NEW ISSUE BOOK-ENTRY ONLY

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1 NEW ISSUE BOOK-ENTRY ONLY S&P: AA for Insured Bonds S&P: A- for Uninsured Bonds See RATINGS herein In the opinion of Fulbright & Jaworski LLP, Los Angeles California, Bond Counsel, a member of Norton Rose Fulbright, under existing statutes, regulations, rulings and court decisions, and assuming compliance with the tax covenants described herein, interest on the Bonds is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 from the gross income of the owners thereof for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax. It is also the opinion of Bond Counsel that under existing law interest on the Bonds is exempt from personal income taxes of the State of California. See TAX MATTERS herein. $15,915,000 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION Tax Allocation Refunding Bonds, Series 2014 (Camarillo Corridor Project) Dated: Date of Delivery Due: September 1, as shown on the inside cover The $15,915,000 Successor Agency to the Camarillo Community Development Commission Tax Allocation Refunding Bonds, Series 2014 (Camarillo Corridor Project) (the Bonds ), are being issued by the Successor Agency to the Camarillo Community Development Commission (the Successor Agency ) pursuant to the provisions of Section of the California Health and Safety Code and Section et seq. of the California Government Code (collectively, the Refunding Bond Law ), a resolution adopted by the Successor Agency and an indenture of trust, dated as of November 1, 2014 (the Indenture ), by and between the Successor Agency and U.S. Bank National Association, as trustee (the Trustee ). Proceeds of the Bonds will be used to (a) refund the outstanding Camarillo Community Development Commission Tax Allocation Refunding Bonds, Series 2004 (Camarillo Corridor Project), (b) purchase a reserve fund surety bond in lieu of cash funding a debt service reserve fund for the Bonds, and (c) provide for the costs of issuing the Bonds, including the premium for a municipal bond insurance policy. The Bonds will be delivered as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ( DTC ), and will be available to ultimate purchasers ( Beneficial Owners ) in the denomination of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC. Beneficial Owners will not be entitled to receive delivery of bonds representing their ownership interest in the Bonds. Principal of, premium if any, and semiannual interest on the Bonds due on March 1 and September 1 of each year, commencing March 1, 2015, will be payable by the Trustee to DTC for subsequent disbursement to DTC participants, so long as DTC or its nominee remains the registered owner of the Bonds. See THE BONDS Description of the Bonds and APPENDIX C BOOK-ENTRY ONLY SYSTEM. The Bonds are subject to optional redemption and mandatory sinking account redemption prior to maturity. See THE BONDS Redemption herein. The Bonds are payable from and secured by the Pledged Tax Revenues, as defined in the Indenture, and moneys in certain funds and accounts established under the Indenture, as further described in this Official Statement. See SECURITY FOR THE BONDS herein. Pledged Tax Revenues include amounts deposited to the Redevelopment Property Tax Trust Fund maintained by the County of Ventura, California (the County ), less certain amounts described herein, including (a) amounts to be paid under an Indenture (as amended, the Prior Indenture ) consisting of the scheduled debt service on the Camarillo Community Development Commission Tax Allocation Parity Bonds, Series 2006 (Camarillo Corridor Project), of which $15,530,000 principal amount is currently outstanding (the 2006 Bonds ), and the Camarillo Community Development Commission Tax Allocation Parity Bonds, Series 2009 (Camarillo Corridor Project), of which $15,950,000 principal amount is currently outstanding (the 2009 Bonds ), as well as amounts payable on any bonds issued by the Successor Agency to refund the 2006 Bonds or the 2009 Bonds (collectively, the Senior Obligations ); and (b) subject to certain limitations, amounts payable on the Camarillo Community Development Commission Housing Set-Aside Tax Allocation Bonds, Series 2006A, of which $4,975,000 principal amount is currently outstanding, and the Camarillo Community Development Commission Taxable Housing Set-Aside Tax Allocation Bonds, Series 2006A-T, of which $4,720,000 principal amount is currently outstanding, as well as amounts payable on any bonds issued by the Successor Agency to refund either of such outstanding series of housing bonds (collectively, the Housing Bonds ). In addition to the Bonds, the Senior Obligations and the Housing Bonds, the Successor Agency may issue or incur Parity Bonds that are payable from Pledged Tax Revenues on a parity with the Bonds. See THE BONDS Parity Bonds herein. The Bonds and the interest and any premium thereon are not a debt of the City of Camarillo, California (the City ), the County, the State of California (the State ) or any of their political subdivisions except the Successor Agency (and then only to the limited extent set forth in the Indenture), and none of the City, the County, the State nor any of their political subdivisions except the Successor Agency is liable thereon. The Bonds and interest thereon are not payable out of any funds or properties other than those set forth in the Indenture. None of the members of the Governing Board of the Successor Agency, the Governing Board of the Oversight Board (defined herein), the County Board of Supervisors or any persons executing the Bonds is liable personally on the Bonds. The scheduled payment of principal of and interest on the Bonds maturing on September 1 in the years 2022 through 2028, inclusive, and on September 1, 2032 and 2036 (collectively, the Insured Bonds ), when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Insured Bonds by ASSURED GUARANTY MUNICIPAL CORP. The Bonds maturing on September 1 in the years 2015 through 2021, inclusive (the Uninsured Bonds ), will not be covered by the insurance policy to be issued by Assured Guaranty Municipal Corp. MATURITY SCHEDULE (see inside cover) This cover page and the inside cover page hereof contain information for quick reference only. They are not intended to be a summary of all factors relating to an investment in the Bonds. Investors should review the entire Official Statement before making any investment decision with respect to the Bonds. The Bonds are offered, when, as and if issued, subject to the approval of Fulbright & Jaworski LLP, Los Angeles, California, Bond Counsel, a member of Norton Rose Fulbright. Certain legal matters will be passed on for the Successor Agency by Quint & Thimmig LLP, Larkspur, California, as Disclosure Counsel. Certain legal matters will be passed on for the Successor Agency by Burke, Williams & Sorensen, LLP, Los Angeles, California, acting as general counsel to the Successor Agency, and for the Underwriter by Nossaman LLP, Irvine, California, Underwriter s 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 November 12, The date of this Official Statement is October 21, 2014

2 $15,915,000 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION Tax Allocation Refunding Bonds, Series 2014 (Camarillo Corridor Project) UNINSURED BONDS $3,525,000 Serial Bonds CUSIP Prefix: 13177U Maturity Principal Interest CUSIP Maturity Principal Interest CUSIP (September 1) Amount Rate Yield Suffix (September 1) Amount Rate Yield Suffix 2015 $575, % 0.28% AA $500, % 1.43% AE , AB , AF , AC , AG , AD5 INSURED BONDS $4,710,000 Serial Bonds CUSIP Prefix: 13177U Maturity Principal Interest CUSIP Maturity Principal Interest CUSIP (September 1) Amount Rate Yield Suffix (September 1) Amount Rate Yield Suffix 2022 $580, % 2.27% AH $705, % 2.86%C AM , AJ , C AN , AK , C AP , AL7 $3,460, % Term Bonds maturing September 1, 2032, Price: %, to yield 3.32%C CUSIP 13177U AT0 $4,220, % Term Bonds maturing September 1, 2036, Price: %, to yield 3.28%C CUSIP 13177U AV5 Copyright 2014, American Bankers Association. CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services Bureau, operated by Standard & Poor s. This data is not intended to create a database and does not serve in any way as a substitute for CUSIP Global Services. CUSIP numbers have been assigned by an independent company not affiliated with the Successor Agency and are included solely for the convenience of the owners of the Bonds. The Successor Agency is not responsible for the selection or use of these CUSIP numbers, and no representation is made as to their correctness on the Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds. C Priced to September 1, 2024, the first optional call date at par.

3 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION SUCCESSOR AGENCY GOVERNING BOARD* Kevin Kildee, Mayor Bill Little, Vice Mayor Charlotte Craven, Councilmember Jeanette McDonald, Councilmember Michael Morgan, Councilmember SUCCESSOR AGENCY STAFF* Bruce Feng, City Manager Ronnie Campbell, Director of Finance Jeffrie Madland, City Clerk Dave Norman, Director of Community Development SPECIAL SERVICES Successor Agency Counsel Burke, Williams & Sorensen, LLP Los Angeles, California Financial Advisor C.M. de Crinis & Co., Inc. Glendale, California Bond Counsel Fulbright & Jaworski LLP Los Angeles, California, a member of Norton Rose Fulbright Fiscal Consultant Rosenow Spevacek Group, Inc. Santa Ana, California Trustee U.S. Bank National Association Los Angeles, California Disclosure Counsel Quint & Thimmig LLP Larkspur, California * The City Council of the City of Camarillo serves as the Governing Board of the Successor Agency, and City Staff serve as Staff to the Successor Agency. -i-

4 TABLE OF CONTENTS Page INTRODUCTION... 1 Authority and Purpose... 1 The City, the Former Agency and the Successor Agency... 2 Project Area... 3 Tax Allocation Financing... 3 Authority to Issue Refunding Bonds... 3 Security for the Bonds... 4 Municipal Bond Insurance Policy... 5 Limited Obligation... 5 Debt Service Reserve Fund... 5 Parity Bonds... 6 Professionals Involved in the Offering... 6 Further Information... 6 REFUNDING PLAN... 7 Refunding of the 2004 Former Agency Bonds... 7 Estimated Sources and Uses of Funds... 7 Debt Service Schedule... 8 THE BONDS... 8 Authority for Issuance... 8 Description of the Bonds... 9 Redemption... 9 Parity Bonds THE DISSOLUTION ACT SECURITY FOR THE BONDS Pledge Under the Indenture Pledged Tax Revenues Flow of Funds Under the Indenture Reserve Fund Limited Obligation Recognized Obligation Payment Schedules Senior Statutory Obligations Other Obligations MUNICIPAL BOND INSURANCE Municipal Bond Insurance Policy Assured Guaranty Municipal Corp PROPERTY TAXATION IN CALIFORNIA Property Tax Collection Procedures Unitary Property Article XIIIA of the State Constitution Appropriations Limitation Article XIIIB Proposition Appeals of Assessed Values Proposition Propositions 218 and Future Initiatives THE SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION Page Successor Agency Powers Status of Compliance with Dissolution Act THE CAMARILLO CORRIDOR PROJECT Redevelopment Plan Land Use Historical Assessed Values Historical Taxable Values and Tax Increment Revenues Largest Taxpayers Recent Real Property Sales Construction Proposition 8 Reassessments and Assessment Appeals PROJECTED AVAILABLE TAX REVENUES AND ESTIMATED DEBT SERVICE COVERAGE RISK FACTORS Recognized Obligation Payment Schedule Challenges to Dissolution Act Concentration of Ownership Reduction in Taxable Value Risks to Real Estate Market; Commercial Activity Reduction in Inflationary Rate Development Risks Assessment Appeals Levy and Collection of Taxes Bankruptcy and Foreclosure Estimated Revenues Hazardous Substances Natural Disasters Changes in the Law Loss of Tax-Exemption Secondary Market TAX MATTERS Tax Exemption Tax Accounting Treatment of Bond Premium and Original Issue Discount Other Tax Consequences VERIFICATION OF MATHEMATICAL COMPUTATIONS UNDERWRITING FINANCIAL ADVISOR LEGAL OPINIONS LITIGATION RATINGS CONTINUING DISCLOSURE AUDITED FINANCIAL STATEMENTS MISCELLANEOUS APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE APPENDIX B FORM OF OPINION OF BOND COUNSEL APPENDIX C BOOK-ENTRY ONLY SYSTEM APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT APPENDIX E EXCERPTS FROM THE COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF CAMARILLO FOR THE FISCAL YEAR ENDED JUNE 30, 2013 APPENDIX F CITY OF CAMARILLO SUPPLEMENTAL INFORMATION APPENDIX G FISCAL CONSULTANT S REPORT APPENDIX H SPECIMEN MUNICIPAL BOND INSURANCE POLICY -ii-

5 GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT No Offering May Be Made Except by this Official Statement. No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations with respect to the Bonds other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized by the Successor Agency. No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. Effective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the Successor Agency or the Camarillo Corridor Project since the date of this Official Statement. Use of this Official Statement. This Official Statement is submitted in connection with the sale of the Bonds referred to in this Official Statement and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract with the purchasers of the Bonds. Preparation of this Official Statement. The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as 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 References and Summaries. All references to and summaries of the Indenture or other documents contained in this Official Statement are subject to the provisions of those documents and do not purport to be complete statements of those documents. Stabilization of and Changes to Offering Prices. The Underwriter may over-allot or take other steps that stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market. If commenced, the Underwriter may discontinue such market stabilization at any time. The Underwriter may offer and sell the Bonds to certain dealers, dealer banks and banks acting as agent at prices lower than the public offering prices stated on the cover page of this Official Statement, and those public offering prices may be changed from time to time by the Underwriter. Bonds are Exempt from Securities Laws Registration. The issuance and sale of the Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for the issuance and sale of municipal securities provided under section 3(a)(2) of the Securities Act of 1933 and section 3(a)(12) of the Securities Exchange Act of Estimates and Projections. Certain statements included or incorporated by reference in this Official Statement constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, section 21E of the United States Securities Exchange Act of 1934, as amended, and section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as plan, expect, estimate, budget or other similar words. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD- LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE AUTHORITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR. Municipal Bond Insurance. Assured Guaranty Municipal Corp. ( AGM ) makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading MUNICIPAL BOND INSURANCE and APPENDIX H--SPECIMEN MUNICIPAL BOND INSURANCE POLICY. Website. The City of Camarillo maintains an Internet website, but the information on the website is not incorporated in this Official Statement. The City has no obligation whatsoever with respect to the Bonds or any other obligations of the Successor Agency. -iii-

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7 OFFICIAL STATEMENT $15,915,000 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION Tax Allocation Refunding Bonds, Series 2014 (Camarillo Corridor Project) INTRODUCTION This Official Statement, including the cover page, is provided to furnish information in connection with the sale by the Successor Agency to the Camarillo Community Development Commission (the Successor Agency ) of its $15,915,000 Successor Agency to the Camarillo Community Development Commission Tax Allocation Refunding Bonds, Series 2014 (Camarillo Corridor Project) (the Bonds ). Authority and Purpose The Successor Agency is issuing the Bonds pursuant to the authority granted by the Constitution of the State of California and Section (a)(1) of the Health and Safety Code of the State of California, Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the Refunding Law ), and an Indenture of Trust, dated as of November 1, 2014 (the Indenture ) by and between the Successor Agency and U.S. Bank National Association, as trustee (the Trustee ). See THE BONDS Authority for Issuance. The Successor Agency is issuing the Bonds to: (a) refund the Camarillo Community Development Commission Tax Allocation Refunding Bonds, Series 2004 (Camarillo Corridor Project), issued by the Camarillo Community Development Commission (the Former Agency ) in the original principal amount of $22,500,000 of which $18,145,000 principal amount is currently outstanding (the 2004 Former Agency Bonds ), (b) purchase a reserve fund surety bond in lieu of cash funding a debt service reserve fund for the Bonds, and (c) provide for the costs of issuing the Bonds, including the premium for a municipal bond insurance policy. Following the refunding of the 2004 Former Agency Bonds, the following bonded obligations of the Former Agency will remain outstanding: (a) the Camarillo Community Development Commission Tax Allocation Parity Bonds, Series 2006 (Camarillo Corridor Project) in the outstanding principal amount of $15,530,000 (the 2006 Bonds ), the Camarillo Community Development Commission Tax Allocation Parity Bonds, Series 2009 (Camarillo Corridor Project) in the outstanding principal amount of $15,950,000 (the 2009 Bonds and, together with the 2006 Bonds, the Senior Obligations ), and (b) the Camarillo Community Development Commission Housing Set-Aside Tax Allocation Bonds, Series 2006A in the outstanding principal amount of $4,975,000 and the Camarillo Community Development Commission Taxable Housing Set-Aside Tax Allocation Bonds, Series 2006A-T in the outstanding principal amount of $4,720,000 (collectively with any bond issued by the Successor Agency to refund either series of such bonds, the 2006 Housing Bonds ). The Pledged Tax Revenues (as defined in the Indenture) to be used to repay the Bonds include amounts allocated to the Successor Agency from the County of Ventura s Redevelopment Property Tax Trust Fund less certain amounts, including amounts required to be paid under the Indenture, as amended, with respect to the Senior Obligations (the Prior Indenture ) and, subject to certain limitations described herein, amounts to be paid on the 2006 Housing Bonds. See SECURITY FOR THE BONDS Pledged Tax Revenues.

8 The City, the Former Agency and the Successor Agency City. The City of Camarillo, California (the City ) was incorporated in 1964 under the general laws of the State of California. Since the early 1900s, the City has been an agricultural community that has evolved into a rural, suburban community on the outskirts of the Los Angeles metropolitan area with a balanced base of land uses. The City, with a population as of January, 2014 of over 66,750, is located in the center of Ventura County whose population as of January, 2014 was over 842,950. It has an area of approximately twenty square miles and is situated in the Pleasant Valley area of the vast agricultural Oxnard Plain. Geographically, the City is midway between Los Angeles and Santa Barbara on Highway 101, nine miles inland from Point Mugu Naval Air Station and the Pacific Ocean. It is 45 miles northwest of Los Angeles and 379 miles south of San Francisco. See APPENDIX F CITY OF CAMARILLO SUPPLEMENTAL INFORMATION. Former Agency. In 1976, pursuant to Ordinance No. 322 of the City Council (the City Council ) of the City and California Health and Safety Code Section et seq. (the Redevelopment Law ), the City Council activated its redevelopment agency (the Original Redevelopment Agency ). The Original Redevelopment Agency did not incur any debt nor establish any projects. The Camarillo Community Development Commission (referred to in this Official Statement as the Former Agency ) was activated on February 28, 1996 by the City Council pursuant to California Health and Safety Code Section et seq., entitled Community Development Commission. The Former Agency is the successor in interest to the Original Redevelopment Agency and functioned as, and had the power and jurisdiction of, a redevelopment agency under the Redevelopment Law. Dissolution Act. On June 29, 2011, California State Assembly Bill No. 26 ( AB 1X 26 ) was enacted together with a companion bill, Assembly Bill No. 27 ( AB 1X 27 ). The provisions of AB 1X 26 provided for the dissolution of all redevelopment agencies statewide. The provisions of AB 1X 27 permitted redevelopment agencies to avoid such dissolution by the payment of certain amounts to the State of California (the State ). A lawsuit was brought in the California Supreme Court, California Redevelopment Association, et al., v. Matosantos, et al., 53 Cal. 4th 231 (2011), challenging the constitutionality of AB 1X 26 and AB 1X 27. On December 19, 2011, in its decision in that lawsuit, the California Supreme Court largely upheld AB 1X 26, invalidated AB 1X 27, and held that AB 1X 26 may be severed from AB 1X 27 and enforced independently. As a result of AB 1X 26 and the decision of the California Supreme Court in the California Redevelopment Association case, as of February 1, 2012, all redevelopment agencies in the State were dissolved, including the Former Agency, and successor agencies were designated as successor entities to the former redevelopment agencies to expeditiously wind down the affairs of the former redevelopment agencies. The primary provisions enacted by AB 1X 26 relating to the dissolution and wind down of former redevelopment agency affairs are found in Parts 1.8 (commencing with Section 34161) and 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code of the State, as amended on June 27, 2012 by Assembly Bill No ( AB 1484 ), enacted as Chapter 26, Statutes of 2012 (as amended from time to time, the Dissolution Act ). Successor Agency. Pursuant to Section of the Dissolution Act and Resolution Nos and adopted by the City Council on January 11, 2012, the City Council made an election to serve as the Successor Agency of the Former Agency. However, subdivision (g) of Section of the Dissolution Act, added by AB 1484, expressly affirms that the Successor Agency is a separate public entity and legal entity from the City, that the two entities shall not merge and that the liabilities of the Former Agency will not be transferred to the City nor will the assets of the Former Agency become assets of the City. -2-

9 Project Area The City Council adopted the Redevelopment Plan for the Camarillo Corridor Project (the Redevelopment Project ) on June 19, 1996, pursuant to its Ordinance No The area that is subject to the Redevelopment Plan (the Project Area ) consists of approximately 1,019 acres, and generally includes properties in the City within the Ventura Boulevard commercial corridor (primarily between Camarillo Town Center and Lewis Road), the industrial/manufacturing district located north of Pleasant Valley Road, the Daily Drive retail commercial corridor (between Lewis Road and Las Posas Road), the Arneill Road commercial corridor (between Fiesta Avenue and the Ventura Freeway), and the industrial district along Mission Oaks Boulevard and Lewis Road. See THE CAMARILLO CORRIDOR PROJECT. The total assessed valuation of taxable property in the Project Area for fiscal year is estimated to be $1,183,256,279, and the corresponding incremental assessed valuation of the taxable property over the base year for the Redevelopment Project is estimated to be $711,189,963. See Table 3 under THE CAMARILLO CORRIDOR PROJECT Historical Assessed Values for historical assessed values of the taxable property within the Redevelopment Project. Tax Allocation Financing Prior to the enactment of AB 1X 26, the Redevelopment Law authorized the financing of redevelopment projects through the use of tax increment revenues. This method provided that the taxable valuation of the property within a redevelopment project area on the property tax roll last equalized prior to the effective date of the ordinance which adopted the redevelopment plan became the base year valuation. Assuming the taxable valuation never drops below the base year level, the taxing agencies receiving property taxes thereafter received only that portion of the taxes produced by applying then current tax rates to the base year valuation, and the redevelopment agency was allocated the remaining portion of property taxes produced by applying then current tax rates to the increase in valuation over the base year. Such incremental tax revenues allocated to a redevelopment agency were authorized to be pledged to the payment of redevelopment agency obligations. Authority to Issue Refunding Bonds The Dissolution Act authorizes each successor agency to issue refunding bonds secured by a pledge of, and lien on, and repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund established and held by the County Auditor- Controller for the Successor Agency by the Dissolution Act (the Redevelopment Property Tax Trust Fund ). Section (a)(1) of the Dissolution Act authorizes the issuance of refunding bonds, to be secured by a pledge of moneys deposited from time to time in the applicable Redevelopment Property Tax Trust Fund to provide savings to the successor agency, provided that (a) the total interest cost to maturity on the refunding bonds or other indebtedness plus the principal amount of the refunding bonds or other indebtedness does not exceed the total remaining interest cost to maturity on the bonds or other indebtedness to be refunded plus the remaining principal of the bonds or other indebtedness to be refunded, and (b) the principal amount of the refunding bonds or other indebtedness does not exceed the amount required to defease the refunded bonds or other indebtedness, to establish customary debt service reserves, and to pay related costs of issuance. The Bonds are issued pursuant to the foregoing authority, and the authority provided by Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code pertaining to the refunding of bonds of California local agencies (the Refunding Law ). -3-

10 Security for the Bonds The Bonds are limited obligations of the Successor Agency entitled to the benefits of the Indenture and are payable solely from and secured by a pledge and lien on all of the moneys in the Successor Agency s Redevelopment Obligation Retirement Fund, and by a pledge of the Pledged Tax Revenues, and moneys on deposit in the Debt Service Fund established under the Indenture (including in the Reserve Fund and the other accounts therein). See SECURITY FOR THE BONDS Pledge Under the Indenture. The Dissolution Act requires the Ventura County Auditor-Controller (the County Auditor-Controller ) to determine the amount of property taxes that would have been allocated to the Former Agency from the Redevelopment Project had the Former Agency not been dissolved pursuant to the operation of AB 1X 26, using current assessed values on the last equalized roll on August 20, and to deposit that amount in the Redevelopment Property Tax Trust Fund for the Successor Agency established and held by the County Auditor-Controller pursuant to the Dissolution Act. The Dissolution Act provides that any bonds or other indebtedness authorized thereunder to be issued by the Successor Agency will be considered indebtedness incurred by the dissolved Former Agency, with the same lien priority and legal effect as if the bonds or other indebtedness had been issued prior to the effective date of AB 1X 26, in full conformity with the applicable provisions of the Redevelopment Law that existed prior to that date, and will be included in the Successor Agency s Recognized Obligation Payment Schedules. See SECURITY FOR THE BONDS Recognized Obligation Payment Schedules. The Dissolution Act further provides that bonds or other indebtedness authorized thereunder to be issued by the Successor Agency will be secured by a pledge of, and lien on, and will be repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund, and that property tax revenues pledged to any bonds authorized under the Dissolution Act, such as the Bonds, are taxes allocated to the successor agency pursuant to the provisions of the Redevelopment Law and the State Constitution. Property tax revenues will be allocated to the Successor Agency on a semi-annual basis on January 2 and June 1 of each year based on a Recognized Obligation Payment Schedule submitted by the Successor Agency to an oversight board established for the Successor Agency (the Oversight Board ) and the California Department of Finance (the DOF ). The County Auditor-Controller will distribute funds from the Redevelopment Property Tax Trust Fund for each six-month period in the order specified in the Dissolution Act. See SECURITY FOR THE BONDS Recognized Obligation Payment Schedules. In accordance with the Dissolution Act, the term Tax Revenues is defined under the Indenture to mean the monies deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to subdivision (c) of Section of the Dissolution Act, as provided in paragraph (2) of subdivision (a) of Section of the Dissolution Act that are equal to that portion of taxes levied upon taxable property in the Redevelopment Project and received by the Successor Agency on or after the date of issue of the Bonds, pursuant to Article 6 of Chapter 6 of the Prior Law and Section 16 of Article XVI of the Constitution of the State. If, and to the extent, that the provisions of Section or paragraph (2) of subdivision (a) of Section of the Dissolution Act are invalidated by a final judicial decision, then Tax Revenues shall include all tax revenues allocated to the payment of indebtedness of the Successor Agency pursuant to Section of the Redevelopment Law or such other section as may be in effect at the time providing for the allocation of tax increment revenues to the Successor Agency in accordance with Article XVI, Section 16 of the California Constitution. -4-

11 The Indenture defines the Pledged Tax Revenues to be used to pay the Bonds as all Tax Revenues less (i) all amounts required by law on or after the date of issuance of the Bonds to be deposited by the Successor Agency in a housing fund (consisting of the scheduled debt service on the Housing Bonds), (ii) amounts payable by the State to the Successor Agency under and pursuant to Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with section 16110) of the California Government Code, and (iii) Statutory Pass-Through Payments, but only to the extent such amounts are not subordinated to payment of debt service on the Bonds, any Parity Bonds and the Senior Obligations, and (iv) amounts required to be paid under the Prior Indenture relating to the 2006 Bonds and the 2009 Bonds. See SECURITY FOR THE BONDS Pledge Under the Indenture. Successor agencies have no power to levy property taxes and must rely on the allocation of taxes as described above. See RISK FACTORS Levy and Collection of Taxes. Municipal Bond Insurance Policy The scheduled payment of the principal and interest on the Bonds maturing on September 1 in the years 2022 through 2028, inclusive, and the Bonds maturing on September 1, 2032 and September 1, 2036 (collectively, the Insured Bonds ), when due will be guaranteed under a municipal bond insurance policy (the Municipal Bond Insurance Policy ) to be issued by Assured Guaranty Municipal Corp. ( AGM ) simultaneously with the issuance of the Insured Bonds. See MUNICIPAL BOND INSURANCE. In addition, AGM has made a commitment to issue a municipal bond insurance policy for the Reserve Fund (the Reserve Fund Insurance Policy ) in an amount equal to the Reserve Requirement for the benefit of the Insured Bonds and the Uninsured Bonds (defined below). See SECURITY FOR THE BONDS Reserve Fund. The Bonds maturing on September 1 in the years 2015 through 2021, inclusive (the Uninsured Bonds ), will not be covered by the Municipal Bond Insurance Policy. Limited Obligation The Bonds are special obligations of the Successor Agency and are secured by an irrevocable pledge of, and are payable as to principal, interest and premium, if any, from Pledged Tax Revenues and other funds specifically pledged therefor under the Indenture. The principal of and interest and premium, if any, on the Bonds are not a debt of the City, the County, the State or any of their political subdivisions except the Successor Agency, and none of the City, the County, the State nor any of their political subdivisions except the Successor Agency are liable thereon. The principal of and interest and premium, if any, on the Bonds are not payable out of any funds or properties other than those set forth in the Indenture. No member, officer, agent, or employee of the Successor Agency, the Oversight Board, the County Board of Supervisors or any person executing the Bonds is liable personally on the Bonds by reason of their issuance. Debt Service Reserve Fund The Indenture establishes a debt service reserve fund (the Reserve Fund ) for the Bonds. The Successor Agency will purchase the Reserve Fund Insurance Policy in lieu of cash funding the Reserve Fund, in an amount equal to the initial Reserve Requirement, as defined in the Indenture. See SECURITY FOR THE BONDS Reserve Fund. -5-

12 Parity Bonds The Indenture permits the issuance of Parity Bonds under certain circumstances. See THE BONDS Parity Bonds. Professionals Involved in the Offering C.M. de Crinis & Co., Inc., Glendale, California, has served as financial advisor to the Successor Agency (the Financial Advisor ) and has advised the Successor Agency with respect to the financial structure of the refinancing and as to other financial aspects of the transaction. Payment of the fees and expenses of the Financial Advisor is contingent upon the sale and delivery of the Bonds. Rosenow Spevacek Group, Inc., Santa Ana, California, has acted as fiscal consultant to the Successor Agency (the Fiscal Consultant ) and advised the Successor Agency as to the taxable values of property in the Redevelopment Project and the Pledged Tax Revenues projected to be available to pay debt service on the Bonds as referenced in this Official Statement. The report prepared by the Fiscal Consultant is referred to as the Fiscal Consultant Report. See APPENDIX G FISCAL CONSULTANT S REPORT. U.S. Bank National Association, Los Angeles, California, will act as Trustee with respect to the Bonds. Barthe & Wahrman, P.A., Minneapolis, Minnesota, (the Verification Agent ), will act as verification agent with respect to the Bonds. All proceedings in connection with the issuance of the Bonds are subject to the approval of Fulbright & Jaworski LLP, Los Angeles, California, Bond Counsel to the Successor Agency, a member of Norton Rose Fulbright. Quint & Thimmig LLP, Larkspur, California, is acting as Disclosure Counsel to the Successor Agency. Burke, Williams & Sorensen, LLP, Los Angeles, California, will render certain opinions on behalf of the Successor Agency as general counsel to the Successor Agency. Certain matters will be passed upon for the Underwriter by Nossaman LLP, Irvine, California, Underwriter s Counsel. Payment of the fees and expenses of Bond Counsel, Disclosure Counsel and Underwriter s Counsel is contingent upon the sale and delivery of the Bonds. Further Information Brief descriptions of the Redevelopment Law, the Dissolution Act, the Refunding Law, the Bonds, the Indenture, the Successor Agency, the Former Agency, the County and the City are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references in this Official Statement to the Redevelopment Law, the Dissolution Act, the Refunding Law, the Bonds, the Indenture, the Constitution and the laws of the State as well as the proceedings of the Former Agency, the Successor Agency, the County and the City are qualified in their entirety by reference to such documents and laws. References in this Official Statement to the Bonds are qualified in their entirety by the form included in the Indenture and by the provisions of the Indenture. During the period of the offering of the Bonds, copies of the forms of all documents are available from the Secretary, Successor Agency to the Camarillo Community Development Commission, 601 Carmen Drive, Camarillo, California

13 Refunding of the 2004 Former Agency Bonds REFUNDING PLAN Pursuant to an escrow agreement (the Escrow Agreement ), by and between the Successor Agency and U.S. Bank, National Association, as escrow bank (the Escrow Bank ), the Successor Agency will deliver a portion of the proceeds of the Bonds, along with certain other available amounts held with respect to the 2004 Former Agency Bonds, to the Escrow Bank for deposit in an escrow fund established under the Escrow Agreement (the Escrow Fund ), in amounts sufficient to redeem all outstanding 2004 Former Agency Bonds on November 24, 2014 (the Redemption Date ), at a redemption price equal to 100% of the principal amount thereof, together with accrued interest to such date. The Escrow Bank will hold amounts deposited in the Escrow Fund in cash, uninvested. Sufficiency of the deposits in the Escrow Fund to pay the redemption price of the 2004 Former Agency Bonds on the Redemption Date will be verified by the Verification Agent. See VERIFICATION OF MATHEMATICAL COMPUTATIONS. Assuming the accuracy of the Verification Agent s computations, as a result of the deposit of the funds into the Escrow Fund and the application of funds as provided in the Escrow Agreement, the Successor Agency s obligations with respect to the 2004 Former Agency Bonds will be legally defeased and discharged. The amounts held by the Escrow Bank in the Escrow Fund are pledged solely to the payment of amounts due and payable by the Successor Agency on the 2004 Former Agency Bonds. The funds deposited in the Escrow Fund will not be available for the payment of debt service on the Bonds. Estimated Sources and Uses of Funds The estimated sources and uses of funds for the financing are summarized below. Sources: Principal Amount of Bonds $15,915, Original Issue Premium 2,384, Available Funds 2004 Former Agency Bonds 531, Total Sources $18,830, Uses: Refund 2004 Former Agency Bonds $18,336, Costs of Issuance (1) 494, Total Uses $18,830, (1) Costs of Issuance include the Underwriter s discount, fees and expenses for Bond Counsel, Disclosure Counsel, the Financial Advisor, the Fiscal Consultant, the Verification Agent, the Trustee, the City, the Successor Agency administrative staff, Successor Agency counsel, printing expenses, rating fees, Municipal Bond Insurance Policy and Reserve Fund Insurance Policy premiums, and other costs related to the issuance of the Bonds. In addition to the foregoing, the Successor Agency will obtain the Reserve Fund Insurance Policy on the date of issuance of the Bonds in the amount of the Reserve Requirement, to be held for the benefit of the Reserve Fund. See MUNICIPAL BOND INSURANCE and SECURITY FOR THE BONDS Reserve Fund. -7-

14 Debt Service Schedule The following table shows the annual debt service schedule for the Bonds, assuming no optional redemption of the Bonds prior to their maturity. Bond Year Ending Bonds Debt Service September 1 Principal Interest Total 2015 $ 575, $ 626, $ 1,201, , , ,196, , , ,199, , , ,195, , , ,197, , , ,197, , , ,195, , , ,198, , , ,194, , , ,199, , , ,197, , , ,198, , , ,193, , , ,196, ,000.00* 394, ,194, ,000.00* 354, ,199, ,000.00* 312, ,197, ,000.00* 268, ,198, ,000.00* 221, ,196, ,025,000.00* 170, ,195, ,080,000.00* 116, ,196, ,140,000.00* 59, ,199, Totals $15,915, $10,424, $26,339, * Indicates a mandatory sinking fund payment. Authority for Issuance THE BONDS The issuance of the Bonds and the Indenture were authorized by the Successor Agency pursuant to Resolution No SA, adopted on July 23, 2014 (the Successor Agency Resolution ), and approved by the Oversight Board for the Successor Agency pursuant to Resolution No , adopted on August 6, 2014 (the Oversight Board Resolution ). Pursuant to the Dissolution Act, written notice of the Oversight Board Resolution was provided to the DOF on August 7, On October 6, 2014, the DOF provided a letter to the Successor Agency stating that based on the DOF s review and application of the law, the Oversight Board Resolution approving the Bonds is approved by the DOF. Section of the Dissolution Act provides that when, as here, a successor agency issues refunding bonds with the approval of the oversight board and the DOF, the oversight board may not unilaterally approve any amendments to or early termination of the bonds, and the scheduled payments on the bonds shall be listed in the successor agency s Recognized Obligation Payment Schedule and are not subject to further review and approval by the DOF or the California State Controller. -8-

15 Description of the Bonds The Bonds will be issued and delivered in fully-registered form without coupons in the denomination of $5,000 or any integral multiple thereof for each maturity, initially in the name of Cede & Co., as nominee for The Depository Trust Company ( DTC ), New York, New York, as registered owner of all Bonds. The Bonds will be dated the date of their delivery to the Underwriter (the Closing Date ), and the Bonds will mature on September 1 in the years and in the amounts shown on the inside cover page of this Official Statement. Interest on the Bonds will be calculated on the basis of a 360-day year of twelve 30-day months at the rates shown on the inside cover page of this Official Statement, payable semiannually on March 1 and September 1 in each year, commencing on March 1, 2015, by check mailed to the registered owners thereof or upon the request of the Owners of $1,000,000 or more in principal amount of Bonds, by wire transfer to an account in the United States which shall be designated in written instructions by such Owner to the Trustee at least fifteen (15) days before the Record Date preceding the Interest Payment Date. One fully-registered 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. See APPENDIX C BOOK-ENTRY ONLY SYSTEM. Redemption Optional Redemption. The Bonds maturing on or before September 1, 2024, are not subject to optional redemption prior to maturity. The Bonds maturing on or after September 1, 2025, are subject to redemption, at the option of the Successor Agency on any date on or after September 1, 2024, in whole, or in part in any order deemed reasonable by the Successor Agency, and by lot within a maturity, from any available source of funds, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued but unpaid interest to the date fixed for redemption, without premium. Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 2032 (the 2032 Term Bonds ), are subject to mandatory redemption, in part by lot, from Sinking Account Installments set forth in the following schedule on September 1, 2029, and on each September 1 thereafter to maturity, at a redemption price equal to the principal amount thereof to be redeemed, together with interest accrued thereon to the date fixed for redemption, without premium; provided, however, that if some but not all of the 2032 Term Bonds have been optionally redeemed, the total amount of Sinking Account Installments to be made subsequent to such redemption shall be reduced in an amount equal to the principal amount of the 2032 Term Bonds so redeemed by reducing each such future Sinking Account Installments on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, as shall be designated pursuant to written notice filed by the Successor Agency with the Trustee. Sinking Account Payment Date (September 1) Principal Amount to be Redeemed 2029 $800, , , ,000 Maturity. -9-

16 The Bonds maturing on September 1, 2036 (the 2036 Term Bonds ), are subject to mandatory redemption, in part by lot, from Sinking Account Installments set forth in the following schedule on September 1, 2033, and on each September 1 thereafter to maturity, at a redemption price equal to the principal amount thereof to be redeemed, together with interest accrued thereon to the date fixed for redemption, without premium; provided, however, that if some but not all of the 2036 Term Bonds have been optionally redeemed, the total amount of Sinking Account Installments to be made subsequent to such redemption shall be reduced in an amount equal to the principal amount of the 2036 Term Bonds so redeemed by reducing each such future Sinking Account Installments on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, as shall be designated pursuant to written notice filed by the Successor Agency with the Trustee. Sinking Account Payment Date (September 1) Principal Amount to be Redeemed 2033 $ 975, ,025, ,080, ,140,000 Maturity. Notice of Redemption. The Trustee on behalf of and at the expense of the Successor Agency will mail (by first class mail) notice of any redemption at least thirty (30) but not more than sixty (60) days prior to the redemption date, to (i) the Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, and (ii) to the Securities Depositories and to one or more Information Services; provided, however, that neither failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice will state the date of the notice, the redemption date, the redemption place and the redemption price, will designate the CUSIP number of the Bonds to be redeemed, state the individual number of each Bond to be redeemed or state that all Bonds between two stated numbers (both inclusive) or all of the Bonds Outstanding (or all Bonds of a maturity) are to be redeemed, and will require that such Bonds be then surrendered at the Corporate Trust Office of the Trustee for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. If at the time of mailing of any notice of optional redemption there shall not have been deposited with the Trustee moneys sufficient to redeem all the Bonds called for redemption, such notice shall state that it is subject to the deposit of the redemption moneys with the Trustee not later than the opening of business on the redemption date and will be of no effect unless such moneys are so deposited. The Successor Agency has the right under the Indenture to rescind any notice of optional redemption by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of such redemption shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under the Indenture. The Successor Agency and the Trustee shall have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent. -10-

17 Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the redemption price of and interest on the Bonds so called for redemption shall have been duly deposited with the Trustee, such Bonds so called shall cease to be entitled to any benefit under the Indenture other than the right to receive payment of the redemption price and accrued interest to the redemption date, and no interest shall accrue thereon from and after the redemption date specified in such notice. Manner of Redemption. Whenever any Bonds or portions thereof of a maturity are to be selected for redemption by lot, the Trustee shall make such selection, in such manner as the Trustee shall deem appropriate, and shall notify the Successor Agency thereof. All Bonds redeemed shall be canceled. Parity Bonds Parity Bonds means any additional tax allocation bonds (including, without limitation, bonds, notes, interim certificates, debentures or other obligations) issued by the Successor Agency and payable from Pledged Tax Revenues on a parity with the Bonds, as authorized by the Indenture. The Indenture permits the issuance of Parity Bonds in such principal amount as shall be determined by the Successor Agency, pursuant to a separate or Supplemental Indenture adopted or entered into by the Successor Agency and Trustee and solely for the purpose of refunding the Bonds or the Prior Obligations as permitted under the Dissolution Act, including without limitation Section thereof, the Redevelopment Law or the Refunding Law. The Successor Agency may issue or incur such Parity Bonds subject to the following specific conditions precedent set forth in the Indenture: (a) Indenture; The Successor Agency must be in compliance with all covenants set forth in the (b) The Parity Bonds will be on such terms and conditions as may be set forth in a separate or Supplemental Indenture, which will provide for (i) bonds substantially in accordance with the Indenture, and (ii) the deposit of moneys into an account of the Reserve Fund or separate reserve account securing such Parity Bonds in an amount equal to the reserve requirement provided for in the Supplemental Indenture or authorizing document relating to such Parity Bonds to the extent permitted pursuant to the Code; (c) The Parity Bonds must mature on and interest must be payable on the same dates as the Bonds (except the first interest payment may be from the date of the Parity Bonds until the next succeeding March 1 or September 1); provided, however, that the Successor Agency may issue and sell Parity Bonds which do not pay current interest. (d) When bonds are issued to provide savings to the Successor Agency pursuant to Section (a)(1) of the Dissolution Act, the following constraints apply to the size of the financing: (i) the total interest cost to maturity on the refunding bonds or indebtedness plus the principal amount of the refunding bonds or other indebtedness may not exceed the total remaining interest cost to maturity on the bonds or other indebtedness to be refunded plus the remaining principal of the bonds or other indebtedness to be refunded, (ii) the principal amount of the refunding bonds or the indebtedness will not exceed the amount required to defease the refunded bonds or other indebtedness, to establish customary debt service reserves, and to pay related costs of issuance, and (iii) the resulting aggregate Annual Debt Service for the remaining Outstanding Bonds, Parity Bonds and Senior Obligations must be reduced in each succeeding Bond Year. If the foregoing conditions are satisfied, the initial principal amount of the refunding bonds or indebtedness may be greater than the outstanding principal amount of the bonds or other indebtedness to be refunded. -11-

