Brentwood City Hall


Our home pageContact UsPrevious Page

Central Park Gazebo

CITY COUNCIL AGENDA ITEM 27

Meeting Date: February 12, 2002

Subject/Title: Approve a Resolution Authorizing Issuance of City of Brentwood General Obligation Bonds, Series 2002, to Finance the Construction of a New Police Station

Submitted by: Pam Ehler, Director of Finance and Information Systems

Approved by: John Stevenson, City Manager


RECOMMENDATION 
Approve a Resolution Authorizing Issuance and Sale of not to Exceed $6,000,000 Principal Amount of Bonds, Approving the Form of the Paying Agent Agreement, Authorizing the Execution and Delivery of a Bond Purchase Agreement by and among the City of Brentwood, the Brentwood Infrastructure Financing Authority and RBC Dain Rauscher and Approving the Form and Distribution of an Official Statement and Authorizing Certain Actions in Connection with the Issuance, Sale and Delivery of Such Bonds.


PREVIOUS ACTION
On July 10, 2001, the City Council adopted its Resolution No. 2332 determining that the public interest and necessity demand the acquisition, construction, and completion by the City of Brentwood of a new police station. By Ordinance No. 680 adopted by the City Council on the same date, the City Council called a Municipal Bond Election for the purposes of submitting to the qualified electors of the City the measure of whether bonded indebtedness of the City in the amount of $6,000,000 should be incurred to finance the acquisition, construction, and completion of said new police station. The election was consolidated with the other elections of the County of Contra Costa and was conducted on November 6, 2001. The measure was passed with more than two-thirds of the voters voting in favor thereof. On December 11, 2001, the City Council adopted its Resolution No. 2419, declaring the election results.


BACKGROUND
The City has found and determined that the public interest and necessity demand the acquisition, construction and completion of a new police station, including the construction of necessary facilities and other works, property and structures. The cost of the acquisition, construction and completion of said police station will be too great to be paid out of the ordinary annual income and revenue of the City, and will require an expenditure greater than the amount allowed therefor by the annual tax levy. By proceedings duly had and taken, the City decided to incur a bonded indebtedness to finance the acquisition and construction of the new police station through the issuance of a series of general obligation bonds in a principal amount not to exceed $6,000,000 and called an election for the purpose of submitting to the qualified electors of the City a measure of whether said bonded indebtedness should be incurred. At an election held on November 6, 2001, the measure was passed with more than two-thirds of the voters voting in favor thereof. 
Following the results of the election, it is recommended that the City Council authorize the issuance of a series of general obligation bonds, in a principal amount not to exceed $6,000,000, to finance the construction of the new police station. To ensure significant public benefits in the form of savings in financing costs and more efficient delivery of local agency services to residential and commercial development, it is recommended that the City sell the bonds to the Brentwood Infrastructure Financing Authority for concurrent sale to RBC Dain Rauscher, formerly Sutro & Co. Incorporated, as Underwriter.

FISCAL IMPACT
No fiscal impact to the City.

Attachments: 
· Resolution
· Paying Agent Agreement
· Bond Purchase Agreement
· Preliminary Official Statement




RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD AUTHORIZING ISSUANCE AND SALE OF NOT TO EXCEED $6,000,000 PRINCIPAL AMOUNT OF BONDS, APPROVING THE FORM OF THE PAYING AGENT AGREEMENT, AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND PURCHASE AGREEMENT BY AND AMONG THE CITY OF BRENTWOOD, THE BRENTWOOD INFRASTRUCTURE FINANCING AUTHORITY AND RBC DAIN RAUSCHER AND APPROVING THE FORM AND DISTRIBUTION OF AN OFFICIAL STATEMENT AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION WITH THE ISSUANCE, SALE AND DELIVERY OF SUCH BONDS


WHEREAS, the City Council (the "City Council") of the City of Brentwood (the "City"), located in the County of Contra Costa (the "County), California, duly called and an election was regularly held in the City on November 6, 2001, at which the following proposition was submitted to the electors of the City:

"Shall the City of Brentwood be authorized to issue General Obligation Bonds in the amount of six million dollars ($6,000,000) principal amount to finance the construction, acquisition, and improvement of a new Police Station, and all costs incident thereto?"

and
WHEREAS, at least two-thirds of the votes cast on said proposition were in favor of issuing said bonds; and
WHEREAS, the City Council has determined that significant public benefits will accrue from the issuance of bonds to finance the construction, acquisition and improvement of a police station, including the provision of demonstrable savings in financing costs pursuant to Section 6586(a) of the Government Code and more efficient delivery of local agency services to residential and commercial development pursuant to Section 6586(d) of the Government Code; and
WHEREAS, the City Council deems that it is necessary and desirable to issue its "City of Brentwood General Obligation Bonds, Series 2002," in an aggregate principal amount not exceeding $6,000,000, pursuant to Chapter 4 of Division 4 of Title 4 of the California Government Code, according to the terms and in the manner as set forth in the Paying Agent Agreement (the "Paying Agent Agreement") by and between the City and U.S. Bank, N.A., as Paying Agent (the "Paying Agent") for the purpose of financing the construction, acquisition and improvement of a new police station in the City of Brentwood and paying the costs of issuance for the Bonds; and
WHEREAS, the City intends to sell the Bonds to the Brentwood Infrastructure Financing Authority for concurrent resale to RBC Dain Rauscher (the "Underwriter") pursuant to a bond purchase agreement in substantially the form on file with the City Clerk of the City (the “Bond Purchase Agreement”), provided, however that (a) the Underwriter's discount shall not exceed 2%, (b) the maximum interest rate on any maturity shall not exceed 7%; and (c) the maximum term of any maturity shall not extend beyond the year 2033; and
WHEREAS, the City has caused to be prepared a Preliminary Official Statement for the Bonds, a copy of which is on file with the City Clerk of the City (the “Preliminary Official Statement”);
NOW, THEREFORE, BE IT RESOLVED by the City of Brentwood as follows:
Section 1. The foregoing recitals are true and correct, and this Council so finds and determines.
Section 2. The form of the Paying Agent Agreement, on file with the City Clerk of the City and incorporated into this Resolution by reference, is hereby approved. The City Manager or the Director of Finance and Information Systems, or the designee thereof, is hereby authorized to execute and deliver the Paying Agent Agreement in substantially said form with such changes or additions thereto that may hereafter become necessary in the interests of the City and which are reviewed and approved by the City Manager or the Director of Finance and Information Systems or the designee thereof, in consultation with the City's bond counsel, such approval to be conclusively evidenced by the execution and delivery of the Paying Agent Agreement.
Section 3. The form of the Bond Purchase Agreement, on file with the City Clerk of the City and incorporated into this Resolution by reference, is hereby approved. The City manager or the Director of Finance and Information Systems, or the designee thereof, is hereby authorized to execute and deliver the Bond Purchase Agreement in substantially said form with such changes or additions thereto that may hereafter become necessary in the interests of the City and which are reviewed and approved by the City manager or the Director of Finance and Information Systems, or the designee thereof, in consultation with the City’s bond counsel, such approval to be conclusively evidenced by the execution and delivery of the Bond Purchase Agreement.
Section 4. The Preliminary Official Statement is hereby approved. The Preliminary Official Statement is hereby deemed final except for certain final pricing and related information pursuant to Rule 15c2-12 of the Securities Exchange Commission. RBC Dain Rauscher is hereby authorized and directed to distribute or cause the distribution of the Preliminary Official Statement to prospective purchasers of the Bonds and any prior distribution of the Preliminary Official Statement is hereby ratified and confirmed. The City Manager or the Director of Finance and Information Systems, or the designee thereof, is hereby authorized to execute and deliver a final Official Statement in substantially the form of the Preliminary Official Statement, which final Official Statement shall include final pricing and related information and any other changes in the interests of the City which are approved by the City Manager or the Director of Finance and Information Systems, or the designee thereof, in consultation with the City’s disclosure counsel, such approval to be conclusively evidenced by such execution and delivery.
Section 5. The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things and deliver any and all documents which they may deem necessary or advisable in order to carry out, give effect to and comply with the terms and intent of this resolution. Such actions heretofore taken by such officers are hereby ratified, confirmed and approved.
Section 6. This resolution shall take effect from and after its adoption.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 12th day of February 2002, by the following vote:

AYES: 
NOES: 
ABSENT: 


Michael McPoland
Mayor


Attest:



Karen Diaz, CMC
City Clerk
City of Brentwood


CITY CLERK’S CERTIFICATE
I, Karen Diaz, City Clerk of the City of Brentwood, do hereby certify as follows:
The following resolution is a full, true and correct copy of a resolution duly adopted by a vote of a majority of the members of the City Council of the City of Brentwood at a regular meeting of said City duly and regularly and legally held in the City of Brentwood, California, on February 12, 2002, of which all of such members had due notice, as follows:
AYES: 
NOES: 
ABSENT: 
An agenda of said meeting was posted at least 72 hours before said meeting at 150 City Park Way, Brentwood, California, a location freely accessible to members of the public, and a brief description of said resolution appeared on said agenda.
I have carefully compared the foregoing with the original minutes of said meeting on file and of record in my office, and the foregoing is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes.
Said resolution has not been amended, modified or rescinded since the date of its adoption and the same is now in full force and effect.
Dated: February 12, 2002.


City Clerk of the
City of Brentwood

[Seal]



PAYING AGENT AGREEMENT


by and between the


CITY OF BRENTWOOD
County of Contra Costa, California



and


U.S. BANK, N.A.
as Paying Agent





Dated as of January 1, 2002




RELATING TO THE
CITY OF BRENTWOOD
GENERAL OBLIGATION BONDS,
SERIES 2002



ARTICLE I DEFINITIONS 2
Section 1.01. Definitions 2
ARTICLE II THE BONDS 4
Section 2.01. Authorization; Terms of Bonds 4
Section 2.02. Form of Bonds 6
Section 2.03. Execution and Authentication of Bonds 6
Section 2.04. Book-Entry System 6
Section 2.05. Discontinuation of Book-Entry System; Transfer and Exchange of Bonds 7
Section 2.06. Bond Register 8
ARTICLE III ISSUANCE OF THE BONDS 8
Section 3.01. Delivery of Bonds 8
Section 3.02. Application of Proceeds of Sale of Bonds 8
ARTICLE IV REDEMPTION OF THE BONDS 9
Section 4.01. Terms of Redemption 9
Section 4.02. Notice of Redemption 9
Section 4.03. Redemption Fund 11
Section 4.04. Effect of Redemption 11
ARTICLE V COVENANTS OF THE CITY 12
Section 5.01. Payment of Principal and Interest 12
Section 5.02. General Obligation; Levy of Tax 12
Section 5.03. Validity of Bonds 12
Section 5.04. Further Assurances 12
Section 5.05. Tax Covenants 12
Section 5.06. Investment of Funds 13
ARTICLE VI THE PAYING AGENT 13
Section 6.01. Paying Agent; Acceptance; Removal; Resignation 13
Section 6.02. Duties of Paying Agent 14
Section 6.03. Reliance on Documents, Etc 14
Section 6.04. Recitals of City 14
Section 6.05. May Own Bonds 14
Section 6.06. Money Held by Paying Agent; Investment 14
Section 6.07. Other Transactions 15
Section 6.08. Interpleader 15
Section 6.09. Indemnification 15
Section 6.10. Compensation 15
ARTICLE VII DEFEASANCE OF BONDS 15
Section 7.01. Defeasance 15
Section 7.02. Unclaimed Monies 16
ARTICLE VIII AMENDMENT OF PAYING AGENT AGREEMENT 16
Section 8.01. Amendment with Bondholder Consent; Amendment Without Bondholder Consent 16
Section 8.02. Disqualified Bonds 17
Section 8.03. Endorsement or Replacement of Bonds After Amendment 17
Section 8.04. Amendment by Mutual Consent 17
ARTICLE IX MISCELLANEOUS 17
Section 9.01. Counterparts 17
Section 9.02. Continuing Disclosure 17
Section 9.03. Unclaimed Moneys 18
Section 9.04. Further Assurances; Incontestability 18
Section 9.05. General Authorization 18
Section 9.06. Waiver of Personal Liability 18
Section 9.07. Acquisition of Bonds by City 18
Section 9.08. Destruction of Cancelled Bonds 18
Section 9.09. Benefits of Agreement Limited to Parties 19
Section 9.10. Notices 19
Section 9.11. Governing Law 19
Section 9.12. Severability 19






$_____________
PAYING AGENT AGREEMENT
This PAYING AGENT AGREEMENT, dated as of January 1, 2002, by and between U.S. BANK, N.A., a national banking association organized and existing under and by virtue of the laws of the United States of America, as paying agent (the “Paying Agent”), and the CITY OF BRENTWOOD, a municipal corporation organized and existing under and by virtue of the Constitution and laws of the State of California (the “City”),
W I T N E S S E T H:
WHEREAS, the Council has determined, by its Resolution No. 2332, adopted on July 10, 2001, that the public interest and necessity demand the acquisition, construction and completion by the City of a new police station, including construction of facilities, works, property or structures necessary or convenient for this police station, and that the cost of this police station will require an expenditure greater than the amount allowed therefore by annual tax levy;
WHEREAS, by Ordinance No. 680 adopted by the City Council on July 10, 2001, the City Council called a Municipal Bond Election on November 6, 2001 for the purpose of submitting to the qualified electors of the City the measure of whether bonded indebtedness of the City in the amount of $6,000,000 should be incurred to finance the acquisition, construction and completion of said police station;
WHEREAS, said election was conducted by the County of Contra Costa in consolidation with its other elections on November 6, 2001, and was passed with more than two-thirds of the voters voting in favor of said measure;
WHEREAS, the City Council adopted its Resolution No. 2419 on December 11, 2001, declaring the election results of said election;
WHEREAS, the City is empowered under the provisions of Article 1 of Chapter 4 of Division 4 of Title 4 of the California Government Code and has adopted its Resolution No. _____ on February 12, 2002 authorizing the issuance of the City of Brentwood General Obligation Bonds, Series 2002 (the “Bonds”) in the principal amount of $6,000,000 in order to provide funds to finance the acquisition, construction and completion of said police station and to pay the costs of issuance for the Bonds;
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Paying Agent Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Paying Agent Agreement;
NOW, THEREFORE, in order to provide for the terms and the payment of the Bonds and the performance and observance by the City of all the covenants, agreements and conditions herein and in the Bonds contained, and in consideration of the mutual covenants and agreements contained herein, and for other valuable consideration, the City and the Paying Agent hereby agree as follows:
1. 

DEFINITIONS
Definitions. Unless the context otherwise requires, the terms defined in this Section 1.01 shall for all purposes hereof and of any amendment hereof or supplement hereto and of the Bonds and of any certificate, opinion, request or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein:
“Authorized City Representative” shall mean the City Manager, the Treasurer, the Finance Director, or any duly appointed deputy of any of them.
“Bondowner”, “Bondholder”, “Holder” or “Owner” shall mean the person in whose name any Bond shall be registered.
“Bonds” shall mean the General Obligation Bonds.
“Business Day” shall mean any day other than a Saturday, Sunday, legal holiday or other day on which banking institutions in San Francisco or Los Angeles, California, or New York, New York, or any state in which the principal corporate trust office of the Paying Agent is located, are authorized or required by law to close, or any day on which the New York Stock Exchange is closed.
“Certificate of the City” See “Request of the City” defined herein. 
“City” shall mean the City of Brentwood, County of Contra Costa, State of California.
“City Manager” shall mean the City Manager of the City.
“Clerk” shall mean the City Clerk of the City.
“Closing Date” shall mean ________, 2002, being the date of initial delivery of the Bonds.
“Code” shall mean the Internal Revenue Code of 1986, as the same shall be hereafter amended, and any regulations heretofore issued or which shall be hereafter issued by the United States Department of the Treasury thereunder.
“Continuing Disclosure Certificate” shall mean that certain Continuing Disclosure Certificate executed and delivered by the City dated the date of issuance and delivery of the Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof.
“Costs of Issuance” shall mean all items of expense directly or indirectly payable by or reimbursable to City and related to the authorization, issuance, sale and delivery of the Bonds, including but not limited to costs of preparation and reproduction of documents, printing expenses, filing and recording fees, initial fees and charges of the Paying Agent, underwriting fees, legal fees and charges, fees and disbursements of consultants and professionals, rating agency fees, fees and expenses related to any credit enhancement (including without limitation bond insurance) for the bonds, fees and expenses with respect to the conduct of the election and other proceedings authorizing the issuance of the bonds, fees and charges for preparation, execution and safekeeping of the Bonds and any other cost, charge or fee in connection with the original issuance of the Bonds. 
“Costs of Issuance Account” shall mean the account of that name created pursuant to Section 3.02(a) hereof.
“Council” shall mean the City Council of the City.
“Dated Date” shall mean [DATE].
“Debt Service Fund” shall mean the Debt Service Fund created pursuant to Section 3.02(c) hereof.
“Finance Director” shall mean the Director of Finance and Information Systems of the City.
“General Obligation Bonds” shall mean the City of Brentwood General Obligation Bonds, Series 2002, issued pursuant to Article II hereof.
“Holder” See “Bondowner” defined herein.
“Interest Payment Date” shall mean [February 1] or [August 1] of each year, as specified in Section 2.01 hereof.
“Law” shall mean Article 1 of Chapter 4 of Division 4 of Title 4 of the California Government Code, and other applicable law.
“Opinion of Counsel” shall mean a written opinion of counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the City.
“Ordinance” shall mean Ordinance No. 680 adopted by the City Council on July 10, 2001.
“Owner.” See “Bondowner” defined herein.
“Paying Agent” shall mean U.S. Bank, N.A., acting as paying agent, registrar, and transfer agent with respect to the Bonds, its successors and assigns and any other corporation or association which may at any time be substituted in its place as provided in Section 6.01 hereof.
“Principal Payment Date” shall mean [August 1] of each year specified in Section 2.01 hereof.
“Project” shall mean that new police station to be acquired, constructed and completed pursuant to the ordinance, including required construction of facilities, works, property and structures necessary for the operation of the police station, for the benefit of the City, to be funded with the proceeds of the Bonds.
“Project Fund" shall mean the fund established by that name pursuant to Section 3.02(b) of this Paying Agent Agreement to hold the proceeds of the Bonds or a portion thereof prior to expenditure on the Project being financed with the proceeds of the Bonds.
“Purchase Agreement” shall mean that certain bond purchase agreement dated [January __, 2002] among the City, the Purchaser and the Underwriter.
“Purchaser” shall mean the Brentwood Infrastructure Financing Authority.
“Record Date” shall mean the fifteenth day of the month immediately preceding an Interest Payment Date, whether or not such day is a Business Day.
“Redemption Date” shall mean the Interest Payment Date on which the Bonds or any of them are called for redemption, as provided in Article IV hereof.
“Redemption Fund” shall mean the fund of that name created pursuant to Section 4.03 hereof.
“Request of the City” or “Certificate of the City” shall mean a written request or written certificate, respectively, authorized and signed by an Authorized City Representative.
“Sinking Fund Account” shall mean the Account established in the Redemption Fund pursuant to Section 4.03 hereof.
“Sinking Fund Payments” shall mean the payments required to be deposited in the Sinking Fund Account for the payment of the term bonds, as described in Section 4.01(b) hereof.
“Tax Certificate” shall mean the Tax Certificate concerning certain matters pertaining to the use of proceeds of the Bonds, executed and delivered by the City on the date of issuance of the Bonds, including all exhibits attached thereto, as such certificate may from time to time be modified or supplemented in accordance with the terms thereof.
“Treasurer” shall mean the Treasurer of the City.
“Underwriter” shall mean RBC Dain Rauscher.
2. 

