followingevents constitutes an Event of Default: (i) the failureby the City to pay in fullany I 993 Purchase Payment, Additional Purchase Payment or other payment required under the respective Installment Purchase Agreements at the time and in the manner specified therein; (ii) the failure by the City to observe or perform any covenant, condition, agreement or provision in the respective Installment Purchase Agreements on its part to be observed or performed, other than as referred to in clause (i), or breach of any warranty by the City contained in the respective Installment Purchase Agreements, for a period of 60 days after written notice has been given to the City by the Financing Authority or the Trustee specifying such failure or breach and requesting that it be remedied; provided, however, in the reasonable opinion of the City if such failure or breach can be remediedbut not within such 60 day period and if the City has taken all action reasonably possible to remedy such failureor breach within such 60 day period, such failureor breach shall not become an Event of Default for so long as the City shall diligently proceed to remedy it in accordance with and subject to any directions or limitations of time established by the Financing Authority or the Trustee; (iii) the filing by the City of a petition in voluntary bankruptcy, for the composition of its affairs or for its corporate reorganization under any state or federal bankruptcy or insolvency law, or making an assignment for the benefit of creditors, or admitting in writing to its insolvency or inability to pay debts as they mature, or consenting in writing to the appointment of a trustee or receiver for itself or the whole or any substantial part of the Electric System; (iv) the entering of an order, judgment or decree by a court of competent jurisdiction declaring the City insolvent, or bankrupt, or the appointment of a trustee or receiver of the City or of the whole of or any substantial part of the Electric System, or approving a petition filed against the City seeking reorganization of the City under any applicable law or statute of the United States or any state thereof, and such order, judgment or decree shall not be vacated or set aside or stayed within 60 days from the date of the entry thereof; or ( v) the assumption under the provisions of any other law forthe relief or aid of debtors by any court of competent jurisdiction of custody or control of the City, which custody or control shall not be terminated within 60 days. Upon the occurrence of an Event of Defaultunder an Installment Purchase Agreement, and in each and every case during the continuance of such Event of Default, the Trustee may take whatever action, at law or in equity, as may appear necessary or desirable to collect the respective 1993 Purchase Payments, Additional Purchase Payments and any other payments then due and thereafter to become due under such Installment Purchase Agreement or to enforcethe performance and observance of any obligation, covenant, agreement or provision contained in such Installment Purchase Agreement. In addition, the Trustee may take whatever other legal action may appear necessary or desirable to enforce their rights and the rights of the owners of the 1993 Bonds. Notwithstanding the foregoing, no such action shall include any remedy of acceleration.

Amendment The Installment Purchase Agreements may not be amended except by the written agreement of the City and the Financing Authority, with the writtenconsent of the Trustee pursuant to the terms of the Indenture. The Indenture provides that the Financing Authority shall not consent to any amendment, alteration or modification of the Installment Purchase Agreements, other than amendments which (i) cure ambiguities, supply omissions, or cure or correct a defector inconsistent provision, (ii) clarify matters or questions arising under such Installment Purchase Agreement as are necessary or desirable and not contrary to or inconsistent with the Indenture, (iii) in the opinion of Counsel do not materially adversely affect the rights of the owners of the 1993 Bonds, or (iv) with the written consent of the owners of the 1993 Bonds representing a majority in

41 aggregate principal amount of the outstanding 1993 Bonds, exclusive of Financing Authority-owned 1993 Bonds. No such amendment, alteration or modification shall be effective unless and until there shall have been filed with the Trustee an opinion of Counsel stating that such amendment, alteration or modificationhas been duly and lawfully entered into by the parties thereto, is authorized or permitted by the Indenture and is valid and binding upon the parties thereto in accordance with its terms.

SUMMARY OF THE INDENTURE Funds and Accounts The Indenture establishes a special trust fund for the 1993 Bonds which is comprised of the following accounts: the Purchase Payment Account, the Reserve Account and the Acquisition Account. Within the Purchase Payment Account, the Indenture establishes the following subaccounts: the Combustion Turbine Purchase Payment Subaccount and the Utilities Building Purchase Payment Subaccount. Purchase Payment Account. The Trustee is required pursuant to the Indenture to deposit into each Purchase Payment Subaccount the following amounts: (i) on the date of initial issuance of the 1993 Bonds, from the proceeds of the sale of the 1993 Bonds, a specified amount of accrued interest; (ii) when received, the 1993 Purchase Payments made by the City pursuant to the Installment Purchase Agreements; (iii) from time to time, moneys transferredfrom the Reserve Account to the extent that the amount available in the Purchase Payment Subaccount on any Purchase Payment Date is less than the amount necessary to pay the principal and interest on any 1993 Bond on such date; (iv) amounts delivered to the Trustee by the Financing Authority for the payment of any redemption premiums pursuant to the Indenture; and (v) other moneys received by the Trustee pursuant to the Installment Purchase Agreements required to be or accompanied by directions that they be paid into the Purchase Payment Subaccounts. The Trustee shall withdraw moneys from the Purchase Payment Subaccounts at such times and in such amounts as are necessary to make payments of the principal, interest and redemption premiums, if any; provided, however, that such payments shall be deemed made firstfrom investment income, if any, transferred to the Purchase Payment Subaccount from the Reserve Account pursuant to the Indenture and investment income, if any, received with respect to moneys deposited to the Purchase Payment Subaccount from the proceeds of the sale of the 1993 Bonds. The amounts deposited in the Purchase Payment Subaccount fromthe proceeds of the sale of the 1993 Bonds, and the investment income therefrom, will be applied to the payment of interest on the 1993 Bonds as set forth in the Indenture. Reserve Account. The Reserve Account is established with the Trustee as a reserve for payment when due of the principal and interest on the 1993 Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE 1993 BONDS - Reserve Account." Acquisition Account. The Trustee is required pursuant to the Indenture to deposit into the Acquisition Account the portion of the proceeds of the 1993 Bonds specified in the Indenture. See "SECURITY AND SOURCES OF PAYMENT FOR THE 1993 BONDS - Reserve Account." The costs or expenses of preparing, authorizing, issuing, selling and delivering the 1993 Bonds shall be paid from the Acquisition Account. Disbursement of moneys is to be made by the Trustee upon the receipt of a requisition signed by the Executive Director or his designee. To the extent other moneys are not available for the purpose of paying the principal and interest on the 1993 Bonds, amounts in the Acquisition Account shall be transferred to the Purchase Payment Account and applied by the Trustee for such purpose.

42 Investment of Accounts All moneys held by the Trustee in the Acquisition Account and the Purchase Payment Account are to be invested and reinvested to the fullest extent practicable in Permitted Investments ( defined below) in accordance with the Indenture. Such deposits and investments shall mature not later than such times as shall be necessary to provide moneys when needed for payments to be made from such accounts and in any event not later than the final maturity of the 1993 Bonds. Notwithstanding the foregoing, moneys deposited in the Purchase Payment Account from the proceeds of the sale of the 1993 Bonds will be held in cash by the Trustee or will be invested and reinvested by the Trustee in obligations described in clauses (i) through (iv) of the definition of Government Obligations. Moneys in the Reserve Account are to be invested and reinvested by the Trustee to the fullest extent practicable in Permitted Investments which mature or are available not more than 15 years from the date of investment. Permitted Investments ("Permitted Investments") shall include, except to the extent not permitted by the laws of the State of California: (i) Government Obligations; (ii) any of the following obligations of federal agencies not guaranteed by the United States of America: (a) debentures issued by the Federal Housing Administration; (b) participation certificatesor senior debt obligations of the Federal Home Loan Mortgage Corporation or Farm Credit Banks (consisting of Federal Land Banks, Federal Intermediate Credit Banks or Banks for Cooperatives); (c) bonds of any federal home loan bank established under said act and stocks, bonds, debentures, participations and other obligations of or issued by the Federal National Mortgage Association, the Student Loan Marketing Association, the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation; and bonds, notes or other obligations issued or assumed by the International Bank for Reconstruction and Development; (iii) interest-bearing demand or time deposits (including certificates of deposits) in federal banks and banking associations (including the Trustee) or State of California chartered banks, provided that (a) in the case of a savings and loan association, such demand or time deposits shall be fully insured by the Federal Savings and Loan Insurance Corporation, or the unsecured obligations of such savings and loan association shall be rated in one of the two highest rating categories of Moody's or S&P, and (b) in the case of a bank, such demand or time deposits shall be fullyinsured by the Federal Deposit Insurance Corporation, or the unsecured long term obligations of such bank ( or the unsecured obligations of the parent bank holding company of which such bank is the lead bank) shall be rated in one of the two highest rating categories of Moody's or S&P; (iv) repurchase agreements entered into with financial institutions such as banks or trust companies organized under the laws of the State of California or national banks or banking associations, insurance companies or government bond dealers reporting to, trading with, and recognized as a primary dealer by, the Federal Reserve Bank of New York and a member of the Securities Investors' Protection Corporation or with a dealer or parent holding company provided that: (a) the unsecured obligations of any financial institution shall be rated in one of the two highest rating categories of Moody's or S&P, or such financial institution shall be the lead bank of a banking holding company whose unsecured long-term obligations are rated in one of the two highest rating categories of Moody's or S&P; (b) the most recent reported combined capital, surplus and undivided profits of such financial institution shall be not less than $100 million; ( c) the repurchase obligation under any such repurchase obligation shall be required to be performedin not more than thirty (30) days or upon demand; and ( d) the entity holding such securities shall have a valid and perfected first security interest therein for the benefit of the Trustee under the California Commercial Code or pursuant to the book entry procedures described by 31 C.F.R. 306. 1 et seq. or 31 C.F.R. 850.0 et seq. and are rated in one of the two highest rating categories of Moody's or S&P; (v) bankers' acceptances endorsed and guaranteed by financial institutions described in clause (iv) above;

43 (vi) obligations, the interest on which is excluded from federal income taxation under Section 103 of the Internal Revenue Code of 1986, as amended and which are rated in one of the two highest rating categories of Moody's or S&P; (vii) money market or mutual funds which invest solely in Government Obligations or in obligations described in the preceding clause (ii) of this definition or money market funds which are rated in the highest rating category by Moody's or S&P; (viii) units of a taxable governmentmoney market portfolio comprised solely of obligations listed in (i), (ii) or (iv) above; (ix) any investment which is a legal investment for proceeds of the 1993 Bonds, and which investment is made pursuant to an agreement between the Financing Authority or the Trustee or any successor Trustee and a financial institution or governmental body whose long term obligations are rated in one of the two highest rating categories of Moody's or S&P; (x) commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical rating as provided for by Moody's or S&P, of issuing corporations that are organized and operating within the United States and having total assets in excess of five hundred million dollars ($500,000,000) and having an "AA" or higher rating for the issuer's debentures or other long-term unsecured obligations, other than commercial paper, as provided for by Moody's or S&P and provided that purchases of eligible commercial paper may not exceed 180 days maturity nor represent more than 10 percent of the outstanding paper of an issuing corporation; (xi) any general obligation of a bank or insurance company whose long term debt obligations are rated in one of the two highest rating categories of Moody's or S&P; or (xii) any other lawful investment for City funds under the Government Code of the State of California as amended from time to time. "Government Obligations" means any of the following, to the extent noncallable by the issuer thereof: (i) obligations of, including specified portions thereof (which may consist of specifiedportions of the interest thereon), or obligations, including specified portions thereof (which may consist of specified portions of the interest thereon), the payment of the principal of and interest on which are unconditionally guaranteed by, the United States; (ii) bonds, debentures or notes issued by any of the following Federal Agencies: Banks for Cooperatives, Federal Land Banks, Federal Financing Bank or Federal National Mortgage Association (including Participation Certificates); (iii) public housing bonds, temporary notes, or preliminary loan notes, fully secured by contracts with the United States; (iv) bonds, debentures or notes issued by any Federal agency created by an act of Congress after the execution and delivery of the Indenture, the payment of the principal of and interest on which are unconditionally guaranteed by the United States; and (v) direct general obligations of, or obligations the payment of the principal of and interest on which are unconditionally guaranteed by, the State of California, or local agencies thereof. Obligations purchased as an investment of moneys in any account created under the provisions of the Indenture shall be deemed at all times to be a part of such account or subaccount and any profit realized from the liquidation of such investment and any income or interest received on account of such investment shall be credited to, and any loss resulting from the liquidation of such investment shall be charged to, such account. In determining the amount in any fund or account established under the provisions of the Indenture, the value of investments credited to such fund or account shall be calculated at the lower of cost or par of such obligations (including accrued interest and brokerage commissions, if any); except that any investments having a maturity of more than 5 years from the date of investment shall be valued at least annually at the market value thereof. Except as otherwise provided in the Indenture, the Trustee shall sell at the best price obtainable or present for prepayment or transfer as provided in the next sentence any obligation so purchased as an investment whenever it shall be requested in writing by an Authorized Authority Representative to do so or whenever it shall be necessary in order to provide moneys to meet any payment or transfer from any account

44 held by it. In lieu of such sale or presentment for prepayment, the Trustee may, in making the payment or transfer from any account mentioned in the preceding sentence, transfer such investment obligations or interest appertaining thereto at its acquisition cost if such investment obligations shall mature or be collectable at or prior to the time the proceeds thereof shall be needed and such transfer of investment obligations may be made in book-entry form. The Trustee shall not be liable or responsible formaking any such investment in the manner provided above or for any loss resulting from any such investment. The Trustee may act as principal or agent in the acquisition or disposition of any investment.

The Trustee The Bank of New York Trust Company of California has been appointed the Trustee. The Indenture requires the Trustee to be a bank or trust company organized and doing business under the laws of the United States or any state thereof, authorized under such laws to exercise corporate trust powers and subject to supervisionor examination by federal or state authority and, if required by law, qualified to do business in the State of California. Any successor Trustee shall have a combined capital and surplus of at least seventy-five million dollars ( $7 5,000,000). The Trustee may at any time resign by giving written notice to the Financing Authority and by giving to the owners of the 1993 Bonds notice by mail. Upon receiving such notice of resignation, the Financing Authority, at the direction of the City (which direction shall not be unreasonably withheld), shall promptly appoint a successor trustee. If no successor trustee has been so appointed and accepted appointment within 60 days after the mailing of such notice of resignation, the resigning trustee or any owner of the 1993 Bonds may petition any court of competent jurisdiction for the appointment of a successor trustee. If at any time (i) the Trustee ceases to satisfy the eligibility requirements and fails to resign after written request by the Financing Authority or by any owner who has been a bona fide owner of a 1993 Bond for at least six months, (ii) the Trustee becomes incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver or conservator of the Trustee or of substantially all of its property shall be appointed or any public officer takes charge or control of the Trustee or substantially all of its property or affairs for the purpose of rehabilitation, conservation or liquidation, or (iii) at such time as there is no Event of Default under the Indenture, the City shall determine to remove the Trustee, then the Financing Authority, with the written approval of the City (which approval shall not be unreasonably withheld), may remove the Trustee and appoint a successor trustee, or any such owner may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. The owners of 1993 Bonds representing a majority of the aggregate principal amount of outstanding 1993 Bonds may at any time remove the Trustee and appoint a successor trustee by an instrument or concurrent instruments signed in writing by such owners. Any resignationor removal of the Trustee and appointment of a successor trustee becomes effective upon the acceptance of such appointment by the successor trustee. The Trustee under the Indenture may appoint a paying agent (the "Paying Agent") for the 1993 Bonds with the prior consent of the Financing Authority at the direction of the City. The Paying Agent is required to be a bank or trust company duly organized under the laws of the United States or any state or territorythereof and having a capital stock and surplus aggregating at least $10,000,000. Any Paying Agent may at any time resign by giving at least 60 days' written notice to the Trustee and the Financing Authority. Any Paying Agent may be removed at any time by an instrument filed with such Paying Agent and the Trustee.