18 THE DISSOLUTION ACT The Dissolution Act requires the County Auditor-Controller to determine the amount of property taxes that would have been allocated to the Former Agency (pursuant to subdivision (b) of section 16 of Article XVI of the State Constitution) had the Former Agency not been dissolved pursuant to the operation of AB 1X 26, using current assessed values on the last equalized roll on August 20, and to deposit that amount in the Redevelopment Property Tax Trust Fund for the Successor Agency established and held by the County Auditor-Controller pursuant to the Dissolution Act. The Dissolution Act provides that any bonds authorized thereunder to be issued by the Successor Agency will be considered indebtedness incurred by the Former Agency, with the same lien priority and legal effect as if the bonds had been issued prior to the effective date of AB 1X 26, in full conformity with the applicable provisions of the Redevelopment Law that existed prior to that date, and will be included in the Successor Agency s Recognized Obligation Payment Schedule. See SECURITY FOR THE BONDS Recognized Obligation Payment Schedules. The Dissolution Act further provides that bonds authorized by the Dissolution Act to be issued by the Successor Agency will be secured by a pledge of, and lien on, and will be repaid from moneys deposited from time to time in the Redevelopment Property Tax Trust Fund, and that property tax revenues pledged to any bonds authorized to be issued by the Successor Agency under the Dissolution Act, including the Bonds, are taxes allocated to the Successor Agency pursuant to subdivision (b) of Section of the Redevelopment Law and Section 16 of Article XVI of the State Constitution. Pursuant to subdivision (b) of Section of the Redevelopment Law and Section 16 of Article XVI of the State Constitution and as provided in the Redevelopment Plan, taxes levied upon taxable property in the Redevelopment Project each year by or for the benefit of the State, any city, county, city and county, district, or other public corporation (herein sometimes collectively called taxing agencies ) after the effective date of the ordinance approving the Redevelopment Plan, are to be divided as follows: (a) To Taxing Agencies: That portion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of the taxing agencies upon the total sum of the assessed value of the taxable property in the Redevelopment Project as shown upon the assessment roll used in connection with the taxation of such property by such taxing agency last equalized prior to the effective date of the ordinance adopting the applicable Redevelopment Plan (the base year valuation ), will be allocated to, and when collected will be paid into, the funds of the respective taxing agencies as taxes by or for the taxing agencies on all other property are paid; and (b) To the Former Agency/Successor Agency: Except for that portion of the taxes in excess of the amount identified in (a) above which are attributable to a tax rate levied by a taxing agency for the purpose of producing revenues in an amount sufficient to make annual repayments of the principal of, and the interest on, any bonded indebtedness approved by the voters of the taxing agency on or after January 1, 1989 for the acquisition or improvement of real property, which portion shall be allocated to, and when collected shall be paid into, the fund of that taxing agency, that portion of the levied taxes each year in excess of such amount, annually allocated within limitations established by the Redevelopment Plan, following the date of issuance of the Bonds, when collected -12-

19 will be paid into a special fund of the Successor Agency. Section of the Dissolution Act provides that, for purposes of Section 16 of Article XVI of the State Constitution, the Redevelopment Property Tax Trust Fund shall be deemed to be a special fund of the Successor Agency to pay the debt service on indebtedness incurred by the Former Agency or the Successor Agency to finance or refinance the redevelopment projects of the Former Agency. That portion of the levied taxes described in paragraph (b) above, less amounts deducted pursuant to section 34183(a) of the Dissolution Act for permitted administrative costs of the County Auditor-Controller, constitute the amounts required under the Dissolution Act to be deposited by the County Auditor-Controller into the Redevelopment Property Tax Trust Fund. In addition, section of the Dissolution Act effectively eliminates the January 1, 1989 date from paragraph (b) above. In addition, pursuant to Section of the Dissolution Act, funds associated with retired enforceable obligations are required to be reallocated to taxing agencies as regular property taxes and not deposited into the Redevelopment Property Tax Trust Fund for the Successor Agency. Potential implementation of Section of the Dissolution Act is not anticipated to have a material effect on the availability of Pledged Tax Revenues for debt service (or debt service coverage) because the statute provides for retention of funds by the Successor Agency, with DOF authorization, to the extent needed for payment of enforceable obligations. SECURITY FOR THE BONDS The County Auditor-Controller will deposit property tax revenues into the Redevelopment Property Tax Trust Fund pursuant to the requirements of the California Health and Safety Code, including inter alia Health and Safety Code Sections and (b). The Bonds are payable from and secured by the Pledged Tax Revenues to be derived from the Redevelopment Project consisting of the property tax revenues deposited in the Redevelopment Property Tax Trust Fund. Pledge Under the Indenture Except as described in under the heading SECURITY FOR THE BONDS Flow of Funds Under the Indenture below and as required to compensate or indemnify the Trustee, and on a subordinate basis to the Senior Obligations and the Housing Bonds, the Bonds are equally secured by a pledge of and lien on all of the moneys in the Redevelopment Obligation Retirement Fund. The Bonds shall be equally secured by a pledge of, security interest in and a first and exclusive lien on all of the Pledged Tax Revenues, whether held in the Redevelopment Property Tax Trust Fund or by the Successor Agency or the Trustee, and a first and exclusive pledge of, security interest in and lien upon all of the moneys in the Debt Service Fund (including the Interest Account, the Principal Account, the Sinking Account and the Redemption Account and all subaccounts in the foregoing) and in the Reserve Fund to the Trustee for the benefit of the Owners of the Bonds, on a parity with the first pledge of and lien thereon of the Parity Bonds without preference or priority for series, issue, number, dated date, sale date, date of execution or date of delivery. The Bonds are also equally secured by the pledge and lien created with respect to the Bonds by Section (g) of the Dissolution Act on moneys deposited from time to time in the Redevelopment Property Tax Trust Fund. Except for the Pledged Tax Revenues and such moneys, no funds or properties of the Successor Agency are pledged to, or otherwise liable for, the payment of principal of or interest or redemption premium (if any) on the Bonds. -13-

20 In consideration of the acceptance of the Bonds by purchasers of the Bonds, the Indenture is deemed to be and will constitute a contract between the Successor Agency and the Trustee for the benefit of the Owners from time to time of the Bonds, and the covenants and agreements set forth in the Indenture to be performed on behalf of the Successor Agency are for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reason of the number or date thereof or the time of sale, execution and delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or in the Indenture. Pledged Tax Revenues Tax Revenues means the monies deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to subdivision (c) of Section of the Dissolution Act, as provided in paragraph (2) of subdivision (a) of Section of the Dissolution Act, that are equal to that portion of taxes levied upon taxable property in the Redevelopment Project and received by the Successor Agency on or after the date of issue of the Bonds, pursuant to Article 6 of Chapter 6 of the Prior Law and Section 16 of Article XVI of the Constitution of the State. The Indenture defines the Pledged Tax Revenues to be used to pay the Bonds as all Tax Revenues less (i) all amounts required by law on or after the date of issuance of the Bonds to be deposited by the Successor Agency in a housing fund (consisting of the scheduled debt service on the Housing Bonds), (ii) amounts payable by the State to the Successor Agency under and pursuant to Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with section 16110) of the California Government Code, and (iii) Statutory Pass- Through Payments, but only to the extent such amounts are not subordinated to payment of debt service on the Bonds, any Parity Bonds and the Senior Obligations, and (iv) amounts required to be paid under the Prior Indenture relating to the 2006 Bonds and the 2009 Bonds. Housing Obligations. Before it was amended by the Dissolution Act, the Redevelopment Law required the Former Agency to set aside not less than 20% of all tax increment generated in the Redevelopment Project into a low and moderate income housing fund to be used for the purpose of increasing, improving and/or preserving the supply of low and moderate income housing. These tax increment revenues were commonly referred to as Housing Set-Aside. The Dissolution Act eliminated the Housing Set-Aside requirement. The housing fund into which these set-aside amounts were formerly deposited has been eliminated and any unencumbered amounts remaining in that fund have been identified through a mandated due diligence review. The amounts found to be unencumbered through this due diligence review have been paid to the County and these funds have been allocated to the applicable taxing entities. Since a deduction for the Housing Set-Aside is no longer required, amounts that were previously required to be deposited in the housing fund are now included in Pledged Tax Revenues, except to the extent they are needed to pay the scheduled debt service on the 2006 Housing Bonds (but not in any event in any Fiscal Year in excess of the amount of the former Housing Set-Aside requirement for such Fiscal Year). Statutory Pass-Through Payments. Under Sections and of the Redevelopment Law and Section of the Dissolution Act, certain amounts in the Redevelopment Project Tax Trust Fund (the Statutory Pass-Through Amounts ) are to be paid to the affected taxing agencies, and have a senior lien on property tax revenues generated from the Redevelopment Project. However, the Redevelopment Law allows for the Successor Agency to subordinate the Statutory Pass-Through Amounts to the payment of debt service on the Bonds, if the Successor Agency reasonably expects to have sufficient funds to pay both the debt service on the Bonds and the Senior Obligations, and the Statutory Pass-Through Amounts. Affected taxing agencies with jurisdictions within the Project Area include, among -14-

21 other public agencies, the following: County of Ventura, Ventura County Library District, Ventura County Flood Control District, Ventura County Regional Sanitation District, Pleasant Valley Recreation and Parks District, United Water Conservation District, Ventura Community College District, Oxnard High School District, Pleasant Valley School District, Ventura County Superintendent of Schools, Ventura County Fire Protection District, Calleguas Municipal Water District, Ventura County Office of Education, Pleasant Valley County Water District, Camarillo Sanitation District, Camarillo Lighting and Maintenance District and the City. A redevelopment agency s obligations to make Section Payments are not subordinate to the redevelopment agency s obligations with respect to the agency s loans or bonds unless the incurrence of such debt satisfies certain conditions and the affected taxing entity does not object to the subordination on grounds permitted by Section The Successor Agency has taken all actions necessary under the Redevelopment Law and the Dissolution Act and its agreements with other taxing agencies to subordinate its obligations to make Section Payments to its obligation to repay the Bonds, and it took similar actions with respect to the Senior Obligations. See the section entitled TAX REVENUE PROJECTIONS METHODOLOGY & GENERAL ASSUMPTIONS PAYMENT TO AFFECTED TAXING ENTITIES in the Fiscal Consultant s Report in Appendix G for a discussion of agreements with the Ventura Community College District, Oxnard Union High School District, Pleasant Valley School District and Ventura County Superintendent of Schools for subordination of the Section Payments and payment procedures. Senior Obligations. As previously stated, the Former Agency issued the 2006 Bonds and the 2009 Bonds under the Prior Indenture. The term Senior Obligations in the Indenture includes the 2006 Bonds and the 2009 Bonds. Any such refunding bonds would need to satisfy the requirements of Section (a)(1) of the Dissolution Act, which are set forth in subparagraph (e) under the heading THE BONDS Parity Bonds. Flow of Funds Under the Indenture General. The Successor Agency previously established the Redevelopment Obligation Retirement Fund pursuant to section (a) of the Dissolution Act and agrees to hold and maintain the Redevelopment Obligation Retirement Fund as long as any of the Bonds are Outstanding. Deposit in Redevelopment Obligation Retirement Fund; Transfer to Debt Service Fund. The Indenture provides that the Successor Agency shall deposit all of the Tax Revenues received in any Bond Year from the Redevelopment Property Tax Trust Fund in accordance with the Dissolution Act into the Redevelopment Obligation Retirement Fund promptly upon receipt thereof by the Successor Agency, and promptly thereafter shall transfer amounts therein to the Trustee first, from housing related Tax Revenues, for deposit in such Bond Year in the funds and accounts established with respect to Housing Bonds, as provided in the Housing Indenture, second, for deposit in such Bond Year in the funds and accounts established with respect to the Senior Obligations as provided in the Prior Indenture), and third, for deposit in the Debt Service Fund and the Reserve Fund (each as described below), if necessary until such time that the aggregate amounts on deposit in such Debt Service Fund and the Reserve Fund equal the aggregate amounts required to be deposited into the Interest Account, the Principal Account, the Sinking Account, the Redemption Account and the Reserve Fund in such Bond Year pursuant to the Indenture, for amounts, if any, due and owing to AGM under the Insurance Policy and the Reserve Policy, and for deposit in such Bond Year in the funds and accounts (including any reserve account) established with respect to Parity Bonds, as provided in any Supplemental Indenture. -15-

22 Deposit of Amounts by Trustee. There is established under the Indenture a trust fund to be known as the Debt Service Fund, which will be held by the Trustee under the Indenture in trust. Moneys in the Debt Service Fund are to be transferred by the Trustee in the following amounts, at the following times, for deposit in the following respective accounts, which are established with the Trustee in the Debt Service Fund, and for deposit to the Reserve Fund, and in the following order of priority: Interest Account. On or before the 5th Business Day preceding each Interest Payment Date, the Trustee will withdraw from the Debt Service Fund and transfer to the Interest Account an amount which, when added to the amount contained in the Interest Account on that date, will be equal to the aggregate amount of the interest becoming due and payable on the Outstanding Bonds on such Interest Payment Date. No such transfer and deposit need be made to the Interest Account if the amount contained therein is at least equal to the interest to become due on the next succeeding Interest Payment Date upon all of the Outstanding Bonds. Subject to the Indenture, all moneys in the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it becomes due and payable (including accrued interest on any Bonds redeemed prior to maturity pursuant to the Indenture). Principal Account and Sinking Account. On or before the 5th Business Day preceding each Interest Payment Date on which principal on the Bonds is due, beginning September 1, 2015, the Trustee will withdraw from the Debt Service Fund and transfer to the Principal Account an amount equal to the principal payments becoming due and payable on Outstanding Bonds on such September 1, to the extent monies on deposit in the Redevelopment Obligation Retirement Fund are available therefor. No such transfer and deposit need be made to the Principal Account if the amount contained therein is at least equal to the principal payments to become due on such September 1 on all Outstanding Bonds. Subject to the Indenture, all moneys in the Principal Account will be used and withdrawn by the Trustee solely for the purpose of paying the principal payments of the Bonds as it becomes due and payable. On or before each Sinking Account Payment Date, the Trustee shall set aside from the Debt Service Fund and deposit in the Sinking Account an amount of money equal to the Sinking Account Installment, if any, payable on the Sinking Account Payment Date in such Bond Year. The Trustee shall use moneys in the Sinking Account to redeem Bonds pursuant to the sinking fund redemption provisions of the Indenture. Reserve Fund. In the event the moneys on deposit in the Debt Service Fund five (5) Business Days before any Interest Payment Date are less than the full amount of the interest, principal and sinking account payments required to be deposited, the Trustee will, five (5) Business Days before such Interest Payment Date, withdraw from the Reserve Fund an amount equal to any such deficiency and will notify the Successor Agency of any such withdrawal. Promptly upon receipt of any such notice, the Successor Agency will withdraw from the Redevelopment Obligation Retirement Fund and transfer to the Trustee for deposit in the Reserve Fund an amount necessary to increase the amount in the Reserve Fund (and any reserve account for any Parity Bonds) to the amount of the then Reserve Requirement. If there is not sufficient moneys in the Redevelopment Obligation Retirement Fund to make any such transfer, the Successor Agency will have an obligation to continue making transfers of Pledged Tax Revenues into the Debt Service Fund, as such revenues become available, and thereafter, as moneys become available in the Debt Service Fund, the Trustee will make transfers to the Reserve Fund and any reserve account for any Parity Bonds) until there is an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve Fund and any reserve account for any Parity Bonds. No such transfer and deposit need be made to the Reserve Fund so long -16-

23 as there is on deposit in such fund a sum at least equal to the Reserve Requirement for the Bonds. Redemption Account. On or before the 5th Business Day preceding any date on which Bonds are to be redeemed, the Successor Agency will deliver or cause to be delivered funds to the Trustee for deposit in the Redemption Account an amount required to pay the principal of, interest and premium, if any, on the Bonds (other than Bonds redeemed from Sinking Account Installment) to be redeemed on such date. Subject to this Indenture, all moneys in the Redemption Account will be used and withdrawn by the Trustee solely for the purpose of paying the principal of and interest or redemption premium (if any) on the Bonds to be redeemed on the date set for such redemption. Reserve Fund Initial Deposit into the Reserve Fund. On the date of issuance of the Bonds, in lieu of a cash deposit to the Reserve Fund, AGM will issue the Reserve Fund Insurance Policy to be held by the Trustee for the benefit of the Reserve Fund, in an amount equal to the initial Reserve Requirement for the Bonds Definition of Reserve Requirement. The Indenture defines Reserve Requirement to mean, as of any date of calculation, an amount equal to the lesser of (i) 10% of the issue price (within the meaning of Section 148 of the Code) of the Bonds; (ii) 125% of the average Annual Debt Service on the Bonds for that and every subsequent Bond Year; or (iii) the Maximum Annual Debt Service on the Bonds. Relationship to Parity Bonds. The Reserve Fund shall be held by the Trustee in trust solely for the benefit of the Owners of the Bonds and will not be available to secure Parity Bonds. Use of Moneys in the Reserve Fund. Subject to the provisions of the Indenture, all money in the Reserve Fund will be used and withdrawn by the Trustee solely for the purpose of making transfers to the Interest Account, the Principal Account and the Sinking Account, in such order of priority, in the event of any deficiency at any time in any of such accounts or for the retirement of all the Bonds then Outstanding, except that so long as the Successor Agency is not in default hereunder, any amount in the Reserve Fund in excess of the Reserve Requirement will be withdrawn from the Reserve Fund semiannually on or before the 5th Business Day preceding March 1 and September 1 by the Trustee and deposited in the Interest Account. All amounts in the Reserve Fund on the 5th Business Day preceding the final Interest Payment Date will be withdrawn from the Reserve Fund and will be transferred either (i) to the Interest Account, the Principal Account and the Sinking Account, in such order, to the extent required to make the deposits then required to be made or, (ii) if the Successor Agency shall have caused to be deposited with the Trustee an amount sufficient to make the deposits required by the Indenture, then at the Written Request of the Successor Agency such amount shall be transferred as directed by the Successor Agency. The prior written consent of the Insurer shall be a condition precedent to the deposit of any credit instrument provided in lieu of a cash deposit into the Reserve Fund, if any. Notwithstanding anything to the contrary set forth in the Indenture, amounts on deposit in the Reserve Fund shall be applied solely to the payment of debt service due on the Bonds. With respect to the Bonds, the Reserve Requirement is satisfied by the deposit of the Reserve Policy in the Reserve Fund. Composition of Reserve Fund for Senior Bonds and 2006 Housing Bonds. The Reserve Fund established under the Prior Indenture under which the Senior Bonds and the 2006 Housing Bonds are outstanding includes a reserve fund surety bond provided by AMBAC Assurance Corp., which following the issuance of the Bonds will account for fifty percent (50%) of the -17-

24 reserve requirement under the Prior Indenture attributable to 2006 Housing Bonds and approximately thirty-nine percent (39%) of the reserve requirement for the Senior Bonds. Limited Obligation The Bonds are not a debt of the City, the County, the State or any of their political subdivisions except the Successor Agency, and none of the City, the County, the State or any of their political subdivisions except the Successor Agency are liable therefor. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. No member of the Successor Agency, the Oversight Board or the Board of Supervisors of the County shall be individually or personal liable for the payment of the principal of or interest or redemption premium (if any) on the Bonds; but nothing contained in the Indenture relieves any such member, officer, agent or employee from the performance of any official duty provided by law. Recognized Obligation Payment Schedules Submission of ROPS. Not less than 90 days prior to each January 2 and June 1, the Dissolution Act requires successor agencies to prepare, and submit to the successor agency s oversight board and the DOF for approval, a Recognized Obligation Payment Schedule listing the enforceable obligations (as defined in the Dissolution Act) of the successor agency, together with the source of funds to be used to pay for each enforceable obligation. As defined in the Dissolution Act, enforceable obligation includes bonds, including the required debt service, reserve set-asides, and any other payments required under the indenture or similar documents governing the issuance of the outstanding bonds of the former redevelopment agency or the successor agency, as well as other obligations such as loans, judgments or settlements against the former redevelopment agency or the successor agency, any legally binding and enforceable agreement that is not otherwise void as violating the debt limit or public policy, contracts necessary for the administration or operation of the successor agency, and, under certain circumstances, amounts borrowed from the successor agency s low and moderate income housing fund. A reserve may be included on the Recognized Obligation Payment Schedule and held by the successor agency when required by a bond indenture or when the next property tax allocation will be insufficient to pay all obligations due under the provisions of the bonds for the next payment due in the following half of the calendar year. Sources of Payments for Enforceable Obligations. Under the Dissolution Act, the categories of sources of payments for enforceable obligations listed on a Recognized Obligation Payment Schedule are the following: (i) the low and moderate income housing fund, (ii) bond proceeds, (iii) reserve balances, (iv) administrative cost allowance (successor agencies are entitled to receive not less than $250,000, unless that amount is reduced by the oversight board), (v) the Redevelopment Property Tax Trust Fund (but only to the extent no other funding source is available or when payment from property tax revenues is required by an enforceable obligation or otherwise required under the Dissolution Act), or (vi) other revenue sources (including rents, concessions, asset sale proceeds, interest earnings, and any other revenues derived from the redevelopment agency, as approved by the oversight board). The Dissolution Act provides that only those obligations listed in the Recognized Obligation Payment Schedule may be paid by a successor agency and only from the funds specified in the Recognized Obligation Payment Schedule. -18-

25 Order of Priority of Distributions from Redevelopment Property Tax Trust Fund. Typically, under the Redevelopment Property Tax Trust Fund distribution provisions of the Dissolution Act, a county auditor-controller is to distribute funds for each six-month period in the following order specified in Section of the Dissolution Act: (i) first, subject to certain adjustments for subordinations to the extent permitted under the Dissolution Act, if any (as described above under SECURITY FOR THE BONDS Statutory Pass-Through Payments and Pass-Through Agreement ) and no later than each January 2 and June 1, amounts required for pass-through payments such entities would have received under provisions of the Redevelopment Law, as those provisions read on January 1, 2011, including negotiated pass-through agreements and statutory pass-through obligations; (ii) second, on each January 2 and June 1, to the successor agency for payments listed in its Recognized Obligation Payment Schedule, with debt service payments scheduled to be made for tax allocation bonds having the highest priority over payments scheduled for other debts and obligations listed on the Recognized Obligation Payment Schedule; (iii) third, on each January 2 and June 1, to the successor agency for the administrative cost allowance, as defined in the Dissolution Act; (iv) fourth, on each January 2 and June 1, to taxing entities in respect of subordinated negotiated pass-through agreements and statutory pass-through obligations, amounts required for pass-through payments such entities would have received under provisions of the Redevelopment Law, as those provisions read on January 1, 2011; and (v) fifth, on each January 2 and June 1, to taxing entities any moneys remaining in the Redevelopment Property Tax Trust Fund after the payments and transfers authorized by clauses (i) through (iii). Failure to Submit a Recognized Obligation Payment Schedule. The Recognized Obligation Payment Schedule must be approved by the oversight board and must be submitted by a Successor Agency to the county administrative officer, the county auditor-controller, the DOF, and the State Controller by 90 days before the date of the next January 2 or June 1 property tax distribution. If the successor agency does not submit a Recognized Obligation Payment Schedule by the applicable deadline, the city or county that established the former redevelopment agency will be subject to a civil penalty equal to $10,000 per day for every day the schedule is not submitted to the DOF. Additionally, the successor agency s administrative cost allowance is reduced by 25% if the successor agency did not submit a Recognized Obligation Payment Schedule by the 80th day before the date of the next January 2 or June 1 property tax distribution, as applicable, with respect to the Recognized Obligation Payment Schedule for the subsequent six-month period. For additional information regarding procedures under the Dissolution Act relating to late Recognized Obligation Payment Schedules and implications thereof on the Bonds, see RISK FACTORS Recognized Obligation Payment Schedule. Dissolution Act Covenant by the Successor Agency. The Successor Agency covenants in the Indenture that it will take all actions required under the Dissolution Act to include on the Recognized Obligation Payment Schedules for each six-month period of a calendar year, beginning with the first six-month period arising after the Closing Date for which no Recognized Obligation Payment Schedule has been submitted, all payments to the Trustee to satisfy the requirements of the Indenture, including any amounts required under the Indenture -19-

26 to replenish the Reserve Fund to the full amount of the Reserve Requirement. The Indenture provides that the foregoing actions will include, without limitation, placing on the periodic Recognized Obligation Payment Schedule for approval by the Oversight Board and DOF, to the extent necessary, the amounts to be held by the Successor Agency as a reserve until the next sixmonth period, as contemplated by paragraph (1)(A) of subdivision (d) of Section of the Dissolution Act, that are necessary to provide for the payment of principal and interest under the Indenture when the next property tax allocation is projected to be insufficient to pay all obligations due under the Indenture for the next payment due in the following six-month period. For the avoidance of doubt, the Successor Agency agrees in the Indenture that it will take all actions required under the Dissolution Act to include in the Recognized Obligation Payment Schedule relating to the January 2 payment date commencing January 2, 2015, the annual scheduled debt service on the Bonds, the Housing bonds, the Senior Obligations, and any Parity Bonds coming due in that same calendar year. The Successor Agency covenants in the Indenture that, in addition to complying with the requirements described in the preceding paragraph, it will comply with all other requirements of the Dissolution Act. Without limiting the generality of the foregoing, the Successor Agency covenants and agrees to file all required statements and hold all public hearings required under the Dissolution Act to assure compliance by the Successor Agency with its covenants under the Indenture. Further, it will take all actions required under the Dissolution Act to include scheduled debt service on the Housing Bonds, the Senior Obligations, the Parity Bonds and the Bonds, as well as any amount required under the Indenture to replenish the Reserve Fund, in Recognized Obligation Payment Schedules for each six-month period so as to enable the County Auditor-Controller to distribute from the Redevelopment Property Tax Trust Fund to the Successor Agency s Redevelopment Obligation Retirement Fund on each January 2 and June 1 amounts required for the Successor Agency to pay principal of, and interest on, the Housing Bonds, the Senior Obligations, the Parity Bonds and the Bonds coming due in the respective six-month period. These actions will include, without limitation, placing on the periodic Recognized Obligation Payment Schedule for approval by the Oversight Board and State Department of Finance, to the extent necessary, the amounts to be held by the Successor Agency as a reserve until the next six-month period, as contemplated by paragraph (1)(A) of subdivision (d) of Section of the Dissolution Act, that are necessary to provide for the payment of principal and interest under the Indenture when the next property tax allocation is projected to be insufficient to pay all obligations due under the Indenture for the next payment due thereunder in the following six-month period. Notwithstanding the foregoing, with respect to the Housing Bonds, the Senior Obligations, the Parity Bonds and the Bonds, the Successor Agency will take all actions required under the Dissolution Act to include in the Recognized Obligation Payment Schedule relating to the January 2 payment date, the annual scheduled debt service on the such Housing Bonds, the Senior Obligation, the Parity Bonds and the Bonds coming due in that same calendar year. The Successor Agency has no power to levy and collect taxes, and various factors beyond its control could affect the amount of Pledged Tax Revenues available in any six-month period to pay the principal of and interest on the Bonds (see RISK FACTORS ). History of Submission of the Recognized Obligation Payment Schedules. The Successor Agency has policies and procedures in place to ensure full and timely compliance with the above-described covenant. Under the direction of the Director of Finance, the Successor Agency has submitted its Recognized Obligation Payment Schedules, as described below. -20-

27 Date ROPS Approved by Oversight Board Date Approved ROPS Submitted to DOF Deadline to Submit ROPS to DOF ROPS Submitted On Time? Funding Period ROPS I Jan-Jun /12/12 4/13/12 4/15/12 Yes ROPS II Jul-Dec /12/12 4/13/12 4/27/12 Yes ROPS III Jan-Jun /23/12 8/27/12 9/4/12 Yes ROPS A Jul-Dec /14/13 2/19/13 3/1/13 Yes ROPS B Jan-Jun /26/13 9/27/13 10/1/13 Yes ROPS A Jul-Dec /27/14 2/27/14 3/1/14 Yes ROPS B Jun-Jul /25/14 9/30/14 10/3/14 Yes Source: Successor Agency. To date, the Senior Obligations, the 2006 Housing Bonds and the 2004 Former Agency Bonds have been included in, and approved under, each Recognized Obligation Payment Schedule submission. Senior Statutory Obligations County Administrative Fees. Chapter 466, Statutes of 1990, (referred to as SB 2557) permits the County to withhold a portion of annual tax revenues for the recovery of County charges related to property tax administration services to cities in an amount equal to their property tax administration costs proportionately attributable to cities. SB 2557, and subsequent legislation under SB 1559 (Statutes of 1992), permitted counties to charge all jurisdictions, including redevelopment agencies, on a year-to-year basis. Section 34182(a)(3) of the Dissolution Act also provides for recovery of County costs in connection with performing duties related to the dissolution of redevelopment agencies. The actual fiscal year charges for the Successor Agency equate to 1.54% of gross Redevelopment Property Tax Trust Fund revenues. The Fiscal Consultant s projections assume that the County administrative costs will continue to be charged at 1.5% of such gross revenue in subsequent fiscal years. For purposes of showing debt service coverage, the Fiscal Consultant has assumed that the County administrative fees, the Senior Obligations, and the 2006 Housing Bond debt service are senior to the Successor Agency s pledge of Pledged Tax Revenues to its obligation to make debt service payments on the Bonds. None of the subordinate obligations described above under the heading SECURITY FOR THE BONDS Pledged Tax Revenues Statutory Pass-Through Payments are reflected in the Fiscal Consultant s revenue projections. Other Obligations The Successor Agency has various other obligations, not secured by a pledge of the Tax Revenues, which are not described in this Official Statement and not included in any way in the projections of Tax Revenues in this Official Statement. All payment obligations of the Successor Agency must be listed on the Successor Agency s Recognized Obligation Payment Schedule for the six-month period during which such payments are made. Municipal Bond Insurance Policy MUNICIPAL BOND INSURANCE Concurrently with the issuance of the Bonds, AGM will issue the Municipal Bond Insurance Policy. The Municipal Bond Insurance Policy guarantees the scheduled payment of -21-

28 principal of and interest on the Insured Bonds when due as set forth in the form of the Municipal Bond Insurance Policy included as APPENDIX H to this Official Statement. The Municipal Bond Insurance Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. Assured Guaranty Municipal Corp. AGM is a New York domiciled financial guaranty insurance company and an indirect subsidiary of Assured Guaranty Ltd. ( AGL ), a Bermuda-based holding company whose shares are publicly traded and are listed on the New York Stock Exchange under the symbol AGO. AGL, through its operating subsidiaries, provides credit enhancement products to the U.S. and global public finance, infrastructure and structured finance markets. Neither AGL nor any of its shareholders or affiliates, other than AGM, is obligated to pay any debts of AGM or any claims under any insurance policy issued by AGM. AGM s financial strength is rated AA (stable outlook) by Standard and Poor s Ratings Services, a Standard & Poor s Financial Services LLC business ( S&P ) and A2 (stable outlook) by Moody s Investors Service, Inc. ( Moody s ). Each rating of AGM should be evaluated independently. An explanation of the significance of the above ratings may be obtained from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such ratings are subject to revision or withdrawal at any time by the rating agencies, including withdrawal initiated at the request of AGM in its sole discretion. In addition, the rating agencies may at any time change AGM s long-term rating outlooks or place such ratings on a watch list for possible downgrade in the near term. Any downward revision or withdrawal of any of the above ratings, the assignment of a negative outlook to such ratings or the placement of such ratings on a negative watch list may have an adverse effect on the market price of any security guaranteed by AGM. AGM only guarantees scheduled principal and scheduled interest payments payable by the issuer of bonds insured by AGM on the date(s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of the relevant insurance policy), and does not guarantee the market price or liquidity of the securities it insures, nor does it guarantee that the ratings on such securities will not be revised or withdrawn. Current Financial Strength Ratings On July 2, 2014, S&P issued a credit rating report in which it affirmed AGM s financial strength rating of AA (stable outlook). AGM can give no assurance as to any further ratings action that S&P may take. On July 2, 2014, Moody s issued a rating action report stating that it had affirmed AGM s insurance financial strength rating of A2 (stable outlook). AGM can give no assurance as to any further ratings action that Moody s may take. For more information regarding AGM s financial strength ratings and the risks relating thereto, see AGL s Annual Report on Form 10-K for the fiscal year ended December 31, Capitalization of AGM At June 30, 2014, AGM s policyholders surplus and contingency reserve were approximately $3,654 million and its net unearned premium reserve was approximately $1,850 million. Such amounts represent the combined surplus, contingency reserve and net unearned premium reserve of AGM, of AGM s wholly owned subsidiary Assured Guaranty (Europe) Ltd., and 60.7% of AGM s indirect subsidiary Municipal Assurance Corp.; after giving effect to -22-

29 certain intercompany eliminations; each amount of surplus, contingency reserve and net unearned premium reserve for each company was determined in accordance with statutory accounting principles. Incorporation of Certain Documents by Reference Portions of the following documents filed by AGL with the Securities and Exchange Commission (the SEC ) that relate to AGM are incorporated by reference into this Official Statement and shall be deemed to be a part hereof: (i) the Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (filed by AGL with the SEC on February 28, 2014); (ii) the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014 (filed by AGL with the SEC on May 9, 2014); and (iii) the Quarterly form on Form 10-Q for the quarterly period ended June 30, 2014 (filed by AGL with the SEC on August 8, 2014). All consolidated financial statements of AGM and all other information relating to AGM included in, or as exhibits to, documents filed by AGL with the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, excluding Current Reports or portions thereof furnished under Item 2.02 or Item 7.01 of Form 8-K, after the filing of the last document referred to above and before the termination of the offering of the Bonds shall be deemed incorporated by reference into this Official Statement and to be a part hereof from the respective dates of filing such documents. Copies of materials incorporated by reference are available over the internet at the SEC s website at at AGL s website at or will be provided upon request to Assured Guaranty Municipal Corp.: 31 West 52nd Street, New York, NY 10019, Attention: Communications Department (telephone (212) ). Except for the information referred to above, no information available on or through AGL s website shall be deemed to be part of or incorporated in this Official Statement. Any information regarding AGM included herein under the caption MUNICIPAL BOND INSURANCE Assured Guaranty Municipal Corp. or included in a document incorporated by reference herein (collectively, the Municipal Bond Insurer Information ) shall be modified or superseded to the extent that any subsequently included Municipal Bond Insurer Information (either directly or through incorporation by reference) modifies or supersedes such previously included Municipal Bond Insurer Information. Any Municipal Bond Insurer Information so modified or superseded shall not constitute a part of this Official Statement, except as so modified or superseded. Miscellaneous Matters AGM or one of its affiliates may purchase a portion of the Insured Bonds or any uninsured Bonds offered under this Official Statement and such purchases may constitute a significant proportion of the Bonds offered. AGM or such affiliate may hold such Insured Bonds or uninsured Bonds for investment or may sell or otherwise dispose of such Insured Bonds or uninsured Bonds at any time or from time to time. AGM makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other -23-

30 than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading MUNICIPAL BOND INSURANCE. Property Tax Collection Procedures PROPERTY TAXATION IN CALIFORNIA Classification. In the State, property which is subject to ad valorem taxes is classified as secured or unsecured. Secured and unsecured property are entered on separate parts of the assessment roll maintained by the County assessor. The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens on the secured property arising pursuant to State law, regardless of the time of the creation of other liens. Generally, ad valorem taxes are collected by a county (the Taxing Authority ) for the benefit of the various entities (e.g., cities, schools and special districts) that share in the ad valorem tax (each a taxing entity) and successor agencies eligible to receive distributions from the respective Redevelopment Property Tax Trust Funds. Collections. Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The taxing authority has four ways of collecting delinquent unsecured personal property taxes: (a) initiating a civil action against the taxpayer, (b) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer, (c) filing a certificate of delinquency for record in the county recorder s office to obtain a lien on certain property of the taxpayer, and (d) seizing and selling personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the property securing the taxes to the State for the amount of taxes which are delinquent. Penalty. A 10% penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, property on the secured roll on which taxes are delinquent is declared in default by operation of law and declaration of the tax collector on or about June 30 of each fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1.5% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the county tax collector. A 10% penalty also applies to delinquent taxes with respect to property on the unsecured roll, and further, an additional penalty of 1.5% per month accrues with respect to such taxes beginning on varying dates related to the tax bill mailing date. Delinquencies. The valuation of property is determined as of the January 1 lien date as equalized in August of each year and equal installments of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due January 1 and become delinquent August 31. Supplemental Assessments. California Revenue and Taxation Code section provides for the reassessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Such reassessment is referred to as the Supplemental Assessment and is determined by applying the current year's tax rate to the amount of the -24-

31 increase or decrease in a property's value and prorating the resulting property taxes to reflect the portion of the tax year remaining as determined by the date of the change in ownership or completion of new construction. Supplemental Assessments become a lien against real property. Prior to the enactment of this law, the assessment of such changes was permitted only as of the next tax lien date following the change, and this delayed the realization of increased property taxes from the new assessments for up to 14 months. Since fiscal year , revenues derived from Supplemental Assessments have been allocated to redevelopment agencies and taxing entities in the same manner as the general property tax. The receipt of Supplemental Assessment revenues by taxing entities typically follows the change of ownership by a year or more. This statute provides increased revenue to the Redevelopment Property Tax Trust Fund 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. If a change in ownership results in a decrease in assessed value, a negative supplemental assessment may occur requiring a refund of taxes paid to the property owner. To the extent such supplemental assessments occur within the Camarillo Corridor Project, tax increment may increase or decrease. Revenues resulting from Supplemental Assessments have not been included in the Fiscal Consultant s projections of tax increment available to pay debt service on the Bonds. County Property Tax Collection and Administrative Costs. In 1990, the Legislature enacted SB 2557 (Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions in proportion to the tax-derived revenues allocated to each. SB 1559 (Chapter 697, Statutes of 1992) explicitly includes redevelopment agencies among the jurisdictions which are subject to such charges. In addition, Sections 34182(e) and 34183(a) of the Dissolution Act allow administrative costs of the County Auditor-Controller for the costs of administering the provisions of the Dissolution Act. For fiscal year , the County charges were 1.54% of gross tax increment within the Redevelopment Project. Based on the collection charges for fiscal year , the Fiscal Consultant projected the charge for fiscal year as a percentage of gross tax increment to remain at 1.50%. For purposes of the Fiscal Consultant s projections of tax increment available to pay debt service on the Bonds, the Fiscal Consultant assumed that the County will continue to charge the Successor Agency for property tax collection and administration and that such charge will increase proportionally with any increases in revenue. The Fiscal Consultant in its Report notes that, although the Project Area is not on the County s Teeter Plan (under which the County Auditor distributes billed amounts prior to full collections), the Project Area is paid 100% of its levy, according to the County Auditor s office. Thus, the Project Area is not affected by delinquent tax payments. However, as Table 4 under the heading THE CAMARILLO CORRIDOR PROJECT Historical Taxable Values and Tax Increment Revenues below shows, gross actual revenue is typically not equal to gross estimated revenue; in some years, gross actual revenue exceeds gross estimated revenue, and in other years, the inverse occurs. According to the County Auditor s office, this discrepancy is due to supplemental revenue and assessment roll corrections (ARCs). Supplemental revenue is the revenue generated from supplemental tax bills, which are issued when a property sale occurs or construction is completed after January 1st (the Assessor s cut-off date for the next year s assessment roll). ARCs relate to values that were added to the assessment roll after it was finalized on August 20, the date by which the roll is required by law to be equalized; these roll corrections occur for any of a variety of reasons, including corrected exemptions and errors by the Assessor. Additionally, the Fiscal Consultant notes that the pass-through payments (which are shown in Table 4 under the heading THE CAMARILLO CORRIDOR PROJECT Historical Taxable Values and Tax Increment Revenues in order to calculate net actual revenue ) are subordinate to debt service. Thus, when submitting its ROPS to DOF for the ROPS B periods -25-