THE BONDS
Authorization; Terms of Bonds. The Bonds shall be issued for the purpose of providing funds to pay for the Project, and to pay costs incurred in connection with the issuance, sale and delivery of the Bonds. The Bonds shall be issued by the City under and subject to the terms of this Paying Agent Agreement and the Law, and shall be designated as the “City of Brentwood General Obligation Bonds, Series 2002” and shall be in the aggregate principal amount of six million dollars ($6,000,000.00).
The Bonds shall be dated as of the Dated Date. The Bonds shall bear interest from the Dated Date to their respective maturity dates, payable commencing on [August 1], 2002, and semiannually thereafter on [February 1] and [August 1] in each year, at the respective interest rates shown in the table below in this Section 2.01.
Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication and registration thereof unless such Bond is authenticated as of a day during the period from and after any Record Date to the immediately following Interest Payment Date, inclusive, in which event it shall bear interest from such Interest Payment Date, or unless it is authenticated on or before the first Record Date, in which event it shall bear interest from the Dated Date; provided, however, that if, at the time of authentication of any Bond, interest is then in default on outstanding Bonds, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on the outstanding Bonds. Interest on the Bonds shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.
The Bonds shall be issued in fully registered form, without coupons, in the denomination of $5,000 or any integral multiple thereof; provided that no Bond shall have principal maturing on more than one principal maturity date.
The Bonds when issued shall be registered in the name of “Cede & Co.,” as nominee of The Depository Trust Company, New York, New York, and shall be initially issued as one bond for each of the maturities of the Bonds, in the principal amounts set forth in the table below in this Section 2.01. The Depository Trust Company is hereby appointed depository for the Bonds and registered ownership of the Bonds may not thereafter be transferred except as provided in Section 2.04 hereof.
The Bonds shall mature on [August 1] of each of the years, in the principal amounts, and bearing interest at the respective interest rates, shown below:
Maturity Date[August 1] PrincipalAmount Interest Rate 




The principal and any premium of the Bonds shall be payable in lawful money of the United States of America to the Owner thereof, upon the surrender thereof at the office of the Paying Agent in St. Paul, Minnesota, or at such other location as the Paying Agent shall designate. The interest on the Bonds shall be payable in like lawful money to the person whose name appears on the bond registration books of the Paying Agent as the Owner thereof as of the close of business on the Record Date immediately preceding such Interest Payment Date.
Payment of the interest on any Bond in accordance with Section 6.02 shall be made to the person appearing on the bond registration books of the Paying Agent as the Owner thereof, such interest to be paid by check mailed by first class mail to such Owner at such Owner’s address as it appears on such registration books or at such address as the Owner may have filed with the Paying Agent for that purpose; or upon written request of the Owner of Bonds aggregating not less than $1,000,000 in principal amount, given no later than the close of business on the Record Date immediately preceding the applicable Interest Payment Date, by wire transfer in immediately available funds to an account maintained in the United States at such wire address as such Owner shall specify in its written notice. So long as Cede & Co. or its registered assigns shall be the registered owner of any of the Bonds, payment shall be made thereto by wire transfer as provided in Section 2.04(d) hereof.
Form of Bonds. The Bonds, the Paying Agent’s certificate of authentication and registration, and the form of assignment to appear thereon shall be in substantially the forms, respectively, attached hereto as Exhibit A, with necessary or appropriate variations, omissions and insertions as permitted or required by this Paying Agent Agreement (provided that if a portion of the text of any Bond is printed on the reverse of the bond, the following legend shall be printed on the bond: “THE PROVISIONS OF THIS BOND ARE CONTINUED ON THE REVERSE HEREOF AND SUCH CONTINUED PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.”).
Execution and Authentication of Bonds. The Bonds shall be signed by the manual or facsimile signature of the Mayor of the City and the Treasurer and shall be countersigned by manual or facsimile signature of the Clerk. The Bonds shall be authenticated by a manual signature of a duly authorized officer of the Paying Agent.
Only such of the Bonds as shall bear thereon a certificate of authentication and registration in the form hereinafter recited, executed by the Paying Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Paying Agent Agreement, and such certificate of the Paying Agent shall be conclusive evidence that the Bonds so authenticated have been duly authenticated and delivered hereunder and are entitled to the benefits of this Paying Agent Agreement.
Book-Entry System. 2.1.1. The Bonds shall be initially issued and registered as provided in Section 2.01 hereof. Registered ownership of the Bonds, or any portion thereof, may not thereafter be transferred except:
1. To any successor of Cede & Co., as nominee of The Depository Trust Company, or its nominee, or to any substitute depository designated pursuant to clause (ii) of this section (a “substitute depository”); provided, that any successor of Cede & Co., as nominee of The Depository Trust Company or substitute depository, shall be qualified under any applicable laws to provide the services proposed to be provided by it;
2. To any substitute depository not objected to by the City, upon (1) the resignation of The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository, or (2) a determination by the City to substitute another depository for The Depository Trust Company (or its successor) because The Depository Trust Company or its successor (or any substitute depository or its successor) is no longer able to carry out its functions as depository; provided, that any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or
3. To any person as provided below, upon (1) the resignation of The Depository Trust Company or its successor (or substitute depository or its successor) from its functions as depository, or (2) a determination by the City to remove The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository.
In the case of any transfer pursuant to clause (i) or clause (ii) of subsection (a) hereof, upon receipt of the outstanding Bonds by the Paying Agent, together with a Request of the City, a new Bond for each maturity shall be executed and delivered in the aggregate principal amount of the Bonds then outstanding, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such Request of the City. In the case of any transfer pursuant to clause (iii) of subsection (a) hereof, upon receipt of the outstanding Bonds by the Paying Agent together with a Request of the City, new Bonds shall be executed and delivered in such denominations numbered in the manner determined by the Paying Agent and registered in the names of such persons as are requested in such Request of the City, subject to the limitations of Section 2.01 and the receipt of such a Request of the City, and thereafter, the Bonds shall be transferred pursuant to the provisions set forth in Section 2.05 of this Paying Agent Agreement; provided, that the Paying Agent shall not be required to deliver such new Bonds within a period of fewer than sixty (60) days.
The City and the Paying Agent shall be entitled to treat the person in whose name any Bond is registered as the Owner thereof, notwithstanding any notice to the contrary received by the Paying Agent or the City, and the City and the Paying Agent shall have no responsibility for transmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the Bonds. Neither the City nor the Paying Agent shall have any responsibility or obligation, legal or otherwise, to the beneficial owners or to any other party including The Depository Trust Company or its successor (or substitute depository or its successor), except as the owner of any Bonds.
So long as the outstanding Bonds are registered in the name of Cede & Co. or its registered assigns, the City and the Paying Agent shall cooperate with Cede & Co., as sole holder, or its registered assigns, in effecting payment of the principal of and interest on the Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made immediately available on the date they are due.
Discontinuation of Book-Entry System; Transfer and Exchange of Bonds. In the event that at any time the Bonds shall no longer be registered in the name of Cede & Co. as a result of the operation of Section 2.04 hereof, then the procedures contained in this Section 2.05 shall apply.
Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred upon the books required to be kept pursuant to the provisions of Section 2.06 hereof by the person in whose name it is registered, in person or by the duly authorized attorney of such person, upon surrender of such Bond to the Paying Agent for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Paying Agent.
Whenever any Bond or Bonds shall be surrendered for transfer, the designated City officials shall execute (as provided in Section 2.03 hereof) and the Paying Agent shall authenticate and deliver a new Bond or Bonds of the same series and maturity, for a like aggregate principal amount. The Paying Agent shall require the payment by the Bondowner requesting any such transfer of any tax or other governmental charge required to be paid with respect to such transfer.
No transfer of Bonds shall be required to be made by the Paying Agent during the period from and after any Record Date to and including the applicable Interest Payment Date.
Exchange of Bonds. Bonds may be exchanged at the office of the Paying Agent in St. Paul, Minnesota, or such other place as the Paying Agent shall designate, for a like aggregate principal amount of Bonds of other authorized denominations of the same maturity. The Paying Agent shall require the payment by the Bondowner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. No exchange of Bonds shall be required to be made by the Paying Agent during the period from and after any Record Date to and including the applicable Interest Payment Date.
Bond Register. 4. The Paying Agent will keep or cause to be kept, at its principal corporate trust office, sufficient books for the registration and transfer of the Bonds, which shall at all times be open to inspection by the City, and, upon presentation for such purpose, the Paying Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, Bonds as hereinbefore provided.
The Paying Agent shall assign each Bond authenticated and registered by it a distinctive letter, or number, or letter and number.
3. 

ISSUANCE OF THE BONDS
Delivery of Bonds. The Paying Agent is hereby authorized to authenticate and deliver the Bonds to or upon the written order of the City, pursuant to the Purchase Agreement.
Application of Proceeds of Sale of Bonds. The City shall direct the Purchaser and the Underwriter, pursuant to the Purchase Agreement, to pay the net purchase price of the Bonds by wire transfer to the Paying Agent upon the delivery of and in exchange for the receipt of the Bonds, and the Paying Agent shall deposit or transfer said sum as follows:
The amount of $____________________ in the Costs of Issuance Account, which is hereby created and shall be held by the Paying Agent on behalf of the City, which amount shall be applied to pay authorized Costs of Issuance of the Bonds pursuant to a Request or Requests of the City.
Any monies remaining in the Costs of Issuance Account on July 1, 2002, shall be transferred to the Finance Director for deposit in the Project Fund described above.
The amount of $____________, deposited in the Project Fund, which is hereby created and which shall be held by the City hereunder.
Any monies remaining in the Project Fund after completion of the Project shall be transferred to the Debt Service Fund.
The amount of $________________, representing original issue premium, shall be deposited in the Debt Service Fund, which is hereby created and which shall be held by the City hereunder.
4. 

REDEMPTION OF THE BONDS
Terms of Redemption. 4.1.1. Optional Redemption. Bonds maturing on or before [August 1], 20__ are not subject to redemption prior to their respective stated maturity dates. Bonds maturing on and after [August 1], 20__ are subject to redemption prior to their respective stated maturity dates, at the option of the City, from any source of available funds, as a whole or in part on any date, on or after [August 1], 20__. If less than all of the Bonds are called for redemption, Bonds shall be redeemed in inverse order of maturities, and if less than all of the Bonds of any given maturity are called for redemption, the portions of Bonds of a given maturity to be redeemed shall be determined by lot. Bonds shall be redeemed at the following redemption prices (expressed as a percentage of the principal amount of the Bonds called for redemption), together with interest accrued thereon to the date of redemption:
Redemption Date OptionalRedemption Price
[August 1], 20__ through [July 31], 20__ 10_%
[August 1], 20__ through [July 31], 20__ 10_%
[August 1], 20__ and thereafter 100%
Mandatory Sinking Fund Redemption. The Bonds maturing on [August 1], 20__, upon notice as hereinafter provided, shall also be subject to mandatory sinking fund redemption prior to maturity, in part, by lot, on [August 1], 20__, in the amount of the mandatory Sinking Fund Payments set forth below, at a redemption price equal to the sum of the principal amount thereof plus accrued interest thereon to the Redemption Date, without premium.
Mandatory Sinking FundPayment Date[August 1] Mandatory Sinking FundPayment Amount
$ ____
____


Notice of Redemption. 4.1.2. Notice of any redemption of Bonds shall be mailed by the Paying Agent in accordance with a written Request of the City given pursuant to Section 4.02(c), postage prepaid, not less than thirty (30) nor more than sixty (60) days prior to the Redemption Date (i) to the respective registered owners thereof at the addresses appearing on the bond registration books, (ii) to the Securities Depositories specified below, and (iii) to one or more of the Information Services specified below, and the City shall also cause such notice to be given as required by the Continuing Disclosure Certificate. Notice of redemption to the Securities Depositories and the Information Services shall be given by registered mail. Each notice of redemption shall (a) state the date of such notice; (b) state the name of the Bonds and the date of issue of the Bonds; (c) state the redemption date; (d) state the redemption price; (e) state the dates of maturity of the Bonds to be redeemed, and, if less than all of the Bonds of any such maturity are to be redeemed, the distinctive numbers of the Bonds of such maturity to be redeemed, and in the case of Bonds redeemed in part only, the respective portions of the principal amount thereof to be redeemed; (f) state the CUSIP number, if any, of each maturity of Bonds to be redeemed; (g) require that such Bonds be surrendered by the owners at the office of the Paying Agent in St. Paul, Minnesota, or at any other place or places designated by the Paying Agent; and (h) give notice that further interest on such Bonds will not accrue after the designated redemption date.
For the purposes of this Section, Information Services shall mean:
Financial Information, Inc.’s
“Daily Called Bond Service,”
30 Montgomery Street, 10th Floor
Jersey City, New Jersey 07302
Attention: Editor
Kenny Information Services’
“Called Bond Service”
55 Broad Street, 28th Floor
New York, New York 10004
Moody’s “Municipal and Government”
99 Church Street, 8th Floor
New York, New York 10007-2796
Attention: Municipal News Reports
Standard and Poor’s “Called Bond Record”
25 Broadway, 3rd Floor
New York, New York 10004
Securities Depositories shall mean:
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530
Fax: (516) 227-4039 or 4190
Midwest Securities Trust Company
Capital Structures – Call Notification
440 South LaSalle Street
Chicago, Illinois 60605
Fax: (312) 663-2343
Philadelphia Depository Trust Company
Reorganization Division
1900 Market Street
Philadelphia, Pennsylvania 19103
Attention: Bond Department
Dex-(215) 496-5058
or, in accordance with then-current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds and/or such other securities depositories, or no such services or depositories, as the City may designate in a Request of the City delivered to the Paying Agent.
The actual receipt by any Bondowner or of any Information Service or Securities Depository of notice of such redemption shall not be a condition precedent to redemption, and failure to receive such notice or any defect in the notice mailed shall not affect the validity of the proceedings for the redemption of such Bonds or the cessation of accrual of interest on the date fixed for redemption.
The notice or notices required for redemption shall be given by the Paying Agent, upon the written Request of the City specifying all information required by Section 4.02(a) to be included in the notice. A certification by the Paying Agent or the City that notice of call and redemption has been given to Bondowners and to the appropriate Securities Depositories and Information Services as herein provided shall be conclusive as against all parties, and no Bondowner whose bond is called for redemption may object thereto or object to the cessation of accrual of interest on the Redemption Date by any claim or showing that said Bondowner failed to actually receive such notice of call and redemption.
Redemption Fund. Prior to the time the City determines to call and redeem any of the Bonds there shall be established in the treasury of the City or deposited with the Paying Agent a redemption fund or account (the “Redemption Fund”) for the Bonds, and prior to or on the Redemption Date there must be set aside in said Redemption Fund moneys available for the purpose and sufficient to redeem, at the premiums payable as in Section 4.01(a) provided, the Bonds designated in said notice of redemption. Said moneys must be set aside in said Redemption Fund, and shall be applied on or after the Redemption Date, solely for payment of principal of and premium, if any, on the Bonds to be redeemed upon presentation and surrender of such Bonds. Any interest due on or prior to the Redemption Date may be paid from the Debt Service Fund provided for herein, or may be paid from the Redemption Fund, as the City shall determine. 
There shall be established within the Redemption Fund a Sinking Fund Account into which the Sinking Fund Payments shall be deposited for the mandatory sinking fun redemption of the term bonds, pursuant to Section 4.01(b) hereof.
Effect of Redemption. 4.1.3. When notice of redemption has been given, substantially as provided for herein, and when a Certificate of the City shall have been delivered to the Paying Agent certifying that the amount necessary for the payment of principal of and premium, if any, on the Bonds to be redeemed is set aside for such purposes in the Debt Service Fund, as provided for herein, the Bonds designated for redemption shall become due and payable on the date fixed for redemption thereof, and upon presentation and surrender of said Bonds at the place specified in the notice of redemption, such Bonds shall be redeemed and paid at said redemption price out of moneys transferred to the Paying Agent for the purpose, and the Paying Agent will pay such redemption price in accordance with Section 6.02, and no interest will accrue on such Bonds called for redemption after the Redemption Date specified in such notice, and the owners of said Bonds so called for redemption after such redemption date shall look for the payment of such Bonds and the premium thereon only to said Redemption Fund and any moneys transferred therefrom to the Paying Agent for such purpose. All Bonds redeemed shall be cancelled forthwith by the Paying Agent and shall not be reissued.
5. 

COVENANTS OF THE CITY
Payment of Principal and Interest. On or before the Business Day immediately prior to the date any payment is due in respect of the Bonds, the City will cause monies on deposit in the debt service fund created in the treasury of the City for the payment of the Bonds, or, to the extent necessary, such other monies as shall be lawfully available for the payment of the Bonds, to be deposited with the Paying Agent sufficient to pay the principal and the interest (and premium, if any) to become due in respect of all Bonds outstanding on such payment date. When and as paid in full, and following surrender thereof to the Paying Agent, all Bonds shall be cancelled by the Paying Agent, and thereafter they shall be destroyed.
General Obligation; Levy of Tax. The Bonds represent a general obligation of the City. The money for the payment of principal and interest on the Bonds shall be raised by ad valorem taxation without limitation as to rate or amount (except with respect to certain personal property which is taxable at limited rates) upon all taxable property in the City, and provision shall be made for the levy and collection of such taxes in the manner provided by law, and such money shall be deposited by the Finance Director in the debt service fund created in the treasury of the City for the payment of the Bonds.
Validity of Bonds. The recital contained in the Bonds that the same are regularly issued pursuant to the Law shall be conclusive evidence of their validity and of compliance with the provisions of the Law in their issuance.
Further Assurances. The City will promptly execute and deliver or cause to be executed and delivered all such other and further instruments, documents or assurances, and promptly do or cause to be done all such other and further things, as may be necessary or reasonably required in order to further and more fully vest in the Bondowners all rights, interest, powers, benefits, privileges and advantages conferred or intended to be conferred upon them by this Paying Agent Agreement.
Tax Covenants. 5.1.1. The City covenants that it shall not take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of the interest payable on the Bonds under Section 103 of the Code. Without limiting the generality of the foregoing, the City covenants that it will comply with the requirements of the Tax Certificate, which is incorporated herein as if fully set forth herein. This covenant shall survive payment in full or defeasance of the Bonds.
In the event that at any time the City is of the opinion that for purposes of this Section it is necessary or helpful to restrict or limit the yield on the investment of any monies held by the Paying Agent hereunder, the City shall so instruct the Paying Agent in writing.
Notwithstanding any provision of this Section, if the City shall obtain an Opinion of Counsel that any specified action required under this Section is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest on the Bonds, the City and the Paying Agent may conclusively rely on such Opinion of Counsel in complying with the requirements of this Section and of the Tax Certificate, and the covenants hereunder shall be deemed to be modified to that extent.
Investment of Funds. Monies in any fund created hereunder and held by the City shall be invested by or at the direction of the Finance Director in accordance with the City’s investment policy and pursuant to applicable law. Monies held by the Paying Agent shall be held and invested pursuant to Section 6.06 hereof.
6. 

THE PAYING AGENT
Paying Agent; Acceptance; Removal; Resignation. U.S. Bank, N.A., San Francisco, California, is hereby appointed Paying Agent, and hereby accepts and agrees to perform the duties and obligations of the Paying Agent, registrar and transfer agent specifically imposed upon it by this Paying Agent Agreement, and no implied duties shall be read into this Paying Agent Agreement against the Paying Agent.
The City may at any time remove the Paying Agent and appoint a new Paying Agent; provided that the removal shall not be effective until a new Paying Agent is appointed.
The Paying Agent may at any time resign by giving written notice to the City of such resignation, whereupon the City shall promptly appoint a successor Paying Agent by the resignation date. Resignation of the Paying Agent will be effective forty-five (45) days after notice of the resignation is given as stated above or upon appointment of a successor Paying Agent, whichever first occurs. After receiving a notice of resignation of the Paying Agent, the City may appoint a temporary Paying Agent to replace the resigning Paying Agent until the City appoints a successor Paying Agent. Any such temporary Paying Agent appointed by the City shall immediately and without further act be superseded by the successor Paying Agent upon the appointment of and acceptance thereof by such successor.
The Paying Agent is hereby authorized to pay and redeem the Bonds when duly presented for payment at maturity, and to cancel all Bonds upon payment thereof. The Paying Agent shall keep accurate records of all funds administered by it and of all Bonds paid and discharged.
Duties of Paying Agent. The Paying Agent hereby agrees, provided sufficient immediately available funds have been provided to it for such purpose by or on behalf of the City, to use the funds deposited with it solely for payment of the principal of and interest on the Bonds as the same shall become due, and for payment from the Costs of Issuance Account of any amounts duly authorized to be paid therefrom pursuant to a Request of the City.
Reliance on Documents, Etc.
The Paying Agent may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Paying Agent by the City.
The Paying Agent shall not be liable for any error of judgment made in good faith. The Paying Agent shall not be liable for other than its negligence or willful misconduct in connection with any act or omission hereunder.
No provision of this Agreement shall require the Paying Agent to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers.
The Paying Agent may rely, or be protected in acting or refraining from acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Paying Agent need not examine the ownership of any Bond, but is protected in acting upon receipt of Bonds containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Bondowner or agent of the Bondowner.
The Paying Agent may consult with counsel, and the written advice of such counsel or any Opinion of Counsel shall be full authorization and protection with respect to any action taken, suffered or omitted by it hereunder in good faith and reliance thereon.
The Paying Agent may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys.
Recitals of City. The recitals contained herein and in the Bonds shall be taken as the statements of the City, and the Paying Agent assumes no responsibility for their correctness.
May Own Bonds. The Paying Agent, in its individual or any other capacity, may become the owner or pledgee of Bonds with the same rights it would have if it were not the Paying Agent for the Bonds.
Money Held by Paying Agent; Investment. Money held by the Paying Agent hereunder shall be segregated from all other funds held by the Paying Agent. The Paying Agent shall be under no obligation to pay interest on any money received by it hereunder.
Funds held by the Paying Agent shall be invested upon a Request of the City signed by the Finance Director, in accordance with the City’s investment policy and pursuant to applicable law, and in the absence of such written instructions, shall be invested in the First American Treasury Obligations Fund (Class D) of the Paying Agent.
Other Transactions. The Paying Agent may engage in or be interested in any financial or other transaction with the City.
Interpleader. The Paying Agent may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in a court of competent jurisdiction. The Paying Agent has the right to file an action in interpleader in any court of competent jurisdiction to determine the rights of any person claiming any interest herein.
Indemnification. The City shall indemnify the Paying Agent, its officers, directors, employees, and agents (“Indemnified Parties”) for, and hold them harmless against, any loss, cost, claim, liability or expense arising out of or in connection with the Paying Agent’s acceptance or administration of the Paying Agent’s duties hereunder or under the Bonds (except any loss, liability or expense as may be adjusted by a court of competent jurisdiction to be attributable to the Paying Agent’s negligence or willful misconduct), including without limitation the cost and expense (including its counsel fees and disbursements, including the allocated costs and disbursements of internal counsel) of defending itself against any claim or liability (except such action as may be brought against the Paying Agent by the City) in connection with the exercise or performance of any of its powers or duties under this Paying Agent Agreement. The provisions of this Section 6.09 shall survive termination of this Paying Agent Agreement and shall continue for the benefit of any Paying Agent after its resignation as Paying Agent hereunder.
Compensation. As compensation for the Paying Agent’s services, the City hereby agrees to pay or cause to be paid to the Paying Agent the fees set forth in a separate agreement between the Paying Agent and the City providing therefor.
7. 

DEFEASANCE OF BONDS
Defeasance. 7.1.1. If at any time the City shall pay or cause to be paid or there shall otherwise be paid to the Bondowners of all outstanding Bonds all of the principal, interest and premium, if any, represented thereby, at the times and in the manner provided herein and in the Bonds or as otherwise provided by law, then such Bondowners shall cease to be entitled to the obligation of the City as provided in Section 5.02 hereof, and such obligation and all agreements and covenants of the City to such Bondowners hereunder and under the Bonds shall thereupon be satisfied and discharged and shall terminate except only as provided in subsection 7.01(b); provided further, however, that the provisions of Section 7.02 hereof shall apply in all events.
Any outstanding Bonds shall be deemed to have been paid within the meaning of and with the effect expressed in this Section 7.01 if there shall be on deposit with the Finance Director or set aside for the purpose with a trustee or escrow agent, including the Paying Agent, monies in an amount sufficient (together with interest thereon) to pay the principal amount thereof plus any accrued interest thereon, payable on their respective principal maturity dates. The Bondowners of such Bonds shall be entitled to the principal and interest represented by such Bonds, and the City shall remain liable for such payments, but only out of such monies on deposit for such payment and monies transferred to the Paying Agent for such purpose.
Unclaimed Monies. Any money deposited with or otherwise held by the Paying Agent for the payment of the principal or interest on any Bond and remaining unclaimed for two years after the stated maturity of such Bond will be paid by the Paying Agent to the City, upon receipt of a written Request of the City, and the City and the Paying Agent hereby agree that the registered Owner of such Bond shall thereafter look only to the City for payment thereof, and that all liability of the Paying Agent with respect to such monies shall thereupon cease.
8. 