Events of Default; Remedies The existence of an Event of Default under an Installment Purchase Agreement is an Event of Default under the Indenture. If an Event of Defaulthappens and is continuing, the Trustee in its discretion may, and upon the written request of the owners of the outstanding 1993 Bonds representing not less than a majority of the aggregate principal amount of the unpaid 1993 Bonds shall, upon notice in writing to the Financing Authority and the

45 City, pursue any available remedy at law or in equity to enforce the payment of the principal of, interest and premium, if any, on the 1993 Bonds and to enforce the rights of the Trustee under or with respect to the Indenture; provided, that, such remedies shall not include any remedy of acceleration. All moneys received by the Trustee pursuant to any right given or action taken under the Indenture or held in any fundor account established by such Indenture are to be applied, after the payment of all fees,costs and expenses of such Trustee, in the following order: First: To the payment to the persons entitled thereto of all interest then due and unpaid on the 1993 Bonds, if the amount available is not sufficient to pay in full any interest maturing on the same date, ratably to the persons entitled thereto; Second: To the payment to the persons entitled thereto of the unpaid principal on the 1993 Bonds then due and payable on the 1993 Bonds, if the amount available is not sufficient to pay in full all the 1993 Bonds due on any date, ratably to the persons entitled thereto without any discrimination or preference; and Third: To the payment of interest on overdue installments of principal and interest, on a pro rata basis in the event that the available amounts are insufficient to pay all such interest in full. No owner of 1993 Bonds has any right to institute any suit, action or proceeding for any remedy under or upon the Indenture or the Installment Purchase Agreements or the 1993 Bonds unless (i) there has occurred and is continuing an Event of Default of which the Trustee has been notified; (ii) the owners of the Outstanding 1993 Bonds representing at least a majority ( determined pursuant to the Indenture) of the aggregate principal amount of the 1993 Bonds Outstanding thereof have made a written request to the Trustee (iii) said owners have afforded the Trustee 60 days to proceed to exercise its rights, remedies and powers under the Indenture or to institute the suit, action or proceeding in its own name and have offered indemnificationto the Trustee as provided in the Indenture; (iv) the Trustee has failedor refused thereafter to exercise such rights, remedies and powers or to institute the suit, action or proceeding in its own name; and ( v) no direction inconsistent with such written request has been given to the Trustee during such 60 day period by the owners of a majority in aggregate principal amount of 1993 Bonds then Outstanding (determined in accordance with the Indenture).

Defeasance The Indenture provides that the Financing Authority may pay and discharge the indebtedness on any or all of the Outstanding 1993 Bonds in any one or more of the following ways: (a) by paying or causing to be paid the principal of and interest and premium (if any) on the 1993 Bonds, as and when the same become due and payable; (b) by irrevocably depositing with the Trustee, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established with the Trustee pursuant to the Indenture and the Installment Purchase Agreements, is fully sufficient to pay such 1993 Bonds, including all principal, interest and premiums (if any); or (c) by irrevocably depositing with the Trustee or any other fiduciary, in trust, Defeasance Securities ( as definedin the Indenture) in such amount as Bond Counsel or an Independent Accountant shall determine will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established with the Trustee pursuant to the Indenture and the Installment Purchase Agreements, be fully sufficientto pay and discharge the indebtedness on such 1993 Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; and if such 1993 Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been mailed pursuant to the Indenture or provision satisfactory to the Trustee shall have been made for the mailing of such notice then, at the written request of the Financing Authority, and notwithstanding that any of such 1993 Bonds shall not have been surrendered for payment, the pledge of the Project Revenues and other fundsprovided for in the Indenture with respect to such 1993 Bonds, and all other pecuniary obligations of the Financing Authority under the Indenture with respect to all such 1993 Bonds, shall cease and terminate, except only the obligation of the Financing Authority to pay or cause to be paid to the owners of such 1993 Bonds not so surrendered and paid all sums due thereon from amounts set aside for such purpose as aforesaid, and all expenses and costs of the Trustee. Any funds held by the Trustee following

46 any payment or discharge of the Outstanding 1993 Bonds which are not required for said purposes shall be paid over to the Financing Authority.

Unclaimed Moneys The Indenture provides that any moneys held by the Trustee in trust for the payment and discharge of the principal, interest and redemption price, if any, on the 1993 Bonds which remain unclaimed for one ( 1) year after the date when such payment has become due and payable, shall, at the request of the Financing Authority be repaid by the Trustee to the Financing Authority, and the owners shall look only to the Financing Authority for the payment of the principal, interest and redemption premium, if any, on such 1993 Bonds.

Amendment The Indenture may be modified or amended at any time by a supplemental indenture, without the consent of any 1993 Bond owners, to the extent permitted by law, but only forany one or more of the following purposes: (a) to add to the covenants and agreements of the Financing Authority contained in the Indenture, other covenants and agreements thereafter to be observed, to pledge or assign additional security for the 1993 Bonds ( or any portion thereof) , or to surrender any right or power therein reserved to or conferred upon the Financing Authority; (b) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defectiveprovision, contained in the Indenture, or in any other respect whatsoever, as the Financing Authority may deem necessary or desirable; (c) to modify, amend or supplement the Indenture in such manner as to permit the qualification of the Indenture under the Trust Indenture Act of 1939, as amended, or any similar federal statute in effect after the date of execution and delivery of the Indenture, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute; ( d) to amend any provision of the Indenture relating to the Internal Revenue Code of 1986, as amended, to any extent whatsoever but only if and to the extent such amendment will not adversely affect the exclusion from gross income of interest on any of the 1993 Bonds under the Internal Revenue Code of 1986, as amended, in the opinion of Bond Counsel; or ( e) to facilitate the issuance of additional obligations of the City pursuant to the Installment Purchase Agreements. Any other modificationor amendment of the Indenture may be made only with the written consent of the owners of the 1993 Bonds representing at least a majority of the aggregate principal amount of the 1993 Bonds then Outstanding at the time such consent is given. No modification or amendment may, however, be made to extend the maturity of or reduce the interest rate on any 1993 Bond or otherwise alter or impair the obligations of the Financing Authority to pay the principal, interest or premium (if any) at the time and place and at the rate and in the currency provided therein of any 1993 Bond without the express written consent of the owner of such 1993 Bond, and no amendment or modification shall reduce the percentages or otherwise affect the classes of 1993 Bonds issued pursuant to the Indenture the consent of the respective owners of which is required to effect any modification or amendment or, without its written consent thereto, modify any of the rights or obligations of the Trustee.

LITIGATION At the time of delivery and payment for the 1993 Bonds, the City Attorney and/ or the Financing Authority Counsel will certify that there is no litigation pending or, to the knowledge of the City and/ or the Financing Authority, threatened, questioning (i) the corporate existence of the City, or the title of the officers of the City to their respective offices, or the validity of the 1993 Bonds or the power and authority of the Financing Authority to issue the 1993 Bonds or (ii) the authority of the City to fix,charge and collect rates for the sale of power and energy by the City as provided in the Installment Purchase Agreements.

VERIFICATION OF MATHEMATICAL COMPUTATIONS Upon the delivery of the 1993 Bonds, Ernst & Young, independent certified public accountants, will deliver a report stating that the firm has reviewed (a) the mathematical accuracy of certain computations

47 relating to the adequacy of the Combustion Turbine Escrow Securities and the interest thereon to pay when due the principal and the prepayment premium, and interest due on the Combustion Turbine Refunded Certificates on the prepayment date thereof, (b) the computations of actuarial yield of the 1993 Bonds and Combustion Turbine Escrow Securities which support the conclusion of Co-Bond Counsel that interest on the 1993 Bonds is exempt from Federal income taxation, (c) the mathematical accuracy of certain computations relating to the adequacy of the Utilities Building Escrow Securities and the interest thereon to pay when due the principal and the prepayment premium, and interest due on the Utilities Building Refunded Certificateson the prepayment date thereof, and (d) the computation of actuarial yield on the 1993 Bonds and Utilities Building Escrow Securities which support the conclusion of Co-Bond Counsel that interest on the 1993 Bonds is exempt from Federal income taxation.

CREDIT RATI NGS Duff& Phelps Credit Rating Co. has assigned the credit rating shown on the cover page hereof. Moody's Investors Service, Inc. and Standard & Poors Corporation have assigned the credit ratings shown on the cover page hereof, with the understanding that upon delivery of the 1993 Bonds, a policy insuring the payment when due of the principal and interest on the 1993 Bonds will be issued by the Insurer. Such ratings reflectonly the views of such organizations and an explanation of the significance of such ratings may be obtained only from the agencies at the following addresses: Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007; Standard & Poors Corporation, 25 Broadway, New York, New York, 10004; and Duff& Phelps Credit Rating Co., 51 East Monroe, Chicago, Illinois 60603. There is no assurance such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by the rating agencies, if in the judgement of such rating agencies, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 1993 Bonds.

TAX EXEMPTION The Internal Revenue Code of 1986, as amended (the "Code"), establishes certain requirements which must be met subsequent to the initial issuance of the 1993 Bonds forthe interest received by the owners of the 1993 Bonds to be and remain excluded fromgross income forFederal income tax purposes. Noncompliance with such requirements could cause the interest received by the owners of the 1993 Bonds to be included in gross income for Federal income tax purposes retroactive to the date of initial issuance of the 1993 Bonds. These requirements include, but are not limited to, provisions which prescribe yield and other limits within which the proceeds of the 1993 Bonds are to be invested and require, under certain circumstances, that certain amounts be paid on a periodic basis to the Treasury Department of the United States of America. The City has covenanted in the Installment Purchase Agreements and the Indenture to maintain the exclusion of the interest received by the owners of the 1993 Bonds from gross income forFederal income tax purposes pursuant to Section 103 (a) of the Code. In the opinion of Mudge Rose Guthrie Alexander & Ferdon, Los Angeles, California, and Rourke, Woodruff& Spradlin, a Professional Corporation, Orange, California, Co-Bond Counsel, under existing law, and assuming compliance with the aforementioned covenant, the interest received by the owners of the 1993 Bonds is excluded from gross income for Federal income tax purposes. Co-Bond Counsel are also of the opinion that the 1993 Bonds do not represent an interest in "specified private activity bonds" within the meaning of Section 57 (a) ( 5) of the Code and, therefore, the interest received by the owners of the 1993 Bonds will not be treated as a specificpreference item for purposes of computing the alternativeminimum tax imposed by Section 55 of the Code. The interest on the 1993 Bonds owned by corporations will, however, be taken into account: ( 1) in determining the alternative minimum tax imposed by section 55 of the Code on 75 percent of the excess of adjusted current earnings over alternative minimum taxable income ( determined without regard to this adjustment and the alternative tax net operating loss deduction); (2) in calculating the environmental tax equal to 0.12 percent of a corporation's modified alternative minimum taxable income in excess of a certain amount (generally $2 million) imposed by Section 59A of the Code; and (3) in determining the foreign

48 branch profits tax imposed on the effectively connected earnings and profits (with adjustments) of United States branches of foreign corporations by Section 884 of the Code. Co-Bond Counsel have not undertaken to advise in the future whether any events after the date of issuance of the 1993 Bonds may affect the tax status of the interest received by the owners of the 1993 Bonds. No assurance can be given that future legislation, or amendments to the Code, if enacted into law, will not contain provisions which could directly or indirectly reduce the benefit of the exclusion of the interest on the 1993 Bonds from gross income for Federal income tax purposes. Although Co-Bond Counsel have rendered an opinion that the interest received by the owners of the 1993 Bonds is excluded fromgross income for Federal income tax purposes, an owner's Federal tax liability may be otherwise affected by the ownership or disposition of the 1993 Bonds. The nature and extent of such other tax consequences will depend upon the owner's other items of income or deduction. Co-Bond Counsel have expressed no opinion regarding any such other tax consequences. In the opinion of Co-Bond Counsel, the interest received by the owners of the 1993 Bonds is exempt from personal income taxes of the State of California.

UNDERWRITING The Underwriters have agreed to purchase all, but not less than all, of the 1993 Bonds at a price representing an aggregate discount of $921,196 from the initial public offering prices set forth on the cover page hereof. The Underwriters may offer and sell the 1993 Bonds to certain dealers and others at prices lower than the initial public offering prices and the initial public offering prices may be changed from time to time by the Underwriters.

49 CERTAIN LEGAL MATTERS Legal matters incident to the authorization, issuance and sale of the 1993 Bonds are subject to the unqualified approving opinion of Mudge Rose Guthrie Alexander & Ferdon, Los Angeles, California, and Rourke, Woodruff & Spradlin, a Professional Corporation, Orange, California, Co-Bond Counsel. Said opinion in substantially the form attached as Appendix D will be delivered at the time of delivery of the 1993 Bonds. Co-Bond Counsel have undertaken no responsibility for the accuracy, completeness or fairness of this Official Statement or any other offering material related to the 1993 Bonds, and express no opinion with respect thereto. Alan R. Watts, Esq., of Rourke, Woodruff& Spradlin, serves as special counsel to the City for utility matters. Certain legal matters will be passed upon for the City and the Financing Authority by the City Attorney and Financing Authority Counsel.

ANAHEIM PUBLIC FINANCING AUTHORITY

By Isl Elisa Stipkovich Executive Director

CITY OF ANAHEIM, CALIFORNIA

By Isl Tom Daly Mayor

By Isl James D. Ruth City Manager

By Isl Edward K. Aghjayan Public Utilities General Manager June 2, 1993

50 APPENDIX A 8tectric Utility Fund Audited Financial Statements Y, arsEnd«J Jun, 30, 1992, and19 91

A-1 8tectric (In thousands)

UTIUTY FUND BAJ.ANCISHll!TS June 30, 1991

Utilitypl ant: Production $209,797 Transmission 15,357 Distribution 106,286 General 12,198 l34rittn•• 343,638 Less -accumulated depreciation it• •,} ::·• ::::r::m�;ift (84,1 36) · )·•••>?· ... .., ...... ···•:264109\ 259,502 Constructionwork in progress 21 ,239 l.•. ·••··• Nuclearfuel, at amortizedcost ···••1:1·••••:•::_• •. i.!.:.:.•. l.1.i.1.1.1 .•. :::::1••>t.S��::�Q98> 7,519 288,260 Restrictedassets: Cash and investments I I 2,286 Other 1,168 113,454 Current assets: Cash andinvestments 36,093 Customerand other accounts receivable,net 21 ,364 Prepaid purchased po'INer 2,719 Accrued interest receivable 1,867 Materials and supplies, at average cost 3,243 65,286 Other assets: Unamortized bond refundingcosts 20,839 Unamortized project costs 6,344 =('.{{.)?t(/?\ :r. . . ·--•··.!.i_J.1_:_:_.•_!_·:_::_:Q.�-to._i�_r_'.:�_::_::_:_::_:.•. •-••.•.· Unamortized debt issuance costs •·::t•

(Continued on followingpaa,,)

A-2 Electric (In thousands)

lJTiuTYFUND BALANCESHEETS (coNnNueo) June 30, 1992 June 30, 1991 Equity, Liabilities and OthuCredits Equity: Beginningfund balance contributedby the City $ 14,629 $ 14,629 Retained earnings 119,758 111,921 Total equity 134,387 126,550 Long-tenndebt, lesscurrent portion 281 ,279 289,765 Total capitalization 415,666 41 6,315 Cwrentliab ilities (paya ble from restricted assets): Current portionof long-tenndebt 7,060 5,465 Accrued interest 4,125 3,51 4 Accounts payable 4,572 4,033 Tax-exempt commercialpaper 20,450 20,450 36,207 33,462 Current liabilities (payablefrom current assets): Current portion oflong-tenndebt 2,315 1,792 Accounts payable andaccrued expenses 6,666 5,686 Obligations under reverse repurchaseagreements 8,527 955 Customer deposits l,010 978 Power cost adjustmentbalancing accoun t Rate stabilizationaccount 52,487 1,034 Restricted SCE Liability account 7,01 4 lntennountainPower Agency refundaccount 2,786 7,603 80,805 18,048 Total current liabilities 117,01 2 51,51 0 Other liabilities anddeferred a-edits: Contributions in aid of construction 23,548 22,734 Decommissioningreserve 7,526 6,01 1 Commitmentsand contingen cies Total equity, liabilities and othercredits $563,752 $496,570

Seeaccompanying Notes to Financial Statements.

