NEW ISSUE - BOOK ENTRY ONLY In the opinion of Co-Bond Counsel, under existing law, the interest on the 1993 Bonds is exempt from personal income taxes of the State of Californiaand, assuming compliance with the tax covenant described herein, is excluded from gross income for federal income tax purposes and is not a specificpreference item for purposes of the federal alternativeminimum tax. See, however, "Federal and State Income Taxes" herein for a description of other taxes on corporations. $25,000,000 CITY OF PASADENA 1993 WATER REVENUE BONDS Dated: June 1, 1993 Due: July 1, as shown below The 1993 Bonds will be issued only as fully registered bonds and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Purchases of the 1993 Bonds will be made in book-entry form, in the denomination of $5,000 or any integral multiple thereof. Purchasers of the 1993 Bonds will not receive certificates representing their interest in the 1993 Bonds. See "Book­ Entry Only System." The 1993 Bonds are being issued to provide moneys to finance certain costs of acquisition and construction of additions to, and extensions and improvements of, the Water System of the City; to advance refund the Refunded Bonds; to fund the 1993 Reserve Fund; and to pay costs of issuance of the 1993 Bonds. Interest is payable semi-annually on January l and July 1 in each year, commencing January 1, 1994, Principal of, interest and any premium on the 1993 Bonds are to be paid to purchasers by DTC through the DTC Participants ( as defined herein). The 1993 Bonds are subject to redemption prior to maturity as set forth herein. The 1993 Bonds are solely an obligation payable from the Water Fund of the City's Water and Power Department (the "Department") and are not an indebtedness of the City. Subject to the limitation that the payment of the expenses for the operation and maintenance of the Water System shall be made prior to the payment of principal and interest on the 1993 Bonds, the 1993 Bonds are payable frommoneys on deposit in the Water Fund. The 1993 Bonds will be payable on a parity with other obligations of the Water System payable from the Water Fund and issued from time to time, including $3, 100,000 aggregate principal amount of prior 1991 Water Revenue Bonds to remain outstanding upon the issuance of the 1993 Bonds. The City may issue additional parity obligations in the future. This cover page contains certain information for quick reference only. It is not intended to be a summary of all factors relating to an investment in the 1993 Bonds. Investors should review the entire Official Statement before making any investment decision. MATURITY SCHEDULE Maturity Principal Interest Maturity Principal Interest (July 1) Amount Rate Yield (July 1) Amount Rate Yield 1994 ...... $ 200,000 4.500% 2. 650% 2001...... $ 305,000 4.500% 4.600% 1995...... 215,000 4.500 3. 100 2002...... 825,000 7.500 4.900 1996...... 235,000 4.500 3. 500 2003...... 885,000 6. 875 5. 000 1997...... 250,000 4.500 3.900 2004 ...... 94 0,000 4.800 4.900 1998...... 260,000 4.500 4.050 2005...... 985,000 4.900 5.000 1999...... 270,000 4.500 4.250 2006...... 1,035,000 5. 000 5. 100 2000 ...... 290,000 4.500 4.4 00 2007 ...... 1,095,000 5. 100 5. 200 $8,090,000 6.00% Term Bond due July 1, 2013 Price 105.220% $9-,120,000 5.00%- Term Bond due July I, 2018 Price 93.255% (Plus Accrued Interest) The 1993 Bonds are offered when, as and if issued and received by the underwriter, subject to the approval of legality by Mudge Rose Guthrie Alexander & Ferdon, Los Angeles, California and Marilyn L. Garcia, Esq., Los Angeles, California, Co-Bond Counsel. O'Brien Partners Inc. and L.P. Charles & Goings, Inc. serve as Co­ Financial Advisors to the City in connection with the issuance of the 1993 Bonds. It is anticipated that the 1993 Bonds will be available for delivery through the facilities of the DTC book-entry system on or about July 30, 1993.

July 15, 1993

CITY OF PASADENA

CITY COUNCIL

Rick Cole, Mayor Kathryn T. Nack, Vice Mayor Bill Crowfoot, Councilmember Chris Holden, Councilmember William M. Paparian, Councilmember Isaac Richard, Councilmember William E. Thomson, Jr., Councilmember

CITY STAFF

Philip A. Hawkey, City Manager Victor J. Kaleta, City Attorney

FINANCE STAFF

Mary J. Bradley, Director of Finance Pamela J. Wilson, Acting Municipal Services Administrator

UTILITY STAFF

David C. Plumb, General Manager Willard 0. Bangham, Assistant General Manager - Water Systems M - Kabirr M.O. Faal, Assistant General Manager- Finance and Administration George F. Morrow, Assistant General Manager - Utility Resource Planning

CO-FINANCIAL ADVISORS

O'Brien Partners Inc. Los Angeles, California

L.P. Charles & Goings, Inc. Los Angeles, California

CO-BOND COUNSEL

Mudge Rose Guthrie Alexander & Ferdon Los Angeles, California

Marilyn L. Garcia, Esq. Los Angeles, California

PAYING/ESCROW AGENT

Bank of America National Trust & Savings Association Los Angeles, California No dealer, broker, salesman or other person has been authorized by the City of Pasadena or the Department of Water and Power 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 City of Pasadena or the Department of Water and Power. 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 persons to make such offer, solicitation or sale.

The information set forth herein has been furnished by the- C1ty of Pasadena and the Department of Water and Power and includes information obtained from other 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 City of Pasadena or the Department of Water and Power 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 THE 1993 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. TABLE OF CONTENTS

Page Page INTRODUCTION ...... 1 CITY WATER SUPPLY ...... 16 Purpose of the 1993 Bonds ...... 1 Raymond Basin Management Board ...... 17 Security and Rate Covenant ...... 1 Water Allotment and Conservation Programs ...... 17 ESTIMATED SOURCES AND USES OF FUNDS ...... 2 Water Management Strategies ...... 18 THE CAPITAL IMPROVEMENT PROGRAM ...... 2 Devil's Gate Multi-Use Project ...... 19 THE PLAN OF REFUNDING ...... 2 Water Quality ...... 19 DESCRIPTION OF THE BONDS ...... 3 lnsurance ...... 20 General...... 3 METROPOL!TANWATER DISTRICT OF Optional Redemption ...... 4 SOUTHERN CALIFORNIA ...... 21 Mandatory Redemption...... 4 MWD Water Supply...... 21 Selection for Redemption ...... 5 Reliability of MWD Water ...... Notice of Redemption ...... 5 Supply to Meet City Requirements ...... 22 BOOK-ENTRY ONLY SYSTEM ...... 5 MWD Scheduling and Operations ...... 23 SECURITY FOR AND SOURCES OF PAYMENT MWD Rates ...... 23 FOR THE 1993 BONDS ...... ? OPERATIONS OF THE WATER DIVISION ...... 24 Funds ...... 8 Basis of Financial Reporting ...... 24 The Water Fund ...... 8 Revenues ...... 24 The Construction Fund ...... 9 Rate Structure...... 25 The 1993 Bond Service Fund ...... 9 Historical Operating Results and Cash-flows ...... 28 The 1993 Reserve Fund ...... 9 Billing and Collection Procedures ...... 29 The Escrow Account ...... 1 0 Projected Operating Results ...... 30 Additional Bonds ...... 10 ESCROW AGREEMENT...... 31 Investment of Funds...... 10 VERIFICATION OF MATHEMATICAL COMPUTATIONS ...... 32 City Covenants ...... 10 RATINGS...... 32 Debt Service Requirements ...... 12 LITIGATION ...... 32 THE WATER AND POWER DEPARTMENT ...... 13 TAX EXEMPTION...... 33 Management of the Water and Power Department...... 13 LEGAL OPINIONS ...... 34 Utility Advisory Commission ...... 14 CERTIFICATION AS TO OFFICIAL STATEMENT ...... 34 THE WATER DIVISION...... 14 FINANCIAL STATEMENTS ...... 34 General ...... 14 ADDITIONAL INFORMATION ...... 34 Water Production and Contracts ...... 15 Appendix A - THE CITY OF PASADENA Appendix B- AUDITED FINANCIAL STATEMENTS Appendix C- PROPOSED FORM OF OPINION OF CO-BOND COUNSEL

Official Statement of the

CITYOF PASADENA Relating to its $25,000,000 1993 WATER REVENUE BONDS

INTRODUCTION

This Official Statement, including the cover page- and Appendices hereto, is provided to furnishinformation in connectionwith the issuance and sale by the City of Pasadena (the "City") of $25,000,000 aggregate principal amount of its 1993 Water Revenue Bonds (collectiveJy the "1993 Bonds"). The 1993 Bonds are authorized and issued pursuant to the Charter of the City, as amended (the "Charter''), including Article XIV thereof and Ordinance No. 6541 (ttre "Ordinance") adopted by the City Council of the City (the "Council") on May 25, 1993. The description of or references to the Ordinance, the 1993 Bonds and all other documents or instruments referred to in this Official Statement do not purport to be comprehensive or definitive. Each reference to any of the foregoing is qualified in its entirety by reference to each such document or instrument, copies of which are available for inspection at the office of the Director of Finance of the City and at the principal corporate trust office of Bank of America National Trust & Savings Association (the "Paying Agent" or "Escrow Agent") in Los Angeles, California.

The City has previously issued for the financing of its Water System the $10,250,000 aggregate principal amount of 19-91 Water Revenue Bonds {the "1991 Bonds"), $3, 100,000 aggregate principal amount of which will be outstanding upon the issuance of the 1993 Bonds.

Purpose of the 1993 Bonds

The 1993 Bonds are being issued - to finance. the costs of construction and expansion of ground water wells and reservoirs, and improvements to distribution mains, meters and services, to advance refund certain of the 1991 Bonds {the "Refunded Bonds"), to fund the 1993 Reserve Fund and to pay costs of issuance with respect to the 1993 Bonds; See "The Capital Improvement Program," "The Plan of Refunding" and "Estimated Sources and Uses of Funds."

Security and Rate Covenant

The 1993 Bonds are payable solely from the Water Fund of the Water and Power Department {the "Department") and are not an indebtedness of the City.

The City has covenanted in the Ordinance that, so long as the 1993 Bonds remain outstanding, the City will maintain and fix rates for services provided by the Water System at least sufficient to pay the necessary Maintenance and Operating Expenses {as defined herein), and so that the Net Income (as defined herein) from the Water System will be at least equal to 1.25 times principal and interest as the same become due on the 1993 Bonds and all Parity Bonds.

Except as otherwise provided in the Ordinance, principal of, interest and premium, if any, on the 1993 Bonds will be payable only from the Water Fund. The. 1993 Bonds will be payable on a parity with the outstanding 1991 Bonds and all other water revenue bonds hereafter issued on a parity with the 1993 Bonds by the City and payable from the Water Fund after payment of Maintenance and Operating Expenses.

Moneys held in the 1993 Reserve Fund (as defined herein) are pledged to and may be used solely for payment of debt service on the 1993 Bonds in the event that money in the 1993 Bond Service Fund is insufficient therefor.

ESTIMATED SOURCES AND USES OF FUNDS

The 1993 Bonds are being issued to finance the acquisition and construction of additions to, and extensions and improvements of, the Water System, to advance refund the Refunded Bonds, to fund the Reserve Fund, and to pay costs of issuance of the 1993 Bonds. The City anticipates that the sources and uses of the 1993 Bonds (excluding accrued interest and premium) will be approximately as follows:

Sources: Principal Amount of 1993 Bonds $25,000;000 Transfer from 1991 Bond Service Account 38,126 Transfer from 1991 Reserve Fund 466,813 Total Sources $25,504,939

Uses: Deposit to Construction Fund $15,628,877 Deposit to Escrow Account 7,559,069 Deposit to 1993 Reserve Fund 2,064,323 Costs of Issuance 252,670 Total Uses $25,504,939

THE CAPITAL IMPROVEMENT PROGRAM

The Water Division has undertaken a five-year Capital Improvement Program (the "Program") for the Fiscal Years 1994 through 1998 in the amount of $33 million. The Program is designed to increase the efficiency of water distribution and production, to reduce the cost of water, and to increase system capacity in order to meet projected demand requirements for the Water Division. For Fiscal Years 1994, 1995 and 1996, such costs are to be financed through the issuance of the 1993 Bonds and from existing fund balances of the Water Fund. The Water Division currently plans to use a portion of the proceeds of the 1993 Bonds to acquire necessary real property and capital items, and to undertake certain capital improvements to its existing facilities. The Program is subject to revision from time to time by the Water Division.

THE PLAN OF REFUNDING

A portion of proceeds of the sale of the 1993 Bonds will be used to advance refund the Refunded Bonds described in the following chart.

2 Refunded Bonds

Principal Redemption Amount Due Interest Redemption Date Issue Refunded July1 Rate Price July 1

1991 Water $500,000 2002 6.30% 102% 2001 Revenue Bonds 535,000 2003 6.40 102 2001 570,000 2004 6.50 102 2001 610,000 2005 6.60 102 2001 650,000 2006 6.65 102 2001 695,000 2007 6.70 102 2001 740,000 2008 6.75 102 2001 795,000 2009 6.80 102 2001 850,000 2010 6.85 102 2001 905,000 2011 6.90 102 2001

Pursuant to the terms of the Ordinance, the advance refunding of the Refunded Bonds will be effected by depositing a portion of the proceeds of the 1993 Bonds in, and transferring certain other available moneys to, the Escrow Account established pursuant to the Ordinance. Except for an amount which will be held in the Escrow Account in cash, such proceeds and moneys will be used to purchase certain non-callable direct obligations of the United States of America, or obligations guaranteed by the United States of America (collectively, ..the Federal Securities"). The Federal 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 redemption price of the Refunded Bonds on July 1, 2001 and interest to become due on or prior to July 1, 2001 on the R-efunded Bonds, The Escrow Account shall be held by the Escrow Agent in irrevocable trust and shall be used solely for the payment of the redemption price of, including premium, and interest on the Refunded Bonds.

The Refunded Bonds will no longer be deemed to be outstanding if the City shall have made adequate provision for the payment, in accordance with the Refunded Bonds and the ordinance relating to the 1991 Bonds, of the principal, interest and premium to become due thereon at maturity or upon call and redemption prior to maturity.

The accuracy of the mathematical computations of the adequacy of the principal and interest on the Federal Securities to provide for the payment of the redemption price of and interest on the Refunded Bonds will be verified at the time of delivery of the 1993 Bonds by Ernst & Young, independent certified public accountants. See "Verification of Mathematical Computations."

DESCRIPTION OF THE 1993 BONDS General

The 1993 Bonds when initially issued will be registered in the name of Cede & Co., as a registered owner and nominee of DTC. So long as DTC, or its nominee, Cede & Co., is the registered owner of all the 1993 Bonds, all payments of principal of, redemption price, if applicable, and interest on the 1993 Bonds will be made directly to DTC. Disbursements of such payments to the OTC Participants (as defined herein) will be the responsibility of OTC. Disbursements of such payments to the Beneficial Owners (as defined herein) of the 1993 Bonds

3 will be the responsibility of the OTC Participants as more fully described herein. See "Book­ Entry OnlySystem."

The 1993 Bonds will be issued in the aggregate principal amount of $25,000,000, will be dated June 1, 1993, will bear interest at the rates per annum set forth on the cover page of this Official Statement and will mature on July 1 in the years and in the principal amounts set forth on the cover of this Official Statement. Interest on the 1993 Bonds will be payable semi-annually on January 1 and July 1 of each year, commencing January 1, 1994.

The 1993 Bonds will be issued as fully registered bonds in the denomination of $5,000 or any integral multiple thereof.

The principal of the 1993 Bonds is payable at the principal corporate trust office of Bank America National Trust & Savings Association, as Paying Agent. Semi-annual interest on the 1993 Bonds will be payable by check or draft mailed to the registered owner thereof on the applicable Record Date at such Owner's address as shown on the registration books of the City kept for that purposeat the corporate trust office of the Paying Agent, acting as Bond Registrar; provided, that in the case of an Owner of $1,000,000 or more in aggregate principal amount of 1993 Bonds, upon written request of such Owner delivered to the Paying Agent not less than 20 days prior to any Interest Payment Date, such interest shall be paid in immediately available funds by wire transfer at the expense of the City to an account specified by the Owner in such written request on the following Interest payment Date. The Record Date for the 1993 Bonds is the 15th day of the month immediately preceding an Interest Payment Date.

Optional Redemption

The 1993 Bonds maturing on or before July 1, 2003 are not subject to call and redemption prior to maturity. The 1993 Bonds maturing on or after July 1, 2004 are subject to call and redemption, at the option of the City, as a whole or in part, in any order of maturity, on July 1, 2003 or on any date thereafter, at the following redemption prices, with accrued interest to the date of redemption:

Redemption Period {dates inclusive} Redemption Price

July 1, 2003 through June 30, 2004 102% July 1, 2004 through June 30, 2005 101 July 1, 2005 and thereafter 100

MandatoryRedem ption

The 1993 Bonds maturing on July 1, 2013 shall be subject to mandatory redemption at a redemption price equal to 100% of the principal amount of such 1993 Bonds to be redeemed from moneys set aside in the Bond Service Fund on July 1 of the years and in the principal amounts set forth in the following table.

Principal Principal Year Amount Year Amount 2008 $1,155,000 2011 $1,380,000 2009 1,225,000 2012 1,470,000 2010 1,300,000 2013 (maturity) 1,560,000

4 The 1993 Bonds maturing on July 1, 2018 shall be subject to mandatory redemption at a redemption price equal to 100% of the principal amount of such 1993 Bonds to be redeemed from moneys set aside in the Bond Service Fund on July 1 of the years and in the principal amounts set forthin the following table.

Principal Principal Year Amount Year Amount 2014 $1,645,000 2017 $1,915,000 2015 1,730,000 2018 (maturity) 2,010,000 2016 1,820,000

Upon any purchase or redemption of the 1993 Bonds designated to be term 1993 Bonds, an amount equal to the aggregate principal amount of 1993 Bonds so purchased or redeemed shall be credited towards a part or all of any one or more yearly mandatory sinking account redemptions required by the Ordinance, as directed in writing by a certificate of the Director of Finance. The portion of any such mandatory redemption remaining after the deduction of any such amounts credited toward the same (or the original amount of any such mandatory redemption if no such amounts shall have been credited toward the same) shall constitute the unsatisfied balance of such mandatory redemption for the purpose of the calculation of principal paymenis due on any future principal payment date;

Selection for Redemption

The City may select 1993 Bonds for redemption and direct the call and redemption prior to maturity of 1993 Bonds in such amount as funds are available therefor, and, upon such selection,shall give written notice of such redemption to the Director of Finance at least 60 days prior to the Redemption Date and shall direct the Director of Finance to mail or cause to be mailed notice of redemption pursuant to the Ordinance.

Notice of Redemption

Notice of redemption shall be mailed to the Owners of the 1993 Bonds, certainsecu rities depositories and one or more information services. Notice of such redemption shall be given to the Owners of the 1993 Bonds designated for redemption at their addresses appearing on the bond registration books, not less than 30 days nor more than 60 days prior to the Redemption Date. The actual receipt by the Owners of any 1993 Bond, the securities depositories and one or more information services of notice of redemption shall not be a condition precedent to redemption, and failure to receive such notice or any defects in such notice shall not affect the validity of the proceedings for the redemption of 1993 Bonds.

BOOK-ENTRY ON LY SYSTEM

OTC will act as securities depository for the 1993 Bonds. The ownership of one fully registered 1993 Bond for each maturity, in the aggregate principal amount of such maturity, will be registered in the name of Cede & Co., as nominee for OTC. 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 17 A of the Securities Exchange Act of 1934, as amended. OTC was created to hold securities of OTC Participants and to facilitate the clearance and settlement of securities transactions among OTC Participants through electronic book-entry changes in accounts of the OTC Participants, thereby eliminating

5 the need of physical movement of securities certificates. OTC Participants include securities brokers, and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of whom (and/or their representatives) own OTC (the "OTC Participants"). Access to the OTC system is also available to others, including without limitation banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a OTC Participant, either directlyor indirectly (the "Indirect Participantsj.

The OTC Participants will receive a credit balance in the recordsof OTC. The ownership interest of each actual purchaser of each 1993 Bond (each, "a Beneficial owner") will be recorded through the records of the OTC Participant. Transfers of ownership interests in the 1993 Bonds are to be accomplished by book entries made by OTC and, in tum, by the OTC Participants who act on behalf of the Beneficial Owners. Beneficial Owners will receive a written confirmation of their purchase providing details of the ownership interests in the 1993 Bonds acquired. Beneficial Owners will not receive certificates representing their ownership interests in the 1993 Bonds except as specifically provided in the Ordinance in the event participation in the OTC book-entrysystem is discontinued.

So long as Cede & Co. is the registered Owner of the 1993 Bonds, as nominee of OTC, references herein to the "Owners" or the "Bondowners," of the 1993 Bonds shall mean Cede & Co. (which shall be the registered Owner of the 1993 Bonds as shown on the registry books of the City kept for that purpose at the principal corporate trust office of the Paying Agent, acting as Bond Registrar) and shall not mean the Beneficial Owners of the 1993 Bonds.

The City and the Paying Agent will recognize OTC or its nominee as the registered Owner of the 1993 Bonds for all purposes, including notices and voting. Conveyance of notices and other communications by OTC to OTC Participants and by OTC Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory and regulatory requirements as may be in effect from time to time.

Payments of principal, redemption price, if applicable, and interest on the 1993 Bonds will be made to OTC or its nominee, Cede & Co., as registered Owner of the 1993 Bonds. Upon receipt of any such payments, OTC's current practice is to credit immediately the account of the OTC Participants in accordance with their respective holdings shown on the records of OTC. Payments by OTC Participants and Indirect Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is now the case with municipal securities held for the accounts of customers in bearer form or registered in "street name", and will be the responsibility of such OTC Participant or Indirect Participants and not of OTC, or the City, subject to any statutory or regulatory requirement as may be in effect from time to time.

The book-entry system with OTC shall be discontinued with respect to the 1993 Bonds if (a) OTC determines not to continue to act as securities depository for the 1993 Bonds or (b) the City has advised OTC that it does not wish OTC to continue as securities depository. If the City replaces OTC, or the existing successor securities depository, with another qualified securities depository, a fully registered 1993 Bond for each maturity, registered in the name of the successor or its nominee, shall be prepared, consistent with the Ordinance. If the City fails to locate another qualified securities depository to replace OTC, or the existing successor securities depository, the City shall execute and the Paying Agent shall authenticate and deliver the 1993 Bond certificates ("Replacement 1993 Bonds") to the Beneficial Owners of the 1993 Bonds. interest on the 1993 Bonds represented by Replacement 1993 Bonds shall be payable by check or draft of the Paying Agent, mailed by first-class mail, postage prepaid, to each Owner of such Replacement 1993 Bond at the address of such Owner as it appears at the close of business on the relevant record date in the registry books maintained by the Paying Agent as Bond Registrar. The principal and redemption price, if applicable, on such 1993 Bonds, represented by the Replacement 1993 Bonds shall be payable upon presentation of such 1993 Bonds, at the corporate trust office of the Paying Agent. The 1993 Bonds will be transferable only by presentation and surrender to the Paying Agent together with an assignment duly executed by

6 the Owner of such 1993 Bonds or by his representation in the form satisfactory to the Paying Agent and containing information required by the Paying Agent in order to effect such transfer.

The book-entry system may be discontinued upon 60 days prior notice from DTC, or the existing successor securities depository, to the City.

Neither the City nor any fiduciary will have any responsibility or obligation to DTC Participants, to Indirect Participants or to any Beneficial Owner with respect to (i) the accuracy of any records maintained by DTC or any DTC Participants; (ii) any notice that is permitted or required to be given to Owners under the Resolution; (iii) the selection by DTC or any DTC Participant of any person to receive payment in the event of a partial redemption of the 1993 Bonds; (iv) the payment by DTC or any DTC Participant of any amount with respect to the principal of, redemption price, if applicable, or interest due on the 1993 Bonds; or (v) any consent given or other action taken by DTC as Owner. The rules applicable to DTC are on file with the Securities and Exchange Commission, and the procedures of DTC to be followed in dealing with DTC Participants are on file with DTC.

The foregoing description of the procedures and record-keeping with respect to beneficial ownership interests in the 1993 Bonds, payment of principal, redemption price, if any, and interest on the 1993 Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in such 1993 Bonds with other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.

The foregoing description concerning DTC and DTC's book-entry system is based solely on in formation furnished by DTC. No representation is made by the City as to the accuracy or completeness of such information.

SECURITY FOR AND SOURCES OF PAYMENT FOR THE 1993 BONDS

The 1993 Bonds are not secured by any pledge of ad valorem taxes or general fund revenues of the City, but are payable only from the Water Fund.

Except as otherwise provided in the Ordinance, payment of principal of, and interest and premium, if any, on the 1993 Bonds shall be made solely from the Water Fund of the Department. The City has covenanted to maintain rates for services furnished by the Water System, at least sufficient in amount to pay Maintenance and Operating Expenses and 1.25 times debt service on the 1993 Bonds and au· Parity Bonds: The Ordinance defines "Parity Bonds" as the outstanding 1991 Bonds, and any other revenue bonds; revenue notes or other evidences of indebtedness heretofore or hereafter issued fo r the acquisition, construction and financing of additions to, and extensions and improvements of the WaterSystem, payable out of the revenues derived therefrom by the Department and which, pursuant to their terms and in accordance with the Ordinance, rank on a parity with the 1993 Bonds.

The 1993 Bonds are further secured by the 1993 Reserve Fund. Moneys held in the 1993 Reserve Fund may only be used for payment of principal and interest on the 1993 Bonds. Immediately upon receiving the proceeds of the sale of the 1993 Bonds, the Director of Finance shall transfer from the Construction Fund to the 1993 Reserve Fund an amount such that the total amount on deposit in the 1993 Reserve Fund shall equal the Reserve Requirement as defined in the Ordinance.

7 Funds

The Ordinance for the 1993 Bonds establishes the following funds and accounts to be held by the Director of Finance of the City:

(a) The 1993 Water Revenue Bonds, Construction Fund (the "Construction Fund") and within the Construction Fund, the Costs of Issuance Account;

(b) The 1993 Water Revenue Bonds, Bond Service Fund (the "1993 Bond Service Fund"); and

(c) The 1993 Water Revenue Bonds, Reserve Fund (the "1993 Reserve Fund'').

The Wate r Fund

Under the provisions of the Charter, all moneys and property received by the City in payment for water must be deposited in the Water Fund. Net Income as used in this Official Statement refers to Gross Revenues less Maintenance and Operating Expenses. The Ordinance defines Gross Revenues as all charges received for, and all other income and receipts derived by the Department from, the operation of the Water System or arising from the Water System received by the Department from the services1 facilities, and distribution of water by the Department, including income from investments and any other moneys deposited in the Water Fund and designated by the City as Gross Revenues, but excepting therefrom all reimbursement charges and deposits to secure service. The Ordinance defines Maintenance and Operating Expenses as the amount required to pay the reasonable expenses of management, repair and other costs necessary to operate, maintain and preserve the Water System in good repair and working order including but not limited to the expenses of conducting the Water Division of the Department, but excluding depreciation. The Charter furtherprovides that disbursement may be made directly from the Water Fund for the following purposes:

(1) the necessary or proper expenses of conducting the water utility, the operation and maintenance of its works, plants and distributing systems; the acquisition and improvement of facilities; and the publishing of reports;

(2) payment of principal (including mandatory redemption payments) , and interest on bonds for the Water System;

(3) formation of surplus or reserves for the future needs of the Water System and for unforeseen emergencies; and

(4) repayment of advances made from other funds of the City.