AMENDMENT OF PAYING AGENT AGREEMENT
Amendment with Bondholder Consent; Amendment Without Bondholder Consent. 8.1.1. This Paying Agent Agreement and the rights and obligations of the City and of the Bondholders may be amended at any time upon the written consents of the Bondholders of a majority in aggregate principal amount of the Bonds then outstanding, exclusive of Bonds disqualified as provided in Section 8.02, filed with the Paying Agent; provided that if such amendment will, by its terms, not take effect so long as any Bonds remain outstanding, the consent of the Holders of such Bonds shall not be required and such Bonds shall not be deemed to be outstanding for the purpose of any calculation of Bonds outstanding under this Section.
No such amendment shall (1) extend the maturity of or reduce the interest rate on or amount of interest on or principal of or redemption premium, if any, on any Bond without the express written consent of the Holder of such Bond, or (2) reduce the percentage of Bonds required for the written consent to any such amendment, or (3) modify any rights or obligations of the Paying Agent or the City without their prior written assent thereto, respectively. It shall not be necessary for the consent of the Bondholders to approve the particular form of any amendment to this Paying Agent Agreement, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the City and the Paying Agent of any amendment to this Paying Agent Agreement pursuant to this subsection (a) the Paying Agent shall mail a notice on behalf of the City, setting forth in general terms the substance of such amendment to the Bondholders at the addresses shown on the registration books maintained by the Paying Agent. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment.
The Paying Agent Agreement and the rights and obligations of the City and of the Bondholders may also be amended at any time without the consent of any Bondholders for any purpose that will not materially adversely affect the interests of the Bondholders, including (without limitation) for any one or more of the following purposes --
5. to add to the agreements and covenants required herein to be performed by the City other agreements and covenants thereafter to be performed by the City, or to surrender any right or power reserved herein to or conferred herein on the City;
6. to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or in regard to questions arising hereunder which the City may deem desirable or necessary.
Any amendment pursuant to this paragraph shall not, for purposes of this paragraph, materially adversely affect the interest of the Bondholders so long as (a) all Bonds are insured by a policy of municipal bond insurance, (b) each issuer of such an insurance policy shall have given its written consent to such amendment, and (c) each such insurer shall at the time of such consent be rated in the highest Rating Category by [Standard & Poor’s] and [Moody’s Investors Service].
Disqualified Bonds. Bonds owned or held by or for the account of the City shall not be deemed outstanding for the purpose of any consent or other action or any calculation of outstanding Bonds provided in this Article, and shall not be entitled to consent to or take any other action provided in this Article.
Endorsement or Replacement of Bonds After Amendment. After the effective date of any action taken as hereinabove provided, the City may determine that the Bonds may bear a notation by endorsement in form approved by the City as to such action, and in that case upon demand of the Bondholder of any outstanding Bonds and presentation of his Bond for such purpose at the office of the Paying Agent a suitable notation as to such action shall be made on such Bond. If the City shall so determine, new Bonds so modified as, in the opinion of the City, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Bondholder of any outstanding Bond a new Bond or Bonds shall be exchanged at the office of the Paying Agent without cost to each Bondholder for its Bond or Bonds then outstanding upon surrender of such outstanding Bonds.
Amendment by Mutual Consent. The provisions of this Article shall not prevent any Bondholder from accepting any amendment as to the particular Bonds held by such Bondholder, provided that due notation thereof is made on such Bonds.
9. 

MISCELLANEOUS
Counterparts. This Paying Agent Agreement may be signed in several counterparts, each of which will constitute an original, but all of which shall constitute one and the same instrument.
Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of this Paying Agent Agreement, failure of the City to comply with the Continuing Disclosure Certificate shall not be considered an event of default hereunder; however, any Bondholder or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Section 9.02. For purposes of this Section, “Beneficial Owner” means any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries).
Unclaimed Moneys. Anything in this Agreement to the contrary notwithstanding, any money held by the Paying Agent for the payment and discharge of any of the Bonds or interest thereon which remains unclaimed for two (2) years after the date when such Bonds have become due and payable, if such money was held by the Paying Agent at such date, or for two (2) years after the date of deposit of such money if deposited with the Paying Agent after the said date when such Bonds become due and payable, shall, at the written request of the City, be repaid by the Paying Agent to the City, as its absolute property and free from trust, and the Paying Agent shall thereupon be released and discharged with respect thereto and the Owners shall look only to the City for the payment of such Bonds; provided, however, that, before being required to make any such payment to the City, the Paying Agent shall, at the written request and expense of the City, cause to be mailed to the registered Owners of such Bonds, at their addresses as they appear on the Bond Register, a notice that said money remains unclaimed and that, after a date named in said notice, which date shall not be less than thirty (30) days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the City. The Paying Agent shall hold any such moneys uninvested.
General Authorization. The Mayor of the City, the Clerk, the Finance Director and the Treasurer are hereby respectively authorized to do and perform from time to time any and all acts and things consistent with this Agreement necessary or appropriate to carry the same into effect.
Waiver of Personal Liability. No member, officer or employee of the City shall be individually or personally liable for the payment of the interest on or principal of the Bonds, but nothing herein contained shall relieve any member, officer or employee of the City from the performance of any official duty provided by law.
Acquisition of Bonds by City. All Bonds acquired by the City, whether by purchase or gift or otherwise, shall be surrendered to the Paying Agent for cancellation.
Destruction of Cancelled Bonds. Whenever in the Paying Agent Agreement provision is made for return to the City of any Bonds which have been cancelled pursuant to the provisions of the Paying Agent Agreement, the City may, by a Written Request of the City, direct the Paying Agent to destroy such Bonds and furnish to the City a certificate of such destruction.
Benefits of Agreement Limited to Parties. Nothing in the Paying Agent Agreement, expressed or implied, is intended to give to any person other than the City, the Paying Agent and the Owners any right, remedy or claim under or by reason of the Paying Agent Agreement. Any covenants, stipulations, promises or agreements in the Paying Agent Agreement contained by and on behalf of the City or any member, officer or employee thereof shall be for the sole and exclusive benefit of the Paying Agent and the Owners.
Notices. All notices and communications hereunder shall be in writing and shall be deemed to be duly given if received or sent by first class mail, as follows:
If to the City: City of Brentwood
150 City Park Way 
Brentwood, CA 94513
Attn: Finance Director
Fax: (925) 516-5401
If to the Paying Agent: U.S. Bank, N.A.
One California Street, Suite 2550
San Francisco, CA 94111
Attn: Corporate Trust
Fax: (415) 273-4590
Governing Law. This Agreement shall be governed by and construed in accordance with, and the rights of the parties shall be governed by the laws of the State of California.
Severability. If any covenant, agreement or provision, or any portion thereof contained in this Agreement, where the application thereof to any Person or circumstance is held to be unconstitutional, invalid or unenforceable, the remainder of this Agreement and the application of such covenant, agreement or provision, or portion thereof, to other Persons or circumstances, shall be deemed severable and shall not be affected thereby, and this Agreement shall remain valid, and the Holders shall retain all valid rights and benefits accorded to them under this Agreement and the Constitution and laws of the State of California.



IN WITNESS WHEREOF, the parties hereto have caused this Paying Agent Agreement to be duly executed by their officers duly authorized as of the date first written above.
CITY OF BRENTWOOD



By: 
Director of Finance and
Information Systems
Attest:




City Clerk
City of Brentwood
U.S. BANK, N.A., as Paying Agent



By: 
Authorized Officer



EXHIBIT A


[FORM OF BOND]
R-__ $____________
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF CONTRA COSTA


CITY OF BRENTWOOD
GENERAL OBLIGATION BOND, SERIES 2002
Interest Rate Maturity Date Dated as of CUSIP NO.
____% [August 1], 20__ [DATE] ________


Registered Owner: CEDE & CO.
Principal Amount: ________________________________________ DOLLARS
The City of Brentwood, County of Contra Costa, State of California (herein called the “City”), acknowledges itself indebted to and promises to pay to the registered owner identified above or registered assigns, on the maturity date set forth above the principal sum specified above in lawful money of the United States of America, and to pay interest thereon in like lawful money from the interest payment date next preceding the date of authentication of this bond (unless this bond is authenticated as of the day during the period from the 16th day of the month next preceding any interest payment date to such interest payment date, inclusive, in which event it shall bear interest from such interest payment date, or unless this bond is authenticated on or before the 15th day of the month immediately preceding an interest payment date (the “Record Date”), in which event it shall bear interest from the Dated Date specified above until payment of such principal sum, at the interest rate per annum stated above, payable on [August 1, 2002], and semiannually thereafter on [February 1] and [August 1] of each year. The principal hereof is payable to the registered owner hereof upon the surrender hereof at the office of U.S. Bank, N.A. (herein called the “Paying Agent”), the paying agent/registrar and transfer agent of the City, in St. Paul, Minnesota, or at such other location as the Paying Agent shall designate. The interest hereon is payable to the person whose name appears on the bond registration books of the Paying Agent as the registered owner hereof as of the Record Date, whether or not such day is a business day, such interest to be paid by check mailed by first class mail, postage prepaid, to such registered owner at the owner’s address as it appears on such registration books, or upon written request of the owner of Bonds (hereinafter defined) aggregating not less than $1,000,000 in principal amount, given no later than the Record Date immediately preceding the applicable interest payment date, by wire transfer in immediately available funds to an account maintained in the United States at such wire address as such Owner shall specify in its written notice.
This bond is one of a duly authorized issue of bonds of like tenor (except for such variations, if any, as may be required to designate varying series, numbers, denominations, interest rates, maturities and redemption provisions), amounting in the aggregate to $6,000,000, designated as “City of Brentwood General Obligation Bonds, Series 2002” (the “Bonds”), issued for the purpose of financing the acquisition and construction of a certain police station (the “Project”). The Bonds were authorized by a resolution approved by the City Council of the City (the “Council”) on February 12, 2002, and are issued and sold pursuant to a Paying Agent Agreement (the “Paying Agent Agreement”), dated as of January 1, 2002 between the City and the Paying Agent. The Bonds are issued and sold by the City pursuant to and in strict conformity with the provisions of the Paying Agent Agreement and of the Constitution and laws of California, specifically under the authority of Article 1 of Chapter 4 of Division 4 of Title 4 of the Government Code of the State of California.
The Bonds are issuable as fully registered bonds without coupons in the denomination of $5,000 or any integral multiple thereof, provided that no bond shall have principal maturing on more than one principal maturity date. Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Paying Agent Agreement, Bonds may be exchanged for a like aggregate principal amount of Bonds of the same maturity of other authorized denominations.
This Bond is transferable by the registered owner hereof, in person or by attorney duly authorized in writing, at said office of the Paying Agent, but only in the manner, subject to the limitations and upon payment of the charges provided in the Paying Agent Agreement, and upon surrender and cancellation of this Bond. Upon such transfer, a new Bond or Bonds of authorized denomination or denominations for the same maturity and same aggregate principal amount will be issued to the transferee in exchange herefor.
The City and the Paying Agent may treat the registered owner hereof as the absolute owner hereof for all purposes, and the City and the Paying Agent shall not be affected by any notice to the contrary.
This Bond is subject to redemption, at the option of the City, under the terms of Section 4.01 of the Paying Agent Agreement. 
The Bonds maturing on [August 1], 20__, are subject to mandatory sinking fund redemption prior to maturity, in part, by lot, on [August 1] in each of the years 20__ through 20__, both years inclusive, solely from Sinking Fund Payments (as defined in Section 1.01 of the Paying Agent Agreement) deposited in the Sinking Fund Account (as defined in Section 1.01 of the Paying Agent Agreement), upon mailed notice as provided in Section 4.02 of the Paying Agent Agreement, at a redemption price equal to one hundred percent (100%) of the principal amount thereof plus accrued interest thereon to the Redemption Date, without premium.
If this Bond is called for redemption and payment is duly provided therefor, interest shall cease to accrue hereon from and after the date fixed for redemption.
The Council hereby certifies and declares that the total amount of indebtedness of the City, including the amount of this Bond, is within the limit provided by law, that all acts, conditions and things required by law to be done or performed precedent to and in the issuance of this Bond have been done and performed in strict conformity with the laws authorizing the issuance of this Bond, that this Bond is in the form prescribed by order of this Council duly made and entered on its minutes, and the money for the payment of the principal of this Bond, premium, if any, and the payment of interest hereon, shall be raised by taxation upon the taxable property of said City.
This Bond shall not be entitled to any benefit under the Paying Agent Agreement, or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed shall have been signed by the Paying Agent.
IN WITNESS WHEREOF the Council of the City of Brentwood has caused this Bond to be signed by facsimile signature of the Mayor and the Treasurer of the City and to be countersigned by the facsimile signature of the City Clerk and the seal of the City as affixed hereon manually or in facsimile.
CITY OF BRENTWOOD


[SEAL]

Mayor


Treasurer

City Clerk
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within-mentioned Paying Agent Agreement and authenticated and registered on [DATE].
U.S. BANK, N.A., as Paying Agent/Registrar and Transfer Agent



By 
Authorized Signatory
[FORM OF DTC LEGEND]
Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to Issuer or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto _____________________ the within-mentioned registered bond and hereby irrevocably constitute(s) and appoint(s) ____________________ attorney, to transfer the same on the books of the Paying Agent/Registrar and Transfer Agent with full power of substitution in the premises.


Dated: ____________


Signature Guarantee: _____________________________


Notice: Signature must be guaranteed by an eligible guarantor institution.





CITY OF BRENTWOOD
General Obligation Bonds
Series 2002





BOND PURCHASE AGREEMENT

____________, 2002



City of Brentwood
150 City Park Way
Brentwood, California 94513

Brentwood Infrastructure Financing Authority
150 City Park Way
Brentwood, California 94513

Ladies and Gentlemen:

The undersigned (the "Underwriter") offers to enter into this Bond Purchase Agreement (the "Bond Purchase Agreement") with the Brentwood Infrastructure Financing Authority (the "Authority") and the City of Brentwood (the "City") which will be binding upon the Authority, the City and the Underwriter upon the acceptance hereof by the Authority and the City. This offer is made subject to its acceptance by the Authority and the City by execution of this Bond Purchase Agreement and its delivery to the Underwriter on or before 5:00 p.m., California time, on the date hereof. All terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Paying Agent Agreement (as hereinafter defined).

1. Purchase and Sale of the Bonds. Upon the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, the Underwriter hereby agrees to purchase from the Authority for offering to the public, and the Authority hereby agrees to sell to the Underwriter for such purpose, all (but not less than all) of the $____________ in aggregate principal amount of the City's General Obligation Bonds, Series 2002 (the "Bonds"). The Bonds shall bear interest at the rates and shall mature in the years shown on Appendix A hereto, which is incorporated herein by this reference. The Bonds shall bear interest payable from ____________, 2002, payable on each February 1 and August 1, commencing August 1, 2002. The Underwriter shall purchase the Bonds at a price of $____________, which is equal to the principal amount of the Bonds ($____________), plus accrued interest ($____________), plus original issue premium ($____________), and less underwriter's discount ($____________). The Bonds are to be purchased by the Authority from the City pursuant hereto for resale and delivery to the Underwriter concurrently with the purchase of the Bonds by the Underwriter from the Authority; provided that the obligation of the Authority to purchase the Bonds from the City shall be solely with moneys provided by the Underwriter.

2. The Bonds. The Bonds shall be dated ____________ 1, 2002. The Bonds shall be as described in, and shall be issued and secured pursuant to the provisions of a resolution of the City Council of the City (the “City Council”) adopted on ____________, 2002 (the "Resolution"), and [Articles 9 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5] of the State of California Government Code (the "Act") and a Paying Agent Agreement (the "Paying Agent Agreement") dated as of January 1, 2002 by and between the City and U.S. Bank, N.A. (the "Paying Agent").

The Bonds shall be executed and delivered under and in accordance with the provisions of this Bond Purchase Agreement and the Paying Agent Agreement. The Bonds shall be in book-entry form, shall bear CUSIP numbers, and shall be in fully registered form, registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York. The Bonds shall initially be in authorized denominations of $5,000 principal amount or any integral multiple thereof.

3. Use of Documents. The City hereby authorizes the Underwriter to use, in connection with the offer and sale of the Bonds, this Bond Purchase Agreement, the Paying Agent Agreement, the Official Statement (defined below), and all information contained herein and therein and all of the documents, certificates or statements furnished by the City to the Underwriter in connection with the transactions contemplated by this Bond Purchase Agreement.

4. Public Offering of the Bonds. The Underwriter agrees to make a bona fide public offering of all the Bonds at the initial public offering price or yield to be set forth on the cover page of the Official Statement and Appendix A hereto. Subsequent to such initial public offering, the Underwriter reserves the right to change such initial public offering price or yield as it deems necessary in connection with the marketing of the Bonds.

5. Review of Official Statement. The Underwriter hereby represents that it has received and reviewed the Preliminary Official Statement with respect to the Bonds, dated ______________, 2002 (the "Preliminary Official Statement"). The City represents that it deemed the Preliminary Official Statement to be final as of its date, except for either revision or addition of the offering price(s), yield(s) to maturity, selling compensation, delivery date and other terms of the Bonds which depend upon the foregoing as provided in and pursuant to Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "Rule") and that it is approved for distribution by resolution of the City. The City shall have executed and delivered to the Underwriter a certification to such effect in the form attached hereto as Appendix B.

The Underwriter agrees that prior to the time the final Official Statement relating to the Bonds is available, the Underwriter will send to any potential purchaser of the Bonds, upon the request of such potential purchaser, a copy of the most recent Preliminary Official Statement. Such Preliminary Official Statement shall be sent by first class mail (or other equally prompt means) not later than the first business day following the date upon which each such request is received.

6. Closing. At 9:00 A.M., California Time, on ______________, 2002, or at such other time or on such other date as shall have been mutually agreed upon by the Underwriter, the City and the Authority, the Authority and the City will deliver (i) the Bonds in definitive form (one bond for each annual maturity) to the Underwriter at The Depository Trust Company (“DTC”) in New York, New York, or such other location as may be specified by the Underwriter, with CUSIP identification numbers printed thereon, in fully registered form and registered in the name of Cede & Co., and (ii) the closing documents hereinafter mentioned at the offices of Orrick, Herrington & Sutcliffe LLP, Bond Counsel (the “Bond Counsel”) in San Francisco, California, or another place to be mutually agreed upon by the City and the Underwriter. The Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof by federal funds wire payable to the order of the Paying Agent on behalf of the City. This payment and delivery, together with the delivery of the aforementioned documents, is herein called the “Closing.”

7. Representations Warranties and Agreements of the City. The City hereby represents, warrants and agrees with the Underwriter that:

(a) Due Organization. The City is a municipal corporation organized and validly existing under the laws of the State of California, with the power to request the issuance of the Bonds pursuant to the Act.

(b) Due Authorization. (i) At or prior to the Closing, the City will have taken all action required to be taken by it to authorize the issuance and delivery of the Bonds; (ii) the City has full legal right, power and authority to adopt the Resolution authorizing issuance of the Bonds and to enter into this Bond Purchase Agreement and the Paying Agent Agreement, to perform its obligations under each such document or instrument, and to carry out and effectuate the transactions contemplated by this Bond Purchase Agreement and the Paying Agent Agreement; (iii) the execution and delivery or adoption of, and the performance by the City of the obligations contained in the Bonds, the Paying Agent Agreement and this Bond Purchase Agreement have been duly authorized and such authorization shall be in full force and effect at the time of the Closing; (iv) this Bond Purchase Agreement and the Paying Agent Agreement constitute valid and legally binding obligations of the City; and (v) the City has duly authorized the consummation by it of all transactions contemplated by the Paying Agent Agreement and this Bond Purchase Agreement.

(c) Consents. No consent, approval, authorization, order, filing, registration, qualification, election or referendum of or by any court or governmental agency or public body whatsoever is required in connection with the issuance, delivery or sale of the Bonds or the consummation of the other transactions effected or contemplated herein or hereby, except for such actions as may be necessary to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and jurisdictions of the United States as the Underwriter may reasonably request, or which have not been taken or obtained; provided, however, that the City shall not be required to subject itself to service of process in any jurisdiction in which it is not so subject as of the date hereof.

(d) Internal Revenue Code. The City has complied and will comply with the Internal Revenue Code of 1986, as amended, with respect to the Bonds.

(e) No Conflicts. To the best knowledge of the City, the issuance of the Bonds, and the execution, delivery and performance of this Bond Purchase Agreement, the Paying Agent Agreement, and the Bonds, and the compliance with the provisions hereof do not conflict with or constitute on the part of the City a violation of or default under, the Constitution of the State of California or any existing law, charter, ordinance, regulation, decree, order or resolution and do not conflict with or result in a violation or breach of, or constitute a default under, any agreement, indenture, mortgage, lease or other instrument to which the City is a party or by which it is bound or to which it is subject.

(f) Litigation. As of the time of acceptance hereof, no action, suit, proceeding, hearing or investigation is pending or, to the best knowledge of the City, threatened against the City: (i) in any way affecting the existence of the City or in any way challenging the respective powers of the several offices or of the titles of the officials of the City to such offices; or (ii) seeking to restrain or enjoin the sale, issuance or delivery of any of the Bonds, the application of the proceeds of the sale of the Bonds, or the collection of taxes of the City pledged or to be pledged or available to pay the principal of and interest on the Bonds, or the pledge thereof, or, the levy of any taxes contemplated by the Paying Agent Agreement, or in any way contesting or affecting the validity or enforceability of the Bonds, this Bond Purchase Agreement or the Paying Agent Agreement or contesting the powers of the City or its authority with respect to the Bonds, the Paying Agent Agreement or this Bond Purchase Agreement; or (iii) in which a final adverse decision could (A) materially adversely affect the operations of the City or the consummation of the transactions contemplated by this Bond Purchase Agreement or the Paying Agent Agreement, (B) declare this Bond Purchase Agreement to be invalid or unenforceable in whole or in material part, or (C) adversely affect the exclusion of the interest paid on the Bonds from gross income for federal income tax purposes and the exemption of such interest from California personal income taxation.

(g) No Other Debt. Between the date hereof and the Closing, without the prior written consent of the Underwriter, the City will not have issued in the name and on behalf of the City any bonds, notes or other obligations for borrowed money except for such borrowings as may be described in or contemplated by the Official Statement.