A-3 81ectric (Inthousa nds)

UnUTYFUND STATEMENTS oP INCOME June 30, 1991

Opera tin1 revenues: Sale of electricity ······.·.·. ::noi,s31: $206,144 Provision for powercost adjustment :l !:: :< Provision forrate stabilization 5,1 15 . l•••..• •.•.• • ·•' .• !·•·•·ss:.••••••. •.· : ?i •.:.. ·..··... •.. ·.········.:,• .:,.• ...... A, Other operating revenues }'.(/ ,·. •.• . . .• . .•;N...... 8. .. .• . 871 .• . • Total operating revenues 21 2.1 30

Operating expenses: Cost of purchased power 127,730 Fuel used for eeneration 3,941 Other operations 22.094 Maintenance 12,175 Depreciation 10,028 Cancelledproject costs Total operatingexpenses 175,968 Operatingincome 36,162

Otherincome (e xpense): :ii!!: :•;;:: ?• ., ... ,::, -·::::.·· .., :: · ...... · = • · Interest income . . .. . �_<:>'. ·•. . t:J@\t:'.:\;1rr:·::::::::··- ...... , ...,. :.••·.• •_••.•.• •.•6_•,·.·.·_-•.··•·9·.. •. ·. ·.• ··.s··.·..·•.·.•.••.•.:.·•._• 7,741 Interest expense .·.·. .., ::: :,: ''.:i\:••

(In thousands)

UnUTY FUND STATEMENTS OP CHANGES IN RETAINED EARNINGS June 30, 1991 Balanceat begimingof year '"'•·• JI··,· ····· si•r•t)nh' $ 92.261 · Net incomethe for year 6 2 27,409 . < ..:,_1,1:, :,·.•_• •.•. • .. :, •·:, •:_n:•':•••. : �••·•:••:• ··•i::: :ii .. . . Transferto the General Fund of theCity . 07.. a·· . (7,749) f\!\\I\f\ _._.,\��__ ..,_,.....,. ._. �,.··,._., . Balanceat endof year $1 11,921

Seeaccompanying Notes toFinancial Stat ements.

A-4 8tectric (Inthousa nds)

UTILITYFUND STATEMENTS OP CASH FLOWS June 30, 1992 June 30, 1991

Operating activities: Operating income $ 27,695 $ 36,162 Adjustmentsto reconcile operating income to net cash provided by opera tions: Depreciation I I.I 06 10,028 Amortizationnuclear of fuel 2,934 3,459 Amortizationof cancelledproject costs 969 Amortizationof debt costs 3,206 3,336 Increase indecommiss ioning reserve 1,515 1,170 Changes in currentassets and lia bilities: Customerand other accountsreceiva ble, net (2,820} 10,691 Prepaidpurchased power 1,946 (61 2) Materials and supplies (1 92) 249 Accounts payable andaccrued expenses 1.519 460 Customerdeposits 32 (92) Power cost adjustmentbalancing account Rate stabilization account 51 ,453 1,034 lntermountain PowerAgency refund account (4,817) (8,855) Te st energybill ings (3.635) Restricted SCE Liability Account 7,014 Totalad justments 73,865 17,233 Net cash provided by operations 101 ,560 53,395 Capital andrelated financing activities: Proceeds from borrowings 45,039 Reductionof long-termdebt (7,258) (7.422) Interestpaid (1 7,487) (16,661) Transferto theGeneral Fund of the City (8,695} (7. 749) Contributionsin aid of construction 597 476 Debt issuance and discount costs (68} (2.285} Net cash providedby (usedin) financingactivi ties (32,91 I) 11.398 Investing activities: Capitalexpenditures (36,835} (32,955} Interestreceived 6,677 7,476 Increase in obligationsunder reverse repurchase agreements 7,572 955 Nuclearfuel expenditures (3,513) (2,435) Project costs (873} (584} Net cash used ininvesting activities (26,972) (27,543) Increase incash and investments 41,677 37.250 Cash and investments at beginningof year 148,379 I l I ,129 Cash and investmentsat endof year $ 190,056 $148,379

Schedule of noncashfina ncing andin vesting activities: Contributionsin aid of construction $ 697 $ 1,620

Seeaccompanying Notes to FinancialStatements.

A-5 81 ectric Note I Summaryof Production 30years Utility Fund SianificantAccou ntina Policie, Transmission and Notes to distribution plant 20 to 75 years Financial Bo.sis of Accounting The ElectricUtili ty Other plant Statements Fund (the Electric Utility) of the City of and equipment 5 to 50 years Anaheim(the City) was establishedJune Depreciationon contributed assets is charged 30, 1 971 , at which time the portionof the directlyto Cont ributionsin aidof construc­ City's General Fund equity relating to tion. During fiscal year 1 992,$480,000 was electric system operationswas transferred chargedto Contributions in aid. to Electric Utility equity. The financial statements of the Electric Utility are presented in conformitywith generally Cash and Investments The City pools idle accepted accounting principles and cash fro m all fu nds forthe purposeof accounting principles and methodspre­ increasing income through investment scribed by the Federal Energy Regulatory activities. Investments are carried at cost, Commission (FERC) . The Electric Utility is which approximatesmarket val ue. Interest not subject to the regulations of the FERC. income on investments is allocated to the various funds of the City on thebasis of average daily cash and investment balances. Utility Plant andDepreciation Thecost of additions to utility plant and replacement For purposes of theState ments of Cash of retired units is capitalized. Utility plant is Flows, the Electric Utility considers cash recordedat cost, includingcapi talized and investments, includingrestricted interest, or in the caseof contributed plant, amounts, to becash equivalents. Cash at fa ir marketval ueat the dateof the equivalents are cash and highly liquid contribution, except that assets acquired investments which are included inthe priorto July I , l 977 are recorded at Electric Utility's share of the City's pool and appraisedhi storical cost. Cost includes in accounts held by the fiscalag ents. labor; materials; allocated indirect charges such as engineering, supervision,construc­ Revenw Recopition To provide a better tion and transportation equipment, matching of costs andrevenues, the Electric retirementplan contri butions and other Utility accruesestimated unbilled revenues fringe benefits; and certainadminist rative forener gy sold but not billedat the end of a and general expenses. Thecost of relatively fiscalperiod; previously, revenues were minorreplacements is included in mainte­ recognizedwhen bill ed to customers. nanceex pense.The net book value of assets Residential and smallercommercial ac­ retired or disposed of, netof proceeds, is counts are billed bimonthly, and all others recorded in accumulated depreciation. are billed monthly. Depreciation of utility plant is provided by The Electric Utility's Rates, Rules and the straight-linemethod based on the Regulations provide forthe use of a Power followingestimated service lives of the Cost Adjustment (PCA) billing formula properties: which, when in use, would be included in

A-6 customer billings to reflectvariations in the the agent for SONGS participants. Federal cost of power to the Electric Utility. The regulations also require the Electric Utility PCA providesfor adj ustmentsto revenues to provide for the fu ture costs of decommis­ from the sale of electricity forove r collec­ sioning SONGS. Decommissioning costs tion or under collection ofrev enues result­ are charged to otheropera ting expenses ing from differencesbetween the Electric and are provided for over the remaining life Utility's actual cost of powerand the of the plant. amount billed to customersthrough the billing formula. Theseover or under collec­ tions would be recorded in the PCA DebtIs suance Cost. Debt issuance costs balancing account until they are refunded are deferred and amortized over the livesof to, or recovered from, utility customers . the related bond issues on a basis which approximates the effective interestmethod . Effective October I , I 989.the Electric Utility electedto recoverall powercosts in base rates and setthe PCA at a zerobalance . BondRef unding Costs Bondref unding Shouldsubstantial changes in power costs costs are deferred and amortized over the occur, the Electric Utility may seek City lives of the related bond issues on a basis Councilapproval to activate the PCA. which approximates the effective interest

On January28, I 986, a wholesale rate method. refund policy (Policy) which included establishing a Rate Stabilization Account Pension Plan All fu ll-time City employees (RSA) was adopted as partof the Electric are members of the State of California Utility's Rates, Rules and Regulations. The Public Employees' Retirement System Policy provides forestablishment of a rate, (PERS). The City's policy is to fu nd all in cents perkilo watt-hourof sales, by which pensioncosts accrued; such costs to be funds are transferred from the RSA to the funded are determined annuallyas of July I Electric Utility Revenue Fund. This transfer by the PERS' actuary. is made on a monthlybasis .

Vo cation and Sick Pay Vacation and sick Nuclear Fu.I The Electric Utility amor­ payfor all City employees are paid by the tizes the cost of nuclear fu el to expense General Benefitsand Insurance Fundof the using the "as burned" method. In accor­ City. The General Benefits and Insurance dance with the NuclearWaste Disposal Act Fund is reimbursedthrough payroll charges of I 982, the Electric Utility is charged a fe e to the Electric Utility based on estimates of forthe disposal of nuclear fue l at the rate of benefits to beearned during the year. one mill per kWh on the Electric Utility's Vested vacation and sick pay benefitsare shareof electricitygen erated by the San accrued in the General Benefits and Insur­ Onofre Nuclear Generating Station, Units 2 ance Fund and amounted to $1 ,01 5,000 and 3 (SONGS) . The Electric Utility pays and $978,000 forthe ElectricUtility at June the fe e quarterly to Southern California 30, 1992 and 1991,respectiv ely. Edison Company (Edison) which is acting as

A-7 TrOMfor• tothe G,,wralFund of tlN City purchases related to the ownershipinterest Article XII of the City Charter provides that in SONGS. The balance outstandingat transfersto the General Fund of the City June 30, l 992 and I 991 totaled shall notexceed 4% of thegross revenue of $20,450,000. Theinterest rates on this the prior year. Such transfers are not in lieu debt at June 30, I 992 ranged between of taxes and arerecorded asdi stributions of 2.65% and 3.35% with maturities ranging retainedearnings. from 8 to 71 days. The Electric Utility has obtained a $21 million revolving credit agreement, which can be used in the event Recla.•ificatloM Certain reclassifications that the commercial papercannot be havebeen madeto the l 991 financial state­ refinanced as it matures. Duringfiscal year ments to conform to the 1 992 presentation. l 992, therewere no amounts borrowed from the revolvingcr edit agreement. Not• 2 Operatina Expenses

Note 5 Jointly-Owned Utility Project Operatingexpenses sharedwith the Water Utility amounted to $1 7, 7 67, 000 and The Electric Utility owns a 3. 16% interest $1 8,01 3,000 forthe fiscalyears ended June as atenant in common in SONGS. The 30, I 992 and 1991,respectively, of which otherpart icipants in Units 2 and 3 are $14,21 3,000 and $1 4,41 0,000 were Edison, 75.05%; San Diego Gas &- Electric allocatedto the Electric Utility. Company, 20%; andthe City of Riverside, Theshared expensesare allocated to each l . 79'%. Units 2 and 3 became operational Utility basedon estimates of the benefits on October9, 1 983 and April 1, 1984, each Utility derives from those common respectively. The Electric Utility's cumula­ expenses. tive share of construction costs, which amounted to $1 83, 745,000 at June 30, Note 3 Unamortized Project Costa I 992,was included in Utility plant at June 30, 1992. The Electric Utility recorded depreciation related to SONGS of TheCity plans to participate in various power $7,422,000 and $6,563,000 forthe fiscal generation projects with other agencies. years ended June 30, l 992 and l 991 , Unamortized projectrepresent costs advance respectively. The ElectricUtilit y made payments toparticipating agencies for provisions during fiscal years l 992 and l 991 preliminaryengineering and environmental fordisposal costs of spent nuclear fu el of impact studiesfor therela ted projects. $409,000 and $482,000, respectively, and forfuture decommissioning costs (see Note Note 4 Short-Tenn Debt I) of$985,000and $1 , 169,000, respec­ tively. These costs along with the Electric Utility's share of SONGS operatingand The Electric Utility hasoutstand ing Rev­ maintenance costs have been included in enue Anticipation Notes in the form of Operating expenses forfiscal year I 992. short-term tax-exemptcommercial paper forthe purpose of financing nuclearfu el

A-8 Note 6 Lone-Term Debt

The ElectricUtility ia indebtec:l u fo llows: June30, 1992 June30, 1991

ElectricRevenue Bonds, Issue of l 972, TIC4.9263%, datedApril 1, 1972, soldMarch 28, 1972 in the amountof$8,000,000 at rates ranging from2.0 % to 7.0%, maturing serially to July I, 1 992 in a principal installmentof$675 ,000; totaldebt service of$682,000 to maturity $675,000 $1 ,300,000

Electric Revenue Bonds, Issue of l 976, TIC6.07%, dated MayI, 1976, soldApril 27, 1976 in the amountof$6,000,000 at rates rangingfrom 5.0% to 8.0%, maturing seriallyto May 1, 2006 in annual principalinstallments ranging from$1 50,000 to $400,000; total debtservice of$6,381 ,000 to maturity 4, 175,000 4,325,000

Electric Revenue Bonds, Issue A of ) 983, TIC 9.3051 %, datedApril I, 1983, sold April 27, 1 983 in the amountof$1 0,000,000 at rates rangingfrom 8.0% to 9.0%, ofwhich $9 00,000 maturingserially October 1, 1995 through19 98 and $8,460,000of term bondsmaturing October I, 2007 were advance refundedon March 31, 1986; the remainingbonds mature onOctober 1, 1993 andOctober I, 1994 in annualprincipal installmentsof$300,000 and $340,000, respectively; totaldebt service of $745,000 to maturity 640,000 640,000

ElectricRevenue Bonds, Issue B of l 983, TIC 9.3051 %, dated April l, 1983, soldApril 27, I 983 in the amountof$40 ,000,000 at rates ranging from8.0 % to 9.0%, ofwhich $3,600, 000 maturingserially Octoberl, 1995 through 1998 and $33,840,000 of term bondsmaturing October l, 2007 were advance refundedon March 31, 1986; the remainingbonds mature on October 1, 1993 andOctober I, 1994 in annual principal installmentsof $1 ,200,000 and$1 ,360,000, respectively; total debt service of$2,981 ,000 to maturity 2,560,000 2,560,000

ElectricRevenue Bonds, Issue C of 1983, TIC 9 .I 023%, dated April I , 1983, sold April 27, 1983 in the amount of$80,400,000 at rates ranging from5. 25% to 9.0%, of which$5, 650,000 maturing serially OctoberI, 1995 through1 998 and$52,500,000 of term bondsmaturing October I, 2007 were advance refundedon March 31 , 1 986; the remaining bonds mature seriallythrough OctoberI, 1994 in annualprincipal installments ranging from $2,350,000 to $2,850,000; total debtservice of $8,253,000 to maturity 7,400,000 I 0,000,000

ElectricRevenue Bonds, Issue of 1986, TIC 7.006%, dated March I, 1986, sold March4, 1986 in the amountof$1 29,275,000, of which(I ) $55,270,000 at rates of 5.25% to 6.9% matureserially through October I, 2001 in annual principalinstallments ranging from $1 ,210,000 to $8,955,000, (2) $30,665,000 at rates of5.75% areterm bondsmaturing October l, 2004, subject to mandatory redemptionfrom October I , 2002 to October I , 2004 in annual principal installments ranging from $9,590,000 to $10,875,000, and (3) $37,885,000 at rates of 5.75% are term bonds maturing October l , 2007, subjectto mandatory redemption fromOctober I , 2005 to October I , 2007 in annual principalinstallments ranging from $1 1 ,550,000 to $13,600,000; total debtservice of $199,669,000 to maturity 123,820,000 125,030,000

A-9 Note 6 Lona-Term Debt (continu.d)