32 (during which tax revenue collected primarily in the first half of the fiscal year is spent in the second half of the same fiscal year following the County distribution on or around January 2nd), the Successor Agency will request the entire amount needed to pay debt service to comply with covenants in the Indenture. The County will subsequently need to pay pass-through payments and other enforceable obligations (and any amount of debt service requested for the prior period but denied due to a lack of sufficient tax revenue) during the ROPS A periods (during which tax revenue collected primarily in the second half of the fiscal year is spent in the first half of the following fiscal year following the County distribution on or around June 1st). Each year, the Agency receives about 68% of their tax revenue for expenditures during the ROPS B periods and 32% for expenditures during the ROPS A periods. Unitary Property Assembly Bill ( AB ) 2890 (Statutes of 1986, Chapter 1457) provides that, commencing with fiscal year , tax revenues derived from unitary property and assessed by the SBE are accumulated in a single Tax Rate Area for the County. The tax revenues are then to be allocated to each taxing entity county-wide as follows: (a) each taxing entity will receive the same amount as in the previous year plus an increase for inflation of up to 2%; (b) if utility tax revenues are insufficient to provide the same amount as in the previous year, each taxing entity's share would be reduced pro rata county wide; and (c) any increase in revenue above 2% would be allocated in the same proportion as the taxing entity's local secured taxable values are to the local secured taxable values of the County. 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 establishing tax rates on State-assessed property and distribution of property tax revenue derived from State-assessed property to taxing jurisdictions within each county in accordance with a new formula. Railroads will continue to be assessed and revenues allocated to all tax rate areas where railroad property is sited. To administer the allocation of unitary tax revenues to redevelopment agencies, the County no longer includes the taxable value of utilities as part of the reported taxable values of a project area. Consequently, the base year values of project areas are reduced by the amount of utility value that existed originally in the base years. The Auditor Controller allocated a total of $466,424 of unitary revenues to the Successor Agency from the Redevelopment Project for fiscal year For purposes of the Fiscal Consultant s projection of tax increment available to pay debt service on the Bonds, the Fiscal Consultant assumed that the amount of unitary revenue allocated for fiscal year will continue to be allocated to the Redevelopment Project in the same amount for the life of the projection. Article XIIIA of the State Constitution Article XIIIA limits the amount of ad valorem taxes on real property to 1% of full cash value of such property, as determined by the county assessor. Article XIIIA defines full cash value to mean the County Assessor s valuation of real property as shown on the 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. Furthermore, the full cash value of all real property may be increased to reflect the rate of inflation, as shown by the consumer price index, not to exceed 2% per year, or may be reduced. Article XIIIA has subsequently been amended to permit reduction of the full cash value base in the event of declining property values caused by substantial damage, destruction -26-

33 or other factors, and to provide that there would be no increase in the full cash value base in the event of reconstruction of property damaged or destroyed in a disaster and in other special circumstances. Article XIIIA (i) exempts from the 1% tax limitation taxes to pay debt service on (a) indebtedness approved by the voters prior to July 1, 1978 or (b) bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition; (ii) requires a vote of two-thirds of the qualified electorate to impose special taxes, or certain additional ad valorem taxes; and (iii) requires the approval of two-thirds of all members of the State Legislature to change any State tax laws resulting in increased tax revenues. The validity of Article XIIIA has been upheld by both the California Supreme Court and the United States Supreme Court. In the general election held November 4, 1986, voters of the State approved two measures, Propositions 58 and 60, which further amended Article XIIIA. Proposition 58 amended Article XIIIA to provide that the terms purchase and change of ownership, for the purposes of determining full cash value of property under Article XIIIA, do not include the purchase or transfer of (1) real property between spouses and (2) the principal residence and the first $1,000,000 of other property between parents and children. This amendment to Article XIIIA may reduce the rate of growth of local property tax revenues. Proposition 60 amended Article XIIIA to permit the Legislature to allow persons over the age of 55 who sell their residence and buy or build another of equal or lesser value within two years in the same county, to transfer the old residence assessed value to the new residence. As a result of the Legislature s action, the growth of property tax revenues may decline. Legislation enacted by the Legislature to implement Article XIIIA provides that all taxable property is shown at full assessed value as described above. In conformity with this procedure, all taxable property value included in this Official Statement is shown at 100% of assessed value and all general tax rates reflect the $1 per $100 of taxable value (except as noted). Tax rates for voter-approved bonded indebtedness and pension liabilities are also applied to 100% of assessed value. Each year the Board of Equalization announces the applicable adjustment factor. Since the adoption of Proposition 13, inflation has, in most years, exceeded 2% and the announced factor has reflected the 2% cap. The changes in the California Consumer Price Index ( CCPI ) from October of one year to October of the next year are used to determine the adjustment factor for the January assessment date. Through fiscal year there were six occasions when the inflation factor was less than 2%. Until fiscal year the annual adjustment never resulted in a reduction to the base year values of individual parcels; however, the factor that was applied to real property assessed values for the January 1, 2010 assessment date was negative 0.237% and this resulted in reductions to the adjusted base year value of parcels. In December 2013, the State Board of Equalization announced the CCPI from October 2012 to October 2013 increased by 0.454% and directed county assessors to prepare the fiscal year assessment rolls based upon an inflation factor of However, a rate below 2% continues to be the exception, not the historical norm. The Fiscal Consultants tax revenue projections assume an annual 2% increase in secured assessed valuation for the remaining years so projected, including fiscal year The Fiscal Consultant advises in the Fiscal Consultant s Report that a growth rate of 2% in fiscal year is supported by the projected inflation factor (1.894%) and value from new construction (0.157%), and incorporates the negative change in valuation from available sales data through August 20, 2014 (-0.107%), -27-

34 the sum of which is 1.944%. See THE CAMARILLO CORRIDOR PROJECT Construction and New Development, and Recent Real Property Sales. Appropriations Limitation Article XIIIB Article XIIIB limits the annual appropriations of the State and its political subdivisions to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the government entity. The base year for establishing such appropriations limit is the 1978/79 fiscal year, and the limit is to be adjusted annually to reflect changes in population, consumer prices and certain increases in the cost of services provided by these public agencies. Section of the Redevelopment Law provides that the allocation of taxes to a redevelopment agency for the purpose of paying principal of, or interest on, loans, advances, or indebtedness shall not be deemed the receipt by a redevelopment agency of proceeds of taxes levied by or on behalf of a redevelopment agency within the meaning of Article XIIIB, nor shall such portion of taxes be deemed receipt of proceeds of taxes by, or an appropriation subject to the limitation of, any other public body within the meaning or for the purpose of the Constitution and laws of the State, including Section of the Redevelopment Law. The constitutionality of Section has been upheld in two California appellate court decisions. On the basis of these decisions, the Successor Agency has not adopted an appropriations limit. Proposition 87 On November 8, 1988, the voters of the State approved Proposition 87, which amended Article XVI, section 16 of the State Constitution to provide that property tax revenue attributable to the imposition of taxes on property within a redevelopment project area for the purpose of paying debt service on certain bonded indebtedness issued by a taxing entity (not the Former Agency or the Successor Agency) and approved by the voters of the taxing entity after January 1, 1989 will be allocated solely to the payment of such indebtedness and not to redevelopment agencies. Appeals of Assessed Values Pursuant to California law, a property owner may apply for a reduction of the property tax assessment for such owner s property by filing a written application, in a form prescribed by the State Board of Equalization, with the appropriate county board of equalization or assessment appeals board. In the County, a property owner desiring to reduce the assessed value of such owner s property in any one year must submit an application to the County Assessment Appeals Board (the Appeals Board ). Applications for any tax year must be submitted by November 30 of such tax year. Following a review of each application by the staff of the County Assessor s Office, the staff makes a recommendation to the Appeals Board on each application which has not been rejected for incompleteness or untimeliness or withdrawn. The Appeals Board holds a hearing and either reduces the assessment or confirms the assessment. The Appeals Board generally is required to determine the outcome of appeals within two years of each appeal s filing date. Any reduction in the assessment ultimately granted applies only to the year for which application is made and during which the written application is filed. The assessed value increases to its pre-reduction level for fiscal years following the year for which the reduction application is filed. However, if the taxpayer establishes through proof of comparable values that the property continues to be overvalued (known as ongoing hardship ), the Assessor has the power to grant a reduction not only for the year for which application was originally made, but also for the then current year as well. Appeals for reduction in the base year value of an -28-

35 assessment, which generally must be made within three years of the date of change in ownership or completion of new construction that determined the base year, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter. Moreover, in the case of any reduction in any one year of assessed value granted for ongoing hardship in the then current year, and also in any cases involving stipulated appeals for prior years relating to base year and personal property assessments, the property tax revenues from which Tax Revenues are derived attributable to such properties will be reduced in the then current year. In practice, such a reduced assessment may remain in effect beyond the year in which it is granted. See THE CAMARILLO CORRIDOR PROJECT Proposition 8 Reassessments and Assessment Appeals for information regarding historical and pending appeals of assessed valuations by property owners in the Redevelopment Project. Proposition 8 Proposition 8, approved in 1978 (California Revenue and Taxation Code section 51(b)), provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions under this code section may be initiated by the County Assessor or requested by the property owner. After such reductions in value are implemented, the Assessor is required to review the property s market value as of each subsequent lien date and adjust the value of real property to the lesser of its base year value as adjusted by the inflation factor pursuant to Article XIIIA of the California Constitution or its full cash value taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. Reductions made under Proposition 8 to residential properties are normally initiated by the Assessor but may also be requested by the property owner. Reductions of value for commercial, industrial and other land use types under Proposition 8 are normally initiated by the property owner as an assessment appeal. After a roll reduction is granted under this code section, the property is reviewed on an annual basis to determine its full cash value and the valuation is adjusted accordingly. This may result in further reductions or in value increases. Such increases must be in accordance with the full cash value of the property and may exceed the maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA. For a summary of the recent history of Proposition 8 reductions in the Redevelopment Project, see THE CAMARILLO CORRIDOR PROJECT Proposition 8 Reassessments and Assessment Appeals. Propositions 218 and 26 On November 5, 1996, California voters approved Proposition 218 Voter Approval for Local Government Taxes Limitation on Fees, Assessments, and Charges Initiative Constitutional Amendment. Proposition 218 added Articles XIIIC and XIIID to the State Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. On November 2, 2010, California voters approved Proposition 26, the Supermajority Vote to Pass New Taxes and Fees Act. Proposition 26 amended Article XIIIC of the California Constitution by adding -29-

36 an expansive definition for the term tax, which previously was not defined under the California Constitution. Pledged Tax Revenues securing the Bonds are derived from property taxes that are outside the scope of taxes, assessments and property-related fees and charges which are limited by Proposition 218 and Proposition 26. Future Initiatives Article XIIIA, Article XIIIB, Article XIIIC and Article XIIID and certain other propositions affecting property tax levies were each adopted as measures which qualified for the ballot pursuant to California s initiative process. From time to time other initiative measures could be adopted, further affecting Successor Agency revenues (including the Pledged Tax Revenues) or the Successor Agency s ability to expend revenues (including the Pledged Tax Revenues). THE SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION As described in INTRODUCTION, the Dissolution Act dissolved the Former Agency as of February 1, Thereafter, pursuant to Section of the Dissolution Act and resolutions adopted by the City Council, the City became the Successor Agency of the Former Agency. Subdivision (g) of Section of the Dissolution Act, added by AB 1484, expressly affirms that the Successor Agency is a separate public entity from the City, that the two entities shall not merge, and that the liabilities of the Former Agency will not be transferred to the City nor will the assets of the Former Agency become assets of the City. Successor Agency Powers All powers of the Successor Agency are vested in its five members who are the elected members of the City Council. Pursuant to the Dissolution Act, the Successor Agency is a separate public body from the City and succeeds to the organizational status of the Former Agency but without any legal authority to participate in redevelopment activities, except to complete any work related to an approved enforceable obligation. The Successor Agency is tasked with expeditiously winding down the affairs of the Former Agency, pursuant to the procedures and provisions of the Dissolution Act. Under the Dissolution Act, substantially all Successor Agency actions are subject to approval by the Oversight Board, as well as review by the DOF. Status of Compliance with Dissolution Act The Dissolution Act requires a due diligence review to determine the unobligated balances of each successor agency that are available for transfer to taxing entities. The due diligence review involves separate reviews of each successor agency s low and moderate income housing fund and of all other funds and accounts that were maintained by the applicable former redevelopment agency. Once a successor agency completes the due diligence review and any transfers to taxing entities, the DOF will issue a finding of completion that expands the authority of each successor agency in carrying out the wind down process. A finding of completion allows a successor agency to, among other things, retain real property assets of the dissolved redevelopment agency and utilize proceeds derived from bonds issued prior to January 1,

37 The Successor Agency has completed the due diligence process and received its Finding of Completion on August 6, After receiving a finding of completion, each successor agency is required to submit a Long Range Property Management Plan detailing what it intends to do with its inventory of properties. Successor agencies are not required to immediately dispose of their properties but are limited in terms of what they can do with the retained properties. Permissible uses include: sale of the property, use of the property to fill an enforceable obligation, retention of the property for future redevelopment, and retention of the property for governmental use. These plans must be filed by successor agencies within six months of receiving a finding of completion, and the DOF will review these plans as submitted on a rolling basis. The Successor Agency submitted its Long Range Property Management Plan on November 7, A revised Long Range Property Management Plan was submitted on May 20, 2014, and was approved by the DOF on June 2, THE CAMARILLO CORRIDOR PROJECT The Redevelopment Plan for the Camarillo Corridor Project Area (the Project Area ) was adopted on June 19, 1996 by Ordinance No. 855 of the City, and was amended in February, 2008 to extend various time limitations in the Redevelopment Plan. The Project Area encompasses 1,019 acres located in the City of Camarillo in Ventura County. The Project Area generally includes properties within the Ventura Boulevard commercial corridor (generally between Camarillo Town Center and Lewis Road), the industrial/ manufacturing district located north of Pleasant Valley Road, the Daily Drive retail commercial corridor (between Lewis Road and Las Posas Road), the Arneill Road commercial corridor (between Fiesta Avenue and the Ventura Freeway), and the industrial district along Mission Oaks Boulevard and Lewis Road. A map highlighting the Project Area is shown on the following page. -31-

38 CAMARILLO CORRIDOR REDEVELOPMENT PROJECT AREA -32-

39 Redevelopment Plan Provisions of the Redevelopment Law and the Redevelopment Plan establish various time limits for undertaking redevelopment activities and for repaying debt incurred to finance redevelopment projects. These time limits for the Project Area, as amended and currently in effect, are set forth in the table below. TABLE 1 CAMARILLO CORRIDOR PROJECT Redevelopment Plan Limitations Last Date to Incur Indebtedness: (1) June 19, 2016 Plan Life: June 19, 2028 Last Date to Collect Tax Increment: June 19, 2043 Limit on Outstanding Bonded Indebtedness: $151,877,460 (2) (1) Certain debt to be repaid from housing set-aside revenues may be incurred after such date. (2) The Redevelopment Plan provides that the limit on outstanding bonded indebtedness, which initially was $100,000,000 when the Redevelopment Plan was adopted, is subject to adjustment annually by changes in the Consumer Price Index. The amount shown is as adjusted through Source: Fiscal Consultant. The Fiscal Consultant advises in the Fiscal Consultant s Report that it is unclear whether the adopted limitations remain in effect, given the dissolution of redevelopment agencies. The conservative assumption is that the limitations do remain in effect. In a letter dated April 2, 2014, the DOF stated that it considers limitations on the amount of tax increment revenue collected no longer applicable, but the letter made no mention of other time and financial limitations established in former redevelopment agencies project area plans, such as bonded indebtedness limit or time limit to collect tax increment. Furthermore, county auditorcontrollers ultimately determine whether to apply time and financial limitations; the DOF s authority allows them to only provide recommendations to county auditor-controllers on this matter. The Redevelopment Plan does not have a limit for the amount of tax increment revenue that may be received by the Successor Agency. See APPENDIX G FISCAL CONSULTANT S REPORT for a more detailed analysis of the cumulative tax increment limit. -33-

40 Land Use The Camarillo Corridor Project is comprised primarily of commercial, industrial and residential land uses, and consists of approximately 1,019 acres (roughly 8% of the total area of the City). Designated land use in the Camarillo Corridor Project for fiscal year is set forth in the following table. TABLE 2 CAMARILLO CORRIDOR PROJECT Land Use Fiscal Year Land Use Number of Parcels 1 % of Total Taxable Parcels Secured Assessed Value 2 % of Project Area FY Secured Assessed Value Commercial % $ 707,174, % Industrial ,893, Residential ,956, Total Vacant ,605, Commercial ,965, Industrial ,565, Residential ,073, Miscellaneous ,099, Agriculture ,134, Institutional , Public Utility , Total % $1,033,899, % 1 The analysis excludes 48 government-owned parcels, 5 parcels used for railways, and 4 parcels used for telephone utilities, all of which are non-taxable and thus have no assessed value. 2 Total secured value amounts provided is net of all exemptions except for homeowners' exemptions. 3 Includes offices, medical/dental facilities and privately owned schools. 4 Includes parcels used for parking lots and parking garages, public right of way and mixed use properties (retail/residential). 5 Includes religious and fraternal organization uses that are taxable. Source: County of Ventura Equalized Property Tax Roll, as reported by the Fiscal Consultant. -34-

41 Historical Assessed Values The following table sets forth the assessed value history of the Camarillo Corridor Project. TABLE 3 CAMARILLO CORRIDOR PROJECT Historical Assessed Values Fiscal Years through Fiscal Year Assessed Value % Annual Change $ 845,083, ,855, % ,065,818, ,103,242, ,169,001, ,151,787, ,180,925, ,152,615, ,163,489, $1,183,256, Source: County of Ventura Auditor-Controller, as reported by the Fiscal Consultant. -35-

42 Historical Taxable Values and Tax Increment Revenues The following table sets forth historical taxable values and tax increment revenues for the Camarillo Corridor Project. TABLE 4 CAMARILLO CORRIDOR PROJECT Historical Taxable Values and Tax Revenues Fiscal Years through Secured 1 $979,964,467 $986,950,228 $1,019,076,742 $995,220,315 $1,013,040,560 $1,033,899,726 Unsecured 189,036, ,837, ,849, ,395, ,448, ,356,553 Total Assessed Value 1,169,001,314 1,151,787,678 1,180,925,804 1,152,615,433 1,163,489,090 1,183,256,279 Less: Base Year 2 (472,066,316) (472,066,316) (472,066,316) (472,066,316) (472,066,316) (472,066,316) Incremental Assessed Value $696,934,998 $679,721,362 $708,859,488 $680,549,117 $691,422,774 $711,189,963 Tax Levy Rate 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Gross Estimated Revenue $6,969,350 $6,797,214 $7,088,595 $6,805,491 $6,914,228 $7,111,900 Gross Actual Revenue $6,639,159 $7,492,218 $6,770,514 6 $6,543,159 $7,158,057 N/A Supplemental Revenue 1,449, , ,240 (355,920) 108,728 N/A Less: County Admin Fee (114,834) (102,017) (90,062) (102,622) (110,125) N/A Less: Subordinated Pass-throughs 3 (1,705,206) (1,924,713) (1,630,385) (1,926,501) (2,001,174) N/A Net Actual Revenue 4 $6,268,392 $5,996,651 $5,274,308 $4,158,116 $5,155,487 N/A % of Gross Estimated vs. Actuals 5 95% 110% 96% 96% 104% N/A 1 Secured values are net of non-homeowner exemptions and inclusive of $466,424 in public utility value. 2 In 2007, the Project Area's base year value decreased from $472,197,182 to $472,066,316 as a result of the removal of railroad unitatary property from certain TRAs per Assembly Bill The pass-through payments are subordinate to debt service. 4 Prior to dissolution, amounts shown were allocated to the Camarillo Corridor Project. Post dissolution, amounts are deposited into the Redevelopment Property Tax Trust Fund (RPTTF). 5 Although the Project Area is paid 100% of their levy, gross actual revenue is not equal to 1% of increment assessed value most fiscal years due to roll corrections and supplemental revenue. 6 Amount is not net of July 2012 AB 1484 tax increment true-up payment ($932,115). Sources: City of Camarillo and the Ventura County Auditor-Controller, as reported by the Fiscal Consultant. -36-

43 Largest Taxpayers The ten largest taxpayers in the Camarillo Corridor Project according to the assessed valuations are shown below. Number of Parcels TABLE 5 CAMARILLO CORRIDOR PROJECT Ten Largest Property Taxpayers Fiscal Year Total Secured Assessed Value Total Unsecured Assessed Value % of Total Project Area FY Assessed Value % of Project FY Incremental Assessed Value Total Assessed Taxpayer Land Use(s) Value Chelsea Property Group 1 6 Commercial $271,039,020 $135,800 $271,174, % 38.13% 3175 Mission Oaks Blvd LLC 2, 5 4 Industrial 60,782,589 97,500 60,880, MF Daily Corporation 3, 5 14 Commercial 56,581,775 1,214,200 57,795, ESJ Centers LLC 4 10 Commercial 41,256,809 1,917,900 43,174, WNG Camarillo 165 LLC 1 Multi-Family 39,685, ,685, Residential Sphear Investments LLC 5 2 Industrial, Residential 30,622,034 22,000 30,644, John P Scripps Newspapers 5 1 Industrial 17,691,648 7,753,100 25,444, Edwards Theatre 5 2 Commercial, Parking 16,630, ,630, Lot/Garage Palmetto Hospitality 1 Commercial 15,852, ,500 16,471, Summit Hotel Properties 2 Commercial, Parking 16,129, ,129, Lot/Garage Totals 43 $578,031, % 81.28% Project Area FY Value $1,183,256,279 Project Area FY Incremental Assessed Value $711,189,963 1 Listed as CHELSEA CGA REALTY PART and CPG PARTNERS LP. 2 Also listed as 3001 MISSION OAKS BLVD LLC and 3233 MISSION OAKS BLVD LLC. 3 Listed as LAS POSAS PLAZA LP, CAMARILLO FINANCIAL PLAZA, DAILY PLAZA LLC, LAS POSAS PLAZA LP LESSOR, and PICKWICK FINANCIAL LLC. 4 Also listed as ESJ CENTERS LLC LESSOR, ESJ CENTERS LLC LESSORS and ESJ CENTERS LLC LESS dor ET AL. 5 These taxpayers have filed appeals of their assessed values. See THE CAMARILLO CORRIDOR PROJECT Proposition 8 Reassessments and Assessment Appeals. Note: Total values are exclusive of non-homeowner exemptions. (None of the top 10 taxpayers are currently subject to an exemption.) Source: County of Ventura Equalized Property Tax Roll; as reported by the Fiscal Consultant. Some of the taxpayers listed in the table above own parcels that are wholly or partially leased to tenants. Parcels owned by Chelsea GCA Realty Partnership include the 87 acre Camarillo Premium Outlets shopping center, which is approximately 99% leased and is currently occupied by approximately 155 different tenants. Parcels owned by ESJ Centers LLC include the Camarillo Town Center shopping center with multiple tenants anchored by Target, Home Depot and Staples. Las Posas Plaza LP owns parcels in the Las Posas Plaza shopping center anchored by Ralph s. Additional information regarding the ten largest property taxpayers, as reported in the Fiscal Consultant s Report, is set forth below. Chelsea Property Group is the taxpayer for six commercially zoned parcels within the Project Area. The 87-acre Camarillo Premium Outlets are located on these parcels, which have a total FY assessed value of over $271 million. The Camarillo Premium Outlets first opened in February 1995 and has been expanded six times, including in 2009, when the 242,

44 square foot addition known as Camarillo Promenade was completed. The property currently includes about 674,000 square feet of retail space and 160 stores, including Neiman Marcus Last Call, Saks Fifth Avenue Off 5th, and Barneys New York (please see the Appendix to the Fiscal Consultant s Report in Appendix G for a complete list of current tenants). Figure 2 below Table 6 in the Fiscal Consultant s Report provides a summary of the remaining lease terms of the Camarillo Premium Outlets; with over sixty percent (60%) of the current tenants having a remaining lease term of over four years, as reported by Chelsea Property Group. According to information in the Fiscal Consultant s Report, Chelsea Property Group is a real estate investment trust headquartered in New Jersey and is the leading owner, developer, and manager of Premium Outlet centers in the U.S. and Asia. In 2004, Chelsea Property Group was acquired by Simon Property Group, the largest real estate investment trust and shopping mall owner in the U.S. and a Standard & Poor s 500 company. Since then, Chelsea Property Group has operated as a subsidiary of Simon Property Group. Table 6 in the Fiscal Consultant s Report sets forth the total assessed value of the parcels in the Project Area owned by Chelsea Property Group since fiscal year Since fiscal year , the value of the parcels has increased each year. The fiscal year total assessed value of the parcels is 35.8% higher than the total assessed value in fiscal year As of September 10, 2014, Chelsea Property Group has no outstanding appeals of the assessed values of its parcels in the Project Area Mission Oaks Blvd LLC, 3001 Mission Oaks Blvd LLC, and 3233 Mission Oaks Blvd LLC are each affiliated with Dune Real Estate Partners, a New York City-based real estate investment firm. Dune Real Estate Partners purchased the four parcels in the Project Area in June The total assessed value of the parcels is almost $61 million. The land use of each of the parcels is industrial. MF Daily Corporation owns 14 commercially-zoned parcels within the Project Area with a total assessed value of nearly $58 million. Las Posas Plaza, a shopping center with over 40 retail stores and a few medical offices, is located on many of these parcels. Las Posas Plaza is anchored by Ralph s; other tenants include Wells Fargo, Starbucks, JPMorgan Chase and Taco Bell. MF Daily Corporation is a real estate development firm based in the City that has owned commercial and agricultural properties throughout the County since ESJ Centers LLC owns 10 parcels in the Project Area with commercial land uses. The Camarillo Town Center, a shopping center anchored by Target, Home Depot and Staples, is located on a number of these parcels. The total assessed value of the 10 properties is about $43 million. WNG Camarillo 165 LLC is the owner of one multi-family residential property with an assessed value of nearly $40 million. The property, called Allure at Camarillo Apartment Homes, includes one and two bedroom apartment units, as well as community amenities, such as a swimming pool and fitness center. Sphear Investments LLC owns two parcels in the Project Area with a total assessed value of approximately $31 million. A gas station is located on one parcel, and a small shopping center is located on the second parcel. John P Scripps Newspapers, a newspaper chain founded in 1928 and headquartered in San Diego, California owns one parcel in the Project Area. Since 1986, the Company has operated as a subsidiary of the E.W. Scripps Company, which owns 21 local television stations and daily newspapers in 13 markets throughout the United States. The John P Scripps Newspapers property is a mixed-use industrial complex with an office building, assessed at over $25 million. -38-

45 Edwards Theatre owns two parcels in the Project Area with a total assessed value of almost $17 million. A movie theater is located on one parcel, and the parking lot for the movie theater is located on the second parcel. Edwards Theatre is one of three main theater brands operated by Regal Entertainment Group, which is headquartered in Knoxville, Tennessee and operates hundreds of movie theaters in the United States. Palmetto Hospitality owns one parcel on which a Marriott Residence Inn hotel is located. The assessed value of the property is over $16 million. Palmetto Hospitality operates as a subsidiary of OTO Hospitality Development Company, which currently manages 33 upscale, mid-scale and extended stay properties throughout the U.S. Summit Hotel Properties is the owner of two parcels within the Project Area. A hotel operated by Hampton Inn & Suites is located on one parcel, and the parking lot for the hotel is located on the other parcel. The assessed value of both parcels is slightly more than $16 million. Summit Hospitality Properties is a self-managed hotel investment company with a current portfolio of 90 hotels located in 22 states. Recent Real Property Sales The Fiscal Consultant s Report includes a Table 8 which describes four real property sales of property in the Redevelopment Project that occurred after the County Assessor s January 1, 2014 lien date for the County s equalized assessment roll, so that the change in assessed value as a consequence of such sales was not included in the County Assessor s assessed valuation for the Redevelopment Project for fiscal year The Fiscal Consultant s Report indicates that such sales will result in a decrease in secured assessed valuation for the property in the Redevelopment Project for fiscal year of about $1,100,000, or about 0.107% of the aggregate assessed value for the property in the Redevelopment Project. Construction Construction Activity. Table 9 in the Fiscal Consultant s Report presents a summary of building permit activity in the Project Area from January 1, 2014 through July 15, The Fiscal Consultant observes that construction during this time period is expected to generate new secured assessed value for the taxable property in the Redevelopment Project in the amount of approximately $1.6 million, or 0.157% of the aggregate fiscal year secured value for the Redevelopment Project; which increased value is expected to be reflected on the County s fiscal year assessment roll. New Development. There are several proposed projects within the Project Area that may add value and be captured in future assessment rolls. Potential value added to future assessment rolls from the proposed developments has not been included in the Tax Increment Projections of the Fiscal Consultant due to market uncertainty, but information on the proposed developments is set forth in the Fiscal Consultant s Report in Appendix G under the heading Tax Revenue Projections Methodology & General Assumptions Growth Assumptions Value From New Construction. Proposition 8 Reassessments and Assessment Appeals California Proposition 8 was a constitutional amendment to Proposition 13 that allows a temporary reduction in assessed valuation when a property suffers a decline in value. Proposition 8 requires the Assessor to enroll the lower of either: (a) the taxable value (market value of the property when it was acquired, plus a consumer price index adjustment of up to 2% per year and the value of any new construction); or (b) the market value as of the annual January 1 lien date. Reductions in assessed valuation under Proposition 8 are temporary and are -39-

46 reviewed annually until the Proposition 13 base year value is again lower than market value, at which point the Proposition 13 base year value is reinstated. Reductions in assessed valuation pursuant to Proposition 8 may be initiated by the Assessor or result from owner initiated assessment appeals. As of the date of the Fiscal Consultant s Report, the County Assessor s office did not have a report that provided the number of Assessor-initiated Proposition 8 reductions applied each year, but the County Clerk of the Appeals Board does maintain records regarding Decline-in-Value applications filed by property owners who believe that their taxable valuation is above market valuation. Table 9 in the Fiscal Consultant s Report provides details regarding the Decline-in-Value applications that were filed for the through tax years. As shown in Table 9 in the Fiscal Consultant s Report, of the 143 appeals filed between FY and , 78 (54.5%) appeals were withdrawn or denied and 34 (23.8%) appeals resulted in a stipulation or reduction in a total amount of approximately $60.3 million. As of September 10, 2014, 31 (21.7%) appeals are pending (all of which are for the roll) and could result in a total reduction of $58.1 million, approximately 5.0% of the area s FY assessed value, if 100% of these applicants are granted 100% of the requested reduction value. However, the Fiscal Consultant notes that in the last four years, only 30.4% of appeals resulted in reductions of value. Additionally, of the total requested reduction in assessment appeals over the past four years, 9.68% of the requested reduction value was granted to the applicant. If this historical reduction rate is applied to the pending reduction amount, the projected reduction of pending appeals totals about $5.6 million, or 0.48% of the area s FY assessed value. See APPENDIX G FISCAL CONSULTANT S REPORT for a more detailed analysis of the Proposition 8 Reassessments and the assessment appeals. PROJECTED AVAILABLE TAX REVENUES AND ESTIMATED DEBT SERVICE COVERAGE The table below shows available net tax increment from the Redevelopment Project, assumes a 1.5% growth rate for fiscal year , and a 2% annual growth for each fiscal year thereafter, and includes projected debt service on the Bonds. Tax Revenues presented in the projection represent the amount available for debt service computed as gross Redevelopment Property Tax Trust Fund Revenue less (a) the County s property tax collection costs and administrative expenses authorized under the Dissolution Act; and (b) the scheduled debt service on the Senior Obligations and the 2006 Housing Bonds. The projection commences with the fiscal year and incorporates the valuation assumptions made in the Fiscal Consultant s Report. -40-

47 TABLE 6 CAMARILLO CORRIDOR PROJECT Projection of Tax Revenues for Debt Service and Debt Service Coverage Estimated Gross Tax Increment Fiscal Year Total Assessed Valuation (1) Incremental Valuation (2) 1% $1,183,256,279 $ 711,189,963 $ 7,111,900 County Admin Fee 1.5% Net Tax Revenue Available for Debt Service (3) Priority Payments (4) Bond Debt Service Total Debt Service Debt Service Coverage (5) $106,678 $ 7,005,221 $2,707,490 $1,201,106 $3,908, % ,198,757, ,691,463 7,266, ,004 7,157,911 2,708,626 1,196,925 3,905, ,219,736, ,670,159 7,476, ,151 7,364,551 2,706,619 1,199,325 3,905, ,241,134, ,068,429 7,690, ,360 7,575,324 2,707,280 1,195,925 3,903, ,262,960, ,894,664 7,908, ,634 7,790,312 2,703,013 1,197,175 3,900, ,285,223, ,157,424 8,131, ,974 8,009,601 2,706,419 1,197,175 3,903, ,307,931, ,865,439 8,358, ,380 8,233,275 2,706,699 1,195,925 3,902, ,331,093, ,027,615 8,590, ,854 8,461,422 2,706,738 1,198,425 3,905, ,354,719, ,653,034 8,826, ,398 8,694,132 2,712,754 1,194,425 3,907, ,378,817, ,750,961 9,067, ,013 8,931,497 2,701,975 1,199,175 3,901, ,403,397, ,330,847 9,313, ,700 9,173,609 2,704,355 1,197,175 3,901, ,428,468, ,402,331 9,564, ,460 9,420,563 2,709,130 1,198,675 3,907, ,454,041, ,975,244 9,819, ,296 9,672,456 2,710,146 1,193,425 3,903, ,480,125,932 1,008,059,616 10,080, ,209 9,929,387 2,707,313 1,196,675 3,903, ,506,731,991 1,034,665,675 10,346, ,200 10,191,457 2,705,888 1,194,550 3,900, ,533,870,171 1,061,803,855 10,618, ,271 10,458,768 2,701,233 1,199,550 3,900, ,561,551,115 1,089,484,799 10,894, ,423 10,731,425 2,701,796 1,197,300 3,899, ,589,785,678 1,117,719,362 11,177, ,658 11,009,536 2,708,453 1,198,050 3,906, ,618,584,932 1,146,518,616 11,465, ,978 11,293,208 2,710,704 1,196,550 3,907, ,647,960,171 1,175,893,855 11,758, ,384 11,582,554 2,697,654 1,195,363 3,893, ,677,922,915 1,205,856,599 12,058, ,878 11,877,688 2,713,688 1,196,550 3,910, ,708,484,914 1,236,418,598 12,364, ,463 12,178,723 2,702,110 1,199,850 3,901, Source: Fiscal Consultant, the Financial Advisor and the Underwriter. (1) Secured assessed values are assumed to increase by 1.5% for fiscal year , and by 2% each fiscal year thereafter, and no increase in unsecured assessed values or in State assessed property values is assumed. (2) Base year valuation was $472,066,316. (3) The amounts shown as Net Tax Revenue Available for Debt Service are not net of pass-through payments, which are subordinate to the debt service. See SECURITY FOR THE BONDS Pledged Tax Revenues Statutory Pass-Through Payments. (4) Includes scheduled debt service on the Senior Obligations and the 2006 Housing Bonds. See SECURITY FOR THE BONDS Pledged Tax Revenues. (5) Net Tax Revenue Available for Debt Service divided by Total Debt Service. RISK FACTORS The following information should be considered by prospective investors in evaluating the investment quality of the Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to investing in the Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. The various legal opinions to be delivered concurrently with the issuance of the Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by State and federal laws, rulings and decisions affecting remedies, and by bankruptcy, reorganization or other laws of general application affecting the enforcement of creditors rights, including equitable principles. Recognized Obligation Payment Schedule The Dissolution Act provides that only those payments listed in a Recognized Obligation Payment Schedule may be made by a successor agency from the funds specified in the Recognized Obligation Payment Schedule. Pursuant to section of the Dissolution Act, -41-

48 not less than 90-days prior to each January 2 and June 1, the Successor Agency shall submit to the Oversight Board and the DOF, a Recognized Obligation Payment Schedule. For each Semiannual Period, the Dissolution Act requires each successor agency to prepare and approve, and submit to the successor agency s oversight board and the DOF for approval, a Recognized Obligation Payment Schedule pursuant to which enforceable obligations (as defined in the Dissolution Act) of the successor agency are listed, together with the source of funds to be used to pay for each enforceable obligation. Consequently, Tax Revenues will not be withdrawn from the Redevelopment Property Tax Trust Fund by the county auditor-controller and remitted to the Successor Agency without a duly approved and effective Recognized Obligation Payment Schedule to pay debt service on the Bonds and to pay other enforceable obligations. See SECURITY FOR THE BONDS Recognized Obligation Payment Schedule. In the event the Successor Agency were to fail to file a Recognized Obligation Payment Schedule with respect to a six-month period and, if applicable, the following half of the calendar year, the availability of Tax Revenues to the Successor Agency could be adversely affected for such period. See SECURITY FOR THE BONDS Recognized Obligation Payment Schedules. If a successor agency does not submit a Recognized Obligation Payment Schedule within five business days of the date upon which the Recognized Obligation Payment Schedule is to be used to determine the amount of property tax allocations and the DOF does not provide a notice to the county auditor-controller to withhold funds from distribution to taxing entities, amounts in the Redevelopment Property Tax Trust Fund for such six-month period would be distributed to taxing entities. For a description of the covenants made by the Successor Agency in the Indenture relating to the obligation to submit Recognized Obligation Payment Schedules on a timely basis, and the Successor Agency s history of submissions of Recognized Obligation Payment Schedules, see SECURITY FOR THE BONDS Recognized Obligation Payment Schedules. AB 1484 also adds new provisions to the Dissolution Act implementing certain penalties in the event a successor agency does not timely submit a Recognized Obligation Payment Schedule for a six-month period. Specifically, a Recognized Obligation Payment Schedule must be submitted by the Successor Agency to the oversight board, to the county administrative officer, the county auditor-controller, the DOF, and the State Controller no later than 90 days before the date of the next January 2 or June 1 property tax distribution with respect to each subsequent six-month period. If a successor agency does not submit a Recognized Obligation Payment Schedule by such deadlines, the city or county that established the redevelopment agency will be subject to a civil penalty equal to $10,000 per day for every day the schedule is not submitted to the DOF. Additionally, a successor agency s administrative cost allowance is reduced by 25% if the successor agency does not submit an oversight board-approved Recognized Obligation Payment Schedule by the 80th day before the date of the next January 2 or June 1 property tax distribution, as applicable, with respect to the Recognized Obligation Payment Schedule for subsequent six-month periods. Challenges to Dissolution Act Several successor agencies, cities and other entities have filed judicial actions challenging the legality of various provisions of the Dissolution Act. One such challenge is an action filed on August 1, 2012, by Syncora Guarantee Inc. and Syncora Capital Assurance Inc. (collectively, Syncora ) against the State, the State Controller, the State Director of Finance, and the Auditor-Controller of San Bernardino County on his own behalf and as the representative of all other County Auditors in the State (Superior Court of the State of California, County of Sacramento, Case No ). Syncora are monoline financial guaranty insurers domiciled in the State of New York, and as such, provide credit enhancement on bonds issued by state and local governments and do not sell other kinds of insurance such as life, health, or -42-

49 property insurance. Syncora provided bond insurance and other related insurance policies for bonds issued by former California redevelopment agencies. The complaint alleged that the Dissolution Act, and specifically the Redistribution Provisions thereof (i.e., California Health and Safety Code sections 34172(d), 34174, 34177(d), 34183(a)(4), and 34188) violate the contract clauses of the United States and California Constitutions (U.S. Const. art. 1, 10, cl.1; Cal. Const. art. 1, 9) because they unconstitutionally impair the contracts among the former redevelopment agencies, bondholders and Syncora. The complaint also alleged that the Redistribution Provisions violate the Takings Clauses of the United States and California Constitutions (U.S. Const. amend. V; Cal Const. art. 1 19) because they unconstitutionally take and appropriate bondholders and Syncora s contractual right to critical security mechanisms without just compensation. After hearing by the Sacramento County Superior Court on May 3, 2013, the Superior Court ruled that Syncora s constitutional claims based on contractual impairment were premature. The Superior Court also held that Syncora s takings claims, to the extent based on the same arguments, were also premature. Pursuant to a Judgment stipulated to by the parties, the Superior Court on October 3, 2013, entered its order dismissing the action. The Judgment, however, provides that Syncora preserves its rights to reassert its challenges to the Dissolution Act in the future. The Successor Agency does not guarantee that any reassertion of challenges by Syncora or that the final results of any of the judicial actions brought by others challenging the Dissolution Act will not result in an outcome that may have a material adverse effect on the Successor Agency s ability to timely pay debt service on the Bonds. Concentration of Ownership The top ten largest secured property taxpayers in the Project Area account for approximately 49% of the total secured and unsecured assessed value (and 81% of the incremental increase in assessed value over the base year value) of the Project Area for fiscal year , including one taxpayer that represents approximately 23% of the total secured and unsecured assessed value. See the table under the heading THE CAMARILLO CORRIDOR PROJECT Largest Taxpayers herein. Concentration of ownership presents a risk in that if one or more of the largest property owners were to relocate their business out of the Project Area, or were to default in the payment of their property taxes, or were to successfully appeal the tax assessments on property within the Project Area, a substantial decline in Pledged Tax Revenues could result. Reduction in Taxable Value Pledged Tax Revenues allocated to the Redevelopment Property Trust Fund and thereby available to pay principal of and interest on the Bonds are determined by the amount of incremental taxable value in the Redevelopment Project and the current rate or rates at which property in the Redevelopment Project is taxed. The reduction of taxable values of property in the Redevelopment Project caused by economic factors beyond the Successor Agency s control, such as relocation out of the Redevelopment Project by one or more major property owners, sale of property to a non-profit corporation exempt from property taxation, or the complete or partial destruction of such property caused by, among other eventualities, earthquake or other natural disaster, could cause a reduction in the tax increment available to pay debt service on the Bonds. Such reduction of tax increment available to pay debt service on the Bonds could have an adverse effect on the Successor Agency s ability to make timely payments of principal of and interest on the Bonds; this risk could be increased by the significant concentration of property ownership in the Redevelopment Project. -43-