(h) Arbitrage Certificate. The City has not been noticed of any listing or proposed listing by the Internal Revenue Service to the effect that the City is a bond issuer whose arbitrage certificates may not be relied upon.

(i) Continuing Disclosure. To assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5), the City will undertake, pursuant to the Paying Agent Agreement and a Continuing Disclosure Certificate, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the final Official Statement.

(j) Certificates. Any certificates signed by any officer of the City and delivered to the Underwriter shall be deemed a representation by the City to the Underwriter, but not by the person signing the same, as to the statements made therein.

8.Representations Warranties and Agreements of the Authority. The Authority represents, warrants and covenants to the Underwriter that:

(a) Due Organization and Existence of Authority. The Authority is a joint powers authority, duly organized and existing, and authorized to transact business and exercise powers under and pursuant to the provisions of the laws of the State of California and has, and on Closing date will have, full legal right, power and authority to enter into this Purchase Agreement, and to carry out and to consummate the transactions contemplated by this Purchase Agreement. 

(b) Official Statement Accurate and Complete. The information relating to the Authority contained in the Preliminary Official Statement and the final Official Statement is correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements contained therein, in the light of the circumstances under which they were made, not misleading.

(c) Purchase and Sale of Bonds. The Bonds will be purchased and sold by the Authority pursuant to the Mark-Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5, Division 7 of Title 1 (commencing with Section 6584) of the California Government Code (the “JPA Act”).

(d) Compliance with Law. The Authority has complied, and will on the Closing Date be in compliance, in all respects, with the JPA Act and all other applicable laws of the State of California.

9. Covenants of the City. The City covenants and agrees with the Underwriter that:

(a) Securities Laws. The City will furnish such information, execute such instruments, and take such other action in cooperation with the Underwriter if and as the Underwriter may reasonably request in order to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and jurisdictions, provided, however, that the City shall not be required to consent to service of process in any jurisdiction in which they are not so subject as of the date hereof;

(b) Application of Proceeds. The City will apply the proceeds from the sale of the Bonds for the purposes specified in the Paying Agent Agreement;

(c) Official Statement. The City hereby agrees to deliver or cause to be delivered to the Underwriter, not later than the seventh (7th) business day following the date this Bond Purchase Agreement is signed, copies of a final Official Statement substantially in the form of the Preliminary Official Statement, with only such changes therein as shall have been accepted by the Underwriter and the City (such Official Statement with such changes, if any, and including the cover page and all appendices, exhibits, maps, reports and statements included therein or attached thereto being herein called the "Official Statement") in such quantities as may be requested by the Underwriter in order to permit the Underwriter to comply with paragraph (b)(4) of the Rule and with the rules of the Municipal Securities Rulemaking Board. The City hereby authorizes the Underwriter to use and distribute the Official Statement in connection with the offering and sale of the Bonds;

(d) Subsequent Events. The City hereby agrees to notify the Underwriter of any event or occurrence that may affect the accuracy or completeness of any information set forth in the Official Statement relating to the City, respectively, until the date which is ninety (90) days following the Closing or until such time (if earlier) as the Underwriter shall no longer hold any of the Bonds for sale;

(e) References. References herein to the Preliminary Official Statement and the final Official Statement include the cover page and all appendices, exhibits, maps, reports and statements included therein or attached thereto; and

(f) Amendments to Official Statement. For a period of ninety (90) days after the Closing or until such time (if earlier) as the Underwriter shall no longer hold any of the Bonds for sale, the City will not adopt any amendment of or supplement to the Official Statement to which, after having been furnished with a copy, the Underwriter shall object in writing or which shall be disapproved by the Underwriter; and if any event relating to or affecting the City shall occur as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in light of the circumstances existing at the time it is delivered to a purchaser, the City shall forthwith prepare and furnish (at the expense of the City) a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading.

10. Conditions to Closing. The Underwriter has entered into this Bond Purchase Agreement in reliance upon the representations and warranties the City contained herein and the performance by the City of its obligations hereunder, both as of the date hereof and as of the date of Closing. The Underwriter's obligations under this Bond Purchase Agreement are and shall be subject at the option of the Underwriter, to the following further conditions at the Closing:

(a) Representations True. The representations and warranties of the City contained herein shall be true, complete and correct in all material respects at the date hereof and at and as of the Closing as if made at and as of the Closing, and the statements made in all certificates and other documents delivered to the Underwriter at the Closing pursuant hereto shall be true, complete and correct in all material respects on the date of the Closing; and the City shall be in compliance with each of the agreements made by it in this Bond Purchase Agreement;

(b) Obligations Performed. At the time of the Closing, (i) the Official Statement, this Bond Purchase Agreement and the Paying Agent Agreement shall be in full force and effect and shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter; (ii) all actions under the Act which, in the opinion of Orrick, Herrington & Sutcliffe LLP, San Francisco, California, bond counsel ("Bond Counsel"), shall be necessary in connection with the transactions contemplated hereby shall have been duly taken and shall be in full force and effect; and (iii) the City shall perform or have performed all of their obligations required under or specified in the Paying Agent Agreement, this Bond Purchase Agreement or the Official Statement to be performed at or prior to the Closing;

(c) Adverse Rulings. No decision, ruling or finding shall have been entered by any court or governmental authority since the date of this Bond Purchase Agreement (and not reversed on appeal or otherwise set aside), or to the best knowledge of the City, pending or threatened which has any of the effects described in Section 7(f) hereof or contesting in any way the completeness or accuracy of the Official Statement;

(d) Marketability. Between the date hereof and the Closing, the market price or marketability or the ability of the Underwriter to enforce contracts for the sale of the Bonds, at the initial offering prices set forth in the Official Statement, of the Bonds shall not have been materially adversely affected in the reasonable judgment of the Underwriter (evidenced by a written notice to the City terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds) by reason of any of the following:

(1) legislation enacted or introduced in the Congress or recommended for passage by the President of the United States, or a decision rendered by a court established under Article III of the Constitution of the United States or by the United States Tax Court, or an order, ruling, regulation (final, temporary or proposed) or official statement issued or made:

(i) by or on behalf of the United States Treasury Department, or by or on behalf of the Internal Revenue Service, with the purpose or effect, directly or indirectly, of causing inclusion in gross income for purposes of federal income taxation of the interest received by the owners of the Bonds; or

(ii) by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction over the subject matter thereof, to the effect that the Bonds, or obligations of the general character of the Bonds, including any and all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended;

(2) legislation enacted by the legislature of the State of California (the "State"), or a decision rendered by a court of the State, or a ruling, order, or regulation (final or temporary) made by State authority, which would have the effect of changing, directly or indirectly, the State tax consequences of interest on obligations of the general character of the Bonds in the hands of the holders thereof, or

(3) the declaration of war or engagement in major military hostilities by the United States or the occurrence of any other national emergency or calamity relating to the effective operation of the government or the financial community in the United States;

(4) the declaration of a general banking moratorium by federal, New York or California authorities, or the general suspension of trading on any national securities exchange;

(5) the imposition by the New York Stock Exchange, other national securities exchange, or any governmental authority, of any material restrictions not now in force with respect to the Bonds, or obligations of the general character of the Bonds, or securities generally, or the material increase of any such restrictions now in force, including those relating to the extension of credit by, or the charge to the net capital requirements of, the Underwriter;

(6) an order, decree or injunction of any court of competent jurisdiction, or order, filing, regulation or official statement by the Securities and Exchange Commission, or any other governmental agency having jurisdiction over the subject matter thereof, issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, as contemplated hereby or by the Official Statement, is or would be in violation of the federal securities laws, as amended and then in effect;

(7) any event occurring, or information becoming known which, in the reasonable judgment of the Underwriter, makes untrue in any material adverse respect any statement or information contained in the Official Statement, or has the effect that the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(e) Delivery of Documents. At or prior to the date of the Closing, Bond Counsel shall deliver sufficient copies of the following documents, in each case dated as of the Closing Date and satisfactory in form and substance to the Underwriter:

(1) Bond and Disclosure Counsel Opinion. An approving opinion of Bond Counsel, as to the validity and tax-exempt status of the Bonds, dated the date of the Closing in substantially the form included in the Official Statement, addressed to the City and an opinion of Jones Hall, A Professional Law Corporation, as Disclosure Counsel addressed to the City, the Authority and the Underwriter in the form attached;

(2) Reliance Letter. A reliance letter from Bond Counsel to the effect that the Underwriter can rely upon the approving opinion described in (e)(l) above;

(3) City Certificate. A certificate signed by appropriate officials of the City to the effect that (i) such officials are authorized to execute the Paying Agent Agreement and this Bond Purchase Agreement, (ii) the representations, agreements and warranties of the City herein are true and correct in all material respects as of the date of Closing, (iii) the City has complied with all the terms of the Paying Agent Agreement and this Bond Purchase Agreement, which are necessary to be complied with prior to or concurrently with the Closing and such documents are in full force and effect, (iv) the City has reviewed the Official Statement and on such basis certifies that the Official Statement does not contain any untrue statement of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, and (v) the Bonds being delivered on the date of the Closing to the Underwriter under this Bond Purchase Agreement substantially conform to the descriptions thereof contained in the Official Statement and the Paying Agent Agreement;

(4) Authority Certificate. A certificate of the Authority, dated the date of the Closing, signed on behalf of the Authority by the Treasurer / Controller or other duly authorized officer of the Authority to the effect that: (i) the Authority is a public body, corporate and politic, organized and existing under the laws of the State, including the JPA Act; (ii) the resolution of the Authority approving and authorizing the execution and delivery of this Bond Purchase Agreement (the “Authority Resolution”) was duly adopted at a meeting of the Authority which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout and the Authority Resolution is in full force and effect and has not been modified, amended or rescinded (iii) the representations, warranties and covenants of the Authority contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing and the Authority has complied with all of the terms and conditions of this Bond Purchase Agreement required to be complied with by the Authority at or prior to the date of the Closing; (iv) to the best of such signing officer after due inquiry, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental agency, public board or body, pending or threatened against the Authority, challenging the creation, organization or existence of the Authority, or the validity of this Bond Purchase Agreement or contesting the authority of the Authority to enter into or perform its obligations under this Bond Purchase Agreement;

(5) Paying Agent Certificate. A certificate signed by appropriate officials of the Paying Agent to the effect that: (i) the Paying Agent is duly organized and existing as a national banking association organized and existing under and by virtue of the laws of the United States of America, having the full power and authority to enter into and perform its duties under the Paying Agent Agreement; (ii) the Paying Agent is duly authorized to enter into the Paying Agent Agreement; (iii) to its best knowledge after due inquiry, there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending against the Paying Agent or threatened against the Paying Agent which in the reasonable judgment of the Paying Agent would affect the existence of the Paying Agent or in any way contesting or affecting the validity or enforceability of the Paying Agent Agreement or contesting the powers of the Paying Agent or its authority to enter into and perform its obligation under the Paying Agent Agreement;

(6) Tax Certificate. A Tax Certificate of the City in a form satisfactory to Bond Counsel;

(7) Paying Agent Agreement. A fully executed copy of the Paying Agent Agreement;

(8) Resolution. A copy of the Resolution of the City Council of the City authorizing the issuance of the Bonds, together with a certificate of the Clerk of the City Council of the City to the effect that (i) such copy is a true and correct copy of such Resolution; and (ii) that the Resolution was duly adopted and has not been modified, amended, rescinded or revoked and is in full force and effect on the date of the Closing;

(9) City Attorney Opinion. An opinion of the City Attorney in the form attached hereto as Appendix C;

(10) Official Statement. An executed 15c2-12 Certificate in the form attached hereto as Appendix B;

(11) Continuing Disclosure Certificate. A Continuing Disclosure Certificate of the City as summarized in the Official Statement and in a form satisfactory to the Underwriter which complies with S.E.C. Rule 15c2-12(b)(5).

(12) Ratings. [Evidence that the Bonds have been rated “____________” by ____________.]

(13) Other Documents. Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter may reasonably request to evidence compliance (i) by the City or the Authority with legal requirements, (ii) the truth and accuracy, as of the time of Closing, of the representations of the City and the Authority herein contained, and (iii) the due performance or satisfaction by the City or the Authority at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the City or the Authority; and

(f) Termination. Notwithstanding anything to the contrary herein contained, if for any reason whatsoever the Bonds shall not have been delivered by the City to DTC prior to the close of business, California Time, on ____________, 2002, then the obligation to purchase Bonds hereunder shall terminate and be of no further force or effect except with respect to the obligations of the City, the Authority and the Underwriter under Section 13 hereof.

If the City or the Authority shall be unable to satisfy the conditions to the Underwriter's obligations contained in this Bond Purchase Agreement or if the Underwriter's obligations shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement may be canceled by the Underwriter at, or at any time prior to, the time of Closing. Notice of such cancellation shall be given to the City in writing, or by telephone or telegraph, confirmed in writing. Notwithstanding any provision herein to the contrary, the performance of any and all obligations of the City and the Authority hereunder and the performance of any and all conditions contained herein for the benefit of the Underwriter may be waived by the Underwriter in writing at its sole discretion.

11.Conditions to Obligations of the City and the Authority. The performance by the City and the Authority of its obligations is conditioned upon (i) the performance by the Underwriter of its obligations hereunder; and (ii) receipt by the City and the Underwriter of opinions and certificates being delivered at the Closing by persons and entities other than the City.

12. Expenses. The City or the Authority shall pay any expenses incident to the performance of its obligations hereunder from the proceeds of the Bonds, including but not limited to the following: (i) the fees and disbursements of Bond Counsel and Disclosure Counsel; (ii) the cost of the preparation and delivery of the Bonds; (iii) the cost of the printing and distribution of the Official Statement; (iv) the initial fees, if any, of the Paying Agent; and (v) all other fees and expenses incident to the issuance and sale of the Bonds. All out-of-pocket expenses of the Underwriter, including the California Debt and Investment Advisory Commission fee, travel and other expenses (except as provided above), shall be paid by the Underwriter.

13. Notices. Any notice or other communication to be given under this Bond Purchase Agreement (other than the acceptance hereof as specified in the first paragraph hereof) may be given by delivering the same in writing if to the City, to the Director of Finance and Information Systems, City of Brentwood, 150 City Park Way, Brentwood, California 94513; or if to the Underwriter, to RBC Dain Rauscher, 201 California Street, San Francisco, California 94111, Attention: Robert Williams.

14. Parties in Interest; Survival of Representations and Warranties. The Bond Purchase Agreement when accepted by the City and the Authority in writing as heretofore specified shall constitute the entire agreement between the City, the Authority and the Underwriter. The Bond Purchase Agreement is made solely for the benefit of the City, the Authority and the Underwriter (including the successors or assigns of the Underwriter). No person shall acquire or have any rights hereunder or by virtue hereof. All representations, warranties and agreements of the City and the Authority in this Bond Purchase Agreement shall survive regardless of (a) any investigation or any statement in respect thereof made by or on behalf of the Underwriter, (b) delivery of and payment by the Underwriter for the Bonds hereunder, and (c) any termination of this Bond Purchase Agreement.

15. Execution in Counterparts. The Bond Purchase Agreement may be executed in several counterparts each of which shall be regarded as an original and all of which shall constitute but one and the same document.

16. Applicable Law. The Bond Purchase Agreement shall be interpreted, governed and enforced in accordance with the law of the State of California applicable to contracts made and performed in such State.

Very truly yours,


RBC DAIN RAUSCHER



By: 
Senior Vice President


CITY OF BRENTWOOD



By: 
Authorized Officer


BRENTWOOD INFRASTRUTURE FINANCING AUTHORITY



By: 
Authorized Officer


APPENDIX A

MATURITY SCHEDULE


Maturity Date(August 1) PrincipalAmount InterestRate




















APPENDIX B

RULE 15c2-12 CERTIFICATE


The undersigned hereby certifies and represents to RBC Dain Rauscher (the “Underwriter”) that he is a duly appointed and acting officer of the City of Brentwood (the “City”), and as such is authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on behalf of the City to the Underwriter as follows:

(1) This Certificate is delivered to enable the Underwriter to comply with Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934 (the “Rule”) in connection with the offering and sale of the City's General Obligation Bonds, Series 2002 (the “Bonds”).

(2) In connection with the offering and sale of the Bonds, there has been prepared a Preliminary Official Statement, setting forth information concerning the Bonds and the issuer of the Bonds (the “Preliminary Official Statement”).

(3) As used herein, “Permitted Omissions” shall mean the offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters and the identity of the underwriter(s), all with respect to the Bonds.

(4) The Preliminary Official Statement is, except for the Permitted Omissions, deemed final within the meaning of the Rule and has been, and the information therein is accurate and complete except for the Permitted Omissions.

(5) If, at any time prior to the execution of the final contract of purchase, any event occurs as a result of which the Preliminary Official Statement might include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the City shall promptly notify the Underwriter thereof.

IN WITNESS WHEREOF, the undersigned has hereunto set my hands as of the _____ day of _______, 2002.


CITY OF BRENTWOOD



By 
City Manager



APPENDIX C

OPINION OF CITY ATTORNEY

$____________
CITY OF BRENTWOOD
(a) General Obligation Bonds
Series 2002


Ladies and Gentlemen:

As counsel to the City Council (the "City Council") of the City of Brentwood (the "City"), I have reviewed the Official Statement (the "Official Statement") for the above-described bonds (the "Bonds"), the Resolution of the City Council authorizing the issuance of the Bonds (the "Resolution"), the Paying Agent Agreement (the "Paying Agent Agreement") dated as of January 1, 2002 by and between the City and U.S. Bank, N.A. (the "Paying Agent") and the Bond Purchase Agreement, dated ____________, 2002, by and between the City and RBC Dain Rauscher, as underwriter (the "Bond Purchase Agreement").

Based upon the foregoing, I am of the opinion, under existing law, that:

(i) The City is a municipal corporation organized and existing under the Constitution and laws of the State of California.

(ii) The City has duly and validly adopted the Resolution and approved the Paying Agent Agreement, and the Resolution and the Paying Agent Agreement are in full force and effect as of the date hereof.

(iii) To the best of my knowledge, except as may be stated in the Official Statement, there is no litigation, proceeding or investigation before or by any court, public board or body pending, or to my knowledge threatened, against or affecting the City challenging the validity of, or in which an unfavorable decision, ruling or finding would adversely affect, the Resolution, the Paying Agent Agreement or any of the transactions contemplated by such instruments and the Official Statement or the performance by the City of any of its obligations thereunder.

(iv) Nothing has come to my attention which causes me to believe that the information contained in the Official Statement is not true and correct or contains any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements in the Official Statement, in light of the circumstances under which they were made, not misleading, except that I express no opinion regarding any financial or statistical information contained therein.

Respectfully submitted,




PRELIMINARY OFFICIAL STATEMENT DATED _________, 2002


NEW ISSUE- BOOK-ENTRY ONLY RATING: _________
(See “RATINGS” herein)

In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating federal corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. See “TAX MATTERS.”


$6,000,000*
CITY OF BRENTWOOD
GENERAL OBLIGATION BONDS
SERIES 2002


Dated: ________, 2002 Due: August 1, as shown below

The City of Brentwood General Obligation Bonds, Series 2002 (the “Bonds”) are being issued for the purpose of financing the construction, acquisition and improvement of a new police station to be located in the City of Brentwood (the “City”) and to pay the costs of issuance for the Bonds, as more fully described herein. (See “THE BONDS - Purpose of the Issue.”)

The Bonds are issued by the City of Brentwood, and the City is empowered and is obligated to levy ad valorem taxes, without limitation of rate or amount, for the payment of interest on and principal of the Bonds, upon all property subject to taxation by the City (except certain personal property which is taxable at limited rates). 

The Bonds will be delivered in fully registered form only and, when executed and delivered, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”). Ownership interests in the Bonds will be in denominations of $5,000 or any integral multiple thereof. Beneficial owners of the Bonds will not receive physical certificates representing their interests in the Bonds, but will receive a credit balance on the books of the nominees for such beneficial owners. The principal and interest with respect to the Bonds will be paid by the U.S. Bank, N.A. as Paying Agent (the “Paying Agent”) to DTC, which will in turn remit such principal and interest to its participants for subsequent disbursement to the beneficial owners of the Bonds as described herein. See “THE BONDS - Book-Entry Only System.” 

The Bonds are subject to redemption prior to their stated maturities as described herein. See “THE BONDS-Redemption” herein.

Maturity Schedule

Year(August 1) PrincipalAmount InterestRate Priceor Yield Year(August 1) PrincipalAmount InterestRate Priceor Yield







$________ _____% Term Bonds due August 1, 20__; Yield ____%

The Bonds are offered when, as and if delivered and received by the Underwriter, subject to the approval as to their legality by Orrick Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel. Certain legal matters will be passed upon for the City by Jones Hall, A Professional Law Corporation, San Francisco, California, Disclosure Counsel and by the City Attorney of the City of Brentwood. It is anticipated that the Bonds will be available for delivery to DTC on or about _______, 2002.

RBC Dain Rauscher

This Official Statement is dated _______, 2002.

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT

Use of Official Statement. This Official Statement is submitted in connection with the offer and sale of the Bonds and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. 

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

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

Involvement of Underwriter. The Underwriter has submitted the following statement for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the Federal Securities Laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. 

Document Summaries. All summaries of the documents referred to in this Official Statement are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions.

Stabilization of Prices. In connection with this offering, the Underwriter may overallot or effect transactions which stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the cover page hereof and said public offering prices may be changed from time to time by the Underwriter.

No Registration. The Bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon an exception from the registration requirements contained in that Act. The Bonds have not been registered or qualified under the securities laws of any state. 