The ElectricUtility is indebted ufollows: JuneSO, 1992 JuneSO, 1991 Electric Revenue Bonds, Second Issue of l 986, TIC 6. 7737% dated October 15, 1986, soldNo vember 25, 1986 inthe amount of$77,780,000, ofwhich (I ) $41 ,030,000 at rates of4.3% to 6.5% mature serially through OctoberI, 2002 in annual principalinstallments ranging from $2,745,000 to $4,960,000, and (2) $30,150,000 at rates of6.75% are term bondsmaturing October 1, 2007, subjectto mandatoryredemption fromOctober I, 2003 to October I, 2007 in annualprincipal installments ranging from $5,275,000 to $6,81 5,000; totaldebt service of$1 1 4,881 ,000 tomaturity 71 ,180,000 73,790,000

Electric Revenue Bonds, Issue of l 991 , datedand soldMay 29, 1991 inthe amount of$3,434,000, at rates of6.50% maturing serially &om October I, 1999to October I, 2004 in annualprincipal installmentsranging from $140,500 to $735,000: totaldebt service $5,565,of 000 tomaturity 3,434,000 3,434,000 Total revenue bonddebt $213,884,000 $221 ,079,000

Note Payableto InternalService Fund of the City, 8.95%, issued October 13, 1984, in theamount of $1,342,000, semi-annual principal andinterest payments ranging &om $55,000 to $106,000 through October31 , 2003; total debtservice of$1 ,606,000 to maturity 1,047,000 l,1 1 0,000

Electric SystemCertificates of Participation(Combustion Tu rbine Peaking Plant),TIC 7.313%, dated September 15, 1989, soldOctober 12, 1989 in theamount of$44, 336,l 45.I Oat rates rangingfrom 6.20% to 7 .20%, of which (l) $1 8, 730,000 mature seriallyfrom October I, 1992 through October 1,2000, (2) $5,356,145.1 0 Capital AppreciationCertificates mature seriallyfrom October I, 2001 throughOctober I, 2005, (3) $6,000,000 at rates of7.20% are term certificatesmaturing October I , 2009, subject to mandatory redemptionfrom October I , 2006 to October I , 2009 inannual principalinstallments ranging from $1 ,350,000 to $1,660,000, and(4) $1 4,250,000 at rates of 6.50% are term certificates maturing October I, 201 1. subject to mandatoryredemption from October I, 2006 to October I, 21 11 in annualprincipal installments rangingfrom $1,495,000 to$3, 950,000; total debt serviceof$82, 750,000 to maturity 44,336,000 44,336,000

ElectricSystem Certificates of Participation(Public Utilities Building), TIC 7.1 5%, datedNov ember I, 1 990, soldNove mber12 , 1990 in theamount of$4 1 ,605,000 at ratesranging from 5.85% to 6. 75%, ofwhich (I) $4,600,000 mature seriallyfrom OctoberI, 1994 throughOctober I, 2005, (2) $5,870,000 at rates of6.75% areterm certificatesmaturing OctoberI, 201 0, subject to mandatory prepaymentfrom October I, 2006 to October 1, 201 0 in annualprincipal installments ranging from $940,000 to $1 ,425,000, and (3) $31 ,135,000 at rates of 6.75% areterm certificates maturing October I, 2022, subjectto mandatory prepayment from OctoberI , 201 1 to October I, 2022 in annualprincipal installments ranging from $30,000 to $3,860,000; total debtservice of $105,91 5,000 to maturity 41 ,605,000 41 ,605,000 Total otherlong-term debt 86,988,000 87,051 ,000 Total long-termdebt 300,872,000 308,1 30,000

Less: current portion 9,375,000 7,257,000 bonddiscounts I 0,218,000 I I ,I 08,000 $281 ,279,000 $289,765,000

A- 10 Note 6 Loni-Term Debt (continued)

Annualdebt 1emc:erequirement& at June 30, 1992to maturityarc follows:u Total All --- Revenue Bond Debt --- -- Other Loni-Term Debt -­ Loni-Tenn FiscalYear Principal Interest Total Principal Interest Total Debt 1993 $ 7,705,000 $ 13,31 5,000 $ 21 ,020,000 $ l,670,000 $ 5,437,000 $ 7,107,000 $ 28,1 27,000 1994 8,1 45,000 12,806,000 20,951,000 1,789,000 5,328,000 7,1 1 7,000 28,068,000 1995 8,765,000 12,226,000 20,991,000 1,899,000 5,209,000 7,1 08,000 28,099,000 1996 9,385,000 11,629,000 21 ,01 4,000 2,056,000 5,081 ,000 7,1 37,000 28,1 51,000 1997 9,970,000 11,01 8,000 20,988,000 2,244,000 4,943,000 7, 1 87,000 28,1 75,000 lnereaA:er 169,91 4,000 64,281 ,000 234, I 95, 000 77,330,000 77,283,000 154,61 3,000 388,808,000 $21 3,884,000 $ 125,275,000 $339,1 59,000 $ 86,988,000 $103,281 ,000 $1 90,269,000 $ 529,428,000

Currentinterest costs of$968,000and from 5.25% to 9.0%. Theexcess of the $996,000 have been included in Construc­ amount requiredto advance refundthe tion work in progressfor fiscal yearsended I 982 Bondsover thecarrying value ofthose June 30, 1992 and 1991 , respectively. bonds at the refunding date amounted to $7,567,000. In accordance with industry In accordance with the bondresolu tions, a practices, this amount is being deferredand reserve for maximumannual debt service amortizedover the life of the Issue C of hasbeen established and a reservefor l 983 Bondsusing the effective interest renewal and replacement is beingacc umu­ method. At June30, I 992, outstanding lated equal to a maximum of 2% of the principalof the refunded 1 982 Bonds depreciated book valueof theutility plant in totaled $48,600,000. Over the life of the service. Issue C of l 983 Bonds, the Electric Utility The bond issuesoutst andingat June 30, expects to saveappro ximately$1 2,297,000 l 992req uirethe establishment of a Bond in debt serviceas compared to the refunded Service Account by accumulating monthly 1 982 Bonds. one-sixthof the interest which will become On March 31 , l 986, the ElectricUtility due and payable on the outstanding bonds defeased a portion of the Electric Revenue within thenext six months and one-twelfth Bonds, IssuesA. Band C of t 983, in the of the principal amount whichwill mature principal amountsof$ 9,360,000, and bepayable on the outstanding bonds $37,440,000 and $58,1 50,000, respec­ within the next twelve months. tively, at rates ranging fr om 8.3% to9.0 %, On June I , l 983, the Electric Utility with a portion of theproceeds fro m thesale defeased Electric Revenue Bonds, Issue A of $129,275,000 of Electric Revenue of l 982, in theaggregate principalamount Bonds, Issue of l986, at rates ranging fr om of $l 8,000,000 at rates of8.0%, and Issue 5.0% to 6.9°k. The excess of the amount B of l 982, in theprincipal amount of requiredto advance refundthe 1983 Bonds $52,000,000 at rates ranging from 7.5% to over the carryingval ue of those bonds at 1 1 .5%, with a portion of theproce eds fro m theref unding date amounted to the sale of $80,400,000 Electric Revenue $21 .476,000. Thisamount is beingdefer red Bonds, IssueC of l 983, at rates ranging and amortized over the life of the 1 986

A-11 Bonds using the effective interest method. 3.8% to 6. 75%. 1he excessof the amount At June 30, I 992,outstanding principal of required to advance refundthe I 980 Bonds the refunded I 983 bondstotaled over the carryingval ue of those bonds at $1 04, 950, 000. Overthe life of the I 986 the refundingdate amounted to Bonds, theElectric Utility expects to save $9,693,000. This amount is being deferred approximately $1 0,849,000 in debt service and amortizedover the life of the Second as comparedto theref unded I 983 Bonds. Issue of I 986 Bonds using the effective interest method. At June 30, 1992, out­ On November25, I 986, theEle ctric Utility standingprinc ipal of theref unded 1 980 defeased a portionof the Electric Revenue bonds totaled $70,625,000. Bonds, Issueof 1 980, in the principal amount of$72, 775,000, at rates of 8.00.k, Overthe lifeof theSecond Issueof I 986 with a portionof the proceeds fr om thesale Bonds, the Electric Utility expects to save of$77,780,000 of Electric Revenue Bonds, approximately $1 0,81 8,000 in debt service Second Issue of I 986, at rates ranging fro m as compared to the refunded 1980 Bonds.

Restricted cashand investmentsinclude reservedamounts, aswell u undisbu.-.edbond proceeds, u fo ltows: June30, 1992 June30, 1991 Held by Fiscal Agent: Bond Reserve Fund $22,803,000 $22,344,000 BondService Fund 690,000 662,000 Certificates ofPar ticipation Proceeds 24,907,000 48,11 9,000 Held by City Treasurer: BondService Account 10,494,000 8,274,000 Renewal andReplacement Account 9, 119,000 8,987,000 Decommissioningand fuel reserves 20,603,000 19,867,000 Restrictedbond proceeds 1,222,000 3,596,000 Restrictedrebate 852,000 437,000 Other restrictedassets 729,000 l ,168,000 $91 ,419,000 $1 1 3,454,000

1heElectric Utilitycash expendituresforinterestexpeosefortheyearsendedJune30, I 992and199 1 were$1 4,572,000and$15,1 96,000,respective(y.

Note 7 Pension Plan Note 8 Self-Insurance Pro,ram

1he City has a contributory pension plan 1he Electric Utility is part of the City's self­ for itsfu ll-timeemployees under the State insuredwork ers' compensationand general of California Public Employees' Retirement liability program. 11,e liability for such System. Informationis not available claims, includingclaims incurred but not separatelyfor the Electric Utility as to the reported, is transferred to the City in cost of benefits fu nded, the actuarially consideration of self-insurance premiums computed present value of vested andnon­ paid by the Electric Utility. Effective July I , vested accumulated plan benefits, the 1986, the City became self-insured. Costs related assumedrates of returnused, and relating to thelitig ation of claims are the actuariallycomputed valued of vested charged to expense as incurred . benefits over therelated pensi on fundassets.

A-12 Note 9 Refund• U.S. aovemmentsecurities $ 1,260,000 U.S. aovemmentaae ncysec\.rities 36,891 ,000 Medium-tenncorporate note s 14,296,000 Orange CountyPool 14,827,000 Since fiscalyear J 986 theElectric Utility Local agency investment hasreceived refundsfro m Edison totaling fund (statepool) 7,171 ,000 $109,324,000. Theseref undshave been Controlledby CityTreasurer 74,445,000 placed in the RSA. 'TheCity received Amounts investedby refunds fro m Edison during the 1992 fiscal fiscalagents 97,790,000 Reverserepurchase agreements 8,527,000 year of$67,l 97,000.At June 30, 1992 and Totalinvestments $180, 762,000 1991, total principaland interest in the RSA amounted to $52,487,000 and $1 ,034,000, respectively. TheCity intends to refund any futurerefunds to Electric Utility Fiscal agentson behalfof theCity hold and customersin the formof reductionsto investfunds fro m long-term debt issuances. future rate increasesthrough the Rate Fiscal agentsare mandated by bondinden­ StabilizationPo licy (see Note 1 ) . ture asto the typesof investments in which proceedscan be invested. Investments by These refunds have beenreflected in the fiscal agents predominantlyconsist of U.S. Electric Utility's FinancialStat ements as Governmentsec urities heldin bookentry partof the RSA. form. Amountsinvested by fiscalagents include Note IO Cashand lnv .. tmentl investments thatare insured or registered or for whichthe securities areheld by the City's agentsin theCity's name. At June 30, 1 992, the carrying amount of theElectric Utility's shareof the City's pooleddeposits was $9,294 ,000. Of this Note I I amount, $9,007,000 is insuredor Commitment• and Contin1enci.. collateralizedwith securitiesheld by the City or its agent in the City's name.The remaining$287, 000 is coltateralizedwith Toa or PayContract• TheCity has securities held by the pledgingfinancial entered into agreementswith the institution's trust department in theCit y's lntennountain Power Agercy (IPA), a name. politicalsubdivision of the Stateof Utah, UtahPower &- Light(UP &-L)and the At June30, 1992, all of the City's pooled SouthernCalif orniaPublic Power Authority investments were insured or registeredwith (SCPPA), a public entity organized under theexception of amountsinvested by fiscal thelaws of theState of California. City'The agents. hasagreed with IPA and UP&-L,pursuant A summaryof the Electric Utility's partici­ to power salescontr acts, to purchase pationin theCity's pooled investments is 1 3.225% of thegeneration output of lPA's allocated based on theove rall percentage 1 ,600 megawatt two unit coal-fueled participationas follows: generating station (theStation} in central Utah. Unit 1 of the Station became

A-13 available for commercialoperation June I 0, 1neCity does notexpect these payments ) 986. Unit 2 was commercially available to have an adverse impacton theElectric May I , I 987. Cost of constructionof the Utility's ratestructure in that suchpay­ Station andrelated transmission lines, ments are in lieu of payments which would including the SouthernTra nsmission have beenmade to purchasepowe r from System (STS) from Utahto Southern Edison.The Cityprojects thatthere will be California,was financed principallythrough substantial long-termpower supply cost sales of IP A's JX)Wersupply revenue bonds savingsfro m thetake or paycontracts and paymentsin aid of construction by compared to purchasesfrom Edison. SCPPA. 1neCity has agreed with SCPPA to purchaserights to 1 7.6% of the transmis­ On July l , l 988,the Certificate of sion capacityin the STS. Completion of the initialfac ilities of the Intermountain Power Project (IPP) was The contracts constitute an obligation of executed and as are sult the surplus in IPA's the City to make paymentssolely from the ConstructionFund was transferred to IPA• s revenues of the Electric Utility. These General Reserve Fund andwilt be allocated payments, which are based theon City's to the various participantsbased on the share of lPA's debt servicerequirements Plan for the Dispositionof Surplus Funds. and productioncosts andSCP PA' s debt The Electric Utility's shareof thesesurplus servicerequirements, beganin July 1986, fu nds was approximately $35.8 million the monthin which Unit l of theStation which the Electric Utilityis usingto reduce and the STS began commercial operation. future IPP purchased powercosts. These paymentswill beconsidered a Cost ofpurchased power. As of June30, ) 992, At June30. 1 992, theElectric Utility's IPA has issued $5.3 billion in revenuebonds remaining shareof these surplusfu ndswas and revenuebond anticipation notesto approximately$2.8 million,which the Electric financeconstruction of the Station and Utility will useto reduceIPP purchased SCPPA has issued$1 .l billion in revenue JX)wer costs overthe next two years. bondsand revenue bond anticipationnote s to financepayments in aid of construction. Liti6ation A numberof claims andsuits are TheElectric Utility's projected minimum pendingaga inst theCity foralleged damages paymentsfor purchased powerdue under to persons and property and forother alleged these takeor paycontracts forthe next five liabilitiesarising out of mattersusually years are as follows: incidental to theoperation of a utility suchas FiscalYear theelectric systemof theCity. In theopinion of management,the exposure underthese 1993 $67,1 94,000 claims and suitswould notmat erially affe ct 1994 67,359,000 thefinancial position of theElectric Utility as 1995 67,440,000 of June30, 1992. 1996 66,356,000 1997 66,01 3,000

A-14 Rat• Chall• na-• andOth.r Actions 'The Capital Ex�nditun• 'The Electric City has filed severalcomplaints against Utility's budget for fiscal 1 992-93provides Edison challengingvar ious rate increases forcapital expenditures of approximately and a suit alleging that Edison has violated $27,000,000, of which$6, 743,000 is certain antitrust laws. These actions could expected to befu nded fro m electric rev­ potentially result in refunds or payment of enue bond andcertifi cate of participation damages to theElectric Utility; however, proceeds. no opinion can be rendered at this time as to theprobable outcome of these actions.