In addition, pursuant to Section 1 408 of the Charter, each fiscal year the Council may transfer moneys to the City's General Fund from the Water Fund, for any municipal purpose up to the lesser of:

(a) 6 percent of the gross. income of the Water Fund· received· during the immediately preceding fiscal year from the sale of water at rates and charges fixed by ordinance, or

(b) the net income of the Water Fund after payment of the Maintenance and Operating Expenses ofthe water works, the expenses of conducting the

8 water utility, depreciation, and the principal, interest and premiums, if any, upon the redemption thereof, of water works revenue bonds.

The Construction Fund

The Ordinance establishes the Construction Fund and provides that the proceeds of the sale of the 1993 Bonds shall be deposited in the Construction Fund except premium, if any, and accrued interest, if any, which shall be deposited in the Bond Service Fund. Immediately upon placing such proceeds in the Construction Fund, the Director of Finance shall transfer to the following funds and accounts: (i) the amount required to be transferred · to the Bonet Service Fund (as described below), (ii) the amount required to be transferred to the Reserve Fund, and (iii) the amount required to pay Costs of Issuance which shail be transferred to the Costs of Issuance Account in the Construction Fund, and (iv) an amount which, when combined with certain other moneys which have been set aside for payment of the Refunded Bonds, shall be sufficient to purchase Escrow Securities, the principal and interest on which when due, will provide moneys sufficient to pay the redemption price of and interest on the Refunded Bonds, which shall be transferred to the Escrow Account. The Ordinance provides that the moneys set aside in the Construction Fund shall remain therein until expended from time to time to provide moneys for the acquisition and construction of additions to, and extensionsand improvements of the Water System, and to pay costs of issuance not paid from the Costs of Issuance Account.

The 1993 Bond Service Fund

The Ordinance establishes the 1993 Bond Service Fund within the City treasury to ensure payment of principal of and interest on the 1993 Bonds. The Ordinance provides that any sums received upon the sale of the 1993 Bonds as accrued interest and premium, if any, shall be set aside, transferred to and placed in the 1993 Bond Service Fund.

On July 1, 1993, and thereafter, so long as any of the 1993 Bonds are Outstanding, on the first day of each calendar month (or promptly after the delivery date of the 1993 Bonds in the event such delivery date occurs after the first day of the calendar month) there shall be transferred from the Water Fund to the Bond Service Fund (i) one-sixth of the amount of interest to be paid on the 1993 Bonds on the next succeeding January 1 or July 1, as the case may be, and (ii) one-tweifth of the amount of the principal (including any mandatory redemption payments) to be paid on the 1993 Bonds on the next succeeding July 1 and (iii) during each month preceding the first interest payment date and the first principal.payment date for the 1993 Bonds, the additional amounts provided for in the Ordinance.

All moneys remaining in the 1993 Bond Service Fund in excess ofthe amount required to accomplish the purpose of its establishment shall be transferred on July 2 of each year to the Water Fund. Notwithstanding the foregoing, until the Completion Date all earnings on moneys on deposit in the Bond Service Fund shall be transferred to and deposited into the Construction Fund.

The 1993 Reserve Fund

The Ordinance provides that the 1993 Reserve Fund shall continue to be maintained so long as any of the 1993 Bonds remain Outstanding. Immediately upon receiving the proceeds of the sale of the 1993 Bonds, a portion of the proceeds shall be transferred fromthe Construction Fund to the 1993 Reserve Fund in an amount such that the total amount on deposit in the 1993 Reserve Fund shall equal the Reserve Requirement. The Reserve Requirement or a portion thereof may be provided by one or more Reserve Account Policies or Credit Facilities (as such terms are defined in the Ordinance). Whenever moneys are transferred from the 1993 Reserve Fund an equal amount of moneys shall be transferred to the 1993 Reserve Fund from the first

9 available moneys in the Water Fund if required to bring the balance on deposit in the 1993 Reserve Fund up to the Reserve Requirement on a parity with transfers to any reserve fund for the Parity Bonds.

The Escrow Account

The Ordinance establishes the Escrow Account. Immediately upon rece1vmg the proceeds of the sale of the 1993 Bonds, a portion of the proceeds shall be transferred from the Construction Fund to the Escrow Account in an amount sufficientto purchase Federal Securities, the principal and interest on which when due, will provide moneys sufficient to pay the redemption price of the Refunded Bonds on July 1, 2001 and interest to become due on and prior to July 1, 2001 on the Refunded Bonds.

Additional Bonds

The Ordinance provides that, except for refunding bonds, no bonds on parity with the 1993 Bonds and any Parity Bonds (the "parity indebtedness") may be issued unless (a) there shall be on deposit in the 1993 Reserve Fund an amount equal to not less than the Reserve Requirement on the 1993 Bonds to be Outstanding upon the issuance of such parity indebtedness, and (b) Net Income, excluding amortization and interest chargeable to the income account, as shown by the books of the City for the latest prior fiscal year (adjusted as described below) amounts to at least 1.25 times the maximum of the aggregate of the amount of interest to accrue and principal payments due on the 1993 Bonds and the Parity Bonds Outstanding immediately subsequent to the incurring of such additional parity indebtedness in any fiscal year ending thereafter.

For the purposes of the above tests, there may be added to Net Income certain allowances for earnings. Such allowances take into account earnings from additions to the Water System (including additions to be financed from the proceeds of bonds representing such additional indebtedness) that would not have been included in the earnings for the prior fiscal year. Additionally, such allowances take into account earnings resulting from rate increases which were not in effect during all or any partof the prior fiscal year but which would be in effect prior to the issuance of the parity indebtedness. Each fiscal year of the City and the Department begins on July 1 and ends on the next following June 30, and each fiscal year is designated herein by the calendar year in which such fiscal year ends.

Investment of Funds

All moneys held in the funds and accounts established pursuant to the Ordinance (other than the Escrow Account) will be deposited or invested in Authorized Investments, as permitted by the Charter, the Ordinance and the investment policies of the City, provided that such deposit or investment shall not affect the obligation of the City to make moneys available in such amounts and at such times as are required by the Ordinance.

City Covenants

The City has covenanted in the Ordinance that, so long as the 19-9-3 Bonds remain Outstanding:

(1) the- City· wil I· ma�nta in. rates. for services provided by the Water System· at least sufficient to pay, as the same become due, the principal and interest on the 1993 Bonds, the Parity Bonds and all other obligations and indebtedness payable from

10 the Water Fund or from any fund derived therefrom, and necessary Maintenance and Operating Expenses, and will be so fixed that the Net Income of the Water System will be at least equal to 1.25 times the amount necessary to pay principal and interest (including mandatory redemption payments), as the same become due on the 1993 Bonds and all Parity Bonds;

(2) the City will not provide water to any agency or person, public or private, without­ charge or at rates substantially below those charged others for similar service, provided that the City may establish a special rate for water furnished to City departments, but such rate shall not be below actual cost of the services;

(3) the City will not sell, lease or dispose of all or substantially all of the Water System without making provision for continuance of payments into the Water Fund sufficient to pay principal of and interest on, and premiums, if any, on all Outstanding 1993 Bonds and Parity Bonds; and

(4) the City will provide for an annual audit of the Water Division books and accounts by an independent certified public accountant. The report must be available for inspection by Owners of the 1993 Bonds and upon request of an Owner, the City must furnish a copy.

In addition, the City has covenanted in the Ordinance that, in order to maintain the exclusion from gross income for federal income tax purposes of the interest on the 1993 Bonds, and for no other purpose, the City will satisfy or take such actions as may be necessary to cause to be satisfied, each provision of the Internal Revenue Code of 1986 (the "Code") necessary to maintain such exclusion.

11 Debt ServiceRequir ements

The following table indicates outstanding debt service payable from the Water Fund.

Debt Service Requirements ($ in thousands) (accrual basis)

FY Ending 1993 Bonds 1991 Bonds Total June 30 Princieal Interest Total Debt Service (1) Debt Service

1994 $-0- $791 $791 $747 $1,538 1995 200 1,352 1,552 509 2,061 1996 215 1,342 1,557 503 2,060 1997 235 1,332 1,567 491 2,058 1998 250 1,321 1,571 486 2,057 1999 260 1,310 1,570 488 2,058 2000 270 1,298 1,568 489 2,057 2001 290 1,285 1,575 488 2,063 2002 305 1,272 1,577 485 2,062 2003 825 1,234 2,059 -0- 2,059 2004 885 1, 173 2,058 -0- 2,058 2005 940 1,120 2,060 -0- 2,060 2006 985 1,073 2,058 -o:.. 2;058 2007 1,035 1,023 2,058 -0- 2,058 2008 1,095 969 2,064 -0- 2,064 2009 1,155 907 2,062 -0- 2,062 2010 1,225 835 2,060 -0- 2,060 2011 1,300 760 2,060 -0- 2,060 2012 1,380 679 2,059 -0- 2,059 2013 1,470 594 2,064 -0- 2,064 2014 1,560 503 2,063 -0- 2,063 2015 1,645 415 2,060 -0- 2,060 2016 1,730 330 2,060 -0- 2,060 2017 1,820 242 2,062 -0- 2,062 2018 1,915 148 2,063 -0- 2,063 2019 2 010 50 2,060 __& 2060 TOTAL $25.000.000 $23.358 $48.358 $4 686 $53.044

(1) Excludesdebt service on the Refunded Bonds.

12 THE WATER AND POWER DEPARTMENT

Management of the Water and Power Department

Under the provisions of the California Constitution and ArticJe XIV of the City_ Charter, the City owns and operates both water and electric public utilities for the benefit of its citizens. The Department exercises jurisdiction over the water and electric utilities owned, controlled and operated by the City. The Department is under the management and control of the City Manager, subject to the powers and duties vested in the Council and is supervised by the General Manager who is responsible for design, construction, maintenance and operation of the water and electric utilities. Following are biographical summaries of the Department's senior management.

David C. Plumb, General Manager of the Department since June 1987, was previously Director of Utilities for Longmont, Colorado, from 1981 through May 1987, and before that he was an electrical engineer with Arizona Public Service Co.for eight years. He holds Bachelor of Science in Engineering and Master of Business Administration degrees from Arizona State University and is a Registered Professional Engineer in the State of Arizona. Mr. Plumb is currently a member of the Board of Directors of the Southern California Public Power Authority and previously was a member of the Board of Directorsof the Platte River Power Authority.

Willard 0. Bangham, Assistant General Manager for Water, has been with the Department for 30 years. He received a Bachelor of Arts degree in Political Science from Occidental College in Los Angeles and a Bachelor of Science degree in Engineering from the Universityof California at Los Angeles. Mr. Bangham is a registered Civil Engineer in the State of California, and he is a member of the American Society of Civil Engineers, the American Water Works Association, and the Southern California Water Utilities Association. He is Chairman of the Raymond Basin Management Board, a post which he has held since that Board was formed in 1984.

M-Kabirr M.O. Faal, Assistant General Manager for Finance and Administration, has been with the City of Pasadena since 1986. He was appointed Assistant General Manager in December 1992. Prior to that, Mr. Faal was Municipal Services Administrator in the City's Finance Department from 1988 through 1992, and a Principal Budget Analyst from 1986 through 1988. He holds a Bachelor of Arts Degree in Business Administration (Finance) from California State University, Fullerton and a Master's Degree in Management from University of Redlands. Mr. Faal has served on numerous workshop and conference panels on the subjects of innovative revenue/financial strategies, organizational dynamics and customer service.

George F. Morrow, Assistant General Manager for Utility Resource Planning, has been with the Department since March 1988. He holds Bachelor of Science in Electrical Engineering and Master of Business Administration degrees from the University of Texas at El Paso; Prior to his employment with the City, Mr. Morrow was employed for ten years in various power resource planning positions by El Paso Electric Company, El Paso, Texas, having served the last five years with that utility as Power Resources Contracts Supervisor. He serves on a number of committees and boards related to utility resource planning.

13 Utility Advisory Commission

In March 1979, the Council approved an ordinance creating a Utility Advisory Commission (the "Commission") to advise the Council on policy matters relating to the operation of the Water Division and the Power Division. Specifically, the Commission is charged with advising the Board on policies and programs concerning, among other things, financial planning, power planning and management, energy usa and conservation, transfers to the General Fund, environmental problems and utility rates. The Commission consists of nine members, who are appointed by the Council and serve three-year terms. City ordinance provides a sunset date of June 30, 1996 for the existence of the Commission. The Commission's existence may be extended by City ordinance beyond such sunset date.

Members of the Commission are:

Term Expires Name Occupation June 30 *Tim Brick Writer 1993 John Brugman Engineer 1994 i:.aurene M. Lopez Public Affairs 1994 *Dr. Robert Nelson Astronomer 1993 Diana Palmer Consultant 1995 Laurence H. Pretty Attorney 1995 Alonso Rodriguez Engineer 1995 **Brian Russ-ell Quality Auditor 1993 Howard Stover Engineer 1994

* To serve until replaced ** To serve until replaced or reappointed

THE WATER DIVISION

General

The Water Division has been distributing water to the City's customers since 1912. The area served by the Water Division encompasses approximately 26 square miles, 3.2 square miles of which lie outside of the incorporated City boundary. Of the total 37,074 water meters, 31,534 meters, or 85.1 percent, are within the City limits and an additional 5,540 meters, or 14.9 percent, are outside the City limits. In Fiscal Year 1992, the Water Division provided water service to a total population of approximately 154,300 people. During this period, water sales within the City limits were about 25,440 acre feet ("af'), or 86.3 percent, while 4,043 at, or 13.7 percent of water was sold to customers located outside the City limits.

The major facilities of the Water System consist of (i) 14 active groundwater wells with a production capacity of 34,500 at per year. (ii) five imported water connections on the Metropolitan Water District Upper Feeder, (iii) a five million gallon per day water treatment plant for treating Arroyo Seco stream water, (iv) · 106.5 million gallons- of treated water storage capacity in 16 distribution reservoirs including the 50 million gallon Morris Jones Reservoir, (v) 18 pumping stations supplying 12 different pressure zones, (vi) 17 chlorination stations, and (vii) approximately 486 miles of transmission and distribution pipelines. Most of the Water System was installed between 1935 and 1965, although a few distribution mains which are more than 100 years old remain in service. The peak sales month for the 1992 Fiscal Year occurred in September 1991, when 3,015 at were sold, while April 1992 was the low sales month for the year, when only 1,762 af were sold. The following table sets forth statistical information relating to the Water Division during the Fiscal Years shown.

14 WATER STATISTICS

Fiscal Year Ended 1992 1991 1990 1989 1988

Pasadena Population Served Inside City Limits 133,315 132,380 133,900 132,171 131 ,960 Population Served Outside City Limits* 20,985 20 837 20,775 20,775 20,775 Total Population Served 154.300 153.217 153.675 152.946 152.735

Rainfall (Inches) 30.2 18.5 12.4 11.8 18.1 Supply (Gallons per Minute) From MWD Connections 12,738 13,965 14;869 15,625 14,206 From Water Systems Wells 6,830 8,489 8,622 7,660 9,698 From Surface Supply 789 413 _§1§. _§QQ _ill Average Supply 20.366 221868 24.008 23.786 24.223

Peak Day Distribution (Million Gallons) 78.50 69.14 51.22 51.96 NA Average Daily Distribution (Million Gallons) 29. 33 32. 93 34. 57 34.15 34.88

Estimate Source: Pasadena Water and Power Department

Water Production and Contracts The area served by the Water Division receives its water supply from three sources (i) local surface supply, (ii) ground water wells and (iii) water imported by the Department. The sole source of the Department's imported water is the Metropolitan Water District of Southern California ("MWD").

During Fiscal Year 1992, of the total production of 32,443 af, the Department purchased 20,549 af (63.3%) of its water from MWD. It pumped 10,606 af (32.7%) from its wells, and received approximately 1,288 af (4.0%) from the gravity sources. The Water Division has adequate production and firm purchase capacity to meet its customers' needs. To minimize costs to its customers, the Division plans to purchase from MWD more water during the winter and less water during the summer through MWD's seasonal storage program. See "MWD Rates". In order to realize the full benefit of this program, the City has shifted the use of its ground water wells from winter to summer, when seasonal storage water is not sold. In addition, the Division is studying the long-term potential of importing significant additional quantities of water and storing it in the local groundwater basin for sale to other water agencies. The following table illustrates the total water pumped from Water Division wells, surface supply and purchase of imported water during the five Fiscal Years shown.

15 ANNUAL WATER PRODUCTION (ACRE-FEET)

Fiscal Year Ended 1992 1991 1990 1989 1988

Purchased from MWD 20,549 22,718 26,692 23,919 25,204 Percentage of Total Supply 63.3%<1> 61.3% 68.9% 61.87% 65.69%

From Water System Wells 10,606 13,694 11,873 13,907 12,358 Percentage of Total Supply 32.7% 36.9% 30.6% 35.97% 32.21%

From Surface Supply 1,288 666 193 833 806 Percentage of Total Supply 4.0% 1.8% .50% 2.16% 2.10%

Total Production 32,443 37,078 38,758 38,659 38 368

(1) Includes 2, 186af taken at no charge and placed intostorage for MWD. Source: Pasadena Water and Power Department

CITY WATER SUPPLY

The City diverts surfacewaters from two streams which flow through its boundaries. The larger of these is the Arroyo Seco which lies on the westerly side of the City. This source accounts for less than 5% of the City's total water supply, depending on rainfall in a particular year. The City has a right to divert up to 25 cubic feet per second ("CFS") from this source. Of this source the Behner Water Treatment Plant treats up to 7.7 CFS, its maximum capacity. Any flow which cannot be treated at the plant either because it exceeds plant capacity or is too turbid to be treated is spread in spreading grounds operated by the Los Angeles County Public Works Department. The amount so spread is subject to recapture by the City through pumping from wells. The amount which may be recaptured is 80% of the amount spread and is in addition to the City's annual adjudicated right of 12,807 af in the Raymond Groundwater Basin (the "Basin").

The second surface water source is Eaton Canyon, which lies in the easterly portion of the City. The City has a right to divert up to 8.9 CFS from this source. Currently, none of this water is treated for direct introduction into the distribution system because it is not economically feasible to do so. All of the City's Eaton- Canyon right is spread by the CUy in the stream's natural channel. The water spread is recaptured through groundwater wells in the same manner as described above for the Arroyo Seco.

Both the diversion rights and the recapture rights described above are set forth in the Raymond Basin Judgment ( the "Judgment"), which adjudicated the groundwater rights in the Basin.

In addition to the surface sources described above, the City has the right to divert 1.82 CFS up to 238 af per year from the Devil's Gate Tunnel. This tunnel predates the Devil's Gate Dam and Reservoir and runs in the bedrock beneath the reservoir. The quality of water emanating from the tunnel is most suitable for agricultural use; Accordingly, it has been put to use on the City's Brookside Golf Course. The right to divert the Devil's Gate Tunnel water was granted by license issued in 1986 by the State of California Water Resources Control Board, Division of Water Rights.

16 Raymond Basin Management Board

The City of Pasadena obtains its groundwater from the Basin. This Basin was the first groundwater basin to be adjudicated in California. Under the adjudication a court of law determined the parties who have the right to extract water and the timing and amount of such pumping based on a "safe yield" concept. There are seventeen entities that are allowed to pump from the Basin. The City has the largest entitlement, with up· to 42% of the total adjudicated rights. The City has adequate well capacity to pump the adjudicated amount and schedules the use of these wells to take advantage of MWD's seasonal pricing structure.

The City has taken an active role in securing greater local control of the management of the Basin. Prior to 1984 the administration of the Basin was under the authority of the State Department of Water Resources as Watermaster. During that time, the Raymond Basin Management Board (the "Management Board") only acted in an advisory capacity to the Watermaster. In 1984 the judgment was amended to appoint the Management Board as Watermaster. The Management Board is comprised of representatives appointed by the producers within the Basin. The Management Board is responsible for overseeing the implementation of the adjudicated provisions. One of the most significant powers conferred on the Management Board in the 1984 amendments was the authority to approve plans for storage of native and imported water in the Basin.

The judgment has been amended several times over the years with the City taking the lead in securing consensus for the amendments among the producers. Each amendment has given the producers more flexibility in the management of the Basin. The Basin is now well positioned to participate in expanded groundwater storage programs which should enhance the value and security of the groundwater resource. The Management Board, in cooperation with the City and MWD, has recently completed a major study of the storage resources of the Basin. As a result of this study, significantly larger amounts of water have been and will be stored in the Basin in the future. Increased storage will enable all basin producers to better meet seasonal demand variations as well as provide reserves against periods of drought. During Fiscal Year 1993 the Management Board adopted policies governing the long-term storage of water in the Basin and set aside approximately 100,000 af for storage programs.

Water Allotment and ConservationProg ram

In early 1993 the Governor of California declared the six-year drought over, as rainfall statewide had been approximately 175 percent of average. Reservoir storage state-wide is estimated at 80 percent of average and annual snowpack and continued runoff during the spring of 1993 has significantly increased storage above 80 percent.

In June 1991, in response to the statewide drought, the Council adopted certain water pricing and conservation measures. The Council at that time adopted a mandatory conservation plan that required customers to reduce their 1991 usage to a level 1 Oo/o below their 1989 usage levels. Customers were charged penalties set at $1.00 per billing unit in the First Block and $3.00 per billing unit in the Second Block for usage in excess of their allotment. In addition, the plan included a reduction in water costs, in the form of incentive credits, of $0.15 per billing unit for customers using water below their conservation allotment. The plan also included a temporary "drought rate" to further stimulate demand reductions. The drought rate was designed as a temporary Third Block commodity rate imposed in addition to the Cjty's existing two-block inverted rate structure. The temporary Third Block commodity rate was sized to impact the top 15% of users in each meter size ("Rate Class'l

In March 1992, the Council discontinued the mandatory conservation portion of the plan and discontinued the penalty charges associated with a customer's usage. In September 1992, the Council terminated the incentive credits paid to customers for water consumption below their allotted conservation goals. In October 1992, as part of the water rate increase, the Council

17 elected to continue the temporary Third Block rates in an effort to continue to influence water consumption by charging a higher commodity rate on high use customers.

In June, 1993, City Council enacted an ordinance amending the Water Rate Ordinance, ending the Water Shortage Plan and incorporating the Third Block rate as a permanent feature of the Water Rate Ordinance.

Conservation Program. The Department has implemented several programs designed to maximize the efficient use of water by residential and commercial customers. The Department continues to assess the feasibility of implementing other demand side management and conservation programs for the future. Current water conservation programs include the following:

Ultra Low Volume ("ULV") Toilet Program . The Department offers residential customers a rebate for installing up to two ULV toilets in their home. These toilets can save a typical family of three as much as 50 gallons of water a day.

Home Water Survey Program. The City's residential Home Water Survey Program targets single-family homes and provides interior/exterior water audits and installation· of water conserving devices. Single family homes previously audited have reduced water consumption by an average of 28.5 gallons per day or 10,400 gallons per home per year.

Multi-Unit Dwelling Audit Program. The Multi-Unit Dwelling Program provides free water conservation kits to multi-family residences of 5 units or more, with installation if desired.

Landscape Irrigation Audit Program. Participating commercial facilities receive on­ site audits and appropriate base irrigation schedules to promote proper and efficient watering.

Low Income Leak Repair Program. The Department's auditors provide repairs of minor home water leaks at no cost to qualifying low income customers.

Water Management Strategy

The reliability of the City's water supply has increased since Fiscal Year 1991, despite the six-year drought period. The opportunity for this increase in reliability has been the result primarily of MWD's seasonal storage program, pursuant to which member agencies such as the City may purchase water for storage at discounted rates ("SSS rates") from October through April see "MWD Rates". The SSS rates have stimulated the City's construction of wells so as to expand its groundwater pumping capacity since Fiscal Year 1991. In addition, on several occasions during the recent drought MWD offered excess water at SSS rates in order to move water into storage. The City purchased some of this water, which is now available for recapture in the future.

The City's goal is to reach the point where it can purchase all of its imported supplies from MWD at the lower SSS rates. Such an arrangement would require (i) that the City have a one-year supply of water in storage in addition to that amount which it normally purchases from MWD for immediate use, and (ii) that the Water Division have the ability to meet all summer period demands from local supplies. The following table illustrates this improvement in supply reliability since Fiscal Year 1991.

18 LOCAL WATER SUPPLY (ACRE-FEET)

Fiscal Year Total Local Well Pumping Percent of Ended Demand Capability Capacity Purchases @ SSS

1991 37,100 16,600 22,700 43% 1992 32,400 21,200 27,900 47 1993 *32,400 24,600 34,500 *64 1994 **35,700 **32,200 **37,800 **81

Estimated ** Projectect Source: PasadenaWater & Power Department

In the above table, local capability indicates the beginning-of-year unfettered right to produce from the underground basin. It includes stored volume, Pasadena's annual pumping right, and the legal righito over�pump the annual right by 10%-. The large increase in local supply capability from Fiscal Year 1993 to Fiscal Year 1994 is due to MWD's termination of its interruptible program (See "MWD Rates.")

Devil's Gate Multi-Use Project (Hahamongna Watershed Park)

The Devil's Gate Multi-Use Project (the "Devil's Gate Project") is planned to be a multi­ use and multi-agency project to revitalize 250 acres of the Upper Arroyo Seco in Northwest Pasadena. It will add to the City's groundwater storage capabilities to maximize the beneficial use of the Basin. The Devil's Gate Project is expected to improve flood control protection for the entire Arroyo Seco, and restore and enhance scenic park and recreational uses to the Upper Arroyo Seco behind the Devil's Gate Dam. The Devil's Gate Project would also provide major equestrian staging facilities for the San Gabriel Mountain Recreational area and enhance the wildlife environment of the Devil's Gate Dam area.

In October 1991, the Devil's Gate Multi-Use Planning Project Joint Powers Planning Authority (DGMUPP-JPPA) was formed with a one-year mandate to (1) adopt a final park plan, (2) explore funding opportunities, and (3) recommend a more permanent form of governance. The DGMUPP-JPPA Board (the "JPPA-Board"), was composed of representatives from the City of Pasadena, the City of LaCanada Flintridge, and the Santa Monica Mountains Conservancy.

Consultants finished work on the park plan and the preliminary economic feasibility assessment in the summer of 1992 and the JPPA Board finalized their adoption of the park plan in January 1993. Part of that plan included renaming the project to Hahamongna Watershed Park. Proposition A (County Park Bonds), which was approved by Los Angeles County voters in November 1992, will provide approximately $1.86 million toward park work at Hahamongna. In February 1993, the JPPA Board recommended to the Pasadena City Council the formation of a joint powers authority (the "JPA") to operate and maintain the Hahamongna Watershed Park. That recommendation is currently pending Council action.

Water Quality

In 1992 the Department met or exceeded the requirements of the federal regulations under the Safe Water Drinking Act of 1986 as well as State regulations under Title 22 of the California Administrative Code. The Department has consistently exceeded federal and state

19 regulations during the past 20 years. The Department collects water samples on a regular basis from all sources of supply, reservoirs, and fifty locations throughout the distribution system. General mineral, general physical, and metals analyses are performed in the Department's state certified Water Chemistry Laboratory. The Water Division's state certified Water Chemistry Laboratory, the Pasadena Health Department, and contract laboratories performed over 6,000 chemical and bacteriological analyses of water samples. The chemical analyses includes tests for pesticides,herbicides, radiochemicals, organic, inorganic, and mineral compounds.