50 As described in greater detail under the heading PROPERTY TAXATION IN CALIFORNIA Article XIIIA of the State Constitution, Article XIIIA provides that the full cash value base of real property used in determining taxable value may be adjusted from year to year to reflect the inflation rate, not to exceed a two percent increase for any given year, or may be reduced to reflect a reduction in the consumer price index, comparable local data or any reduction in the event of declining property value caused by damage, destruction or other factors (as described above). Such measure is computed on a calendar year basis. Any resulting reduction in the full cash value base over the term of the Bonds could reduce the Pledged Tax Revenues available to pay debt service on the Bonds. In addition to the other limitations on, and required application under the Dissolution Act of property tax revenues on deposit in the Redevelopment Property Tax Trust Fund, the State electorate or Legislature could adopt a constitutional or legislative property tax reduction with the effect of reducing Tax Revenues allocated to the Redevelopment Property Tax Trust Fund and available to the Successor Agency. Although the federal and State Constitutions include clauses generally prohibiting the Legislature s impairment of contracts, there are also recognized exceptions to these prohibitions. There is no assurance that the State electorate or Legislature will not at some future time approve additional limitations that could reduce the tax increment available to pay debt service on the Bonds and adversely affect the source of repayment and security of the Bonds. Risks to Real Estate Market; Commercial Activity The Successor Agency s ability to make payments on the Bonds will be dependent upon the economic strength of the Redevelopment Project. A significant amount of the tax revenues from the Redevelopment Project are attributable to parcels improved with shopping malls and related commercial uses. See THE CAMARILLO CORRIDOR PROJECT Land Use. The general economy of the Redevelopment Project will be subject to all of the risks generally associated with urban, commercial real estate markets and related commercial sales activities of the businesses located in the Redevelopment Project. Real estate prices and commercial activity may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in development costs and by other similar factors. Further, real estate development within the Redevelopment Project could be adversely affected by limitations of infrastructure or future governmental policies, including governmental policies to restrict or control development. In addition, if there is a significant decline in the general economy of the Redevelopment Project, the owners of property within the Redevelopment Project may be less able or less willing to make timely payments of property taxes or may petition for reduced assessed valuation causing a delay or interruption in the receipt of Pledged Tax Revenues by the Successor Agency from the Redevelopment Project. See PROJECTED AVAILABLE NET TAX INCREMENT AND ESTIMATED DEBT SERVICE COVERAGE for a description of the debt service coverage on the Bonds. Reduction in Inflationary Rate As described in greater detail below, Article XIIIA of the State Constitution provides that the full cash value of real property used in determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data. Such measure is computed on a calendar year basis. Because Article XIIIA limits inflationary assessed value adjustments to the lesser of the actual inflationary rate or 2%, there have been years in which the assessed values were adjusted by actual inflationary rates, which were less than 2%. -44-

51 Since Article XIIIA was approved, the annual adjustment for inflation has fallen below the 2% limitation several times; in fiscal year , the inflationary value adjustment was negative for the first time at %. In fiscal year , the inflationary value adjustment was 0.753%. For fiscal years and , the inflationary value adjustment is 2.00%, which is the maximum permissible increase under Article XIIIA. The fiscal year inflationary value adjustment is 0.454%. The Successor Agency is unable to predict if any adjustments to the full cash value of real property within the Redevelopment Project, whether an increase or a reduction, will be realized in the future. Development Risks The general economy of a redevelopment project area will be subject to all the risks generally associated with real estate development. Projected development within a redevelopment project area may be subject to unexpected delays, disruptions and changes. Real estate development operations may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in development costs and by other similar factors. Further, real estate development operations within a redevelopment project area could be adversely affected by future governmental policies, including governmental policies to restrict or control development. If projected development in a redevelopment project area is delayed or halted, the economy of the redevelopment project area could be affected. If such events lead to a decline in assessed values they could cause a reduction in incremental property tax revenues. The Successor Agency believes that a decline in development activity in the Redevelopment Project is unlikely to adversely impact its ability to pay debt service on the Bonds in light of the debt service coverage provided by fiscal year Tax Revenues. See PROJECTED AVAILABLE NET TAX INCREMENT AND ESTIMATED DEBT SERVICE COVERAGE. Assessment Appeals Property taxable values may be reduced as a result of Proposition 8, which reduces the assessed value of property, or of a successful appeal of the taxable value determined by the County Assessor. An appeal may result in a reduction to the County Assessor s original taxable value and a tax refund to the applicant property owner. A reduction in taxable values within the respective project area and the refund of taxes which may arise out of successful appeals by property owners will affect the amount of Pledged Tax Revenues and, potentially, Revenues under the Indenture. The Successor Agency has in the past experienced reductions in its tax increment revenues as a result of assessment appeals. The actual impact to tax increment is dependent upon the actual revised value of assessments resulting from values determined by the County Assessment Appeals Board or through litigation and the ultimate timing of successful appeals. For a discussion of historical assessment appeals in the Redevelopment Project and summary information regarding pending and resolved assessment appeals for the Successor Agency, see APPENDIX G FISCAL CONSULTANT S REPORT. Levy and Collection of Taxes The Successor Agency has no independent power to levy or collect property taxes. Any reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the tax increment available to pay debt service on the Bonds. -45-

52 Although delinquencies in the payment of property taxes by the owners of land in the Redevelopment Project, and the impact of bankruptcy proceedings on the ability of taxing agencies to collect property taxes, could have an adverse effect on the Successor Agency s ability to make timely payments on the Bonds, the Successor Agency believes any such adverse impact is unlikely in light of the debt service coverage provided by fiscal year net tax increment. See PROJECTED AVAILABLE NET TAX INCREMENT AND ESTIMATED DEBT SERVICE COVERAGE for a description of the debt service coverage on the Bonds. Bankruptcy and Foreclosure The payment of the property taxes from which Pledged Tax Revenues are derived and the ability of the County to foreclose the lien of a delinquent unpaid tax may be limited by bankruptcy, insolvency, or other laws generally affecting creditors rights or by the laws of the State relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases. Although bankruptcy proceedings would not cause the liens to become extinguished, bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings. Although such delay would increase the possibility of delinquent tax installments not being paid in full and thereby increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds, the Successor Agency believes any such adverse impact is unlikely in light of the debt service coverage provided by fiscal year net tax increment. See PROJECTED AVAILABLE NET TAX INCREMENT AND ESTIMATED DEBT SERVICE COVERAGE for a description of the debt service coverage on the Bonds. Estimated Revenues In estimating that net tax increment will be sufficient to pay debt service on the Bonds, the Successor Agency has made certain assumptions with regard to present and future assessed valuation in the Redevelopment Project, future tax rates and percentage of taxes collected. The Successor Agency believes these assumptions to be reasonable, but there is no assurance these assumptions will be realized and to the extent that the assessed valuation and the tax rates are less than expected, the net tax increment available to pay debt service on the Bonds will be less than those projected and such reduced net tax increment may be insufficient to provide for the payment of principal of, premium (if any) and interest on the Bonds. See PROJECTED AVAILABLE NET TAX INCREMENT AND ESTIMATED DEBT SERVICE COVERAGE. Hazardous Substances An additional environmental condition that may result in the reduction in the assessed value of property would be the discovery of a hazardous substance that would limit the beneficial use of taxable property within the Redevelopment Project. In general, the owners and operators of property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner or operator may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the Redevelopment Project be affected by a hazardous substance, could be to reduce the marketability and value of the property by the costs of remedying the condition. -46-

53 Natural Disasters The value of the property in the Redevelopment Project in the future can be adversely affected by a variety of additional factors, particularly those which may affect infrastructure and other public improvements and private improvements on property and the continued habitability and enjoyment of such private improvements. Such additional factors include, without limitation, geologic conditions such as earthquakes, topographic conditions such as earth movements, landslides and floods and climatic conditions such as droughts. In the event that one or more of such conditions occur, such occurrence could cause damages of varying seriousness to the land and improvements and the value of property in the Redevelopment Project could be diminished in the aftermath of such events. A substantial reduction of the value of such properties and could affect the ability or willingness of the property owners to pay the property taxes. The State, including the City, is subject to periodic earthquake activity. In fact, the City is located in a moderate to high risk seismic environment. The nearest active fault is the San Andreas fault located approximately 35 miles from the City. The City has adopted the Uniform Building Code and the Uniform Building Code Standards adopted by the State of California. All new construction is required to comply with the highest earthquake resistance design standard presently in use in California. The Redevelopment Project also is subject to minimal flood risk. Portions of the Redevelopment Project are within the Shaded X Flood Zone inundation classification. These areas are not within Special Flood Hazard Areas. Small portions of the Redevelopment Project near the Pickwick area are within Flood Zone AO, Special Flood Hazard Areas. If an earthquake or other disaster were to substantially damage or destroy taxable property within the Redevelopment Project, the assessed valuation of such property could be reduced. There is no assurance that property owners within the Redevelopment Project area maintain earthquake or disaster insurance or that any such insurance would be sufficient in the event of an earthquake or other disaster. Further, there is no assurance that federal, State or other emergency funds will be provided or would be sufficient for reconstruction in the Redevelopment Project in the event of an earthquake or other disaster. A reduction of assessed valuations in the Redevelopment Project could result in a reduction of Pledged Tax Revenues, which could impair the ability of the Successor Agency to make payments of principal of and interest on the Bonds when due. Changes in the Law There can be no assurance that the California electorate will not at some future time adopt initiatives or that the Legislature will not enact legislation that will amend the Dissolution Act, the Redevelopment Law or other laws or the Constitution of the State resulting in a reduction of Pledged Tax Revenues available to pay debt service on the Bonds. Loss of Tax-Exemption As discussed under the caption TAX MATTERS Tax Exemption, interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued, as a result of future acts or omissions of the Successor Agency in violation of its covenants in the Indenture. In addition, current and future legislative proposals, if enacted into law, may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation by, for example, changing the current exclusion or deduction rules to limit the aggregate amount of interest on state and local government bonds that may be treated as tax exempt by individuals. -47-

54 Should such an event of taxability occur, the Bonds are not subject to special redemption and will remain outstanding until maturity or until redeemed under other provisions set forth in the Indenture. Secondary Market There can be no guarantee that there will be a secondary market for the Bonds, or, if a secondary market exists, that the Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances. Tax Exemption TAX MATTERS The Internal Revenue Code of 1986 (the Code ) imposes certain requirements that must be met subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax purposes. Noncompliance with such requirements could cause the interest on the Bonds to be included in the gross income of the owners thereof for federal income tax purposes retroactive to the date of issuance of the Bonds. The Successor Agency has covenanted in the Indenture to maintain the exclusion of the interest on the Bonds from the gross income of the owners thereof for federal income tax purposes. In the opinion of Fulbright & Jaworski LLP, a member of Norton Rose Fulbright, Los Angeles, California, Bond Counsel, under existing statutes, regulations, rulings and court decisions, interest on the Bonds is exempt from personal income taxes of the State of California and, assuming compliance with the covenants mentioned herein, interest on the Bonds is excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax purposes. In the further opinion of Bond Counsel, under existing statutes, regulations, rulings and court decisions, the Bonds are not specified private activity bonds within the meaning of section 57(a)(5) of the Code and, therefore, interest on the Bonds will not be treated as an item of tax preference for purposes of computing the alternative minimum tax imposed by section 55 of the Code. Receipt or accrual of interest on the Bonds owned by a corporation may affect the computation of the alternative minimum taxable income. A corporation s alternative minimum taxable income is the basis on which the alternative minimum tax imposed by section 55 of the Code will be computed. Pursuant to the Indentures and in the Tax Certificate Pertaining to Arbitrage and Other Matters under Sections 103 and of the Internal Revenue Code of 1986 (the Tax Certificate ) to be delivered by the Successor Agency in connection with the issuance of the Bonds, the Successor Agency will make representations relevant to the determination of, and will make certain covenants regarding or affecting, the exclusion of interest on the Bonds from the gross income of the owners thereof for federal income tax purposes. In reaching its opinions described in the immediately preceding paragraph, Bond Counsel will assume the accuracy of such representations and the present and future compliance by the Successor Agency with such covenants. Except as stated in this section above, Bond Counsel will express no opinion as to any federal or state tax consequence of the receipt of interest on, or the ownership or disposition of, -48-

55 the Bonds. Furthermore, Bond Counsel will express no opinion as to any federal, state or local tax law consequence with respect to the Bonds, or the interest thereon, if any action is taken with respect to the Bonds or the proceeds thereof predicated or permitted upon the advice or approval of other counsel. Bond Counsel has not undertaken to advise in the future whether any events after the date of issuance of the Bonds may affect the tax status of interest on the Bonds or the tax consequences of the ownership of the Bonds. Bond Counsel s opinion is not a guarantee of a result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the Successor Agency described above. No ruling has been sought from the Internal Revenue Service (the Service ) with respect to the matters addressed in the opinion of Bond Counsel, and Bond Counsel s opinion is not binding on the Service. The Service has an ongoing program of auditing the tax-exempt status of the interest on municipal obligations. If an audit of the Bonds is commenced, under current procedures the Service is likely to treat the Successor Agency as the taxpayer, and the owners would have no right to participate in the audit process. In responding to or defending an audit of the taxexempt status of the interest on the Bonds, the Successor Agency may have different or conflicting interest from the owners of the Bonds. Public awareness of any future audit of the Bonds could adversely affect the value and liquidity of the Bonds during the pendency of the audit, regardless of its ultimate outcome. Existing law may change to reduce or eliminate the benefit to Bondowners of the exemption of interest on the Bonds from personal income taxation by the State of California or of the exclusion of the interest on the Bonds from the gross income of the owners thereof for federal income tax purposes. Any proposed legislation or administrative action, whether or not taken, could also affect the value and marketability of the Bonds. Prospective purchasers of the Bonds should consult with their own tax advisors with respect to any proposed or future changes in tax law. A copy of the form of opinion of Bond Counsel relating to the Bonds is included in Appendix B. Tax Accounting Treatment of Bond Premium and Original Issue Discount To the extent that a purchaser of a Bond acquires that bond at a price in excess of its stated redemption price at maturity (within the meaning of section 1273(a)(2) of the Code), such excess will constitute bond premium under the Code. Section 171 of the Code, and the Treasury Regulations promulgated thereunder, provide generally that bond premium on a taxexempt obligation must be amortized over the remaining term of the obligation (or a shorter period in the case of certain callable obligations); the amount of premium so amortized will reduce the owner s basis in such obligation for federal income tax purposes, but such amortized premium will not be deductible for federal income tax purposes. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of the obligation. The amount of premium that is amortizable each year by a purchaser is determined by using such purchaser's yield to maturity. The rate and timing of the amortization of the bond premium and the corresponding basis reduction may result in an owner realizing a taxable gain when its Bond is sold or disposed of for an amount equal to or in some circumstances even less than the original cost of the Bond to the owner. The excess, if any, of the stated redemption price at maturity of the Bonds of a maturity over the initial offering price to the public of the Bonds of that maturity is original issue discount. Original issue discount accruing on a Bond is treated as interest excluded from the gross income of the owner thereof for federal income tax purposes and is exempt from -49-

56 California personal income tax to the same extent as would be stated interest on that Bond. Original issue discount on any Bond purchased at such initial offering price and pursuant to such initial offering will accrue on a semiannual basis over the term of the Bond on the basis of a constant yield method and, within each semiannual period, will accrue on a ratable daily basis. The amount of original issue discount on such a Bond accruing during each period is added to the adjusted basis of such Bond to determine taxable gain upon disposition (including sale, redemption or payment on maturity) of such Bond. The Code includes certain provisions relating to the accrual of original issue discount in the case of purchasers of Bonds who purchase such Bonds other than at the initial offering price and pursuant to the initial offering Persons considering the purchase of Bonds with original issue discount or initial bond premium should consult with their own tax advisors with respect to the determination of original issue discount or amortizable bond premium on such Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of such Bonds. Other Tax Consequences Although interest on the Bonds may be exempt from California personal income tax and excluded from the gross income of the owners thereof for federal income tax purposes, an owner s federal, state or local tax liability may be otherwise affected by the ownership or disposition of the Bonds. The nature and extent of these other tax consequences will depend upon the owner s other items of income or deduction. Without limiting the generality of the foregoing, prospective purchasers of the Bonds should be aware that (i) section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds and the Code contains additional limitations on interest deductions applicable to financial institutions that own tax-exempt obligations (such as the Bonds), (ii) with respect to insurance companies subject to the tax imposed by section 831 of the Code, section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15% of the sum of certain items, including interest on the Bonds, (iii) interest on the Bonds earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by section 884 of the Code, (iv) passive investment income, including interest on the Bonds, may be subject to federal income taxation under section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than 25% of the gross receipts of such Subchapter S corporation is passive investment income, (v) section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining the taxability of such benefits, receipts or accruals of interest on the Bonds and (vi) under section 32(i) of the Code, receipt of investment income, including interest on the Bonds, may disqualify the recipient thereof from obtaining the earned income credit. Bond Counsel will express no opinion regarding any such other tax consequences. VERIFICATION OF MATHEMATICAL COMPUTATIONS The Verification Agent will examine the arithmetical accuracy of certain computations included in the schedules provided by the Successor Agency relating to the refunding of the 2004 Former Agency Bonds. See REFUNDING PLAN Refunding of the Former 2004 Agency Bonds. The Verification Agent has restricted its procedures to examining the arithmetical accuracy of certain computations and has not made any study or evaluation of the assumptions and information upon which the computations are based and, accordingly, has not expressed an opinion on the data used, the reasonableness of the assumptions, or the achievability of the forecasted outcome. -50-

57 UNDERWRITING The Bonds are being purchased by Stifel, Nicolaus & Company, Incorporated (the Underwriter ). The Underwriter has agreed to purchase the Bonds at a price of $18,221, (being the principal amount of the Bonds, plus an original issue premium of $2,384, and less an Underwriter s discount of $77,893.75). The Underwriter will purchase all of the Bonds if any are purchased. The Underwriter may offer and sell Bonds to certain dealers and others at a price lower than the offering prices stated on the inside cover page of this Official Statement. The offering prices may be changed from time to time by the Underwriter. FINANCIAL ADVISOR The Successor Agency has retained the Financial Advisor in connection with the authorization, issuance, sale and delivery of the Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. The Financial Advisor is an independent registered municipal advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities. LEGAL OPINIONS The final approving opinions of Fulbright & Jaworski LLP, Los Angeles, California, Bond Counsel, a member of Norton Rose Fulbright, will be furnished to the purchaser at the time of delivery of the Bonds. Copies of the proposed form of Bond Counsel s final approving opinion with respect to the Bonds are attached hereto in APPENDIX B FORM OF OPINION OF BOND COUNSEL. In addition, certain legal matters will be passed on by Quint & Thimmig LLP, Larkspur, California, as Disclosure Counsel. Certain legal matters will be passed on for the Successor Agency by Burke, Williams & Sorensen, LLP, Los Angeles, California, as Counsel for the Successor Agency, and for the Underwriter by Nossaman LLP, Irvine, California, as Underwriter s Counsel. Compensation paid to Bond Counsel, Disclosure Counsel and Underwriter s Counsel contingent upon the sale and delivery of the Bonds. LITIGATION There is no action, suit or proceeding known to the Successor Agency to be pending and notice of which has been served upon and received by the Successor Agency, or threatened, restraining or enjoining the execution or delivery of the Bonds or the Indenture or in any way contesting or affecting the validity of the foregoing or any proceedings of the Successor Agency taken with respect to any of the foregoing. See, however, RISK FACTORS Challenges to Dissolution Act. -51-

58 RATINGS Standard & Poor s Ratings Services, a Standard & Poor s Financial Services LLC business ( S&P ), has assigned the rating of AA to the Insured Bonds based on the issuance of the Municipal Bond Insurance Policy by AGM at the time of issuance of the Bonds. See MUNICIPAL BOND INSURANCE. In addition, S&P has assigned the underlying rating of A- to the Bonds without regard to the delivery of the Municipal Bond Insurance Policy. These ratings reflect only the view of S&P and any desired explanation of the significance of such ratings should be obtained from S&P at 55 Water Street, New York, NY There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by S&P if, in the judgment of S&P, circumstances so warrant. Any such downward revision or withdrawal of a rating may have an adverse effect on the market price for the Bonds so rated. CONTINUING DISCLOSURE The Successor Agency will covenant for the benefit of owners of the Bonds to provide certain financial information and operating data relating to the Successor Agency by not later than February 1 of each year, commencing February 1, 2015 for the report for the fiscal year (the Annual Report ), and to provide notices of the occurrence of certain listed events. The specific nature of the information to be contained in the Annual Report or the notices of listed events is summarized in APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT. These covenants have been made in order to assist the Underwriter in complying with Securities Exchange Commission Rule 15c2 12(b)(5) (the Rule ). The City and its related entities, including the Former Agency, previously entered into several disclosure undertakings under the Rule in connection with the issuance of long-term obligations. During the past five years, while the City on three occasions filed its financial statements as much as 32 days after the deadline in prior City continuing disclosure obligations, and the Former Agency failed to timely file certain debt service coverage tables required by Former Agency continuing disclosure obligations (all of which have now been filed), the City and the Former Agency have represented that they have not otherwise failed to comply with their prior continuing disclosure undertakings. AUDITED FINANCIAL STATEMENTS Excerpts from the City s Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013 (the City CAFR ) is attached as APPENDIX E EXCERPTS FROM THE COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF CAMARILLO FOR THE FISCAL YEAR ENDED JUNE 30, The City CAFR includes the Successor Agency s audited financial statements for the fiscal year ended June 30, The Successor Agency s audited financial statements were audited by White Nelson Diehl Evans, LLP (the Auditor ). The Auditor has not been asked to consent to the inclusion of the Successor Agency s audited financial statements in this Official Statement and has not reviewed this Official Statement. As described in SECURITY FOR THE BONDS Limited Obligation, the Bonds are payable from and secured by a pledge of Tax Revenues and the Bonds are not a debt of the City. Excerpts from the City CAFR are attached as Appendix E to this Official Statement only because it includes the Successor Agency s audited financial statements. -52-

59 MISCELLANEOUS All of the preceding summaries of the Indenture, the Redevelopment Law, the Dissolution Act, other applicable legislation, the Redevelopment Plan for the Redevelopment Project, agreements and other documents 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. Reference is hereby made to such documents on file with the Successor Agency for further information in connection therewith. This Official Statement does not constitute a contract with the purchasers of the Bonds. Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The execution and delivery of this Official Statement by the City Manager of the City has been duly authorized by the Successor Agency. SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION By: /s/ Bruce Feng City Manager, City of Camarillo -53-

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61 APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE The following is a summary of certain provisions of the Indenture. This summary is not to be considered a full statement of the terms of such documents and accordingly is qualified by reference thereto and is subject to the full text thereof. Capitalized terms not otherwise defined in this summary or in this Official Statement have the respective meanings set forth in the Indenture. DEFINITIONS Act means Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code. Adverse Change in State Law means a change in State law, including any judicial decision, that adversely affects the ability of the Successor Agency to comply with or perform Section 5.1 Covenant 3 of the Indenture. Annual Debt Service means, for any Bond Year, the principal and interest payable on the Outstanding Bonds in such Bond Year. Bond Counsel means Fulbright & Jaworski LLP, an attorney or firm of attorneys acceptable to the Successor Agency of nationally recognized standing in matters pertaining to the federal tax exemption of interest on bonds issued by states and political subdivisions. Bond or Bonds means the Successor Agency to the Camarillo Community Development Commission Tax Allocation Refunding Bonds, Series 2014 (Camarillo Corridor Project), authorized by and at any time Outstanding pursuant to the Indenture. Bond Year means the twelve (12) month period commencing on September 2 of each year, provided that the first Bond Year shall extend from the Delivery Date to September l, Bondowner or Owner, or any similar term, means any person who shall be the registered owner or his duly authorized attorney, trustee or representative of any Outstanding Bond. Business Day means any day other than (i) a Saturday or Sunday or legal holiday or a day on which banking institutions in the city in which the corporate trust office of the Trustee is located are authorized to close, or (ii) a day on which the New York Stock Exchange is closed. Certificate or Certificate of the Successor Agency means a Written Certificate of the Successor Agency. Chairman means the chairman of the Successor Agency or other duly appointed officer of the Successor Agency authorized by the Successor Agency by resolution or bylaw to perform the functions of the chairman in the event of the chairman s absence or disqualification. City means the City of Camarillo, State of California. Appendix A Page 1

62 Code means the Internal Revenue Code of 1986, as amended, and any regulations, rulings, judicial decisions, and notices, announcements, and other releases of the United States Treasury Department or Internal Revenue Service interpreting and construing it. Commission means the Camarillo Community Development Commission. Continuing Disclosure Agreement means that certain Continuing Disclosure Agreement between the Successor Agency and Digital Assurance Certification, L.L.C., dated as of November 1, 2014, as originally executed and as it may be amended from time to time in accordance with the terms thereof. Corporate Trust Office means the corporate trust office of the Trustee at the address set forth in the Indenture, except for exchange, surrender and payment of the Bonds, in which case Corporate Trust Office will refer to the office or agency of the Trustee at which, at any particular time, its corporate trust agency business will be conducted, or such other or additional offices as may be specified to the Successor Agency by the Trustee in writing. Costs of Issuance means the costs and expenses incurred in connection with the issuance and sale of the Bonds including the initial fees and expenses of the Trustee, rating agency fees, legal fees and expenses, costs of printing the Bonds and Official Statement, fees of financial consultants and other fees and expenses set forth in a Written Certificate of the Successor Agency. Costs of Issuance Fund means the trust fund established by that name in the Indenture. County means the County of Ventura, California. Debt Service Coverage means, for each Bond Year, Pledged Tax Revenues divided by Annual Debt Service. Debt Service Fund means that trust fund established by that name in the Indenture. Defeasance Securities means (1) cash, (2) non-callable direct obligations of the United States of America ( Treasuries ), (3) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (4) subject to the prior written consent of the Insurer, pre-refunded municipal obligations rated AAA and Aaa by S&P and Moody s, respectively, or (5) subject to the prior written consent of the Insurer, securities eligible for AAA defeasance under then existing criteria of S & P or any combination, unless the Insurer otherwise approves. Delivery Date means the date on which the Bonds are delivered to the initial purchaser thereof. Dissolution Act means Parts 1.8 (commencing with Section 34161) and 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code of the State of California. DOF means the California Department of Finance. DTC means The Depository Trust Company, New York, New York, and its successors and assigns. Appendix A Page 2

63 Escrow Agreement means the Escrow Agreement between the Successor Agency and the Escrow Bank. Escrow Bank means U.S. Bank National Association, a national banking association, as escrow bank under the Escrow Agreement. Escrow Fund means the escrow fund established under the Escrow Agreement. Fiscal Year means any twelve (12) month period beginning on July 1st and ending on the next following June 30th. Fund or Account means any of the funds or accounts referred to in the Indenture. Housing Bonds mean, collectively, the Commission s $5,110,000 Housing Set-Aside Tax Allocation Bonds, Series 2006A and $5,715,000 Taxable Housing Set-Aside Tax Allocation Bonds, Series 2006A-T, and any refunding bonds issued thereof. Housing Indenture means the Indenture dated as of November 1, 2006, by and between the Commission and U.S. Bank National Association, as trustee, providing for the issuance of the Housing Bonds. Indenture means the Indenture of Trust dated as of November 1, 2014, between the Successor Agency and U.S. Bank National Association, authorizing the issuance of the Bonds. Independent Financial Consultant Independent Engineer Independent Certified Public Accountant or Independent Redevelopment Consultant means any individual or firm engaged in the profession involved, appointed by the Successor Agency, and who, or each of whom, has a favorable reputation in the field in which his/her opinion or certificate will be given, and: (1) is in fact independent and not under domination of the Successor Agency; (2) does not have any substantial interest, direct or indirect, with the Successor Agency, other than as original purchaser of the Bonds; and (3) is not connected with the Successor Agency as an officer or employee of the Successor Agency, but who may be regularly retained to make reports to the Successor Agency. Information Services means the Electronic Municipal Market Access System (referred to as EMMA ), a facility of the Municipal Securities Rulemaking Board, at provided, however, in accordance with then current guidelines of the Securities and Exchange Commission, Information Services shall mean such other organizations providing information with respect to called Bonds as the Successor Agency may designate in writing to the Trustee. Insurance Policy means the insurance policy issued by the Insurer guaranteeing the scheduled payment of principal of and interest on the Insured Bonds when due. Insured Bonds means the Bonds maturing on September 1 in the years 2022 through 2028, inclusive, 2032 and Insurer or Bond Insurer means Assured Guaranty Municipal Corp., a New York stock insurance company, or any successor thereto or assignee thereof. Interest Account means the account by that name referenced in the Indenture. Appendix A Page 3

64 Interest Payment Date means March 1 and September 1, commencing March 1, 2015 so long as any of the Bonds remain Outstanding under the Indenture. Law means the Community Redevelopment Law of the State of California as cited in the recitals of the Indenture. Maximum Annual Debt Service means the largest of the sums obtained for any Bond Year after the computation is made, by totaling the following for each such Bond Year: (1) the principal amount of all Outstanding Bonds and the amount of any sinking account payments payable in such Bond Year; and (2) the interest which would be due during such Bond Year on the aggregate principal amount of Outstanding Bonds if the Outstanding Bonds on the date of such computation were to mature or be redeemed in accordance with the maturity schedules for the Outstanding Bonds. At the time and for the purpose of making such computation, the amount of term Outstanding Bonds already retired in advance of the above-mentioned schedules shall be deducted pro rata from the remaining amounts thereon. Opinion of Counsel means a written opinion of an attorney or firm of attorneys of favorable reputation in the field of municipal bond law. Any opinion of such counsel may be based upon, insofar as it is related to factual matters, information which is in the possession of the Successor Agency as shown by a certificate or opinion of, or representation by, an officer or officers of the Successor Agency, unless such counsel knows, or in the exercise of reasonable care should have known, that the certificate, opinion or representation with respect to the matters upon which his or her opinion may be based, as aforesaid, is erroneous. Outstanding means, when used as of any particular time with reference to the Bonds and Parity Bonds, subject to the provisions of the Indenture, all Bonds theretofore issued and authenticated under the Indenture, and, to the extent applicable, Parity Bonds permitted under the Indenture, except: (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds paid or deemed to have been paid; and (c) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and authenticated pursuant to the Indenture. Oversight Board means the oversight board duly constituted from time to time pursuant to Section of the Dissolution Act. Parity Bonds means any additional tax allocation bonds (including, without limitation, bonds, notes, interim certificates, debentures or other obligations) issued by the Successor Agency as permitted by the Indenture. Pass-Through Agreements means those certain tax-sharing agreements entered into with certain taxing agencies to alleviate any financial burden on such taxing agencies which could result from the reallocation of taxes under Section of the Law. Paying Agent means any paying agent appointed by the Successor Agency pursuant to this Indenture, and the Trustee shall be the initial Paying Agent. Permitted Investments means: (a) for all purposes, including defeasance investments in refunding escrow accounts, Defeasance Securities; and (b) for all purposes other than defeasance investments in refunding escrow accounts: (1) Obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America, including: Export-Import Bank, Rural Economic Community Development Administration, U.S. Maritime Administration, Small Appendix A Page 4

65 Business Administration, U.S. Department of Housing & Urban Development (PHAs), Federal Housing Administration -Federal Financing Bank; (2) Direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America: Senior debt obligations issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC), Obligations of the Resolution Funding Corporation (REFCORP), Senior debt obligations of the Federal Home Loan Bank System, Senior debt obligations of other Government Sponsored Agencies; (3) U.S. dollar denominated deposit accounts, federal funds and bankers acceptances with domestic commercial banks, which may include the Trustee, its parent holding company, if any, and their affiliates, which have a rating on their short term certificates of deposit on the date of purchase of P-1 by Moody s and A-1 or A-1+ by S&P and maturing not more than 360 calendar days after the date of purchase. (Ratings on holding companies are not considered as the rating of the bank); (4) Commercial paper which is rated at the time of purchase in the single highest classification, P-1 by Moody s and A-1 by S&P and which matures not more than 270 calendar days after the date of purchase; (5) Investments in a money market fund, including those of an affiliate of the Trustee or for which the Trustee provides shareholder services rated AAAm or AAAm-G or better by S&P; (6) Pre-refunded Municipal Obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (A) which are rated, based on an irrevocable escrow account or fund (the escrow ), in the highest rating category of Moody s or S&P or any successors thereto; or (B) (i) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (2) of the definition of Defeasance Securities, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate; (7) Municipal Obligations rated Aaa/AAA or general obligations of States with a rating of A2/A or higher by both Moody s and S&P; (8) Investment Agreements with an entity rated A or higher by S&P; and; (9) The Local Agency Investment Fund of the State or any state administered pooled investment fund in which the Successor Agency is statutorily permitted or required to invest will be deemed a permitted investment. Appendix A Page 5

66 (c) The value of the above investments shall be determined as follows: (1) for the purpose of determining the amount in any fund, all Permitted Investments credited to such fund shall be valued at fair market value. The Trustee shall determine the fair market value based on accepted industry standards and from accepted industry providers. Accepted industry providers shall include but are not limited to pricing services provided by Financial Times Interactive Data Corporation, and Bank of America Merrill Lynch; (2) as to certificates of deposit and bankers acceptances: the face amount thereof, plus accrued interest thereon; and (3) as to any investment not specified above: the value thereof established by prior agreement among the Successor Agency and the Trustee. Pledged Tax Revenues means all Tax Revenues less (i) all amounts required by law on or after the Delivery Date to be deposited by the Successor Agency in a housing fund (consisting of the scheduled debt service on the Housing Bonds), (ii) amounts payable by the State to the Successor Agency under and pursuant to Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with section 16110) of the California Government Code, and (iii) Statutory Pass-Through Payments, but only to the extent such amounts are not subordinated to payment of debt service on the Bonds, any Parity Bonds and the Senior Obligations, and (iv) amounts required to be paid under the Prior Indenture relating to the 2006 Bonds and the 2009 Bonds. Principal Account means the account by that name referenced in the Indenture. Prior Indenture means the Indenture dated as of September 1, 2004, as amended and supplemented by a First Supplemental Indenture, dated as of November 1, 2006, and by a Second Supplemental Indenture, dated as of December 1, 2009, each by and between the Commission and U.S. Bank National Association, as trustee, providing for the issuance of the 2004 Bonds, the 2006 Bonds and the 2009 Bonds. Prior Law means the Community Redevelopment Law of the State of California (commencing with Health and Safety Code Section 33000) as it existed on or before June 29, Qualified Reserve Fund Credit Instrument means (i) with respect to the Bonds, an irrevocable standby or direct pay letter of credit or surety bond issued by a financial institution or insurance company and deposited with the Trustee, provided that all of the following requirements are met at the time of acceptance thereof by the Trustee: (a) the financial institution or insurance company having, at the time of such delivery, unsecured debt obligations rated in at least the second highest rating category (without respect to any modifier) of S&P or Moody s, and, if rated by A.M. Best & Company, rated in the three highest rating categories by A.M. Best & Company; (b) such letter of credit or surety bond has a term of at least 12 months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released; and (d) the Trustee is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Interest Account, the Principal Account and the Sinking Account for the purpose of making payments required pursuant to the Indenture and (b) with respect to any Parity Bonds, such instrument as is set forth in the Supplemental Indenture or authorizing document relating to such Parity Bonds. Recognized Obligation Payment Schedule means a Recognized Obligation Payment Schedule, each prepared and approved from time to time pursuant to subdivision (l) of Section of the Dissolution Act. Redemption Account means the account by that name established in the Indenture. Appendix A Page 6

67 Redevelopment Obligation Retirement Fund means the fund by that name established pursuant to Health & Safety Code Section (b) and administered by the Successor Agency. Redevelopment Plan means the Redevelopment Plan originally adopted and approved by Ordinance No. 855, adopted on June 19, 1996, together with any amendments thereof hereafter duly enacted pursuant to the Law. Redevelopment Project Area, Redevelopment Project or Project Area means, the Camarillo Corridor Project Area described in the Redevelopment Plan. Redevelopment Property Tax Trust Fund or RPTTF means the fund by that name established pursuant to Health & Safety Code Section (a) and administered by the County auditor-controller. Registration Books means the records maintained by the Trustee pursuant to the Indenture for the registration and transfer of ownership of the Bonds. Regular Record Date means the fifteenth calendar day of the month preceding any Interest Payment Date whether or not such day is a Business Day. Report means a document in writing signed by an Independent Financial Consultant and including: (a) a statement that the person or firm making or giving such Report has read the pertinent provisions of the Indenture to which such Report relates; (b) a brief statement as to the nature and scope of the examination or investigation upon which the Report is based; and (c) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said consultant to express an informed opinion with respect to the subject matter referred to in the Report. Reserve Fund means the fund by that name referenced in the Indenture. Reserve Policy means the Municipal Bond Debt Service Reserve Insurance Policy issued by the Insurer and deposited into the Reserve Fund. Reserve Requirement means, as of the date of computation, an amount equal to the lesser of (i) 10% of the issue price (within the meaning of section 148 of the Code) of the Bonds, (ii) 125% of the average Annual Debt Service for that and every subsequent Bond Year, or (iii) the Maximum Annual Debt Service. Securities Depositories means The Depository Trust Company, New York, New York and its successors and assigns or if (i) the then Securities Depository resigns from its functions as depository of the Bonds or (ii) the Successor Agency discontinues use of the then Securities Depository, any other securities depository which agrees to follow the procedures required to be followed by a securities depository in connection with the Bonds and which is selected by the Successor Agency. Senior Obligations means the means the 2006 Bonds and the 2009 Bonds. Sinking Account means the account by that name in the Debt Service Fund held by the Trustee pursuant to the Indenture. Sinking Account Installment means the amount of money required by the Indenture to be paid by the Successor Agency on any single date toward the retirement of any particular term bonds on or prior to their respective stated maturity dates. Appendix A Page 7

68 Sinking Account Payment Date means any date on which Sinking Account Installments are scheduled to be paid with respect to the Bonds. State means the State of California, United States of America. Statutory Pass-Through Amounts means amounts paid to affected taxing agencies, if any, pursuant to Sections and/or of the Law and Section of the Dissolution Act. Supplemental Indenture means any indenture then in full force and effect which has been duly adopted by the Successor Agency under the Dissolution Act, or any act supplementary thereto or amendatory thereof, at a meeting of the Successor Agency duly convened and held, of which a quorum was present and acted thereon, amendatory of or supplemental to the Indenture or any indebtedness entered into in connection with the issuance of Parity Bonds; but only if and to the extent that such Supplemental Indenture is specifically authorized thereunder. Tax Certificate means that certain Tax Certificate executed by the Successor Agency with respect to the Bonds. Tax Revenues means the monies deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to subdivision (c) of Section of the Dissolution Act, as provided in paragraph (2) of subdivision (a) of Section of the Dissolution Act that are equal to that portion of taxes levied upon taxable property in the Project Area eligible for allocation to the Successor Agency on or after the date of issue of the Bonds, pursuant to Article 6 of Chapter 6 of the Prior Law and Section 16 of Article XVI of the Constitution of the State. If, and to the extent, that the provisions of Section or paragraph (2) of subdivision (a) of Section are invalidated by a final judicial decision, then Tax Revenues shall include all tax revenues allocated to the payment of indebtedness pursuant to Health & Safety Code Section or such other section as may be in effect at the time providing for the allocation of tax increment revenues in accordance with Article XVI, Section 16 of the California Constitution. Trustee means U.S. Bank National Association, a national banking association, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in the Indenture. Written Request of the Successor Agency or Written Certificate of the Successor Agency means a request or certificate, in writing signed by the Executive Director, Secretary or Finance Officer of the Successor Agency or by any other officer of the Successor Agency duly authorized by the Successor Agency for that purpose Bonds means the $22,500,000 Camarillo Community Development Commission Tax Allocation Refunding Bonds, Series 2004 (Camarillo Corridor Project) Bonds means the Commission s $16,805,000 Tax Allocation Parity Bonds, Series 2006 (Camarillo Corridor Project) Bonds means the Commission s $17,490,000 Tax Allocation Parity Bonds, Series 2009 (Camarillo Corridor Project). Appendix A Page 8