A-15 /ndependent To the Honorable City Council Those standards requirethat we plan and Auditors' City of Anaheim, California perform the audit to obtain reasonable assurance about whether the financial Report statements are fre e of materialmisstate­ We have audited the accompanying balance ment. Anaudit includesexamining, on a sheet of the Electric Utility Fund of the City test basis, evidence supporting theamounts of Anaheim, California, as ofJune 30, 1 992 and disclosures in thefinancial stat ements. and the related statementsof income, Anaudit also includes assessingthe ac­ changes in retained earnings and cash flows counting principles used and significant fo r the year then ended. These financial estimates made by management, as well as statements are the responsibilityof the eval uatingthe overall financial statement Electric Utility's management. Our respon­ presentation. We believe that our audit sibility is to express an opinion on these provides a reasonable basis forour opinion. financial statements based on our audit. In our opinion, the financialstatements The financialstatements of the Electric referredto above present fa irly, in all Utility Fund forthe year ended June 30, material respects, the financial position of l 991 were audited by other auditors whose the Electric Utility Fund of the City of report, dated October l 1 , l 991 , expressed Anaheim, California, asof June 30, I 992 an unqualifiedopinion on those statements. and the results of its operations for the year We conducted our audits in accordance then ended, in conformitywith generally with generally accepted auditing standards. accepted accounting principles.

Deloitte &- Touche October9, I 992 Costa Mesa, California

A- 16 APPENDIX B

CITY OF ANAHEIM

ELECTRIC UTILITY FUND UNAUDITED FINANCIAL STATEMENTS

SIX MONTHS ENDED DECEMBER 31, 1992 AND DECEMBER 31, 1991

B-1 CITY OF ANAHEIM ELECTRIC UTILITY FUND BALANCE SHEET (Unaudited)

December 31 1992 1991 (in thousands) ASSETS

Utility plant: Production $217 , 667 $209 ,797 Transmission 13, 052 15,357 Distribution 118, 712 106,286 General 11, 740 12,198 361, 171 343 , 638 Less: accumulated depreciation (101,874) ( 90,441) 259,297 253,197 Construction work in progress 52, 180 38, 415 Nuclear fuel, at amortized cost 6,246 6,576 317,723 298,188 Restricted cash and investments 80,821 95,041 Current assets: Cash and investments 99 , 904 53,723 Customer and other accounts receivable 24,230 22,420 Accrued interest receivable 3,260 3,319 Materials and supplies at average cost 3,367 3,144 Prepaid purchase power 941 3,285 131,702 85,891 Other assets: Unamortized bond refunding costs 17, 718 19 , 784 Unamortized project costs 3,168 6,539 Unamortized debt issuance costs 2,126 2,349 23,012 28,672 Total assets $553,258 $507 ,792

B-2 CITY OF ANAHEIM ELECTRIC UTILITY FUND BALANCE SHEET (Unaudited)

December 31 1992 1991 (in thousands)

EQUITY , LIABILITIES AND OTHER CREDITS

Equity, liabilities and other credit s Equity : Fund balance transfer $14, 629 $14, 629 Retained earnings 126,934 114. 483 Total equity 141, 563 129, 112 Long term debt , less current portion 272, 001 281.013 Total capitalization 413, 564 410,125

Current liabilities (payable from restricted asset s) : Current portion of long term debt 2, 518 2,558 Accrued interest 4,338 4,021 Accounts payable 1,873 1,221 Tax exempt commercial paper 20,450 20.450 29,179 28. 250

Current liabilities (payable from current assets) : Current portion of long term debt 7,376 6,814 Accounts payable and accrued expenses 6,122 5,389 Ob ligations under reverse repurchase agreements 8,527 0 Customer deposits 1,563 898 Power cost adjustment balancing account 0 0 Rate stabilization account 47 , 758 15,747 SCE restricted liab ilities 7,305 6,715 IPA credit account 0 4.228 78.651 39.791 Total current liab ilities 107, 830 68,041

Cont ributions in aid of construction 23,630 23, 106 Decommissioning reserve 8,234 6,520 Total equity , liabilities, other credits �553,258 �507,792

B-3 CITY OF ANAHEIM ELECTRIC UTILITY FUND STATEMENT OF INCOME Six Months Ended December 31, 1992 and 1991 (Unaudited)

December 31 1992 1991 �n thousands)

Operating revenues: Sale of electric energy $113, 807 $103,381 Provision for power cost adjustment 0 0 Rate stabilization ad justment 6,764 5,292 Other operating revenues 336 293 Total operating revenues 120.907 108.966 Operating expenses: Cost of purchased power 67, 865 65,470 Fuel used for generation 2,410 1,642 Other operations 12, 294 12, 204 Maintenance 8,779 6,624 Depreciation 6.981 6.501 Total operating expenses 98,329 92.441 Operating income 22.578 16,525 Other income (expenses) : Interest income 3,626 3,974 Interest expense ( 10,066} ( 9 1 242} (6.440} ( 5,268} Net income $ 16,138 $ 11, 257

STATEMENT OF RETAINED EARNINGS (Unaudited)

December 31 1992 1991 (in thousands)

Balance at beginning of the year $119,758 $111, 921 Net income for the year 16,138 11,257 Transfer to the General Fund of the City ( 8.962) <81 695) Balance at end of six months $126.934 $114. 483

B-4 APPENDIX C

The 1993 Bonds will not be secured by any pledge of ad valorem taxes or General Fund revenues but will be secured by, among other things, Project Revenues, which consist of 1993 Purchase Payments to be made by the City under the Installment Purchase Agreements. The 1993 Purchase Payments and all other payments with respect to Qualified Obligations are payable from the Surplus Revenues in the Qualified Obligations Account of the City 's Electric System. The description of the financial and economic position of the City of Anaheim set fo rth below and on the fo llowing pages is included in the Offi cial Statement fo r informational purposes only.

THE CITY OF ANAHEIM The community of Anaheim was founded and incorporated in 1857, disincorporated in 1872, reincorpo­ rated in 1876, and reorganized in 1888. No change in organization took place until June 1964, when the local voters approved a City Charter. The City operates under the Charter and with a Council-Manager form of government. The five City Council members are elected to four-year terms in alternate slates of three and two every two years, with the Mayor being elected every two years. The Mayor presides over meetings of the City Council and has one vote. The City Council appoints the City Manager, who heads the executive branch of government, implements City Council directives and policies, and manages the administrative and operational functions through the various departmental heads, who are appointed by the City Manager. City full-time employees numbered 2,057 at July 1, 1992, of whom 516 were assigned to the Police Department and 243 to the Fire Department. The latter has ten stations; the City enjoys a Class One fire insurance rating, the highest rating possible. Anaheim is located in northwestern Orange County, about 28 miles southeast of downtown Los Angeles and about 90 miles north of San Diego. The City lies on a coastal plain which is bordered by the PacificOcean on the west and the Santa Ana Mountains on the east. The climate is generally characterized as sunny and mild with mean temperatures ranging between 53 degrees in January and 72 degrees in July. Rainfall averages about 14 inches per year. Afternoon humidity averages 45%-52% throughout the year. Anaheim, Orange County's oldest and most populous city, is strategically situated in relation not only to Orange County's population but also to the economies of San Diego, Los Angeles, Riverside and San Bernardino counties. Major freeways in and through the City conveniently locate industry to labor markets and recreation and commerce to consumers of a much broader area. The Santa Ana Freeway (Interstate 5) connecting Los Angeles and San Diego, is the main artery traversing the City. It connects in or near the City with the Artesia/Riverside (State Route 91), the Garden Grove (State Route 22), the Orange (State Route 57), and the Costa Mesa (State Route 55) freeways. AMTRAK rail passenger service to a station situated at Anaheim Stadium commenced operation October 30, 1983. Anaheim is also served by three other railroads, the SouthernPacific, the Santa Fe, and the Union Pacific, and by numerous truck carriers in Southern California. The major airports in the area include John Wayne (14 miles south), Ontario International (20 miles northeast), Los Angeles International (30 miles northwest) and Long Beach (14 miles west). Frequent daily bus service is provided by various lines including the Orange County Transit District, the Southern California Rapid Transit District, Greyhound Lines and Fun Bus, Inc.

City Council TOM DALY, Mayor, won his firstfour-y ear term to the City Council in 1988. Active in the community, Mr. Daly is a member of the Club of Greater Anaheim, the Anaheim Community Foundation and the

C- 1 Anaheim Museum. Mr. Daly served on the Board of Trustees forthe Anaheim Union High School District before his election to the City Council. BOB D. SIMPSON, Mayor Pro Tern, was elected to his first four-year term on the City Council in November, 1990. He has served as City Manager from 1987-1990, after serving as Anaheim's Deputy City Manager/Public Safety Director and prior to that as the City's Fire Chief for six years. Mr. Simpson has devoted more than thirty-three years to public service. FRED HUNTER, Councilman, won his first term on the City Council in 1986 before running forthe mayoral seat in 1988. He was re-elected as Mayor in November 1990, and served in that capacity until November 1992 whereupon he was re-elected to the City Council. Mr. Hunter served as an Anaheim police officer for 10 years before he began practicing law in Anaheim in 1975. He is a member of the California Lawyers Association, the Orange County Bar Association and the American Cancer Society. FRANK E. FELDHAUS, JR., Councilman, was elected to his firstterm on the Anaheim City Council in November 1992. Mr. Feldhaus has been an active member of the community for more than thirty years. He has been a member of the Chamber of Commerce since 1962, including sitting on the Board of Directors from 1984-87. He was re-elected to the Board of Directors for a second term in 1992. IRV PICKLER, Councilman, was elected to his firstfour-year term on the City Council in 1982 and was reelected in 1986 and 1990. Prior to his election, Mr. Pickler served as an elected trustee of the Anaheim Union High School District and as a member of various school boards and commissions, including the Orange County Planning Commission.

City Management JAMES D. RUTH, City Manager, was named to the City's top administrative post on May 1, 1990. Mr. Ruth had previously served the City of Anaheim in the capacities of Parks, Recreation and Community Services Director, Deputy City Manager, Public Works Director, and Assistant City Manager between 1976 and 1984. He rejoined the City as Assistant City Manager in 1987, following 31/2 years with the City of Long Beach as Director of Parks, Recreation, and Beaches, where he also chaired the City's highly successful Strategic Plan Implementation Committee. Mr. Ruth is a member of the International City Managers Association and a member and past president of both the National Recreation and Park Association and the California Park and Recreation Society. Since returning to Anaheim, Mr. Ruth has played a major role in implementing the City's Vision 2000 Plan and establishing and coordinating major committees and task forces to enhance the City's development activities. GEORGE P. FERRONE, Finance Director, joined the City in August of 1977 with an extensive accounting background which included Vice President of Financial Affairs at Chapman College, Orange, California; Controller of Lightcraft of California and management consulting supervisor for the accounting firm of Ernst & Whinney in Los Angeles. Mr. Ferrone has a B.S. degree in Accounting from California State University at Long Beach and is a member of the American Institute of Certified Public Accountants; the Government Finance Officers Association of the United States and Canada; California Society of Municipal Finance Officers, where he completed a three-year term on the Board of Directors, and is past President and received the Distinguished Service Award in February 1988, the association's highest honor for Finance Directors given to only eleven Finance Directors in the last twenty years; and the League of California Cities, where he completed a term on the Board of Directors, representing all Finance Directors in the State. The Finance Director oversees City-wide financial affairs and internal controls over a $538 million budget including 2,057 full-time and 2,000 part-time employees. Mr. Ferrone's overall responsibilities include the following: centralized accounting functions; budget administration; capital financing, monthly and annual financial reporting; financial systems design, implementation and control; City payroll; all disbursements; purchasing; reprographics and mail operation for the City; and warehousing. JACK L. WHITE, City Attorney, heads the legal department of the City, which includes a civil division consisting of nine attorneys and a criminal prosecution division with seven attorneys. Mr. White joined the City as Deputy City Attorney in 1977, became an Assistant City Attorney in 1979 and was appointed City

C-2 Attorneyby the City Council in July 1985. He has an extensive background in municipal law practice. He was formerly a member of the law firm of Martin & Flandrick, San Marino, California, which for seven years represented thirteen Southern California cities as City Attorney. Mr. White has a Juris Doctor degree from the University of California, Los Angeles, and was admitted to the practice of law in 1969. Mr. White is a member of the National Institute of Municipal Law Officers, the American Trial Lawyers' Association, the American Arbitration Association, the California District Attorney's Association and is past president of the Orange County City Attorney's Association. CHARLENE C. JUNG, City Treasurer,joined the City as Investment Officerin 1990 and was appointed City Treasurer by the City Council in August of 1992. Her municipal treasury experience includes servingas City Treasurer and Assistant City Treasurer forthe City of West Covina. Ms. Jung has a Bachelor's Degree in Psychology from the University of Southern California and has completed postgraduate work in Finance at California State University, Los Angeles. Ms. Jung is a member of the California Municipal Treasurers Association ("CMTA") and is currently serving on the Board of Directors as a Division Chair. She received certificationby CMTA as a California Municipal Treasurer in 1988 and was re-certifiedin 1992. Ms. Jung is also a member of the Municipal Treasurers Association of the United States and Canada and received her certification as a Certified Municipal Finance Administrator in 1991. The City Treasurer's responsibilities include collections, cash management and investments, licensing, transient occupancy tax processing, acting as trustee for certain debt issues, and the administration of the City's deferred compensation and utility users' tax programs.

Area and Population Anaheim's land area remainedat 3. 7 square miles from19 00 through 1940. From 1940 to 1993, that area multiplied by 13.16 times to 48.68 square miles. Since World War II, immigration and, to a lesser extent, annexation have produced major population growth in Anaheim. The growth multiple was about 19.6 from 14,556 in 1950 to 285,477 in 1993. Anaheim is California's tenth most populous city. The following chart includes the growth in the area and population of the City since 1900 as well as that of the County.

CITY OF ANAHEIM AND ORANGE COUNTY Area and Population Calendar Year Annual Average City City of Anaheim Population Orange Population Size of Square Percent County Percent California Year Miles Population Change(l) Population of County Cities 1900 ...... 3.70 1,456 0.0% 19,696 7.4% 51

1910 I••0 e e • 0 • o • • o o • 0 o •Ioo • o o o • • o • o o o 3.70 2,628 8.0 34,436 7.6 66 1920 ...... 3.70 5,526 11.0 61,375 9.0 42

1930 0 0 o O Io••• o o o • o o I•o O • o o • • o o o O o o o o 3.70 10,995 9.9 118,674 9.3 44 1940 ...... 3.70 11,031 0.0 130,760 8.4 NIA 1950 ...... 4.40 14,556 3.2 216,224 6.7 68

1960 o o o e • e o O O O Ioo o o • o • 0 IoO O o O • o o o • • o 27.34 104,184 61.6 703,925 14.8 12 1970 ...... 33.10 166,701 6.0 1,420,386 11.7 8 1980 ...... 42.05 219,310 3.2 1,931,570 11.4 8 1990 ...... 45.03 266,406 2.1 2,410,556 11.1 10 1991 ...... 45.03 273,491 2.6 2,453,277 11.1 10 1992 ...... 48.68 279,408 2.2 2,512,198 11.1 10

1993 o O O O o • 0 • • o • o o O • • 0 0 0 • o o o • o o • 0 • o • I 48.68 285,477 2.2 2,557,300 11.2 10

(1) Expressed as the annual average population change over each period as a percent of the prior year. SOURCES: United States Bureau of Census; California Department of Finance; City of Anaheim Planning Department.

C-3 Building Activity According to the 1990 Federal Census, prepared by the U.S. Bureau of Census, the total number of dwelling units in the City increased from 82, 709 in 1980 to 93, 177 in 1990, an increase of 10,468 (or 13%). Total valuation of all building permits issued by the City of Anaheim Building Division was approxi­ mately $239 million in 1992; total permits issued was 5,273 in 1992.