The Water Division has made advances in the number and the precision of chemical compounds that can be analyzed in its Water Chemistry Laboratory through the purchase of an ion chromatograph and an atomic absorption spectrometer this year. The ion chromatograph is used to analyze ionic compounds such as nitrate, fluoride, sulfate, chloride, and bromide. The atomic absorption spectrometer is used to analyze inorganic compounds such as aluminum, arsenic, barium, cadmium, chromium, copper, lead, selenium, and silver. This equipment permits for timely and cost effective analyses even at extremely low concentrations.

The Water Division has completed the first phase of a federally-mandated study to determine the lead and copper levels in City tap water. The City's water supply contains no lead or copper. However, lead and copper in tap water can come from the leaching of these chemicals from customers' plumbing. A total of 290 lead and copper samples were taken, with assistance from customers, from kitchen or bathroom water taps. Eight lead samples (3%) exceeded the EPA action level of 15 micrograms per liter, and none of the copper samples exceeded the action level of 2,300 micrograms per liter. The eight customers who had lead concentrations above the action levels were provided with assistance in reducing their exposure to lead from their drinking water.

The quality of water in the Basin, the source of approximately 40% of the City's total supply, is generally good. The Basin has not suffered from the widespread contamination evident in some of Southern California's groundwater basins. In some portions of the Basin the presence of nitrates requires blending of some sources to meet drinking water quality standards. There is some contamination from volatile organic chemicals ("VOCs") in scattered parts of the Basin.

The most notable contamination is in the vicinity of the Jet Propulsion Laboratory ("JPL") located in the northwest part of the City's service area adjacent to the Arroyo Seco Stream, a major recharge area for the Basin. Contamination in this area had resulted in the inability to operate several wells. Four of the contaminated wells belong to the City and have supplied on average approximately 30% of the City's annual groundwater supply. In early 1990, the City and JPL reached an agreement whereby JPL paid for the construction of a treatment plant to remove the voe contamination from the City's four contaminated wells. The agreement also provides for JPL to pay all of the operating costs of the treatment plant until February 1997. The treatment method for the plant is air stripping with activated carbon off-gas air pollution control. This treatment scheme results in no contamination being released to the atmosphere, but does require the periodic removal of contaminated carbon. Responsibility for the construction and operation of the treatment plant, including handling of the contaminated carbon, lies with Calgon Carbon Corporation as the City's contractor. The treatment plant was completed and all four wells were returned to full production in September 1990. The treatment plant is considered temporary. During the term of the agreement JPL will conduct additional investigations to determine more precisely the extent, origin, and remediation required to address the contamination.

Insurance

The insurable property and facilities of the Water Division are covered under the City's general insurance policies. For fire, extended coverage and vandalism, the City is insured to a

20 maximum of $250,000,000, up to full replacement value for each occurrence, based on a total estimated value of City assets in excess of $500,000,000, and is self-insured for the first $25,000. The City does not carry earthquake insurance on its water facilities. For liability to third parties by reason of property damage, personal injury or death, the City is self-insured for the first $5,000,000 and has $10,000,000 in coverage over this $5,000,000 amount. The City's insurance coverage extends through August 1993. The City plans to continue its coverage at the current level after August 1993. Under the City's workers compensation program, the City is self-insured for up to $500,000. In addition, the City purchases excess workers' compensation insurance for full statutory workers'compensation coverage.

METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA

MWD is a public agency organized in 1928 by vote· of the electorates of several Southern California cities, including the City, following adoption of the original Metropolitan Water District Act by the California legislature. MWD is not subject to regulation by the California Public Utilities Commission, although its enabling statute is subject to amendment by the California Legislature. MWD currently has full authority to set rates and policies as necessary to provide a dependable water supply to Southern California. MWD currently provides nearly 60% of the water used in its service area, which consists of 5, 149 square miles in portions of Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura Counties. MWD serves a population of approximately 15 .6 million people;

MWD is governed by a 51-member Board of Directors consisting of at least one representative from each of the 27 members public agencies, including the City, that comprise the District. Representation and voting rights are based upon each agency's assessed valuation.

MWD Water Supply

After deducting evaporation and seepage losses in transporting and storing the water, the amount currently available for delivery by the District to its member agencies is approximately 1.2 million af a year. MWD's two primary sources of water are the Colorado River via the Colorado River Aqueduct, and the State Water Project via the Edmund G. Brown California Aqueduct (the "California Aqueduct") owned by the State of California and operated by the State Department of Water Resources. To obtain its Colorado River supply, MWD contracted with the United States Secretary of the Interior in the early 1930's for an allotment of 1,212,000 af of Colorado River water a year. In 1963, California lost a portion of its entitlement to the State of Arizona by U.S. Supreme Court decision. The Colorado River system operating criteria issued by the Secretary of the Interior in 1970 delayed the reduced entitlement's impact for 15 years. In March 1985, the Central Arizona Project began supplying water to Arizona by diverting Colorado River water from lake Havasu. This reduced MWD's dependable Colorado River water supply to less than 550,000 af a year. Water used by higher priority Indian and miscellaneous rights (30,000 af) and conveyance losses (10,000 af) further lowers this figure to 510,000 a year.

MWD has entered into agreements with the Imperial Irrigation District and Palo Verde Irrigation District and is seeking additional agreements with other agencies to reduce their diversions from the Colorado River, thereby augmenting MWD's available supply. In addition, the Secretary of the Interior could allow MWD to divert water unused by Arizona or Nevada. In years in which surplus water is available, California would be entitled to divert up to one-half of the surplus, and the District would have the highest priority of any California contractor to divert this surplus water by virtue of its fifth priority right.

The State Water Project is MWD's other major water source. The State Water Project taps supplies available from the Sacramento-San Joaquin Delta (the "Delta") and transports the

21 water 444 miles to Southern California via the California Aqueduct. Presently, the State Water Project can deliver on average approximately 1 million af a year to MWD, although MWD has a contractual entitlement of 2,011,500 af a year. The projected State Water Project supply available to MWD, combined with the projected availability of Colorado River water and water produced through storage, transfer, reclamation and conservation programs, is projected by MWD to meet its demands in normal supply years to the year 2000.

Efforts are continuing to reach a statewide consensus on the most appropriate method for completing the State Water Project and ensuring that all entitlement supplies can be delivered. In addition, the State Department of Water Resources is focusing on various storage and water management projects to increase the State Water Project water supply. The feasibility and yield of these projects depend on a number of uncertainties.

MWD's supply from the State Water Project could be significantly affected by the State Water Resources Control Board's (the "State Board") seven-year long hearing process to review its 1978 water rights decision 1485 (D-1485) and related water quaJity control plans for the- San Francisco Bay Delta and the Central Valley basins. Neither the City nor MWD can predict at this time whether MWD's supply from the State Water Project will be curtailed by virtue of the State Board determinations. In addition, on May 31, 1991, a group of environmental organizations filed an action against the State Board seeking an order setting aside the salinity plan issued by the State Board on May 2, 1991. This litigation involves a number of significant issues related to California's water rights and environmental laws, and could have a significant impact on the State Water Project's ability to export water from the Delta. The District and the State Water Project contractors have intervened in this litigation.

On April 16, 1993, a coalition of environmental and fishery organizations, including the Sierra Club, filed an action against the United States Environmental Protection Agency ("EPA") seeking to require the EPA to issue water quality standards for the San Francisco Bay-Delta estuary under its federal Clean Water Act authority. MWD and ten other urban state water contractors have filed a motion to intervene as parties in the lawsuit in order to provide them with an opportunity to challenge EPA's authority to establish any standards, such as freshwater outflow requirements, which affect the State water rights allocations. A hearing has been set for July 6, 1993, in the United States District Court in Sacramento to hear the motion. The EPA had been deferring to the State Board to complete interim standards rather than setting its own standards. As a result of the Governor's request that the State Board stop work on interim standards, however, the EPA now intends to issue its own standards to the Washington, D.C. office of the EPA in 1993. It is not currently known if or when the proposed standards will be published in the Federal Register. However, if such standards are published, the EPA must conduct a public comment process which could take several months, and a final decision by the EPA regarding the standards, if any, may not occur until next year. It is not currently known what the standards, if implemented, would provide. It also is not currently known whether any party or parties will challenge any standards issued by the EPA. The EPA standards, if implemented, could significantly reduce the State Water Project's ability to export water from the Delta, thereby decreasing MWD's water supply.

In order to compensate for potential shortfalls during dry years over the next ten years, MWD is initiating a number of water transfer and exchange programs with agricultural water interests in the State. MWD estimates that such programs, if implemented, will make available to MWD in dry years approximately 500,000 af of water to augment MWD's State Water Project supply, which should be sufficient to meet needs.

Reliability of MWD Water Supply to Meet with City Requirements

In most years, MWD supplies approximately 60 percent of the water used in its service area. MWD is projecting increasing demands on the water it supplies, due to growth throughout the entire service area and possible losses of local supplies by certain other member agencies.

22 Such increased demand for MWD water, coupled with a reduction in MWD's existing water supplies could reduce the amount of water available to MWD to supply the City. Certain statutory provisions and Board policies provide allocation criteria to member agencies in such circumstances.

The Metropolitan Water District Act provides a preferential entitlement for the purchase of water by each of the MWD member agencies. This preferential right is based on the ratio of all payments made to MWD by each agency compared to total payments made by all member agencies on tax assessments and otherwise, except purchases of water, toward the capital cost and operating expenses of MWD. Based upon such formula, as of April 30, 1993, the City had a statutory preferential right to 1.29% of MWD's total supply. However, MWD has never used this criteria in allocating water. Moreover, if a shortage should arise, legal issues exist as to whether certain Constitutional and California Water Code provisions supersede the MWD Act so as to require reasonable allocation of water in time of shortage.

MWD Scheduling and Operations

MWD member agencies request water from MWD to be delivered at various delivery points within MWD's service area. For planning purposes, each MWD member agency advises MWD annually in December of its anticipated delivery requirements for each of the following fiscal years. Charges for water delivered are billed monthly payable by the end of the second month following delivery.

MWD Rates

The primary source of MWD revenue is water sales. Revenues from water sa1es are projected to represent approximately 76 percent of MWD's total revenues for its 1992 Fiscal Year. Remaining income is derived from ad valorem taxes, a standby charge on real property in the District, power sales, interest income and land sales and leases.

Water rates are established by majority vote of the MWD board in March of each year; after a public hearing held in February. Rates are not subject to regulation by any local, state or federal agency. Under the MWD Act, MWD must, so far as practicable, fix such rates for water as will result in revenue which, together with revenue from any water standby or availability of service charge or assessment, will pay the operating expenses of MWD, provide for repairs and maintenance, provide for payment of the purchase price or other charges for property or services or other rights acquired by MWD, and provide for the payment of the interest and principal of the bonded debt of MWD.

MWD has four rate categories for the sale of water to member agencies. The rates are established on a per acre foot basis: noninterruptible (firm) service, emergency service, seasonal storage service, and reclaimed water service. The Department purchased no emergency or reclaimed water from MWD in Fiscal Year 1992. Seasonal storage service is available to member agencies during the months October through April, and use of such water by the City is limited to groundwater replenishment, in lieu of pumping from the groundwater basin. During the last several years MWD has phased out a fifth category, interruptible service, which essentially permitted a member agency to purchase MWD water at a discount on the condition that at any time within a three-year period MWD could "interrupt" water sales to the agency by half the amount of interruptible water purchased and require the agency to rely on local supplies. The Department last purchased interruptible water in 1991.

The Department purchases all of its water on a treated basis. In Fiscal Year 1992 the Department purchased 9,767 af of firm service and 8,600 af of seasonal storage water.

23 MWD has had wholesale water rates that have been relatively stable and inexpensive in recent years. However, the recent drought in California and anticipated capital improvement program to meet future regional water demand and quality requirements has required MWD to increase its water rates significantly. Effective July 1, 1993, MWD rates for firm service for treated water will be $385 per af, an increase of $63 per af from the previous year, and $253 per af for treated seasonal storage water, an increase of $50 per af from the previous year.

OPERATIONS OF THE WATER DIVISION

Basis of Financial Reporting

The City's financial statements are prepared in accordance with generally accepted accounting principles for municipal governments. Financial statements of the Water Fund, an enterprise fund of the City, are prepared on the accrual basis of accounting. Financial statements for the Water Fund for the Fiscal Years ended June 30, 1991 and June 30, 1992 are included as Appendix B.

All revenues of the Water Division are generated by charges and other activities of the Water Division. The Water Division does not receive funds from the City or any tax revenues. All revenues generated by the Water Division are deposited into the Water Fund as required by the Charter, see "Security for the 1993 Bonds -- The Water Fund". Labor costs for personnel working in both the Water Division and the Power Division are allocated on the basis of time worked for each division.

Revenues

Ongoing Revenues

As shown in the table below, customers inside the City's boundary consumed approximately 86% of the 12,842,968 cubic feet of water sold by the Water Division in Fiscal Year 1992. Receipts from customers within the City limits represent 70% of the $15,331,076 in revenues collected by the Division in Fiscal Year 1992. Each meter is considered a separate customer.

WATER SALES

Fiscal Year Ended 1992 1991 1990 1989 . 1988

Volume (OOO's Billing Units) Inside City Limits 10,227 12,064 13, 160 12,840 13,032 Outside City Limits 1,761 2,105 2,402 2,218 2,211 Municipal & Other 855 _fil§ __fil§ _ill 773

Total 12.843 14.845 16.378 15 809 16 017

Revenue (OOO's Dollars) Inside City Limits $10,729 $11,141 $11,505 $10,970 $10,862 Outside City Limits 2,480 2,575 2,453 2,215 2,165 Municipal & Other 2. 122 1,055 1.132 846 1.001 Total j1 5,331 j14/71 j15,090 !14,031 !1 4 028

Billing Unit = 100 Cubic Feet Source: Pasadena Water & Power Department

24 For the Fiscal Year ended June 1992 the twenty largest customers of the Water Division are listed in the table below.

20 LARGEST CUSTOMERS (BILLING UNITS)

Customer Industry

Cal. Tech./JPL Education· 545,164 City of Pas. Steam Power Plant Utility 259,995 American Golf (Brookside) Golf Course 225,680 City of Pasadena Parks & Landscaping Recreation 176,568 Huntington Hospital Health Care 158,752 Douglas Colliflower Golf Courses 136,469 Pasadena Unified School Dist. Education 136,303 City of Pasadena, Rose Bowl & Adjacent Facilities Sports/Recreation 113,825 Annandale Golf Club Golf Course 113,516 Dept of Transportation/Cal Trans Frwy Landscape 80,890 Norman's Nursery Nursery 59,046 Ambassador College Education 52,817 Thomas Pottmeyer Housing Units 49,367 Ready Pac Produce Produce 43,240 Dy-Dee Diaper Service Laundry 34,399 Fuller Theological Seminary Education 34,236 KOAR-Pas Investment Partnership Hotel/Office· Mg mt 26,994 ArtCenter College Education 26,488 McNeil Consumer Products Pharmaceuticals 24,578 Ritz Carlton Hotel 24,440

Billing Unit = 100 CubicFeet Source: Pasadena Water & Power Department

Rate Structure

The Charter provides that the City Council shall set water rates by ordinance. Such rates are not subject to approval by any other body or agency. The Rate Ordinance sets rates and charges for Water Division customers� Effective October 13, 1992, rates were increased in anticipation of increasing maintenance and operating expenses, to partially fund capital improvements, and to cover the expected annual debt service resulting from the issuance of the 1993 Bonds. The rate increase was designed to collect an additional 7.5% of revenue when compared to previous rate levels.

Under the City's Water Ordinance, Chapter 13.20 of the Pasadena Municipal Code, costs associated with water projected to be purchased from MWD are passed through to residential customers via the Second Block and Third Block commodity rates. The Second Block and Third Block commodity rates are re-set from time to time to recover all costs associated with the purchase and distribution of MWD water. In order to accommodate changes in MWD's rates, water delivered under Second Block and Third Block commodity rates is subject to an automatic adjustment which tracks changes in MWD's prices occurring since the last change in rates.

The City's cu rrent rate structure is an inverted block structure. Water usage rates are higher for higher levels of consumption. The rates also have Winter/Summer and Inside City

25 Limits/Outside City Limits price differentials, with higher water rates in the summer and in areas outside the City limits.

The following chart outlines the current water rate structure for the City of Pasadena effective July 1, 1993.

RATE STRUCTURE

SUMMER WINTER INSIDE First Block $0.438 First Block $0;396 Second Block 1.276 Second Block 1.187 Third Block 1.424 Third Block 1.417

OUTSIDE First Block 0.590 First Block 0.534 Second Block 1.723 Second Block 1.604 Third Block 1.923 Third Block 1.915

Meter Size (Inches) Meter Size (Inches) OUTSIDE(1) INSIDE(1 )

5/8 & 3/4" $7.86 5/8 & 3/4" $5.86 1" 15.14 1" 11.14 1 1/2" 35.01 1 1/2" 22.97 2" 70.83 2" 52.8'1 3" 173.01 3" 128.97 4" 266.23 4" 198.16 6" 410.00 6" 305.90 8" 667:69 8" 497.53 10" 825.43 10" 643.46 12" 984.72 12" 734.46

(1 ) Includes fire protection service. Source: Pasadena Water & Power Department

Water delivered under Second Block and Third Block commodity rates is subject to the MWD Purchased Water Adjustment Charge (the "PWAC"). Effective July 1, 1993 a new PWAC was calculated and is inck.lded in Second Block and Third BJock rates.

Rates have increased historically to cover increases in costs and to meet other fund requirements. A five-year history of rates by class of customer follows in the table below.

HISTORY OF RATES BY CLASS OF CUSTOMER (AVERAGE BILLING PRICE PER 100 CUBIC FEET IN DOLLARS)

Fiscal Year Ended 1992 1991 1990 1989 1988

Customer Class Inside City Limits $1,049 $0.924 $0.874 $0.854 $0.833 Outside City Limits 1.408 1.223 1.021 0.998 0.979 Other 1.119 0.921 0.851 0.851 0.851

Source: Pasadena Water & Power Department

26 The following table compares the water rates in effect in the City with those of other cities in the market area. The City's rates are consistently among the lowest in the areas surveyed. This rate level demonstrates that the City has been successful in keeping bills to a minimum by a variety of rate, demand side and supply side efficiencies.

Water Rate Comparison Rates in Effect March 1993

Cubic Feet 500 2,000 3,000 5,000 10,000 50,000 200,000 Meter Size 5/8" 5/8" 1" 1" 1 1/2" 2" 4"

Pasadena $7.84 $16.98 $32.63 $56.13 $94.62 $579.52 $2,342.77

Los Angeles (1) 5.70 22. 80 43.72 90.32 121.00 605.00 2,420,00 Anaheim (1) 11.05 21.53 37.22 51.86 82.85 343.50 1,351.30 Burbank 9. 11 26.25 37.68 60.53 117.66 574.70 2,288.60 Glendale 11.36 33.70 49.58 81.34 164.46 804.99 3,209.42

(1) Assumed switch from residential to commeFcial -rate after 1" meter. Source: Pasadena Water & Power Department

27 Historical Operating Results and Cash-Flows

The following table shows the historical net income and debt service coverage on outstanding 1991 · Bonds.

HISTORICAL OPERATING RESULTS AND CASH FLOWS ($ IN THOUSANDS)

Fiscal Year Ended 1992 1991 1990 1989 1988 Revenue Sales Within City Limits $10,729 $11, 142 $11,505 $10,969 $10,861 Sales Outside City Limits 2,480 2,575 2,452 2,215 2,165 Municipal Sales 956 728 694 639 658 Fire Protection Services 455 365 131 123 120 Miscellaneous - Other _ill <39> 307 _M 222

Total Revenues(1) $15.331 $14.771 $15.089 $14.030 $14.026

Operating Expenses Purchased Water 3,857 4,376 5,774 4,95fr 5;599 Fuel & Purchased Power 988 1,202 1,268 1,187 1,132 Direct Operating Expenses 3,650 3;867 3.463 3,042 2,644 Ad min. & General Expenses 4.867 3 918 3 384 2.988 2.598

Total Expenses(1) $13.362 $13.363 $13.889 $12.172 $11.973

Earnings from Operations 1,969 1,408 1,200 1,858 2,053

Non-Operating lncome(2) 967 323 769 256 255.

Cash Flow Available for Debt Service $2.936 $1.731 $1.969 $2.113 $2.308

1991 Debt Service 343 0 0 0 0 Debt Service Coverage 8.56X NIA NIA NIA NIA Amount Available After Debt Service $2,593 $1,731 $1,969 $2, 113 $2,308 General Fund Transfer 920 884 899 841 836 Cash Available After Debt Service and Transfer $1,673 $847 $1,1072 $1,272 $1,472

(1) Excludes Depreciation and Interest Expense (2) Includes Interest Income and Interest Income on Bonds. Source: Audited Financial Statements of the City and Water & PowerDepartment

28 The following table shows historical production and sales information for the Division.

HISTORICAL OPERATING DATA (THOUSANDS OF BILLING UNITS)

Fisc1I Year �nded Fiscal Year Ending 1992 1991 1990 1989 1988 Production Surface Supply 561 290 84 363 351 Pumped Water 4,620 5,965 5,172 6,058 5,383 Purchased Water 8.951 9 896 11 627 10.419 10.979

Total Production 14.132 16.151 16.883 16.840 16.713

Water Sold 12,843 14,845 16,606 15,825 16,017 Water System Losses 1,289 1,306 277 1,015 696 Number of Services 37,074 37,041 37,287 36,776 36,653

Billing Unit = 100Cubic Feet Source: Pasadena Water & Power Department

Pursuant to the Charter, the City Council may transfer moneys from the Water Fund to the City's General Fund. See "Security For the 1993 Bonds -- The Water Fund". The table below sets forth the income before transfer to the General Fund for the past five ·fiscal years and the transfer in the subsequent fiscal year.

TRANSFERS TO THE GENERALFUND

Fiscal Year Ended

Income Before Accrual of Operating Transfer $1,386,347 $930,989 $1,061,128 $1,286,117 $1,526,535 Transfer in Subsequent Fiscal Year $920,165 $884, 196 $899,148 $841,216 $836,278

Source: Pasadena Water & Power Department

Billing and Collection Procedures

Billing and collection services for all water services are provided by the City's Finance Department, Municipal Services Division. Most residential and certain commercial customers are billed bimonthly; all-electric residential customers and large commercial users are billed monthly. The City prepares a single bill for electric, water, refuse and sewer collection services. Payments received for the billed period are credited first to the oldest charges in the system, then to current charges for each service in the order stated .

The City's policy is that utility bills are due when rendered and delinquent after 15 days. After 30 days a Now Delinquent notice is generated and mailed. Any account over $100 and outstanding after 32 days from actual billing date, is assessed an 8% late penalty charge. Lifeline customers are exempted. A 48-hour notice of termination is generated approximately 45 days afterthe actual billing date, and is hand-delivered to the service address. If payment is not received, the delinquent amount due is more than $25, and the customer has both electric and water service, the water service is interrupted. Should the bill not be paid within a week, the electric service is also interrupted. The total bill plus all charges must be paid to resume service.

29 If after both water and electric have been shut off, the bill remains unpaid, the meters are checked twice to insure that they have not been turned back on or tampered with, at one week intervals, then the account is closed. After 90 days the account is written off and sent to a collection agency.

HISTORICAL CUSTOMER BAD DEBT ($ IN THOUSANDS)

Fiscal Year Ended 1992 1991 1990 1989 1988

Bad Debt Written Off $ 48 $ 45 $35 $52 $34 Total Operating Revenue 15,331 14,770 15,091 14,031 14,028 Bad Debt as a Percent of Operating Revenue 0.31% 0.30% 0.23% 0.38% 0.24%

Source: Pasadena Finance Department

Projected Operating Results

During the past three years, the Water Division has experienced lower than expected retail sales. This is due in large part to the Water Allotment procedures and conservation measures set in place following six years of continuing drought In Fiscal Year 199-2, water sales hit a fourteen year low with sales of 12,842,968 hundred cubic feet ("hcf'). A slight increase, to 13,243,000 hcf, is expected for Fiscal Year 1993. However this still represents a 15% reduction from what was considered "normal sales" prior to the drought measures. Projected sales are expected to increase approximately 60,000 hcf annually, from Fiscal Year 1993 levels, thereafter.

Fiscal Year 1993 operating expenses are estimated using actual results for the first nine months of the Fiscal Year through March 31, 1993. The projections for Fiscal Years 1994 through 1997 are based on forecasts completed by the Department's financial planners and submitted as part of the operating budget for approval. The Financial Plan is currently adjusted by the Department to reflect recent trends and information.

Retail revenue forecasts reflect the October 13, 1992, 7.5% rate increase and assume similar 5.1% annual increases in July of 1994, 1995 and 1996. Additionally, the revenue forecast is based on the assumption that increases in purchased water costs over present costs, using existing MWD wholesale rates, will be collected in the Purchased Water Adjustment Charge that is added to all water bills.

Projected expenses reflect the Department's best estimates of trends for this period. They incorporate the additional interest expenditures of the 1993 Bonds, an additional issue in 1996 and the six percent (6%) of gross revenue annual contribution from the Water Fund to the General Fund.

To the extent that actual future conditions differ from thoseassumed herein, the actual results will vary from those projected herein.

30 PROJECTED OPERATING RESULTS AND CASH FLOWS ($ IN THOUSANDS)

Fiscal Year Ended 1997 1996 1995 1994 1993ill Revenue Sales Within City Limits $12,929 $12,885 $12,841 $12,798 $11,882 Sales Outside City Limits 2,631 2,622 2,613 2,604 2,773 Municipal Sales 1,050 1,050 1,050 1,050 947 Fire Protection Services 450 450 450 450 476 Miscellaneous - Other 85 85 85 85 93 Rate Increase FY 1995 at 5. 1% 982 976 972 -0- -0- Rate Increase FY 1996 at 5. 1 % 1,063 1,059 -0- -0- -0- Rate Increase FY 1997 at 5. 1% 1, 152 -0- -0- -0- -0- Purchased Water Cost 2.439 1,824 1 215 664 -0- Adjustment

Total Revenues $22,781 $20,951 $1 9,226 $17,651 $16, 171

Operating Expenses (2) Purchased Water $6,026 $5,371 $4,716 $4, 118 $4,333 Fuel & Purchased Power 1,446 1,373 1,304 1,239 692 Direct Operating Expenses 4,641 4,437 4,242 4,055 3,877 Admin. & General Expenses 5,971 5,727 5,494 5,268 5,076

Total Expenses (1} $1 8,084 $1 6,908 $1 5,756 $14 680 $13,978

Earnings from Operations 4,697 4,043 3,470 2,971 2, 193

Non-Operating Income 773 795 1,010 1,266 617

Cash Flow Available for Debt Service 5.470 4,838 4,480 4,237 2,810

Debt Service 2,439(3) 2,060 2, 061 1,538 687

Debt ServiceCoverage 2.24X 2.35X 2. 17X 2.75X 4.09X Amount Available After Debt Service 3,031 2,778 2,419 2,699 2, 123

General Fund Transfer 1,362 1,252 1,14 8 1 054 965 Cash Available After Debt Service and Transfer $ \669 $ \526 $ 1.211 $ \645 $ 1 1158

(1) Nine months actual expenditure; three months budget. (2) Excludes depreciation and interest expense. (3) Includes anticipatedbond issue. Source: PasadenaWater & Power Department

ESCROW AGREEMENT

A portion of the proceeds of the sale of the 1993 Bonds will be deposited with the E.scrow­ Agent and will be held, pursuant to the Escrow Agreement, in the Escrow Account. Federal Securities wi ll be purchased by the Escrow Agent with such funds and, under the Escrow Agreement, will be deposited in the Escrow Account Such Federal Securities and the earnings thereon are irrevocably pledged to, and in trust for the benefit of, the owners of the Refunded Bonds.