CITY OF BRENTWOOD



City Council/Authority Members

Michael A. McPoland, Mayor/Chair
Milan “Pete” Petrovich, Vice Mayor/Vice Chair
Wade Gomes, Councilmember/Member
Bill Hill, Councilmember/Member
Annette Beckstrand, Councilmember/Member


City Administrative Staff

John Stevenson, City Manager
Pam Ehler, Director of Finance and Information Systems
Dennis Beougher, City Attorney
Karen Diaz, City Clerk



PROFESSIONAL SERVICES

Bond Counsel

Orrick, Herrington & Sutcliffe LLP
San Francisco, California


Disclosure Counsel

Jones Hall, A Professional Law Corporation
San Francisco, California


Paying Agent

U.S. Bank, N.A.
Corporate Trust Services
Los Angeles, CA



TABLE OF CONTENTS


INTRODUCTION 1
THE BONDS 3
Authority for Issuance 3
Purpose of the Issue 3
Description of the Bonds 3
Interest 3
Payment 3
Redemption 4
SOURCES AND USES OF FUNDS 5
DEBT SERVICE SCHEDULE 6
SOURCES OF PAYMENT FOR THE BONDS 7
Ad Valorem Taxes 7
Investment of Bond Proceeds 7
BOND REPAYMENT AND 
TAX INFORMATION 7
Bond Repayment 7
Property Tax Collection Procedures 8
Supplemental Assessments 8
Taxation of State-Assessed Utility 
Property 9
Teeter Plan 10
Property Taxes 11
Largest Taxpayers 13
Direct and Overlapping Debt 13
THE CITY 14
The County of Contra Costa and 
City of Brentwood 15
Regional Growth Projections 16
Management 17
CITY OF BRENTWOOD FINANCES 17
Accounting Policies and Financial 
Reporting 18
Budgetary Process 18
General Fund Financial Summary 19
Tax Receipts 21
Long-Term Debt 22
CONSTITUTIONAL AND 
STATUTORY LIMITATIONS ON 
REVENUES AND EXPENDITURES 22
Property Tax Rate Limitations ﷓ 
Article XIIIA 23
Legislation Implementing Article XIIIA 23
Appropriation Limitation ﷓ Article XIIIB 23
California Constitution Article XIIIC 
and Article XIIID (Proposition 218) 24
Proposition 62 24
Future Initiatives 25
State Budgets 25
CONTINUING DISCLOSURE 26
LEGAL MATTERS 26
Tax Exemption 26
Legal Opinion 27
Legality for Investment 28
Absence of Material Litigation 28
RATINGS 28
UNDERWRITING 28
MISCELLANEOUS 28


APPENDIX A - THE CITY OF BRENTWOOD
APPENDIX B - EXCERPTS OF AUDITED FINANCIAL STATEMENTS FO THE CITY 
FOR FISCAL YEAR ___________
APPENDIX C - CITY OF BRENTWOOD INVESTMENT POLICY
APPENDIX D - PROPOSED FORM OF OPINION OF BOND COUNSEL
APPENDIX E - FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX F - BOOK-ENTRY ONLY SYSTEM


OFFICIAL STATEMENT



$6,000,000*
CITY OF BRENTWOOD
GENERAL OBLIGATION BONDS
SERIES 2002


INTRODUCTION


This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement.

The $6,000,000* principal amount of the City of Brentwood General Obligation Bonds, Series 2002 (the “Bonds”) represents the sale of bonds approved by more than two-thirds of the voters casting ballots at an election held in the City of Brentwood (the “City”) on November 6, 2001. The Bonds are being issued under provisions of Chapter 4 of Division 4 of Title 4 of the California Government Code, and pursuant to a resolution of the City Council of the City adopted on __________________. Proceeds from the sale of the Bonds will be used for the construction, acquisition and improvement of a new police station to be located within the City and to pay the costs of issuance of the Bonds.

Summary Information

The Bonds 
Principal Amount $6,000,000*
Dated Date _________, 2002
Maturities ____ - ____
Interest Payments February 1 & August 1
Principal Payments August 1
Denominations Multiples of $5,000
Optional redemption on or after _________, ____
Maturities subject to optional redemption ____ - ____
Financial and Economic Data 
Assessed Valuation (2001-02) $2,194,021,265
Ratio direct debt to assessed value ______%
Ratio of total gross debt to assessed value ______%
Estimated 2001 City population 25,350
Estimated employment in City ___________
Estimated number of employers in City ___________
Taxable transactions in City (2000) $12,330,560


The City. The City is located in eastern Contra Costa County (the “County”), adjacent and southeast of the City of Antioch, 25 miles northeast of Walnut Creek, 45 miles northeast of San Francisco and 65 miles southwest of Sacramento. The City is situated between the Mt. Diablo foothills to the West, Antioch and Oakley to the north, Discovery Bay to the East and Byron to the South. The City was incorporated in 1952. The population of the City as of January 1, 2001 was 25,350 residents, representing an increase of 92% over the 1996 population. See “THE CITY” and Appendix A.

Sources of Payment for the Bonds. The City has the power and is obligated to annually levy ad valorem taxes for the payment of the Bonds and the interest thereon, upon all property within the City subject to taxation, without limitation of rate or amount (except certain personal property which is taxable at limited rates). See “BOND REPAYMENT AND TAX INFORMATION” herein.

Description of the Bonds. The Bonds will be dated _______ 1, 2002 and will be issued as fully registered bonds, without coupons, in denominations of $5,000 or any integral multiple thereof. The Bonds will mature on August 1 in the years indicated on the cover page hereof. Interest on the Bonds is payable on February and August 1 of each year, beginning August 1, 2002.

The Bonds will be issued in fully registered form only, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to actual purchasers of the Bonds (the “Beneficial Owners”) in the denominations set forth on the cover page hereof, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. See “APPENDIX F - Book-Entry-Only System.” In event that the book-entry-only system described below is no longer used with respect to the Bonds, the Bonds will be registered in accordance with the Paying Agent Agreement described herein. See “THE BONDS -- Registration, Transfer and Exchange of Bonds.”

The Bonds are subject to redemption prior to maturity as described in “THE BONDS - Optional Redemption” and “ - Mandatory Sinking Fund Redemption” herein. 

Offering and Delivery of the Bonds. The Bonds are being purchased by the Brentwood Infrastructure Financing Authority (the “Authority”) and concurrently re-sold to RBC Dain Rauscher, as underwriter (the “Underwriter”), pursuant to the terms of a Bond Purchase Agreement, among the City, the Authority and the Underwriter (the “Bond Purchase Agreement”). The Bonds will be offered when, as and if issued, subject to the approval as to the legality by Bond Counsel. It is anticipated that the Bonds will be available for delivery through the facilities of DTC in New York, New York on or about _______, 2002. 

Other Information. This Official Statement speaks only as of its date, and the information contained herein is subject to change.

Copies of documents referred to herein and information concerning the Bonds are available from the Director of Finance and Information Systems, City of Brentwood, 150 City Park Way, Brentwood, California 94513. The City may impose a charge for copying, mailing and handling.

This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The summaries and references to documents, statutes and constitutional provisions referred to herein do not purport to be comprehensive or definitive, and are qualified in their entireties by reference to each of such documents, statutes and constitutional provisions.

The information set forth herein has been obtained from official sources which are believed to be reliable but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the City. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.


THE BONDS

Authority for Issuance

The $6,000,000* principal amount of the Bonds of the City are issued under provisions of Chapter 4 of Division 4 of Title 4 of the Government Code of the State of California, and other applicable provisions of law and pursuant to the terms of a Paying Agent Agreement dated as of January 1, 2002 (the “Paying Agent Agreement”), by and between the City and U.S. Bank, N.A. (the “Paying Agent”), as paying agent for the Bonds. The Bonds represent the issuance of an authorization in the amount of $6,000,000 approved by City voters on November 6, 2001. 

Purpose of the Issue

The proceeds of the Bonds are to be used to finance the acquisition, construction and completion of a new police station to be located within the City, including construction of facilities, works, property or structures necessary or convenient to the police station, and to pay the costs of issuance of the Bonds.

Description of the Bonds

The Bonds will be dated ______, 2002 and will be issued in registered form in denominations of $5,000 principal amount or any integral multiple thereof, provided that no Bond shall have principal maturing on more than one maturity date. The Bonds will be delivered in fully registered form only and, when executed and delivered, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”). Beneficial owners of the Bonds will not receive physical certificates representing their interests in the Bonds, but will receive a credit balance on the books of the nominees for such beneficial owners. The principal and interest with respect to the Bonds will be paid by the Paying Agent to DTC, which will in turn remit such principal and interest to its participants for subsequent disbursement to the beneficial owners of the Bonds as described herein. As long as Cede & Co. is the registered owner of the Bonds, principal and interest on the Bonds are payable by wire transfer with same-day funds transferred by Cede & Co. As long as Cede & Co. is the registered owner of the Bonds, references herein to the registered owners shall mean Cede & Co. as aforesaid and shall not mean the Beneficial Owners (as defined herein) of the Bonds. See “APPENDIX F - Book - Entry System.” The Bonds will mature on August 1, in the years and amounts set forth on the cover page hereof.

Interest

Interest on the Bonds at the rates specified on the cover page hereof, calculated on the basis of a 360-day year comprised of twelve 30-day months, is payable on August 1, 2002 and semiannually thereafter on each February 1 and August 1 (each an “Interest Payment Date”).

Payment

Principal and premium, if any, is payable upon surrender of the Bonds in lawful money of the United States of America at the office of the Paying Agent. Interest on the Bonds shall be payable in like lawful money to the person whose name appears on the bond registration books of the Paying Agent as the registered owner thereof as of the close of business on the fifteenth (15th) day of the month immediately preceding an interest payment date, whether or not such day is a business day. Such interest is to be paid by check mailed to such owner at such address as appears on such registration books. However, as long as Bonds are held in book entry form only, interest payments shall be made by the Paying Agent in immediately payable funds to DTC. The Bonds shall no longer be deemed to be outstanding and unpaid if the City shall have made adequate provision for the payment, in accordance with the Bonds and the Resolution, of the principal and interest to become due thereon at and prior to maturity. Such provision for payment shall be deemed to be adequate if the City shall have irrevocably set aside, in a special trust fund or account, monies or direct or indirect and non-callable obligations of, or obligations guaranteed by, the full faith and credit of the United States of America, in which the City may lawfully invest its money, in an amount sufficient (including interest to accrue thereon) to pay when due the principal of, premium, if any, and interest on the Bonds on and prior to the maturity date.

Redemption

Optional Redemption. The Bonds maturing on or before [August 1], 20__ are not subject to redemption prior to their respective stated maturity dates. Bonds maturing on and after [August 1], 20__ are subject to redemption prior to their respective stated maturity dates, at the option of the City, from any source of available funds, as a whole or in part on any date, on or after [August 1], 20__ If less than all of the Bonds are called for redemption, Bonds shall be redeemed in inverse order of maturities, and if less than all of the Bonds of any given maturity are called for redemption, the portions of Bonds of a given maturity to be redeemed shall be determined by lot. Bonds shall be redeemed at the following redemption prices (expressed as a percentage of the principal amount of the Bonds called for redemption), together with interest accrued thereon to the date of redemption:

Redemption Dates Redemption Price
August 1, 20__ through July 31, 20__ 
August 1, 20__ through July 31, 20__ 
August 1, 20__ through July 31, 20__ 

Mandatory Sinking Fund Redemption. The Bonds maturing on [August 1], 20__, upon notice as hereinafter provided, shall also be subject to mandatory sinking fund redemption prior to maturity, in part, by lot, on [August 1], 20__, in the amount of the mandatory sinking fund payments set forth below, at a redemption price equal to the sum of the principal amount thereof plus accrued interest thereon to the Redemption Date, without premium.

Sinking Fund Payment Date(August 1) Principal Amountto be Redeemed





The Bonds maturing on [August 1], 20__, upon notice as hereinafter provided, shall also be subject to mandatory sinking fund redemption prior to maturity, in part, by lot, on [August 1], 20__, in the amount of the mandatory sinking fund payments set forth below, at a redemption price equal to the sum of the principal amount thereof plus accrued interest thereon to the Redemption Date, without premium.

Sinking Fund Payment Date(August 1) Principal Amountto be Redeemed




Notice of Redemption. Notice of any redemption of Bonds shall be mailed by the Paying Agent, postage prepaid, not less than thirty (30) nor more than sixty (60) days prior to the Redemption Date (i) to the respective registered owners thereof at the addresses appearing on the bond registration books, (ii) to the Securities Depositories specified in the Paying Agent Agreement, and (iii) to one or more of the Information Services specified in the Paying Agent Agreement, and the City shall also cause such notice to be given as required by any obligation for continuing disclosure. Each notice of redemption shall (a) state the date of such notice; (b) state the name of the Bonds and the date of issue of the Bonds; (c) state the redemption date; (d) state the redemption price; (e) state the dates of maturity of the Bonds to be redeemed, and, if less than all of the Bonds of any such maturity are to be redeemed, the distinctive numbers of the Bonds of such maturity to be redeemed, and in the case of Bonds redeemed in part only, the respective portions of the principal amount thereof to be redeemed; (f) state the CUSIP number, if any, of each maturity of Bonds to be redeemed; (g) require that such Bonds be surrendered by the owners at the office of the Paying Agent in St. Paul, Minnesota, or at any other place or places designated by the Paying Agent; and (h) give notice that further interest on such Bonds will not accrue after the designated redemption date.

Mailing of Notice of redemption shall not be a condition precedent to such redemption and failure to mail or to receive such notice shall not affect the validity of the proceeding for the redemption of the Bonds.


SOURCES AND USES OF FUNDS 

The sources and uses of funds with respect to the Bonds are as follows:

Sources of Funds:
Principal Amount of Bonds
Plus Original Issue Premium $ 
Accrued Interest 
Total Sources 

Uses of Funds:
Deposit into the Project Fund 
Costs of Issuance (1) 
Debt Service Fund
Total Uses $ 

(1) Costs of Issuance include legal fees, printing costs, underwriter’s discount, rating agency fees.



DEBT SERVICE SCHEDULE 

The following table shows the annual debt service schedule with respect to the Bonds (assuming no optional redemptions).

City of Brentwood
General Obligation Bonds, Series 2002

Year Ending(August 1) Principal Interest Annual Total


































SOURCES OF PAYMENT FOR THE BONDS 

Ad Valorem Taxes

The City Council of the City has the power and is obligated to annually levy ad valorem taxes for payment of both principal and interest of the Bonds upon all property within the City subject to taxation by the City (except certain personal property which is taxable at limited rates), without limitation of rate or amount. Such money shall be deposited by the Director of Finance of the City (the “Finance Director”) in the debt service fund created in the treasury of the City for the payment of the Bonds.

The annual tax rate will be based on the assessed value of taxable property in the City. Fluctuations in the annual debt service on the Bonds and the assessed value of taxable property in the City may cause the annual tax rate to fluctuate. Economic and other factors beyond the City's control, such as economic recession, deflation of land values, a relocation out of the City or financial difficulty or bankruptcy by one or more major property taxpayers, or the complete or partial destruction of taxable property caused by, among other eventualities, earthquake, flood or other natural disaster, could cause a reduction in the assessed value within the City and necessitate a corresponding increase in the annual tax rate. See “BOND REPAYMENT AND TAX INFORMATION” below. 

Investment of Bond Proceeds

A portion of the proceeds from the sale of the Bonds shall be deposited in the City treasury to the credit of the City's Project Fund and, together with other bond proceeds and funds of the City required to be deposited therein, shall be accounted for separately and distinctly from all other City and funds but may be commingled for investment purposes. The proceeds shall be used solely for the purpose for which the Bonds are issued. The accrued interest and any premium received from the sale of the Bonds, together with tax collections deposited for the payment of the City's bonds, shall be kept separate and apart in the City's Debt Service Fund and used only for payments of principal and interest on the Bonds. Interest earned on the investment of monies held in the Debt Service Fund shall be retained in the Debt Service Fund and used to pay principal and interest on the Bonds when due.

Monies in any fund created under the Paying Agent Agreement and held by the City shall be invested by or at the direction of the Finance Director in accordance with the City’s investment policy, which is included herein as Appendix C and pursuant to applicable law. Monies held by the Paying Agent shall be segregated from all other funds held by the Paying Agent. The Paying Agent is under no obligation to pay interest on any money received by it under the Paying Agent Agreement. Funds held by the Paying Agent for the City by or at the written direction of the Finance Director of the City in accordance with the City’s investment policy, and pursuant to applicable law, and in the absence of such written instructions, shall be invested by the Paying Agent in the First American Treasury Obligations Fund (Class D) of the Paying Agent.


BOND REPAYMENT AND TAX INFORMATION

Bond Repayment

The Bonds represent the general obligation of the City, and the City Council of the City is empowered and is obligated to annually levy ad valorem taxes, without limitation as to rate or amount, for the payment of principal and interest on the Bonds, upon all property subject to taxation within the City (except certain personal property which is taxable at limited rates). Such taxes, when collected, will be placed in the Debt Service Fund of the City, which is maintained by the City and which is required to be applied for the payment of principal and interest on the Bonds when due.

The annual tax rate will be based on the annual debt service and assessed value of property in the City. Variations in the annual debt service on the Bonds and changes in the assessed values of taxable property in the City may cause annual tax rate to fluctuate. Economic and other factors beyond the City’s control, such as economic recession, deflation of land values, a relocation out of the City or financial difficulty or bankruptcy by one or more major property tax payers, or the complete or partial destruction of taxable property due to earthquake, flood or other natural disaster, could cause a reduction in the assessed value of taxable property within the City and necessitate a corresponding increase in the annual tax rate.

Property Tax Collection Procedures

The City uses the services of the County for the assessment and collection of taxes for City purposes. City property taxes are assessed and collected by the County at the same time and on the same rolls as county, special district, and city property taxes.

In California, property which is subject to ad valorem taxes is classified as “secured” or “unsecured.” The “secured roll” is that part of the assessment roll containing state assessed public utilities' property and property, the taxes on which are a lien on real property sufficient, in the opinion of the county assessor, to secure payment of the taxes. A tax levied on unsecured property does not become a lien against such unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on such secured property, regardless of the time of the creation of the other liens. Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property.

Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year. If unpaid, such taxes become delinquent after December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is declared tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1﷓1/2% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is subject to sale by the Department of Finance.

Property taxes are levied for each fiscal year on taxable real and personal property situated in the taxing jurisdiction as of the preceding January 1. A bill enacted in 1983, SB 813 (Statutes of 1983, Chapter 498), however, provided for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Thus, this legislation eliminated delays in the realization of increased property taxes from new assessments. As amended, SB 813 provided increased revenue to taxing jurisdictions to the extent that supplemental assessments of new construction or changes of ownership occur subsequent to the January 1 lien date and result in increased assessed value.

Property taxes on the unsecured roll are due on the January 1 lien date and become delinquent, if unpaid on the following August 31. A 10% penalty is also attached to delinquent taxes in respect of property on the unsecured roll, and further, an additional penalty of 1﷓1/2% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder's office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes in respect of property on the secured roll is the sale of the property securing the taxes for the amount of taxes which are delinquent.

Supplemental Assessments

Legislation enacted in 1983 (Chapter 498, Statutes of 1983), provides for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Previously, California law enabled the assessment of such changes only as of the next tax lien date following the change and thus delayed the realization of increased property taxes from the new assessments.

Chapter 498 provided increased revenue to redevelopment agencies to the extent that supplemental assessments of new construction or changes of ownership occur within the boundaries of redevelopment projects subsequent to the January 1 lien date. To the extent such State supplemental assessments occur within the Merged Project Area, Tax Increment Revenues may increase.

Taxation of State-Assessed Utility Property

The State Constitution provides that most classes of property owned or used by regulated utilities be assessed by the State Board of Equalization (“SBE”) and taxed locally. Property valued by the SBE as an operating unit in a primary function of the utility taxpayer is known as “unitary property”, a concept designed to permit assessment of the utility as a going concern rather than assessment of each individual element of real and personal property owned by the utility taxpayer. State-assessed unitary and “operating nonunitary” property (which excludes nonunitary property of regulated railways) is allocated to the counties based on the situs of the various components of the unitary property. Except for unitary property of regulated railways and certain other excepted property, all unitary and operating nonunitary property is taxed at special county-wide rates and tax proceeds are distributed to taxing jurisdictions according to statutory formulae generally based on the distribution of taxes in the prior year.

AB 2890 (Statutes of 1986, Chapter 1457) provides that, commencing with the fiscal year 1988/89, assessed value derived from State-assessed unitary property is to be allocated county-wide as follows: (i) each tax rate area will receive the same amount from each assessed utility received in the previous fiscal year unless the applicable county-wide values are insufficient to do so, in which case values will be allocated to each tax rate area on a pro rata basis; and (ii) if values to be allocated are greater than in the previous fiscal year, each tax rate area will receive a pro rata share of the increase from each assessed utility according to a specified formula. Additionally, the lien date on State-assessed property was changed from March 1 to January 1.

AB 454 (Statutes of 1987, Chapter 921) further modified Chapter 1457 regarding the distribution of tax revenues derived from property assessed by the State Board of Equalization. Chapter 921 provides for the consolidation of all State-assessed property, except for regulated railroad property, into a single tax rate area in each county. Chapter 921 further provides for a new method of distributing property tax revenues derived from State-assessed property to taxing jurisdictions within each county as follows: for revenues derived from the one percent tax rate, each jurisdiction, including redevelopment project areas, will receive a percentage up to 102% of its prior year State-assessed unitary revenue; and if countywide revenues generated from unitary property are greater than 102% of the previous year’s unitary revenues, each jurisdiction will receive a percentage share of the excess unitary revenue generated from the application of the one percent tax rate to countywide unitary taxable value; further, each jurisdiction will receive a percentage share of revenue based on the jurisdiction’s annual debt service requirements and the percentage of property taxes received by each jurisdiction from unitary property taxes. Railroads will continue to be assessed and revenues allocated to all tax rate areas where railroad property is sited.

SBE assessment of investor-owned gas and electric companies, incumbent local exchange companies, AT&T Corp., and AT&T Communications of California, Inc. is subject to a Settlement Agreement, dated May 1, 1992, among those companies, the SBE and all California counties (the “Agreement”), under which, for the fiscal years 1992-1993 through 1999-2000, the SBE sets the assessed property value equal to historical cost less depreciation less 25% of each utility's deferred tax reserve (all as defined in the Agreement). The Agreement provides that this valuation method is not intended to be precedent for calculating fair market value in years after the term of the Agreement. The Agreement was in response to a February 1, 1991, Sacramento Superior Court decision in AT&T Communications of California, Inc., et al v. State Board of Equalization, in which the court held that the SBE's valuation approaches had overvalued AT&T's unitary property, and ordered AT&T's statewide assessed value to be reduced from approximately $1.75 billion to approximately $1.1 billion. The Agreement was approved by the Sacramento Superior Court on July 14, 1992 in a validation action brought by the county parties.