CITY OF ANAHEIM Building Activities Calendar Year 1988 1989 1990 1991 1992 Total Valuation (thousands) ...... $297,836 $363,785 $210,113 $338,011 $238,909 Total Permits Issued ...... 4,840 5,795 4,649 4,742 5,273 New Construction Residential (thousands) ...... $126,445 $2 13,386 $ 51,678 $107,927 $ 79,179 Permits ...... 312 1,087 176 360 395 Non-Residential (thousands) ...... $109,118 $ 68,993 $ 76,679 $134,440 $ 75,545 Permits ...... 139 138 50 75 48 Additions and Alterations Residential (thousands) ...... $ 20,146 $ 27,447 $ 24,353 $ 21,619 $ 24,304 Permits ...... 2,922 3,158 2,979 3,110 3,436 Other (thousands) ...... $ 42,127 $ 53,959 $ 57,403 $ 74,025 $ 59,881 Permits ...... 1,467 1,412 1,444 1,197 1,394

New Dwelling Units Total Residential Units ...... 1,780 2,298 531 1,188 604 SOURCE: City of Anaheim Planning Department, Building Division.

Employment No annual information is regularly compiled on employment and unemployment for the City alone. Employment in Orange County decreased from about 1,331,800 in 1988 to about 1,316,400 in 1992. The County unemployment rate was lower than that in the State in each of the past fiveyears. The mobile resident labor force of Orange County is employed not only in the County but also in adj acent counties, such as Los Angeles, San Bernardino and Riverside. The 1990 census indicated that 99.6% of the City's population was in the civilian labor force and 94.4% of that labor force was employed.

ORANGE COUNTY Employment, Unemployment and Labor Force(l) Calendar Year Averages: 1988-1992 (OOO's) 1988 1989 1990 1991 1992 Employment ...... 1,331.8 1,321.2 1,327.9 1,336.6 1,316.4 Unemployment ...... 38.4 32.8 55.8 61.0 85.9 Civilian Labor Force ...... 1,370.2 1,354.0 l,383.7 1,397.6 1,402.3 Unemployment Rate ...... 2.8% 2.4% 4.0% 4.4% 6.1% State Unemployment Rate ...... 5.5% 4.8% 6.6% 7.7% 9.3%

( 1) By place of residence, including workers involved in labor disputes. SOURCE: State of California, Employment Development Department.

C-4 The 1990 Census for Anaheim prepared by the United States Bureau of Census indicated a civilian labor forceliving within the City of 141,959. The percentages of Anaheim workers in different industries so reported were: Percent of Industry Workers Services ...... 29.7% Manufacturing ...... 24.3 Wholesale and Retail Trade ...... 22.0 Construction ...... 7.2 Finance, Insurance and Real Estate ...... 6.9 Transportation, Communications and Utilities ...... 5.6 Public Administration ...... 2.5 Agriculture, Forests, Fisheries and Mining ...... 1.8 The table below lists the major manufacturing and non-manufacturing employers within the City.

CITY OF ANAHEIM Major Employers March 1993 Percent of Number Employees to Total of Employment in Company Employees City Products/Purpose Disneyland & Disneyland Hotel ..... 11,000 7.0% Family recreation Rockwell International Corporation .. 4,000 2.5 Guidance and navigation systems, etc. City of Anaheim ...... 3,447 2.2 Municipality Pacific Bell ...... 2,444 1.5 Telephone sales and service Kaiser Permanente Medical Center .. 2,400 1.5 Medical Facility Anaheim Union High School District 1,941 1.2 Junior & Senior High Schools Anaheim City School District ...... 1,561 1.0 Elementary Schools Anaheim Marriott ...... 1,465 .9 Luxury Hotel United Parcel Service, Inc...... 1,400 .9 Small package delivery Anaheim Hilton & Towers ...... 1,200 .8 Luxury Hotel Anaheim Memorial Hospital ...... 1,050 .7 General/ acute care hospital Interstate Electronics Corporation . . . 1,000 .7 Voice data entry systems, etc. California Computer Products, Inc. 1,000 .7 Computer graphics equipment, etc. Kwikset, Division of Emhart Industries ...... 1,000 .7 Residential lock sets Martin Luther Hospital Medical Center ...... 750 .5 Acute care hospital Southern California Gas Company .. 710 .5 Natural gas utility Carl Karcher Enterprises, Inc...... 700 .5 Fast service restaurant chain Subtotal ...... 37,068 23.8% TOTAL EMPLOYED IN CITY OF ANAHEIM ...... 155,464 100.0%

SOURCE: City of Anaheim, City Administration Department.

C-5 Income The following table summarizes the total effective buying income and the median household effective buying income for the City, the State and the nation over the past five years. CITY OF ANAHEIM PERSONAL INCOME Calendar Years 1987 through 1991 Total Effective Median Household Buying Income Effective Year and Area ($000) Buying Income 1987 City of Anaheim ...... $ 3,838,711 $33,210 California ...... 426,008,347 30,537 United States ...... 3,202,847,131 25,888 1988(1) City of Anaheim ...... 3,816,797 32,807 California...... 426,174,001 30,088 United States ...... 3,064,005,977 24,488 1989 City of Anaheim ...... 3,892,595 33,276 California...... 444,988,647 30,713 United States ...... 3,287,489,252 25,976 1990 City of Anaheim ...... 4, 135, 131 36,418 California...... 477,784,771 33,342 United States ...... 3,499,365,237 27,912 1991 City of Anaheim ...... 4,243,016 40,461 California ...... 490,749,649 36,943 United States ...... 3,728,967 ,043 32,073

( 1) Commencing in 1988, Sales & Marketing Management Survey of Buying Power has excluded other labor­ related income, imputed personal interest income and imputed rental income from the definition of effective buying income. On a national level, these changes result in an 11 % reduction in effective buying income. Source: Sales & Marketing Management Survey of Buying Power. Tourism and Community and Recreational Facilities Tourism is a major industry in Anaheim. Much of that industry, including about 142 hotels and motels and over 613 eating establishments, is located to provide convenience to the major local attractions, including Disneyland, Anaheim Stadium, Anaheim Convention Center and the Anaheim Sports and Entertainment Arena. Disneyland occupies a 184 acre site in the City and is one of the major tourist attractions in the nation. Opened in 1955 with an original investment of $17,000,000, Disneyland today is the second largest amusement park in the world, second only to Disney World in Florida. Disney is currently negotiating with the City of Anaheim for a proposed second gate attraction to be built on what is now Disneyland's parking lot. According to Disney studies, the $3 billion project would bring more than 27 ,000 jobs to the region and generate $45 million in taxes for the City while serving as the catalyst for revitalization of the entire Commercial Recreation Area. Highlights of Disney's proposed expansion project

C-6 include: the creation of WESTCOT, patterned after Walt Disney World's EPCOT; three new theme hotels and the renovation of the Disneyland Hotel, creating an additional 5,000 hotel rooms; and building the world's largest parking structures with a combined capacity for30,000 vehicles. In 1964, the City built the Anaheim Stadium for the public presentation of major league baseball, football, soccer, track, field and other sporting and nonsporting events. The stadium now consists of a 70,500 seat athletic stadium and supportive facilities, including a 15,000 car parking lot. In 1966 the City entered into a 35-year agreement with Golden West Baseball Company (the California Angels) forthe purpose of exhibiting American League baseball at the Stadium. On November 21, 1978, the City signed a 35-year exhibition agreement with the Los Angeles Rams Football Company (the "Rams") for exhibiting the Rams professional National Football League games in the Stadium, beginning with the 1980 season. To accommodate spectator attendance for the Rams games, the City agreed to expand, and has expanded, the Stadium from its former seating capacity of 43,200 to approximately 70,500 seats. The following improvements were added: 500 parking stalls; press and media facilities; football box office; 108 executive box suites; locker facilities; a training room; storage space; concession stands and ticket booths. The City installed a $5.3 million scoreboard system in July 1988, including one color video system, two black and white matrix scoreboards, two additional auxiliary scoreboards and two boards fordisplay of scores fromother games. The Anaheim Convention Center was opened in January 1967 with facilitieswhich included a 9,000-seat arena, a 100,000 square foot exhibit hall, and the north meeting room complex consisting of approximately forty meeting and lobby areas as well as office space. In 1977, the first expansion took place which included the addition of a 100,000 square foot exhibit hall and an additional 25,000 square feet which can be used for exhibits or meeting purposes. In 1982, the next expansion took place which duplicated the earlier expansion adding another 100,000 square feet of exhibit hall space and approximately 25,000 square feet of ex­ hibit/ meeting room areas. In 1988, a third expansion commenced which consisted of the construction of a two-level expansion to the existing complex and a five-level parking garage. The upper level of the expansion added 158,000 square feet of exhibit space and the lower level was originally designed foradditional parking. In 1992, a fourth project commenced which entailed conversion of the subterranean parking area to approximately 150,000 square feet of additional exhibit space. The total square footage of the Convention Center complex will be approximately one million square feet when the project is completed. The Anaheim Convention Center is the largest facility of its kind on the west coast and one of the most successful in operation in the country. In 1991, the City began construction on a $103 million 19,200-seatSpor ts and Entertainment Arena (the "Arena") with approximately 3,900 parking spaces. The Arena project is publicly financed with bonds secured by a direct pay irrevocable letter of credit. The project is currently 96 percent complete and is within budget and ahead of schedule. The City has entered into an agreement formanagement of the Arena with Ogden Facility Management Corporation of Anaheim ("Ogden"). The City anticipates that the Arena will accommodate spectator attendance for National Basketball Association games, National Hockey League games, as well as a major concert series. Ogden has entered into an agreement with Disney Sports Enterprises, Inc. ("Disney"), forthe use of the Arena by Disney's National League hockey team. The first season of hockey games will be in 1993. The Arena is due to open in September 1993. Orange County is a major tourist center of Southern California. Forty-fourmiles of shorelines with more than twenty publicly maintained beach areas provide year-round aquatic activities. In Anaheim, there are two 18-hole golf courses, eleven community parks, seven of which contain major athletic facilities, 37 neighborhood parks and playgrounds, a nature center, two senior citizen centers and two community centers. Previously mentioned recreational and amusement facilities in Anaheim include Disneyland, the Anaheim Convention Center, Anaheim Stadium and the Anaheim Sports and Entertainment Arena. Within an hour's drive from the City are Knott's Berry Farm in the adjacent City of Buena Park, the Los Alamitos Race Course, the renowned Spanish Mission of San Juan Capistrano, and the Art Colony at Laguna Beach

C-7 which sponsors an annual art festival. Within a two hour drive are numerous summer and winter resort areas in the San Bernardino and San Jacinto mountains. The Newport Harbor area, a few miles south of the City, provides anchorage facilities for approximately 4,600 private boats. Boat launching ramps, deep sea fishing, skin-diving, and other aquatic activities are readily accessible.

Other Anaheim facilities include a main public library and four branch libraries. Within the City, there are seven general hospitals with a capacity of 1,276 beds, four AM or FM radio stations, 33 banks and 28 savings and loan associations, and 66 churches of all major denominations.

Retail Sales

The table below presents the City's taxable retail sales for the period 1987 through 1991 in comparison to other cities in Orange County, Orange County and the State of California.

ANAHEIM, MAJOR ORANGE COUNTY CITIES, ORANGE COUNTY, CALIFORNIA Taxable Retail Sales, All Outlets(!) Calendar Year ($000) 1987 1988 1989 1990 1991 Anaheim ...... $ 2,816,496 $ 2,917,936 $ 3,130,406 $ 3,005,793 $ 2,729,513 Buena Park ...... 834,442 861,274 910,125 882,813 787,176 Costa Mesa ...... 1,927,810 2,143,389 2,280,333 2,203,103 2,059,859 Fullerton ...... 1,096,630 1,178,615 1,217,264 1,187,141 1,120,552 Garden Grove ...... 1,114,315 1,181,051 1,190,077 1,142,952 1,046,437 Huntington Beach ...... 1,544,775 1,521,594 1,629,149 1,519,635 1,454,920 Orange ...... 1,510,807 1,742,684 1,938,501 1,793,501 1,698,135 Santa Ana ...... 2,346,771 2,620,122 2,676,423 2,519,262 2,494,842 Westminster ...... 729,868 741,905 763,689 801,284 759,761 Major Cities ...... 13,921,914 14,908,570 15,735,967 15,055,484 14,151,195 All Other ...... 9,698,319 10,500,131 11,684,575 12,711,833 12,323,737 Orange County ...... $ 23,620,233 $ 25,408,701 $ 27,420,542 $ 27,767,317 $ 26,474,932 California ...... $231,869,731 $251,078,129 $272,088,591 $281,860,293 $270,844,829

( l) Owing to changes in the sales tax base for retail goods, the years are not totally comparable, but the trend in relative magnitude of retail sales tax bases is exhibited.

SOURCE: California State Board of Equalization, Trade Outlets and Taxable Retail Sales in California for 1987, 1988, 1989, 1990 and 1991 .

C-8 Following is the breakdown of calendar year 1991 sales tax permits in the City by type of outlet, and the percentage of each type's total dollar transactions: Percent of Type of Outlet Permits Transactions Apparel Stores ...... 128 1.0% General Merchandise Stores ...... 29 2.5 Drug Stores ...... 37 l.2 Food Stores ...... 198 4.8 Packaged Liquor Stores ...... 78 0.8 Eating and Drinking Places ...... 607 8.8 Home Furnishings and Appliances ...... 164 5.0 Building Materials and Farm Implements ...... 99 7.2 Auto Dealers and Auto Supplies ...... 140 7.4 Service Stations ...... 111 5.5 Other Retail Stores ...... 827 10.9 All Other Outlets ...... 6,120 44.9

SOURCE: Taxable Sales in California, Annual Report, State Board of Equalization. Following is a table indicating the growth of taxable transactions for the period 1987 through 1991 in the City by type of business.

CITY OF ANAHEIM TAXABLE TRANSACTION BY TYPE OF BUSINESS Calendar Year (OOO's) 1987 1988 1989 1990 1991 Apparel Stores ...... $ 32,183 $ 29,227 $ 32,362 $ 29,953 $ 28,369 General Merchandise ...... 91,409 74,345 76,805 72,945 68,643 Drug Stores ...... 24,973 25,614 28,498 29,707 31,480 Food Stores ...... 118,119 120,131 124,536 124,920 130,179 Packaged Liquor Stores ...... 22,367 20,855 19,482 20,126 21,378 Eating and Drinking Places ...... 231,625 226,757 236,770 243,088 241,151 Home Furnishings Appliances ...... 136,173 145,068 148,258 141,704 135,82 1 Building Materials and Farm Implements 225,133 219,591 249,464 219,277 197,713 Auto Dealers and Auto Supplies ...... 268,787 262,420 271,429 238,152 202,969 Service Stations ...... 133,898 147,964 145,197 145,269 150,146 Other Retail Stores ...... 245,437 273,727 314,460 293,614 298,447 Retail Stores Total ...... 1,530,104 1,545,699 1,647,261 1,558,755 1,506,296 All Other Outlets ...... 1,286,392 1,372,237 1,483,145 1,447,038 1,223,217 Total All Outlets ...... $2,816,496 $2,917,936 $3,130,406 $3,005,793 $2,729,513

SOURCES: California State Board of Equalization, Taxable Sales in California, as of December 31, 1987, 1988, 1989, 1990 and 1991 Annual Reports.

C-9 The table below compares the taxable sales per capita for the City of Anaheim and Orange County during the period 1987 to 1991 .

COMPARISON OF TAXABLE SALES CITY OF ANAHEIM AND ORANGE COUNTY Calendar Year Taxable Sales City of Anaheim Orange County Per Capita Taxable Sales Taxable Sales Orange ($000) Population ($000) Population Anaheim County 1987 ...... $2,816,496 242,200 $23,620,233 2,193,600 $11,629 $10,768 1988 ...... 2,917,936 243,021 25,408,701 2,238,721 12,007 11,350 1989 ...... 3,1 30,406 244,309 27,420,542 2,280,405 12,813 12,024 1990 ...... 3,005,793 266,406 27,767,317 2,410,556 11,283 11,519 1991 ...... 2,729,513 273,491 26,474,932 2,453,277 9,980 10,792

SOURCES: California State Board of Equalization, Taxable Sales in California, as of December 31, 1987, 1988, 1989, 1990 and 1991 Annual Reports, United States Bureau of Statistics.