31 T-he- Escrow Agent shall collect on the due dates thereof the principal of and interest on the Federal Securities on deposit with it in the Escrow Fund and shall apply from such matured principal of and interest on the Federal Securities, money sufficient to pay the principal, interest and redemption price of the Refunded Bonds when due in accordance with the Escrow Agreement.

VERIFICATION OF MATHEMATICAL COMPUTATIONS

Ernst & Young, a firm of independent certified public accountants, upon delivery of the 1993 Bonds, will deliver to the City its attestation report indicating that it has examined, in accordancewith standards established by the American Institute of Certified Public Accountants, the mathematical accuracy of computations prepared by the Co-Financial Advisors relating to the accuracy of. among other things, (i) the mathematical computations of the adequacy of the: principal of, or other payments required to be made under the Ordinance and interest on the Federal Securities to be held in the Escrow Fund to pay when due interest on the Refunded Bonds to and including the redemption date, and the redemption price of the Refunded Bonds, and (ii) certain mathematical computations supporting the conclusion that the 1993 Bonds are not "arbitrage bonds" under the Code.

RATINGS

Fitch Investors Service, Inc., Moody's Investors Service Inc., and Standard & PoMs Corporation have assigned ratings of AA, Aa, AA-, respectively, to the 1993 Bonds. Such ratings reflect only the views of such organizations and any desired explanation of the significance of such ratings may be obtained from the rating agency furnishing the same, at the following addresses: Fitch Investors Service, Inc., One State Street Plaza, New York, New York 10004; Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007; Standard & Poor's Corporation, 25 Broadway, New York, New Y-o rk- 10004; Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumption of its own. There is no assurance that any of such ratings will continue for any given period of time or that any of them will not be revised downward or withdrawn entirely by the respective rating agency, if in the judgment of such rating agency circumstances so warrant. The City, the Department and the Paying Agent undertake no responsibility either to notify the Owners of the 1993 Bonds of any revision or withdrawal of the ratings or to oppose any such revision or withdrawal. Any such downward revision or withdrawal of such ratings may have an adverse effecton the market price of the 1993 Bonds.

LITIGATION

There is no litigation or action of any nature now pending against the City or, to the knowledge of its respective officers, threatened, seeking to restrain or enjoin the issuance, sale, execution or delivery of the 1993 Bonds or in any way contesting or affecting the validity of the 1993 Bonds or any proceedings of the City taken with respect to the issuance or sale thereof, or the pledge or application of any moneys or security provided for the payment of the 1993 Bonds or the use of 1993 Bond proceeds. There are no pending lawsuits which in the opinion of the City Attorney challenge the validity of the above issue, the corporate- existence of the City, the Department or the Water Division, or the title of the officersto their respective offices.

As determined by the Office of the City Attorney, the City is involved in no other legal proceedings which could have a material adverse effect on the Water Fund or the operation of the Water System.

32 TAX EXEMPTION

The Internal Revenue Code of 1986 (the "Code") establishes certain requirements which must be met subsequent to the issuance and delivery of the 1993 Bonds for interest thereon to be and remain excluded from gross income for federal income tax purposes. Noncompliance with such requirements could cause the interest on the 1993 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issue 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 investment earnings on the foregoing be rebated on a periodic basis to the Treasury Department of the United States of America. The City has covenanted in the Ordinance to satisfy, or take such actions as may be necessary to cause to be satisfied, each provision of the Code necessary to maintain the exclusion of interest on the 1993 Bonds from gross income for federal income tax purposes.

In the opinion of Mudge Rose Guthrie Alexander & Ferdon and Marilyn L. Garcia, Esq., Co-Bond Counsel, under existing law, interest on the 1993 Bonds is exempt from personal income taxation of the State of California and, assuming compliance with the aforementioned covenant, interest on 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 are not "specified private activity bonds" within the meaning of Section 57(a)(5) of the Code and, therefore, the interest on the 1993 Bonds will not be treated as a preference item for purposes of computing the alternative minimum tax imposed by Section 55 of the Code. Interest on the 1993 Bonds owned by corporations will, however, be taken into account in determining the alternative minimum tax imposed by Section 55 of the Code on 75 percent of adjusted current earnings over alternative minimum taxable income (determined without regard to this adjustment and the alternative tax net operating loss deduction).

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 interest on 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 interest on the 1993 Bonds is excluded from gross income for federal income tax purposes, an Owner's federal tax liability may otherwise be affected by the ownership or disposition of the 1993 Bonds. The nature and extent of these other tax consequences will depend upon the Owner's other items of income or deduction. While not limiting the generality of the foregoing, prospective purchasers of the 1993 Bonds should be aware that (i) Section 265 of the Code denies a deduction for interest or indebtedness incurred or continued to purchase or carry the 1993 Bonds or, in the case of a financial institution, that portion of an Owner's interest expense allocated to interest on the 1993 Bonds, (ii) with respect to insurance companies subject to the tax imposed by Section 831 of the Code, Section 832(b)(5)(B)(i) reduces the deduction from loss reserves by 15 percent of the sum of certain items, including interest on the 1993 Bonds, (iii) interest on the 1993 Bonds earned by some corporations could be subject to the environmental tax imposed by Section 59A of the Code, (iv) interest on the 1993 Bonds earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by Section 884 of the Code, (v) passive investment income, including interest on the 1993 Bonds, may be subject to Federal income taxation under Section 1375 of the Code for a Subchapter S corporation that has Subchapter C earnings and profits at the close of the taxable year if more than 25% of the gross receipts of such Subchapter S corporation is passive investment income and (vi) Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take in account, in determining the taxability of such benefits, receipts or accruals of interest on the 1993 Bonds. Co-Bond Counsel have expressed no opinion regarding any such other tax consequences.

33 LEGAL OPINIONS

The legal opinion of Mudge Rose Guthrie Alexander & Ferdon and Marilyn L. Garcia, Esq. approving the validity of the 1993 Bonds (the form of which opinion is attached hereto as Appendix C) will be made available to purchasers at the- time of original delivery of the 1993 Bonds. Co-Bond Counsel will render no opinion or view regarding information contained in this Official Statement. Certain legal matters with respect to the City will be passed upon by the City Attorney.

CERTIFICATION AS TO OFFICIAL STATEMENT

The City will, at the time of deliveryof the 1993 Bonds, provjde to the successful bidder for the 1993 Bonds a certificate, signed by appropriate officers of the City of Pasadena, acting in their official capacity, to the effect that at the time of the sale of the 1993 Bonds and at all times subsequent thereto up to and including the time of delivery of the 1993 Bonds, the Official Statement relating to the 1993 Bonds did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

FINANCIAL STATEMENTS

The financial statements of the City, including the audited financial statements of the Water Fund, for the Fiscal Years ended June 30, 1992 and June 30, 1991, have been examined by KPMG Peat Marwick and Gilbert Vasquez & Co., Certified Public Accountants. The City's financial statements are prepared in accordance with generally accepted accounting principles for municipal governments, and are included as Appendix B to this Official Statement

ADDITIONAL INFORMATION

All quotations from, and summaries and explanations of the Charter, the Ordinance and other statutes and documents contained herein do not purport to be complete, and reference is made to the Charter, Ordinance, documents and statutes for full and complete statements of their provisions.

This Official Statement is submitted only in connection with the sale of the 1993 Bonds by the City and may not be reproduced or used in whole or in part for any other purpose. All estimates, assumptions, statistical information and other statements contained herein, while taken from sources considered reliable, are not guaranteed. The information contained herein should not be constructed as representing all conditions affecting the City or the 1993 Bonds.

All information contained in this Official Statement pertaining to the City has been furnished by the City, and the execution and delivery of this Official Statement have been duly authorized by the City Council of the City.

CITY OF PASADENA

By: /s/ Philip A. Hawkey City Manager

34 APPENDIX A

The 1993 Bonds will not be secured by any pledge of ad valorem taxes or General Fund revenues but will be payable solely from the Wa ter Fund. The description of the financial and economic information regarding the City of Pasadena set forth on the fo llowing pages is included in the Official statement for information purposes only.

THECITY OF PASADENA General

The City of Pasadena was incorporated in 1886 and became a freehold charter city in 1901 . Pasadena's city manager form of governmentwas adopted by amendments to the City Charterin 1921. The City Council is responsible for the administration of the City.

Pasadena covers near1y 23 square miles and is located in Los Angeles County in the northwestern portion of the San Gabriel Valley. It is bounded on the west by the cities of Los Angeles and Glendale, on the south by South Pasadena and San Marino, on the east by Arcadia and Sierra Madre, and on the north by the unincorporated community of Altadena and by the San Gabriel mountains.

The City of Pasadena provides its residents with power, water, refuse and sewage services. The Southern CaliforniaGas Company supplies natural gas.

While the City of Pasadena is primarily a residential community, it serves as a principal suburban retail center in the greater San Gabriel Valley and has several commercial and industrial districts. The City enjoys a warm climate )'ear-round and provides its residents with a wide variety of cultural and recreational opportunities.

City Council

All powers of the City are vested in the City Council, which is empowered to carry out the provisions of the Charterand perform all duties and obligations of the City as imposed by State law. The seven membersof the City Council are electedfor four-year terms. Councilmembus are nominated and elected by district. The Councilmembers elect a Mayor and Vice-Mayor from their membership. The names and occupations of the members of the City Council and the dates their terms expire are as follows:

Name Occupation Yerm Expires Rick Cole, Mayor Consultant May, 1995 KathrynT. Nack, Vice-Mayor Architect May, 1995 Chris Holden Commercial Real Estate Broker IVlay, 1997 Bill Crowfoot Attorney Ma�. 1997 William M. Paparian Attorney •�ay, 1995 Isaac Richard Investment Banker May, 1995 William E. Thomson, Jr. Attorney May, 1997

City Staff

Philip A. Hawkey assumed the duties of City Manager on June 18, 1990. Prior to that time Mr. Hawkey was the City Manager of Toledo, Ohio. His prior professional positions include Deputy City Manager of the City of Cincinnati, Ohio and City Manager of both Kettering, Ohio and Wooster, Ohio. He holds a Bachelor of Arts Degree in Economics from Baldwin-Wallace College, a Master's Degree in Public Administration from Ohio State University and a Juris Doctorate Degree from Cleveland State University. Mr. Hawkey is activein a number of professional associations including the International City Management Association. He has published articles on a variety of public sector management topics and taught related courses at the university level. A-1 Mary J. Bradley, Director of Finance for the City of Pasadena, has been connected with the City since 1970 in a variety of financial and administrative positions. She was appointed Directorof Finance in August 1986, having served as Deputy Finance Directorfor the previous four y-ears. Ms. Bradlay holds a Bachelor of Arts Degree from Pomona College in Claremont, California, and a Master's Degree from the University of Southern California. She is an active member of the GovernmentFina nce Officers Association (GFOA), the California Society of Municipal Finance Officers (CSMFO), the League of CaliforniaCities, and a number of local organizations.

Victor J. Kaleta, City Attorney, left private practiceto join the City Attorney's office in 1977. He was appointed City Attorney in 1983. Mr. Kaleta holds a Bachelor of Science degree in Physics from Florida State University and received his Juris Doctorate degree from Loyola University of Los Angeles. Prior to entering the legal profession, Mr. Kaleta was a systems/operations analyst in the aerospace industry. He is an active member of the National Institute of Municipal Law Officers, the City Attorneys' Association of Los Angeles County, and the League of CaliforniaCities.

Pamela J. Wilson joined the City of Pasadena in January 1989, as the Principal Financial/Rate Analyst for the Water and Power Department. In December 1992, she assumed responsibility for the operations of the Municipal Services Division of the Finance Department. She holds a Bachelor of Science degree in Business Administration with an emphasis in Finance, from California State University, Dominquez Hills and a Master of Business Administration from CaliforniaLutheran University. Prior to her coming to the City, Ms. Wilson spent eight years in various accounting and revenue requirements position with General Telephone of California.

Population

The following chartindica tes the growth in the population of the City since 1983.

CITYOF PASADENA POPULATION For Years 1983 through 1992

Year (as of January 1} PopulationC1 > 1983 125,123 1984 127,561 1985 129,649 1986 130,361 1987 131 ,645 1988 132,053 1989 131,819 1990 132,510 1991 131 ,868 1992 133,535

(1) Population fi gures for years 1983-1990have been adjusted using the Error of Closure methodology. Ttiis has calibrated State­ Oepartment of Financeestimates with the figures from the U.S. Bureau of the Census for 1990. The population figures for years after 1990are State Department of Financeestimates . Source: Stateof California, Department of Finance

Education

Total enrollment within the Pasadena Unified School District, which also includes territories outside- the City of Pasadena-, is shown below for the past ten years:

A-2 PASADENA UNIFIED SCHOOL DISTRICT TOTAL ENROLLMENT* For Fiscal Years19 83-84thr ough 1992-93

Fiscal Year Total Enrollment 1983-84 22,507 1984-85 22,359 1985-86 22,393 1986-87 21,937 1987-88 22,345 1988-89 21,044 1989-90 21,176 1990-91 21,682 1991-92 21,985 1992-93 22,071

Includesstudents outside from the Cityof Pasadena. Source: Pasadena Unified School District

Employment

No annual information is regularly compiled on employment and unemployment for the City alone. Employment in Los Angeles County was 3.969 million in 1988 and 4.099 million in 1992, representing a 3.3% increase over the four-year period. The County unemployment rate ranged from 4.9% in 1988 to 9.6% in 1992. Statewide unemployment rates were 5.3% in 1988 and 9.1% in 1991.

LOS ANGELES COUNTY EMPLOYMENT, UNEMPLOYMENT AND LABOR FORCE(1) Averagesfor each of the Calendar Years 1988-1992 (in thousands)

1988 1989 1990 1991 1992 Employment 3,969 4,034 4,173 4,142 4,099 Unemployment 205 197 255 362 436 Civilian Labor Force 4,174 4,231 4,428 4,504 4,535 Unemployment Rate 4.9% 4.7% 5.8% 8.0o/o 9.6% State Unemployment Rate 5.3% 5.1% 5.6% 7.5% 9.1%

<1) By placeof residence, includingworkers irwolved in laborcfis putes. Source: Stateof California, Employment DevelopmentDepartment

Major Private Employers

Industry in the City of Pasadena is diversified. Some of the leading industries include health care, telephone utilities, engineering and construction, financial services, higher education, cosmetics and general retail merchandise.

The major private employerswithin the City and the number of persons employed by each are shown on the following page:

A-3 CITY OF PASADENA MAJOR PRIVATE EMPLOYERS (as of March 1993)

Company Number of Employees Business Line

California Institute of Technology 3,912 Education Ralph M. Parsons Corporation 3,650 Engineering & Construction Huntington Memorial Hospital 3,100 Medical Facility Kaiser Permanente 2,300 Health Care Bank of America 1 ,850 (1) Financial Pacific Bell 1,518 Telephone Utility Countrywide Credit Industries 1,429 Financial Lending Institution Datatape Incorporated 750 Manufacturer- RecordingEquipment Fedco, Inc. 674 General Merchandise - Retail Jacobs Engineering 650 Engineering Avon Products, Inc. 600 Manufacturer- Cosmetics Ritz-Carlton Hotel 600 Hotel James M. Montgomery 434 Consulting Engineers Bullock's DepartmentStore 430 General Merchandise - Retail Fuller Theological Seminary 400 Education Loral Electro-Optical Systems Inc. 322 Defense Contractor

(1) Figure as of April, 1992. Updatedfi gure is unavailable due to mergerwith Security Pacific. Source: City of Pasadena

Building Pennit Activity

The following table shows the value of building permits issued in the City between 1988 and 1992. The unusually high figure for non-residential valuation for calendar year 1988 is due to individuals obtaining building permits prior to the passage of a growth management ballot initiative on March 7, 1989 (the "1989 Initiative;. The 1989 Initiative limited annual development within the City to 250 residential units and 250,000 square feet of nonresidential projects. After its approval by the voters, a lawsuit challenging the validity of the 1989. Initiative was immediateJy filed .. Following two years of pre;. trial hearings and negotiations, the City Council elected to settle the lawsuit. The settlement required that the City revise the Land Use and Mobility elements of the General Plan and present the revisions to the voters as an alternativeto the 1989 Initiative.

Accordingly, in September of 1992, the City Council adopted a draft General Plan. In November of 1992, the voters approved the ballot measure which replaced the 1989 Initiative with the new General Plan. The new General Plan targets development in the City providing for growth in employment and housing, and removes the specificres trictions of the 1989 Initiative.

A-4 CITY OF PASADENA BUILDING PERMIT VALUATION for Calendar Years19 88 through 1992

1988 1989 1990 1991 1992 Valuation On millions) Residential $ 79.8 $57.7 $49.7 $38.3 $ 54.0 Nonresidential 161.8 • 91 .2 60.1 70.6 38.9 TOTAL $241.6 $148.9 $109.8 $108.9 $92.9

New Dwelling Units Single Family 18 219<1 > 64 68 35 Multiple Family 985 137 110 100 395(2) TOTAL 1003 356 174 168 440

(1 ) Theunusually highfig ure is dueto approvalof one largeresidential townhouse development (2) Includes 374units in oneproject. Source: City of Pasadena, Planning, Building and NeighborhoodServices Department

Taxable Sales

Retail sales in the City increased 16.21 % from 1988 to 1991. The following table indicates taxable transactions in the City by type of business from 1988 through 1991, and for the nine months ended September 30, '1991 and September 30, 1992.

CITY OF PASADENA TAXABLE TRANSACTIONS BY TYPE OF BUSINESS for Calendar Years19 88 through 1991 and nine months ended September 30, 1991 and 1992 (in Millions of Dollars) Nine Months Ended September 30

1988 1989 1990 1991 1991 1992 Apparel Stores $ 120.2 $ 150.3 $ 153.3 $130.8 $102.3 $ 97.2 General Merchandise 209.2 197.9 199.2 195.7 137.5 127.5 Drug Stores 15.2 16.1 15.9 16.5 12.2 14.0 Food Stores 68.7 84.4 80.0 90.3 65.8 69.8 Packaged Liquor Stores 10.0 10.1 11.3 9.0 6.7 6.4 Eating & Drinking Places 165.6 178.9 178.8 183.5 136.3 141 .6 Home Furn. &Applianc es 45.1 54.4 59.8 66.9 45.5 55.0 Bldg. Mat. & Farm lmpl. 50.2 58.5 49.3 48.4 35.8 33.7 Auto Dlrs.& Auto Suppl. 293.6 284.9 258.8 202.5 157.7 136.8 Service Stations 51 .1 58.0 64.8 61 .6 44.8 53.8 Other Retail Stores 190.8 184.9 175.1 170.2 117.9 127.7 Retail Stores Total $1 ,219.7 $1,278.4 $1,246.3 $1,175.4 $ 862.5 $ 863.5

All Other Outlets 289.9 343.3 534.5 578-.9 3-96;4 413a5

TOTAL ALL OUTLETS $1 ;509;6 $1,621.7 $1,780.8 $1,754.3 S-1�258.9 $1,277.0

Source: State of California, State Board ofEqualization , TaxableSales lo Caljfomia

A-5 Community Facilities

Pasadena has a central library and eight branch libraries, four community centers, 24 parks and 33 playgrounds. Other entertainment and cultural facilities include the Rose Bowl, the Pasadena Center, the Norton Simon Museum, the Pacific Asia Museum, Gamble House, the Wrigley Estate, California Institute of Technology, the Art Center College of Design, the Ambassador Auditorium, Beckman Auditorium and the Pasadena Playhouse. Pasadena has long enjoyed a reputation as a community rich in its heritage of culture, traditions and quality of life. The City is also home to the Tournament of Roses Association, which in cooperation with the City sponsors the well-known New Year's Day Parade and Rose Bowl Game held in the City each year.

Transportation

The City is served by an extensive surface and air transportation network. Several major freeways make Pasadena accessible to the entire Los Angeles Basin. AMTRAK provides rail service through Pasadena, and all major truck lines service Pasadena and provide overnight delivery to San Diego, San Francisco, and points in Oregon and Nevada. The City is served by three commercial airports within one hour's driving time: Burbank-Glendale-Pasadena Airport is 15 miles away, Los Angeles International is 35 miles away and Ontario International is 45 miles away. Continental Trailways and Greyhound bus lines have local depots in Pasadena. The nearest port facilities are Los Angeles and Long Beach harbors, 30 and 35 miles away, respectively.

Employee Relations

City employees are represented by various unions, and labor relations have been generally amicable. The City has experienced no major strikes, work stoppages, or other incidents. Currently, 55% of all City employees are represented by unions, including the American Federation of State, County and Municipal Employees (AFSCME, Local 858); International Brotherhood of Electrical Workers (IBEW, Local 18); International Union of Operating Engineers (IUOE, Local 501); Los Angeles City Employees Union (LACEU, Local 347, Sanitation) ; Pasadena Association of Clerical and Technical Employees (PACTE); Pasadena Fire Fighters (Local 809); Pasadena Police Officers Association; Police Sergeants Association; and Fire Management Association. These unions are designated representatives under the Meyers-Millias-Brown Act(Section 351 0 et seq. of the Government Code of Cal ifornia), and are covered by current memoranda of understanding.

The following table sets forth the number of employees covered by memoranda of understanding open for negotiation in the following fiscal years:

Year Number of Employees

1993 77 1994 686 1995 320

CITY FINANCIAL INFORMATION

Budget Preparation and Approval Process

At such· date as . the City. Manager determines, each department head must furnish to the City Manager an estimate of revenues and expenditures for such department for the ensuing fiscal year, 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 respectivedepartment heads as necessary, and may revise the estimates as he deems advisable.

On or before the third Monday in May, the City Manager submits to the City Council the proposed budget for the ensuing fiscal year, as required by the City Charter. After reviewing and making such revisions as it deems ad visable, the City Council determines the time for the holding of a public hearing thereon and causes to be published a notice of the public hearing no less than two weeks prior to the A-6 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, and, on or before June 30, it 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, funds become appropriated to City departments for the objects and purposes named. At any public meeting after the adoption of the budget, the City Council may amend or supplement the budget by motion adopted by the affirmative vote of at least a majority of the total membersof the City Council.

A-7 CITYOF PASADENA GENERALBUDGE TED OBLIGATIONS Fiscal Years 1992 and 1993

Flsca1 Year 1992 Flsca1 Year 1993 AmendedBudget Amended Budget REVENUES TAXES: PropertyTaxes S 20,17 3,825 S 18,860,862 SalesTax 21,615,000 19,650,000 Utility Users Tax 16,462,700 16,502,260 OtherTaxes 12591 225 13 753800 TOTAL TAXES 70,842,750 68,766,922

OTHER REVENUE SOURCES: OtherGovernmental Agencies 6,471 ,357 6,157,143 Licensesand Permits 3,004,904 3,640,000 Chargesfor Services 3,868,133 6,129,330 Fines and Forfeitures 2,936,960 2,479,000 Miscellaneous 5,124,590 6,099,291 Utility Contribution 8,340,000 · 8,778,492 lntetfund Reimbursements 9,657,890 13,236,423

TOTAL OTHER REVENUE SOURCES 39403 834 4§519 679

TOTAL GENERAL REVENUES $110 246 584 $115286601

APPROPRIATIONS:

DEPARTMENTAL APPROPRIATIONS: City Council s 791,546 s 810,481 City Manager 1,733,399 1,998,595 City Attorney 2,983,552 3,084,273 City Clertc 713,751 1,038,995 Finance 7,870,116 8;031 ,0.U Fire 14,982,479 17,008,567 Police 26,355,263 27,353,707 Planning, Building & Neighborhood Services 6,957,775 7,893,670 Human Resources 2,403,989 2.156,459 Risk Management 664,627 694,333 AffirmativeAction 434,766 472,760 Communication 1,024,824 0 Health 329,191 365,117 Information Services 5,813,979 6,060,548 Human Services 1,238,701 1,935,301 Nonhwest Programs 499,452 588,304 Recreation & Parks 2,138,568 2,297,925 PublicWorks 13,072,631 12,621,194

TOTAL DEPARTMENTAL APPROPRIATIONS: 90,008,609 94,411 ,262

NON-DEPARTMENTAL APPROPRIATI ONS: City-wide Obligations 820,358 2,594,704 City Contributions 2,840,075 2,328,044 Debi Service 14088213 13 491 lU TOTAL NON DEPARTMENTAL APPROPRIATIONS 17,748,646 18,413,925 CONTRIBUTIONS TO RESERVES 3075000 1 880000

TOTAL GENERAL CITY APPROPRIATIONS !J1S!§32 255 s11411os1181

A-8 General Fund

The following tables describe the financial condition of the City's General Fund by showing a five.;. year history of the City's Comparative Balance Sheet, and . a five-year history of the City's Statement of Revenues, Expenditures and Changes in Fund Balance.