The California electric utility industry is currently undergoing significant changes in its structure and in the way in which components of the industry are or are not regulated. Sale of electric generation assets to largely unregulated, nonutility companies may affect how those assets are assessed in the future and which local agencies are to receive the property taxes. The City is unable to predict the impact of these changes on its utility property tax revenues, or whether legislation may be proposed or adopted in response to industry restructuring, or whether any future litigation may affect the State's methods of assessing utility property and the allocation of assessed value to local taxing agencies.

Teeter Plan

The Board of Supervisors of the County adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”), as provided for in Section 4701 et seq. of the California Revenue and Taxation Code, “to accomplish a simplification of the tax-levying and tax apportioning process and an increased flexibility in the use of available cash resources.” This alternative method is used for distribution of the ad valorem property tax revenues.

The County will be responsible for determining the amount of the ad valorem tax levy on each parcel in the City, which will be entered onto the secured real property tax roll. Upon completion of the secured real property tax roll, the County auditor determines the total amount of taxes and assessments actually extended on the roll for each fund for which a tax levy has been included, and apportions 100% of the tax and assessment levies to that fund's credit. Such monies may thereafter be drawn against by the taxing agency in the same manner as if the amount credited had been collected.

Under the Teeter Plan, the County establishes the Tax Loss Reserve Fund. The County determines which monies in the County treasury (including those credited to the Tax Loss Reserve Fund) shall be available to be drawn onto the extent of the amount of uncollected taxes credited to each fund for which a levy has been included. When amounts are received on the secured tax roll for the current year, or for redemption of tax﷓defaulted property, Teeter Plan monies are distributed to the apportioned tax resources accounts.

When tax﷓defaulted property is sold, the taxes and assessments which constitute the amount required to redeem the property are prorated between apportioned (Teeter) levies and unapportioned (or non﷓Teeter) levies. The pro rata share for apportioned levies is distributed to the tax losses reserve fund. The pro rata share for unapportioned levies is prorated between tax levies and assessment levies and then distributed to the applicable funds.

If the tax losses reserve fund exceeds 3% of the total taxes and assessments levied on the secured roll for that year, the amounts coming in after it reaches 3% are credited to the County's general fund. Upon adoption of a resolution by the Board of Supervisors of the County by September 1 of any fiscal year, the 3% tax losses reserve fund threshold may be reduced to 50% of the total delinquent taxes and assessments for the previous year.

The Teeter Plan is to remain in effect unless the Board of Supervisors orders its discontinuance or unless, prior to the commencement of any fiscal year of the County (which commences on July 1), the Board of Supervisors shall receive a petition for its discontinuance joined in by resolutions adopted by two thirds of the participating revenue districts in the County, in which event the Board of Supervisors is to order discontinuance of the Teeter Plan effective at the commencement of the subsequent fiscal year.

The Board of Supervisors may, by resolution adopted not later than July 15 of the fiscal year for which it is to apply after holding a public hearing on the matter, discontinue the procedures under the Teeter Plan with respect to any tax levying agency or assessment levying agency in the County if the rate of secure tax delinquency in that agency in any year exceeds 3% of the total of all taxes and assessments levied on the secured rolls for that agency.

In the event that the Teeter Plan were terminated, the amount of the levy of ad valorem taxes in the City would depend upon the collections of the ad valorem property taxes and delinquency rates experienced with respect to the parcels within the City.

So long as the Teeter Plan remains in effect with respect to the City, the City's receipt of revenues with respect to the levy of ad valorem property taxes will not be dependent upon actual collections of the ad valorem property taxes by the County.


Property Taxes

Tax Rates. For taxing purposes, the State Board of Equalization has divided the City into various tax rate areas. The following table summarizes the component secured property tax rates being levied in the City for the 2001-02 tax year. 

CITY OF BRENTWOOD
Tax Rate Components

County-wide Rate (1) 





(1) Maximum rate for purposes other than paying debt service in 
accordance with Article XIIIA of the State Constitution. 
Source: California Municipal Statistics.

Assessed Valuation. The valuation of property in the City is established by the Contra Costa County Assessor, except for public utility property which is assessed by the State Board of Equalization. Assessed valuations are reported at 100% of the full value of the property, as defined in Article XIIIA of the California Constitution. Prior to 1981-82, assessed valuations were reported at 25% of the full value of the property. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS,” above.
A State-reimbursed exemption currently provides a credit of $7,000 of the full value of an owner-occupied dwelling for which application has been made to the County Assessor. Revenue estimated to be lost to local taxing agencies due to the this exemption has in the past been reimbursed from State sources. Reimbursement is based upon total taxes due upon such exemption values and therefore is not reduced by any estimated amount of actual delinquencies.

CITY OF BRENTWOOD
Historic Assessed Valuation
For Fiscal Years 1996-97 through 2001-02

Secured Utility Unsecured Total
1996-97 $ 801,247,248 $ 47,486 $ 22,102,286 $ 823,397,020
1997-98 910,287,285 57,618 24,395,197 934,740,100
1998-99 1,061,957,024 229,085 22,671,455 1,084,857,564
1999-00 1,343,423,659 29,407 22,541,617 1,368,994,683
2000-01 1,661,627,361 27,185 33,668,004 1,695,322,550
2001-02 2,155,314,823 289,943 38,416,499 2,194,021,265

Source: California Municipal Statistics.

Property Tax Levies. The table below sets forth for fiscal years 1996-97 through 2000-01, the property tax levies and collections in the City for property tax accruing to the City's general fund. Because the City participates in the County's Teeter Plan, total collections equal total levies.

CITY OF BRENTWOOD
Property Tax Levies
For Fiscal Years 1996-97 through 2000-01

Fiscal Year Total Levies Total Collections
1996-97 $ 846,055 $ 846,055
1997-98 960,071 960,071
1998-99 1,135,554 1,135,554
1999-00 1,499,452 1,499,452
2000-01 1,828,939 (1) 1,828,939 (1)

(1) Estimated.
Source: City of Brentwood, Finance Department.


Largest Taxpayers

The twenty largest secured taxpayers in the City for fiscal year 2000-01 are as follows:

CITY OF BRENTWOOD
Largest Local Secured Taxpayers
Fiscal Year 2000-01

2000-01 % of
Property Owner (1) Primary Land Use Assessed Valuation Total 
Brookfield Brentwood Lakes Inc. Residential Development $ 39,348,223 2.37%
California Sun Properties Residential Development 24,046,437 1.45
Blackhawk-Nunn Active Adult Communities Golf Course/Res. Development 22,874,819 1.38
HPH Properties LP Shopping Center/Office & Apartments 21,923,337 1.32
U.S. Print Corporation Industrial 16,757,892 1.01
Brentwood Country Club Partners Golf Course 13,704,460 0.82
Pulte Home Corporation Residential Development 10,204,592 0.61
Morrison Homes Inc. Residential Development 9,506,399 0.57
American Stores Properties Inc. Shopping Center 8,695,000 0.52
Safeway Stores Inc. Shopping Center 7,784,043 0.47
Signature Properties Inc. Residential Development 7,446,613 0.45
Centex Homes Residential Development 7,183,414 0.43
Ronald E. and Shirley A. Nunn Vacant 6,866,383 0.41
LP Homes #1 LLC Residential Development 4,876,075 0.29
Pacific & Bowie-Brentwood Shopping Center 4,189,475 0.25
WEC 97-34 Investment Trust Shopping Center 4,100,000 0.25
Ryder Homes Inc. Residential Development 3,577,230 0.22
Shea Homes LP Residential Development 3,427,200 0.21
Kaufman & Broad of Northern California Inc. Residential Development 3,040,847 0.18
Daniel and Teresa Montanelli, Trustees Industrial 2,967,747 0.18
$222,520,186 13.39%

(1) 2000-01 Local Secured Assessed Valuation: $1,661,627,361.
Source: California Municipal Statistics, Inc.

Direct and Overlapping Debt

Contained within the City’s boundaries are numerous overlapping local agencies. Set forth below is a direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc. and dated _________________. This Debt Report is included for general information purposes only. The City has not reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith.

The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term obligations generally are not payable from revenues of the City (except as indicated) nor are they necessarily obligations secured by land within the City. In many cases long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency.

The second column in the table shows the percentage of each overlapping entity's assessed value located within the boundaries of the City. The third column shows the corresponding portion of the overlapping entity's existing debt payable from property taxes levied within the City. The total amount of debt for each overlapping entity is not given in the table.


CITY OF BRENTWOOD
Statement of Direct and Overlapping Debt As of August 1, 2001

2000-01 Assessed Valuation: $1,695,322,550
Redevelopment Incremental Valuation: 208,691,834
Adjusted Assessed Valuation: $1,486,630,716

OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 8/1/01
Liberty Union High School District 34.341% $ 10,800,245
Brentwood Union School District 89.997 17,489,344
Oakley Union School District 0.004 387
City of Brentwood 1915 Act Bonds 100. 90,810,000
East Bay Regional Park District 0.880 1,531,596
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $120,631,572

DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT:
Contra Costa County General Fund Obligations 1.981% $ 6,559,784
Contra Costa County Pension Obligations 1.981 5,890,305
Contra Costa County Board of Education Certificates of Participation 1.981 59,826
Contra Costa County Mosquito Abatement District Certificates of Participation 1.981 25,357
Contra Costa Community College District Certificates of Participation 1.983 28,456
Liberty Union High School District Certificates of Participation 34.341 1,074,873
Brentwood Union School District Certificates of Participation 89.997 6,349,288 
City of Brentwood General Fund Obligations 100. 6,185,000 (1)
TOTAL DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT $26,172,889

COMBINED TOTAL DEBT $146,804,461 (2)

(1) Excludes issue to be sold.
(2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations.

Ratios to 2000-01 Assessed Valuation:
Total Overlapping Tax and Assessment Debt 7.12%

Ratios to Adjusted Assessed Valuation:
Combined Direct Debt ($6,185,000) 0.42%
Combined Total Debt 9.87%

STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/01: $0

Source: California Municipal Statistics, Inc.


THE CITY 

The information in this and other sections concerning the City's operations and operating budget is provided as supplementary information only, and it should not be inferred from the inclusion of this information in this Official Statement that the principal of or interest on the Bonds is payable from the General Fund of the City. The Bonds are payable from the proceeds of an ad valorem tax required to be levied by the County in an amount sufficient for the payment thereof. See “SOURCES OF REPAYMENT FOR THE BONDS” herein. 


The County of Contra Costa and City of Brentwood

Contra Costa County was incorporated in 1850 as one of the original 27 counties of the State of California with the City of Martinez as the County Seat. It is one of the nine counties in the San Francisco-Oakland Bay Area. The County covers about 733 square miles and extends from the northeastern shore of the of San Francisco Bay easterly about 20 miles to San Joaquin County. The County is bordered on the south and west by Alameda County and on the north by Suisun and San Pablo Bays. The western and northern shorelines are highly industrialized while the interior sections are suburban/residential, commercial and light industrial. A large part of the interior of the County is served by the Bay Area Rapid Transit District (“BART”) which has contributed to the expansion of residential and commercial development. In addition, economic development along the Interstate 680 corridor in the County has been substantial in the cities of Concord, Walnut Creek, and San Ramon. The County had a population of approximately 972,100 as of January 1, 2001, according to the State Department of Finance.

The City is located adjacent and southeast of the City of Antioch, 25 miles northeast of Walnut Creek, 45 miles northeast of San Francisco, and 65 miles southwest of Sacramento. The City of Tracy is located approximately 12 miles to the southeast and Livermore is located roughly 20 miles to the south. The City is situated in the eastern portion of the County, roughly five miles west of the San Joaquin County line. It is situated between the Mount Diablo foothills to the west, Antioch and Oakley to the north, Discovery Bay to the east and Byron to the south.

The City was incorporated in 1952 and until the 1980's retained its agricultural orientation. In recent years, new residential subdivisions have transformed the City into a more suburban environment. Land uses in and around the City are characterized by older farming and retail districts (the older retail districts are primarily located in downtown of the City) and rapidly expanding residential neighborhoods in the peripheral areas of the City.

In 1999, the City was the fastest growing city in California (excluding Corcoran, where increased population is primarily attributable to an increase in correctional facility inmates) by percentage increase in population in California. The City's incorporated boundary totals 5,668 acres (as of 1996) within a sphere of influence totaling in excess of 15,000 acres. An additional 3,000 acres are within the City's planning area adjacent to the sphere of influence.

The rapid expansion of nearby cities and communities including Antioch, Pittsburg, Oakley, Discovery Bay, and Livermore fuels local growth for the area. Highway 4 passes through the City extending easterly through the City of Stockton intersecting Interstate 5 and State Highway 99. Twenty-five miles to the west, Highway 4 connects to the western portion of the County and connects with Interstate 80, connecting the City to the cities of Berkeley, Richmond and San Francisco. Interstate 580 is located within 20 minutes of the City. The newly constructed Vasco Road links the City to the Interstate 580 corridor and the cities of Livermore, Tracy, Pleasanton, and Dublin.

Located in one of the fastest growing counties in California, the City has had a significant population increase in the past five years and is projected to continue to expand into the next decade. The total population for the City as of January 1, 2001 was 25,350 residents. This represents an increase of approximately 35% from the 1997 figure of 17,100 residents. According to the Association of Bay Area Governments (“ABAG”) Projections 2000, the total population for the City is estimated to reach 38,000 residents by 2005 and 46,000 by 2010. This translates to a percentage increase over the year 2000 of approximately 99% based on the census population for the year 2000.

In addition, the total number of households is projected to increase by 87% and jobs by 116% from 2000 to 2010. This overall increase in demographics suggests that the City is becoming a more self-sufficient community.

The City attracts homebuyers with its wide variety of affordable, single-family homes. Median home prices are lower in the City than the overall median home prices in the County. The City offers a variety of neighborhood styles, from gated communities with custom homes in the $400,000 range, to entry-level homes for the first time home buyer that start in the mid $200,000s. The City features two golf course style housing developments, Summerset and Apple Hill, as well as traditional detached home developments. Based on current approvals, the City expects to see specific plan developments and residential subdivisions for nearly 6,000 units over the next 10 years. This residential growth will create the need for supporting retail and business developments.

The State Route 4 Bypass is a planned nine-mile highway that will run along the eastern boundary of the City of Antioch and the western boundary of the City. It will link the City (and other far east county areas) to the City of Livermore and Interstate 580. The approved alignment maps for the Bypass depict a 250 foot wide right of way, which could accommodate up to 4 lanes (3 mixed flow and 1 high occupancy vehicle) in each direction, plus a transit median. The first phase of Segment II of State Route 4 Bypass, the stretch from Lone Tree Way to Balfour Road, is currently under construction. This phase includes one lane in each direction. Phase one of Segments I and III of the State Route 4 Bypass isplanned for 2004. Once the first phase of each segment is constructed, additional phases (widening) will occur based on traffic demand and funding availability. Ultimately, interchanges are planned for Laurel Road, Lone Tree Way, Sand Creek Road, Balfour Road, Marsh Creek Road, and the recently completed Vasco Road. This route will eventually replace Highway 4 as the main City thoroughfare. 

The City is also served by bus lines and railroads. Bay Area Rapid Transit (BART) provides a bus service from nearby Antioch connecting to the existing Bay Point BART Station. Despite measures to alleviate traffic problems, traffic congestion is anticipated to become a major constraint to future growth. For more demographic and economic information regarding the City, See “APPENDIX A﷓ THE CITY OF BRENTWOOD.”

Regional Growth Projections

The projections presented in this section are for regional general information purposes only. They have not been prepared or updated by the City and no assurance is given by the City or the Underwriter that such information is accurate or that the projections might be met or exceeded.

ABAG publishes projections of San Francisco Bay Area growth and has compiled current forecasts in its publication “Projections 2000 ﷓ Forecasts for the San Francisco Area to the Year 2020” dated December 1999 (“ABAG 2000”). ABAG projects that by the year 2040, the San Francisco Bay Region is projected to increase by 37%. In the East Bay, the Counties of Alameda and Contra Costa are forecast to grow 41 and 36% respectively. The economy is expected to generate demand for about 1,000,000 new jobs during the next twenty years. Housing production is projected to continue to lag behind demand between 2000 and 2020 with a projected production level of over 400,000 new dwelling units. ABAG indicates that this is lower than potential demand for housing, but is generally reflective of local policies.

ABAG projects that inadequate housing production, especially units affordable to moderate and lower income households, and housing prices will be the most serious constraint to the economic health of the region. High housing prices have negatively affected disposable incomes, which in turn have negatively affected taxable sales. The reduction in real growth of taxable sales has affected local governments' tax bases and their ability to finance services and infrastructure. People are moving to places where real estate prices are considerably lower, and traveling longer distances to get to work. According to ABAG, this housing-job mismatch has already begun to have a significant impact on the Bay Area.

ABAG reports that the 1980's brought substantial change to the physical and economic environment of the County. During that period, ABAG estimates that the population increased by more than 22% or about 147,400 new residents, with the economy adding approximately 113,300 new jobs (a 53% growth rate), twice the growth rate for the overall Bay Area economy. Between 2000 and 2010, the County should add about 69,400 new jobs. Over the period 2000-2010, the three top job growth centers are expected to be San Ramon, Concord, and Richmond over the period 2000﷓2010. While Richmond has the largest manufacturing job growth among these three areas, San Ramon adds the most jobs in the services and other categories. Because of their small existing job bases, Oakley, Brentwood, and Rural East Contra Costa County show very large percentage job growth; Oakley adds the most manufacturing jobs of any area in the County.

The ABAG report projects that Contra Costa County will remain a major provider of regional housing opportunities. Between 2000 and 2020, the County is expected to add about 81,880 new households, more than any other county in the region. More than half of this growth, 43,320 households, should occur within the next ten years. From 2010 to 2020, growth is projected at 38,560 new households. The number of new households in the County is the second highest in the region (behind Santa Clara). In the 2000 through 2020 period, East Contra Costa County and San Ramon will dominate the County's growth, accounting for over 62 percent of new households. East County includes Antioch, Pittsburg, Brentwood, Oakley and Rural East Contra Costa.

Based on evidence from building permits over the past five years, Brentwood is primarily single family in orientation. This is primarily the result of the less developed nature of the east county and the demand for detached single family housing in the Brentwood area. Since 1990, the City of Brentwood has experienced a relatively stable level of permit activity. The most noticeable difference between Contra Costa County and Brentwood is the lack of multifamily construction in Brentwood since 1990. This low percentage reflects the strong preference for single family homes in the suburban/rural environment available in Brentwood. Authorizations for single family units in 1996 through 2000 ranged from 482 units to a high of 1,128 units. The highest number of units were issued in 1999. The total 3,792 single-family building permits issued by the City of Brentwood from 1996 through 2000 equals an average of 758 units per year. 

ABAG 2000 reports there were approximately 320,240 households in Contra Costa County in 1995, 338,860 in 2000, and 420,740 expected in 2020. Brentwood and its sphere of influence had approximately 2.2 percent of those units in 2000. Projections from ABAG estimate demand for 382,180 new housing units in Contra Costa County by the year 2010. This equates to an increase of households in the County of nearly 12.8 percent within the decade, according to ABAG's figures. Overall, Contra Costa County jurisdictions do not have quite enough residential land to accommodate projected housing need. For the period 1995 to 2020, ABAG's Local Policy Survey documented a potential for 100,320 dwelling units, just less than ABAG's projection of 100,500 new households. The two areas where the residential land supply exceeds projected household growth are the West County and unincorporated areas of the County. 

According to the Brentwood General Plan, 28,119 new residential units are planned in the City by the year 2010. This is equal to an average of 1,875 new units per year. Approximately 35.9 percent of these new units are anticipated to be multifamily housing with density of 8.0 units per acre and above. 

Management

The members of the City Council and the expiration of their current terms of office are summarized below. 

Council Members Expiration of Term

Michael A. McPoland, Mayor November 2002
Milan “Pete” Petrovich, Vice Mayor November 2004
Wade Gomes, Council Member November 2002
Bill Hill, Council Member November 2004
Annette Beckstrand, Council Member November 2002


CITY OF BRENTWOOD FINANCES

The following selected financial information provides a brief overview of the City's finances. This financial information has been extracted from the City's audited financial statements and, in some cases, from unaudited information provided by the City's Department of Finance. The most recent audited financial statements of the City with an unqualified auditor's opinion is included as Appendix B hereto. See “APPENDIX B – CITY AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, ______.”


Accounting Policies and Financial Reporting

The City's accounting records are organized and operated on a “fund” basis, which is the basic fiscal and accounting entity in governmental accounting. The three broad fund categories include governmental, proprietary and fiduciary funds. The operations of the different funds are accounted for with separate sets of self-balancing accounts with assets, liabilities, fund balance or equity, and revenues and expenses. The basis of accounting for all funds is more fully explained in the Notes to General Purpose Financial Statements contained in Appendix B.

The City has received the Government Finance Officers Association's Certificate of Achievement for Excellence in Financial Reporting for the past three fiscal years. 

Budgetary Process

The budget of the City is a detailed operating plan which identifies estimated costs and activities in relation to estimated revenues. The City is required to adopt an annual operating budget on or before June 30 for the ensuing fiscal year which begins July 1. Initially, the City Manager submits to the City Council a proposed annual operating and capital improvement project budget for the fiscal year commencing the following July 1. Public hearings are then conducted to obtain taxpayer comments. Finally, the budget is legally adopted through the passage of a minute order.

From the effective date of the budget, the amounts stated therein as proposed expenditures become appropriations to the applicable governmental funds. The City Council may amend the budget by motion during the fiscal year. The level of budgetary control is at the object category level. The City Manager may transfer appropriations within the same object category of a department within the same fund without approval from the City Council. All other transfers require City Council approval.

All annual appropriations lapse at the end of the fiscal year to the extent they have not been expended or encumbered. For the actual GAAP basis financial statements, encumbered appropriations are not reported as expenditures, but are reported as a reservation of fund balance available for subsequent year expenditures based on the encumbered appropriation authority carried over to the next fiscal year.

Set forth below is the City's fiscal year 1999-00 Adopted Budget, the fiscal year 1999-00 Actuals, the fiscal year 2000-01 Adopted Budget, the unaudited fiscal year 2000-01 results and the fiscal year 2001-02 Adopted Budget. 