69 THE INDENTURE Security of Bonds; Equal Security Except as provided in the Indenture, and on a subordinate basis to the Senior Obligations and the Housing Bonds, the Bonds will be equally secured by a pledge and lien on all of the moneys in the Redevelopment Obligation Retirement Fund. The Bonds will be equally secured by a pledge of, security interest in and a first and exclusive lien on all of the Pledged Tax Revenues, whether held in the Redevelopment Property Tax Trust Fund or by the Successor Agency or the Trustee, and a first and exclusive pledge of, security interest in and lien upon all of the moneys in the Debt Service Fund (including the Interest Account, the Principal Account, the Sinking Account and the Redemption Account and all subaccounts in the foregoing) and in the Reserve Fund to the Trustee for the benefit of the Owners of the Bonds, on a parity with the first pledge of and lien thereon of the Parity Bonds without preference or priority for series, issue, number, dated date, sale date, date of execution or date of delivery. Except for the Pledged Tax Revenues and such moneys, no funds or properties of the Successor Agency are pledged to, or otherwise liable for, the payment of principal of or interest or redemption premium (if any) on the Bonds. In consideration of the acceptance of the Bonds by those who will own the same from time to time, the Indenture will be deemed to be and will constitute a contract between the Successor Agency and the Trustee for the benefit of the Owners from time to time of the Bonds, and the covenants and agreements therein set forth to be performed on behalf of the Successor Agency will be for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reason of the number or date thereof or the time of sale, execution and delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein. Transfer and Exchange of Bonds Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of such Bond to the Trustee at its Corporate Trust Office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. Whenever any Bond or Bonds will be surrendered for registration of transfer, the Successor Agency will execute and the Trustee will authenticate and deliver a new Bond or Bonds, of like series, interest rate, maturity and principal amount of authorized denominations. The Trustee will collect any tax or other governmental charge on the transfer of any Bonds. The cost of printing any Bonds and any services rendered or any expenses incurred by the Trustee in connection with any exchange or transfer will be paid by the Successor Agency. The Trustee may refuse to transfer either (a) any Bonds during the period established by the Trustee for the selection of Bonds for redemption, or (b) any Bonds selected by the Trustee for redemption. Exchange of Bonds. Bonds may be exchanged at the Corporate Trust Office for a like aggregate principal amount of Bonds of other authorized denominations of the same series, interest rate and maturity. The Trustee will collect any tax or other governmental charge on the exchange of any Bonds. The cost of printing any Bonds and any services rendered or any expenses incurred by the Trustee in connection with any exchange or transfer will be paid by the Successor Agency. The Trustee may refuse to exchange either (a) any Bonds during the period established by the Trustee for the selection of Bonds for redemption or (b) any Bonds selected by the Trustee for redemption. Appendix A Page 9

70 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond becomes mutilated, the Successor Agency, at the expense of the Owner of such Bond, will execute, and the Trustee will thereupon deliver, a new Bond of like amount and maturity in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee will be canceled by it. If any Bond will be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Successor Agency and the Trustee and, if such evidence is satisfactory to both and indemnity satisfactory to them will be given, the Successor Agency, at the expense of the Owner, will execute, and the Trustee will thereupon authenticate and deliver, a new Bond of like amount and maturity in lieu of and in substitution for the Bond so lost, destroyed or stolen. The Successor Agency may require payment of a sum not exceeding the actual cost of preparing each new Bond issued and of the expenses which may be incurred by the Successor Agency and the Trustee in the premises. Any Bond issued under the provisions of the Indenture in lieu of any Bond alleged to be lost, destroyed or stolen will constitute an original additional contractual obligation on the part of the Successor Agency whether or not the Bond so alleged to be lost, destroyed or stolen will be at any time enforceable by anyone, and will be equally and proportionately entitled to the benefits of the Indenture with all other Bonds issued pursuant to the Indenture. Costs of Issuance Fund The Indenture establishes a separate fund to be known as the Costs of Issuance Fund, which will be held by the Trustee in trust. The moneys in the Costs of Issuance Fund will be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance upon submission of a Written Request of the Successor Agency stating the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against said Fund. On the date which is three (3) months following the Delivery Date, or upon the earlier Written Request of the Successor Agency, all amounts (if any) remaining in the Costs of Issuance Fund will be withdrawn therefrom by the Trustee and transferred to the Debt Service Fund and the Trustee will close the Costs of Issuance Fund. Covenants of the Successor Agency As long as the Bonds are outstanding and unpaid, the Successor Agency will (through its proper members, officers, agents or employees) faithfully perform and abide by all of the covenants, undertakings and provisions contained in the Indenture or in any Bond issued thereunder, including the following covenants and agreements for the benefit of the Bondowners which are necessary, convenient and desirable to secure the Bonds and will tend to make them more marketable; provided, however, that the covenants do not require the Successor Agency to expend any funds other than the Pledged Tax Revenues. Use of Proceeds; Management and Operation of Properties. The Successor Agency covenants and agrees that the proceeds of the sale of the Bonds will be deposited and used as provided in the Indenture and that it will manage and operate all properties owned by it comprising any part of the Project Area in a sound and businesslike manner. No Priority. The Successor Agency covenants and agrees that it will not issue any obligations on parity with the Senior Obligations, including obligations to refund the Senior Obligations. The Successor Agency further covenants and agrees that it will not issue any obligations payable, either as to principal or interest, from the Pledged Tax Revenues which have any lien upon the Pledged Tax Revenues prior or superior to the lien of the Bonds. Except for Parity Bonds issued to refund all or a portion of the Outstanding Bonds, Housing Bonds or Senior Obligations, as permitted by the Indenture, it will not issue any obligations, payable as to principal or interest, from the Pledged Tax Revenues, which have any lien Appendix A Page 10

71 upon the Pledged Tax Revenues on a parity with the Bonds authorized therein. Notwithstanding the foregoing, nothing in the Indenture will prevent the Successor Agency (i) from issuing and selling obligations which have, or purport to have, any lien upon the Pledged Tax Revenues which is junior to the Bonds or (ii) from issuing and selling bonds or other obligations which are payable in whole or in part from sources other than the Pledged Tax Revenues. As used herein obligations includes, without limitation, bonds, notes, interim certificates, debentures or other obligations. Punctual Payment. The Successor Agency covenants and agrees that it will duly and punctually pay or cause to be paid the principal of and interest on each of the Bonds on the date, at the place and in the manner provided in the Bonds. Further, it will take all actions required under the Dissolution Act to include on the Recognized Obligation Payment Schedules for each six-month period of a calendar year, beginning with the first six-month period arising after the Delivery Date for which no Recognized Obligation Payment Schedule has been submitted, all payments to the Trustee to satisfy the requirements of the Indenture, including any amounts required under the Indenture to replenish the Reserve Fund to the full amount of the Reserve Requirement and amounts, if any, due and owing to the Insurer under the Insurance Policy or the Reserve Policy. These actions will include, without limitation, placing on the periodic Recognized Obligation Payment Schedule for approval by the Oversight Board and DOF, to the extent necessary, the amounts to be held by the Successor Agency as a reserve until the next six-month period, as contemplated by paragraph (1)(A) of subdivision (d) of Section of the Dissolution Act, that are necessary to provide for the payment of principal and interest under the Indenture when the next property tax allocation is projected to be insufficient to pay all obligations due under the Indenture for the next payment due in the following six-month period. For the avoidance of doubt, the Successor Agency agrees that it will take all actions required under the Dissolution Act to include in the Recognized Obligation Payment Schedule relating to the January 2 payment date commencing January 2, 2015, the annual scheduled debt service on the Bonds, the Housing Bonds, the Senior Obligations, and any Parity Bonds coming due in that same calendar year. Payment of Taxes and Other Charges. The Successor Agency covenants and agrees that it will from time to time pay and discharge, or cause to be paid and discharged, all payments in lieu of taxes, service charges, assessments or other governmental charges which may lawfully be imposed upon the Successor Agency or any of the properties then owned by it in the Project Area, or upon the revenues and income therefrom, and will pay all lawful claims for labor, materials and supplies which if unpaid might become a lien or charge upon any of the properties, revenues or income or which might impair the security of the Bonds or the use of Pledged Tax Revenues or other legally available funds to pay the principal of and interest on the Bonds, all to the end that the priority and security of the Bonds will be preserved; provided, however, that nothing in this covenant will require the Successor Agency to make any such payment so long as the Successor Agency in good faith shall contest the validity of the payment. Books and Accounts; Financial Statements. The Successor Agency covenants and agrees that it will at all times keep, or cause to be kept, proper and current books and accounts (separate from all other records and accounts) in which complete and accurate entries will be made of all transactions relating to the Redevelopment Project Area and the Tax Revenues and other funds relating to the Redevelopment Project Area. The Successor Agency will prepare within one hundred eighty (180) days after the close of each of its Fiscal Years a complete financial statement or statements for such year, in reasonable detail covering the Tax Revenues and other funds, accompanied by an opinion of an Independent Certified Public Accountant appointed by the Successor Agency, and will furnish a copy of the statement or statements to the Trustee and any rating agency which maintains a rating on the Bonds and, upon written request, to any Bondowner. The Trustee shall have no duty to review the Successor Agency s financial statements. The Successor Agency s financial statements may be included as part of the City s Comprehensive Annual Financial Report. Appendix A Page 11

72 Eminent Domain Proceeds. The Successor Agency covenants and agrees that if all or any part of the Project Area should be taken from it without its consent, by eminent domain proceedings or other proceedings authorized by law, for any public or other use under which the property will be tax exempt, it will take all steps necessary to adjust accordingly the base year property tax roll of the Project Area. Disposition of Property. The Successor Agency covenants and agrees that it will not dispose of more than ten percent (10%) of the land area in the Project Area (except property shown in the Redevelopment Plan in effect on the date the Indenture is adopted as planned for public use, or property to be used for public streets, public offstreet parking, sewage facilities, parks, easements or right-of-way for public utilities, or other similar uses) to public bodies or other persons or entities whose property is tax exempt, unless such disposition will not result in Pledged Tax Revenues to be less than the amount required for the issuance of Parity Bonds as provided in the Indenture, based upon the certificate or opinion of an Independent Financial Consultant appointed by the Successor Agency. Protection of Security and Rights of Bondowners. The Successor Agency covenants and agrees to preserve and protect the security of the Bonds and the rights of the Bondowners and to contest by court action or otherwise (a) the assertion by any officer of any government unit or any other person whatsoever against the Successor Agency that (i) the Law is unconstitutional or (ii) that the Pledged Tax Revenues pledged under the Indenture cannot be paid to the Successor Agency for the debt service on the Bonds or (b) any other action affecting the validity of the Bonds or diluting the security therefor, including, with respect to the Pledged Tax Revenues, the senior lien position of the Bonds to the Pass- Through Agreements. Tax Covenants Relating to Bonds. The Successor Agency will not use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction or improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner that if made or omitted, respectively, would cause the interest on the Bonds to fail to be excluded pursuant to section 103(a) of the Code from the gross income of the owner thereof for federal income tax purposes. Without limiting the generality of the foregoing, unless and until the Successor Agency receives a written opinion of Bond Counsel to the effect that failure to comply with such covenant will not adversely affect the exemption from federal income tax of the interest on any Bond, the Successor Agency will comply with each of the specific tax covenants in the Indenture. Independent Redevelopment Consultant. The Successor Agency covenants that it will retain an Independent Redevelopment Consultant and, as long as any Bonds are Outstanding, cause the Independent Redevelopment Consultant to prepare an annual report for the Successor Agency and the dissemination agent named in the Continuing Disclosure Agreement, not later than December 31 of each year (commencing December 31, 2015), that includes the following: (i) Project Area taxable assessed valuation for the Fiscal Year ending June 30 of the next ensuing calendar year; (ii) Project Area base year assessed valuation; (iii) the taxable assessed valuation for each of the ten largest taxpayers in the Project Area for the Fiscal Year ending June 30 of the next ensuing calendar year; (iii) the total amount of Tax Revenues, including Pledged Tax Revenues, deposited into the Redevelopment Property Tax Trust Fund by the County Auditor-Controller since the previous report; (iv) the amount of Tax Revenues, including Pledged Tax Revenues, remitted by the County Auditor-Controller to the Trustee on each of January 2 and June 1 of the then-current calendar year; (v) the balance in the Reserve Fund as of the immediately preceding September 1; and (vi) the Debt Service Coverage for the Bond Year ending on the immediately preceding September 1. Compliance with Dissolution Act. The Successor Agency covenants that in addition to complying with the requirements of the third covenant, it will comply with all other requirements of the Dissolution Act. Without limiting the generality of the foregoing, the Successor Agency covenants and Appendix A Page 12

73 agrees to file all required statements and hold all public hearings required under the Dissolution Act to assure compliance by the Successor Agency with its covenants under the Indenture. Further, it will take all actions required under the Dissolution Act to include scheduled debt service on the Housing Bonds, the Senior Obligations, the Parity Bonds and the Bonds, as well as any amount required under the Indenture to replenish the Reserve Fund, in Recognized Obligation Payment Schedules for each sixmonth period so as to enable the County Auditor-Controller to distribute from the Redevelopment Property Tax Trust Fund to the Successor Agency s Redevelopment Obligation Retirement Fund on each January 2 and June 1 amounts required for the Successor Agency to pay principal of, and interest on, the Housing Bonds, the Senior Obligations, the Parity Bonds and the Bonds coming due in the respective sixmonth period. These actions will include, without limitation, placing on the periodic Recognized Obligation Payment Schedule for approval by the Oversight Board and State Department of Finance, to the extent necessary, the amounts to be held by the Successor Agency as a reserve until the next sixmonth period, as contemplated by paragraph (1)(A) of subdivision (d) of Section of the Dissolution Act, that are necessary to provide for the payment of principal and interest under the Indenture when the next property tax allocation is projected to be insufficient to pay all obligations due under the Indenture for the next payment due thereunder in the following six-month period. Notwithstanding the foregoing, with respect to the Housing Bonds, the Senior Obligations, the Parity Bonds and the Bonds, the Successor Agency will take all actions required under the Dissolution Act to include in the Recognized Obligation Payment Schedule relating to the January 2 payment date, the annual scheduled debt service on the such Housing Bonds, the Senior Obligation, the Parity Bonds and the Bonds coming due in that same calendar year. Limitation on Indebtedness. The Successor Agency covenants and agrees that it has not and will not incur any loans, obligations or indebtedness repayable from Tax Revenues such that the total aggregate debt service on said loans, obligations or indebtedness incurred from and after the date of adoption of the Redevelopment Plan, when added to the total aggregate debt service on the Housing Bonds, the Senior Obligations, the Parity Bonds and the Bonds, will exceed the maximum amount of Tax Revenues to be divided and allocated to the Successor Agency pursuant to the Redevelopment Plan. The Successor Agency will file annually with the Trustee on or prior to August 1 of each year a Written Certificate of the Successor Agency certifying that Tax Revenues received by the Successor Agency through the date of the certificate combined with the amount remaining to be paid on all outstanding obligations of the Successor Agency will not exceed the Plan Limit. To the extent it does, all Tax Revenues will be deposited in an escrow account and applied to the payment of such outstanding obligations. Adverse Change in State Law. If, due to an Adverse Change in State Law, the Successor Agency determines that it cannot comply with the third covenant, then the Successor Agency will immediately notify the Trustee in writing of such determination. The Successor Agency will immediately seek a declaratory judgment or take other appropriate action in a court of competent jurisdiction to determine the duties of all parties to the Indenture with regard to the performance of the third covenant by the Successor Agency. The Trustee may, but will not be obligated to, participate in the process of seeking any such declaratory judgment. Any fees and expenses incurred by the Trustee (including, without limitation, legal fees and expenses) in connection with such participation will be borne by the Successor Agency. Further Assurances. The Successor Agency covenants and agrees to adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Indenture, and for the better assuring and confirming unto the Owners of the rights and benefits provided in the Indenture. Continuing Disclosure. The Successor Agency covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other Appendix A Page 13

74 provision of the Indenture, failure of the Successor Agency to comply with the Continuing Disclosure Agreement will not be considered an Event of Default; however, any participating underwriter, holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order. Investment of Moneys in Funds and Accounts Subject to the provisions of the Indenture, all moneys held by the Trustee in the Debt Service Fund, the Reserve Fund and the Costs of Issuance Fund, shall, at the written direction of the Successor Agency, be invested only in Permitted Investments. If the Trustee receives no written directions from the Successor Agency as to the investment of moneys held in any Fund or Account, the Trustee will request such written direction from the Successor Agency and, pending receipt of instructions, will invest such moneys solely in Permitted Investments described in subsection (b)(5) of the definition thereof. Moneys in the Redevelopment Obligation Retirement Fund will be invested by the Successor Agency only in obligations permitted by the Law which will by their terms mature not later than the date the Successor Agency estimates the moneys represented by the particular investment will be needed for withdrawal from the Redevelopment Obligation Retirement Fund. Moneys in the Interest Account, the Principal Account, the Sinking Account and Redemption Account of the Debt Service Fund will be invested only in obligations which will by their terms mature on such dates as to ensure that before each interest, principal, sinking account or redemption payment date, there will be in such account, from matured obligations and other moneys already in such account, cash equal to the interest and principal payable on such payment date. Moneys in the Reserve Fund shall be invested in (i) obligations which will by their terms mature on or before the date of the final maturity of the Bonds or five (5) years from the date of investment, whichever is earlier or (ii) an investment agreement which permits withdrawals or deposits without penalty at such time as such moneys will be needed or in order to replenish the Reserve Fund. Obligations purchased as an investment of moneys in any of the Funds or Accounts will be deemed at all times to be a part of such respective Fund or Account and the interest accruing thereon and any gain realized from an investment will be credited to such Fund or Account and any loss resulting from any authorized investment will be charged to such Fund or Account without liability to the Trustee. The Successor Agency or the Trustee, as the case may be, will sell or present for redemption any obligation purchased whenever it will be necessary to do so in order to provide moneys to meet any payment or transfer from such Fund or Account as required by the Indenture and will incur no liability for any loss realized upon such a sale. All interest earnings received on any monies invested in the Interest Account, Principal Account, Sinking Account, Redemption Account or Reserve Fund, to the extent they exceed the amount required to be in such Account, will be transferred prior to each Interest Payment Date to the Debt Service Fund. The Trustee may purchase or sell to itself or any affiliate, as principal or agent, investments authorized by the Indenture. The Trustee will not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with the Indenture. The Trustee will furnish the Successor Agency periodic cash transaction statements which include detail for all investment transactions effected by the Trustee or brokers selected by the Successor Agency. Upon the Successor Agency s election, such statements will be delivered via the Trustee s online service and upon electing such service, paper statements will be provided only upon request. The Successor Agency waives the right to receive brokerage confirmations of security transactions effected by the Trustee as they occur, to the extent permitted by law. The Successor Agency further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker. The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made by the Trustee under the Indenture. Appendix A Page 14

75 Modification or Amendment of the Indenture Amendment Without Consent of Owners. The Indenture and the rights and obligations of the Successor Agency and of the Owners may be modified or amended at any time by a Supplemental Indenture which will become binding upon adoption, without consent of any Owners, to the extent permitted by law and any for any one or more of the following purposes: (i) to add to the covenants and agreements of the Successor Agency in the Indenture contained, other covenants and agreements thereafter to be observed or to limit or surrender any rights or power therein reserved to or conferred upon the Successor Agency; or (ii) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Indenture, or in any other respect whatsoever as the Successor Agency may deem necessary or desirable, provided under any circumstances that such modifications or amendments will not materially adversely affect the interests of the Owners; or (iii) to provide for the issuance of Parity Bonds, and to provide the terms and conditions under which such Parity Bonds may be issued, including but not limited to the establishment of Redevelopment Obligation Retirement Funds and accounts relating thereto and any other provisions relating solely thereto, subject to and in accordance with the provisions of the Indenture; or (iv) to amend any provision of the Indenture relating to the requirements of or compliance with the Code, to any extent whatsoever but only if and to the extent such amendment will not adversely affect the exclusion from gross income for purposes of federal income taxation of interest on any of the Bonds, in the opinion of nationally-recognized bond counsel. Amendment With Consent of Owners. Except as set forth in above, this Indenture and the rights and obligations of the Successor Agency and of the Owners may be modified or amended at any time by a Supplemental Indenture which will become binding when the written consent of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding are filed with the Trustee. No such modification or amendment will (i) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Successor Agency to pay the principal, interest or redemption premiums (if any) at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the Owner of such Bond, (ii) reduce the percentage of Bonds required for the written consent to any such amendment or modification, or (iii) without its written consent thereto, modify any of the rights or obligations of the Trustee. In determining whether any amendment, consent, waiver or other action to be taken, or any failure to take action, under the Indenture would adversely affect the security for the Bonds or the rights of the Owners, the Trustee will consider the effect of any such amendment, consent, waiver, action or inaction as if there were no Insurance Policy. No contract will be entered into or any action taken by which the rights of the Insurer or security for or sources of payment of the Insured Bonds may be impaired or prejudiced in any material respect except upon obtaining the prior written consent of the Insurer. Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective pursuant to the Indenture, the Indenture will be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties to thereto and all Owners, as the case may be, will thereafter be determined, exercised and enforced thereunder subject in all respects to such modification and amendment, and all the terms and conditions of any Supplemental Indenture will be deemed to be part of the terms and conditions of the Indenture for any and all purposes. Endorsement or Replacement of Bonds After Amendment. After the effective date of any amendment or modification of the Indenture, the Successor Agency may determine that any or all of the Bonds will bear a notation, by endorsement in form approved by the Successor Agency, as to such Appendix A Page 15

76 amendment or modification and in that case upon demand of the Successor Agency, the Owners of such Bonds will present such Bonds for that purpose at the Corporate Trust Office, and thereupon a suitable notation as to such action will be made on such Bonds. In lieu of such notation, the Successor Agency may determine that new Bonds will be prepared and executed in exchange for any or all of the Bonds and, in that case upon demand of the Successor Agency, the Owners of the Bonds will present such Bonds for exchange at the Corporate Trust Office, without cost to such Owners. Events of Default and Remedies of Owners Events of Default and Acceleration of Maturities. The following events constitute Events of Default under the Indenture: (i) if default will be made in the due and punctual payment of the principal of or interest or redemption premium (if any) on any Bond when and as the same becomes due and payable, whether at maturity as therein expressed, by declaration or otherwise; (ii) if default will be made by the Successor Agency in the observance of any of the covenants, agreements (including default by the obligor on any underlying agreement) or conditions on its part in the Indenture or in the Bonds contained, other than a default described in the preceding clause (i), and such default has continued for a period of 30 days following receipt by the Successor Agency of written notice from the Trustee or any Owner of the occurrence of such default; or (iii) if the Successor Agency commences a voluntary action under Title 11 of the United States Code or any substitute or successor statute. If an Event of Default has occurred and is continuing, the Trustee may, or if requested in writing by the Owners of the majority in aggregate principal amount of the Bonds then Outstanding, the Trustee will, by written notice to the Successor Agency, (a) declare the principal of the Bonds, together with the accrued interest thereon, to be due and payable immediately, and upon any such declaration the same will become immediately due and payable, and (b) upon receipt of indemnity to its satisfaction exercise any other remedies available to the Trustee and the Owners in law or at equity. Upon becoming aware of the occurrence of an Event of Default, the Trustee will give notice of such Event of Default to the Successor Agency and the Insurer by telephone confirmed in writing. Such notice will also state whether the principal of the Bonds has been declared to be or has immediately become due and payable. With respect to any Event of Default described in clauses (i) or (iii) above the Trustee will, and with respect to any Event of Default described in clause (ii) above the Trustee in its sole discretion may, also give such notice to the Successor Agency, the Insurer and the Owners in the same manner as provided for notices of redemption of the Bonds, which will include the statement that interest on the Bonds will cease to accrue from and after the date, if any, on which the Trustee has declared the Bonds to become due and payable (but only to the extent that principal and any accrued, but unpaid interest on the Bonds is actually paid on such date.) This provision, however, is subject to the condition that if, at any time after the principal of the Bonds has been so declared due and payable, and before any judgment or decree for the payment of the moneys due has been obtained or entered, the Successor Agency will deposit with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest on such overdue installments of principal and interest (to the extent permitted by law) at the net effective rate then borne by the Outstanding Bonds, and the reasonable fees and expenses of the Trustee, including but not limited to attorneys fees, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) has been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate has been made therefor, then, and in every such case, the Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Successor Agency and to the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences. However, no such rescission and annulment will extend to or affect any subsequent default, or impair or exhaust any right or power consequent thereon. Appendix A Page 16

77 Upon the occurrence of an event of default, the Trustee may, with the consent of a majority of the Holders, by written notice to the Successor Agency, declare the principal of the Bonds and Parity Bonds to be immediately due and payable, whereupon that portion of the principal of the Bonds thereby coming due and the interest thereon accrued to the date of payment will, without further action, become and be immediately due and payable. Notwithstanding anything to the contrary in the Indenture, the maturity of Insured Bonds will not be accelerated without the consent of the Insurer and in the event the maturity of the Insured Bonds is accelerated, the Insurer may elect, in its sole discretion. to pay accelerated principal and interest accrued, on such principal to the date of acceleration (to the extent unpaid by the Successor Agency) and the Trustee will be required to accept such amounts. Upon payment of such accelerated principal and Interest accrued to the acceleration date as provided above, the Insurer s obligations under the Insurance Policy with respect to such Bonds will be fully discharged. Application of Funds Upon Acceleration. Subject to the prior lien of the Senior Obligations and the Housing Bonds, all of the Tax Revenues, and all sums in the funds and accounts established and held by the Trustee under the Indenture upon the date of the declaration of acceleration, and all sums thereafter received by the Trustee under the Indenture, will be applied by the Trustee in the order following, upon presentation of the several Bonds, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid: First, to the payment of the fees, costs and expenses of the Trustee in declaring such Event of Default and in exercising the rights and remedies set forth in the Indenture, including reasonable compensation to its agents, attorneys and counsel including all sums owed the Trustee; and Second, to the payment of the whole amount then owing and unpaid upon the Bonds and Parity Bonds for principal and interest, with interest on the overdue principal and installments of interest at the net effective rate then borne by the Outstanding Bonds and Parity Bonds (to the extent that such interest on overdue installments of principal and interest has been collected), and amounts, if any, due and owing to the Insurer under the Insurance Policy or the Reserve Policy pursuant to the Indenture, and in case such moneys will be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds and Parity Bonds, then to the payment of such principal and interest and such amounts due and owing to the Insurer, without preference or priority of principal over interest, or interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest or any Bond or Parity Bonds over any other Bond or Parity Bonds. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, has taken any action, by judicial proceedings or otherwise, pursuant to its duties under the Indenture, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee will not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in principal amount of the Outstanding Bonds opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation. Limitation on Owner s Right to Sue. No Owner of any Bond issued under the Indenture will have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon Appendix A Page 17

78 the Indenture, unless (a) such Owner has previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding have made written request upon the Trustee to exercise the powers thereinbefore granted or to institute such action, suit or proceeding, including a writ of mandamus in its own name; (c) said Owners have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee has refused or omitted to comply with such request for a period of 60 days after such written request has been received by, and said tender of indemnity has been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy under the Indenture; it being understood and intended that no one or more Owners have any right in any manner whatever by his or their action to enforce any right under the Indenture, except in the manner therein provided, and that all proceedings at law or in equity to enforce any provisions of the Indenture will be instituted, had and maintained in the manner therein provided and for the equal benefit of all Owners of the Outstanding Bonds. The right of any Owner of any Bond to receive payment of the principal of (and premium, if any) and interest on such Bond as provided in the Indenture, will not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions or any other provision of the Indenture. Non-waiver. Nothing in the Indenture or in the Bonds, will affect or impair the obligation of the Successor Agency, which is absolute and unconditional, to pay from the Pledged Tax Revenues and other amounts pledged under the Indenture, the principal of and interest and redemption premium (if any) on the Bonds to the respective Owners on the respective Interest Payment Dates, as therein provided, or affect or impair the right of action, which is also absolute and unconditional, of the Owners to institute suit to enforce such payment by virtue of the contract embodied in the Bonds. A waiver of any default by any Owner will not affect any subsequent default or impair any rights or remedies on the subsequent default. No delay or omission of any Owner to exercise any right or power accruing upon any default will impair any such right or power or will be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owners by the Dissolution Act or by the Indenture may be enforced and exercised from time to time and as often as will be deemed expedient by the Owners. If a suit, action or proceeding to enforce any right or exercise any remedy will be abandoned or determined adversely to the Owners, the Successor Agency and the Owners will be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. Actions by Trustee as Attorney-in-Fact. Any suit, action or proceeding which any Owner has the right to bring to enforce any right or remedy under the Indenture may be brought by the Trustee for the equal benefit and protection of all Owners similarly situated and the Trustee is appointed (and the successive respective Owners by taking and holding the Bonds or Parity Bonds, as applicable, will be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective Owners for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact, provided the Trustee will have no duty or obligation to enforce any such right or remedy if it has not been indemnified to its satisfaction from loss, liability or any expense including, but not limited to reasonable fees and expenses of its attorneys. Remedies Not Exclusive. No remedy conferred upon or reserved to the Owners under the Indenture is intended to be exclusive of any other remedy. Every such remedy will be cumulative and in addition to every other remedy given thereunder or now or thereafter existing, at law or in equity by Appendix A Page 18

79 statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Law or any other law. Discharge of Indenture If the Successor Agency pays and discharges the entire indebtedness on all Bonds or any portion thereof in any one or more of the following ways: (i) by well and truly paying or causing to be paid the principal of and interest and premium (if any) on all Outstanding Bonds, including all principal, interest and redemption premiums, (if any), or; (ii) by irrevocably depositing with the Trustee, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established pursuant to the Indenture, is fully sufficient to pay all Outstanding Bonds, including all principal, interest and redemption premiums (if any), or, (iii) by irrevocably depositing with the Trustee, in trust, Defeasance Securities in such amount as an Independent Certified Public Accountant shall determine will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established pursuant to the Indenture, be fully sufficient to pay and discharge the indebtedness on all Bonds (including all principal, interest and redemption premiums, if any) at or before maturity and notwithstanding that any Bonds will not have been surrendered for payment, the pledge of the Pledged Tax Revenues and other funds provided for in the Indenture and all other obligations of the Trustee and the Successor Agency under the Indenture with respect to all Outstanding Bonds will cease and terminate, except only (a) the obligation of the Trustee to transfer and exchange Bonds thereunder and (b) the obligation of the Successor Agency to pay or cause to be paid to the Owners, from the amounts so deposited with the Trustee, all sums due thereon and to pay the Trustee all fees, expenses and costs of the Trustee. Notice of such election will be filed with the Trustee. Any funds thereafter held by the Trustee, which are not required for said purpose, will be paid over to the Successor Agency. To accomplish defeasance of the Bonds, the Successor Agency will cause to be delivered (i) a report of an Independent Certified Public Accountant verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity or redemption date ( Verification ), (ii) an Escrow Deposit Agreement (which shall be acceptable in form and substance to the Insurer), (iii) an opinion of nationally recognized bond counsel to the effect that the Bonds are no longer Outstanding under the Indenture and (iv) a certificate of discharge of the Trustee with respect to the Bonds; each Verification and defeasance opinion will be acceptable in form and substance, and addressed, to the Successor Agency, the Trustee Outstanding under the Indenture unless and until they are in fact paid and retired or the above criteria are met. Provisions Related to Bond Insurance Payment Procedures. So long as the Insurance Policy is in effect and the Insurer is not in default thereunder, and notwithstanding anything to the contrary in the Indenture, the following provisions apply to claims upon the Insurance Policy and to payments by and to the Insurer: If, on the third Business Day prior to the related scheduled interest payment date or principal payment date ( Payment Date ) there is not on deposit with the Trustee, after making all transfers and deposits required under the Indenture, moneys sufficient to pay the principal of and interest on the Insured Bonds due on such Payment Date, the Trustee will give notice to the Insurer and to its designated agent (if any) (the Insurer s Fiscal Agent ) by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the second Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available to pay the principal of and interest on the Bonds due on such Payment Date, the Trustee will make a claim under the Insurance Policy and give notice to the Insurer and the Insurer s Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay interest on the Appendix A Page 19

80 Insured Bonds and the amount required to pay principal of the Insured Bonds, confirmed in writing to the Insurer and the Insurer s Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the Insurance Policy. The Trustee shall designate any portion of payment of principal on Insured Bonds paid by the Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Insured Bonds registered to the then current Owner, whether DTC or its nominee or otherwise, and will issue a replacement Insured Bond to the Insurer, registered in the name of Assured Guaranty Municipal Corp., in a principal amount equal to the amount of principal so paid (without regard to authorized denominations); provided that the Trustee s failure to so designate any payment or issue any replacement Insured Bond will have no effect on the amount of principal or interest payable by the Successor Agency on any Insured Bond or the subrogation rights of the Insurer. The Trustee shall keep a complete and accurate record of all funds deposited by the Insurer into the Policy Payments Account (defined below) and the allocation of such funds to payment of interest on and principal of any Insured Bond. The Insurer will have the right to inspect such records at reasonable times upon reasonable notice to the Trustee. Upon payment of a claim under the Insurance Policy, the Trustee will establish a separate special purpose trust account for the benefit of Owners of the Insured Bonds referred to herein as the Policy Payments Account and over which the Trustee shall have exclusive control and sole right of withdrawal. The Trustee will receive any amount paid under the Insurance Policy in trust on behalf of Owners of the Bonds and will deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts will be disbursed by the Trustee to Owners of the Insured Bonds in the same manner as principal and interest payments are to be made with respect to the Bonds under the sections of the Indenture regarding payment of Bonds. It will not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. Notwithstanding anything in the Indenture to the contrary, the Successor Agency agrees to pay to the Insurer (i) a sum equal to the total of all amounts paid by the Insurer under the Insurance Policy (the Insurer Advances ); and (ii) interest on such Insurer Advances from the date paid by the Insurer until payment thereof in full, payable to the Insurer at the Late Payment Rate per annum (collectively, the Insurer Reimbursement Amounts ). Late Payment Rate means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in The City of New York, as its prime or base lending rate (any change in such rate of interest to be effective on the date such change is announced by JPMorgan Chase Bank) plus 3%, and (ii) the then applicable highest rate of interest on the Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate will be computed on the basis of the actual number of days elapsed over a year of 360 days. The Successor Agency covenants and agrees that the Insurer Reimbursement Amounts are secured by a lien on and pledge of the Pledged Tax Revenues and payable from such Pledged Tax Revenues on a parity with debt service due on the Bonds. Funds held in the Policy Payments Account will not be invested by the Trustee and may not be applied to satisfy any costs, expenses or liabilities of the Trustee. Any funds remaining in the Policy Payments Account following a Payment Date will promptly be remitted to the Insurer. The Insurer will, to the extent it makes any payment of principal of or interest on the Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Insurance Policy (which subrogation rights shall also include the rights of any such recipients in connection with any Insolvency Proceeding). Each obligation of the Successor Agency to the Insurer under the Related Documents will survive discharge or termination of such Related Documents. The Appendix A Page 20

81 Successor Agency will pay or reimburse the Insurer any and all charges, fees, costs and expenses that the Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in any Related Document; (ii) the pursuit of any remedies under the Indenture or any other Related Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, the Indenture or any other Related Document whether or not executed or completed, or (iv) any litigation or other dispute in connection with the Indenture or any other Related Document or the transactions contemplated thereby, other than costs resulting from the failure of the Insurer to honor its obligations under the Insurance Policy. The Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the Indenture or any other Related Document. After payment of reasonable expenses of the Trustee, the application of funds realized upon default will be applied to the payment of expenses of the Successor Agency or rebate only after the payment of past due and current debt service on the Bonds and amounts required to restore the Reserve Fund for the Bonds to the Reserve Requirement. The Insurer will be entitled to pay principal or interest on the Insured Bonds that will become Due for Payment but will be unpaid by reason of Nonpayment by the Successor Agency (as such terms are defined in the Insurance Policy) and any amounts due on the Insured Bonds as a result of acceleration of the maturity thereof in accordance with the Indenture, whether or not the Insurer has received a Notice of Nonpayment (as such terms are defined in the Insurance Policy) or a claim upon the Insurance Policy. Insurer Rights; Concerns. The Insurer is a third party beneficiary to the Indenture. Any amendment, supplement, modification to, or waiver of, the Indenture or any other transaction document, including any underlying security agreement (each a Related Document ), that requires the consent of Owners of the Insured Bonds or adversely affects the rights and interests of the Insurer will be subject to the prior written consent of the Insurer. The rights granted to the Insurer under the Indenture or any other Related Document to request, consent to or direct any action are rights granted to the Insurer in consideration of its issuance of the Insurance Policy. Any exercise by the Insurer of such rights is merely an exercise of the Insurer s contractual rights and will not be construed or deemed to be taken for the benefit, or on behalf, of the Owners and such action does not evidence any position of the Insurer, affirmative or negative, as to whether the consent of the Owners or any other person is required in addition to the consent of the Insurer. Amounts paid by the Insurer under the Insurance Policy will not be deemed paid for purposes of the Indenture and the Insured Bonds relating to such payments will remain Outstanding and continue to be due and owing until paid by the Successor Agency in accordance with the Indenture. The Indenture will not be discharged unless all amounts due or to become due to the Insurer have been paid in full or duly provided for. The Insurer will be deemed to be the sole Owner of the Insured Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Owners of the Insured Bonds are entitled to take pursuant to the Indenture pertaining to (i) defaults and remedies and (ii) the duties and obligations of the Trustee. In furtherance thereof and as a term of the Indenture and each Insured Bond, the Trustee and each Owner of Insured Bonds appoint the Insurer as their agent and attorney-in-fact and agree that the Insurer may at any time during the continuation of any proceeding by or against the Successor Agency under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an Insolvency Proceeding ) direct all matters relating to such Insolvency Proceeding, including without limitation, (A) all matters relating to any claim or enforcement proceeding in connection with an Insolvency Proceeding (a Claim ), (B) the direction of any appeal of any order relating to any Claim, (C) the posting of any surety, supersedeas or performance bond pending any such appeal, and (D) the right to vote to accept or Appendix A Page 21

82 reject any plan of adjustment. In addition, the Trustee and each Owner of Insured Bonds delegate and assign to the Insurer, to the fullest extent permitted by law, the rights of the Trustee and each Owner of Bonds in the conduct of any Insolvency Proceeding, including, without limitation, all rights of any party to an adversary proceeding or action with respect to any court order issued in connection with any such Insolvency Proceeding. Remedies granted to the Owners shall expressly include mandamus. Notwithstanding satisfaction of the other conditions to the issuance of Parity Bonds set forth in the Indenture, no such issuance may occur (1) if an Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) exists unless such default shall be cured upon such issuance and (2) unless the Reserve Fund for the Bonds is fully funded at the Reserve Requirement (including the proposed issue) upon the issuance of such Parity Bonds, in either case unless otherwise permitted by the Insurer. The Successor Agency will not entered into an interest rate exchange agreement or any other interest rate maintenance agreement secured by and payable from the Pledged Tax Revenues without the prior written consent of the Insurer. The Successor Agency will permit the Insurer to discuss the affairs, finances and accounts of the Successor Agency or any information the Insurer may reasonably request regarding the security for the Bonds with appropriate officers of the Successor Agency and will use commercially reasonable efforts to enable the Insurer to have access to the facilities, books and records of the Successor Agency on any business day upon reasonable prior notice. Provisions Relating to Reserve Policy The Successor Agency will repay any draws under the Reserve Policy and pay all related reasonable expenses incurred by the Insured and will pay interest thereon from the date of payment by the Insured at the Late Payment Rate. If the interest provisions will result in an effective rate of interest which, for any period, exceeds the limit of the usury or any other laws applicable to the indebtedness created herein, then all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice between or by any party hereto, be applied as additional interest for any later periods of time when amounts are outstanding under the Indenture to the extent that interest otherwise due thereunder for such periods plus such additional interest would not exceed the limit of the usury or such other laws, and any excess will be applied upon principal immediately upon receipt of such moneys by the Insured, with the same force and effect as if the Successor Agency had specifically designated such extra sums to be so applied and the Insurer had agreed to accept such extra payment(s) as additional interest for such later periods. In no event will any agreed-to or actual exaction as consideration for the indebtedness created herein exceed the limits imposed or provided by the law applicable to this transaction for the use or detention of money or for forbearance in seeking its collection. Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate (collectively, Policy Costs ) shall commence in the first month following each draw, and each such monthly payment will be in an amount at least equal to 1/12 of the aggregate of Policy Costs related to such draw. Amounts in respect of Policy Costs paid to the Insurer will be credited first to interest due, then to the expenses due and then to principal due. As and to the extent that payments are made to the Insurer on account of principal due, the coverage under the Reserve Policy will be increased by a like amount, subject to the terms of the Reserve Policy. The obligation to pay Policy Costs will be secured by a valid lien on all revenues and other collateral pledged as security for the Bonds (subject only to the priority of payment provisions set forth under the Indenture). Appendix A Page 22