CITYOF PASADENA COMPARATIVE BALANCESHEE TS GENERAL FUND FISCAL YEARS ENDED JUNE 30, 1988 TO JUNE 30, 1992

� � � .J..ffl ASSETS AND OTHER DEBITS Cash and Cash Equivalents $45,521 ,889 $32,894,683 $33,246,990 $26,512,541 $33,638,542 Accounts Receivable 4,373,961 5,973,897 6,370,395 7,079,189 8,718,m LessAllowance for UncollectibleAmounts (368,546) (1 ,203,321) (1 ,286,613) (1 ,446,1 35) (1,551 ,290) Loan Receivable 3,500,000 3,160,000 3,650,000 Due from other Funds 1,255,263 605,851 2,300,031 2,321 ,864 2,076,081 Duefrom otherEntities 1,697,082 1,882,480 8,336,571(1 ) 8,736,263 3,737,662 Prepaids and other Assets 1185672 �.61i 1�� 1�§1� 1428 669 TOTAL ASSETS AND OTHER DEBITS ��3,1 H?�409 �� 839 �7 731 5� £?1,697 �1 LIABILITIES, FUND EQUITY AND OTHER CREDITS

Liabilities andother Credits: Accounts Payable and Accrued Liabilities $3,591 ,004 $3,493,062 $4,219,118 $5,192,440 $4,694,225 Deposits 1,625,904 1,122,234 1,331 ,586 1,939,908 1,731,884 Dueto other Funds 1,394,510 m,989 1,272,637 59,097 Dueto Affiliated Agencies 6,536 2,067,114(2) Deferred Revenue 3,069,652 2,798,249 2,764,299 2,669,352 2,577,532 Obligation Under Reverse Repurchase Agreement 1,305,000 Notes Payable 7600000 10 000000 TOTAL LIABILITIES AND OTHER CREDITS !F i§1 g10 lZ4l�� Ill g,§1 Q7� ��5 �� Fund Equity: !i�m Fund Balances: ReservedCapital for Projects Improvements and Contingencies $6,987,342 $9,163,653 $9 ,108,384 $9,930,884 $9, 175,994 Reserved for Subsequent Years' Expenditures 23, 192,534 19,199,825 35,725,463 26,71 9,578 19,886,495 Uncommitted 4204375 4 623�

TOTAL FUND EQUITY 36,384,251 32,986,864 44,833,847 36,650,462 29,062,489

TOTAL LIABILITIES, FUND EQUITYAND OTHER CREDITS !?�665 � 21 H?�409 !?3192683 i �7 73J � 121 �7 �1

(1) Cash advances madeto the Pasadena CommunityDevelopment Commission (PCDC). (2) Cash held bythe Cityon behalf of PCDC Downtown Project. Source: Cityof Pasadena, Department of Finance, Annual Financial Report

A-9 CITY OFPASADENA GENERAL FUND STATEMENT OF REVENUES� EXPENDITURES AN D CHANGES IN FUND BALANCE FISCAL YEARS ENDED JUNE 30

� --1.m _ffiQ _jffl _1ffi REVENUES Taxes $51 ,657,291 $54,929,863 $61 ,009,994 $ 66,728,746 $69,264,422 Licensesand Permits 3,005,975 2,762,010 2,860,369 2,666,31 3 2,978,495 Intergovernmental Revenues 6,030,229 7,213,169 6,610,791 6,512,105 6,320,969 Chargesfor Services 6,959,340 8,067,627 10,1 27,110 11,454,895 13,225,761 Fines and Forfeits 1,819,188 2,160,678 2,612,420 2,766,455 2,326,634 Investment Earnings 4,441,518 4,758,421 4,824,483 4,703,354 4,934,896 Rental Income 337,788 444,093 434,002 547,739 1,036,252 Miscellaneous Revenues 643317 705490 587110 597216 1 91 5514 TOTAL REVENUES MB94� 81 Q41 �1 aie§§2Z9 9§92§823 1Q2Q02lm EXPENDITURES Current: General Government 17,908,533 17,090,267 18,852,797 22,1 25,730 22,880,748 Public Safety 33,924,321 37,963,550 40,344,229 46,598,289 46,539,693 Transportation 4,173,993 3,946,752 5,071,804 4,994,536 5,61 1,344 Cultureand Leisure 11,748,539 12,310,310 14,658,399 15,129,097 15,300,994 Community Development 5,934,815 7,094,449 7,537,054 7,706,869 8,049,278 Capital Outlay 922,769 Debt Service: Principal Retirement 1,307,408 1,705,601 1,843,21 6 2,061 ,113 2,795,116 Interest 2504294 2 591 2as 4 816296 6799205 7721 390

TOTAL EXPENDITURES IT.�1 903 a2ZQ2 12 4 93 1�7� 1� 414m 1�a21 m Deficiencyof Revenues under Expenditures (2 607257) (1660a§J ) (4057 516) (9438 016) aa1s379) OTHER FINANCING SOURCES (USES) Proceeds from Issuance of Debt 23,700,000 26,684,012 922,760 OperatingTransfers In 6,568,762 10,667,730 16,535,747 13,488,869 11,488,090 1 OperatingTransfers Out (10 0014 7Q) (12�� ,21;m� 2§0)< > (12234�) (12,18Q§ TOTAL OTHER FINANCING SOURCES (USES) 19357m U �524) 15�� 1 ��1 23:Q.g Excessof Revenues& other Financing Sources over(under) Expenditures & other Uses 16,760,035 (3,397,387) 11,846,983 (8, 183,385) (7,587,973)

FUND BALANCESAT BEGINNING OF YEAR 19624216 ��251 ��� 44 �� �§§Q§2 FUND BALANCESAT END OF YEAR G§384�1 ElB� w��1 1�622� �.�- (1) Reflectsdrawdowns from Certif icates of Participationgoing to capital projects. Source: City of Pasadena, Departmentof Finance,Annual Financial Report

General Obligation Debt

Under the City Charter, the City may not incur indetnedness evidenced by general obligation bonds which would in the aggregate exceed 15% of the total assessed valuation of all the real and personal property within the City subject to assessment fo r municipal taxation. In addition, no bonded indebtedness which will constitute a general obligation of the City may be created unless authorized by the affirmative vote of two-thirds of the electorate voting on such proposition at any election at whicn the question is submitted. A general obligation bond· proposition was approved by· Pasadena· voters on the November4, 1986 ballot authorizing the City to issue general obligation bonds in an amount not to exceed $17,000,000 payable over a 20-year period. The City issued such general obligation bonds on A-10 September 15, 1987 and has used the proceeds to construd a new police station and jail, which was completed in June of 1990. The bonds are secured by an ad valorem property tax assessed againstthe property owners of the City. The property tax override rate as of August, 1992 is .016091 per $100 of assessed valuation.

The City currently has $11.5 million in principal amount of tax and revenue anticipation notes outstanding, with a maturity date of September 18, 1993. The City is contemplating another issuance of tax and revenue anticipation notes in FiscalYear 1994.

Lease Obligations

The City has entered into various long-term lease agreements. Under the agreements, the City is required to make annual payments to occupy public buildings or acquire equipment necessary for City operations. The following table shows existing long-term lease obligations:

Year Ending Total Lease June 30. payments

1993 $18,404,153 1994 19,934,667 1995 19,472,378 1996 18,732,866 1997 17,978,851 Balance 1998 through 2018 250,048,589

Source: City of Pasadena, DepartmentFinance of

The table presented above excludes lease payments of $1,200,000 annually through Fiscal Year 2012 to be made by the City for improvements to the Rose Bowl. Such payments are made from the Rose Bowl Fund, an enterprise fund of the City.

Payments made on the 1977 South Lake Avenue Parking Distrid Assessment Bonds are also excluded, as debt service is fully funded by assessments. Current collections in the SpecialAssess ment Fund exceed debt service requirements. Annual debt service averages $84,310 annually and is required through Fiscal Year 2004.

Estimated Direct and Overlapping Bonded. Debt

The estimated direct and overlapping bonded debt of the City as of April 8, 1993 is shown on the following page.

A-1 1 CITYOF PASADENA ESTIMATED DIRECT AND OVERLAPPING BONDED DEBT as of April 8, 1993

1992-93 Assessed Valuation: $7,772,072, 133 (afterdeducting $1 , 135, 142,462 redevelopment incremental valuation).

DIRECT AND OVERLAPPING BONDED DEBT: Debt as of % A1212licable A12ril 81 1993 Los Angeles County 1.760% $1,431 ,320 Los Angeles County General Fund Obligations 1.760 38,167,343 Los Angeles County Superintendent of Schools Certificatesof Participation 1�760 37&,728 Los Angeles County Flood Control District 1.857 1,988,538 Los Angeles County Flood Control DistrictCerti ficates of Participation 1.857 700,739 Metropolitan Water District 0.986 6,566,366 La Canada Unified School District 0.01 1 24 Pasadena Unified School District Certificatesof Participation 73.119 2,721 ,708 City of Pasadena 100.000 14,895,000 City of Pasadena General Fund Obligations 100.000 180,440,000 City of Pasadena 1915 Act Bonds 100.000 685,000 City of Pasadena Community Facilities District #1 100.000 9,497,000

TOTAL GROSS DIRECT AND OVERLAPPING BONDED DEBT $257 ,469, 766(1)

(i) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded capitallease obligations.

Ratios to Assessed Valuation: DirectDebt ($195,335,000) ...... 2.51 % Total Debt ...... 3.310/o

SHARE OF AUTHORIZED AND UNSOLD BONDS:

Metropolitan Water District...... $493,000 Los Angeles County Flood Control District ...... $342,617

STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/92: $0

Source: CaliforniaMunicipal Statistics, Inc.

Assuming the total direct and overlapping bonded debt figure for the City of Pasadena is $257,469,766, as reported by CaliforniaMun icipal Statistics, lnc1, and the most recent reported population figure is 133,535, the per capita direct overlapping bonded debt for the City is $1, 928.11.

A-12 Retirement System

All full-time City employees, except police and fire personnel employed prior to August 1, 1977, are members of the Public Employees' Retirement System ("PERSj, administered by the State of California, to which contributions are made by both the City and the employees. As of June 30, 1992, the actuarialstaff of PERS reported an unfunded liability for the City of $21 ,314,319 for safety and non-safety members. The reported unfunded liability is being amortized by an increase in the City's contribution rate over the next twenty years.

The Pasadena Fire and Police Retirement System ("FPRSj covers all police and fire personnel who became employed by the City prior to August 1, 1977, except for those who elected to transfer to the State system at that time. Consulting actuaries to the Retirement Board determined the excess of actuarial present value of earned plan benefits over net assets available for plan benefits to be $153,109,744 as of June 30, 1991 and $1 55,045,629 as of June 30, 1992. In making this calculation, the consulting actuaries assumed annualinvestment earnings of 7% and annual cost of living increases of 5.5%.

Senate Bill 481 , which became law on January 1, 1988, helps the City reduce its unfunded FPRS liability. SB 481 allows the repayment by the Pasadena Community Development Commission of $21 ,545,032 advanced to the Commission by the CHy in the early 1970s to be dedicated to the FPRS. The repayment is made, pursuant to an agreement between the City and the Commission, by extending the date to which tax increment revenues from the Downtown Redevelopment Project can be realized beyond the final maturity of the outstanding tax allocation bonds to which the tax increment revenues are currently pledged. The $21 ,545,032 will be repaid with interest accrued from August 23, 1974. The City estimates that the revenues available to fund FPRS as a result of SB 481 will reduce the City's unfunded liability by approximately 62.4%. The City has also assigned various income-producing assets to the FPRS, thus eliminating on an actuarial basis the remainder of this unfunded liability.

Assessed Valuation and Tax Collections

Taxes are levied for each fiscal year 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 partsof the assessment roll. The "secured roll• is that part of the assessment roll containing State-assessed property and real property having a tax lien which is sufficient, in the opinion of the 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 1 and February 1 of the fiscal year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. If such taxes remain unpaid as of June 30 of the fiscal year in which the tax is levied, the property securing the taxes may only be redeemed by payment of the delinquent taxes and the delinquent penalty, plus a redemption penalty of 1 Yzo/o per month from the original June 30 date to the time of redemption. If taxes are unpaid for a period of five years or more, the property may thereafterbe conveyed to the County Treasurer and Tax Collector as provided by law.

Propertytaxes on the unsecured roll are due as of the March 1 lien date and become delinquent, if unpaid, on August 31. A 10% penalty attaches to delinquent taxes on property of the unsecured roll, and an additional penalty of 1 Yzo/o permonth begins to accrue commencing on November 1 ofthe fiscai year. Collectionof delinquent unsecured taxes is the responsibility ofthe County of Los Angeles us1ng the several means legally available to it.

Assessed valuation for revenue purposes increased by •10.13% in Fiscal Year 1992 over Fiscal Year 1991 . Such assessed valuations include secured and unsecured utility properties assessed by the State Board of Eq ualization.

The tax roll for Fiscal Year 1993 indicates an assessed valuation for revenue purposes of $7,772,072,133 for the City.

The following tables show the assessed property valuations within the City, as well as City secured property tax charges and delinquencies. A-13 CITYOF PASADENA ASSESSED VALUATIONS For Fiscal Years19 89 through 1993

Total Before Total After Redevelopment Redevelopment Year Local Secured Utility{1) Unsecured Increment Increment

1989 $5,602,667 ,654 $6,572,659 $361,886, 750 $5,971, 127,063 $5,275,857,805 1990 6,184,055,733 6,497,626 366,925,394 6,557,478,753 5,765 ,486,361 1991 6,971,068,386 4,025,595 394,246,395 7,369,340,376 6,399,943,474 1992 7,696, 122,611 3,261 ,190 388,787,568 8,088, 171 ,369 7,020,637,330 1993 8,428,554,440 0 478,660, 155 8,907,214,595 7, 772,072, 133

(1 ) Effective Fiscal Year 1989, California law changed with respect to the valuation of utiHties, which resulted In the majority of utility properties being shown oncounty tax rolls, withrev enuesreallocated backto individual citiesan on annual basis. Source: California Municipal Statistics, Inc.

Assessed valuations include homeowners and business inventory exemptions, the taxes on which have been paid by the State of California. Figures in the final column above consist of gross assessed valuation, less redevelopment project area incremental assessed valuations, the taxes on which are payable to the Pasadena Community Development Commission.

CITYOF PASADENA SECURED TAX CHARGES AND DELINQUENCIES For Fiscal Years 1987 through 1992

Amount Delinquent % Delinquent Fiscal Secured as of as of Year Tax ChameC1) June 30 June 30

1988 $1,491 ,505.88 $60,429.34 4.05% 1989 1,564,318.31 68,701.88 4.39 1990 1,602;607.94 83,470.42 5�21 1991 1,625,609.50 86,747.15 5.34 1992 NJA(2)

(1) Debt service levyonly. (2) NotAvailable. LoaAngeles County is not releasing information. Source: California Municipal Statistics, Inc.

A-14 Ten LargestLocally Secured Taxpayers

The following table showsthe ten largest locallysecur ed taxpayersof the City.

CITYOF PASADENA TEN LARGESTLOCALLY SECURED TAXPAYERS

1991 - 1992 Assessed Valuation

1. California Institute of Technology $192,881,597 2. Gleeson L. Payne Trust, Et Al. 164,949,290 3. Kaiser Foundation Health Plan 151 ,470,041 4. Huntington Hotels Partnership 97,457,368 (1) 5. Home Savings of America 91,146,690 6. Maguire Thomas Partners 82,562,001 7. Teachers Insurance & Trust 82,356,792 8. Operating EngineersFunds Inc. 67,560,334 9. Aetna Life Insurance Company 61,296,317 10. Worldwide Church of God 60,304.634

TOTAL $1 ,051 ,985,064

(1) Includedon PossessoryInterest Roll. Source: Cityof Pasadena, Departmentof Finance

These ten largest locally secured taxpayers represent 11.8% of the City's assessed valuation for revenue purposes.

Limitations on Taxes and Expenditures

Article XIII A of the California Constitution limits the taxing powers of California public agencies. Article XIII A provides that the maximum ad valorem tax on real propertycanno t exceed 1 % of "full cash value" ofthe property, and effectiveiy prohibits the levying of any other ad valorem property taxes except for taxes above that level required to pay debt service on voter-approved general obligation bonds. "Full cashvalue" is defined as "the County Assessor's valuation of real property as shown on the 1975ll6 tax bill under 'full cash value' or, thereafter, the appraised value of real property when purchased, newly constructed, or a change of ownership has occurred afterthe 1975 assessment." The "full cash value" is subjectto annual adjustment to reflect increases (not to exceed 2%) or decreases in the Consumer Price Index or comparable local data, or to reflect reduction in property value caused by damage, destruction or other factors.

On June 3, 1986 the votersap proved Proposition 46 which amends Article XIII A to exempt from the 1 % minimum limitation on ad valorem taxes 'any bonded indebtedness for the acquisition or improvement of real property approved on or afterAug ust 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition." This amendment means that California municipalities may now issue general obligation bonds requiring assessment of ad valorem taxes in excess of the 1 % limitation to finance the acquisition of land for or improvements to their respective facilities so long as (i) the issuance of such bonds has been approved by at least two-thirds ofthe voters casting their votes on the proposed issuance and (ii) any improvements to be financed from the proceeds of such bonds are made to real property.

On June 18, 1992, the United States Supreme Court upheld the Constutionality of certain challenged provisions of Article XIII A in connection with its review of Nordlinger v. Hahn.

A- 15 (This page intentionally left blank) APPENDIX B

AUDITED FINANCIAL STATEMENTS

OF

THE CITY OF PASADENA

B-1 ( This page intentionally left blank) 725 South Figueroa Street Los Angeles,Calif ornia KPMG Peat Marwick (213) 972-4000 Gilbert Vasquez & Compan1

REPORTOF INDEPENDENTAUDRORS TheHonorable Board of Directors City of Pasadena,ornia: Calif We have audited the general purpose financial statements of the City of Pasadena, Californiaas of and for the yearended June 30, 1992, as listed in the accompanying table of contenlS. Theseger,eral purpose financial statementsare the responsibility of the "9anagementof the City of Pasadena, California. Ourresponsibility is to expressan opinion on thesegeneral purposefinancial statements based auditon our We conducted our audit inaccordance with generallyacce ptedauditing standards. 1bosestandards require thatwe plan and perform theaudit to obtainreasonable assurance about whether the general purpose financial statementsare freematerial of misstatement.. An audit includes examining, on testa basis, evidence supportingthe amountsand disclosures in the general purposefinancial statements.audit An also includes assessing theaccounting principles used and significantestimates madeby management,as well asevaluating theoverall financial statement presentation. We believethat our aµdit providesa reasonablebasis for our opinion. Thegeneral purposefinancial statements referred toabove do not includethe fin&Aeial activities of thePasadena Community Development Commission , which should beincluded in orderto conform with generally accepted accounting principles. If theomitte4 component unit hadbeen included, the assets and other debilS of the capital projecasand debt service fund types and the long tenn debtaccounts groupof would have increased by $22,716,086, $9,928,010 and $65,182,192, respectively. Reported revenues in the capital projects and debtservice fund types would ha� increased $7,1 by 28r576 and $7,553,573, respectively. The C•ty has notmaintained completerecords relating to its ge� fixedasset group of accounts. Accordingly, we were unable tosatisfy ourselves as to the reported general fa xed assetbalances. With respectto the City of Pasadenarare andPolice Retirem ent System, generally accepted accounting principles requirethe use of actuarial cost methodsand assumptions that resultin a reasonablemeasure of pensioncosts from year toyear as services are r endered. As describedin theaccompanying notes tothe generalpurpose financial statements, the City has adoptedlong-term a plan to fund the costs of this closed �sion plan,which hasexperienced a substantial excessof acc�ulated plan benefitsover net assetsaviutable to pay such benefits. Theultimate ability of the City tobenefits fundsuch reslS upon therealization the of conttibutionlevels contemplated in the City's long-termplan. In our opinion, except for theeffec ts on thepurpose general fm af!ci� statementsof the omission of the financialactivities of the Pasadena CommunityDevelopment Commission describedin the third precedingparagraph, the effec tsof suchadj µsbnents, if any, as might have beendeterm ined to benecessary h.i webeen �hie to audit adequategeneral fixed asset records, as discussed in the second precedingparagraph and t.he effects of ·� recording pension costs on thebasis discussed in the immediately preceding paragraph, the generalpurpose financial statements referredto above present fairlf, in all matenal re.,pects, thefinancial position of the City of Pasadena, California,at June 30, 199Z, and the resultsof its operations and cashits Dowsof proprietary, nonexpendable and pef!sion ttustfund types for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the general pprpose financial statements taken as a whole. The Supple'11entary Information listed in the accompanying table ofcontents is presentedfor purposes of ad�i�onalanalysis and is not a requiredpart of the general purpose financial s'3tementsof the City of Pasadena, Catifornia. Such information has been jectedsub to the auditing procedures applied in the audit of the generalpurpose financial statements and, in our opinion, except for the mattersdiscussed in precedingparagraphs, is fairly statedin all ��rialrespects in relationto the general purposefinancial statementstaken as llwhole. K r111 er- f� � October30, 1992 �Vn�� ( This page intentionally left blank) CITY OF PASADENA COMBINED BALANCE SHEET ALL FUND TYPESAND ACCOUNT GROUPS June 30, 1992 (In thousands) STATEMENT 1

PROPRIETARY FIDUCIARY GOVERNMENTAL FUND TYPES FUND TYPES FUND TYPES ACCOUNT GROUPS GENERAL GENERAL Tolllle SPECIAL CAPITAL INTERNAL TRUST FIXED LONG-TEAM (Memonlndum Only) GENERAL REVENUE PROJECTS ENTERPRISE SERVICE AND AGENCY ASSETS DEBT 1992 1911 (unaudited) ASSETS AND OTHER DEBITS Cash and lnvestments--Note 2 28,660 27,535 30,314 62,070 33,724 33,939 216,242 168,822 Restricted Cash and Investments-Nole 2 4,978 314 7,256 10,933 13,968 42,700 80,147 93,832 Accounts Receivable 8,718 3,140 187 20, 165 64 1,979 34,253 32,747 Less Allowance for Uncollectible Amounts (1,551) (98) (627) (2,276) (2,262) Capital Leases Receivable 2,837 2,837 0 Loans Receivable--Note 5 3,650 11, 149 14,799 13,495 Due FromOther Govemments 4n 2,354 2,831 313 Due From Other Funds--Note 4 2,078 953 1,850 4,879 5,770 Due From Afflliat•·Note 3 3,738 417 4,155 8,971 Inventories 8,124 350 8,474 8,991 Prepalds andOther Assets 1,429 18 1,352 6,n2 174 11 9,756 8,838 Property, Plant and Equlpment--Note a 325,682 26,822 271,489 623,993 585,413 Less Accumulated OeJ>reclatlon (1 31 ,440) (21,814) (1 53,254) (143,902) Construction In Progress 20,197 20,197 15,243 Amount Available for Retirement of General Long-Term Debt 10,758 10,758 9,916 Amount To Be Provided for Retirement of General Long-Term Debt 102,625 102,625 105,712 TOT AL ASSETS AND OTHER DEBITS 51,698 42,535_ 42,833 323,726 56,123 78,629 ___ 271 �!!9 113,383 980,416 91 1,899

Continued

2 CITYOF PASADENA COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS, Continued June 30, 1992 (In thousands) STATEMENT 1

PROPRIETARY flDUCIARY GOVERNMENTALFUND TYPES FUND TYPES FUND TYPES ACCOUNT GROUPS GENERAL GENERAL Toblla SPECIAL CAPITAL INTERNAL TRUST FIXED LONG-TERM (Memor•ndum Only) GENERAL REVENUE PROJECTS ENTERPalSE SERVICE AND AG�NCY ASSETS DEBT 1992 1991 (unaudited) LIABILITIES, FUND EQUITY AND OTHER CREDITS Llabllltles: 303 AccountsPayable and Accrued Uabllltles 4,894 n4 4,287 1,,a21 5,361 28,660 55, 45,594 Deposits 1,732 186 17 ,,972 18 3,925 4,446 Insurance Claims Payable 15,212 15,212 15,840 Due to Other Funds--Note4 59 836 424 ?,899 661 4,879 5,no Due to Other Governments 10 875 702 1,587 1,440 Due to AffiliatedAgencies 2,068 341 2,409 216 Due to BondHolders 81 7 817 843 OblllgatlonsUnder Reverse Repurchase Agreements--Note 2 1,305 3,795 5,1� Deferred Revenue--Note 8 2,578 11,008 19,781 4,356 1,305 39,026 37,038 Notes Payable-Note 1 O 10,000 1,504 11,504 1,876 Bonds Payable--Note 9 General Obligation Bonds 14,895 14,895 15,440 Revenue Bonds 63,865 63,865 55,290 Certificates of Particlpatlon--Note 11 59,938 23,400 87,312 170,650 151,945 Unamortized Discount (872) (216) (1 ,088) (1 , 164) Capitalized Lease Obligations-Note 14 1,699 215 9,672 11,586 9,806 TOTAL LIABILITIES 22,636 12,812 5,603 164,404 49,048 31,784 0 113,383 399,670 344,180

Contim.1ed

3 CITY OF PASADENA COMBINED BALANCESHEET ALL FUND TYPESAND ACCOUNT GROUPS, Continued June 30, 1992 (In thousands) STATEMENT 1

PROPRIETARY FIDUCIARY GOVERNMENTAL FUND lYPES FUND lYPES FUND lYPES ACCOUNT GROUPS GENERAL GENERAL Totala SPECIAL CAPfTAL INTERNAL TRUST FIXED LONG-TERM (Memorandum Only) GENERAL REVENUE PROJECTS - ENTERPRISE SEm,ICE AND AGENCY AS�ETS DEBT 1992 1991 (una1..1dited) Fund Equity: ContributedCapital 23,433 383 23,816 21 ,966 Investment In General Fixed Assets 271,489 271 ,489 259,722 Retained Eamlngs: Reserved for Capital Improvements 2,242 2,242 2,949 Reservedfor Equipment Replacement 2,567 2,567 525 Reserved for Debt Service 11,320 792 12,112 10,424 Reserved for SubsequentYears' Operatjons 15,793 15,793 18,961 Unreserved 106,534 3,333 109,867 103,593 Fund Balances: Reserved forCapital Protects 4,475 23,229 17,169 44,873 57,234 Reservedfor Emergency\Capltal Improvement 9,176 9,176 9,931 Reserved for Debt Service 7,427 3,331 10,758 9,916 Res!'!rvedfor Endowment 94 94 93 Reserved for Human Services 738 738 0 Reserved forEmployees' Retirement 44,251 44,251 39,074 Reserved for EquipmentReplacement 301 301 211 Reservedfor Loans Receivable 3,650 143 3,793 3,197 Reservedfor Due From Affiliate 2,905 326 3,231 2,598 Reserved for Prepaidsand Other Assets 1,429 18 1,352 2,799 1,386 Reservedfor SubsequentYears' Expe�itures 25 25 1,758 Unreserved 6,007 15,052 1,762 22,821 24, 181 TOTAL FUND EQUITY 29,062 29,723 37,230 159,322 7,075 46,845 271 ,489 0 560,746 567,719 ___;, TOTAL LIABILmES, FUND EQUITY AND OTHER CREDITS 51,698 42,535 42,833 323,726 56,123 78,629 271 ,489 113,383 980,416 91 1,899 The �tes to the combinedfinancial statementsare an lnt�ral part of this statement.

4 ( This page intentionally left blank) CITYOF PASADENA COMBINED STATEMENT OF REVENUES, EXPENDITURESA,.., D CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPESAND EXPENDABLE TRUST FUNDS Year Ended June 30, 1992 STATE'1,1ENT2 (In thousands)

GOVERNMENTAL FUND TYPES FIDUCIARY FUND TYPE Totals SPECIAL CAPIT�L EXPENDABLE (Memorandum Only) GENERAL REVENUE PROJECTS TRUST 1992 1991

Revenues: Taxes 69,264 2,539 71,803 69,278 Licensesand Permits 2,978 454 3,432 3,092 IntergovernmentalRevenues 6,321 18,653 11,365 36,339 24,578 Chargesfor Services 13,226 3,605 16,831 14,788 Fines and Forfeits 2,327 2,327 2,766 Investment Earnings 4,935 1,263 2,694 93 8,985 9,967 RentalIncome 1,036 5 1,041 557 Miscellaneous Revenues 1,918 390 1,122 3,428 1,000 Contributions 713 26 739 602 TOTAL REVENUES 102,003 . 26,909 15,894 119 144,925 126,628

Expenditures Current: General Government 22,881 22,881 22,704 Public Safety 46,540 1,146 47,686 47,449 Transportation 5,612 2,288 7,898 7,060 Sanitation 1,592 1,592 1,531 Health 4,642 4,642 4,322 Culture and leisure 15,301 155 15,456 15.422 Community Development 8,049 9,274 24 17,347 15,673 Capital Outlay 922 35,832 36,754 29,712 Debt Service: Principal Retirement 2,795 254 3,049 2,061 Interest 7,721 399 8,120 8,067 TOTAL EXPENDITURES 109,821 19,593 . 35,832 179 165,425 154,001 Excess of Revenuesover (under) Expenditures (7,818) 7,316 (19,938) (60) (20.500) (27,373) Continued

5 CITY OF PASADENA COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPESAND EXPENDABLE TRUST FUNDS, Continued Vear Ended June 30, 1992 STATEMENT 2 (In thousands)

GOVERNMENTAL FUND TYPES FIDUCIARY FUND TYPE Totals SPECIAL CAPITAL EXPENDABLE (Memorandum Only) GENERAL REVENUE PROJECTS TRUST 1992 1991

Other A�g Sources (Uses) Proceeds from Issuance of Debt 922 922 39,730 0�111"!9 Transfers In 11,488 787 26,425 38,700 41,426 OP4!!ratlf!g Transfers Out (12,18fil (4,841) (14,08g} (31,103) (32,873) T?tal C>therFinancing Sources (Uses) 230 (4,054) 12,343 0 8,519 48,283

Ex� of Revenues andOther Financing Sources ov"°(uncMr) Expenditures and Other Uses �� 3,262 Q'.,595) (60) (11,981) 20,910 Fund B� at beginningof year 36,650 26,461 44,825 1,470 109,406 . 88,496 Fund Bal�es at end of year $29,062 $29,7� $37,230 $1 ,41() $97,425 $109,406

Thenotes to thecombined flnanclalstatements are anIntegral partof thisstatemem.