CITY OF BRENTWOOD
General Fund Budgets
For Fiscal Years 1999-00 through 2001-02

Adopted Budget1999-00 Actual1999-00 Adopted Budget2000-01 Unaudited2000-01 Results Adopted 2001-02 Budget
Revenues: 
Taxes $3,265,800 $3,816,208 $4,429,030 $4,769,444 $5,456,739
Licenses 45,000 52,690 52,000 60,000 69,000
Permits and Fines 77,000 155,191 179,700 175,000 201,250
Intergovernmental 1,220,150 1,487,123 1,654,142 1,782,650 1,813,570
Franchises 236,000 225,795 259,600 259,600 285,560
Charges for other Services 81,500 95,239 95,500 129,750 154,750
Uses of Monies and Property 600,000 728,469 550,000 815,000 815,000
Charges to other Funds 2,207,500 2,186,433 2,668,221 2,674,471 3,507,914
Fees and Other Revenues 101,000 277,809 115,500 111,550 201,560
Total Revenues 7,833,950 9,024,957 10,003,693 10,777,465 12,505,343

Expenditures: 
Current: 
General Government 1,811,081 1,641,917 2,004,189 2,085,786 2,279,488
Public Safety 4,172,178 4,250,440 4,851,075 4,656,101 5,934,747
Planning and Community Dev. 232,000 187,875 258,389 207,416 514,642
Public Works 1,262,509 1,107,390 1,737,250 1,709,105 1,675,821
Parks and Community Services 89,414 96,487 215,375 244,093 218,682
Other 229,054 623,233 594,421 360,590 602,877
Capital Outlay 48,800 25,552 312,940 380,419 115,060
Total Expenditures 7,845,036 7,932,894 9,973,639 9,643,510 11,341,317

REVENUES OVER (UNDER) EXPENDITURES (11,086) 1,092,063 30,054 1,133,955 1,164,026

OTHER FINANCING SOURCES (USES) 
Operating transfers in 586,000 582,066 563,500 604,000 731,250
Operating transfers out (1,195,596) (947,468) (1,552,761) (1,697,761) (1,868,514)
Total other financing sources (uses) (609,596) (365,402) (959,207) (1,093,761) (1,137,264)

REVENUES AND OTHER 
FINANCING SOURCES OVER 
(UNDER) EXPENDITURES AND OTHER USES $ (620,682) $ 726,661 $ (959,207) $ 40,194 $ 26,762

Source: City of Brentwood, Finance Department; Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2000, 2000-01 Adopted Budget and 2001-02 Adopted Budget.

General Fund Financial Summary

The information contained in the following tables of revenues, expenditures and changes in fund balances, and assets, liabilities and fund equity has been derived from the City's audited financial statements for the past three fiscal years.

A copy of the City's audited financial statements for the twelve months ended June 30, ______ is attached as Appendix B hereto. 

CITY OF BRENTWOOD
General Fund Balance Sheet
As of June 30 for Fiscal Years 1997-98 through 1999-00

1997-98 1998-99 1999-00
ASSETS 
Cash and Investments $6,230,677 $8,535,847 $9,343,555
Receivables 338,280 302,609 528,001
Prepaids -- 89,585 320,268
Advances 1,470 -- --

Total Assets $6,570,427 $8,928,041 $10,191,824

LIABILITIES 

Liabilities: 
Accounts Payable 373,650 183,622 209,610
Current Maturities on Long – Term Debt 7,886 -- --
Deferred Revenue 2,172,711 8,670 9,318
Deposits Held -- 5,724,817 6,235,203
Deferred Compensation Payable -- -- 100
Total Liabilities 2,554,247 5,917,109 6,454,231
FUND EQUITY 
Prepaids -- 89,585 320,268
Undesignated 4,016,180 2,921,347 3,417,325
Total Fund Equity 4,016,180 3,010,932 3,737,593
Total Liabilities and Fund Equity $6,570,427 $8,928,041 $10,191,824

Source: City of Brentwood, Finance Department, Comprehensive Annual Financial Reports.


CITY OF BRENTWOOD
General Fund
Summary of Revenues and Expenditures
For Fiscal Years 1997-98 through 1999-00 (Audited); 2000-01 (Unaudited)

1997-98 1998-99 1999-00 2000-01(unaudited)
Revenues: 
Taxes $2,524,882 $3,018,943 $3,816,208 $4,769,444
Licenses 39,555 44,838 52,690 60,000
Permits and Fines 46,286 92,576 155,191 175,000
Intergovernmental 864,315 994,488 1,487,123 1,782,650
Franchises 197,030 225,795 259,600
Charges for other Services 64,638 67,158 95,239 129,750
Uses of Monies and Property 425,394 745,344 728,469 820,650
Charges to other Funds 3,890,184 2,400,849 2,186,433 2,532,971
Fees and Other Revenues 232,952 3,980 277,809 247,400
Total Revenues 8,291,706 7,565,206 9,024,957 10,777,465

Expenditures: 
Current: 
General Government 1,087,842 1,168,754 1,641,917 2,507,977
Public Safety 2,710,923 3,455,518 4,250,440 5,312,030
Planning and Community Dev. 2,104,511 473,470 187,875 219,354
Public Works 1,086,997 1,039,850 1,107,390 1,277,134
Parks and Community Services 210,008 82,322 96,487 645,264
Other 198,474 411,899 623,233 247,593
Capital Outlay -- -- 25,552 443,919
Total Expenditures 7,398,755 6,631,813 7,932,894 10,653,271

REVENUES OVER (UNDER) EXPENDITURES 892,951 933,393 1,092,063 124,194

OTHER FINANCING SOURCES (USES) 
Operating transfers in 789,200 861,195 582,066 604,000
Operating transfers out (513,186) (2,799,839) (947,468) (688,000)
Total other financing sources (uses) 276,014 (1,938,644) (365,402) (84,000)

EXCESS (DEFICIENCY) OF REVENUES AND OTHER 
FINANCING SOURCES OVER 
(UNDER) EXPENDITURES AND OTHER USES 1,168,965 (1,005,248) 726,661 40,194
Fund Balance, Beginning of Year 2,847,215 4,016,180 3,010,932 
Fund Balance, End of Year $4,016,180 $3,010,932 $3,737,593 

Source: City of Brentwood, Finance Department, Comprehensive Annual Financial Reports.


Tax Receipts

Taxes received by the City include Sales and Use Taxes, Property Taxes, Transient Occupancy Tax, Franchise Taxes, and others. Of such taxes, Sales and Use Taxes (approximately 45% of the City's 1999-00 tax revenues), Property Taxes (approximately 36% of 1999-00 tax revenues), and Franchise Taxes (approximately 5% of 1999-00 tax revenues) constitute the major sources of tax revenues. None of the general taxes currently imposed by the City are affected by Proposition 218. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS - Proposition 218.” 

The following table sets forth tax revenues received by the City, by source:

CITY OF BRENTWOOD
Tax Revenues by Source 
For Fiscal Years 1998-99 through 2000-01
($'s in thousands)

Fiscal Year 
Ended June 30: 1999 2000 2001*
Source: 
Sales & Use Tax $1,607,208 $1,954,804 $2,260,000
Property Tax 1,135,554 1,499,452 1,828,939
Franchises 197,029 225,795 259,600
Transient Occupancy 81,662 88,147 105,000
Other 301,616 481,685 561,425

Total $3,323,069 $4,249,883 $5,014,964

* Pre-audited 

Source: City of Brentwood, Finance Department.


Long-Term Debt

For information on the long-term debt of the City, see “Note 5” to the City's audited financial statements shown in Appendix B hereto. 


CONSTITUTIONAL AND STATUTORY LIMITATIONS ON REVENUES AND EXPENDITURES

Principal of and interest on the Bonds are payable from the proceeds of an ad valorem tax required to be levied by the County in an amount sufficient for the payment thereof. (See “THE BONDS – Security” herein.) Articles XIIIA and XIIIB, XIIIC and XIIID of the Constitution, Propositions 62, 98, 111, 187, and 218, and certain other provisions of law discussed herein, are summarized in this section and in the section entitled “State of California Finances” to describe the potential effect of these Constitutional and statutory measures on the ability of the City to levy taxes and spend tax proceeds for operating and other purposes, and it should not be inferred from the inclusion of such materials that these laws impose any limitation on the ability of the City to levy taxes for payment of debt service on the Bonds. The tax levied by the County for payment of the Bonds was approved by the City's voters in compliance with Article XIIIA, Article XIIIC, and all applicable laws.


Property Tax Rate Limitations ﷓ Article XIIIA

On June 6, 1978, the California voters added to the State Constitution Article XIIIA, which limits the amount of any ad valorem taxes on real property to one percent (1%) of the full cash value of the property, except that additional ad valorem property taxes may be levied to pay debt service on indebtedness approved prior to July 1, 1978 and (as a result of an amendment to Article XIIIA approved by California voters on June 3, 1986) on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after July 1, 1978, by two thirds of the voters voting on such indebtedness. Article XIIIA defines full cash value to mean “the county assessor's valuation of real property as shown on the 1975﷓76 tax bill under full cash value, or thereafter, the appraised value of real property when purchased, newly constructed or a change in ownership has occurred after the 1975 assessment period.” This cash value may be increased at a rate not to exceed two percent (2%) per year to account for inflation.

Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the event of declining property values caused by damage, destruction or the other factors, to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster and in various other minor or technical ways which affect only certain categories of property or property owners.

The California Supreme Court and the U.S. Supreme Court have upheld the constitutionality of Article XIIIA.

Legislation Implementing Article XIIIA

Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any ad valorem property tax for their general purposes. The 1% property tax is automatically levied annually by the county and distributed, according, to a formula among taxing agencies. Any special tax to pay voter approved indebtedness is levied in addition to the basic 1% property tax.

Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership, or from the 2% annual adjustment are allocated among the various jurisdictions in the “taxing area” based upon their respective “situs.” Any such allocation made to a local agency continues as part of its allocation in future years.

Beginning in the 1981﷓82 Fiscal Year, assessors in California no longer record property values on tax rolls at the assessed value of 25% of market value, under which a 1% tax rate was expressed as $4.00 per $100 of assessed value. All taxable property is now shown at full market value on the tax rolls. Consequently, the basic 1% tax rate is expressed as $1.00 per $100 of taxable value.

Appropriation Limitation ﷓ Article XIIIB

On November 6, 1979, the voters of the State approved Proposition 4, known as the Gann Initiative, which added Article XIIIB to the State Constitution. On June 5, 1990, the voters approved Proposition 111, which amended Article XIIIB in certain respects. Under Article XIIIB, as amended, state and local government entities each have an annual “appropriations limit” which limits the ability to spend certain monies which are called “appropriations subject to limitation” (consisting of most tax revenues and certain state subventions, together called “proceeds of taxes,” and certain other funds) in an amount higher than the “appropriations limit.” Article XIIIB does not affect the appropriation of monies which are excluded from the definition of “appropriations limit,” including debt service on indebtedness existing or authorized as of January 1, 1979, or bonded indebtedness subsequently approved by two thirds of the voters. The “appropriations limit” is adjusted annually for changes in the cost of living and in population, for transfers in the financial responsibility for providing services, and in the case of certain declared emergencies. If a City receives any proceeds of taxes in excess of its appropriations limit, it may, by resolution of the City's governing board, increase its appropriations limit to equal that amount (provided that the State has excess appropriations limit of its own in that fiscal year).

California Constitution Article XIIIC and Article XIIID (Proposition 218)

On November 5, 1996, the voters of the State approved Proposition 218, the so-called “Right to Vote on Taxes Act.” Proposition 218 added to the State Constitution Articles XIIIC and XIIID, which contain a number of provisions affecting the ability of local agencies, including cities, to levy and collect both existing and future taxes, assessments, fees and charges. Among other things, Article XIIIC establishes that every tax is either a “general tax” (imposed for general governmental purposes ) or a “special tax” (imposed for specific purposes); prohibits special purpose government agencies such as cities from levying general taxes; and prohibits any local agency from imposing, extending or increasing any special tax beyond its maximum authorized rate without a two thirds vote. Article XIIIC also provides that no tax may be assessed on property other than ad valorem property taxes imposed in accordance with Articles XIII and XIIIA of the California Constitution and special taxes approved by a two-thirds vote under Article XIIIA, Section 4.

Article XIIIC also provides that the initiative power shall not be limited in matters of reducing or repealing local taxes, assessments, fees and charges. The State Constitution and the laws of the State impose a mandatory, statutory duty on the County Treasurer to levy a property tax sufficient to pay debt service on any Bonds coming due in each year. The initiative power cannot be used to reduce or repeal the authority and obligation to levy such taxes or to otherwise interfere with performance of the mandatory, statutory duty of the City and the County with respect to such taxes which are pledged as security for payment of the Bonds. Legislation adopted in 1997 provides that Article XIIIC shall not be construed to mean that any owner or beneficial owner of a municipal security assumes the risk of or consents to any initiative measure which would constitute an impairment of contractual rights under the contracts clause of the U.S. Constitution.

Article XIIID deals with assessments and property-related fees and charges. Article XIIID explicitly provides that nothing in Article XIIIC or XIIID shall be construed to affect existing laws relating to the imposition of fees or charges as a condition of property development; however it is not clear whether the initiative power is therefore unavailable to repeal or reduce developer and mitigation fees imposed by the City. No developer fees imposed by the City are pledged or expected to be used to pay the Bonds.

The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination. 

Proposition 62

On November 4, 1986, California voters adopted Proposition 62, a statutory initiative which amended the California Government Code by the addition of Sections 53720-53730. Proposition 62 requires that (i) any local tax for general governmental purposes (a “general tax”) must be approved by a majority vote of the electorate; (ii) any local tax for specific purposes (a “special tax”) must be approved by a two-thirds vote of the electorate; (iii) any general tax must be proposed for a vote by two-thirds of the legislative body; and (iv) proceeds of any tax imposed in violation of the vote requirements must be deducted from the local agency's property tax allocation. Provisions applying Proposition 62 retroactively from its effective date to 1985 are unlikely to be of any continuing importance; certain other restrictions were already contained in the Constitution. The requirements of Proposition 62 have generally been superseded by the enactment of Article XIIIC of the Constitution (Proposition 218) in 1996.

Most of the provisions of Proposition 62 were affirmed by the 1995 California Supreme Court decision in Santa Clara County Local Transportation Authority v. Guardino, which invalidated a special sales tax for transportation purposes because fewer than two-thirds of the voters voting on the measure had approved the tax. By its terms, Proposition 62 applies to cities, but because the City does not receive any material amount of tax revenues from any tax levied in contradiction to Proposition 62, the City has not experienced nor does it expect to experience any substantive adverse financial impact as a result of the passage of this initiative or the Santa Clara decision.

Future Initiatives

Article XIIIA, Article XIIIB, Proposition 98, Proposition 111, Proposition 218 and Proposition 62 were each adopted as measures that qualified for the ballot pursuant to the State's initiative process. From time to time other initiative measures could be adopted, further affecting the City's finances or the City's ability to raise or expend revenues.

State Budgets

The State of California (the “State”) requires that from all State revenues there first shall be set apart the moneys to be applied for support of the public school system and public institutions of higher education. California school districts receive a significant portion of their funding from State appropriations. As a result, decreases in State revenues may significantly affect appropriations made by the legislature to school districts.

The following information concerning the State’s budgets for the current and most recent preceding years has been compiled from publicly-available information provided by the State. Neither the City nor the Underwriter is responsible for the information relating to the State’s budgets provided in this section. Further information is available from the Public Finance Division of the State Treasurer’s Office.

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

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

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

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

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

The California State Treasurer’s Internet home page at www.treasurer.ca.gov, under the heading “Bond Information,” posts various State of California Official Statements, many of which contain a summary of the current State Budget, past State Budgets, and the impact of those budgets on school districts in the State. 

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

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

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


CONTINUING DISCLOSURE

The City has covenanted for the benefit of the holders and beneficial owners of the Bonds to provide certain financial information and operating data relating to the City (the “Annual Report”) not later than nine months following the end of the City's fiscal year (currently ending June 30), commencing with the report for the 2000-01 Fiscal Year, and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be filed by the City with each Nationally Recognized Municipal Securities Information Repository, and with the State information repository, if any. The notices of material events will be filed by the City with each Nationally Recognized Municipal Securities Information Repository or with the Municipal Securities Rulemaking Board, and with the State information repository, if any. The specific nature of the information to be contained in the Annual Report or the notices of material events is summarized below under the caption “APPENDIX B – Excerpts of Audited Financial Statements of the City for Fiscal Year ____ - __.” These covenants have been made in order to assist the underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). The City has never failed to comply in all material respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material events.


LEGAL MATTERS

Tax Exemption

In the opinion of Orrick, Herrington & Sutcliffe LLP (“Bond Counsel”), based upon an analysis of existing laws, regulations, rulings, and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”) and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that such interest is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating federal corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix D hereto.
The amount (if any) by which the issue price of the Bonds of any given maturity date is less than the amount to be paid on such date (excluding amounts stated to be interest and payable at least annually over the term of such Bonds) constitutes “original issue discount,” the accrual of which, to the extent properly allocable to each owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and which is exempt from State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to Bonds of any maturity date accrues daily over the term to such maturity date on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Owners of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public.
Bonds purchased, whether at original issuance or otherwise, for an amount greater than their principal amount payable at maturity (or, in some cases, at their earlier call date) (“Premium Bonds”) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, a purchaser’s basis in a Premium Bond, and under Treasury Regulations, the amount of tax exempt interest received, will be reduced by the amount of amortizable bond premium properly allocable to such purchaser. Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. 
The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The District has covenanted to comply with certain restrictions designed to ensure that interest on the Bonds will not be included in federal gross income. Failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original delivery of the Bonds. The opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of delivery of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. 
Certain requirements and procedures contained or referred to in the Resolution, the Tax Certificate of the District dated the date of delivery of the Bonds (the “Tax Certificate”), and other relevant documents may be changed and certain actions (including, without limitation, defeasance of Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of Bond Counsel other than Orrick, Herrington & Sutcliffe LLP.
Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect an Owner’s federal or state tax liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the Owner or the Owner’s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.
In addition, no assurance can be given that any future legislation, including amendments to the Code, if enacted into law, or changes in interpretation of the Code, will not cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent Owners of the Bonds from realizing the full current benefit of the tax status of such interest. Prospective purchasers of the Bonds should consult their own tax advisers regarding any pending or proposed federal tax legislation. Further, no assurance can be given that the introduction or enactment of any such future legislation, or any action of the Internal Revenue Service (“IRS”), including but not limited to regulation, ruling, or selection of the Bonds for audit examination, or the course or result of any IRS examination of the Bonds, or obligations which present similar tax issues, will not affect the market price for the Bonds.

Legal Opinion

The legal opinion of Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel to the City, approving the validity of the Bonds, will be supplied to the original purchasers of the Bonds without cost. 

Bond Counsel's employment is limited to a review of the legal proceedings required for authorization of the Bonds and to rendering an opinion as to the validity of the Bonds and the exclusion from gross income for federal income tax purposes of interest on the Bonds. The opinion of Bond Counsel will not consider or extend to any documents, agreements, representations, offering circular, or other material of any kind concerning the Bonds. Bond Counsel has undertaken no responsibility for the accuracy, completeness or fairness of this Official Statement or other offering materials relating to the Bonds and expresses no opinion relating thereto.

Legality for Investment

Under provisions of the California Financial Code, the Bonds are legal investments for commercial banks in California to the extent that the Bonds, in the informed opinion of the bank, are prudent for the investment of funds of depositors, and under provisions of the California Government Code, the Bonds are eligible to secure deposits of public monies in California.

Absence of Material Litigation 

No litigation is pending or threatened concerning the validity of the Bonds, and a certificate to that effect will be furnished to purchasers at the time of the original delivery of the Bonds. The City is not aware of any litigation pending or threatened that (i) questions the political existence of the City, (ii) contests the City’s ability to receive ad valorem taxes or to collect other revenues or (iii) contests the City’s ability to issue and retire the Bonds.

RATINGS

__________________ has given the Bonds the rating of “____” and _________________ has given the Bonds the rating of “____”. Such ratings reflect only the view of these organizations and an explanation of the significance of such rating may be obtained from such rating agencies. There is no assurance that the ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by a rating agency, if, in the judgment of such agency, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Bonds. The City has no obligation to maintain any rating for the Bonds.

UNDERWRITING

RBC Dain Rauscher (the “Underwriter”) has agreed to purchase the Bonds, subject to certain conditions, at a price of $_________ (representing the principal amount of the Bonds, less an Underwriter’s discount of $______). The Underwriter is committed to purchase all of the Bonds if any are purchased. 

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

MISCELLANEOUS

Additional information may be obtained from the City by contacting the City of Brentwood, 150 City Park Way, Brentwood, California, Attention: Director of Finance and Information Systems.

At the time of delivery and payment for the Bonds, an authorized representative of the City will deliver a certificate stating that to the best of his or her knowledge this Official Statement, excluding therefrom information regarding the Book Entry System and DTC does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements herein, in light of the circumstances under which they were made, not misleading. 

Such certificate will also certify that to the best of his or her knowledge from the date of this Official Statement to the date of such delivery and payment there was no material adverse change in the information set forth herein.

CITY OF BRENTWOOD

By: 
Director of Finance and Information Systems

APPENDIX A

THE CITY OF BRENTWOOD

The following information concerning the City and surrounding areas are included only for the purpose of supplying general information regarding the community. The Local Obligations and the Bonds are not a debt of the City, the State, or any of its political subdivisions and neither said City, said State, nor any of its political subdivisions is liable therefor. See the section herein entitled “SECURITY FOR THE BONDS AND SOURCES OF PAYMENT THEREFOR.”

The City is located in eastern Contra Costa County (the “County”) across the San Francisco Bay approximately 45 miles northeast of San Francisco, 65 miles southwest of Sacramento and 10 miles east of the City of Antioch. The City contains approximately 8.65 square miles in total area and has a population which has increased significantly in recent years to its present level of approximately 23,350 persons. Certain demographic information on the County is presented below under the subcaption “Contra Costa County.”

The City was first settled by farmers in 1878 and was incorporated in 1952. Until the past decade, the City had retained its agricultural orientation. In recent years, new residential subdivisions have transformed the City into a more suburban environment, as evidenced by its rapid population growth. Land uses in and around the City are characterized by older farming districts and an original downtown area, contrasted with rapidly expanding residential neighborhoods in the peripheral areas of the City.