Education The City is served by nine public high schools, ten public junior high schools and forty-four public elementary schools. Almost all of the City lies within eight districts: the Anaheim City, Magnolia, Savanna and Centralia Elementary School Districts, the Anaheim Union High School District, the Placentia and Orange Unified School Districts, and the North Orange County Community College District. There are eleven institutions of higher learning in Orange County and an additional twelve in adjacent areas of southern Los Angeles County. Within Orange County are the University of California, Irvine; California State University at Fullerton; Chapman University; Southern California College; and public community colleges with grades 13 and 14.

C-10 CITY FINANCIAL INFORMATION The following unaudited summaries of certain Funds of the City have been prepared by the City of Anaheim Finance Department from audited financial statements. CITY OF ANAHEIM ALL GOVERNMENTAL FUND TYPES(l) SUMMARY OF REVENUE AND TRANSFERS Years Ended June 30 ($000) 1988 1989 1990 1991 1992 Property taxes ...... $ 32,318 $ 36,343 $ 38,832 $ 39,542 $ 39,235 Other taxes (including sales and use taxes) ...... 32,837 33,845 36,554 33,393 30,878 Transient occupancy tax ...... 20,458 24,400 24,473 26,732 28,745 Licenses, fees and permit ...... 8,027 11,193 11,896 12,294 16,214 Fines, forfeits and penalties ...... 2,112 2,389 2,440 1,984 1,659 Intergovernmental revenue ...... 32,951 36,605 45,851 43,460 47,204 Use of money and property ...... 11,062 25,473 27,234 25,937 22,042 Charges for services ...... 4,441 5, 190 7,063 7,566 7,902 Other revenues ...... 5,064 5,065 6,318 7,029 8,305 Revenue before transfer from other funds 149,270 180,503 200,661 197,937 202, 184 Other financing sources ...... 1,419 131,763(2) 67,997 7,710 31,734 (3) Total revenue and other financing sources $150,689 $312,266 $268,658 $205,647 $233,918

( 1) Table includes the General Fund, Special Revenue Funds, Debt Service Funds and Capital Projects Funds and excludes the Enterprise and Internal Service Funds. (2) Other financing sources were markedly higher in 1989 than in 1988 due to operating transfers, contributions from property owners, restatement of Debt Service Fund balance for 1988 and loan proceeds. (3) Redemption of serial bonds, general obligations is significantly higher due to refunding a Certificates of Participation issue. SOURCE: City Finance Department. SUMMARY OF EXPENDITURES Years Ended June 30 ($000) 1988 1989 1990 1991 1992 General government ...... $ 13,299 $ 15,820 $ 17,124 $ 23,217 $ 19,370 Nondepartmental...... 26,943 28,497 35,538 49,257 60,672 Public safety ...... 52, 194 53,927 59,178 65,276 71,045 Public works/parks/recreation / community services ...... 32,003 38,765 57,575 50,8 18 34,034 Library ...... 4,782 5,143 5,395 5,608 5,562 Total operating expenditures ...... 129,221 142,152 174,810 194, 176 190,683 Redemption of serial bonds, general obligations ...... 2,473 2,600 61,592(1) 3,58 1 3,830 Interest expense, general obligations ..... 15,263 22,688 24,544 26,644 30,122 Advance refunding escrow ...... NIA NIA NIA NIA 20,972 Capital outlay ...... 8,844 10,897 14,674 28,067 6,906 Total expenditures ...... $155,801 $178,337 $275,620 $252,468 $252,513

( 1) Redemption of serial bonds, general obligations is significantly higher due to refunding of Certificates of Participation issue. SOURCE: City Finance Department.

C-11 Budgetary Processes The fiscalyear of the City begins on the firstday of July of each year and ends on the thirtieth day of June of the following year. At such date as the City Manager determines, each board or commission and each department head must furnish to the City Manager an estimate of revenues and expenditures for such department, board or commission for the ensuing fiscalyear, detailed in such manner as may be prescribed by the City Manager. In preparing the proposed budget, the City Manager reviews the estimates, holds conferences thereon with the respective department heads, boards or commissions as necessary, and revises the estimates as he may deem advisable. At least thirty days prior to the beginning of each fiscal year, the City Manager submits to the City Council the proposed budget as prepared by the City Manager. After reviewingand making such revisions as it deems advisable, the City Council determines the time for the holding of a public hearing thereon and causes to be published a notice thereof not less than ten days prior to the hearing date. Copies of the proposed budget are available for inspection by the public in the office of the City Clerk at least ten days prior to the hearing. At the conclusion of the public hearing, the City Council further considers the proposed budget and makes any revisions thereof that it deems advisable. On or beforeJune 30 the City Council adopts the budget with revisions, if any, by the affirmative vote of at least a majority of the total members of the City Council. From the effective date of the budget, the amounts stated as proposed expenditures are appropriated to the departments, officesand agencies forthe objects and purposes named. The City Manager is empowered to transfer funds from one object or purpose to another within the same department, office or agency, as necessary. All appropriations lapse at the end of the fiscalyear to the extent that they have not been expended or lawfullyencumbered. At any public meeting after the adoption of the budget, the City Council may amend or supplement the budget by the affirmative vote of at least a majority of the total members of the City Council. Under the City Charter, the City may not incur indebtedness evidenced by general obligation bonds which would in the aggregate exceed fifteen percent of the total assessed valuation, for purposes of City taxation, of all the real and personal property within the City, and no bonded indebtedness which shall constitute a general obligation of the City may be created unless authorized by the affirmative votes of two­ thirds of the electors. The City Council employs, at the beginning of each fiscal year, an independent certified public accountant who, at such time or times as specified by the City Council, at least annually, and at such other times as they shall determine, examines the books, records, inventories and reports of all officers and departments as the City Council may direct. As soon as practicable after the end of the fiscalyear, a report is submitted by such accountant to the City Council and a copy of the financial statements as of the close of the fiscal year is published.

Assessed Valuation and Tax Collections Taxes are levied each fiscalyear on taxable real and personal property which is situated in the City as of the preceding March 1. For assessment and collection purposes, property is classified either as "secured" or "unsecured" and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the assessment roll containing State-assessed public utilities property and property the taxes on which are a lien on real property sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the "unsecured roll." Property taxes on the secured roll are due in two installments, on November l and February l of each fiscal year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquent penalty, plus a redemption penaltyof l % per

C-12 month to the time of redemption. If taxes are unpaid for a period of fiveyears or more, the property is deeded to the State and is then subject to sale by the County Tax Collector. Property taxes on the unsecured roll are due as of the March 1 lien date and become delinquent, if unpaid, on August 31 of each fiscal year. A 10% penalty attaches to delinquent taxes on property of the unsecured roll, and an additional penalty of 1 % per month begins to accrue beginning November 1 of the fiscal year. The taxing authority has four ways of collecting unsecured personal property taxes: ( 1) a civil action against the taxpayer; (2) filing a certificatein the officeof the County Clerk specifying certain facts in order to obtain a judgement lien on certain property of the taxpayer; ( 3) filing a certificate of delinquency forrecord in the County Recorder's office, in order to obtain a lien on certain property of the taxpayer; and ( 4) seizure and sale of personal property, improvements or possessory interest belonging or assessed to the assessee. Assessed valuation for revenue purposes increased by 3. 7% in 1992-93 over 1991-92. Such assessed valuations include secured and unsecured properties assessed by the Orange County Assessor, and secured utility properties assessed by the State Board of Equalization. Such assessed valuations exclude State­ reimbursed homeowner's and business inventory exemptions and exclude veterans, religious, charitable, and other such nonrecoverable exemptions. In 1981-82, the assessed valuation became equivalent to the fair market valuation. The tax roll for 1992-93 indicates a full market valuation of $13,889,466 for the City. The table below shows the assessed and estimated fu ll market values, City tax levies, collections, collection percentage, and per capita estimated full market valuation for the last ten completed fiscal years.

CITY OF ANAHEIM Assessed Valuation and Tax Collection Record (In Thousands) Estimated Total Percent of Per Capita Fiscal Assessed Total Current Current Estimated Year Ended Full Market City Tax Levy Tax Levy Full Market June 30 Valuation Tax Levy Collections Collected Population Valuation 1983 ...... $6,306,823 $ 9,365 $ 9,034 96.5% 229 $28 1984 ...... 6,811,403 9,692 9,693 100.0 233 29 1985 ...... 7,632,556 10,287 10,009 97.3 235 32 1986 ...... 8,435,269 11,469 11, 138 97.1 238 35 1987 ...... 9,032,389 13,009 12,938 99.5 242 37 1988 9,841,449 15,033 15,025 99.9 243 O o O O O O O O O O O o o O O O o o o • 0 0 0 o o O O I 40 1989 ...... 10,491,110 16,573 16,432 99.1 244 43 1990 ...... 11,559,382 17,825 17,621 98.9 266 43 1991 ...... 12,403,261 21, 183 20,299 95.8 273 45 1992 ...... 13,392,116 21,21 1 20,650 97.4 279 48 SOURCE: City of Anaheim Annual Financial Reports; City Finance Director.

C-13 Summarized below is a 10-year history of property tax rates levied by the City and overlapping taxing agencies in a typical tax code area in Anaheim.

CITY OF ANAHEIM TYPICAL TAX CODE AREA Property Tax Rate History (Per $100 of Assessed Valuation) Basic Total County, Orange Rate Per Fiscal City, County Metropolitan $100 Year Ended School County of School Flood Water Assessed June 30 Levy City Orange Districts Control District Valuation 1983 ...... 1.0000 .0066 .0004 .0929 .0024 .0166 1.1189 1984 ...... 1.0000 .0098 .0004 .0865 .0021 .0237 1.1225 1985 ...... 1.0000 .0088 .0003 .1090 .0018 .0156 1.1355 1986 ...... 1.0000 .0010 .0003 .0609 .0016 .0164 1.0802 1987 ...... 1.0000 .0017 .0003 .0244 .0014 .0148 1.0426 1988 ...... 1.0000 .0119 .0002 .0225 .0012 .0112 1.0470 1989 ...... 1.0000 .0113 .0002 .0229 .0011 .0110 1.0465 1990 ...... 1.0000 .0056 .0002 .0195 .0009 .0121 1.0383 1991 ...... 1.0000 .0048 .0002 .0118 .0008 .0097 1.0273 1992 ...... 1.0000 .0050 .0001 .0096 .0007 .0089 1.0243

SOURCE: County Tax Rates (various years); Auditor-Controller, County of Orange.

C-14 Direct and Overlapping Debt The direct and overlapping bonded debt of the City as of May 1, 1993 is shown below.

CITY OF ANAHEIM Statement of Direct and Overlapping Debt As of May 1, 1993 1991-92 Assessed Valuation: $14,126,394, 117 (after deducting $1,720,020,213 redevelopment tax alloca­ tion increment) Debt Direct and O,erlapping Bonded Debt % Applicable May 1, 1993 Orange County ...... 8.890% $ 87,122 Orange County Building Authorities ...... 8.890 25,368,548 Orange County Flood Control District ...... 8.879 291,675 Orange County Water District Certificates of Participation ...... 13.211 16,879,563 Metropolitan Water District ...... 1.787 11,900,705 County Sanitation Districts Certificates of Participation ...... 9.350-35.352 63,300,357 Rancho Santiago Community College District Certificates of Participation .. 12.094 200,156 Orange Unified School District and Certificates of Participation ...... 26.291 3,235,108 Placentia Unified School District ...... 15.241 200,419 Centralia School District and Certificates of Participation ...... 15.435 998,312 Other School Districts and Certificates of Participation ...... Various 32,273 City of Anaheim ...... 100.000 9,235,000 City of Anaheim General Fund Obligations ...... 100.000 300,004,3 87 ( 1) Community Facilities Districts ...... 100.000 39,870,000 Other Special Districts ...... Various 10,081 TOTAL GROSS DIRECT AND OVERLAPPING BONDED DEBT ...... $471,613,706(2) Less: Anaheim Public Improvement Corporation Refunding Certificates of Participation ( 100% self-supporting) ...... 22,385,000 Recycling Equipment Certificates of Participation ( 100% self-supporting) 8,755,000 Convention Center, Stadium Inc. and Parking Facilities Certificates of Participation ( 100% self-supporting) ...... 216,010,627 TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT ...... $224,463,079

( 1 ) Excludes tax and revenue anticipation notes. (2) Excludes revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Ratios to Assessed Valuation: Gross Direct Debt ($302,315,477) ...... 2.19% Net Direct Debt ($62,688,390) ...... 0.44% Total Gross Debt ...... 3.34% Total Net Debt...... 1.59% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/92: $1,084, 140

SOURCE: California Municipal Statistics, Inc.

Constitutional Amendments Affecting City Revenues On June 6, 1978, California voters approved Proposition 13, the Jarvis-Gann Initiative, which added Article XIIIA to the California Constitution. The principal thrust of Article XIIIA is to limit the amount of ad valorem tax 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 when purchased,

C-15 newly constructed, or a change in ownership has occurred after the 1975 assessment period." Furthermore, all real property valuation may be increased to reflect the inflationaryrate, as shown by the consumer price index, not to exceed 2% per year, or may be reduced.

Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in the event of declining property values caused by damage, destruction or other factors, and to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster. Additionally, Article XIIIA has been amended to provide that there would be no increase in the full cash value base in the event that property title is transferredfrom one member of the same immediate family to another member.

Article XII IA exempts from the 1 % tax limitation any taxes to repay indebtedness approved by the voters prior to July I, 1978, and requires a vote of two-thirds of the qualified electorate to impose special taxes, while totally precluding the imposition of any additional ad valorem, sales or transaction tax on real property. In addition, Article XIIIA requires the approval of two-thirds of all members of the State Legislature to change any State tax laws resulting in increased tax revenues.

On November 6, 1979, the voters of the State approved Proposition 4, known as the Gann Initiative, which added Article XIIIB. On June 5, 1990, the voters approved Proposition 111, which amended Article XIIIB in certain respects. Under Article XIIIB, as amended, State and local government entities have an annual "appropriations limit" which limits the ability to spend certain moneys which are called "appropria­ tions subject to limitation" (consisting of most tax revenues and certain state subventions, together called "proceeds of taxes" and certain other funds) in an amount higher than the "appropriations limit." Article XIIIB does not affect the appropriation of moneys which are excluded from the definition of "appropriations limit," including debt service on indebtedness existing or authorized as of January 1, 1979, or bonded indebtedness subsequently approved by two-thirds of the voters.

In general terms, the City's "appropriations limit" in each year is based on the City's limit for the prior year, adjusted annually for changes in the cost of living and changes in population, and adjusted, where applicable, for transfer of financial responsibility of providing services to or from another unit of government. The change in the cost of living reflects changes in California per capita personal income (or, at the City's option, changes in assessed value caused by local nonresidential new construction). Among other provisions of Article XIIIB, if the revenues of such entities in any fiscal year and the following fiscal year exceed the amounts permitted to be spent in such years, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years.

As originally enacted in 1979, the City's appropriations limit was based on 1978-79 authorizations to expend proceeds of taxes and was adjusted annually to reflect changes in cost of living and population (using different definitions, which were modified by Proposition 111). Starting with fiscal year 1990-91, the City's appropriations limit was recalculated by taking the actual fiscal year 1986-87 limit, and applying the annual adjustments as if Proposition 111 had been in effect.