6 CITY OF PASADENA COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES-BUDGETAND ACTUAL GENERAL AND SPECIAL REVENUE FUND TYPES Year Ended June 30, 1992 STATEMENT 3 General Fund Special Revenue Funds Totals (Memorandum OnlyJ Variance Variance Variance Favorable Favorable Favorable REVENUES Budget Actual (Unfavorable) Budget Actual (Unfavorable) Budget Actual {Unfavorable) Ta,ces 70,842,750 69,264,422 (1 ,578,328) 2,681,163 2,539,266 (141,897) 73,523,913 71,803,688 (1,720,225) Licensesand Permits 3,004,904 2,978,495 (26,409) 506,815 454,126 (52,689) 3,51 1,719 3,432,621 (79,098) Intergovernmental Revenues 6,470,485 8,320,989 (149,498) 20,135,751 18.�2.262 (1 ,483,489) 26,606,236 24,973,251 (1 ,632,985) Chargesfor Services 13,380,827 13,225,781 (155,066) 3,977,738 3,604,998 (372,742) 17,358,565 16,830,757 (527,808) Finesand Forfeits 2,938,960 2,326,834 (610,326) 2,938,960 2,326,634 (61 0,326) lnvestme!lfEarnings 3,866,464 4,934,886 1,068,422 1,224,888 1,262,660 37,772 5,091 ,352 �.197,546 1,106,194 Rental Income 689,126 1,036,252 347,126 9,000 5,250 (3,750) 698, 126 1,041 ,502 343,376

Miscellaneous Revenues 569,000 1 191 51514 1.346.514 2991650 390.348 901696 868,650 2,305,860 1,437',210 TOTAL REVENUES 101,760,516 102,002,953 242,437 28,835,005 26,908,906 (1,926,099) 130,595,521 128,911,859 !1,683,662) EXPENDITURES GeneralGovernment 23,725,248 22,880,748 844,498 23,725,246 22,880,748 8+4,498 Public Safety--Note 15 45,818,789 48,539,693 (720,904) 1,199,286 1,146,416 52,870 47,018,075 47,686,109 (668,034) Transpor'latlon 6,553,153 5,61 1 ,344 941,809 2,650,269 2,286,169 364, 100 9,203,422 7,897,513 1,305,909 Sanitation 1,666,378 1,591,998 74,380 1,666,378 1,591 .�8 74,380 Health 5,191,689 4,642,201 549,488 5, 191 ,689 4,642,201 549,488 Culture and lelsure--Note 15 14,805,742 15,300,994 (495,252) 14,805,742 15,300,994 (495,252) Community Development 8,385,825 8,049,278 336,547 10,007,639 9,273,039 734,600 18,393,464 17,322,317 1,071, 147 Capital Outlay 922,769 (922,769) 922,769 (922,769)

Debt Service 111048,213 10,5161506 531?07 3001000 652i799 (352,799) 11,348,213 11,169,305 178,908 TOTAL EXPENDITURES 110,336,968 109,821 ,332 515,636 21,015,261 19,592,622 1,422,639 131,352,229 129,413,954 1,938,275

Excess of Revenues over (under) Expenditures (8,578,452) (7,818,379) 758,073 7,819,744 7,318,284 (503,480) (756,708) (502,095) 254,613 OTHER FINANCING SOURCES (USES) Proceeds fromIssuance of Debt 922,769 922,769 922,769 922,769 Operating Transfers In 8,412,373 11,488,090 3,075,717 477,923 787,273 309,350 8,890,296 12,275,363 3,385,067

OperatingTransfers Out (3,644,989) (121180,453) (8,535.464) (1116431875) (4,841,441) 6,802,434 {1�.28fl,81)4} . l17,021,894) (1.,'133,030) TOTAL OTHER FINANCING SOURCES (USES) 4,767,384 230,406 (4,536,978) (11,165,952) (4,054,168) 7,111,784 (6,398,568) (3,823, 762)_ 2,574,806 Excess of Revenues andOther Sources over (under) Expenditures and Ot'1er uses (3,809,068) (7,587,973) (3,778,905) (3,346,208) 3,262,1 18 6,608,324 (7, 155,276) (4,325,857) 2,829,419

FUND BAlANCES at beginningof year 36,650,462 361650,462 26,460,775 26,460,775 63,111,2:3_7_�.111,_237 FUND BAlANCES at endof year 32,841,394 29,062,489 (3,778,905) 23,114,567 29,722,891 6,608,324 55,955,961 !ijl,785,380 2,829,419

The notes to the combinedstatements financial are an Integral part of thisstatement.

7 CITY OF PASADE,.A COMBINED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS/FUND BALANCES ALL PROPRIETARY FUND TYPESAND SIMILARTRUST FUNDS Year Ended June 30r 1992 (In ttiousands) STATEMENT 4 PROPRIETARY FUND TYPES FIDUCIARY FUND TYPES TOTALS INTERNAL NONEXPENDABLE PENSION (Memorandum Only) ENTERPRISE SERVICE TRUST TRUST 1992 1991 OPERATING REVENUES Chargesfor Services: Utilities 113,745 113,745 111,947 GolfCourse 1,307 1,307 1,187 Rose Bowl 3,928 3,928 3,779 Arroyo Park 141 141 155 Plaza LasFuentes Parking 1,087 1,087 1,440 Refuse Collection 6,651 6,651 7,184 OldPasadena Parking 2:226 2,226 1,897 General Services 13,370 13,370 16,425 Employee Benefits and Insurance 43,041 43,041 40,059 Investment Earnings 81 6,248 6,329 3,029 Rental Income 7 7 3 Contributions 9,335 9,335 9, 153 Other Operating Revenues 2,798 3 2,801 123 TO'TAL OPERATING REVENUES 129,085 59,209 88 15,588 203,968 196,381

OPERATING EXPENSES Utility Production Expenses 7&, 170 76, 170 74,739 Utility Transmission and Distribution Expenses 7,974 7,974 7,375 Utility Commercial and General Expenses 14,094 14,094 12,595 Golf Course Operations 326 326 248 Rose Bowl Operations 3,532 3,532 3,46� Arroyo Park Operations 811 81 1 959 Plaza Las Fuentes Parking 1,024 1,024 1,305 RefuseCollection Operations 6,971 6,971 7,656 Old Pasadena Parking 1,084 1,084 1,914 General Services Department 11, 167 11,16 7 12,007 Depreciation 8,190 1,831 10,021 9,112 Benefit Payments 32,147 9,605 41,752 40.�8 Insurance 9,601 9,601 7,181 Other Operating Expenses 1,590 2 804 2,396 3,190 TOTAL OPERATING EXPENSES 120,176 56,336 2 10,409 186,923 181,837 OPERATING INCOME 8,909 2,873 86 5, 177 17,045 14,544 Continued

8 CITY OF PASADENA COMBINED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EA�NINGS/FUND BALANCES ALL PROPRIETARY FUND TYPESAND SIMILARTRUS T FUNDS, Continued Year Ended June 30, 1992 (In thousands)

STATEMENT 4

PRO�RIETARYFUND TYPES FIDUCIARY FUND TYPES TOTALS INTERNAL NONEXPEN�ABLE PENSION (MemorandumOnly) ENTERPRISE SERVICE TRUST TRUST 1992 1991 NONOPERATINGREVENUES (EXPENSES) Investment Earnings 4,733 678 5,41 1 6,484 IntergovernmentalRevenue 42 42 0 Taxes 813 813 755 Interest Expense {7,783) (701) (8,484) (8,343) Gain (Lossl on Dlspasal of Assets (99) (155) (254) 32 OtherNonqperatlng Revenues (Expenses) 1,300 J!fil 1,1 13 1 017 TOTAL NONOPERATING REVENUES (EXPENSES) (994) (365) 0 0 (1,359) (55)

Income Before Operating Transfers and 7,915 2,508 86 5,177 15,6� 14,489 Extraordinary lterre OPERATl�GTRANSFERS IN 2,767 267 3,034 5,031 OPERATING TRANSFERS OUT (9,709) (922) (10,631) (13,584) Extraordinary Item: Losson Qefeasarce of BondsPay able--Note 11 (323) (323) 0 �rtlzatlon of lntermountaln Power Project Refund--Note 8 2,739 �739 0 NET INCOME eeFORE ADDING BACK DEPRECIATION ON CAPITAL GRANTS 3,389 1,853 88 5,177 10,505 5,936

Add Depreciation on Fixed Assets Acquired by Capital Grants 867 887 820

NET INCOME AFTER ADDING BACK DEPRECIATION ON CAPITAL GRANTS 4,276 1,853 86 5,177 11,392 6,756 RETAINED J:ARNINGS/FUND BALANCESat beginning of year 1 31,613 4,839 _ 1,099 39,074 176,625 169,869 RETAINED EARNINGS/FUND BALANCESat end of year $1 35,889 �$6,692 . $1 ,185 $44,251 $188,017 $176,625

Th� notes to the COl'flblned financial statements are an Integralpart of this statement.

9 CITY OF PASADENA COMBINED STATEMENT OF CASH FLOWS ALL PROPRIETARY FUND TYPES AND SIMIUAR TRUST FUNDS June 30, 1992 and 1991 (In thousands) staiement s

PROPRIETARY FUND TYPES FIDUCIARY FUND TYPES TOTALS (Memor�umOnly) INTERNAL NONEXPENDABLE PENSION ENTERPRISE SERVICE TRUST TRUST 1992 1991 Operating Activities: OperatingIncome 8,909 2,873 88 5,177 17,045 14,544 Adjustmentreconcile to operating Income to net providedcash by operatingactivities: Depreciation 8,190 1,831 10,021 9,112 Amortization of bond discounts 152 (78) 78 107 Changes In assets andllabllitles: Accounts receivable (3,083) (30) 18 2,640 (455) 828 Allowance foruncollectlble accounts (1 18) (1 16) 9 Due tO/from other funds (566) (8) 8 (566) 256 Due to/from other governments 142 142 0 Inventories 502 15 517 (905) Prepalds andother assets (794) (112) (906) 543 Accountspayable and llabHltlesaccrued 4,129 (99) 54 4,085 (2,773) Deposits (257) 12 (245) 493 Deferred revenue (219) 4,324 5 4,110 2,448 Total adjustments 7,938 6,001 18 2,705 16,663 10,1 18

Net cashprovided byoperating actlvitles 16,647 8,874 104 7,882 33,706 24,662

Cash flows from noncapltalfinancing actMtles: Operating transfers In 2,767 267 3,034 5,031 Operating transfers out (9,709) (922) (10,631) (13,584) Intergovernmental revenue 42 42 0 Taxes 813 813 755 Nonoperatlng revenue (expenses) 1,300 (187) 1,11 3 __ 1.017

Net cash used by noncapltal financingactivities � (842} (5,629) __ (6,781)

Continued 10 CITYOF PASADENA COMBINED STATEMENT OF CASH FLOWS ALL PROPRIETARY FUND TYPES AND SIMILIAR TRUST FUNDS, Continued June 30, 1992 and 1991 (In thousands) Statement 5

PROPRIETARY FUND TYPES FIDUCIARY FUND TYf'ES TOTALS (Memorandum Only) INTERNAL NONEXl»ENDABLE PENSION ENTERPRISE SERVICE TRUST TRUST 1992 1991 Cashflows from capital andrelated financing actMtles: Proceeds from sale of bonds 22,950 13,735 36,685 20,900 Acqusltlon and construction of capital assets (28,937) (1 ,838) (30,nS) (29,438) Prtnct11al paidon bond maturities (5, 191) (3,020) (8,211) (6,836) lnter9:'t paidon bonds (7,525) (701) (8,226) (7,891) toss on defeasance of bonds (323) (323) 0 Proceedsfrom sale of equipment 5,600 Capital contributed byothers 2,738 2,738 1,852 Net cash provided by(used for) capital and related financing activities (16,288) 8,176 (8,112) (15,813)

Cashflows from Investing actlvltl�: •ntere.st Income 4,756 678 5,434 6,499 Capital leases receivable (2,837) (2,837) 0 Obligations under reverse repurc.'hase agreement 3,795 3,795 0 Restricted cash and lnves� 7,685 (9,9861 {8,0991 {10,4001 {23,4851 Nel cash provided by(used for) �ting activities 16,236 (12,145) (8,099) (4,008) ___( 1'5,986)

1f1Cre8$e (decrease) In cash and Investments 12,008 4,063 104 (217) 15,958 (14,918) qash .,d hwestmentsat beginningof year 50,062 29,661 1,081 2,741 83,545 98,463 Cash $lldInvestments at endof year 62,070 33,724 1,185 2,524 99,503 83,545

11 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATE,-.ENTS June 30, 1992

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Reporting Entity

Included within the financialreporting entity , City of Pasadena (the City), are the Fire and Police Retirement System, the Pasadena Parking Authority, the Pasadena Housing Authority and the Pasadena Civic Improvement Corporation. Although these entities are legally separate from each other, the City's elected officialshave a continuing full or partial oversight responsibility and accountabilityfor. fiscal matters of these other entities. Oversight responsibility Includes the appointment of governing bodies, budget authority, approval of tax levies and responsibility for funding deficits. The Board of Directors acts as the governing board of each of these entities. The Board of Directors also acts as the governingboard for the Pasadena Community Development Commission (PCDC). However, the City has excluded PCDC from the financialrepor ting entity as discussed more fully in Note 18.

The City

The City was Incorporated in 18�6 and be�ame a freehold charter city In 1901. All powersof the City are vested in the Board of Directors, which is empowered to carry out the provisions of the Charterand performall duties and obligations of the City as imposed by State law. The City provides a full range of municipal servicesincluding: public safety (police and fire), street construction and maintenance, refuse collection, water and power utilities, sewer utilities, cul�ure and recreation, public improvements, planning and zoning, housing and community development and general administrative and supportservices.

Pasadena Parking Authority{The Authority)

The Authority was created by Resolution No. 1399, dated June 6, 1972 pursuant to the provisions of the Parking Law of 1949 (California Streets and Highways Code, Sections 32651 and 32661 .1). The Board of Directors constitutes the governing board of the Authority pursuant to the aforementioned Resolution. The primary purposeof the Authority is to establish parking facilities for motor v1ahicles within the City, to furnish motor vehicle parking spaces, and to care for such ve�i�les withjn any parking facility or space owned, controlled Qr operated by the Authority.

12 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Pasadena Civic Improvement Corporation fPCIC)

PCIC was created on August 9, 1985 pursuant to the Nonprofit Public Benefit Corporation Law of the State of California (Title 1, Division 2, Part2 of the California Corporations Code). At the request of the City, PCIC was organized for the specificand primary purpose of providing financial assistance to the City by acquiring property and appurtenances for and on behalf of the City. This is accomplished through the issuance of such instruments as equipment leasing certificatesof partlcip{ition. PCIC ais non-profitorganization with three volunteer directors (a President, Vice-Presi�ent, and Secretary!Treasurer):

Pasadena Fire and Police Retirement System (FPRS)

FPRS was originally established by the CityCharter in 1919. The system closed on June 30, 1977, but continues to pay out ben!Bfitsto retirees and their beneficiaries. FPRS covers all sworn fire and police personnel who were employed by the City prior to July 1, 1977, except those who elected to tram�fer to the Public Employees Retirement System (PERS) when the system closed. FPRS is managed by a Retirement Board which is controlled by the City Board of Directors. FPRS Is more fully disclosed In Note 7.

Pasadena Housing Authorl�

Formerly known as the Local Housing Authority the Pasadena Housing Authority administers the City's federally funded ho�sing programs under contract with the United States Departmentof Housing and Urban Development (HUD).

Basis of Presentation • Fund Accounting

The City uses funds and ace9unt groups to report its financialtransac tions and the results of its operations. Fund accounti11gis designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain city functions or activities.

A fund Is a separate accounting entity with a self-balancing set of accounts. An account group, on the other hand, is a financial reporting tool designed to provide accountability for certainassets and liabilities that are not recorded in the funds because they do not directly affect net e>!:pendable available financial resources.

The combined financial statements in this report have been grouped into three broad fund categories and two accqunt groups as follows:

Governmental Fund Types

The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund.

13 CITYOF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Special Revenue Funds are used to account for theproceeds of specificre venue sources that are legally restricted to expenditures for specified purposes.

Capital Projects Funds are used to account for financialresources to be used for the acquisitionor construction of major capital facilities (other than those financed byproprietary funds).

Proprietary Fund Types Enterprise Funds are usedto account for operations (a) that are financedprimarily through user charges,or (b) where the governingbody has decided that determination of net Income Is appropriate.

Internal Service Funds areused to account for goods or services provided by one departmentto oth�r departmentson a cost-reimburserpent basis.

Fiduciary Fund Types Trust and AgencyFunds are used to account for amounts received and held by the City in the capacity of trustee, custodianor agent for individu­ als, non-public organizationsor other governmentalentities .

AccountGroups The General Fixed Asset Account Group is used to maintain control and cost information for fixed assets other than those accounted for in the proprietaryand nonexpendabletrust funds.

The General Long-Term Debt Account Group is used to record the outstanding long-term obligations not otherwiserecord ed in proprietaryfunds, nonexpendable trust funds,and pension trust funds.

Measurement Focus

The accountingand reporting treatment applied to a fund is determined by its measurement focus. All governmental funds and expe11dabletrust funds are accounted for using a current financialresources measurement focus. With this measurement focus, only �urrent assets and current liabilities generally are included on the balance sheet. Governmentalfund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets.

14 CITY OF PASADENA NOTES TO COMBINED FINANC,AL STATEMENTS June 30, 1992 Continued

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

All proprietary funds, nonexpendable trust funds, and pension trust funds use an economic resources measurement focus. Thus, all assets and all liabilities associated with the activities of these funds are included on their balance sheets. Their reported fund equity (net total assets) is segregated into components of contributed capital and retained earnings. Operating statements of proprietary fund types present increases (revenues) and decreases (expenses) In net total assets.

Modified Accrual Basis of Accounting

All governmental funds, expendable trustfunds and agency funds are accounted for using themodified accrual basis of accounting. Under the modified accrualbasis, revenues arerecog nized when they become measurable and ava,lable. The City considersacco unts receivable (net of allowance for uncollectibles), notes, Interest, property taxes receivable collected within 60 days of year-end and grant revenues billed but not received, as susceptible to accrual. Expenditures are generally recognized under the modified accrual basis of accountingwhen the related fund liabilityis incurred.

Accrual Basis of Accounting

All proprietaryfunds and nonexpendable trust funds are accounted for using the accrual basis of accounting. Under this accounting method, revenues are recognized when they are earned, and their expenses are recognizedwhen they· are incurred. · Unbilled service receivables in the enterprise· funds are accrued at year-end.

Prop•rtyTaxes

Taxes are levied for each fiscalyear on taxable real and personal property whic'1is situated in the City as of the preceding May 1. For assessment and collection purposes, property Is classifiedeither as "secured" or "unsecured" and is listed accordingly on separate partsof the assessment roll. The •secured rolr is that part of the assessment roll containingproperty the taxes on which are a lien on real property sufficient, in the opinion of the County Asse�sor, to secure payment of the taxes. Other propertyis assessed on the "unsecured roll".

Propertytaxes on the secured roll are due In two Installments, on November 1 and February 1 of the fiscal year. If unpaid, such taxesbecome delinquent on December 10 and April 1 0, respectively, and a 10% penalty attaches to any delinquent payment. Such delinquent property may thereafter be re­ deemed by payment of the delinquent taxes and the delinquent penalty, plus a redemption penalty of 1 % per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is then subject to sale by the County Tax Collector.

Property taxes on the unsecured roll are due as of the May 1 lien date and become delinquent, if unpaid, on August 31. A 10% penalty attachesto delinquent taxes on property of the unsecured roll, and an additio11al penalty of 1% per month begins to accrue. Collection of delinquent unsecured taxes is the responsibilityof the Countyof Los Angeles using the several means legally available ,o it. Property taxes receivable at June 30, 1992 are $1,483,000and are included In the General Fund.

15 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Appropriated Budget and Budgetary Control

The Board of Directors is required to adopt an annual budget resolution by July 1 of each fiscal year for the General and Special Revenue Funds. These budgets are adopted and presented for reporting purposes on a basis consistent with generally accepted accpunting principles.

The Board of Directors also adopts a budget for the Enterprise an� lntemal Service Funds. However, the City Is not legally manctated to report the results of operations for these Proprietary Fund types on a budget compijrison basis; therefore, bu�getarydata related to these funds h�s not been presented.

The level of appropriated budgetary control ls at the departmental level. The City Manager may authorize transfers of appropriations within a departm�nt up to $25,000. Expenditures may not legally exceed total departmentalappropriat ions. Supplemental appropriations during the year must be approved by the Board of Directors. Unexpended or unencumbered appropriations lapse at the end of the fiscal year.

Encumbrances

Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting, under which purchase orders, contracts, and ott,er commitmentsfor resource expenditl!reare recorded to reserve that portionof the applicable appropriation, is used in the g9vemmen­ tal funds. Funds for encumbrances lapse at year-end an� are reappropriated in the ensuing year's budget by action of the Boar� of Directors.

Compensated Absences

The City accounts for compensated absences including ¥&cation and certain sick bank benefits through the Benefits and Insurance Internal Service Fund. Eligible employe$S accumulate 5 to 20 days of vacation each year, depending on the employee's length of service, but may not carry overfrom one year to the other more than the equivalent of one year's vacatjon. All outstanding vacation benefits are accrued as a liability and the r\9lated expense recog- nized In the Bemtfits and Insurance Internal Service Ft1nd.

Sick pay benefits only accumulate. They do not vest �nd therefore cannot be cashed out at retirement or termination. Com;istent with this policy, the City does not accrue sick pay benefits except for those benefits that were earned prior to 1970 for which the employee is paid at termination or retirf!ment. The total outstanding vacation and sick obligations that tiave beer accrued as of June 30, 1992 are included under the "Accounts Payable and Accrued Liabilities" In the Benefitsand Insurance Internal Service Fund.

Cash Flows

For purposes of the Combined Statement of Cash Flow�. the City considers all highly liquid investments with original maturities lf!SSthan three months and pooled cash and investments to be cash equivalents.

16 CITY OF PASADENA NOTES TO FINANCIAL STATEMENTS June 30, 1992 Continued

(1 ) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Investments

Investments are carried at amortized cost except for the deferred compensation plan investments which are stated at market value. Gain or loss on the sale of Investments is computed using the specificidentification method.

Market \/alueof investments Is disclosed In Note 2 - Cash and Investments. The City determines the market value of publicly traded securities based upon thepublis hed closing price of the security on June 30, 1992. Other Investments are valued based upon appraisals by qualified experts.

Inventories

Inventories, consisting primarily of fuet oil, held by the Power and Water Funds (Enterprise Funds) are carried at the lower of weighted averc�ge cost or market.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost, except in the General Fixed Assets group of accounts where cost is not determina�le since complete historical records have not been maintained. General infrastructure fixed assets are not capitalized. Interest costs are not capitalized for fixed assets constn.1cted by the City.

Depreciation has been provided using the straight-line method over the estimated useful life of the property, plant and equipment of the Enterprise and Internal Service Funds. Depreciation is not recorded on general fixed assets of the City.

A summaryof the estimated useful lives of fixed assets in the Enterprise and Internal Service Funds follows:

Light and Power Fund: Water Fund: Production Plant 20 to 40 years Source of Supply 20 to 50 years Transmission Plant 25 to 40 years Pumping Plant 1 O to 50 years Distribution Plant 20 to 40 years Treatment Plant 1 O to 20 years General Plant 1 o to 40 years Transmission & Distribution Plant 1 O to 80 years General Plant 6 to 50 years

All other Enterprise Funds: Internal Service Funds: Buildings & Improvements 20 to 45 years Buildings & Improvements 20 to 40 years Equipment 4 to 10 years Equipment 4 to 10 years

17 CITY OF PASADENA NOTES TO FINANCIAL STATEMENTS June 30, 1992 Continued

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Costs of assets sold or retired, and the related amounts of accumulated depreciation of Enterprise and Internal ServiceFund assets, are removed from the accounts in the year of sale or retirement. Any resulting gain or loss is included in the results of operations. (See Note 6.)

Deferred Revenue

The City records deferred revenues when a potential revenue meetsthe "measurable" revenue recognition criterion in the current period, but revenue recognition is deferred to a subsequent periodwhen it will become available. Deferred revenues are reported in the liability section of the combined balance sheet. (See Note 8.)

Capltallzed Lease Obllgatlons

Capital lease obligations for governmentalfund types are carried In the General Long-Term Debt group of accounts at the discounted present value of the payments due under the lease contracts. The related assets are classified as property, plant or equipment as applic�ble. (See Note 14.)

Self-Insurance

The City Is self-insured for general liability claims and workers' compensation claims up to a specified limit. Premiums are paid into the Benefits and Insurance Internal Service Fund by all other funds and are available to pay claims, claim reserves, and administrative costs of the program. lnterfund premiums are based primarily upon the insured funds' claim experience. The City is insured with outside insurance carriers for certain amounts in excess of self-insurance llmits. The liability for self-insurance claims payable at June 30, 1992 Is based upon review py the City's Risk Management Department and includes provisions for actual cases pending and claims incurred but not reported. Workers' compensation claims calculations are not actuarily derived.

Fund Equity

Contributed capital is recorded in proprietary fund types that have received capital grants, contributions from developers, or contributions from other funds.

Reservesrepresent those portionsof fund equity not appropriable for expenditure or legally segregated for a specific future use.

Total "Memorandum Only" Columns and Reclasslflcatlons

The combined financial statements include certain"memorandum only" totals which represent applicable mathematical summations of account totals by fund type and account group, and do not reflect the elimination of interfund transactions. Such totals are for informatipn purposes only, and do not present consolidated financial information. Certain memorandum only totals from 1991 have been reclassified to conform with 19ij2 presentations.

18 CITY OF PASADENA NOTES TO FINANCIAL STATEMENTS June 30, 1992 Contin"ed

(2) CASH AND INVESTMENTS - Continued

The City follows the practice of pooling cash and Investments of all funds except for certain trust or agency funds, or for funds required to be held by outsidefiscal agents under the provisions of bond and/or certificateof participation indentures.

Interest Income earned on pooled cash and Investments is allocated monthly to various funds based on the month-end cash balances. Interest income from cash and Investments with fiscalagents is credited directly to the related fund.