83 All cash and investments in the Reserve Fund (the Reserve Fund ) will be transferred to the Debt Service Fund for payment of debt service on Bonds before any drawing may be made on the Reserve Policy or any other Qualified Reserve Fund Credit Instrument credited to the Reserve Fund in lieu of cash ( Credit Facility ). Payment of any Policy Costs will be made prior to replenishment of any such cash amounts. Draws on all Credit Facilities (including the Reserve Policy) on which there is available coverage shall be made on a pro-rata basis (calculated by reference to the coverage then available thereunder) after applying all available cash and investments in the Reserve Fund. Payment of Policy Costs and reimbursement of amounts with respect to other Credit Facilities shall be made on a prorata basis prior to replenishment of any cash drawn from the Reserve Fund. For the avoidance of doubt, available coverage means the coverage then available for disbursement pursuant to the terms of the applicable alternative credit instrument without regard to the legal or financial ability or willingness of the provider of such instrument to honor a claim or draw thereon or the failure of such provider to honor any such claim or draw. If the Successor Agency fails to pay any Policy Costs in accordance with the requirements of the Indenture, the Insurer will be entitled to exercise any and all legal and equitable remedies available to it, including those provided under the Indenture other than (i) acceleration of the maturity of the Bonds or (ii) remedies which would adversely affect owners of the Bonds. The Indenture will not be discharged until all Policy Costs owing to the Insurer will have been paid in full. The Successor Agency s obligation to pay such amounts will expressly survive payment in full of the Bonds. The Successor Agency will include any Policy Costs then due and owing the Insurer in the calculation of the additional bonds test in the Indenture. The Trustee will ascertain the necessity for a claim upon the Reserve Policy in accordance with the provisions of the Indenture and to provide notice to the Insurer in accordance with the terms of the Reserve Policy at least five (5) business days prior to each date upon which interest or principal is due on the Bonds. Unclaimed Moneys. Anything contained in the Indenture to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of the interest or premium (if any) on or principal of the Bonds which remains unclaimed for two (2) years after the date when the payments of such interest, premium (if any) and principal have become payable, if such money was held by the Trustee at such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when the interest and premium (if any) on and principal of such Bonds have become payable, will be repaid by the Trustee to the Successor Agency as its absolute property free from trust, and the Trustee will thereupon be released and discharged with respect thereto and the Bond Owners will look only to the Successor Agency for the payment of the principal of and interest and redemption premium (if any) on such Bonds. Appendix A Page 23

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85 APPENDIX B FORM OF OPINION OF BOND COUNSEL November, 2014 Successor Agency to the Camarillo Community Development Commission Camarillo, California Ladies and Gentlemen: $15,915,000 Successor Agency to the Camarillo Community Development Commission Tax Allocation Refunding Bonds, Series 2014 (Camarillo Corridor Project) We have acted as bond counsel to the Successor Agency to the Camarillo Community Development Commission (the Successor Agency ) in connection with the issuance of its Tax Allocation Refunding Bonds, Series 2014 (Camarillo Corridor Project) (the Bonds ) in the aggregate principal amount of $15,915,000. The issuance of the Bonds was authorized by the Successor Agency pursuant to Resolution No SA adopted on July 23, 2014 (the Resolution ) and by the Oversight Board for the Successor Agency pursuant to Resolution No SA adopted on August 6, 2014 (the Oversight Board Resolution ). The Bonds will be issued pursuant to the Constitution and laws of the State of California, including Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the Bond Law ) and the Community Redevelopment Law, Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State of California (the Redevelopment Law ). The Bonds are also being issued pursuant to an Indenture of Trust, dated as of November 1, 2014 (the Indenture ), by and between the Successor Agency and U.S. Bank National Association, as trustee (the Trustee ). As bond counsel, we have examined applicable provisions of the Bond Law and the Redevelopment Law and copies certified to us as being true and complete copies of the proceedings of the Successor Agency and the Oversight Board for the authorization and issuance of the Bonds, including the Resolution, the Oversight Board Resolution, the Indenture and the Tax Certificate (as defined below). Our services as bond counsel were limited to an examination of such proceedings and to the rendering of the opinions set forth below. In this connection we have also examined such certificates of public officials and officers of the Successor Agency as we have considered necessary for the purposes of this opinion. We have assumed the genuineness of all documents and signatures presented to us. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture and the Tax Certificate. In addition, we call attention to the fact that the rights and obligations under the Bonds and the Indenture are subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other similar laws affecting creditors rights, to the application of equitable principles, to the possible unavailability of specific performance or Appendix B Page 1

86 injunctive relief, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against public agencies in the State of California. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions: 1. The Bonds constitute valid and binding obligations of the Successor Agency, payable as to principal and interest from Pledged Tax Revenues as provided in the Indenture. 2. The Indenture has been duly and validly authorized, executed and delivered by the Successor Agency and, assuming the Indenture constitutes the legally valid and binding obligation of the Trustee, constitutes the legally valid and binding obligation of the Successor Agency, enforceable against the Successor Agency in accordance with its terms. 3. Under existing statutes, regulations, rulings and court decisions, interest on the Bonds is exempt from personal income taxes of the State of California and, assuming compliance with the covenants mentioned herein, interest on the Bonds is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 (the Code ) from the gross income of the owners thereof for federal income tax purposes. It is our further opinion that, under existing statutes, regulations, rulings and court decisions, the Bonds are not specified private activity bonds within the meaning of section 57(a)(5) of the Code and, therefore, that interest on the Bonds is not treated as an item of tax preference for purposes of computing the alternative minimum tax imposed by section 55 of the Code; however, the receipt or accrual of interest on Bonds owned by a corporation may affect the computation of the alternative minimum taxable income of that corporation. A corporation s alternative minimum taxable income is the basis on which the alternative minimum tax imposed by section 55 of the Code is computed. The Code imposes certain requirements that must be met subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax purposes. Noncompliance with such requirements could cause the interest on the Bonds to fail to be excluded from the gross income of the owners thereof retroactive to the date of issuance of the Bonds. Pursuant to the Indenture and the Tax Certificate as to Arbitrage and the Provisions of Sections 103 and of the Internal Revenue Code of 1986 (the Tax Certificate ) being delivered by the Successor Agency in connection with the issuance of the Bonds, the Successor Agency is making representations relevant to the determination of, and is undertaking certain covenants regarding or affecting, the exclusion of interest on the Bonds from the gross income of the owners thereof for federal income tax purposes. In reaching our opinions described in the immediately preceding paragraph, we have assumed the accuracy of such representations and the present and future compliance by the Successor Agency with such covenants. Further, except as stated in the preceding paragraph, we express no opinion as to any federal or state tax consequence of the receipt of interest on, or the ownership or disposition of, the Bonds. Furthermore, we express no opinion as to any federal, state or local tax law consequence with respect to the Bonds, or the interest thereon, if any action is taken with respect to the Bonds or the proceeds thereof predicated or permitted upon the advice or approval of other counsel. Our opinions are based on existing law, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may hereafter come to our attention or to reflect any changes in any law that may hereafter occur or become effective. Moreover, our opinions are not a guarantee of results and are not binding on the Internal Appendix B Page 2

87 Revenue Service; rather, such opinions represent our legal judgment based upon our review of existing law that we deem relevant to such opinions and in reliance upon the representations and covenants referenced above. This opinion is limited to the laws of the State of California and the federal laws of the United States. Respectfully submitted, Appendix B Page 3

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89 APPENDIX C BOOK-ENTRY ONLY SYSTEM The information in this Appendix C concerning The Depository Trust Company ( DTC ), New York, New York, and DTC s book-entry system has been obtained from DTC and the Successor Agency takes no responsibility for the completeness or accuracy thereof. The Successor Agency cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current Rules applicable to DTC are on file with the Securities and Exchange Commission and the current Procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. The Depository Trust Company ( DTC ), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at The information set forth on such website is not incorporated herein by reference. 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 Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration Appendix C Page 1

90 in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 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 Direct and Indirect 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. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Successor Agency as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, premium (if any), and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the Successor Agency or the Trustee, on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Trustee, or the Successor Agency, subject to any statutory or regulatory requirements as may be in effect from time to time. Principal, premium (if any), and interest payments with respect to the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Successor Agency or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Successor Agency or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, certificates representing the Bonds are required to be printed and delivered. The Successor Agency may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, representing the Bonds will be printed and delivered to DTC in accordance with the provisions of the Indenture. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that the Successor Agency believes to be reliable, but the Successor Agency takes no responsibility for the accuracy thereof. Appendix C Page 2

91 APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the Disclosure Agreement ), dated as of November 1, 2014, is executed and delivered by Successor Agency to the Camarillo Community Development Commission (the Issuer ) and Digital Assurance Certification, L.L.C., as exclusive Disclosure Dissemination Agent (the Disclosure Dissemination Agent or DAC ) for the benefit of the Holders (hereinafter defined) of the Bonds (hereinafter defined) and in order to provide certain continuing disclosure with respect to the Bonds in accordance with Rule 15c2-12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time (the Rule ). The services provided under this Disclosure Agreement solely relate to the execution of instructions received from the Issuer through use of the DAC system and do not constitute advice within the meaning of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act ). DAC will not provide any advice or recommendation to the Issuer or anyone on the Issuer s behalf regarding the issuance of municipal securities or any municipal financial product as defined in the Act and nothing in this Disclosure Agreement shall be interpreted to the contrary. SECTION 1. Definitions. Capitalized terms not otherwise defined in this Disclosure Agreement shall have the meaning assigned in the Rule or, to the extent not in conflict with the Rule, in the Official Statement (hereinafter defined). The capitalized terms shall have the following meanings: Annual Filing Date means the date, set in Sections 2(a) and 2(f), by which the Annual Report is to be filed with the MSRB. Annual Financial Information means annual financial information as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Agreement. Annual Report means an Annual Report described in and consistent with Section 3 of this Disclosure Agreement. Audited Financial Statements means the financial statements (if any) of the Issuer for the prior fiscal year, certified by an independent auditor as prepared in accordance with generally accepted accounting principles or otherwise, as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(b) of this Disclosure Agreement. Bonds means the $15,915,000 aggregate principal amount of Successor Agency to the Camarillo Community Development Commission Tax Allocation Refunding Bonds, Series 2014 (Camarillo Corridor Project), as listed on the attached Exhibit A, with the 9-digit CUSIP numbers relating thereto. Certification means a written certification of compliance signed by the Disclosure Representative stating that the Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure delivered to the Disclosure Dissemination Agent is the Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure required to be Appendix D Page 1

92 submitted to the MSRB under this Disclosure Agreement. A Certification shall accompany each such document submitted to the Disclosure Dissemination Agent by the Issuer and include the full name of the Bonds and the 9-digit CUSIP numbers for all Bonds to which the document applies. Disclosure Dissemination Agent means Digital Assurance Certification, L.L.C, acting in its capacity as Disclosure Dissemination Agent hereunder, or any successor Disclosure Dissemination Agent designated in writing by the Issuer pursuant to Section 9 hereof. Disclosure Representative means Director of Finance or his or her designee, or such other person as the Issuer shall designate in writing to the Disclosure Dissemination Agent from time to time as the person responsible for providing Information to the Disclosure Dissemination Agent. Failure to File Event means the Issuer s failure to file an Annual Report on or before the Annual Filing Date. Force Majeure Event means: (i) acts of God, war, or terrorist action; (ii) failure or shut-down of the Electronic Municipal Market Access system maintained by the MSRB; or (iii) to the extent beyond the Disclosure Dissemination Agent s reasonable control, interruptions in telecommunications or utilities services, failure, malfunction or error of any telecommunications, computer or other electrical, mechanical or technological application, service or system, computer virus, interruptions in Internet service or telephone service (including due to a virus, electrical delivery problem or similar occurrence) that affect Internet users generally, or in the local area in which the Disclosure Dissemination Agent or the MSRB is located, or acts of any government, regulatory or any other competent authority the effect of which is to prohibit the Disclosure Dissemination Agent from performance of its obligations under this Disclosure Agreement. Holder means any person (a) having the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income tax purposes. Information means, collectively, the Annual Reports, the Audited Financial Statements (if any), the Notice Event notices, the Failure to File Event notices, the Voluntary Event Disclosures and the Voluntary Financial Disclosures. MSRB means the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of Notice Event means any of the events enumerated in paragraph (b)(5)(i)(c) of the Rule and listed in Section 4(a) of this Disclosure Agreement. Obligated Person means any person, including the Issuer, who is either generally or through an enterprise, fund, or account of such person committed by contract or other arrangement to support payment of all, or part of the obligations on the Bonds (other than providers of municipal bond insurance, letters of credit, or other liquidity facilities), as shown on Exhibit A. Official Statement means that Official Statement, dated October 21, 2014, prepared by the Issuer in connection with the Bonds. Appendix D Page 2

93 Trustee means U.S. Bank National Association. Voluntary Event Disclosure means information of the category specified in any of subsections (e)(vi)(1) through (e)(vi)(11) of Section 2 of this Disclosure Agreement that is accompanied by a Certification of the Disclosure Representative containing the information prescribed by Section 7(a) of this Disclosure Agreement. Voluntary Financial Disclosure means information of the category specified in any of subsections (e)(vii)(1) through (e)(vii)(9) of Section 2 of this Disclosure Agreement that is accompanied by a Certification of the Disclosure Representative containing the information prescribed by Section 7(b) of this Disclosure Agreement. SECTION 2. Provision of Annual Reports. (a) The Issuer shall provide, annually, an electronic copy of the Annual Report and Certification to the Disclosure Dissemination Agent, together with a copy for the Trustee, not later than the Annual Filing Date. Promptly upon receipt of an electronic copy of the Annual Report and the Certification, the Disclosure Dissemination Agent shall provide an Annual Report to the MSRB not later than February 1, commencing with February 1, Such date and each anniversary thereof is the Annual Filing Date. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 3 of this Disclosure Agreement. (b) If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure Dissemination Agent has not received a copy of the Annual Report and Certification, the Disclosure Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may be by ) to remind the Issuer of its undertaking to provide the Annual Report pursuant to Section 2(a). Upon such reminder, the Disclosure Representative shall either (i) provide the Disclosure Dissemination Agent with an electronic copy of the Annual Report and the Certification no later than two (2) business days prior to the Annual Filing Date, or (ii) instruct the Disclosure Dissemination Agent in writing that the Issuer will not be able to file the Annual Report within the time required under this Disclosure Agreement, state the date by which the Annual Report for such year will be provided and instruct the Disclosure Dissemination Agent that a Failure to File Event has occurred and to immediately send a notice to the MSRB in substantially the form attached as Exhibit B, accompanied by a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1. (c) If the Disclosure Dissemination Agent has not received an Annual Report and Certification by 6:00 p.m. Eastern time on Annual Filing Date (or, if such Annual Filing Date falls on a Saturday, Sunday or holiday, then the first business day thereafter) for the Annual Report, a Failure to File Event shall have occurred and the Issuer irrevocably directs the Disclosure Dissemination Agent to immediately send a notice to the MSRB in substantially the form attached as Exhibit B without reference to the anticipated filing date for the Annual Report, accompanied by a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1. (d) If Audited Financial Statements of the Issuer are prepared but not available prior to the Annual Filing Date, the Issuer shall, when the Audited Financial Statements are available, provide in a timely manner an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certification, together with a copy for the Trustee, for filing with the MSRB. Appendix D Page 3

94 (e) The Disclosure Dissemination Agent shall: (i) Filing Date; verify the filing specifications of the MSRB each year prior to the Annual (ii) upon receipt, promptly file each Annual Report received under Sections 2(a) and 2(b) with the MSRB; (iii) upon receipt, promptly file each Audited Financial Statement received under Section 2(d) with the MSRB; (iv) upon receipt, promptly file the text of each Notice Event received under Sections 4(a) and 4(b)(ii) with the MSRB, identifying the Notice Event as instructed by the Issuer pursuant to Section 4(a) or 4(b)(ii) (being any of the categories set forth below) when filing pursuant to Section 4(c) of this Disclosure Agreement: 1. Principal and interest payment delinquencies; 2. Non-Payment related defaults, if material; 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, IRS notices or events affecting the tax status of the security; 7. Modifications to rights of securities holders, if material; 8. Bond calls, if material; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the securities, if material; 11. Rating changes; 12. Tender offers; 13. Bankruptcy, insolvency, receivership or similar event of the obligated person; 14. Merger, consolidation, or acquisition of the obligated person, if material; and 15. Appointment of a successor or additional trustee, or the change of name of a trustee, if material; Appendix D Page 4

95 (v) upon receipt (or irrevocable direction pursuant to Section 2(c) of this Disclosure Agreement, as applicable), promptly file a completed copy of Exhibit B to this Disclosure Agreement with the MSRB, identifying the filing as Failure to provide annual financial information as required when filing pursuant to Section 2(b)(ii) or Section 2(c) of this Disclosure Agreement; (vi) upon receipt, promptly file the text of each Voluntary Event Disclosure received under Section 7(a) with the MSRB, identifying the Voluntary Event Disclosure as instructed by the Issuer pursuant to Section 7(a) (being any of the categories set forth below) when filing pursuant to Section 7(a) of this Disclosure Agreement: 1. amendment to continuing disclosure undertaking; 2. change in obligated person; 3. notice to investors pursuant to bond documents; 4. certain communications from the Internal Revenue Service; 5. secondary market purchases; 6. bid for auction rate or other securities; 7. capital or other financing plan; 8. litigation/enforcement action; 9. change of tender agent, remarketing agent, or other on-going party; 10. derivative or other similar transaction; and 11. other event-based disclosures; (vii) upon receipt, promptly file the text of each Voluntary Financial Disclosure received under Section 7(b) with the MSRB, identifying the Voluntary Financial Disclosure as instructed by the Issuer pursuant to Section 7(b) (being any of the categories set forth below) when filing pursuant to Section 7(b) of this Disclosure Agreement: 1. quarterly/monthly financial information; 2. change in fiscal year/timing of annual disclosure; 3. change in accounting standard; 4. interim/additional financial information/operating data; 5. budget; 6. investment/debt/financial policy; 7. information provided to rating agency, credit/liquidity provider or other third party; Appendix D Page 5

96 8. consultant reports; and 9. other financial/operating data. (viii) provide the Issuer evidence of the filings of each of the above when made, which shall be by means of the DAC system, for so long as DAC is the Disclosure Dissemination Agent under this Disclosure Agreement. (f) The Issuer may adjust the Annual Filing Date upon change of its fiscal year by providing written notice of such change and the new Annual Filing Date to the Disclosure Dissemination Agent, Trustee (if any) and the MSRB, provided that the period between the existing Annual Filing Date and new Annual Filing Date shall not exceed one year. (g) Any Information received by the Disclosure Dissemination Agent before 6:00 p.m. Eastern time on any business day that it is required to file with the MSRB pursuant to the terms of this Disclosure Agreement and that is accompanied by a Certification and all other information required by the terms of this Disclosure Agreement will be filed by the Disclosure Dissemination Agent with the MSRB no later than 11:59 p.m. Eastern time on the same business day; provided, however, the Disclosure Dissemination Agent shall have no liability for any delay in filing with the MSRB if such delay is caused by a Force Majeure Event provided that the Disclosure Dissemination Agent uses reasonable efforts to make any such filing as soon as possible. SECTION 3. Content of Annual Reports. (a) Each Annual Report shall contain Annual Financial Information with respect to the Issuer, including the information provided in the Official Statement within Table 4 Historical Tax Values and Tax Revenues, Table 5 Ten Largest Property Taxpayers, calculation of the debt service coverage ratio for such Fiscal Year, calculated in the same manner as provided Table 6 and a description of outstanding indebtedness payable from Tax Revenues issued during such Fiscal Year. (b) Audited Financial Statements will be included in the Annual Report. If audited financial statements are not available, then, unaudited financial statements, prepared in accordance with GAAP as described in the Official Statement will be included in the Annual Report. Audited Financial Statements (if any) will be provided pursuant to Section 2(d). Any or all of the items listed above may be included by specific reference from other documents, including official statements of debt issues with respect to which the Issuer is an obligated person (as defined by the Rule), which have been previously filed with the Securities and Exchange Commission or available on the MSRB Internet Website. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The Issuer will clearly identify each such document so incorporated by reference. Any Annual Financial Information containing modified operating data or financial information is required to explain, in narrative form, the reasons for the modification and the impact of the change in the type of operating data or financial information being provided. SECTION 4. Reporting of Notice Events. (a) The occurrence of any of the following events with respect to the Bonds constitutes a Notice Event: Appendix D Page 6

97 1. Principal and interest payment delinquencies; 2. Non-payment related defaults, if material; 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, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; 7. Modifications to rights of Bond holders, if material; 8. Bond calls, if material, and tender offers; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the Bonds, if material; 11. Rating changes; 12. Bankruptcy, insolvency, receivership or similar event of the Obligated Person; Note to subsection (a)(12) of this Section 4: For the purposes of the event described in subsection (a)(12) of this Section 4, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an Obligated Person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Obligated Person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Obligated Person. 13. The consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material. The Issuer shall, in a timely manner not in excess of ten business days after its occurrence, notify the Disclosure Dissemination Agent in writing of the occurrence of a Notice Appendix D Page 7

98 Event. Such notice shall instruct the Disclosure Dissemination Agent to report the occurrence pursuant to subsection (c) and shall be accompanied by a Certification. Such notice or Certification shall identify the Notice Event that has occurred (which shall be any of the categories set forth in Section 2(e)(iv) of this Disclosure Agreement), include the text of the disclosure that the Issuer desires to make, contain the written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event). (b) The Disclosure Dissemination Agent is under no obligation to notify the Issuer or the Disclosure Representative of an event that may constitute a Notice Event. In the event the Disclosure Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will within two business days of receipt of such notice (but in any event not later than the tenth business day after the occurrence of the Notice Event, if the Issuer determines that a Notice Event has occurred), instruct the Disclosure Dissemination Agent that (i) a Notice Event has not occurred and no filing is to be made or (ii) a Notice Event has occurred and the Disclosure Dissemination Agent is to report the occurrence pursuant to subsection (c) of this Section 4, together with a Certification. Such Certification shall identify the Notice Event that has occurred (which shall be any of the categories set forth in Section 2(e)(iv) of this Disclosure Agreement), include the text of the disclosure that the Issuer desires to make, contain the written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event). (c) If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in subsection (a) or (b)(ii) of this Section 4 to report the occurrence of a Notice Event, the Disclosure Dissemination Agent shall promptly file a notice of such occurrence with MSRB in accordance with Section 2 (e)(iv) hereof. This notice will be filed with a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1. SECTION 5. CUSIP Numbers. Whenever providing information to the Disclosure Dissemination Agent, including but not limited to Annual Reports, documents incorporated by reference to the Annual Reports, Audited Financial Statements, Notice Event notices, Failure to File Event notices, Voluntary Event Disclosures and Voluntary Financial Disclosures, the Issuer shall indicate the full name of the Bonds and the 9-digit CUSIP numbers for the Bonds as to which the provided information relates. SECTION 6. Additional Disclosure Obligations. The Issuer acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the Issuer, and that the duties and responsibilities of the Disclosure Dissemination Agent under this Disclosure Agreement do not extend to providing legal advice regarding such laws. The Issuer acknowledges and understands that the duties of the Disclosure Dissemination Agent relate exclusively to execution of the mechanical tasks of disseminating information as described in this Disclosure Agreement. SECTION 7. Voluntary Filing. (a) The Issuer may instruct the Disclosure Dissemination Agent to file a Voluntary Event Disclosure with the MSRB from time to time pursuant to a Certification of the Disclosure Representative. Such Certification shall identify the Voluntary Event Disclosure (which shall be any of the categories set forth in Section 2(e)(vi) of this Disclosure Agreement), include the text of the disclosure that the Issuer desires to make, contain the written authorization of the Issuer Appendix D Page 8

99 for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information. If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in this Section 7(a) to file a Voluntary Event Disclosure, the Disclosure Dissemination Agent shall promptly file such Voluntary Event Disclosure with the MSRB in accordance with Section 2(e)(vi) hereof. This notice will be filed with a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-2. (b) The Issuer may instruct the Disclosure Dissemination Agent to file a Voluntary Financial Disclosure with the MSRB from time to time pursuant to a Certification of the Disclosure Representative. Such Certification shall identify the Voluntary Financial Disclosure (which shall be any of the categories set forth in Section 2(e)(vii) of this Disclosure Agreement), include the text of the disclosure that the Issuer desires to make, contain the written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information. If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in this Section 7(b) to file a Voluntary Financial Disclosure, the Disclosure Dissemination Agent shall promptly file such Voluntary Financial Disclosure with the MSRB in accordance with Section 2(e)(vii) hereof. This notice will be filed with a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-3. (b) The parties hereto acknowledge that the Issuer is not obligated pursuant to the terms of this Disclosure Agreement to file any Voluntary Event Disclosure pursuant to Section 7(a) hereof or any Voluntary Financial Disclosure pursuant to Section 7(b) hereof. (c) Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information through the Disclosure Dissemination Agent using the means of dissemination set forth in this Disclosure Agreement or including any other information in any Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure, in addition to that required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure. SECTION 8. Termination of Reporting Obligation. The obligations of the Issuer and the Disclosure Dissemination Agent under this Disclosure Agreement shall terminate with respect to the Bonds upon the legal defeasance, prior redemption or payment in full of all of the Bonds, when the Issuer is no longer an obligated person with respect to the Bonds, or upon delivery by the Disclosure Representative to the Disclosure Dissemination Agent of an opinion of counsel expert in federal securities laws to the effect that continuing disclosure is no longer required. SECTION 9. Disclosure Dissemination Agent. The Issuer has appointed Digital Assurance Certification, L.L.C. as exclusive Disclosure Dissemination Agent under this Disclosure Agreement. The Issuer may, upon thirty days written notice to the Disclosure Dissemination Agent and the Trustee, replace or appoint a successor Disclosure Dissemination Agent. Upon termination of DAC s services as Disclosure Dissemination Agent, whether by notice of the Issuer or DAC, the Issuer agrees to appoint a successor Disclosure Dissemination Agent or, alternately, agrees to assume all responsibilities of Disclosure Dissemination Agent under this Disclosure Agreement for the benefit of the Holders of the Bonds. Notwithstanding any replacement or appointment of a successor, the Issuer shall remain liable until payment in Appendix D Page 9

100 full for any and all sums owed and payable to the Disclosure Dissemination Agent. The Disclosure Dissemination Agent may resign at any time by providing thirty days prior written notice to the Issuer. SECTION 10. Remedies in Event of Default. In the event of a failure of the Issuer or the Disclosure Dissemination Agent to comply with any provision of this Disclosure Agreement, the Holders rights to enforce the provisions of this Agreement shall be limited solely to a right, by action in mandamus or for specific performance, to compel performance of the parties' obligation under this Disclosure Agreement. Any failure by a party to perform in accordance with this Disclosure Agreement shall not constitute a default on the Bonds or under any other document relating to the Bonds, and all rights and remedies shall be limited to those expressly stated herein. SECTION 11. Duties, Immunities and Liabilities of Disclosure Dissemination Agent. (a) The Disclosure Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement. The Disclosure Dissemination Agent s obligation to deliver the information at the times and with the contents described herein shall be limited to the extent the Issuer has provided such information to the Disclosure Dissemination Agent as required by this Disclosure Agreement. The Disclosure Dissemination Agent shall have no duty with respect to the content of any disclosures or notice made pursuant to the terms hereof. The Disclosure Dissemination Agent shall have no duty or obligation to review or verify any Information or any other information, disclosures or notices provided to it by the Issuer and shall not be deemed to be acting in any fiduciary capacity for the Issuer, the Holders of the Bonds or any other party. The Disclosure Dissemination Agent shall have no responsibility for the Issuer s failure to report to the Disclosure Dissemination Agent a Notice Event or a duty to determine the materiality thereof. The Disclosure Dissemination Agent shall have no duty to determine, or liability for failing to determine, whether the Issuer has complied with this Disclosure Agreement. The Disclosure Dissemination Agent may conclusively rely upon Certifications of the Issuer at all times. The obligations of the Issuer under this Section shall survive resignation or removal of the Disclosure Dissemination Agent and defeasance, redemption or payment of the Bonds. (b) The Disclosure Dissemination Agent may, from time to time, consult with legal counsel (either in-house or external) of its own choosing in the event of any disagreement or controversy, or question or doubt as to the construction of any of the provisions hereof or its respective duties hereunder, and shall not incur any liability and shall be fully protected in acting in good faith upon the advice of such legal counsel. The reasonable fees and expenses of such counsel shall be payable by the Issuer. (c) All documents, reports, notices, statements, information and other materials provided to the MSRB under this Agreement shall be provided in an electronic format and accompanied by identifying information as prescribed by the MSRB. SECTION 12. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Issuer and the Disclosure Dissemination Agent may amend this Disclosure Agreement and any provision of this Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to both the Issuer and the Disclosure Dissemination Agent to the effect that such amendment or waiver does not materially impair the interests of Holders of the Bonds and would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule; provided neither the Issuer or the Disclosure Appendix D Page 10

101 Dissemination Agent shall be obligated to agree to any amendment modifying their respective duties or obligations without their consent thereto. Notwithstanding the preceding paragraph, the Disclosure Dissemination Agent shall have the right to adopt amendments to this Disclosure Agreement necessary to comply with modifications to and interpretations of the provisions of the Rule as announced by the Securities and Exchange Commission from time to time by giving not less than 20 days written notice of the intent to do so together with a copy of the proposed amendment to the Issuer. No such amendment shall become effective if the Issuer shall, within 10 days following the giving of such notice, send a notice to the Disclosure Dissemination Agent in writing that it objects to such amendment. SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Trustee of the Bonds, the Disclosure Dissemination Agent, the underwriter, and the Holders from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 14. Governing Law. This Disclosure Agreement shall be governed by the laws of the State of Florida (other than with respect to conflicts of laws). SECTION 15. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Appendix D Page 11

102 The Disclosure Dissemination Agent and the Issuer have caused this Continuing Disclosure Agreement to be executed, on the date first written above, by their respective officers duly authorized. DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Disclosure Dissemination Agent By: Name: Title: SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION, as Issuer By: Name: Title: Appendix D Page 12

103 EXHIBIT A NAME AND CUSIP NUMBERS OF BONDS Name of Issuer Successor Agency to the Camarillo Community Development Commission Obligated Person(s) Successor Agency to the Camarillo Community Development Commission Name of Bond Issue: $15,915,000 Successor Agency to the Camarillo Community Development Commission Tax Allocation Refunding Bonds, Series 2014 (Camarillo Corridor Project) Date of Issuance: November 12, 2014 Date of Official Statement: October 21, 2014 CUSIP Number: 13177U AA1 CUSIP Number: 13177U AJ2 CUSIP Number: 13177U AB9 CUSIP Number: 13177U AK9 CUSIP Number: 13177U AC7 CUSIP Number: 13177U AL7 CUSIP Number: 13177U AD5 CUSIP Number: 13177U AM5 CUSIP Number: 13177U AE3 CUSIP Number: 13177U AN3 CUSIP Number: 13177U AF0 CUSIP Number: 13177U AP8 CUSIP Number: 13177U AG8 CUSIP Number: 13177U AT0 CUSIP Number: 13177U AH6 CUSIP Number: 13177U AV5 Appendix D Page 13

104 EXHIBIT B NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT Name of Issuer Successor Agency to the Camarillo Community Development Commission Obligated Person(s) Successor Agency to the Camarillo Community Development Commission Name of Bond Issue: $15,915,000 Successor Agency to the Camarillo Community Development Commission Tax Allocation Refunding Bonds, Series 2014 (Camarillo Corridor Project) Date of Issuance: November 12, 2014 Date of Disclosure Agreement: November 1, 2014 CUSIP Number: NOTICE IS HEREBY GIVEN that the Issuer has not provided an Annual Report with respect to the above-named Bonds as required by the Disclosure Agreement between the Issuer and Digital Assurance Certification, L.L.C., as Disclosure Dissemination Agent. [The Issuer has notified the Disclosure Dissemination Agent that it anticipates that the Annual Report will be filed by ]. Dated: Digital Assurance Certification, L.L.C., as Disclosure Dissemination Agent, on behalf of the Issuer cc: Successor Agency to the Camarillo Community Development Commission Appendix D Page 14

105 EXHIBIT C-1 EVENT NOTICE COVER SHEET This cover sheet and accompanying event notice will be sent to the MSRB, pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(C) and (D). Issuer s and/or Other Obligated Person s Name: Issuer s Six-Digit CUSIP Number: or Nine-Digit CUSIP Number(s) of the bonds to which this event notice relates: Number of pages attached: Description of Notice Events (Check One): 1. Principal and interest payment delinquencies; 2. Non-Payment related defaults, if material; 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, IRS notices or events affecting the tax status of the security; 7. Modifications to rights of securities holders, if material; 8. Bond calls, if material; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the securities, if material; 11. Rating changes; 12. Tender offers; 13. Bankruptcy, insolvency, receivership or similar event of the obligated person; 14. Merger, consolidation, or acquisition of the obligated person, if material; and 15. Appointment of a successor or additional trustee, or the change of name of a trustee, if material. Failure to provide annual financial information as required. I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly: Signature: Name: Title: Digital Assurance Certification, L.L.C. 390 N. Orange Avenue Suite 1750 Orlando, FL Date: Appendix D Page 15

106 EXHIBIT C-2 VOLUNTARY EVENT DISCLOSURE COVER SHEET This cover sheet and accompanying voluntary event disclosure will be sent to the MSRB, pursuant to the Disclosure Dissemination Agent Agreement dated as of between the Issuer and DAC. Issuer s and/or Other Obligated Person s Name: Issuer s Six-Digit CUSIP Number: or Nine-Digit CUSIP Number(s) of the bonds to which this notice relates: Number of pages attached: Description of Voluntary Event Disclosure (Check One): 1. amendment to continuing disclosure undertaking; 2. change in obligated person; 3. notice to investors pursuant to bond documents; 4. certain communications from the Internal Revenue Service; 5. secondary market purchases; 6. bid for auction rate or other securities; 7. capital or other financing plan; 8. litigation/enforcement action; 9. change of tender agent, remarketing agent, or other on-going party; 10. derivative or other similar transaction; and 11. other event-based disclosures. I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly: Signature: Signature: Name: Title: Digital Assurance Certification, L.L.C. 390 N. Orange Avenue Suite 1750 Orlando, FL Date: Appendix D Page 16

107 EXHIBIT C-3 VOLUNTARY FINANCIAL DISCLOSURE COVER SHEET This cover sheet and accompanying voluntary financial disclosure will be sent to the MSRB, pursuant to the Disclosure Dissemination Agent Agreement dated as of between the Issuer and DAC. Issuer s and/or Other Obligated Person s Name: Issuer s Six-Digit CUSIP Number: or Nine-Digit CUSIP Number(s) of the bonds to which this notice relates: Number of pages attached: Description of Voluntary Financial Disclosure (Check One): 1. quarterly/monthly financial information; 2. change in fiscal year/timing of annual disclosure; 3. change in accounting standard; 4. interim/additional financial information/operating data; 5. budget; 6. investment/debt/financial policy; 7. information provided to rating agency, credit/liquidity provider or other third party; 8. consultant reports; and 9. other financial/operating data. I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly: Signature: Signature: Name: Title: Digital Assurance Certification, L.L.C. 390 N. Orange Avenue Suite 1750 Orlando, FL Date: Appendix D Page 17

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109 APPENDIX E EXCERPTS FROM THE COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF CAMARILLO FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Appendix E

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111 INDEPENDENT AUDITORS REPORT The Honorable Mayor and Members of City Council City of Camarillo Camarillo, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Camarillo, California (the City) as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the City s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions Michelle Drive, Suite 300, Irvine, CA Tel: Fax: Offices located in Orange and San Diego Counties

112 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Camarillo, California as of June 30, 2013, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Emphasis of Matters As discussed in Note 1S to the financial statements, the City incorporated deferred outflows of resources and deferred inflows of resources into the definitions of the required components of the residual measure of net position due to the adoption of Governmental Accounting Standards Board s Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. The adoption of this standard also provides a new statement of net position format to report all assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position. Our opinion is not modified with respect to this matter. As discussed in Note 1S to the basic financial statements, the City has changed its method for accounting and reporting certain items previously reported as assets or liabilities during fiscal year due to the early adoption of Governmental Accounting Standards Board s Statement No. 65, Items Previously Reported as Assets and Liabilities. The adoption of this standard required retrospective application resulting in a $371,681 reduction of previously reported net position of the Sanitary District business-type activity. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, budgetary information, and schedules of funding progress, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the management s discussion and analysis, and schedules of funding progress in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during the audit of the basic financial statements. We do not express an opinion or provide any assurance on the management s discussion and analysis and schedules of funding progress because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance on them. The budgetary information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements of the City or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the budgetary information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. 22

113 Other Matters (Continued) Other information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City s basic financial statements. The introductory section, combining statements and individual fund schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining statements and individual fund schedules, as listed in the table of contents, are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining statements and individual fund schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 9, 2013, on our consideration of the City s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City s internal control over financial reporting and compliance. Irvine, California December 9,

114 MANAGEMENT S DISCUSSION AND ANALYSIS 24

115 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 This analysis of the City of Camarillo s (City) financial performance provides an overview of the City s financial activities for the fiscal year ended June 30, Please read it in conjunction with the accompanying transmittal letter, the basic financial statements, and the accompanying notes to those financial statements. A. FINANCIAL HIGHLIGHTS At June 30, 2013, the City s net position (excess of assets over liabilities) was $459.2 million. Of this amount, $108.8 million is available to meet the City s ongoing operations. During the fiscal year ended June 30, 2013, the City s total net position decreased by $35.1 million. Governmental activities decreased by $40.5 million when compared to the prior year. Business-type activities showed an increase of $5.4 million. The City s governmental funds reported combined ending fund balances of $74.9 million, a decrease of $14.2 million in comparison with the prior fiscal year. Approximately $51.4 million of this total amount is available for ongoing operations. At the end of Fiscal Year 2012/13, approximately $38.2 million of the General Fund was available for ongoing operations, or percent of total General Fund expenditures. The City s total debt decreased by $1.1 million during Fiscal Year 2012/13. The decrease is the result of principal payments on bonds (see Long Term Debt note 8 in the basic financial statements for more information). B. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City s basic financial statements, which are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to basic financial statements. The basic financial statements include the City (primary government) and all legally separate entities (component units) for which the government is financially accountable. The City s component units consist of the following: The Camarillo Sanitary District, Camarillo Capital Improvement Corporation, Camarillo Public Finance Authority, Camarillo Industrial Development Authority, and the Camarillo Library Board. These component units have been included in the basic financial statements as an integral part of the primary government using the blended method. Government-Wide Financial Statements The government-wide financial statements present the financial picture of the City and provide readers with a broad view of the City s finances. These statements present governmental activities and business-type activities separately, and include all assets of the City (including infrastructure) as well as all liabilities (including long-term debt). Additionally, certain interfund receivables, payables and other interfund activity have been eliminated as prescribed by GASB Statement No

116 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 B. OVERVIEW OF FINANCIAL STATEMENTS, Continued Government-Wide Financial Statements, Continued The Statement of Net Position and the Statement of Activities report information about the City as a whole and about its activities. These statements include all assets and liabilities of the City using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year s revenues and expenses are taken into account, regardless of when cash is received or paid. The Statement of Net Position presents information on all of the City s assets and liabilities, with the difference between the two reported as net position. Over time, changes in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities presents information showing how the City s net position changed during the year. All changes in net position are reported as soon as the underlying event occurs, regardless of timing of related cash flows. In the Statement of Net Position and the Statement of Activities, we separate the City s activities as follows: Governmental Activities Most of the City s basic services are reported in this category, including public safety, highways and streets, and community services. Property, business, hotel and sales taxes, charges for services, interest income, franchise fees, and state and federal grants finance these activities. Business-type Activities The City charges a fee to customers to cover all or most of the costs of certain services it provides. The City s water utility, sanitary district, solid waste, and transit activities are reported as business-type activities. Fund Financial Statements The fund financial statements provide detailed information about the City s major funds not the City as a whole. Some funds are required to be established either by state law or by bond covenants. However, management establishes many other funds to help it control and manage money for particular purposes, or to show that it is meeting legal responsibilities for using certain taxes, grants and other money. The fund financial statements include statements for each of the three categories of activities governmental, proprietary, and fiduciary. The governmental activities are prepared using the current financial resources measurement focus and modified accrual basis of accounting. The proprietary (business-type) activities are prepared using the economic resources measurement focus and the accrual basis of accounting. The fiduciary activities include a private-purpose trust fund, which is prepared using the economic resources measurement focus and the accrual basis of accounting. Agency funds, which only report assets and liabilities, do not have a measurement focus. 26

117 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 B. OVERVIEW OF FINANCIAL STATEMENTS, Continued Fund Financial Statements, Continued Governmental Funds The governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds financial statements focus on current financial resources, which emphasize near-term inflows and outflows of spendable resources as well as balances of spendable resources at the end of the fiscal year. This information is essential in evaluating the City s near-term financial requirements. To better understand the City s long-term and short-term requirements, it is useful to compare the City s governmental fund statements with the governmental activities in the government-wide financial statements. Reconciliation is provided for both the governmental fund balance sheet and the statement of revenues, expenditures, and changes in fund balances to facilitate this comparison. The major governmental funds include the General Fund, Library Debt Service Fund, and Capital Improvement Projects Fund, which are reported in detail in the governmental fund financial statements. All other funds are shown in the aggregate as other non-major funds. Individual fund data for other nonmajor governmental funds is provided in the form of supplementary information elsewhere in the report. Proprietary Funds The City maintains two types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water utility, sanitary district, solid waste, and transit operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City s various functions. The City uses internal service funds to account for its Risk Management Fund, Human Resources Fund, Information Services Fund, Vehicles & Equipment Fund, City Hall Facility Fund, Corporation Yard Facility Fund, Police Facility Fund, Library Facility Fund, Camarillo Ranch Facility Fund, and Chamber of Commerce Facility Fund. Because these services predominantly benefit the governmental rather than business-type activities, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The major enterprise funds, Water Utility Fund, Sanitary District Fund, Solid Waste Fund, and Transit Fund, are presented in detail. The internal service funds are combined into a single aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of supplementary information elsewhere in the report. Fiduciary Funds The City is the trustee, or fiduciary, for certain funds held on behalf of external parties. The City s fiduciary activities are reported in separate financial statements. These activities are excluded from the City s other financial statements because the resources of these funds are not available to support the City s own programs. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. 27