The City enjoys close proximity to major regional employment areas, including San Francisco and the northern Bay Area, Walnut Creek and the San Ramon corridor in Contra Costa County and the Stockton and central San Joaquin Valley area to the east. The City also enjoys close proximity to major regional recreation areas, including Mt. Diablo State Park approximately 25 miles to the west, the Sierra Nevada Mountains 90 miles to the east and the Sacramento Delta waterway to the north. Interstate Highway 680, a 20﷓minute drive from the City's downtown area, and California Highway 4, which runs through the City, provide convenient access to the City. The City is also served by the Southern Pacific Railroad.

Municipal Government

The City was incorporated in 1952 as a general law city. The City government provides for four council members elected at large to serve four-year overlapping terms, at elections held every two years. The mayor is directly elected to serve a two-year term. A city manager is appointed by the council and mayor to administer daily affairs of the City and to implement policies established by the council.

Municipal functions include police protection, water service, highways and streets, sanitation, youth services, public improvements, parks and recreation services, community development and general administrative services. The City has approximately 110 full-time employees and 10 part-time employees.

Population

The City is located in the fast-growing eastern portion of the County. The City's population as of January 1, 2001 was 25,350, as estimated by the State Department of Finance. This figure is 238 percent greater than the 1990 U.S. Census figure and 472 percent higher than the 1980 U.S. Census figure.

Set forth below is comparative historical and projected population data for the City and County, respectively.


HISTORICAL CITY, COUNTY AND STATE POPULATION DATA

Year City ofBrentwood PercentChange Contra CostaCounty PercentChange State ofCalifornia PercentChange
1970 2,649 -- 556,116 -- 19,935,144 --
1980 4,434 67.4% 657,252 18.2% 23,668,562 18.6%
1990 7,500 69.1 802,933 22.2 29,588,000 24.9
1996 13,200 76.0 872,600 8.7 32,232,000 8.9
1997 14,600 10.6 887,100 1.7 32,670,000 1.4
1998 17,100 17.1 906,500 2.2 33,226,000 1.7
1999 20,250 18.4 924,400 2.0 33,766,000 1.6
2000 22,250 9.9 955,900 1.7 34,207,000 1.3
2001 25,350 13.9 972,100 1.7 34,818,000 1.8

Sources: U.S. Department of Commerce, Bureau of the Census (1970-1990); State Department of Finance (1996-2000).

Prior to the 1970's, the City's growth lagged behind growth in the County as a whole because development was centered in the western portion of the County. As development activity moved eastward during the 1970's, population in the City began to grow sharply, outpacing growth in the County. The City experienced a population increase of approximately 421% from 1980 to 2000. According to projections by the Association of Bay Area Governments (“ABAG”), the City's population is forecast to increase to 46,000 by the year 2010.

Income

“Effective buying income” (“EBI”) is a classification developed exclusively by Sales & Marketing Management magazine to distinguish it from other sources reporting income statistics. EBI is defined as “money income” less personal tax and nontax payments ¾ a number often referred to as “disposable” or “after-tax” income. Money income is the aggregate of wages and salaries, net farm and nonfarm self-employment income, interest, dividends, net rental and royalty income, Social Security and railroad retirement income, other retirement and disability income, public assistance income, unemployment compensation, Veterans Administration payments, alimony and child support, military family allotments, net winnings from gambling and other periodic income. Money income does not include money received from the sale of property (unless the recipient is engaged in the business of selling property); the value of “in-kind” income such as food stamps, public housing subsidies, medical care, employer contributions for persons, etc.; withdrawal of bank deposits; money borrowed; tax refunds; exchange of money between relatives living in the same household; gifts and lump-sum inheritances, insurance payments, and other types of lump-sum receipts. EBI is computed by deducting from money income all personal income taxes (federal, state and local), personal contributions to social insurance (Social Security and federal retirement payroll deductions), and taxes on owner-occupied nonbusiness real estate. Note that the methodology for calculating EBI was modified in 1995. Therefore, the figures cited herein are not comparable to EBI statistics compiled prior to 1995.

Although Sales & Marketing Management does not list EBI figures for Brentwood, figures for Contra Costa County and the nearby city of Antioch are available. The county-wide median household EBI was $53,234 in 1999. In Antioch, the 1999 median household EBI was $52,597. This compares to 1999 median household EBI figures of $50,501 in San Francisco County; $36,730 in Los Angeles County; $39,213 in San Diego County; $37,152 in Sacramento County; and $61,122 in Santa Clara County.

Brentwood's mean household income level, in constant 1995 dollars, has risen from $54,400 in 1990 to $72,300 in 2000, according to 2000 ABAG estimates. Brentwood's income figures are below those of Contra Costa County as a whole, whose 1990 and 2000 median household incomes were $67,800 and $79,000, respectively.

As a consequence of its strong employment sector, Contra Costa County achieves high rankings among all California counties in a variety of income measurements. As reported in the 1990 U.S. Census, Contra Costa County ranked fifth in terms of median family income ($51,651), sixth in terms of median household income ($45,087), and third in terms of per capita income ($20,748). The medians for the State of California were $40,559 (family income), $35,798 (household), and $16,409 (per capita).

Sales Taxes

During fiscal year 2000-01, the City expects sales and use taxes to generate approximately 45% of the City's 2000-01 tax revenues. A sales tax is imposed on retail sales or consumption of personal property. The tax rate is established by the State Legislature. Effective January 1, 2001, the statewide tax rate is 7%. An additional 1% is collected in Contra Costa County for transportation purposes. The State collects and administers the tax, and makes distributions on taxes collected within the City. The State's administrative costs are deducted before distribution.

The following table shows taxable transactions in the City during calendar years 1995 through 1999. As indicated below, total retail sales for the City in calendar year 1999 increased by approximately 73% over the calendar year 1995 level. During the first two quarters of 2000, total taxable sales in the City were reported to be to $83,930,000, a 17.3% increase over the total taxable sales of $71,560,000 that were reported in the City during the first two quarters of 1999. 

CITY OF BRENTWOOD
Taxable Transactions
For Calendar Years 1995 through 1999
($'s in thousands)

Year Retail Transactions Total
1995 $ 76,337 $ 87,786
1996 86,729 102,088
1997 94,010 109,373
1998 111,729 132,601
1999 129,608 151,789

Source: California State Board of Equalization.

Employment

The following tables list some of the largest employers, together with the approximate employment of each such employer, in eastern Contra Costa County.

EAST CONTRA COSTA COUNTY SUB-REGION
Major Employers

Name/Company Number of Employees
USS-POSCO 1,100
Dow Chemical 400
Sutter Delta Medical Center 400
Brentwood Unified School District 269
Lesher Communications 250
Gaylord Container Corporation 175
U.S. Print 125
Safeway 100
Laidlaw Transit 100

Source: City of Brentwood Community Development Department.

Contra Costa County and Alameda County comprise the Oakland Metropolitan Statistical Area. The civilian labor force, employment and unemployment for the Oakland Metropolitan Statistical Area is outlined in the following table.

OAKLAND METROPOLITAN STATISTICAL AREA 
(Alameda and Contra Costa Counties)
Civilian Labor Force, Employment and Unemployment, Employment by Industry
(Annual Averages)

1996 1997 1998 1999 2000
Civilian Labor Force (1) 1,140,200 1,171,500 1,187,800 1,209,900 1,245,500
Employment 1,083,800 1,121,200 1,141,200 1,170,200 1,209,900
Unemployment 56,400 50,300 46,600 39,300 35,600
Unemployment Rate 4.9% 4.3% 3.9% 3.3% 2.9%
Wage and Salary Employment: (2) 
Total All Industries 918,500 949,900 978,100 1,010,200 1,049,800
Agriculture 2,100 2,100 1,900 2,300 3,400
Nonagricultural Industries 916,400 947,800 976,200 1,008,000 1,046,400
Mining 2,200 2,100 1,900 2,400 2,300
Construction 46,600 50,000 54,100 60,400 65,200
Manufacturing 114,600 120,100 121,300 117,600 122,000
Transportation, Public Utilities 58,500 60,900 62,500 63,300 64,700
Wholesale Trade 55,500 59,100 63,000 67,100 67,700
Retail Trade 152,500 153,200 157,300 164,100 168,300
Finance, Insurance, Real Estate 52,100 54,600 55,400 57,000 57,700
Services 266,200 279,900 291,800 303,00 322,000
Government 168,200 167,900 168,900 173,000 176,600

(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
Source: Labor Division of the California State Employment Development Department.

Contra Costa County and Alameda County comprise the Oakland Metropolitan Statistical Area. A breakdown of the labor force by industry in the Oakland Metropolitan Statistical Area is set forth in the following table.

OAKLAND METROPOLITAN STATISTICAL AREA
Wage And Salary Workers By Industry
Annual Averages

1996 1997 1998 1999 2000
Agriculture 2,100 2,100 1,900 2,300 3,400
Mining 2,200 2,100 1,900 2,400 2,300
Construction 46,600 50,000 54,100 60,400 65,200
Manufacturing 114,600 120,100 121,300 117,600 122,000
Transportation and Public Utilities 58,500 60,900 62,500 63,300 64,700
Wholesale Trade 55,500 59,100 63,000 67,100 67,700
Retail Trade 152,500 153,200 157,300 164,100 168,300
Finance, Insurance and Real Estate 52,100 54,600 55,400 57,000 57,800
Services 266,200 279,99 291,800 303,000 322,000
Government 168,200 167,900 168,900 173,000 176,600
Total All Industries* 918,500 949,900 978,100 1,010,200 1,049,800

* Total may not be precise due to independent rounding.
Source: Employment Development Department, State of California Health and Welfare Agency.

Construction

Between 1996 and 2000, the City issued building permits valued at more than $683 million. New residential construction accounted for approximately 95 percent of this total, and new commercial/industrial projects represented approximately5 percent.

During this five-year period, residential permits in the City included approximately 4,164 new dwelling units, 3,792 of which were single-family homes. Set forth below are building permit valuations for the City during the five-year period from 1996 through 2000.

CITY OF BRENTWOOD
Building Permit Valuation
1996 through 2000

1996 1997 1998 1999 2000
Valuation (000): 
New Residential $74,068,969 $111,647,892 $97,407,800 $184,961,200 $178,533,700
New Commercial/Industrial 1,562,475 6,795,767 9,358,200 6,412,400 12,732,100
Total Value $75,631,444 $118,443,659 $106,766,000 $191,373,600 $191,265,800

Number of New Housing Units: 
Single 482 623 606 1,128 953
Multiple 84 286 0 2 0
Total Units 566 909 606 1,130 953

Source: Construction Industry Research Board.


The following table shows residential building permit data for the County for the last five years.

p
COUNTY OF CONTRA COSTA
New Residential Building Permits
1996 through 2000

Year Single FamilyUnits Single FamilyPercent of Total Multi-FamilyUnits Multi-FamilyPercent of Total
1994 3,680 95 189 5
1995 3,047 91 307 9
1996 3,137 88 415 12
1997 3,093 88 421 12
1998 3,143 62 1,106 38
1999 4,081 89 508 11
2000 4,344 77 1,295 23

Source: Construction Industry Research Board.

Utilities

Gas and electric service in the City is provided by Pacific Gas & Electric. Telephone service is provided by Pacific Bell. Water is supplied by City wells and the East Bay Municipal Utility District through the City water lines and filtration plant. Sewer service is supplied by the City.

Education

The City is part of the Brentwood and Liberty Union School Districts which provide K﷓12 public education needs. There is one high school, one junior high school and two elementary schools located in the City.

Near the City are four colleges: Los Medanos Community College in Pittsburg, Diablo Valley Community College in Concord and San Joaquin Delta Community College and University of the Pacific in Stockton.

Transportation

The City, located near the cities of Antioch and Stockton, is in close proximity to a highly developed transportation network. State Highway 4 runs in an east/west direction through the City, intersecting Interstate 680 near Martinez and Interstate 80 in Hercules. To the east, Highway 4 leads to Stockton where it intersects with Interstate 5. The highways provide the City with access to major regional workplace and recreation areas. The City is close to both regional and international airports — Concord Airport, Stockton Airport and Oakland International Airport.

Proximity to Major Urban Centers
Proximity Distance Time
Antioch to Brentwood 10 miles 15 minutes
Concord to Brentwood 26 miles 30 minutes
Oakland to Brentwood 46 miles 50 minutes
Stockton to Brentwood 37 miles 30 minutes
San Francisco to Brentwood 54 miles 80 minutes
Sacramento to Brentwood 75 miles 90 minutes
_______________
Source: City of Brentwood

The City is also served by bus lines and railroads. Bay Area Rapid Transit (“BART”) provides a bus service from Antioch connecting to the existing Concord BART station. BART stations in West Pittsburg and Pittsburg have recently opened, further extending the rapid transit system into the east County area.

Contra Costa County

Situated northeast of San Francisco, Contra Costa County (the “County”) is bounded by San Francisco and San Pablo Bays, the Sacramento River Delta, and by Alameda County on the south. Ranges of hills effectively divide the County into three distinct regions. The western portion, with its access to water, contains much of the County’s heavy industry. The central section is rapidly developing from a suburban area into a major commercial and financial headquarters center. The eastern part is also undergoing substantial change, from a rural, agricultural area, to a suburban region. The County has extensive and varied transportation facilities-ports accessible to ocean-going vessels, railroads, freeways, and rapid transit lines connecting the area with Alameda County and San Francisco.

The County is home to more than 972,100 people and thousands of businesses who are served by 18 cities, 201 special districts and the County. The County also provides municipal services for the 154,100 residents of the unincorporated areas.

Population. Population figures for the cities and unincorporated areas of County for the last five years are shown in the following table.

COUNTY OF CONTRA COSTA 
Population Estimates

1997 1998 1999 2000 2001

Antioch 77,200 79,800 82,300 91,200 93,800
Brentwood 14,600 17,100 20,250 22,250 25,350
Clayton 10,100 10,650 11,200 10,850 11,000
Concord 112,800 114,200 115,500 123,000 124,200
Danville 38,450 39,450 40,250 41,800 42,850
El Cerrito 23,500 23,750 24,000 23,350 23,550
Hercules 18,950 19,200 19,400 19,650 20,000
Lafayette 23,800 24,150 24,450 24,050 24,200
Martinez 35,650 36,350 36,900 36,050 36,500
Moraga 16,450 16,650 16,850 16,400 16,550
Oakley 25,900 26,200
Orinda 17,050 17,300 17,500 17,700 17,850
Pinole 18,350 18,550 18,750 19,250 19,450
Pittsburg 51,300 52,500 53,500 57,400 58,600
Pleasant Hill 31,750 32,750 33,200 33,000 33,350
Richmond 92,100 93,400 94,600 100,700 101,700
San Pablo 26,150 26,600 26,950 30,750 31,000
San Ramon 42,300 43,800 45,100 44,850 46,100
Walnut Creek 62,800 63,600 64,500 64,600 65,800
Unincorporated 173,700 176,800 179,200 153,100 154,100

Total 887,100 906,500 924,400 955,900 972,100

Source: State Department of Finance estimates (as of January 1)


Effective Buying Income. “Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.”

The following table summarizes the total effective buying income for the County, the State and the United States for the period 1996 through 2000.

Effective Buying Income
As of January 1, 1996 through 2000

Year Area Total Effective Buying Income (000’s Omitted) Median Household Effective Buying Income

1996 Contra Costa County $ 17,251,252 $45,119
California 477,640,503 34,533
United States 3,964,285,118 32,238

1997 Contra Costa County $ 17,773,391 $46,468
California 492,516,991 35,216
United States 4,161,512,384 33,482

1998 Contra Costa County $ 19,979,564 $48,476
California 524,439,600 36,483
United States 4,399,998,410 34,618

1999 Contra Costa County $ 21,772,470 $53,234
California 590,376,663 39,492
United States 4,877,786,658 37,233

2000 Contra Costa County $ 24,823,698 $60,189
California 652,190,282 44,464
United States 5,230,824,904 39,129

Source: Sales & Marketing Management Survey of Buying Power.

Commercial Activity. During calendar year 2000, total taxable transactions in the County were $12,330,560,000, or 10.9% greater than total taxable transactions of $11,114,476,000 that occurred in the County during 1999. A summary of historic taxable sales within the County during the past five years is shown in the following table. 

COUNTY OF CONTRA COSTA
Taxable Transactions
(dollars in thousands)

Retail Stores Total Outlets
Taxable Taxable
Year Permits Transactions Permits Transactions
1996 12,223 $5,945,099 24,326 $8,575,704
1997 11,798 6,556,188 23,643 9,277,418
1998 11,375 7,223,699 23,093 10,093,690
1999 11,008 7,718,261 22,733 11,114,476
2000 10,791 8,649,419 22,674 12,330,560

Source: California State Board of Equalization.

Construction Activity. Building activity for the past five years in the County is shown in the following table.

COUNTY OF CONTRA COSTA
Total Building Permit Valuations
(valuations in thousands)

1996 1997 1998 1999 2000
Permit Valuation 
New Single-family $568,853.5 $602,366.0 $651,643.5 $ 853,526.4 $ 919,039.8
New Multi-family 35,231.1 30,900.5 96,238.9 44,769.4 116,450.8
Res. Alterations/Additions 81,855.3 116,842.7 133,446.1 165,018.5 188,993.9
Total Residential 685,940.0 750,109.3 881,328.4 1,063,314.3 1,224,484.5
New Commercial 108,905.0 157,039.1 56,959.3 127,938.8 216,485.6
New Industrial 4,189.0 9,186.4 16,710.7 18,192.0 12,652.7
New Other 50,113.8 44,098.2 48,242.2 56,939.7 57,254.3
Com. Alterations/Additions 170,049.7 116,928.0 119,968.3 128,973.6 193,878.9
Total Nonresidential 333,257.5 327,251.8 241,880.6 332,044.0 480,271.5

New Dwelling Units 
Single Family 3,137 3,093 3,143 4,081 4,344
Multiple Family 415 421 1,106 508 1,295
TOTAL 3,552 3,514 4,249 4,589 5,639

Source: Construction Industry Research Board, Building Permit Summary

APPENDIX B

EXCERPTS OF AUDITED FINANCIAL STATEMENTS OF THE
CITY FOR FISCAL YEAR ____ - __

APPENDIX C

CITY OF BRENTWOOD INVESTMENT POLICY

APPENDIX D

PROPOSED FORM OF OPINION OF BOND COUNSEL

APPENDIX E

FORM OF CONTINUING DISCLOSURE CERTIFICATE

This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the City of Brentwood (the “City”) in connection with the issuance of $__________ aggregate principal amount of City of Brentwood General Obligation Bonds, Series 2002 (the “Bonds”). The Bonds are being issued pursuant to a Resolution adopted by the City Council of the City on __________, 2002 (the “Resolution”) and a Paying Agent Agreement, dated as of January 1, 2002, between the City and U.S. Bank, N.A., as Paying Agent. The City covenants and agrees as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5).

Section 2. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

“Annual Report” shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.

“Dissemination Agent” shall mean the City or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.

“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Certificate.

“National Repository” shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. 

“Participating Underwriter” shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. 

“Repository” shall mean each National Repository and each State Repository.

“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

“State Repository” shall mean any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Certificate, there is no State Repository.

Section 3. Provision of Annual Reports. 

(a) The City shall, or shall cause the Dissemination Agent to, not later than nine (9) months after the end of the City's fiscal year (which currently ends on June 30), commencing with the report for the 2000-01 Fiscal Year, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than fifteen (15) Business Days prior to said date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the City's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c).

(b) If the City is unable to provide to the Repositories an Annual Report by the date required in subsection (a), the City shall send a notice to the Municipal Securities Rulemaking Board and the appropriate State Repository, if any, in substantially the form attached as Exhibit A.

(c) The Dissemination Agent shall:

(i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and 

(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided and listing all the Repositories to which it was provided.

Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following:

(a) Audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

(b) To the extent not contained in the audited financial statements filed pursuant to the preceding clause (a), the Annual Report shall contain information showing:

(i) property tax collection delinquencies for the City, for the most recently completed Fiscal Year, if the City is no longer a participant in the County of Contra Costa's Teeter Plan; and

(ii) current fiscal year assessed valuation of taxable properties in the City, including assessed valuation of the top ten properties.

(c) In addition to any of the information expressly required to be provided under paragraphs (a) and (b) of this Section, the City shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.

Section 5. Reporting of Significant Events. 

(a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:

(1) Principal and interest payment delinquencies.
(2) Non﷓payment related defaults.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform.
(6) Adverse tax opinions or events affecting the tax﷓exempt status of 
the security.
(7) Modifications to rights of security holders.
(8) Contingent or unscheduled bond calls.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of 
the securities.
(11) Rating changes.

(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall as soon as possible determine if such event would be material under applicable Federal securities law.

(c) If the City determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the City shall promptly file a notice of such occurrence with the Municipal Securities Rulemaking Board and each State Repository. 

Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (a)(9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds pursuant to the Resolution.

Section 6. Termination of Reporting Obligation. The City's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).

Section 7. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent.

Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:

(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted;

(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Resolution for amendments to the Resolution with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.

If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to each State Repository in the same manner as for a Listed Event under Section 5(c).

Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.

Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriters and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Date: _____________, 2001
CITY OF BRENTWOOD

By 

EXHIBIT A

NOTICE OF FAILURE TO FILE ANNUAL REPORT

Name of Obligor: City of Brentwood

Name of Bond Issue: $6,000,000 aggregate principal amount of City of Brentwood 
General Obligation Bonds, Series 2002

Date of Issuance: _________, 2002

NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with respect to the above-named Bonds as required by Section 9.02 of the Paying Agent Agreement under which the Bonds have been issued, approved by Resolution of the City Council of the City adopted on ___________, 2002. The City anticipates that the Annual Report will be filed by _____________.

Dated: 

CITY OF BRENTWOOD

By 

APPENDIX F

BOOK-ENTRY ONLY SYSTEM

The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, premium, if any, and interest with respect to the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions by and between DTC and the DTC Participants is based solely on information provided by DTC. Accordingly, the City makes no representation as to the completeness or accuracy of the following information and neither the DTC Participants or the Beneficial Owners should rely on the following information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.

DTC, New York, New York will act as securities depository for the Bonds. The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.

DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants (“Participants”) deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participant's records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the securities is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Redemption notices shall be sent to Cede & Co. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Principal and interest payments on the Bonds will be made to DTC. DTC's practice is to credit Direct Participants' accounts on payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the City or the Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the City or the Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Security certificates are required to be printed and delivered.

Top of Page