Cash and Investments at June 30, 1992 consisted of the following (in thousands):

Cash In banks $ 5,776 Certificatesof Deposit 2,000 Restricted Cash In banks � Tota� Deposits $ 11,104

Investments held by the City $180,015 Restricted Investments with Fiscal Agents 37,1 28 Marketable Securities of Pasadena Fire and Police Retirement System, held in trust 39,691 Deferred Compensation Plan Investments (See Note 20) 28,306

Total Investments $285,140 Petty Cash Funds lli Total Cash and Investments $296.389

Deposits

As of Jµne 30, 1992, the carrying amQunt of the City's deposits was $7,77Q,000 and the bank balance totalled $10,712,000. The bank balances �s of June 30, 1992 were comprised of cash in banks and non-negotiable certificates of deposit (as scheduled above) which are insured or collateralized as follows (amounts In thousands):

Federal Deposit Insurance Corporation Insured $ 379 Collateralized, e9llateral not held In City's name 10.m $10,712

19 CITY OF PASADENA NOTES TO FINANCIAL STATEMENTS June 30, 1992 Continued

(2) CASH AND INVESTMENTS - Continued All cash In banks and certificates of deposit are entirely insured or collateralized in accordance with the California GovernmentCode Section 53601 . The California Government Code requires California banks and savings and loan associations to secure a city's deposits by pledging government securities as collateral. The market value of pledged securities must equal at least 110% of a city's deposits. California law also allows financial institutions to secure city deposits by pledging firsttrust deed mortgage notes having a value of 150% of a city's deposits'. Such pledged assets are not held by the City or its agent In the City's name. The City may, and In some Instance� did, waive collateral requirements for deposits which are fully Insured up to $100,000 by the FDIC. As of June 30, 1992, the carrying amount of Trustee-held deposits was $3,328,000. The bank balances as of June 30, 1992 were comprised of cash in banks and non-negotiable certificates of deposits (as scheduled above) which were Insured as follows (amounts in thousands): Insured $ 109 Uninsured and Uncollateralized 3,274 $3,383 Trustees are legally responsible via applicable trust agreements with the City for the safekeeping of these funds. Authorized Investments As a Charter City, Pasadena operates its temporary pooled idle cash investments under the "prudent man" rule (Civil Code Section 2261 et seq.) This affordsthe City a broad spectrum of investment opportunities as long as the investment is deemed prudent and is allowable under current legislation of the State of California (GovernmentCode Section 53600 et seq.) and the City's investment policy. The Government Coc:Jecurrently permits investments In the following instruments: Securities of the U.S. Government or its agencies Small Business Administration Loans

Certificates of Deposit (or Time Deposits) placed Negotiable Certificates of Deposit with commercial banks or savings and loan associations Bankers' Acceptances

Commercial Paper (rated A-1/P-1 or better) Fixed Income Funds

Local Agency Investment Fund (state pool) Passbook Savings Accounts

Medium-Term Corporate r,Jotes (up to 5 years maturity) Repurchase Agreements

Other Local Government Entity's Pooled Investment Funds Reverse Repurchase Agreements

Financial Option Contracts on Authorized Investments Financial Futures Contracts on Authorized Investments

20 CITY OFPASADENA NOTES TO FINANCIAL STATEMENTS June 30, 1992 Continued

(2) CASH AND INVESTMENTS • Continued The GovernmentCode also permits investments in bonds, notes, warrants, or other evidences of indebtedness of any local agency within the State, including bonds payable solely out of the revenues from a revenue-producing propertyowned, controlled, or operated by the local agency, or by a depart­ ment, board, agency, or authority thereof. Credit Risk, CarryingAmount, and Market Value of Investments Investments owned by theCity as of June 30, 1992 are summarized below. Investments that are represented by specificidentifiable investment securities are classified as to credit risk by three categories as follows: Category 1 Includes investments that are il"!suredor registered or for which securities are held by the City or its agent In the City's name; Category 2 Includes uninsured and unregistered Investments for which the securities are held by the counterparty'strust departmentor agent In the City's name; and Category3 includes uninsured and unregistered investments for which the securities are held by the counterparty,or by its trust departmentor agent but not In the City's name. The investments scheduled below are in thousands.

CATEGORY Carrying Market 1 2 3 Amount Value Corporate Bonds $153,194 $153,194 $152,225 Federal National MortgageAssocia tion (FNMA) 2,019 2,019 2,185 Federal Home Loan MortgageCorp. (FHLMC) 1,128 1,128 1,134 GovernmentNational MortgageAssoc. (GNMA) 1,739 1,739 1,750 Municipal Bonds 4,416 4,416 4,417 Repurchase Agreements 14,519 14,519 14,519 RESTRICTED INVESTMENTS 11> Corporate Bonds 5,672 4,317 6,460 16,449 16,551 Commercial Paper 2,208 2,208 2,208 Corporate Stocks 18,098 18,098 19,156 Guaranteed Investment Contract 1,440 1,440 1,441 US TreasuryNotes 1U2l 2...5.83 H.mm 32,592 32.997 $ 39,691 $183,915 $24,196 $247,802 $248,583 Deferred Compensation Plan Investments• 28,306 28,306 City Held Mutual Fµnds* 3,000 2,820 Restricted Mutual Funds* !W.32 6.032 Total Investments $285,140 $285,741 --- - -·· -- - ·- --- - *Not subject to cat�gorization. 111 Trustees are legally responsible via applicable trust agreements with the City for the safekeeping of these securities on behalf of the City.

21 CITY OF PASADENA NOTES TO FINANCIAL STATEMENTS June 30, 1992 Continued

(2) CASH AND INVESTMENTS - Continued

Reverse Repurchase Agreements

As of June 30, 1992 theCity had two reverse repurchase agreements totalling $5, 100,000, as follows (dollars in thousands):

Carrying Market Repurchase Amount/ Loan Value of Agreement Orlglnal Market Interest City's City's Term Proceeds Value Rates Collateral Collateral 6-26-92 Corporijte Bond- to Discover 7-16-92 $4,500 $4,500 4.4% 9.2% 11/95 $5,246

6-26-92 Corporate Bond to Mi.ABC 7-22-92 600 4.4% 9.1% 5/95 654 $5,100 $5,600100 $5,900

The City's Statement of Investment Policy prohibits the City Treasurer from investing assets in any companyor financial institution appearing in the South Africa portion of The Unified List of United States Companies with Investments or Loans In South Africa as published by the African Fund and the American Committee on Africa. As of June 30, 1992, the City had no investments in financial institutions or companies appearing on thelist.

22 CITY OF PASADENA NOTES TO FINANCIAL STATEMENTS June 30, 1992 Continued

(3) DUE FROM AFFILIATE

The following advances to PCDC were outstanding at June 30, 1992:

Resolution No. Entitlement Due Date Amount Outstanding 4223 $ 536,200 Unspecified $ 10Q,OOO 4970 341,000 Unspecified 113,000 4971 50,000 Unspecified 50,000 5060 54,000 Unspecified 54,000 5086 900,000 Unspecified 314,000 5535 71,000 2000 71,000 5544 200,000 2000 15�.ooo 5790 250,000 Unspecified 250,000 12535 153,000 2000 153,000 5997 75,000 Unspecified 75,000 5993 250,000 Unspecified 250,000 5789 235,000 201 1 235,000 6614 907,000 2016 451 ,000 14583 437,541 Unspecified $ 437,000 TOTAL ADVANCES OUTSTANDING TO PCDC $ 2,712,000

Loans to PCDC for capital improvements/acquisitions 1.443,000 TOTAL DUE FROM PCDC AT JUNE 30, 1992 $ 4,1 55,000

PCDC Is also obligated to reimburse the City for the costs of improvements made i11 redevelopment project areas totaling $54,586,000. With interest ranging from 7.26% to 10%, such reimbursements will aggregate $146,834,000 at June 30, 1992: These reimbursements will be recognized as revenue when received. Such reimbursements began in 1 �89, and will continue as funds become available.

23 CITY OF PASADENA NOTES TO FINANCIAL STATEMENTS June 30, 1992 Continued

(4) INTERFUND TRANSACTIONS lnterfund receivables and payables were as follows at June 30, 1992 (in thousands): Due From Due To Other Funds Other Funds General Fund $2,076 $ 59 Special Revenue Funds 836 Capital Project Funds 953 424 Enterprise Funds 1,850 2,899 Trustand Agency Funds __.661 TOTAL $4.879 $4879

(5) LOANS RECEIVABLE Loans receivable for each fund type consisted of the following at June 30, 1992 (in thousands): SPECIAL GENERAL REVENUE

Rose Bowl Aquatics Center $ 3,650 Community Development Block GrantAssistance $10,564 Pasadena Housing Authority Grant Assistance 5.85 TOTAL $ 3,650 S 11.149

(6) PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment,including construction In progress, atJune 30, 1992, consisted of thefollowing (in thousands): Internal Enterprise Service General Funds Funds Fixed Assets (unaudited) land $ 2,763 $ 13 $ 14,056 Buildings and improvements, including $1 15,836 $ 885 $ 230, 153 capital leases of $20,532 in general fixed assets Machineryand equipment $227.280 $25.924 $ 27,280 $345,879 $26,822 $271,489

24 CITY OF PASADENA NOTES TO FINANCIAL STATEMENTS June 30, 1992 Continued

(6) PROPERTY, PLANT,AND EQUIPMENT - Continued

Changes In general fixedassets duringthe year (unaudited) were as follows (in thousands):

Balance at Balance at June 30, 1991 Additions June 30, 1992

Land $ 14,056 $ - $ 14,056 Buildings and Improvements 219,719 10,434 230,153 Machinery and equiprnent 25,947 1 ,333 22 280 S____259..Z22 S 11.Z6Z S__ 2ZJ .-489

(7) PENSION PLANS

Each full-time employee and each part-time employee (with 1000 hours or more of service) of the City is a member of the Pasadena Fire and Police Retirement System or the California Public Employees Retirement System (PERS), depending upon the employee's type of work and length of service. Both plans are defi11ed contribution benefit pension pli3ns and aredescribed individually in the following notes.

Pasadena Fire and Police Retl�ement System

(a) Plan Description

The Pasadena Fire and Police Retirement System (FPRS) covers all fire and police personnel who became employed by the City prior to July 1, 1977, except for those who elected transfer to PERS when the system closed. As of June 30, 1992, there were 353 retirees and beneficiaries currently receiving benefits, 1 terminated employee entitled to benefits but not currently receiving them, and 67 active employees, all of whom are fully vested in the plan. FPRS is governed by an appointed Retirement Board (Board) under provisions of the City Ch�rter. The Board selects an investment agent; FPRS assets are held by a trustee.

FPRS is a single-employer public employees retirement system which is included as a trust fund in the financial statements of the City of Pasadena. The system uses the accrual basis of accounting for revenue and expense; assets are valued at cost for balance sheet purposes.

The pension plan provides retirement benefits, survivorbenefits , and death and disability benefits. Vesting occurs after 1 O years of credited service. EmplQyees who retire after 25 years of service, or after age 50 with 15 or more years of service, are entitled to a retirement benefit, payable monthly for the remainder of their lives.

25 CITY OF PASADENA NOTES TO FINANCIAL STATEMENTS June 30, 1992 Continued

(7) PENSIO" PLANS( FPRS) - Continued

The City makes monthly contributionsto FPRS based on actuarially determined employer contribution rates which, together with employee contributions, should provide sufficient assets to pay only base benefits when due. Cost of living and most death benefits are not being funded, but are being paid primarily on an as-incurred basis. Additionally, the City also contributes 7 percent of fire personnelgross earnings and 9 percent of police personnel gross earnings to FPRS representing a portionof the employee contribution; the remaining 4 to 7 percent (percentage varies based on actuarial factors) contributionis made by the employee.

The City's payroll for employees covered by the Pasadena Fire and Police Retirement System for the year ended June 30, 1992 was $4,637,000. Total City payroll for the year ended June 30, 1992 was $77,648,000. (b) Funding Status and Progress {FPRS)

The amount shown below as the "pension benefit obligation" is a standardized measure of the present value of pension benefits, adjusted for the effects of projected salaryincreases and step-rate benefits, estimated to be payable in the future as a result of employee serviceto date. The measure is intended to help users assess the funding status of FPRS on a going-concern basis, assess progress made ;n accumulatingsuffi cient assets to pay benefits when due, and make comparisons among employers. The measure is the actuarial present value of credited projected benefits, and is Independent of the funding method used to determine contributions to FPRS.

The total unfunded pension benefit obligation of $165,563,000applicable to the City's employees covered under FPRS at June 30, 1992 is shown based on information provided by the actuary. The following information was obtained from an actuarial evaluation calculated as of June 30, 1992 (the significant actuarial assumptions used to calculate the pension benefit obligation are also indicated):

26 CITY OF PASADENA NOTES TO FINANCIAL STATEMENTS June 30, 1992 Continued

(7) PENSION PLANS (FPRS) - Continued Significant Actuarial Pension benefit obligation (In thousands) Assumptions

Retirees and beneficiariescurrently Actuarial interestrate: receiving benefits and terminated 7 .0% per annum employees entitled to benefits not yet receiving them. $168,216 SalaryScale: Rate of inflation 5.!>% Current employees: Real salary increases 0.0% Accumulated employee contributions Merit raises 0.0%. Including allocated InvestmentIncome 9,31 1 TOTAL � Employer-financed vested 20,607 Employer-financednon-vested 12A50 Total pension benefitobligation 210,584 Less: Net assets available for benefits at cost (market value totaled $47 ,255) §Jl21 UNFUNDED PENSION BENEFIT OBLIGA110N $165,563

There were no current-year changes in actuarial assumptions or benefit provisions whic� affected the pension benefit obligation.

(c) Actuarially Deter111inedContribution Requirements�nd Contribution Made (FPRS)

The City's annual contribution rate Is calculated based on an annual actuarial valuation and is effective each July 1. The purpose of an actuarial cost method is to �ssign to each year the cost of the benefit accrued in that ye�r. The actuarial cost of the benefits assigned to a particularyear is called the norm�I cost The Pasadena Fire and Police Retirement System uses the EntryAge Normal Actuarial Cost Method which is a pro­ jected benefitcosJ method; that is, it takes Into act9unt those benefits thatare expected to be earned in the future as well as those already accmed.

Accqrding to this cost method, the normal cost for an employee is the level amount which would fund the projected benefit if it were paid annually from date of empl()yment until retirement. However. because of changes through the years in the benefit structur:e and the actuarial assumptions, and because act1.1arial g�ins and losses caused by experience are different fromsuch assumptions, these conditions nor,nallywill not be satisfied; therefore, ai, unfunded actuarialliabil ity may develc.,p.

27 CITY OF PASADENA NOTES TO FINANCIAL STATEMENTS June 30, 1992 Continued

(7) PENSION PLANS( FPRS) - Continued

The present value of projected benefits is funded by the normal cost paid over the future working lifetime of the plan participants, assets accumu­ lated to date, and the unfunded actuarial liability, if any, which will be funded by the City over a fixed period of time. The amortization period of the unfunded actuarial liability ends on June 30, 2007 for the FPRS.

The significant actuarial assumptions used to compute the actuarially determined contribution requirement are the same as those used to com­ pute the pension benefit obligation as described previously In Section (b).

The City's contribution for Normal Cost to the system for the year ended June 30, 1992 was $295,861 (6.38% of covered payroll) which was based upon actuarially determined requirements computed through an actuarial valuation performed as of June 30, 1991 . The City's contribution for the amortization of the unfunded actuarial accrued liability was $1,840,000 (39. 7% of covered payroll) which was based upon actuarially determined requirements computed through an actuarial valuation performed as of June 30, 1990. An actuarial determination of the amortization of unfunded actuarial accrued liability as of June 30, 1991 was available. However due to the City's budgeting process a one year lag naturally occurs.

(d) Supplemental City Funding (FPRS)

In a May 1991 contribution agreement, the City obligated itself to contribute an estimated present value of $141,500,000 to cover FPRS's actuari­ ally estimated unfunded liability as of June 30, 1990. The agreement provides that contributions will be made from various sources commencing in 1991 and terminating in the year 2042.

The fiscal year 1992 and 1991 City contributions of $4,409,000 and $4,400,000 respectively are from the following sources:

1992 1991 Funding Source Contribution ContrlbutlQn

Senate Bill 481 Tax Increments $1 ,344,000 $1,335,000 1992 City Cash Contribution 3,000,000 3,000,000 Concord Housing Lease Payments 65,000 65,00Q

Total $4,409,000 $4,400,000

28 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(7) PENSION PLANS( FPRS) - Continued

{e) Trend Information {FPRS)

Trend information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. Ten year trend informa­ tion for FPRS is summarized in the section titled "Analysis of funding Process (FPRS)" included in the supplementary i11formation followjng the Notes to theGeneral Purpose Financial Statements.

Threeyear historical trend information Is as follows:

Fiscal Year 1992 1990

Net Assets available for Benefits expressed as a percentageof Pension BenefitObl igation 21.4% 19.5% 18.3%

Unfunded Pension Obligation expressed as a percentage of Annual Covered Payroll 3570.5% 3184.8% 301a.3%

Employer Defined Contributions expressed as a percentage of Annual Covered Payroll 46.1% 39.7% 37.7%

Callfornla Public Employees Retirement System

{a) Plan Description

The City is a member of the California Public Employee's Retirement System (PERS), an agency multiple-employer pe11sion system whjch prQ­ vides a defined contribution benefit pension for covered employees. PERS functions as an investment and administrative agent for the members of the system. All full-time safety workers, i.e., police and fire employees not covered by the Pasadena Fire and Police Retirement System described above, are covered by the PERS safety plan. All full-time employees and all part-timeemployees (with 1000 hours or more of service), other than police and fire personnel, are covered by the PERS plan for miscellaneous employees.

29 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(7) PENSION PLANS(PERS) - Continued

PERS provides retirement benefits, survivorbenefits , and death and disability benefits. Vesting occurs after 5 years of credited service. Employ­ ees who retire at or after age 50 with 5 or more years of service areentitled to a retirement benefit, payable monthly for the remainder of their lives.

The City makes biweekly contributionsto PERS based on actuarially determined employer contribution rates which, together with employee contributions, will provide sufficientassets to pay benefits when due. The City also contributes 7 percent of fire and miscellaneous personnel gross earningsand 9 percent of police personnel gross earningsto PERS representing the employee portion of contributions.

The City covered payroll for the fiscal year ended June 30, 1992 for PERS was $68,431,000. Total City payroll for the fiscal year was $77,648,000.

(b) Funding Status and Progress (PERS)

The amount shown below as the "pension benefit obligafion" is a standardized measure of the present value of pension benefits, adjusted for the effects of projected salary increases and step-rate benefits, estimated to be payable in the future as a result of employee service todate. The measure is intended to help users assess the funding status of PERS on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among employers. The measure is the actuarial present value of credited projected benefits, and Is independent of the funding method used to determine contributions to the systems, which are described further in section (c).

The unfunded pension benefit obligation of $21,314,000 applicable to the City's employees covered under PERS (Safety and Non-Safety), based on information provided by PERS, is shown below. The information was obtained from an actuarial evaluation calculated as of June 30, 1991 which reflects all plan amendments adopted through June 30, 1992 (the significant actuarial assumptions used to calculate the pension benefit Qbligation are also indicated):

30 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(7) PENSION PLANS( PERS) - Continued

Significant Actuarial Pension benefit obllgatlon (In thousands) Assumptions

Retirees and beneficiariescurrently Actuarial interest rate: receiving benefitsand terminated 8. 75% per annum employees entitled to benefits NON SAFETY not yet receiving them. $106,945 SalaryScale: Rate of inflation 4.50% Current employees: Real salary increases 0.75% Accumulated employee contributions Merit raises � Including allocated investment income 49,620 TOTAL � Employer-financed vested 57,193 Employer-financednon-vested 32Z9 SAFETY SalaryScale: Total pension benefitobligation $217,037 Rate of inflation 4.50% Real salary increases .75% Merit Raises � Less: Net assets available for benefits at cost (market value totaled TOTAL � $217,057) 195,723

UNFUNDED PENSION BENEFIT OBLIGATION $ 21,314 There were no current-year changes in actuarial assumption� or benefit provisions which affected the pension benefit obligation. The contribution rates calculat�d annually by PERS include an amount necessarytQ amortize past unfunded obligations by the year 201 1.

(c) Actuarially Determined Contribution Requirements and Contribution Made (PERS) PERS uses the EntryAge Normal Actuarial Cost Method, which is a projected benefit-cost method; that is, it takes into account those benefits that are expected to be earned in the future as well as those already accrued. According to this cost method, the normal cost for an employee is the level amount which would fund the projected benefit if it were paid annually from date of employment until retirement. PERS uses a modification of the Entry Age Cost Method in which the employer's total normal cost Is expressed as a level percentage of payroll. PERS also uses the Level Percentage Of Payroll Method to amortize any unfunded actuarial liabilities. The amortizationperiod of the unfunded actuarial liability ends on June 30, 201 1.

31 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(7) PENSION PLANS (PERS) - Continued

The significantactu arial assumptions used to compute the actuarially determined contribution requirement are the same as those used to com­ pute the pension benefitobligation as previously described.

The City's 1992 actuarially determined contribution of $8,668,000 was made in accordance with an actuarial valuation as of June 30, 1991 . The contribution consisted of (in thousands):

Percentage of Covered Amount Payroll

SAFETY

Normal cost $1,830 11.992%

Unfunded actuarial liability amortization __B.3 .5.41.% S1Jil.3 12.533%

NON SAFETY

Normal cost $3,381 6.358% Unfunded actuarial liability amortization .a.a1.4 6.346%

$ 6,755 12,704%

(d) Trend Information (PERS)

Trend information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. Systemwide ten year information is not yet available. However, fiscal year 1986-87 is the first year that this actuarial information has been made available by PERS. Therefore, the available trend information is summarized in the section titled "Analysis of Funding Process (PERS)" included in the Supplementary Information following the Notes to the General Purpose Financial Statements.

32 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(7) PENSION PLANS (PERS) - Continued

Within the City's financial statements the following three year historical trend information is required:

Fiscal Year

1992 1991 1990 Net Assets available for BEmefits expressed as a percentage of Pension BenefitObliga tion N/A 90.2% 86.7%

Unfunded Pension Obligation expressed as a percentage of Annual Covered Payroll N/A 33.1% 47.3%

Employer Contributions expressed as a per­ centage of Annual Covered Payroll (Safety) 12.5% 12.5% 0.0%

Employer Contributions expressed as a per­ centage of Annual Covered Payroll (Non-Safety} 12.7% 11.2% 12.4%

N/A: Information not available as of June 30, 1992.

(8) DEFERRED REVENUES (In thousands)

Deferred revenues for each fund type consist of the following at June 30, 1992: Special Internal Tru�t and General Revenue Enterprise Service Agency

Community Development Block Grant Assistance 10,564 Pasadena Housing Authority Grant Assistance 585 Deferred Gain in lnterfun Sale of Fix�d Assets - Water 4,576 Energy Cost Adjustment Charges 6,691 lntermountain Power Project Refund 8,217 Public Employees Retirement System Refund 4,344 2,578 297 12 1 Miscellaneous Revenue Collected in Advance --1305 TOTAL 2,578- - 11,006 19,781 4,356 -1,305 33 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(8) DEFERRED REVENUES (In thousands) - Continued

Duringfiscal year 1991 the City'sWater Utility sold the AzusaHydro Electric Plant to the City's Power Utility. This financing transaction totalled $5,600,000. The book value of this fixed asset was $866,561, which resulted in a gain of $4,773,439. This gain is being amortized over thirty years,the estimated remaining life of the relate� asset at the date of sale, and the net balance stands at $4,575,658 at June 30, 1992.

The EnergyCost Adjustment Charges In the Enterprise Fund relate to a method designed torecover the costs of fuel and purchased power, while avoid- ing large month-to-month fluctuations in rates charged to customers.

In fiscal year 1989, the Power Fund received a refund in the amount of $10,956,000 from the lntermountain Power Authority. This one time refund represents cost savings from the constr�ction of the lntermountaln Power Project. This refund was recorded as a deferred revenue in the Power Fund when It wasreceived . Beginning with this fiscal year (1992), the City elected to recognize this refund as an extraordinaryitem and to amortize it over four years.

The Public Employees Retirement Rebid consistsof interest earnings on employee contributions which had been previously heldin trust to provide benefits. Assembly Bill 702 provided in general that these funds would be allocated to the State and the contracting agencies, of which the City is one. A lawsuit was filedchallenging AB702 and a decision was reached in July, 1992. The City will recognize this refund as revenue in fiscal year 1993.

(9) BONDS PAYABLE (In thousands)

Legal Debt Limit

The City Is subject to a legal debt limit for an amount which, in the aggregate, shall not exceed 15% of the assessed value of all real and personal property In the City subject to taxation for municipal purposes. As of June 30, 1992, the legal debt limit approximated $1 , 162,928.