118 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 B. OVERVIEW OF FINANCIAL STATEMENTS, Continued Notes to Basic Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Required Supplementary Information In addition to the basic financial statements, this report also presents certain required supplementary information including the City s budgetary comparison schedules for the General Fund, and information concerning the progress in funding its obligation to provide pension benefits to its employees. C. GOVERNMENT-WIDE FINANCIAL ANALYSIS Statement of Net Position Net position is a good indicator of the City s financial position. For the fiscal year ended June 30, 2013, net position of the City was $459.2 million, which is a decrease of $33.8 million from the prior year. The following is the condensed Statement of Net Position for the fiscal years ended June 30, 2013 and City of Camarillo s Net Position As of June 30, 2013 and 2012 Governmental Activities Business-Type Activities Total Current and Other Assets $ 110,888,837 $ 112,755,659 $ 57,454,138 $ 54,258,812 $ 168,342,975 $ 167,014,471 Capital Assets 252,397, ,324,164 88,880,899 87,323, ,278, ,647,815 Total Assets 363,286, ,079, ,335, ,582, ,621, ,662,286 Current Liabilities 18,147,393 8,528,089 3,941,677 3,788,014 22,089,070 12,316,103 Long-term Liabilities Outstanding 7,010,000 7,275,000 19,410,973 19,933,142 26,420,973 27,208,142 Other Liabilities 986,857 1,280, , ,805 1,896,818 2,144,057 Total Liabilities 26,144,250 17,083,341 24,262,611 24,584,961 50,406,861 41,668,302 Net Position: Net investment in Capital Assets 245,054, ,279,288 68,943,384 67,714, ,998, ,994,127 Restricted 25,908,200 37,973,060 10,479,346 9,718,538 36,387,546 47,691,598 Unrestricted 66,179,359 65,744,134 42,649,696 39,564, ,829, ,308,259 Total Net Position $ 337,142,465 $ 375,996,482 $ 122,072,426 $ 116,997,502 $ 459,214,891 $ 492,993,984 28

119 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 C. GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Statement of Net Position, Continued At June 30, 2013, the largest portion of net position ($314.0 million or 68.4 percent) consists of the City s investment in capital assets net of related debt. This component portrays the total amount of funds required to acquire those assets, less any related debt used for such acquisition that is still outstanding. The City uses these capital assets to provide services to citizens. The capital assets of the City are not sources of income for repayment of debt as most assets are not revenue generating and generally are not liquidated to repay debt. Therefore, debt service payments are funded from other sources available to the City. A portion of the City's net position ($36.4 million or 7.9 percent) is subject to restrictions imposed by external parties, and their use is determined by those restrictions and agreements. The remainder of net position, $108.8 million, may be used at the City s discretion to meet ongoing operations. For the years ended June 30, 2013 and 2012, the City reported positive balances in every category of net position for governmental and business-type activities. The $26.0 million decrease in the City s net investment in capital assets was primarily related to the transfer of capital related debt from the City to the Successor Agency (SA). There was a decrease in restricted net position of $11.3 million primarily due to the SA loan (See Successor Agency Trust note 18 in the basic financial statements for more information). The increase of $3.5 million of the City s unrestricted net position was primarily related to the transfer of debt from the City to the SA. (See Successor Agency Trust note 18 in the basic financial statements for more information). The following chart shows the comparison of the three components of net position for Fiscal Years 2012/13 and 2011/12 (in millions). $600.0 $500.0 $400.0 $300.0 $200.0 $100.0 $- Net investment in Restricted Unrestricted Total Net Position Capital Assets 2011/12 $340.0 $47.7 $105.3 $ /13 $314.0 $36.4 $108.8 $

120 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 C. GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Statement of Activities The following is the condensed Statement of Activities for the fiscal years ended June 30, 2013 and Statement of Activities As of June 30, 2013 and 2012 Governmental Business-Type Activities Activities Total Revenues: Program Revenues: Charges for Services $ 8,254,680 $ 3,606,976 $ 30,209,403 $ 27,674,591 $ 38,464,083 $ 31,281,567 Operating Grants and Contributions 2,326,716 2,518,591 84, ,696 2,411,010 3,044,287 Capital Grants and Contributions 4,798,696 3,473,171 3,144,828 5,821,585 7,943,524 9,294,756 General Revenues: Taxes 32,779,730 36,823, , ,529 33,776,027 37,802,657 Investment Earnings 186, , , , , ,583 Gain (Loss) on Sale of Assets - 24, ,776 Grants and Contributions Not Restricted to Specific Programs 67,808 75, ,808 75,433 Other 579,524 1,279, , ,367 1,094,470 1,629,044 Total Revenues 48,993,515 48,346,017 35,055,600 35,637,086 84,049,115 83,983,103 Expenses: General Government 6,578,775 6,796, ,578,775 6,796,825 Public Safety 15,879,390 16,307, ,879,390 16,307,898 Highways and Streets 17,018, , ,018, ,137 Community Services 648,253 3,248, ,253 3,248,069 Culture and Recreation 5,133,315 4,004, ,133,315 4,004,723 Interest on Long-term Debt (unallocated) 257, , , ,589 Water Utility ,390,524 11,779,014 13,390,524 11,779,014 Sanitary District - - 8,988,900 8,946,284 8,988,900 8,946,284 Solid Waste - - 6,184,139 6,100,797 6,184,139 6,100,797 Transit - - 1,650,848 1,510,091 1,650,848 1,510,091 Total Expenses 45,515,265 32,102,241 30,214,411 28,336,186 75,729,676 60,438,427 Increase in Net Assets before Transfers 3,478,250 16,243,776 4,841,189 7,300,900 8,319,439 23,544,676 Transfers (605,416) (786,789) 605, , Special Item - Asset transfer to Successor Agency (43,414,063) 38,086, (43,414,063) 38,086,177 - see note 18B Increase in Net Position (40,541,229) 53,543,164 5,446,605 8,087,689 (35,094,624) 61,630,853 Net Position - Beginning of Year, as restated 377,683, ,453, ,625, ,909, ,309, ,363,131 Net Position - End of Year $ 337,142,465 $ 375,996,482 $ 122,072,426 $ 116,997,502 $ 459,214,891 $ 492,993,984 30

121 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 C. GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Governmental Activities The City s governmental activities decreased net position by $40.5 million, which was a 10.7 percent decrease from the prior fiscal year. Total revenue for governmental activities were $49.0 million, $647.5 thousand more than the prior fiscal year. Key elements of this change were as follows: Revenue highlights: Charges for services increased $4.6 million, or percent, primarily due to one-time development related revenues. Operating grants and contributions decreased $191.9 thousand, or 7.6 percent, primarily due to a decrease of $138.8 thousand in CDBG funding, and $32.7 thousand decrease in UASI funding for Police Facility improvements. Capital grants and contributions increased $1.3 million, or 38.2 percent, primarily due to increase in federal and state grants for capital projects. Property tax decreased $4.6 million, or 26.0 percent, primarily due to AB (See Successor Agency Trust note 18 in the basic financial statements for more information). Sales tax increased $377.0 thousand, or 2.8 percent, primarily due to increases in apparel sales, and auto dealers and supplies categories. Interest rates continued to decrease from an average of 0.9 percent in 2011/12 to an average of 0.6 percent in 2012/13, a decrease of $357.9 thousand. Governmental Activities - Revenues by Source For the Year Ended June 30, 2013 Taxes 67.0% Grants & contributions (not restricted) 0.1% Investment earnings 0.4% Miscellaneous 1.2% Charges for services 16.8% Capital grants & contributions 9.8% Operating grants & contributions 4.7% 31

122 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 C. GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Governmental Activities, Continued Expense highlights: Total expenses for governmental activities were $45.2 million (not including interest on long-term debt of $257.4 thousand), $14.0 million greater than the prior fiscal year. Program revenues offset total expenses as follows: Those who directly benefited from programs contributed $8.2 million in charges for services. The City was able to fund a portion of its programs through operating grants and contributions from outside sources or other governments for a total amount of $2.3 million. A total of $4.8 million in capital projects was funded by capital grants and contributions from outside agencies. As a result, total expenses that were funded by tax revenues, investment income, grants and contributions not restricted to specific programs, and other general revenues were $29.9 million. $18 Governmental Activities Revenues and Expenses by Function/Program For the Year Ended June 30, 2013 $16 $14 $12 Millions $10 $8 $6 $4 $2 $- General government Public safety Highways & streets Community services Culture & recreation Program Revenue Expenses 32

123 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 C. GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Governmental Activities, Continued Functional expenses (excluding interest on debt) for the years ended June 30, 2013 and 2012 were as follows (amount in millions): Net (Cost) Revenue Total Cost of Services Percent Change of Services Percent Change General Government $ 6.6 $ % $ (5.4) $ (5.6) -3.6% Public Safety % (15.1) (15.4) -2.0% Highways and Streets % (5.0) % Community Services % 0.1 (2.3) % Culture and Recreation % (4.5) (3.7) 21.6% Total $ 45.2 $ % $ (29.9) $ (21.6) 38.4% In total, the Net Cost of Services increased by $8.3 million, or 38.4 percent, from 2011/12. Highlights of the changes are: Highways and streets net cost of services increased $10.4 million primarily due to a decrease in capital outlay in 2011/12, as the Springville Interchange project was partially funded by an agency fund. Community services net cost of services decreased $2.4 million primarily due to elimination of redevelopment. Business-type Activities The City s business-type activities increased net position by $5.4 million (4.7 percent). Key elements of this increase are as follows: Revenue Highlights: Total program revenues in business-type activities decreased by $583.3 thousand primarily due to decreased capital grants and contributions in water utility and sanitary district of $2.7 million, and increased charges for services of $2.5 million in the water utility and sanitary district. 33

124 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 C. GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Business-type Activities, Continued Net revenue in water utility and sanitary district activities was $3.1 million and $1.7 million respectively, while solid waste and transit experienced a net cost of $129.4 thousand and $1.4 million respectively. Business-type Activities - Revenues by Source For the Year Ended June 30, 2013 Charges for services 86.2% Operating grants & contributions 0.2% Capital grants & contributions 9.0% Miscellaneous 1.5% Taxes 2.8% Investment earnings 0.3% Expense Highlights: Total expenses increased by $1.9 million over fiscal year 2011/12, with the largest increase in water utility of $1.6 million (13.7 percent), primarily due to increased cost of water purchased for resale. 34

125 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 C. GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued Business-type Activities, Continued Business-type Activities Revenues and Expenses For the Year Ended June 30, 2013 Millions $18 $16 $14 $12 $10 $8 $6 $4 $2 $- Water utility Sanitary district Solid waste Transit Program Revenue Expenses D. FUND FINANCIAL STATEMENT ANALYSIS The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the City s governmental funds is to provide information on short-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City s financing requirements. As of the end of Fiscal Year 2012/13, the City s governmental funds reported combined ending fund balances of $74.9 million, a decrease of $14.2 million in comparison with the prior fiscal year. Of this amount, $23.5 million is non-spendable and restricted. (See Fund Balances for Governmental Funds note 10 for more information). The General Fund is the chief operating fund of the City. At the end of Fiscal Year 2012/13, assigned/unassigned fund balance of the General Fund was $38.2 million, while the total fund balance was $50.3 million. As a measure of the General Fund s liquidity, it may be useful to compare both assigned/unassigned fund balance and total fund balance to total expenditures. At June 30, 2013, 35

126 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 D. FUND FINANCIAL STATEMENT ANALYSIS, Continued Governmental Funds, Continued assigned/unassigned fund balance was percent of total General Fund expenditures and net transfers in/out, while total fund balance was percent of total expenditures and net transfers. The City s General Fund balance increased by $2.9 million in Fiscal Year 2012/13 as compared to an increase of $1.7 million in Fiscal Year 2011/12, and is principally related to increases of $3.7 million in charges for services for one-time development fees, offset by approximately $1.7 million increase in net operating transfers. Proprietary Funds The City s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Factors concerning these funds have already been addressed in the discussion of government-wide financial analysis of business-type activities. E. GENERAL FUND BUDGETARY HIGHLIGHTS Over the course of the fiscal year, the City budget was revised a number of times. These budget amendments fall into two categories: Amendments and appropriations approved by the City Manager consistent with City Council policy after the beginning of the year to reflect capital, grant and encumbrance carryovers for unspent appropriations of projects and purchases that have not been completed. New appropriations approved by the City Council. Amendments between Fiscal Year 2012/13 original budget and final budget resulted in increased revenues of $3.4 million, increased expenditures of $1.8 million, and increased net transfers in and out of $973.3 thousand. The General Fund reflected a net total favorable budget variance of $1.7 million (before transfers) when comparing actual amounts to the final budget for the current fiscal year. The budget reflects a positive variance in revenues of $218.6 thousand, primarily from taxes and charges for services, and a positive variance in total expenditures of $1.5 million, primarily due to timing differences in planned expenditures. 36

127 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 F. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets Including Infrastructure Capital assets including infrastructure of the City are those assets that are used in the performance of the City s functions. At June 30, 2013, net capital assets totaled $252.4 million for governmental activities and $88.9 million for business-type activities, including depreciation on capital assets, which is recognized in the government-wide financial statements. This investment in capital assets includes land, buildings, utility systems, improvements other than buildings, infrastructure (roads, sidewalks, streetlights, etc.), machinery and equipment, and construction in progress. The total decrease in the City s investment in capital assets for Fiscal Year 2012/13 was 7.2 percent (10.0 percent decrease for governmental activities and 1.8 percent increase for business-type activities). Major capital asset events included the following: Governmental decrease of $1.4 million in Land, and $31.8 million decrease in Construction in Progress, is primarily due to transfer of assets from the City to the Successor Agency. Infrastructure for governmental activities increased $5.8 million primarily due to citywide pavement and median improvements. Business-type Construction in Progress increased $2.3 million primarily due to water utility distribution and collection systems improvement projects. The following is a summary of the City s capital assets as of June 30, 2013 and City of Camarillo's Capital Assets (net of depreciation) Governmental Business-Type Activities Activities Total Land $ 28,866,252 $ 30,257,008 $ 1,261,634 $ 1,261,634 $ 30,127,886 $ 31,518,642 Buildings 32,376,033 32,122, , ,803 32,814,990 32,588,621 Utility Systems ,156,559 66,545,912 66,156,559 66,545,912 Infrastructure 175,124, ,310, ,124, ,310,593 Machinery and Equipment 5,581,712 6,378,164 5,064,080 5,414,145 10,645,792 11,792,309 Construction in Progress 10,448,938 42,255,581 15,959,669 13,636,157 26,408,607 55,891,738 Total Net Assets $ 252,397,878 $ 280,324,164 $ 88,880,899 $ 87,323,651 $ 341,278,777 $ 367,647,815 (See Capital Assets note 5 in the basic financial statements for more information). 37

128 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 F. CAPITAL ASSETS AND DEBT ADMINISTRATION, Continued Long-Term Debt At the end of Fiscal Year 2012/13, the City had total outstanding revenue debt issues of $27.2 million. Due to the elimination of Redevelopment agencies, long-term debt of the former CDC were transferred to the Successor Agency Private-Purpose Trust Fund. (See Successor Agency Trust note 18 and Long- Term Debt note 8 in the basic financial statements for more information). The City has no general obligation debt. Non-city obligations are not included in the following table. All of the City s bonds are backed by certain revenues and carry AAA ratings. Additional information on the City s long-term debt can be found in note 8 of the basic financial statements. The City s long-term obligations as of June 30, 2013 and 2012 were as follows: City of Camarillo's Outstanding Debt Revenue Bonds Governmental Business-Type Activities Activities Total Revenue Bonds $ 7,275,000 $ 7,845,000 $ 19,930,973 $ 20,433,142 $ 27,205,973 $ 28,278,142 G. ECONOMIC FACTORS AND NEXT YEAR S BUDGET In preparing the budget for Fiscal Year 2013/14, the following factors were taken into consideration: There were no adjustments to employee salary bands. Other benefit factors included increased costs of health care at 2.0 percent and retirement at 1.2 percent. Sales tax revenues were projected to increase 1.9 percent in Fiscal Year 2013/14 due to anticipated continual economic recovery. Property tax revenues were projected to increase 1.0 percent due to the lag in the rebounding housing market and assessed valuations, and payment delinquencies. Several large capital projects are planned, including Santa Rosa Road widening ($1.5 million), various overlay and median improvement projects ($4.9 million), Regional Desalter Treatment Plant ($6.9 million), and Wastewater Pump Station Rehabilitation, sewer main and pipeline improvements/replacement projects ($12.0 million). 38

129 City of Camarillo Management s Discussion and Analysis, Continued Fiscal Year Ended June 30, 2013 G. ECONOMIC FACTORS AND NEXT YEAR S BUDGET, Continued The City s operating budget for Fiscal Year 2013/14 reflects the use of set-aside reserves to complete the large capital projects listed above. Fiscal Year 2013/14 represents the second year of the City s revived objective towards fiscal sustainability in its General Fund Operations. City staff is working to fully implement a long-term strategy to address the on-going fiscal impacts of operating transfers from the General Fund. This will be one of the key deliverables of our long-range plan for Fiscal Sustainability. It is anticipated that the City will remain in good financial condition throughout the fiscal year 2013/14 and beyond. H. REQUEST FOR INFORMATION This financial report is designed to provide citizens, taxpayers, customers, investors and creditors with a general overview of the City s finances and to demonstrate the City s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City of Camarillo Finance Department, 601 Carmen Drive, Camarillo, California or (805)

130 40

131 BASIC FINANCIAL STATEMENTS 41

132 42

133 GOVERNMENT-WIDE FINANCIAL STATEMENTS 43

134 44

135 City of Camarillo Statement of Net Position June 30, 2013 Primary Government Governmental Activities Business-type Activities Total ASSETS Current assets: Cash and investments $ 91,564,387 $ 52,399,775 $ 143,964,162 Receivables, net 6,314,836 5,227,293 11,542,129 Internal balances 215,000 (215,000) - Due from Successor Agency Trust 29,992-29,992 Prepaid items 51,868 17,818 69,686 Deposits 127,000 18, ,000 Advance to Successor Agency Trust 11,950,459-11,950,459 Restricted cash and investments 635,295 6, ,547 Total current assets 110,888,837 57,454, ,342,975 Noncurrent assets: Capital assets: Non-depreciable 39,315,190 17,221,303 56,536,493 Depreciable, net 213,082,688 71,659, ,742,284 Total capital assets 252,397,878 88,880, ,278,777 Total assets 363,286, ,335, ,621,752 LIABILITIES Current liabilities: Accounts payable 3,478,788 1,955,238 5,434,026 Deposits payable 1,419, ,470 1,802,908 Retentions payable 39,818-39,818 Interest payable 19,118 72,790 91,908 Due to Successor Agency Trust 11,852,273-11,852,273 Unearned revenue 169, , ,323 Compensated absences payable 835, ,548 1,281,300 Capital lease payable 67,972 6,542 74,514 Long-term debt - due within one year 265, , ,000 Total current liabilities 18,147,393 3,941,677 22,089,070 Noncurrent liabilities: Compensated absences payable 986, ,961 1,896,818 Long-term debt - due in more than one year 7,010,000 19,410,973 26,420,973 Total noncurrent liabilities 7,996,857 20,320,934 28,317,791 Total liabilities 26,144,250 24,262,611 50,406,861 NET POSITION Net investment in capital assets 245,054,906 68,943, ,998,290 Restricted for: Capital projects 20,041,800-20,041,800 Debt service 501, ,237 Special projects and programs 5,365,163 10,479,346 15,844,509 Total restricted 25,908,200 10,479,346 36,387,546 Unrestricted 66,179,359 42,649, ,829,055 Total net position $ 337,142,465 $ 122,072,426 $ 459,214,891 See Independent Auditors' Report and accompanying Notes to Basic Financial Statements 45

136 City of Camarillo Statement of Activities For the Fiscal Year Ended June 30, 2013 Program Revenues Expenses Functions/Programs Primary government: Governmental activities: General Government 6,578,775 Charges for Services Operating Grants and Contributions Capital Grants and Contributions $ $ 1,226,218 $ - $ - Public Safety 15,879, , ,635 - Highways and Streets 17,018,178 5,652,839 1,521,813 4,798,696 Community Services 648, , ,263 - Culture and Recreation 5,133,315 89, ,005 - Interest on long-term debt 257, Total governmental activities 45,515,265 8,254,680 2,326,716 4,798,696 Business-type activities: Water Utility 13,390,524 14,355,497-2,084,757 Sanitary District 8,988,900 9,703, ,502 Solid Waste 6,184,139 6,017,861 36,914 - Transit 1,650, ,067 47,380 72,569 Total business-type activities 30,214,411 30,209,403 84,294 3,144,828 Total primary government $ 75,729,676 $ 38,464,083 $ 2,411,010 $ 7,943,524 General Revenues and Transfers: General revenues Taxes: Property taxes Sales taxes Business license taxes Transient occupancy Other Taxes Franchise Total taxes Grants and contributions not restricted to specific programs Investment earnings Miscellaneous Transfers Total general revenues and transfers Special Item - Asset transfers to Successor Agency - see note 18B Change in net position Net position - beginning of year, as restated - see note 17 Net position - end of year See Independent Auditors' Report and accompanying Notes to Basic Financial Statements 46

137 Net (Expense) Revenue and Changes in Net Position Governmental Activities Business-Type Activities Total $ (5,352,557) $ - $ (5,352,557) (15,107,969) - (15,107,969) (5,044,830) - (5,044,830) 143, ,473 (4,515,936) - (4,515,936) (257,354) - (257,354) (30,135,173) - (30,135,173) - 3,049,730 3,049,730-1,702,580 1,702,580 - (129,364) (129,364) - (1,398,832) (1,398,832) - 3,224,114 3,224,114 $ (30,135,173) $ 3,224,114 $ (26,911,059) 13,200, ,297 14,197,022 13,745,464-13,745,464 1,309,336-1,309,336 1,849,831-1,849, , ,670 2,519,704-2,519,704 32,779, ,297 33,776,027 67,808-67, , , , , ,946 1,094,470 (605,416) 605,416-33,008,007 2,222,491 35,230,498 (43,414,063) - (43,414,063) (40,541,229) 5,446,605 (35,094,624) 377,683, ,625, ,309,515 $ 337,142,465 $ 122,072,426 $ 459,214,891 47

138 48

139 FUND FINANCIAL STATEMENTS Governmental Fund Financial Statements Proprietary Fund Financial Statements Fiduciary Fund Financial Statements 49

140 50

141 GOVERNMENTAL FUND FINANCIAL STATEMENTS General Fund - This fund is used to account for resources which are not required legally or by sound financial management to be accounted for in another fund. Library Debt Service Fund - This fund is used to account for the accumulation of resources and payment of long-term debt principal and interest for bonds issued by the City to finance the construction of the Library. Capital Improvement Projects Fund - This fund is used to account for capital asset acquisition, construction and improvement of capital facilities, including infrastructure, from general government resources, developer fees, and intergovernmental grants. Other Governmental Funds is the aggregate of all the non-major governmental funds. 51

142 City of Camarillo Balance Sheet Governmental Funds June 30, 2013 General Fund Major Funds Library Debt Service Capital Improvement Projects Other Governmental Funds Total Governmental Funds ASSETS Cash and investments $ 48,344,799 $ 4,304 $ 14,332,349 $ 11,769,500 $ 74,450,952 Receivables: Accounts, net 3,888,895-1,237, ,952 5,444,262 Interest 103,756-27,716 26, ,987 Notes , ,443 Due from other funds 215, ,000 Due from Successor Agency Trust 29, ,992 Advance to Successor Agency Trust 11,950, ,950,459 Prepaid items 10, ,186 Deposits 125, ,000 Restricted cash and investments - 496, , ,295 Total assets $ 64,668,137 $ 501,237 $ 15,735,842 $ 12,768,360 $ 93,673,576 LIABILITIES Liabilities: Accounts payable $ 1,828,089 $ - $ 1,120,718 $ 398,226 $ 3,347,033 Deposits payable 5,954-1,389,334-1,395,288 Retentions payable ,818-39,818 Due to Successor Agency Trust 11,852, ,852,273 Unearned revenues 106, , ,234 Compensated absences payable 402, , ,010 Total liabilities 14,196,047-2,549, ,739 17,446,656 Deferred Inflows of Resources: Unavailable revenue - notes receivable proceeds , ,443 Unavailable revenue - grants , ,790 Unavailable revenue - special assessments 153, ,370 Total deferred inflows of resources 153, , ,443 1,331,603 Fund Balances: Nonspendable 12,085, ,086,645 Restricted ,369,121 11,369,121 Assigned 91, ,237 12,661,182 44,107 13,297,915 Unassigned 38,141, ,141,636 Total fund balances (deficit) 50,318, ,237 12,661,182 11,414,178 74,895,317 Total liabilities, deferred inflows of resources, and fund balances $ 64,668,137 $ 501,237 $ 15,735,842 $ 12,768,360 $ 93,673,576 See Independent Auditors' Report and accompanying Notes to Basic Financial Statements 52

143 City of Camarillo Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2013 Total Fund Balances - Total Governmental Funds $74,895,317 Amounts reported for governmental activities in the Statement of Net Position were different because: Certain assets are not considered available to pay for current period expenditures and therefore are offset by deferred inflows of resources in the funds. 1,331,603 Capital assets used in governmental activities were not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet. Except for the internal service funds reported below, the capital assets were adjusted as follows: Statement of Net Position Internal Service Funds Non-depreciable 39,315,190 (2,996,466) 36,318,724 Depreciable, net 213,082,688 (29,278,686) 183,804,002 Total capital assets $ 252,397,878 $ (32,275,152) 220,122,726 Interest payable on long-term debt did not require current financial resources. Therefore, interest payable was not reported as a liability in Governmental Funds Balance Sheet. (19,118) Internal service funds were used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The Position and liabilities of the Internal Service Funds were included in governmental activities in the Statement of Net Position. Risk Management Fund 657,842 Human Resources Fund 184,600 Information Services Fund 2,263,910 Vehicles & Equipment Fund 5,164,414 City Hall Fund 5,878,368 Corporation Yard Fund 2,304,492 Police Facility Fund 5,384,575 Library Facility Fund 24,560,846 Camarillo Ranch Facility Fund 1,814,326 Chamber of Commerce Fund 446,765 Total internal service funds 48,660,138 Long-term liabilities were not due and payable in the current period. Therefore, they were not reported in the Governmental Funds Balance Sheet. Statement of Net Position Long-term liabilities - due within one year (265,000) Internal Service Funds $ $ - (265,000) Long-term liabilities - due in more than one year (7,010,000) - (7,010,000) Compensated absences (986,857) 413,656 (573,201) Total long-term liabilities $ (8,261,857) $ 413,656 (7,848,201) Net Position of Governmental Activities $337,142,465 See Independent Auditors' Report and accompanying Notes to Basic Financial Statements 53

144 City of Camarillo Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2013 General Fund Major Funds Library Debt Service Capital Improvement Projects Other Governmental Funds Total Governmental Funds REVENUES: Taxes $ 28,038,611 $ - $ - $ 2,276,371 $ 30,314,982 Subventions and grants 189,442-2,594,878 3,880,894 6,665,214 Licenses and permits 541, ,310 Franchises 2,519, ,669 2,674,372 Contributions and developer fees , ,006 1,306,306 Fines and forfeitures 418, , ,613 Charges for services 4,993, ,940 5,668,801 Investment earnings 106, ,120 24, ,072 Miscellaneous 167, ,793 Total revenues 36,976, ,397,298 7,552,526 47,926,463 EXPENDITURES: Current: General government 7,164, ,164,851 Public safety 15,878, ,878,506 Highways and streets 2,731, ,970,154 9,701,745 Community services 439, , ,439 Culture and recreation 3,772,646 2, ,690 4,384,149 Capital outlay - - 5,966,038 10,725 5,976,763 Debt service: Principal - 355, , ,000 Interest and fiscal charges - 235,085-6, ,274 Total expenditures 29,987, ,898 5,966,038 8,018,442 44,564,727 REVENUES OVER (UNDER) EXPENDITURES 6,989,205 (592,813) (2,568,740) (465,916) 3,361,736 OTHER FINANCING SOURCES (USES): Transfers in 325, ,850 3,852,005 3,220,374 7,985,504 Transfers out (4,436,622) - (300,000) (3,948,014) (8,684,636) Total other financing sources (uses) (4,111,347) 587,850 3,552,005 (727,640) (699,132) Special Item - Asset transfers to Successor Agency - see note 18B (16,901,071) (16,901,071) Net changes in fund balances 2,877,858 (4,963) 983,265 (18,094,627) (14,238,467) FUND BALANCES (DEFICIT): Beginning of year 47,440, ,200 11,677,917 29,508,805 89,133,784 End of year $ 50,318,720 $ 501,237 $ 12,661,182 $ 11,414,178 $ 74,895,317 See Independent Auditors' Report and accompanying Notes to Basic Financial Statements 54

145 City of Camarillo Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities For the Fiscal Year Ended June 30, 2013 Net Change in Fund Balances - Total Governmental Funds $ (14,238,467) Amounts reported for governmental activities in the Statement of Activities were different because: Governmental funds reported capital outlay as expenditures. However, in the Statement of Activities, the cost of those assets was allocated over their estimated useful lives as depreciation expense. This was the amount of capital outlay and developer-contributed assets recorded in the current period. Developer Capital Outlay Contributions Expenditures $ 7,624,605 $ 4,329,389 $ (6,276,128) 5,677,866 Depreciation expense on capital assets was reported in the Statement of Activities, but they did not require the use of current financial resources. Therefore, depreciation expense was not reported as expenditures in Governmental Funds. (This figure does not include $2,018,024 of depreciation expense on capital assets of the Internal Service Funds.) (7,067,368) Transfers of capital assets to private-purpose trust fund as a result of CDC dissolution reduced capital assets, net in the Statement of Net Position (26,512,992) Long-term compensated absences were reported in the Statement of Activities, but they did not require the use of current financial resources. Therefore, long-term compensated absences were not reported as expenditures in governmental funds. 220,575 Repayment of bond principal and payment of debt issuance costs is reflected as expenditure in the governmental funds while the payment to refund bond escrow agent is reflected as an other financing use. Repayment reduced the long-term liabilities in the Statement of Activities. The debt issuance costs are amortized over the life of the debt. 570,000 Interest expense on long-term debt was reported in the Statement of Activities, but they did not require the use of current financial resources. Therefore, interest expense was not reported as expenditures in governmental funds. The following amount represented the change in accrued interest from prior year. (14,677) Revenues are deferred in the governmental funds when they are not received soon after yearend to be considered to be available. The availability criteria does not apply to the Statement of Net Position and therefore, the revenue is recognized. 680,026 Internal service funds were used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The net revenue of the internal service funds was reported with governmental activities. 143,808 Change in Net Position of Governmental Activities $ (40,541,229) See Independent Auditors' Report and accompanying Notes to Basic Financial Statements 55

146 56

147 PROPRIETARY FUND FINANCIAL STATEMENTS Water Utility Fund - This fund is used to account for the activities associated with the transmission and distribution of potable water by the City to its users. Sanitary District Fund - This fund is used to account for the activities of the Sanitary District (a component unit of the City of Camarillo) which includes the transmission, pumping and treatment of the City's sewage. Solid Waste Fund - This fund is used to account for the activities associated with collection and disposal of rubbish and recycle materials. Transit Fund - This fund is used to account for the operations of the City's bus system which includes both leased bus activities and the City-owned bus system. Internal Service Funds - These funds are used to account for interdepartmental operations where it is the stated intent that costs of providing services to the departments of the City on a continuing basis be financed or recovered primarily by charges to the user departments. 57

148 City of Camarillo Statement of Net Position Proprietary Funds June 30, 2013 Major Funds Water Sanitary Solid Utility District Waste ASSETS Current assets: Cash and investments $ 30,090,061 $ 21,794,327 $ 514,376 Receivables: Accounts, net 2,226,316 1,376, ,217 Interest 67,068 48,223 1,636 Prepaid items 15,662 2,156 - Deposits - 18,000 - Restricted cash and investments 6, Total current assets 32,405,353 23,239,528 1,472,229 Noncurrent assets: Capital assets: Non-depreciable assets 5,308,351 11,912,952 - Depreciable assets, net 19,873,643 51,428,338 - Total capital assets 25,181,994 63,341,290 - Total noncurrent assets 25,181,994 63,341,290 - Total assets 57,587,347 86,580,818 1,472,229 LIABILITIES Current Liabilities: Accounts payable 914, , ,289 Deposits payable 168,964 69, ,701 Due to other funds Interest payable - 72,790 - Unearned revenue 58, Compensated absences payable 190, ,041 11,009 Capital lease payable 6, Long-term debt - due within one year - 520,000 - Total current liabilities 1,338,903 1,299, ,999 Noncurrent liabilities: Compensated absences payable 574, , Long-term debt - due in more than one year - 19,410,973 - Total noncurrent liabilities 574,347 19,716, Total liabilities 1,913,250 21,015, ,112 NET POSITION Net investment in capital assets 25,175,452 43,410,317 - Restricted for special projects and programs 9,962, ,004 Unrestricted 20,536,303 22,155, ,113 Total net position $ 55,674,097 $ 65,565,389 $ 869,117 See Independent Auditors' Report and accompanying Notes to Basic Financial Statements 58

149 Governmental Major Funds Activities Internal Transit Total Service Funds $ 1,011 $ 52,399,775 $ 17,113, ,017 5,110,366 23, ,927 35,268-17,818 40,682-18,000 2,000-6, ,028 57,669,138 17,215,261-17,221,303 2,996, ,615 71,659,596 29,278, ,615 88,880,899 32,275, ,615 88,880,899 32,275, , ,550,037 49,490, ,873 1,955, , ,470 24, , , , , ,089-10, , ,742-6,542 67, , ,519 4,156, ,619 30, , ,656-19,410,973-30,301 20,320, , ,820 24,477, , ,615 68,943,384 32,207,180-10,479,346 - (393,792) 42,649,696 16,452,958 $ (36,177) $ 122,072,426 $ 48,660,138 59

150 City of Camarillo Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the Fiscal Year Ended June 30, 2013 OPERATING REVENUES: Major Funds Water Sanitary Solid Utility District Waste Charges for services $ 14,355,497 $ 9,703,978 $ 6,017,861 OPERATING EXPENSES: Cost of sales and services 10,148,516 4,823,003 5,714,180 General and administrative 2,333,591 2,051, ,959 Depreciation 907,829 2,097,808 - Total operating expenses 13,389,936 8,972,532 6,184,139 OPERATING INCOME (LOSS) 965, ,446 (166,278) NONOPERATING REVENUES (EXPENSES): Property taxes - 996,297 - Investment earnings 58,366 46,042 1,424 Interest expense (588) (16,368) - Operating grants and contributions ,914 Other 24, ,729 - Total nonoperating revenues (expenses) 82,054 1,501,700 38,338 INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 1,047,615 2,233,146 (127,940) Capital contributions 2,084, ,502 - Transfers in Transfers out (56,336) (40,318) - Change in net position 3,076,036 3,180,330 (127,940) NET POSITION: Beginning of year, as restated 52,598,061 62,385, ,057 End of year $ 55,674,097 $ 65,565,389 $ 869,117 See Independent Auditors' Report and accompanying Notes to Basic Financial Statements 60

151 Governmental Major Funds Activities Internal Transit Total Service Funds $ 132,067 $ 30,209,403 $ 8,836,477 1,130,914 21,816,613 4,173, ,468 5,209,739 2,979, ,466 3,171,103 2,018,024 1,650,848 30,197,455 9,171,194 (1,518,781) 11,948 (334,717) - 996, ,832 30,289 - (16,956) (6,108) 47,380 84,294-14, , ,955 62,321 1,684, ,136 (1,456,460) 1,696,361 (121,581) 72,569 3,144, , , ,000 93,716 (22,930) (119,584) - (681,821) 5,446, , , ,625,821 48,516,330 $ (36,177) $ 122,072,426 $ 48,660,138 61

152 City of Camarillo Combining Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2013 CASH FLOWS FROM OPERATING ACTIVITIES: Major Funds Water Sanitary Solid Utility District Waste Receipts from customers and users $ 14,034,547 $ 9,457,387 $ 5,983,938 Receipts from interfund services provided Payments to employees (4,562,031) (5,178,280) (161,577) Payments to suppliers (7,714,917) (2,347,094) (6,034,077) Payments for interfund services used Net cash provided by (used in) operating activities 1,757,599 1,932,013 (211,716) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Property Taxes - 996,297 - Subsidy from other governments 24, ,729 36,914 Other noncapital funding sources Transfers to other funds (56,336) (40,318) - Transfers from other funds Net cash provided by (used in) noncapital financing activities (32,060) 1,431,708 36,914 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Principal payments - bonds - (500,000) - Principal payments - capital leases (12,696) - - Interest paid (588) (4,300) - Acquisition and construction of capital assets (487,468) (2,681,310) - Loss on disposal of capital assets Cash received from others for capital improvements 942, ,240 - Net cash provided by (used in) capital and related financing activities 441,407 (2,524,370) - CASH FLOWS FROM INVESTING ACTIVITIES: Interest received 141, ,394 3,894 Net cash provided by (used in) investing activities 141, ,394 3,894 CASH AND CASH EQUIVALENTS: Beginning of year 27,851,251 20,893, ,837 End of year 30,160,019 21,840, ,929 Investments that are not cash equivalents Increase (decrease) in fair value of investments (63,712) (45,809) (1,553) Cash and investments - ending $ 30,096,307 $ 21,794,333 $ 514,376 See Independent Auditors' Report and accompanying Notes to Basic Financial Statements 62

153 Governmental Major Funds Activities Internal Transit Total Service Funds $ 128,430 29,604,302 $ 131, ,834,676 (181,737) (10,083,625) (2,527,752) (1,168,615) (17,264,703) (3,324,798) - - (1,309,131) (1,221,922) 2,255,974 1,804, , ,483 1,025,402-14,941 14, ,955 (22,930) (119,584) - 725, ,000 93,716 1,205,494 2,642, ,671 - (500,000) - - (12,696) (131,904) - (4,888) (6,108) 17,371 (3,151,407) (310,089) - - 3,074-1,603, ,673 17,371 (2,065,592) (273,354) - 253,110 73, ,110 73, ,431,553 15,258,784 1,011 52,517,101 17,146,939 - (111,074) (33,504) $ 1,011 $ 52,406,027 $ 17,113,435 (Continued) 63

154 City of Camarillo Combining Statement of Cash Flows Proprietary Funds, Continued For the Fiscal Year Ended June 30, 2013 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: Major Funds Water Sanitary Solid Utility District Waste Operating income (loss) $ 965,561 $ 731,446 $ (166,278) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities Depreciation expense 907,829 2,097,808 - Changes in operating assets and liabilities: Receivables, net (328,485) (251,765) (42,538) Prepaid items (293) 40 - Accounts payable 213,592 (657,639) (11,496) Wages payable (2,198) 1,091 (647) Compensated absences payable (5,942) 34, Deposits payable 18,643 5,174 8,615 Retentions payable - (28,568) - Due to other funds Unearned revenue (11,108) - - Total adjustments 792,038 1,200,567 (45,438) Net cash provided by (used in) operating activities $ 1,757,599 $ 1,932,013 $ (211,716) NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Increase (decrease) in fair value adjustment for investments $ (63,712) $ (45,809) $ (1,553) Contributed capital assets received 1,142, ,262 - Amortization expense - 13,654 - See Independent Auditors' Report and accompanying Notes to Basic Financial Statements 64

155 Governmental Major Funds Activities Internal Transit Total Service Funds $ (1,518,781) $ 11,948 $ (334,717) 165,466 3,171,103 2,018,024 (3,637) (626,425) 128,479 - (253) 13, ,145 (343,398) (47,521) 594 (1,160) (5,838) 16,791 45,903 31,525-32,432 1,708 - (28,568) - 5,500 5, (11,108) - 296,859 2,244,026 2,139,700 $ (1,221,922) $ 2,255,974 $ 1,804,983 $ - $ (111,074) $ (33,504) - 1,468, ,654 - (Concluded) 65

156 FIDUCIARY FUND FINANCIAL STATEMENTS Successor Agency Private-Purpose Trust Fund - This fund accounts for the Redevelopment Property Tax Trust Fund distributions for the dissolution of the former Camarillo Community Development Commission. Agency Funds - These funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. They are used to account for assets held in an agency capacity for others and therefore cannot be used to support the City's program. 66

157 City of Camarillo Statement of Net Position Fiduciary Funds June 30, 2013 Successor Agency Private- Purpose Trust Fund Agency Funds ASSETS Current assets: Cash and investments $ 2,203,910 $ 1,204,694 Restricted cash and investments 15,449,340 1,044,414 Accounts receivable, net - 14,290 Interest receivable 457 2,180 Land held for resale 15,919,057 - Total current assets 33,572,764 2,265,578 Noncurrent assets: Notes Receivable 275,000 - Capital assets: Non-depreciable assets 4,291,911 - Depreciable assets, net 21,565,060 - Total capital assets 25,856,971 - Total noncurrent assets 26,131,971 - Total assets 59,704,735 $ 2,265,578 DEFERRED OUTFLOWS OF RESOURCES Deferred loss on refunding, net of accumulated amortization 318,077 - Total Deferred Outflows of Resources 318,077 - LIABILITIES Current liabilities: Accounts payable 36,115 $ 15,268 Intergovernmental payables 29, ,345 Deposits payable - 540,079 Advance from City of Camarillo 98,186 - Retentions payable - - Due to note holders - 539,993 Due to bondholders - 1,051,893 Long-term debt - due within one year 1,045,000 - Total current liabilities 1,209,293 2,265,578 Noncurrent liabilities: Long-term debt - due in more than one year 60,102,414 - Total noncurrent liabilities 60,102,414 - Total liabilities 61,311,707 $ 2,265,578 NET POSITION Net position held in trust for other purposes $ (1,288,895) See Independent Auditors' Report and accompanying Notes to Basic Financial Statements 67