On November 4, 1986, an initiative statute (known as Proposition 62) was approved by the voters of the State which (i) requires that any tax for general government purposes imposed on local governmental entities such as the City be approved by resolution or ordinance adopted by a two-thirds vote of the governmental entity's legislative body and by a majority vote of the electorate of the governmental entity, (ii) requires that any special tax (defined as taxes levied for other than general government purposes) imposed by local governmental entity be approved by a two-thirds vote of the voters within that jurisdiction, (iii) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was imposed, (iv) prohibits the imposition of ad valorem taxes on real property by local government entities except as permitted by Article XIIIA, (v) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities, and (vi) requires that any tax imposed by a local governmental entity on or after August 1, 1985, be ratified by a majority vote of the electorate within two years of the adoption of the initiative or be terminated by November 15, 1988.

C-16 A finalState Court of Appeal decision has declared the voter majority provisions referred to above to be unconstitutional. A second appellate courtdecision held unconstitutional both the effective date and majority­ vote provisions of Proposition 62. However, the California Supreme Court has ordered that the latter decision not be published (making it unavailable for citation as precedent) thus creating uncertainty as to the voter­ approval requirement of Proposition 62. Consequently, the effect, if any, the initiative will have on the City is unclear.

Largest Taxpayers The ten largest taxpayers in Anaheim and their full market valuations as of March 1, 1991 are as follows:

CITY OF ANAHEIM Major Taxpayers

($000) Full Market Valuation Taxpayer of Property Walt Disney Productions ...... $ 586,834 Rockwell International Corporation ...... 265,375 Equitable Pacific ...... 89,775 Catellus Development Corporation ...... 59,837 Anaheim Land Associates ...... 56,163 Ciba-Geigy Corporation ...... 54,541 Pei-Chung Chao ...... 45,630 Canyon Corporate Center ...... 44,707 Weyerhaeuser Co ...... 41,210 RREEF USA Fund II ...... 40,967 $1,285,039

SOURCE: Orange County Assessor's Office.

Pensions City personnel belong to the State Public Employees Retirement System (P.E.R.S.). As of June 30, 1991, P.E.R.S. had separate contracts with the State of California, 1,227 local public agencies and 57 master contracts with school districts. Membership includes state, school, city, county, and special district groups. Each has somewhat differing benefitprograms and amounts of actuarial liabilities. For the Public Employees' Retirement Fund as a whole, net assets available for benefits at market value on June 30, 1991, according to the annual audit, were $56,569,177,863, while the unfunded obligation was $7,207,109,872, representing a funded ratio of 87.3 percent.

For the City, net assets available for benefits on June 30, 1992 were $388,021,566 while the unfunded obligation was $3,221,781, representing a funded ratio of 99 percent. In 1980 the City's funded ratio was 63.3 percent. The unfunded obligation is the amount by which the excess of the present value of total projected benefits over the sum of the present values of future employernormal costs and future member contributions exceeds the amount of available net assets at carrying value. Based on the actuarial valuation made as of June 30, 1992, the City's unfunded prior service cost relating to the City's participation in P.E.R.S. was zero.

As of the middle of October 1982, for most of its miscellaneous employees, the City began paying the full cost to such employees' share of the P.E.R.S. contribution, equal to 7% for such miscellaneous employees' earnings. Additionally, as of July 1987, forPolice public safety employees, the City began paying the full cost of such employees' share of the P.E.R.S. contribution, thereby assuming responsibility for contributing 9% of such employees' earnings. In January 1989, for Fire public safety employees, the City increased its contribution from 7% to 9% to begin paying the full cost of such employees' share of the P.E.R.S. contribution.

C-17 The City's contribution rate is determined by periodic actuarial valuations based on the benefit formula and the number of employees and their respective salary schedules. As of July 1, 1992, the City's contribution rate was 6.978% for miscellaneous employees and 13.448% for public safety employees. City contributions totaled $10,197,419 (net of P.E.R.S. credit of $6,318,871) in fiscal year 1991-92. During fiscal year 1983, P.E.R.S. refunded to the City their share of an actuarial gain resulting from SB46 which put a cap on the P.E.R.S. System's Reserve for Deficiencies at 1% of system assets. The City's share, $2,571,000, has been deferred in accordance with Accounting Principles Board Opinion No. 8, "Accounting forthe Cost of Pension Plans", and will be amortized over a 10-year period. The effect of the amortization forthe year ended June 30, 1992 is to reduce pension expense by $257,000.

Labor Relations City employees are represented by various unions, and labor relations have been generally amicable in that there have been no major strikes, work stoppages, or other incidents. Currently, 73.2% of all City employees are represented by unions, including the Anaheim Municipal Employees Association; the Anaheim Police Association; the Anaheim Fire Association; the International Brotherhood of Electrical Workers, Local 47 (IBEW) (utility department employees); the Hospital and Service Employees Union, Local 399; and the General Truck Drivers Union, Local 952. The preceding are designated representatives under the Meyer-Milias-Brown Act (Section 3500 et seq. of the GovernmentCode of California). The expiration dates of current memoranda of understanding are: Anaheim Municipal Employees Association, October 7, 1993; Anaheim Firefighters Association, December 30, 1993; Anaheim Police Association, July 2, 1992; the International Brotherhood of Electrical Workers, July 1, 1993; Hospital and Service Employees Union, Local 399, February 2, 1995; and the General Truck Drivers Union, Local 952, February 2, 1995. There are no other organized employee groups. Negotiations are presently underway to renew the agreement with the Anaheim Police Association. There is no reason to believe that an amicable settlement will not be reached with this group.

Litigation There is no litigation pending or, to the knowledge of the City, threatened, questioning the corporate existence of the City, or the title of the officers of the City to their respective offices, or the power and authority of the City to execute the Resolution and make the payments thereunder. There is no litigation pending, or to the knowledge of the City, threatened, questioning or affecting in any material respect any of the financial information with respect to the City contained in the Official Statement.

Financial Statements Audited financialstatements of the City forthe year ended June 30, 1992 are available upon request from the Director of Finance, City of Anaheim, P.O. Box 3222, Anaheim, California 92803.

C-1 8 APPENDIX D

[Form of Proposed Opinion of Co-Bond Counsel] [ Delivery Date] Board of Directors Anaheim Public Financing Authority Anaheim, California

Gentlemen: We have examined the Constitution and the laws of the State of California and a record of the proceedings relating to the issuance of $71,300,000 aggregate principal amount of Anaheim Public Financing Authority Revenue Bonds, Series 1993 (City of Anaheim Electric Utility Projects) (the "1993 Bonds"). Pursuant to an Installment Purchase Agreement, dated as of May 1, 1993, between the Anaheim Public Financing Authority ( the "Financing Authority") and the City of Anaheim ( the "City") ( the "Combustion Turbine Installment Purchase Agreement"), the Financing Authority has agreed to sell an interest in the Combustion Turbine Peaking Plant (the "Combustion Turbine Project") to the City, and the City has agreed to purchase the Combustion Turbine Project and to make certain purchase payments (the "Combustion Turbine Purchase Payments"). Pursuant to an Installment Purchase Agreement, dated as of May 1, 1993, between the Financing Authority and the City (the "Utilities Building Installment Purchase Agreement"), the Financing Authority has agreed to sell an interest in the Public Utilities Building (the "Utilities Building Facilities") to the City, and the City has agreed to purchase the Utilities Building Facilities and to make certain purchase payments ( the "Utilities Building Purchase Payments"). Pursuant to the Indenture of Trust (the "Indenture"), dated as of May 1, 1993, by and between The Bank of New York Trust Company of California,as Trustee (the "Trustee") and the Financing Authority, the Financing Authority has assigned to the Trustee, among other things, the right to receive Combustion Turbine Purchase Payments from the City under the Combustion Turbine Installment Purchase Agreement and the right to receive Utilities Building Purchase Payments fromthe City under the Utilities Building Installment Purchase Agreement. The 1993 Bonds are issued under and pursuant to the provisions relating to the joint exercise of powers found in Chapter 5 of Division 7 of Title 1 of the Government Code of California, as amended (the "Act"), and under and pursuant to the Indenture. The proceeds received fromthe sale of the 1993 Bonds will provide funds to refund certain of the City's outstanding Electric System Certificates of Participation ( Combustion Turbine Peaking Plant) and to refund certain of the City's outstanding Electric System Certificates of Participation (Public Utilities Building). The 1993 Bonds are secured by, among other things, a pledge, charge and lien upon Project Revenues, which consist of 1993 Purchase Payments to be made by the City under the Installment Purchase Agreements. The Installment Purchase Agreements provide for the payment of 1993 Purchase Payments by the City from Surplus Revenues in the Qualified Obligations Account (as definedin the Installment Purchase Agreements). Capitalized terms used herein which are not defined herein shall have the meanings given such terms in the respective Installment Purchase Agreements. The City reserves the right to execute and deliver additional Qualified Obligations, the payments under which are on a parity with the 1993 Purchase Payments, upon the terms and conditions stated in the Installment Purchase Agreements.

D-1 The 1993 Bonds are dated as provided in the Indenture and mature on October 1 of the years and in the amounts, and the interest on the 1993 Bonds shall be payable at the rates, as set forthbelow: Principal Principal Maturity Amount of Interest Maturity Amount of Interest (October 1) 1993 Bonds Rate (October l) 1993Bonds Rate 1994 $ 285,000 5.000% 2005 $ 1,145,000 5.200% 1995 300,000 5.000 2006 4,075,000 5.300 1996 315,000 5.000 2007 4,340,000 5.375 1997 335,000 5.000 2008 4,610,000 5.400 1998 345,000 5.000 2009 4,900,000 5.400 1999 2,825,000 5.000 2010 5,215,000 5.500 2000 2,965,000 5.000 2011 5,555,000 5.500 2001 760,000 5.000 2012 1,900,000 5.550 2002 850,000 5.000 2013 2,050,000 5.550 2003 945,000 5.000 2016 7,115,000 5.600 2004 1,045,000 5.100 2022 19,425,000 5.625 The 1993 Bonds are deliverable in the denomination of $5,000 or any integral multiple thereof. The 1993 Bonds are subject to optional and mandatory redemption prior to maturity in the manner and upon the terms set forth in the Indenture. Neither the 1993 Bonds nor the obligation of the City to make 1993 Purchase Payments constitutes a debt of the City, the State of California or any political subdivision thereof with the meaning of any statutory or constitutional debt limitation. Neither the 1993 Bonds nor the obligation of the City to make 1993 Purchase Payments constitutes a pledge of the faith and credit of the Financing Authority, the City, the State of California or any other political subdivision thereof. We are of the opinion that: 1. Each of the Installment Purchase Agreements and the Indenture has been duly authorized, executed and delivered by the Financing Authority and constitutes a valid, legal and binding obligation of the Financing Authority, enforceable in accordance with its terms. Each of the Installment Purchase Agreements has been duly authorized, executed and delivered by the City and constitutes a valid, legal and binding obligation of the City, enforceable in accordance with its terms. 2. The 1993 Bonds have been duly and validly authorized and issued by the Financing Authority in accordance with the Constitution and statutes of the State of California, including the Act, and the Indenture. The 1993 Bonds constitute the valid and binding obligations of the Financing Authority as provided in the Indenture, are enforceable in accordance with their terms and the terms of the Indenture and are entitled to the benefits of the Act and the Indenture. 3. The InternalRevenue Code of 1986 (the "Code") sets forthcertain requirements which must be met subsequent to the initial issuance of the 1993 Bonds for the interest received by the Owners of the 1993 Bonds to be and remain excluded from gross income for Federal income tax purposes. Noncompli­ ance with such requirements could cause the interest received by the Owners of the 1993 Bonds to be included in gross income retroactive to the date of initial issuance of the 1993 Bonds. The Financing Authority has covenanted in the Indenture to maintain the exclusion of the interest received by the Owners of the 1993 Bonds fromgross income for Federal income tax purposes pursuant to section 103(a) of the Code. In our opinion, under existing law, and assuming compliance with the aforementioned covenant, the interest received by the Owners of the 1993 Bonds is excluded fromgross income for Federal income tax purposes. The 1993 Bonds are not "specified private activity bonds" within the meaning of section 57(a) (5) of the Code and, therefore, the interest received by the Owners of the 1993 Bonds will not be treated as a preference item forpurposes of computing the alternative minimum tax imposed by section 55 of the Code. However, we note that a portion of the interest received on 1993 Bonds owned by

D-2 corporations may be subject to the Federal alternative minimum tax, which is based in part on adjusted net book income or adjusted current earnings. The interest received by the Owners of the 1993 Bonds is exempt from personal income taxes of the State of California. Except as stated in the immediately preceding two paragraphs, we express no opinion as to any Federal or state tax consequences of the ownership of or disposition of the 1993 Bonds. The opinions expressed in paragraphs 2 and 3 hereof are qualified to the extent that enforceabilityof the Installment Purchase Agreements, the Indenture and the 1993 Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally and by the application of equitable principles if equitable remedies are sought.

Very truly yours,

D-3 (This page intentionally left blank.) APPENDIX E MBIA FINANCIALGU ARANTY INSURANCE POLICY Municipal Bond Investors Assurance Corporation Annonk, New York 10504

Policy No. XXXXXX

Municipal Bond Investors Assurance Corporation (the "Insurer"), in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and in-evocably guarantees to any owner, as hereinafter defined, of the following described obligations. the full and con1plc1e payment required to be made by or on behalf of the Is.«uer to [PA YINO AOENTJ or its succcaor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or by llllY advancement of mawrity pursuant lo a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be sopaid (exocpt that in the event of any acoclcration of the due date of such principal by reason of mandatory or optional redemption or accclaation resulting from defau lt or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amount., and at such times as such p11ymcnt5 of principal would have been due had there not been any such acoclcration): and (ii) the reimbu111Cment of any such payment which is subl!equently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bank,uptcy law. The amount., refm-cd to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligation.� " shall mean:

(PAR AMOUNT) [LEGALTIIl..E OF ISSUE)

Upon rcceipt of telephonic or telegraphic notice, such notice sub5equently confirmed in writing by registered or certified mail, or upon receipt of written notioc by regisfll::red or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due. that such requiredpayment has not been made, the Insurer on the due date ofsuch paymentor within one business day after receipt of notice of such nonpayment, whichcvu is later, will make a deposit of funds, in an account wich Otibank. N.A., in New York, New Yortt, or its auCClellllor, aufficientfor thepayment of any such Insured Amouota which aR thenclue. Upon preec:ntment and surrender of auch Obligations or pm,enunent of such other proof of ownership of the Obligations, together with my appropnate inatnnncnts of assignment to evidence the -ignmcnt of the Insured Amounts due on the Obligations as are paid by the lmurer, and appropriate instnnncnts to effect the appointment of the Insurer • agent for such owners of the Oblisationa in any legal pcocceding related to payment of Insured Amounts on the Obligations, nch insenamerua being in a fonn satisfactory to Citibank, N.A., Citi bank, N.A.shall disbunc to such owners. orthe Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amoun� and leJally avail.blc therefor. This policy docs not insure against loss of any prepayment i-mium which may at any time be payable with ��rec1 '" any Ot.,ligation.

ft � usedherein, thetam "owncr shall mean theregistered owner of any Obligation as indicated in thebooks maintained by the Paying Agent.. the IMuer, or 1111y dcsit!f1CC of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agrccmcntwith the Issuer comtitulell the underlyingsecurity for theOblig ation.<;.

Any service of process on the Insurer may be made to the Insurer at its offices located al 113 King Street.. Annonk, New York 10504 and such ,;crviccof proces11 11hallbe valid and binding.

Thi" policy iii non

In lhe event the Insurer were to become insolvent, any claims arising under a policy of financial guaranty insurance are excluded from coverage

by the California lnsuranoc Guaranty Association, established pursuant to Article 14.2 (commencing with Section 1063)of Oiapter I of Part 2 of Division l of tlic California Insurance Code.

IN WITNESS WHEREOF, the Insurer has caused this policy to be executed in fa csimile on it.'l behalf by it.� duly aurhorized officer!'., thi� (DAY] day of (MONTHJ, 1991.

MUNICIPAL BOND INVESTORS ASSURANCECORPORATION

Attest:

SlD-R/CA-4 E-1 (This page intentionally left blank)