Revenue Bonds

Revenue bonds outstanding at June 30, 1992, collateralized by revenues of the electricor water utilities, consist of the following:

1972 Electric Works Revenue Bonds; interest from 4.25% to 4.9%, payable June 1 and December 1; maturities payable December 1 in annual redemptions of $500; final payment due December 1, 1992 $ 500

34 CITYOF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(9) BONDS PAYABLE (In thousands) · Continued

1980 ElectricWorks Revenue Bonds; Interest from 6.25% to 8.25%, payable January 1 and July 1; maturities payable July 1 In annual redemptions of $425; final payment due July 1, 201 O $ 13,600

1985 Electric WorksRevenue Bonds; Interest from 8.10% to 9.0%, payable January 1 and July 1 ; maturities payable July 1 In annual redemptionsfrom $555 to $685; finalpayment due July 1, 1992 $ 685

1986 Electric Works Reverue Bonds; interest from 7.0!% to 7.20%, payabl� January 1 and July 1 ; maturities payable July 1 in annual redemptions from $100 to $2,025; finalpayment due July 1, 2005 $17,930

1990 Electric Works Revenue Bonds; Interest fmm 6.10% to 8.0%, payable August 1 and February 1 ; maturities payable August 1 in annual redemptloris from $585 to $1 ,880; final payment due August 1, 2010. $ 20,900

1991 Water Revenue Bonds; Interest from 5.90% to 7.90%, payable January 1 and July 1; maturities payable July 1 in annual redemptiqns from $300 to $905; final payment due July 1, 201 1. $10 250

TOTAL REVENUE BONpS OUTSTANDING AT JUNE 30, 1992 $ 63,865

Future debt service requirements for the Electric Works and Water Revenue Bonds are as follows: Fiscal Years E.ndlng Amount 19�3 $ 6,720 1994 6,459 1995 6.408 1996 6,375 1997 6,331 Balance thrpugh 2011 19..W 111,604 Less: amount representing interest (47,739) Total t,onds payable at Ju11e 30, 1992 $63,�65

35 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(9) BONDS PAYABLE (In thousands) · Continued

General Obllgatlon Bonds

General obligation bonds outstanding at June 30, 1992 are direct obligations and pledge the full faith and credit of the City. Revenues for retirement of the bonds are provided fromad valorem tmces on real property within the City. These bonds consist of the following:

1987 Police Building and Jail General Obligation Bonds, Interest ranging from 6:50% to 7.20%, payable June 1 and December 1; maturities payable June 1 In annual redemptions from $585 to $1,550; finalpayment due June 1, 2007 $14,895

F�re debt servicerequirements for the bonds are as follows:

fiscalYears Ending Amount 1993 $1,602 1994 1,604 1995 1,609 1996 1,615 1997 1,618 Balance through 2007 16.448 24,496 Less: amount representing interest ( 9 601) Total bonds payable at June 30, 1992 $ 14,895

(10) NPTES PAYABLE (In thousands) 1991-1992 Tmc and Revenue Anticipation Notes, interest at an annual rate of 5. 125% principal due on September 22, 1992. $ 10,000 Lake Washington Neighborhood Shopping Center notes payable owed to the Federal Financing Bank (authorized by the Housing and Community Development Act of 1974, Public Law 93-383), Interest at 8.595% principal and interest payable in annual installments of $278 through July 15, 1996. 1,094 Kings Plaza Shopping Center notes payable owed to the Federal Financing Bank (authorized by the Housing and Community Development Act of 1974, Public Law 93-383), interest at 8.15% principal and interest payable in annual installments of $124 through February 1, 1996. .410 $ 11,504

36 CITYOF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(10) NOTES PAYABLE (In thousands) - Continued

Future debt servicerequir ements for the notes are as follows:

Fiscal Years Amount

1993 10,917 1994 404 1995 404 1996 404 1997 -219 $12,408 Less: amounts representing Interest {9(M) Total notes payable at June 30, 1992 $11.504

(11) CERTIFICATES OF PARTICIPATION (In thousands)

1986 01� Pasadena Park,ng Facllltles

Certificatesof ParticipationIssued In �onnection with financing of certain land purchases and construction of parking facilities; repayment is to be made from the proceeds of new revenues derived from parking operations and tax increment from the Old Pasadena Redevelopment Project Area. The Certificatesare repayable in varying amounts ranging from $400 In January 1993 to $660 in January20 01. In addition, term bonds totaling $4,075 and $18,045 are due In January2006 and January 2018 respectively. Interest is payable semiannually at rates ranging from 6.0% to 7.2%. The interest rate on the $4,075 term bonds is 7 .125%, and the Interest rate on the $18,045 term bonds is 7 .20% $ 26,760

1987 Capital lmprovemeot Project

Certificatesof Participatior issued in connection with financing of certain capital improvements, payment of which is budgeted in each year's operating budget. The Certificates are repayable in varying amounts ranging from $460 in November 1992 to $1,005 in November 2003. In addition, term certificates totaling $13,835 are due in November 2012. Interest is payable semiannually at rates ranging from 6.0% ta 7.80%. The interest rate on the $13,835 term certificates is 8.0% $ 22,105

37 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(1 1) CERTIFICATES OF PARTICIPATION (In thousands) · Continued

19$7 Los Robles Avenue Parking Faclllty (Plaza Las Fuentes)

Certificatesof Participation issued in connectionwith financing of certain parking facilities; repayment Is t� be made out of parking operations and increased revenues resulting from the project. The ce"ificatesare repayable in full on November 1, 2012. Interest is payable monthly at a variable rate (4.0% as of June 30, 1992) $19,900

1988 Equipment Acquisition Program

Certificatesof ParticipationIssued in connectionwith financing of certain equipment purchases, payment of which is budgeted in each year's operating budget. The Certificates are repayable semiannually in varying amounts ranging from $1,850 In July 1992 to $445 on January 1996. Interest is payable semiannually at rates ranging from 6.0% to 6.8% $ 9,665

1989 Public F,1cllltles project

Certificates of Participation issued in connection with financing certainconstruction projects and other public facilities, payment of which is budgeted In each year's operating budget. The Certificates are repayable In varyingamounts ranging from $135 In December, 1992 to $610 in December, 1999. Interest is payable semiannually at rates ranging from 6.2% to 6. 7% In addition, term certificatestotal ling $5,020 and $19,305 are due in December, 2004 and December, 2014 respectively. The interest on the term certificates Is 7.0%. $ 26,705

1990Capital Improvement Project

Certificate� of Participation issued in connection with financing certain construction projects and infrastructure Improvements, payme11J of which is budgeted in each year's operating budget. The Certificates are repayable in varying amounts ranging from $690 in August, 1992 to $1 ,410 in August, 2003. Interest is payable semiannually at rates ranging from 6:0% to 7.0%. In addition, term certificates totalling $27,035 are due in August, 201 5. The l11ter!9st or the tenri certificates is 6. 75%. $ 39,080

1 �91 Rose Bowl lmpr:pvementProject

Certificates of Participation issued in connection with financing certain construction projects and infrastructure improvefTlents in the City, consisting primarily of improvements to the City's Rose Bowl Stadium, and to defease $2,280 in aggregate principal amount of Certificates of Participation originally issued by the City in 1983 for Rose

38 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(11) CERTIFICATES OF PARTICIPATION (In thousands) · Continued Bowl capital purposes. The Certificates are to be repaid from the proceeds of new revenues to be derived from Rose Bowl operations. The Certificates are repayable in full on December 1, 201 1. Interest is payable monthly at a variable rate (2.25% as of June 30, 1992). $ 12,700

1992 Equipment Acquisition Program

Certificatesof ParticipationIssued In connection with financingof certainequip ment purchases, payment of which Is budgeted In each year's operating budget. TheCertificates arerepay able semiannually In varying amounts ranging from $175 In January, 1993 to $1, 170 in July, 1997, and to $220 on July 1, 2002. Interest is payable semiannually at rates ranging from 3. 75% to 6.35% $13,735 TOTAL $170,650

Future debt service requirementsfor the Certificates of Participation are as follows: Fiscal Years Amount

1993 $17,385 1994 17,345 1995 16,848 1996 16,164 1997 15,522 Balance through 2018 243,159 326,423 Less: amounts representing Interest (155.773) Total certificates payable at June 30, 1992 $170,650

Loss on Defeasance of Long-Term Debt

During 1992, as a result of Improved interest rates, the City issued $12,700of 19Q1 Variable Rate Demand Certificates of Participationfor the purpose of construc:tingcertain major improvements to the stadium and redeeming the 1983 Rose Bowl Certificates of Participation prior to maturity. This transaction resulted In the in-substance defeasance of $2,280 of the 1983 Rose Bowl Certificates of Participation and a loss of $323 for the current period. The City advance-refunded the old certificates to release the City from restrictive covenants associated with the 1983 Certificates of Participation. The advance­ refunding removed all encumbrances associated with the asset being leased, namely the Rose Bowl Stadium, thereby allowing the 1992 Certificates of Participationto be issued. In ad�ition, because of the variable interest rates asso�iated with the new issue, the City anticipates some overall savings as a r�sult of the advance-refunding.

39 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(12) CHANGES IN LONG TERM DEBT (in thousands)

The following is a summary of changes in general long term debt for the year ended June 30, 1992:

Beginning Ending Balance Balance Jul� 1 1 1991 Additions Deletions June 301 1992 General Obligation Bonds $ 15,440 $ 545 $14,895 Certificates of Participation 88,506 1,194 87,312 Capital Lease Obligations 9,806 922 1,056 9,672 Notes Payable 1,758 254 1,504 TOTALS S115_.S1Q s 922 13.049 $1 11.383

There are a number of limitations and restrictions contained in the bond and certificates of participation indentures. The City is in compliance with all significant limitations and restrictions.

(13) PRIOR YEAR DEFEASANCE OF DEBT

In prior years, the City placedthe proceeds of new bonds or certificate� in an irrevocable trust to provide for all future debt service payments on certain existing bonds and certificates of participation. Accordingly, such bonds and certificates of participation are considered to be defeased. The trust account assets and the liabilityfor the defeased bonds and certificates are not included in the City's financial statements. On June 30, 1992, $41,515,000 of such bonds or certtticatesof p�rticipl;ltion are outstanding.

(14) CAPITALIZED LEASE OBLIGATIONS

The City leases facilities as discusse� below, which meet the criteria for capital leases. In addition to the annual lease payments, the leases provide for the City to pay all operating costs associatedwith the facilities and equipment involved.

Conference Cen�er

The lease with the City of Pasadena Conference Center Corporation, which expires July 1, 1998, calls for annual payments of $1 ,668, 115. Upon termina­ tion or expiration of the lease, title to the Conference Center will vest with the City.

Holly Street Par�lng Structure

This lease with the Parking Authority of the City of Pasadena expires July 1, 2003. The annual rental of $1 18,000 is payable in twoequal semiannual installments.

40 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(14) CAPITALIZED LEASE OBLIGATIONS - Continued

VIiia Parke Neighborhood Center

This facility is leased from the Pasadena Community Development Commission (PCDC) at an annual rental payment of $58, 125, the amount necessaryto meet debt servicerequirements on the bonds issued by the PCDC for the original construction of the facility in 1974. The lease expires June 1, 1995. In July of 1992 the City completed a major reconstruction of this facility at which time title to the facility will be vested in the City of Pasadena.

Robinson Park Recreation Center

This facility is being leased from the Pasadena Community Development Commission (PCDC) under terms which call for annual rental payments of $112, 765, the amount necessaryto meet debt servicerequirements on the bonds Issued by the PCDC for construction of this facility in 1975� The lease expire� on May 1, 1996 at which time title tq the propertywill be transferred to the City of Pasadena.

Future minimum lease payment requirements under the capital leases described above are as follows (in thousands):

Governmental Fund Proprietary Fund Fls�al Years Obllgatlons Obllgatlons

1993 $ 2,178 $ 482 1994 2,223 424 1995 2,141 424 1996 2,025 424 1997 1,855 141 Balance through 2004 � --19 12,813 1,914 Less amount attributable to interest ruw __a Total I-eases Payable at June 30, 1992 $9.672 $1 .914

(1 5) BUDGET OVERAGES AND RETAINED EARN,NGS/FUNO BALANCE DEFICITS Expenditures exceeded appropriations during fiscal year 1992 in the General Fund in the following programs:

APPROPRIATIONS EXPENDITURES EXCESS Public Safety $45,818,789 $46,539,693 $720,904 Culture and Leisure 14,805,742 15,300,994 495,252

41 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(15) BUDGET OVERAGES AND RETAINED EARNINGS/FUND BALANCE DEFICITS - Continued

Overages in the Public Safety categorywere attributable to salary adjustments made by union negotiations and bonus pay for special assignments which were unexpected. The Culture and leisure category exceeded budget due to the opening of a major community center and the associated start-up costs which were anticipated to occur 111 fiscal year 1993. However, the General Fund did not exceed its total budget overall.

The Arroyo Park Fund had an accumulated deficit of $23, 134 at June 30, 1992. This deficit will be alleviated duringfiscal year 1993 by merging this fund with the Golf Course Fund.

The PlazaLas Fuentes and the Old Pasadena Parking Enterprise Funds had accumulated deficits of $1 ,424,727 and $7.406,624 at June 30, 1992 respectively. It is anticipated that these deficits will be alleviated through future rate charges and increased demand.

The 1992 Equipment Leasing Fund had an accumulated deficit of $253,837 at June 30, 1992, caused by costs of issuance of the certificates. It is antici­ pated that this deficit will be alleviated through future lease payments as these costs of issuance are amortized.

(16) COMMITMENTS AND CONTINGENCIES

Joint Veotur�s

Under a Joint Powers Agreement dated November22, 1966, both the City of Pasadena and the County of Los Angeles participated in construction of a parking structure at 199 NorthGarfield Avenue, Pasadena, California. In 1985, the County exercised an option to purchase the structure from the Retire­ ment Board qf the Los Angeles County Employees' Retirement Association, at which time the City became tenant in common holding a 30% share of the facility. As a result, the City receives 30% of the revenue and is liable for 30% of the annual expenses. As of June 30, 1992, the City had accrued net expenses of $40,389.

Souther� C1:tllfornla Publlc Power Authority

The Power Fund of the Cityjoined the Southern California Public Power Authority (SCPPA) on November 1, 1980. This authority, consisting of the cities of Los Angeles. Pasadena, Anaheim, Azusa, Banning, Riverside, Colton, Vernon, Burbank, Glendale and the Imperial Irrigation District, was formed for the purpose of financing future power resources.

The first project SCPPA participated in was a 3,810 megawatt nuclear fuel generation plant in Arizona (Palo Verde). The Palo Verde Nuclear Project consists of three (3) units, each having an electric output of approximately 1,270 megawatts. Unit No. 1 began commercial operation in February 1986, Unit 2 was commercially operable in September 1986 and Unit No. 3 attained commercial qperation in January 1988. SCPPA has purchased approxi­ mately 225 megawatts of capacity and associated energy in Palo Verde (approximately 5.9% of total output), of which Pasadena received 10 megawatts.

42 CITYOF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(16) COMMITMENTS AND CONTINGENCIES - Continued

A second projectfinanced through SCPPA Is the SouthernTrans mission System which transmitspower fromthe coal-fired lntermountain Power Project {IPP) to SouthernCalifornia. The City of Pasadena joined IPP on August 1, 1980. This project, consisting of the Utah lntermountain Consumer Power Association, the Utah Power and Light Company and the Californiacities of Anaheim, Riverside, Pasadena, Burbank, Glendale and Los Angeles, was formed to financethe construction of a 1,522 megawatt coal-fueled generating plant consisti�g of two generating units locate!'.I near Delta, U�h. The Cityof Pasad�na Is obligatedfor 96 megawattsor 4.409% of the generation. Unit No. 1 began commercial operation in June 1986 and Unit No. 2 was commerciallyoperable InMay 1987.

A summaryof the City of Pasadena -rakeor Pay" contracts and related projects and its contingent liability {in thousands) at June 30, 1992 is as follows:

lntennountalnPower SCPPA {Southem Project SCPPA(Palo Verde) TransmissionSvstem} Bonds a'1d notes $5,478,453 $1,204,400 $1,900,000 authorized

Bonds and notes S 5,270,122 $1,174,081 $1,174,165 sold (outstanding)

Interest S 8,725,936 $1,056,433 $1,550,223

Combined total $13,996,058 $2,230,514 $2,724,388 debt service

Cityof Pasadena 4.409% 4.400% 5.883% perce"'"e City of Pasadena $ 617,086 $ 98,143 $ 160,276 ms.sos obllgath,ns It is the opinion of utility management that the City will fully utilize the output for which it is obligated and that its obligation under the "Take or Pay" con­ tracts will be recovered through utility fees. Accordingly, no li�bility has been recorded in the accompanying combined finanpial statements.

43 CITYOF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(16) COMMITMENTS AND CONTINGENCIES - Continued

June, 1991 Earthquake

0'1 June 28, 1991 the City of Pasadena experienced an earthquake of magnitude 5.4 on the Richter Scale. Centered approximately five miles north and eijstof the City, the quake caused moderate structural damage to a number of older facilities within city limits. Damage to City owned buildings, facilities, and infrastructure is currently being assessed. The City has expended $1,427 ,000 for the repairs to date. The City expects that most of the cost of repairs will be funded through a state relief program which reimburses at a rate of 75% of eligible costs.

Litigation and Other

A number of suits and claims are pending against the City arising in the normal course of operations. In the opinion of the City Attorney, the results of such legal actions will not have a material adverse effect on the financial position or results of operations of the City.

Certain Federal and State revenues are received for specific purposes and are subject to audit by the granter agencies. City management is of the opinion that adjustments, if any, resulting from such audits will not be significijnt.

(17) SEGMENT INFORMATION FOR ENTERPRISE FUNDS

TJ1eCity maintains eight Enterprise Operations which provide for light and power, water, refuse collection, golf services, Rose Bowl op�rations, Arroyo Park operations, Old Pasadena Parking operations and Plaza Las Fuentes Parking operations. Segment information for the year ended June 30, 1992 is as follows (in thousands):

44 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(1 7) SEGMENT INFORMATION FOR ENTERPRISE FUNDS - Continued

Old Plaza Light and Water Golf Rose Arroyo Pasadena Las Power Fund Fund Fund Bowl Park Refuse Parking Fuentes

Operating Revenues $98,415 $15,331 $1,307 $3,928 $141 $ 6,651 $ 2,226 $1,087

Depreciation Expense 5,543 1,066 75 210 40 201 536 520

Operating 1.ncome (Loss) 7,995 903 907 186 (710) (521) 607 (458)

Operating Transfers In (Out) (7,451) (884) (781) 507 126 238 502 800

Net Income (Loss) 3,909 318 ( 5) 203 (23) (226) (773) (14)

Contributions In Aid of Construction 2,011 727 - 527 114

Additions of Property Plant and Equipment 13,456 6,051 - 9,017 144 2,885

WorkingCapital 62,364 6,132 3,158 1,097 (431) 447 (1 ,356) (108)

Bond and Certificates Payable 53,615 10,250 - 13,278 -- 26,760 19,900

Unamortized Oiscol.lnt (Premium) ------(135) (736)

Total Equity (Deficit) 121 ,454 37,777 3,782 4,192 438 51 1 (7,407) (1,454)

Total Assets $200,631 $54,738 $3,791 $21 ,894 $869 $2,597 $20,717 $1 8,490

45 CITY OF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(18) PASADENA COMMUNITY DEVELOPMENT COMMISSION (PCDC)

PCDC was activated on April 27, 1981 , by City Ordinance No. 5507 pursuant to Part 1 . 7 of Division 24 of the Health and Safety Code of the State of California, for the purpose of operating and governing the redevelopment agency of the City and exercising any other powers regarding housing and community development which the Board of Directors may desire to delegate. In effect, the Board of Directors operates and governs the City's redevelop­ ment agency.

The National Council on Governmental Accpunting (NCGA) issued Statement No. 3 "Defining The Governmental Reporting Entity", subsequently adopted by theGovernmental Accounting Standard$ Board (GASB). This statement established criteria for inclusion of related governmententities in the overall financial reports of oversight governmental units. Under the requirements so established, all functions, activities, or entities over which a City's elected officials exercise oversight responsibilities should be included in the government's combined financial statements.

Officials ofthe City of Pasadena believe th�t the PCDC is a separate distinct legal entity, and that the City is not legally responsible for payment of liabili­ ties or debt of PCDC, or to finance deficitsr:esulting from operations of PCDC. Accordingly, the financial statements of PCDC are excluded from this report. PCDC Is audited annually and a separate report issued thereon.

Were such financial statements to be included as a part ofthe City's financial statements, the effect would be to increase the assets, liabilities, and fund balance of the following fund types and long-term debt account group as shown below (in thousands):

F�nd Type/Account Group Assets Llabllltles Fund Balance

Capital Projects Funds $22,627 $14,548 $8,079 Debt Service Funtj 9,941 27 9,914 Long-TermDebt Account Group 65,182 65,182

(19) SUBSEQUENT EVENTS (in thousands)

In July, 1992, the City issued $28,900 of Certificates of Participation in connection with financing certain construction projects and to defease $24,050 in aggregate principal amount of certificates Qf participation originally issued by the City in 1987.

In August, 1992, the City i�sued $1 1,500 of Tax and Revenue Anticipation Notes. The notes are interest bearing at an annual rate of 3.50%, and are due and paya�le on September 18, 1993.

46 CITYOF PASADENA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1992 Continued

(20) DEFERRED COMPENSATION PLAN For the benefit of its employees, the City has adopted and administers a deferred compensation plan in accordance with Section 457 of the Internal Revenue Code. Generally, eligible employees may defer receipt of a portion of their salary until termination, retirement, death, or unforeseeable emer­ gency. Liability for Income taxes Is similarly deferred until the funds are withdrawn. All amounts of compensation deferred under the plan, all assets purchased with these amounts, and all Income attributable to these amounts or assets (until paid or made available tothe employee or other beneficiary) are solely the property of the City, subject to the claims of the City's generalcr editors. Participants'rights to deferred amounts under the plan are equal to those of the general creditors of the City. It is the opinion of the City Attorney that the City has no liabilityfor losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. The City believes It Is highly unlikely that It will ever become necessary to use these assets to satisfythe claims of general creditors in the future. Deferred amounts under the plan are Invested with several trustee financial institutions. Total assets attributable to the plan as of June 30, 1992 amounted to $28,306,000. There was no difference between the cost and mark�t value of deferred compensation fund assets at year end as all assets are held In cash or cash equivalent items.

(21) AGENCY FUNDS As of June 30, 1992 the Cityheld the following agency funds (in thousands):

Deferred Compensation $28,306 Old Pasadena Business Improvement District 4 South Lake Business Improvement District 37 Library Equipment and Replacement 341 South Lake ParkingAssessment ---1.J_t $28,819 (22) PRIVATE PROPERTY FINANCING ASSISTANCE The City participates in private property financing arrangements between lenders and property owners under the Marks Historical Rehabilitation Act of 1976. Such financing arrangements were issued by the City in 1984 in an aggr�ate amount of $4,000,000 and are due in December, 2014. These financing arrangementsare not obligations of the City, and are therefore excluded from the City's financial statements. The Housing Authority Commission of the City of Pasadena issued the 1985 Series A, B and C Multifamily Housing Revenue Bonds due December 1, 2007, at 8.40%, in the original aggregate amount of $2 1 ,080,000. The City issued the 1982 Home Mortgage Revenue Bonds due November 1, 1985 through 1994, with interest rates of 9.00% to 10.50%, in the original aggregate �mount of $33,325,000. These bonds are limited obligations of the City, payable solely from home mortgages and repayments and prepayments thereof. Neither the faith and credit nor the taxing pow�r of the city is pledged for payment of the bonds. Accordingly, the bonds have not been included in the Cjty's long-term debt group of accounts.

47 CITY OF PASADE .. A SUPPLEMENTAL INFORMATION ANALYSIS OF FUNDING PROCESS (FPRS) June 30, 1992

The following ten-year trend Information Is Intended for use in analysis of thePasadena Fire and Police Retirement System by giving an indication of the progress made In accumulating sufficient assetsto pay benefits whendue. The Pasaden� Fire and Police Retirement System is a single-employer Public EmployeesRetirement System which Is Includedas a trust fund in the general purpose fin.anclal statements of the City ofPasaden a.

(Dolan,In Thousands) Unfunded Pension Benefit Employer U�funded Obligation As A Contributions Net Auets Pension P!enslon Annual Percentage of As A Percentage Available For Bflne� Percent Benefit Covered Covered Employer of Covered Flscal Year Benefits Obligation Funded Obligation Payroll Payroll Contribution Payroll

1983 $24,478 $1�.649 17.4% $1 16,162 $5,631 2063% $1 ,275 22.6% 1984 $21,114 $152,278 13.9% $131,162 $5,516 2378% $1 ,488 27.0% 1985 $22,879 $157,015 14.6% Sl34,136 $5,453 2460% $1,730 31.7% 1988 $27,038 $164,074 16.5% $137,036 $5,662 2420% $1,932 34.1% 1987 $31,913 $172,356 18.5% S,40,443 $5,272 2664% $1,446 27.4% 1988 $33,317 $178,902 18.6% $145,585 $5,312 2710% $835 15.5% 1989 $33,953 $186,138 18.2% $152,183 $5, 121 2972% $682 13.3% 1990 $35,813 $1£,16,037 18.3% $160,224 $5,205 3078% $1,962 37.7% 1991 $39,866 $204,585 19.5% $164,719 $5,172 3185% $2,053 39.7% 1992 $45,021 $210,584 21 .4% $165,563 $4,637 3570% $2,136 46.1%

48 CITY OFPASADENA SUPPLEMENTAL INFORMATION ANALYSIS OF FUNDING PROCESS (PERS)

The following six-year trend lnfonnatlon Is Intended foruse In analysis of thec.tlfomla Public Employees Retirement System (PERS). Ten-yeartrend lnfonn�tlon was not available from PERS, therefore available �ars are presented (In millions).

�et Assets Pension Unfunded Annual Benefit Obligation As Available For Pension Bene�t Percent Pellslon Benefit Covered A Percentage of Flscal Year Beneffls Obligation Funded Obligation Payroll Covered Payroll ___

1987 $127.0 $157.4 80.7% $3o.4 $45.4 67.0% 1988 $141.3 $169.5 83.4% $28.2 $49.8 56.9% 1989 $159.9 $185.2 88.3% $25.2 $51.9 48.6% 1990 $178.4 $205.7 86.7% $27.3 $57.7 47.3% 1991 $195.7 $217.0 90.2% $21 .3 $64.4 33.1% 1992 N/A NIA N/A N/A $68.4 NIA

N/A: Informationnot availableas of June 30, 1992.

49 (This page intentionally left blank) APPENDIX C

[Proposed Form of Opinion of Co- Bond Counsel] [Delivery Date]

City Council City of Pasadena Pasadena, California

Ladies and Gentlemen : We have examined a record of proceedings relating to the issuance and delivery 11 on the date hereof by the City of Pasadena, California (the 11 City ) of $25 ,000, 000 aggregate principal amount of 1993 Water Revenue Bonds (the 11 1993 Bonds") . The 1993 Bonds have been issued pursuant to Article XIV of the Charter of the City , as amended (the "Charter" ) , and Ordinance No . 6541 of the City Council (the "Ordinance "), for the purpose of providing moneys to finance certain costs of acquisition and construction of additions to, and extensions and improvements of , the City's Water System, to advance refund the Refunded Bonds , to fund the 1993 Reserve Fund, and to pay costs of issuance of the 1993 Bonds . The 1993 Bonds bear interest from June 1, 1993, payable semiannually on January 1 and July 1, commencing January 1, 1994, at the rates per annum and mature on July 1 in each of the years and in the principal amounts, as follows :

Due Principal Interest Due Principal Interest July 1 Amount Rate July 1 Amount Rate 1994 $200,000 4.500% 2002 $825,000 7.500% 1995 215,000 4.500 2003 885, 000 6.875 1996 235, 000 4.500 2004 940, 000 4.800 1997 250, 000 4.500 2005 985, 000 4.900 1998 260,000 4.500 2006 1,035,000 5.000 1999 270, 000 4.500 2007 1,095, 000 5.100 2000 290,000 4.500 2013 8,090,000 6.000 2001 305, 000 4.500 2018 9,120,000 5.000 The 1993 Bonds are in the form of fully registered bonds in the denomination of $5, 000 or any integral mu ltiple thereof . The 1993 Bonds are solely an obligation of the Water Fund . The 1993 Bonds are payable on a parity with $3, 100, 000 aggregate principal amount of 1991 Bonds to remain outstanding upon the issuance of the 1993 Bonds . The City reserves the right to issue additional obligations on a parity with the 1993 Bonds upon the terms and conditions stated in the Ordinance. We have also examined originals, or copies authenticated or otherwise identified to our satisfaction, of such other agreements , documents and certificates of public officials and representatives of the City , and we have made such investigations of law and of the facts, as we have deemed necessary or advisable for purposes of the opinions herein expressed . Based upon the foregoing, we are of the opinion that : (1) The City is authorized and empowered by law , including the Charter, to adopt the Ordinance and to issue the 1993 Bonds . ( 2) The Ordinance has been duly adopted by the City Council in accordance with the Charter, and constitutes a legal, valid and binding obligation of the City enforceable in accordance with its terms . (3) The 1993 Bonds have been duly and validly authorized, executed and delivered in accordance with the Constitution and laws of the State of California, including the Charter and the Ordinance, and the 1993 Bonds are legal, valid and binding obligations of the City enforceable in accordance with their terms and the terms of the Ordinance and are entitled to the benefits of the Ordinance . The 1993 Bonds are special obligations of the City , payable solely from the Water Fund; subject only to the provisions of the Ordinance permitting the appl ication thereof for the purposes and on the terms and conditions set forth in the Ordinance. The 1993 Bonds are not a debt of the City or a legal or equitable pledge, charge, lien or encumbrance upon any of its property or upon any of its income, receipts or revenues, except as provided by the Ordinance. The owners of the 1993 Bonds shall not be entitled to compel the exercise of the taxing power by the City or the forfeiture of any of its property . (4) The Internal Revenue Code of 1986 (the "Code") sets forth certain requirements wh ich must be met subsequent to the issuance and delivery of the 1993 Bonds for interest thereon to be and remain excluded from gross income for Federal income tax purposes. Noncompliance with such requirements could cause the interest on the 1993 Bonds to be included in gross income retroactive to the date of issue of the 1993 Bonds . The City has covenanted in the Ordinance to satisfy , or take such actions as may be necessary to cause to be satisfied, each provision of the Code necessary to maintain the exclusion of interest on the 1993 Bonds from gross income for Federal income tax purposes.

C-2 In our opinion , under existing law, interest on the 1993 Bonds is exempt from personal income taxation of the State of California and, assuming compliance with the aforementioned covenant , interest on the 1993 Bonds is excluded from gross 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 on the 1993 Bonds will not be treated as a preference item for purposes of computing the alternative minimum tax imposed by section 55 of the Code . However , we note that a portion of the interest on 1993 Bonds owned by corporations may be subject to the Federal alternative minimum tax, which is based in part on adjusted current earnings . Except as stated in the two immediately preceding paragraphs, we express no opinion as to any other Federal or state tax consequences of the ownership or disposition of the 1993 Bonds . The foregoing opinions are subject to the effect of bankruptcy, insolvency, reorganization , moratorium and other similar laws and principles of equity relating to or affecting the enforcement of creditors' rights or contractual obligations generally. Very truly yours,

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