158 City of Camarillo Statement of Changes in Net Position Fiduciary Funds For the Year Ended June 30, 2013 ADDITIONS: Successor Agency Private- Purpose Trust Fund Property taxes $ 3,061,918 Investment earnings 12,395 Total additions 3,074,313 DEDUCTIONS: Administration expenses 1,638,111 Interest expense 3,136,905 Capital projects expense 1,000,000 Depreciation 453,751 Amortization 43,672 Total deductions 6,272,439 SPECIAL ITEM: Asset transfers from City of Camarillo - see note 18B 43,414,063 Total special items 43,414,063 Change in net position 40,215,937 Net position - beginning of year, as restated - See note 17 (41,504,832) Net position - end of year $ (1,288,895) See Independent Auditors' Report and accompanying Notes to Basic Financial Statements 68

159 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the City of Camarillo have been prepared in conformity with Generally Accepted Accounting Principles (GAAP) applicable to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the City s accounting policies are described below. A. Financial Reporting Entity The City of Camarillo (City) is a general law city governed by an elected five-member City Council. As required by GAAP, these basic financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities are, in substance, part of the City s operations and data from these units are combined with data of the City. Each blended component unit has a June 30 year-end. The City had no discretely presented component units. The following entities are reported as blended component units: Camarillo Sanitary District The Camarillo Sanitary District (District) was formed in 1955 to provide wastewater treatment to most of what is now the City of Camarillo. The City Council also acts as the Camarillo Sanitary District s (District) governing board and as such is able to impose its will with regard to the District. Therefore, the District is considered a blended component unit and is included in the accompanying financial statements of the City. Rates for user charges and bond issuance authorizations are approved by the District s governing board, and the legal liability for the general obligation portion of the District s debt remains with the District. The District is reported as an enterprise fund in the City s financial statements. Camarillo Capital Improvement Corporation The Camarillo Capital Improvement Corporation (Corporation) was formed on December 23, 1987, pursuant to the laws of the State of California. The governing body is the City Council, which can impose its will on the Corporation and the City can receive financial benefit or burden of the Corporation. Thus, it is considered a blended component unit. The Corporation has the power to acquire sites, construct, maintain, operate and lease public buildings and related facilities; to provide for the development of the City and the District; to make and enter into contracts; to acquire, construct, manage, maintain or operate any buildings, works or improvements; to acquire property or dispose of property by lease or sale. The Corporation s activities presently consist of providing financial assistance to the City through the issuance of bonds and the leasing of assets to the City and the District. At the end of the lease term, all assets revert to the City and the District. The activities of the Corporation related to the Las Posas/Upland Bridge and the Police Facility, are included in the debt service funds with long-term obligations reflected in the governmental activity column of the Statement of Net Position. The activities of the Corporation related to the District plant expansion are included in the Sanitary District Enterprise Fund. For financial reporting purposes, the leases between the Corporation and the City, and between the Corporation and the District, have been eliminated. 69

160 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued A. Financial Reporting Entity, Continued Camarillo Public Finance Authority The Camarillo Public Finance Authority (PFA) established in 1998 for the purpose of providing a mechanism for the 1999 combining and refunding of three existing bonds to take advantage of favorable interest rates. The PFA was formed under the Joint Exercise of Powers Law between the City and the Redevelopment Agency. The last meeting occurred in January For Fiscal Year 2012/13 there was no activity. Camarillo Industrial Development Authority The Camarillo Industrial Development Authority (IDA) established in 1996 for the sole purpose of providing a mechanism for the issuance of Industrial Development Revenue Bonds. The IDA is a public, corporate instrumentality of the State and was organized under the California Industrial Development Financing Act (being Title 10 of the California Government Code, commencing with Section 91500, as amended). The last meeting occurred in January For Fiscal Year 2012/2013 there was no activity. Camarillo Library Board The Camarillo Library Board was established in 2010 to manage the Camarillo Public Library as required by the California Education Code. The City took over operation of the Camarillo Library January 1, The Camarillo Library Board s first meeting was held February 9, B. Financial Reporting Fiduciary Entity City of Camarillo as Successor Agency to the Camarillo Community Development Commission The Successor Agency was created to serve as a custodian for the assets and to wind down the affairs of the former Redevelopment Agency of the City of Camarillo. The Successor Agency is a separate public entity from the City, subject to the direction of an Oversight Board. The Oversight Board is comprised of seven member representatives from local government bodies: two appointed by the Mayor; two County of Ventura (County) representatives; the County Superintendent of Education; the Chancellor of California Community Colleges; and the largest special district taxing entity. Based upon the nature of the Successor Agency s custodial role, it is reported in a fiduciary fund (private-purpose trust fund). C. Budgets and Budgetary Accounting Budgets are legally adopted annually by the Council by resolution, and are prepared for each fund in accordance with its basis of accounting consistent with generally accepted accounting principles. The City Manager is responsible for preparing the budget and for its implementation after adoption. For the year ended June 30, 2013, no budget was adopted for the Las Posas/Upland debt service fund, City CDC CIP Administration and City CIP SA Housing capital projects funds. Annual appropriations lapse at fiscal year-end; however, the City Manager has the authority to approve appropriation carryovers for unexpended appropriations for incomplete capital projects, and unexpended appropriations for the grant programs. 70

161 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Budgets and Budgetary Accounting, Continued The City maintains budgetary controls to ensure compliance with provisions embodied in the annual budget approved by the City Council and the Camarillo Sanitary District Board. The City Council approves operating and capital appropriations at the fund and department levels. The City Manager has the authority to transfer between expenditure accounts and between funds of the City and the Camarillo Sanitary District as long as there is no funding source incompatibility, and provided those changes do not increase overall appropriations in either component unit. The level of budgetary control is established at the fund level. The Council has the legal authority to amend the budget at any time during the fiscal year. D. Basis of Accounting and Measurement Focus The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Government-Wide Financial Statements The City s government-wide financial statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements. These basic financial statements are presented on an economic resources measurement focus and the accrual basis of accounting. Accordingly, all of the City s assets and liabilities, including capital assets, as well as infrastructure assets and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Certain types of transactions are reported as program revenues for the City in three categories: Charges for services Operating grants and contributions Capital grants and contributions 71

162 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued D. Basis of Accounting and Measurement Focus, Continued Certain eliminations have been made in regards to interfund activities, payables, and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated: Due to/from other funds Advances to/from other funds Transfers in/out Governmental Fund Financial Statements Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures, and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in net position as presented in these statements to the net position presented in the government-wide financial statements. The City has presented all major funds that met the applicable criteria. The following is a list of these major funds: General Fund This fund was established to account for sources and uses of financial resources traditionally associated with governments, which are not required to be accounted for in another fund. Library Debt Service Fund This fund is used to account for the accumulation of resources and payment of long-term debt principal and interest for bonds issued by the City to finance the construction of the Library. Capital Improvement Projects Fund The capital improvement projects fund accounts for financial resources to be used for purchase or construction of major capital improvements (other than those funded through proprietary funds.) All governmental funds are accounted for on a spending or "current financial resources measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures, and Changes in Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. 72

163 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued D. Basis of Accounting and Measurement Focus, Continued Revenues are recorded when received in cash, except for those revenues subject to accrual, generally 60 days after year-end, which are recognized when due. One exception is the state triple flip true up of sales tax revenue, which has a 195 day recognition period. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, sales tax, franchise taxes, special assessments, intergovernmental revenues and other taxes. Expenditures are recorded in the accounting period in which the related liability is incurred. Unearned revenues arise when potential revenues do not meet both the measurable and available criteria for recognition in the current period. Unearned revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met or when the government has a legal claim to the resources, the unearned revenue is removed and revenue is recognized. The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34. Proprietary Fund Financial Statements Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses, and Changes in Fund Net Position, and a Combining Statement of Cash Flows for each major proprietary fund. A separate column representing internal service funds is also presented in these statements. However, internal service balances and activities have been combined with the governmental activities in the government-wide financial statements. Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses, and Changes in Fund Net Position presents increased (revenues) and decreased (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned, while expenses are recognized in the period in which the liability is incurred. In these funds, receivables have been recorded as revenue and provisions have been made for uncollectible amounts. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses. 73

164 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued D. Basis of Accounting and Measurement Focus, Continued Internal Service Fund The City reports ten internal service funds. These proprietary funds are used to account for the financing of services provided by one department to another on a cost-reimbursement basis. The services provided by these funds are Risk Management, Human Resources, Information Services, Vehicles & Equipment, City Hall Facility, Corporation Yard Facility, Police Facility, Library Facility, Camarillo Ranch Facility and Chamber of Commerce Facility. Fiduciary Fund Financial Statements Fiduciary fund financial statements include a Statement of Net Position and a Statement of Changes in Net Position. The Successor Agency Private-Purpose Trust Fund is reported using the economic resources measurement focus and the accrual basis of accounting. This fund is being used to account for the Redevelopment Property Tax Trust Fund distributions made by the County of Ventura for the dissolution activity related to the former Camarillo Community Development Commission. The Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The agency funds are accounted for on an accrual basis of accounting. E. Cash, Cash Equivalents, and Investments Cash Management The City pools cash resources of its various funds to facilitate cash management. Cash in excess of current requirements is invested and reported as investments. It is the City s intent to hold investments until maturity. However, the City may, in response to market conditions, sell investments prior to maturity in order to improve the quality, liquidity or yield of the portfolio. Interest earnings are apportioned among funds based on average daily accounting period, cash and investment balances. The City s cash and cash equivalents are considered to be cash on hand, demand deposits, and highly liquid investments with original maturities of three months or less at the time of acquisition. Investments Valuation Highly liquid market investments with maturities of one year or less at time of purchase, are stated at amortized cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available. State Investment Pool The City participates in the Local Agency Investment Fund (LAIF), an investment pool managed by the State of California. LAIF has invested a portion of the pool funds in structured notes and asset-backed securities. In addition, these structured notes and asset-backed securities are subject to market risk as a result of changes in interest rates. LAIF is not registered with Securities and Exchange Commission (SEC). 74

165 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued F. Interfund Transactions Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either due to/from other funds (i.e., the current portion of interfund loans) or advances to/from other funds (i.e., the noncurrent portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. G. Land or Building Held for Resale Assets held for resale are recorded at the lower of cost or market, but not greater than the net realizable value. An amount equal to the carrying value of land is nonspendable in fund balance because such assets are not available to finance the City s current operations. H. Capital Assets Capital assets, which include land, buildings, improvements, equipment, furniture, and infrastructure assets (e.g., roads, sidewalks, and similar items), are reported in the applicable governmental or business-type activities in the government-wide financial statements. All purchased capital assets are recorded at cost where historical records are available and at an estimated historical cost where no historical records exist. Donated (contributed) capital assets are valued at their estimated fair market value on the date received. City policy has set the capitalization threshold for reporting capital assets at the following: General Capital Assets $ 5,000 Infrastructure Capital Assets $ 50,000 For all capital assets, depreciation is recorded on a straight-line basis over the useful lives of the assets as follows: Buildings and improvements Furniture and fixtures Machinery and equipment Water and Sewer Transmission, Collection and Distribution lines Infrastructure years 8-15 years 5-40 years years 5-75 years 75

166 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued H. Capital Assets, Continued The City has included the value of all infrastructures into its Basic Financial Statements and it defines infrastructure as the basic physical assets that allow the city to function. The assets include: Storm drain system Streets system Site amenities such as parking and landscaped areas used by the City in the conduct of its business Each major infrastructure system can be divided into subsystems. For example, the street system can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, traffic control devices (signs, signals and pavement markings), landscaping and land. These subsystems were not delineated in the Basic Financial Statements. The appropriate operating department maintains information regarding the subsystems. In the accompanying financial statements are non-depreciable right-of-way costs that represent the value of the City s access and use of public roads. For July 1, 2001 and prior, the valuation of the rights-of-way was done by an outside appraiser using current replacement costs factored back to acquisition dates to arrive at historical cost amounts. Thereafter, the City has valued rights-of-way based on present cost formulas. The accumulated depreciation, defined as the total depreciation from the date of construction/acquisition to the current date, was calculated on a straight-line method using industry accepted life expectancies for each infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation from the original cost. Interest accrued during capital assets construction, if any, is capitalized for the business-type and proprietary funds as part of the asset cost. I. Interest Payable In the government-wide financial statements, interest payable of long-term debt is recognized as the liability is incurred for governmental fund types and proprietary fund types. In the fund financial statements, propriety fund types recognize the interest payable when the liability is incurred. 76

167 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued J. Deferred Outflows/Inflows of Resources In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has one item that qualifies for categorization under deferred outflows of resources. A deferred loss on refunding, net of accumulated amortization is reported on the Statement of Net Position of the Successor Agency Private-Purpose Trust Fiduciary Fund. A deferred loss on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is amortized over the shorter of the life of the refunded or refunding debt. In addition to liabilities, the government-wide Statement of Net Position and the Balance Sheet of the governmental funds will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The City has only one type of item, which arises only under the modified accrual basis of accounting, that qualifies for reporting in this category. Accordingly, the item, unavailable revenues, is reported only on the Governmental Funds Balance Sheet. Reported unavailable revenues are from three sources: notes receivable proceeds, grants, and special assessments. These amounts will be recognized as an inflow of resources in the period that the amounts become available. K. Compensated Absences Compensated absences are recorded in accordance with GAAP. Only vested or accumulated compensated absences that are expected to be due or mature are reported as an expenditure and fund liability of the governmental fund that will pay it. Amounts of vested or accumulated compensated absences, that are not expected to be liquidated with expendable available financial resources, are reported in the governmental activities of the government-wide financial statements. Vested or accumulated compensated absences of proprietary funds are recorded as an expense and liability of those funds as the benefits accrue to employees. L. Long-Term Obligations Government-Wide Financial Statements Long-term debt and other long-term obligations are reported as liabilities in the appropriate activities. 77

168 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued L. Long-Term Obligations, Continued Fund Financial Statements The fund financial statements do not present long-term debt but are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position. Bond premiums and discounts, as well as issuance costs, are recognized during the current period. Bond proceeds are reported as other financing sources net of the applicable premium or discount. Issuance costs, whether or not withheld from the actual net proceeds received, are reported as debt service expenditures. M. Net Position In the government-wide financial statements, net position is classified in the following categories: Net investment in capital assets This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or improvement of the assets. Restricted Net Position This amount is restricted by external creditors, grantors, contributors, laws enabling legislation or regulations of other governments. Unrestricted Net Position This amount is the net position that does not meet the definition of net invested in capital assets or restricted net position. N. Use of Restricted/Unrestricted Net Positions When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the City s policy is to apply restricted net position first. O. Fund Balances In the fund financial statements, governmental funds report fund balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. See note 10 for more detail on fund balances. P. Property Tax Calendar The State of California Constitution Article XIIIA provides that the combined maximum property tax rate on any given property may not exceed 1 percent of its assessed value, unless an additional amount for debt has been approved by voters. Assessed value is calculated at 100 percent of market value as defined by Article XIIIA, and may be increased by no more than 2 percent per year unless the property is sold, transferred, or improved. 78

169 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued P. Property Tax Calendar, Continued The County of Ventura assesses properties, bills for, collects, and distributes property taxes on the basis of the taxing jurisdiction s tax rate percentage, subject to individual tax jurisdiction s adjustments as may be allowed for voter-approved debt, as follows: Secured Unsecured Lien dates January 1 January 1 Levy dates July 1 July 1 Due dates 50% on November 1 and July 1 50% on February 1 Delinquent as of December 10 (for November) August 31 April 10 (for February) The term unsecured refers to taxes on personal property other than real estate, land, and buildings. Q. Use of Estimates The preparation of the basic financial statements, in conformity with GAAP, requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In addition, estimates affect the reported amount of expenses. Actual results could differ from these estimates and assumptions. R. New, Deleted and Reclassified Funds and Reclassification of Revenues New Funds: None. Deleted Funds: Redevelopment Special Revenue, Redevelopment Debt Service, City CDC Debt Administration, Community Facilities District #2 Capital Projects, Ramona Drive Sewer Capital Projects, and Housing Successor Funds were closed out during the prior fiscal year. Reclassified Funds: None. Reclassification of Revenues: None. 79

170 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued S. New GASB Pronouncements Effective in the Current Year: GASB Statement No. 63 In June 2011, the GASB issued Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Assets. This Statement provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. Concepts Statement No. 4, Elements of Financial Statements, introduced and defined those elements as a consumption of net assets by the government that is applicable to a future reporting period, and an acquisition of net assets by the government that is applicable to a future reporting period, respectively. Previous financial reporting standards do not include guidance for reporting those financial statements elements, which are distinct from assets and liabilities. This Statement was implemented effective June 30, GASB Statement No. 65 In March 2012, the GASB issued Statement No. 65, Items Previously Reported as Assets and Liabilities. This Statement establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. This Statement was implemented effective June 30, See Restatement of Beginning Net Position note 17. Effective in the Future Periods: GASB Statement No. 66 In March 2012, the GASB issued Statement No. 66, Technical Corrections 2012 an amendment of GASB Statements No. 10 and No. 62. The objective of this Statement is to improve accounting and financial reporting for a governmental financial reporting entity by resolving conflicting guidance that resulted from the issuance of two pronouncements, Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. This Statement is not effective until June 30, The City has not determined its effect on the financial statements. GASB Statement No. 67 In June 2012, the GASB issued Statement No. 67, Financial Reporting for Pension Plans an amendment of GASB Statement No. 25 This Statement replaces the requirements of Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 50, Pension Disclosures, as they relate to pension plans that are administered through trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain criteria. The requirements of Statements 25 and 50 remain applicable to pension plans that are not administered through trusts covered by the scope of this Statement and to defined contribution plans that provide postemployment benefits other than pensions. This Statement is not effective until June 30, The City has not determined its effect on the financial statements. 80

171 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued S. New GASB Pronouncements, Continued Effective in the Future Periods: GASB Statement No. 68 In June 2012, the GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions an amendment of GASB Statement No. 27. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for pensions. It also improves information provided by state and local governmental employers about financial support for pensions that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision-useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. This Statement is not effective until June 30, The City has not determined its effect on the financial statements. GASB Statement No. 69 In January 2013, the GASB issued Statement No. 69, Government Combinations and Disposals of Government Operations. This Statement establishes accounting and financial reporting standards related to government combinations and disposals of government operations. As used in this Statement, the term government combinations includes a variety of transactions referred to as mergers, acquisitions, and transfers of operations. This Statement is not effective until June 30, The City has not determined its effect on the financial statements. GASB Statement No. 70 In April 2013, the GASB issued Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. Some governments extend financial guarantees for the obligations of another government, a not-for-profit entity, or a private entity without directly receiving equal or approximately equal value in exchange (a nonexchange transaction). As a part of this nonexchange financial guarantee, a government commits to indemnify the holder of the obligation if the entity that issued the obligation does not fulfill its payment requirements. Also, some governments issue obligations that are guaranteed by other entities in a nonexchange transaction. The objective of this Statement is to improve accounting and financial reporting by state and local governments that extend and receive nonexchange financial guarantees. This Statement is not effective until June 30, The City has not determined its effect on the financial statements. 81

172 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, CASH AND INVESTMENTS The City had the following cash and investments at June 30: Fair Value 2013 City Treasury Deposits: Deposits $ 2,320,355 Petty cash 3,175 Total City Treasury Deposits 2,323,530 City Treasury Investments: Securities of U.S. Government Agencies FFCB 9,107,910 FHLB 10,198,733 FHLMC 16,277,812 FNMA 12,635,246 U.S. Treasury 10,691,657 Total City Securities of U.S. Government Agencies 58,911,358 Developer deposits - Primarily certificates of deposit 262,278 Local agency investment fund 85,875,600 Local City Treasury Investments 145,049,236 Total Funds in City Treasury 147,372,766 Cash and Investments with Fiscal Agents: Deposits 144,607 Money market mutual funds 16,990,694 Total Cash and Investments with Fiscal Agents 17,135,301 Total Cash and Investments $ 164,508,067 82

173 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, CASH AND INVESTMENTS, Continued A. Cash Deposits The City s deposits and certificates of deposit are entirely covered by Federal Depository Insurance Corporation (FDIC), or by collateral held in a multiple financial institution collateral pool. The FDIC insures the first $250,000 of the City s deposits at each financial institution. At June 30, 2013, the reported amount of the City's deposits was $2,320,355 and the bank balances totaled $5,393,885. Of the total bank balances, $250,000 was covered by FDIC, and $5,143,885 was covered by collateral held in the pledging bank's trust department, but not in the City's name. According to California law, the market value of pledged securities with banking institutions must equal at least 110 percent of the City s cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150 percent of the City s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the FDIC. The City, however, has not waived the collateralization requirements. The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on a quarterly basis to the various funds based on average daily cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund. B. Investments The City is authorized by State statutes, and in accordance with the City s Investment Policy (Policy) to invest in the following: Securities issued or guaranteed by the Federal Government or its agencies State Local Agency Investment Fund (LAIF) Insured and/or collateralized certificates of deposit The Policy, in addition to State statutes, establishes that funds on deposit in banks must be federally insured or collateralized, and investments shall: (1) have maximum maturity not to exceed five years, (2) be laddered and based on cash flow forecasts, and (3) be subject to limitations to a certain percent of the portfolio for each of the authorized investments. The City s investments comply with the established policy. 83

174 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, CASH AND INVESTMENTS, Continued B. Investments, Continued Investments of debt proceeds held by fiscal agent are governed by provisions of the debt covenants, rather than the general provisions of the California Government Code or the City s investment policy. These provisions allow for the investments in the following: U.S. Treasury obligations, U.S. Agency securities, non-negotiable certificates of deposit, negotiable certificates of deposit, investment agreements, repurchase agreements, forward purchase agreements, money market mutual funds, and LAIF. Investments were stated at fair value based on quoted market prices in all funds and component units. The following is a summary of investment income: Realized gain/(loss) on matured/sold investments $ (941,177) Unrealized gain/(loss) in changes in fair value of investments (229,694) Net gain/(loss) (1,170,871) Interest income 1,463,064 Total Investment Income $ 292,193 The calculation of realized gains and losses is independent of a calculation of the net change in the fair value of investments. Realized gains and losses on investments that had been held in more than one fiscal year that matured or were called/sold in the current year, were included as a change in the fair value of investments reported in the prior year(s) and the current year. The City portfolio value fluctuates in an inverse relationship to any change in interest rate. Accordingly, if interest rates have risen, the portfolio value will have declined. If interest rates have fallen, the portfolio value will have risen. The portfolio for year-end reporting purposes is treated as if it were all sold. Therefore, fund balance must reflect the portfolio s change in value. These portfolio value changes are unrealized unless sold. The City s policy is to buy and hold investments until their maturity dates. 84

175 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, CASH AND INVESTMENTS, Continued C. Summary of Cash and Investments The following is a summary of cash and investments at June 30, 2013: Government-Wide Statement of Net Position Fiduciary Funds Governmental Business-type Statement of Activities Activities Total Net Position Total Cash and investments $ 91,564,387 $ 52,399,775 $ 143,964,162 $ 3,408,604 $ 147,372,766 Restricted cash and investments 635,295 6, ,547 16,493,754 17,135,301 Total $ 92,199,682 $ 52,406,027 $ 144,605,709 $ 19,902,358 $ 164,508,067 Deposits and investments were categorized as follows at June 30, 2013: Credit Quality Ratings Fair Value 2013 City Treasury Deposits: Deposits Not Rated $ 2,320,355 Petty cash Not Rated 3,175 Total City Treasury Deposits 2,323,530 City Treasury Investments: Securities of U.S. Government Agencies FFCB AA 9,107,910 FHLB AA 10,198,733 FHLMC AA 16,277,812 FNMA AA 12,635,246 U.S. Treasury AA 10,691,657 Total City Securities of U.S. Government Agencies 58,911,358 Developer deposits - Primarily certificates of deposit Not Rated 262,278 Local agency investment fund Not Rated 85,875,600 Local City Treasury Investments 145,049,236 Total Funds in City Treasury 147,372,766 Cash and Investments with Fiscal Agents: Deposits Not Rated 144,607 Money market mutual funds AAA 16,990,694 Total Cash and Investments with Fiscal Agents 17,135,301 Total Cash and Investments $ 164,508,067 85

176 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, CASH AND INVESTMENTS, Continued D. Risk Disclosures Interest Rate Risk. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City s investment policy requires that at least 30 percent of the City s investment portfolio mature in less than one year. Additional limitations are that the average maturity of the investment portfolio will not exceed three years, and no investment will have a maturity of more than five years from its date of purchase. At June 30, 2013, the City Treasury had the following investment maturities: Investment Investment Maturities (In Years) Type Fair Value Less than 1 1 to 2 2 to 3 3 to 4 4 to 5 FFCB $ 9,107,910 $ 5,060,150 $ 2,051,700 $ 1,996,060 $ - $ - FHLB 10,198,733 5,092,610 1,040,690 4,065, FHLMC 16,277, ,082 4,600,335 6,135,410 2,549,085 2,033,900 FNMA 12,635,246 4,017,691 2,034,090 3,039,980 3,543,485 - U.S. T Notes 10,691,657 3,015,782 3,567,135 3,101,010 1,007,730 - CD's 262, , LAIF 85,875,600 85,875, Total $ 145,049,236 $ 104,283,193 $ 13,293,950 $ 18,337,893 $ 7,100,300 $ 2,033,900 At June 30, 2013, the City s investments held by Fiscal Agents had the following maturities: Fiscal Agent Investment Investment Maturities (In Years) Type Fair Value Less than 1 1 to 2 2 to 3 3 to 4 4 to 5 Mutual Funds $ 16,990,694 $ 16,990,694 $ - $ - $ - $ - Total $ 16,990,694 $ 16,990,694 $ - $ - $ - $ - Credit Risk. State law limits investments in commercial paper and corporate bonds to the top two ratings issued by nationally recognized statistical rating organizations (NRSROs). It is in the City s policy to limit its investments in these investment types to the top rating issued by NRSROs, including Standard & Poor s and Moody s Investors Services. 86

177 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, CASH AND INVESTMENTS, Continued D. Risk Disclosures, Continued At June 30, 2013, the City s Treasury investment credit risks, expressed on a percentage basis, are as follows: City Treasury Investments Credit Quality Distribution for Securities with Credit Exposure as a Percentage of Total Investments Moody's Credit S & P's % of Investment Type Rating Rating Investments FFCB AA AA 6.28% FHLB AA AA 7.03% FHLMC AA AA 11.22% FNMA AA AA 8.71% U.S. T Notes AA AA 7.37% CD's Not Rated Not Rated 0.18% LAIF Not Rated Not Rated 59.21% Total % At June 30, 2013, the City s Fiscal Agent investment credit risks, expressed on a percentage basis, are as follows: Fiscal Agent Investments Credit Quality Distribution for Securities with Credit Exposure as a Percentage of Total Investments Moody's Credit S & P's % of Investment Type Rating Rating Investments Mutual Funds Aaa AAA % 87

178 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, CASH AND INVESTMENTS, Continued E. Concentration of Credit Risk The investment policy of the City states Federal agency or United States government sponsored total issues will not exceed 75%, nor will one issuer exceed 20%, of the total portfolio. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total entity investments are as follows: Issuer Investment Type Reported Amount FFCB Federal agency securities $ 9,107,910 FHLB Federal agency securities 10,198,733 FHLMC Federal agency securities 16,277,812 FNMA Federal agency securities $ 12,635,246 48,219,701 F. Investments in Local Agency Investment Funds The City s investments in LAIF, a State of California investment pool, at June 30, 2013, included a portion of the pool funds invested in Structured Notes and Asset-Backed Securities. These investments included the following: Structured Notes are debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options. Asset-Backed Securities, the bulk of which are mortgage-backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (such as Collateralized Mortgage Obligations) or credit card receivables. As of June 30, 2013, the City had $85,875,600 invested in LAIF, of which LAIF had invested 1.96 percent of the pool investment funds in Structured Notes and Asset-Backed Securities. The City valued its investments in LAIF as of June 30, 2013, by multiplying its account balance with LAIF by a fair value factor determined by LAIF. This fair value factor was determined by dividing all LAIF participants total aggregate fair value by total aggregate amortized cost resulting in a factor of

179 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, RECEIVABLES Government-Wide Financial Statements The following is a summary of receivables, including restricted receivables, net of allowances for uncollectible amounts at June 30, 2013: Government-Wide Statement of Net Position Fiduciary Funds Governmental Business-type Statement of Activities Activities Net Position Total Accounts $ 5,468,138 $ 5,110,366 $ 14,290 $ 10,592,794 Interest 193, ,927 2, ,819 Notes 653, ,443 Total $ 6,314,836 $ 5,227,293 $ 16,927 $ 11,559,056 Fund Financial Statements At June 30, 2013, the Fund Financial Statements show the following receivables: A. Accounts Receivable, Net Net accounts receivable consisted of amounts accrued in separate funds in the ordinary course of operations. The total accounts receivable as of June 30, 2013, were as follows: Governmental Funds: General Fund $ 3,888,895 Capital Improvement Projects Capital Projects Fund 1,237,415 Non-Major Funds 317,952 Total Governmental Funds 5,444,262 Proprietary Funds: Water Utility Enterprise Fund 2,226,316 Sanitary District Enterprise Fund 1,376,816 Solid Waste Enterprise Fund 956,217 Transit Enterprise Fund 551,017 Internal Service Fund 23,876 Total Proprietary Funds 5,134,242 Fiduciary Funds: Agency Funds 14,290 Total Accounts Receivable, Net $ 10,592,794 89

180 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, RECEIVABLES, Continued B. Interest Receivable Interest receivable, including restricted interest receivable, from investments pooled by the City is distributed among the funds according to their ending cash balances. The interest receivable as of June 30, 2013 was as follows: Governmental Funds: General Fund $ 103,756 Capital Improvement Projects Fund 27,716 Non-Major Funds 26,515 Total Governmental Funds 157,987 Proprietary Funds: Water Utility Enterprise Fund 67,068 Sanitary District Enterprise Fund 48,223 Solid Waste Enterprise Fund 1,636 Internal Service Fund 35,268 Total Proprietary Funds 152,195 Fiduciary Funds: Successor Agency Private-Purpose Trust Fund 457 Agency Funds 2,180 Total Fiduciary Funds 2,637 Total Interest Receivable $ 312,819 C. Notes Receivable Promissory notes receivable of $653,443 at June 30, 2013, had the following outstanding balances: Non-major funds - Community Development Block Grant Fund (CDBG) Various notes used for down payment and closing assistance and silent second trust deeds for purchase of affordable housing. Notes are due on property at the time of sale. $ 653,443 Total Notes Receivable $ 653,443 90

181 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, INTERFUND TRANSACTIONS A. Government-Wide Financial Statements Internal Balances The City had the following internal balances as of June 30, 2013: Governmental Business-type Activities Activities Internal Balances Receivable $ 215,000 $ - Internal Balances Payable - 215,000 Transfers Total Internal Balances $ 215,000 $ 215,000 The City had the following transfers for the fiscal year ended June 30, 2013: Governmental Business-type Activities Activities Transfers Out $ 605,416 $ - Transfers In - 605,416 B. Fund Financial Statements Due to/from Other Funds Total Transfers $ 605,416 $ 605,416 The City had the following due to/from other funds as of June 30, 2013: Due to Other Due from Other Funds Funds Transit Fund $ 215,000 $ - General Fund - 215,000 Total Due to/from Other Funds $ 215,000 $ 215,000 91

182 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, INTERFUND TRANSACTIONS, Continued B. Fund Financial Statements, Continued The General Fund provided money to the Transit Fund for cash flow purposes which will be paid back from future operating revenues of the Transit Fund. Transfers The City had the following transfers for the fiscal year ended June 30, 2013: Transfers In Library Capital Non-major Internal General Debt Improve. Gov't Transit Service Transfers Out Fund Service Projects Funds Fund Funds Total General Fund $ - $ 587,850 $ - $ 3,220,374 $ 575,000 $ 53,398 $ 4,436,622 Capital Improve. Proj. 300, ,000 Non-major Govt. Fund 25,275-3,772, ,000-3,948,014 Water Fund , ,336 Transit Fund , ,930 Sanitary Fund ,318 40,318 Total $ 325,275 $ 587,850 $ 3,852,005 $ 3,220,374 $ 725,000 $ 93,716 $ 8,804,220 C. Fund Financial Statements The General Fund provides transfers to support operations of various Non-major Governmental Funds, such as funding of community service grants, transfers to debt service funds for bond debt repayment and also to supplement revenues received for public transit with a transfer of funds to the Transit Enterprise Fund. The transfer to the General Fund from the Capital Improvement Projects Fund is related to excess funds that had accumulated in the CIP fund for capital projects that have been either postponed or completed. 92

183 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, CAPITAL ASSETS A. Government-Wide Financial Statements At June 30, 2013, the City s capital assets consisted of the following: Governmental Business-type Activities Activities Total Non-depreciable assets: Land $ 28,866,252 $ 1,261,634 $ 30,127,886 Construction in progress 10,448,938 15,959,669 26,408,607 Total non-depreciable assets 39,315,190 17,221,303 56,536,493 Depreciable assets: Buildings and improvements 45,895, ,749 46,698,084 Machinery and equipment 13,708,413 8,537,729 22,246,142 Infrastructure 271,473, ,426, ,900,608 Total depreciable assets 331,077, ,767, ,844,834 Less accumulated depreciation for: Buildings and improvements (13,519,302) (363,792) (13,883,094) Machinery and equipment (8,126,701) (3,473,649) (11,600,350) Infrastructure (96,348,710) (50,270,396) (146,619,106) Total accumulated depreciation (117,994,713) (54,107,837) (172,102,550) Total capital assets, being depreciated, net 213,082,688 71,659, ,742,284 Total capital assets, net $ 252,397,878 $ 88,880,899 $ 341,278,777 93

184 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, CAPITAL ASSETS, Continued A. Government-Wide Financial Statements, Continued The following is a summary of capital assets for governmental activities for the year ended June 30, 2013: Balance Balance July 1, 2012 Additions Deletions June 30, 2013 Non-depreciable assets: Land $ 30,257,008 $ 27,041 $ (1,417,797) $ 28,866,252 Construction in progress 42,255,581 5,428,761 (37,235,404) 10,448,938 Total non-depreciable assets 72,512,589 5,455,802 (38,653,201) 39,315,190 Depreciable assets: Buildings and improvements 44,167,437 2,071,603 (343,705) 45,895,335 Machinery and equipment 13,804, ,089 (405,825) 13,708,413 Infrastructure 257,700,737 20,644,893 (6,871,977) 271,473,653 Total depreciable assets 315,672,323 23,026,585 (7,621,507) 331,077,401 Less accumulated depreciation for: Buildings and improvements (12,044,619) (1,499,221) 24,538 (13,519,302) Machinery and equipment (7,425,985) (892,319) 191,603 (8,126,701) Infrastructure (88,390,145) (6,693,850) 422,497 (94,661,498) Total accumulated depreciation (107,860,749) (9,085,390) 638,638 (116,307,501) Prior Period Adjustment - See note 17 (1,687,212) - - (1,687,212) Total capital assets, being depreciated, net 206,124,362 13,941,195 (6,982,869) 213,082,688 Total capital assets, net $ 278,636,951 $ 19,396,997 $ (45,636,070) $ 252,397,878 Depreciation expense, including depreciation to internal service funds, for the year ended June 30, 2013 was charged to functions/programs of the governmental activities as follows: Governmental Activities General government $ 13,984 Public safety 7,385 Highway and streets, including depreciation of general infrastructure assets 7,045,997 Internal service funds 2,018,024 Total depreciation expense - governmental activities $ 9,085,390 94

185 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, CAPITAL ASSETS, Continued A. Government-Wide Financial Statements, Continued The following is a summary of capital assets for business-type activities for the fiscal year ended June 30, 2013: Balance Balance July 1, 2012 Additions Deletions June 30, 2013 Non-depreciable assets: Land $ 1,261,634 $ - $ - $ 1,261,634 Construction in progress 13,636,157 3,259,490 (935,978) 15,959,669 Total non-depreciable assets 14,897,791 3,259,490 (935,978) 17,221,303 Depreciable assets: Buildings and improvements 802, ,749 Machinery and equipment 8,350, ,637-8,537,730 Infrastructure 114,209,753 2,217, ,426,955 Total depreciable assets 123,362,595 2,404, ,767,434 Less accumulated depreciation for: Buildings and improvements (336,946) (26,846) - (363,792) Machinery and equipment (2,935,948) (537,702) - (3,473,650) Infrastructure (47,663,841) (2,606,555) - (50,270,396) Total accumulated depreciation (50,936,735) (3,171,103) - (54,107,838) Total capital assets, being depreciated, net 72,425,860 (766,264) - 71,659,596 Total capital assets, net $ 87,323,651 $ 2,493,226 $ (935,978) $ 88,880,899 Depreciation expense for business-type activities for the fiscal year ended June 30, 2013, was charged as follows: Business-type Activities Water $ 907,829 Sewer 2,097,808 Transit 165,466 Total depreciation expense - business-type activities $ 3,171,103 B. Fund Financial Statements The fund financial statements do not present general government capital assets, but are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position. 95

186 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, COMPENSATED ABSENCES The City s policy relating to compensated absences is described in note 1. As shown in the table below, the long-term portion of this debt is expected to be paid in future years from future resources. There is no fixed payment schedule for compensated absences. In prior years, compensated absences have been liquidated primarily by the General Fund and the proprietary funds. The balance of compensated absences for the Governmental Activities and Business-type Activities at June 30, 2013, was as follows: Amount Amount Balance Balance Due Within Due in More July 1, 2012 Additions Deletions June 30, 2013 One Year Than One Year Governmental activities: $ 2,060,530 $ 597,831 $ (835,752) $ 1,822,609 $ 835,752 $ 986,857 Business-type activities: $ 1,309,607 $ 491,452 $ (445,550) $ 1,355,509 $ 445,548 $ 909, CAPITAL LEASES The City had the following capital lease obligations at June 30, 2013: Amount Amount Balance Balance Due Within Due in More July 1, 2012 Additions Deletions June 30, 2013 One Year Than One Year Governmental activities Capital lease obligation $ 199,876 $ - $ (131,904) $ 67,972 $ 67,972 $ - Business-type activities Capital lease obligation $ 19,238 $ - $ (12,696) $ 6,542 $ 6,542 $ - Governmental Activities On October 8, 2003, the City entered into a Lease with Option to Purchase agreement with Siemens Building Technologies, through SunTrust Leasing Corporation, for energy saving equipment for City Hall and Corporation Yard Facilities. The lease between the City and SunTrust Leasing Corporation has an interest rate of 4.05 percent, and the lease will terminate in October The gross amount of machinery and equipment acquired with this lease was $1,158,520. Outstanding capital lease payments for these facilities as of June 30, 2013, are as follows: 96

187 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, CAPITAL LEASES, Continued Year Ending June 30, Principal Interest Total 2014 $ 67,972 $ 1,034 $ 69,006 Total $ 67,972 $ 1,034 $ 69,006 Business-type Activities On October 8, 2003, the Water Utility Fund entered into a Lease with Option to Purchase agreement with Siemens Building Technologies for energy saving equipment for the Water Facility. The lease between the Water Fund and SunTrust Leasing Corporation has an interest rate of 4.05 percent, and the lease will terminate in October The gross amount of machinery and equipment acquired with this lease was $108,784. Outstanding capital lease payments for the Water Fund as of June 30, 2013, are as follows: Year Ending June 30, Principal Interest Total 2014 $ 6,542 $ 100 $ 6,642 Total $ 6,542 $ 100 $ 6, LONG-TERM DEBT Following is a summary of long-term debt transactions for the fiscal year ended June 30, 2013: Amount Due Balance Balance Within July 1, 2012 Additions Deletions June 30, 2013 One Year Governmental Activities: 1999 Revenue Refunding Bonds $ 215,000 $ - $ (215,000) $ - $ Lease Revenue Bonds-Library 7,630,000 - (355,000) 7,275, ,000 Total Governmental Activities $ 7,845,000 $ - $ (570,000) $ 7,275,000 $ 265,000 Business-Type Activities: 2005 Wastewater Bonds $ 20,380,000 $ - $ (500,000) $ 19,880,000 $ 520,000 Premium on 2005 Bonds 53,142 - (2,169) 50,973 - Total Business-Type Activities $ 20,433,142 $ - $ (502,169) $ 19,930,973 $ 520,000 97

188 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, LONG-TERM DEBT, Continued A. Governmental Activities 1999 Revenue Refunding Bonds Original Issue $6,530,000 On January 1, 1999, the City issued, through the Camarillo Public Finance Authority (a nonprofit benefit corporation), $6,530,000 in Revenue Refunding Bonds Series 1999, bearing interest rates ranging from 3.5 to 5 percent and maturing on December 1, The proceeds were used to defease the outstanding balance of the 1991 Refunding Certificates of Participation and the 1993 Certificates of Participation, all of which has been paid in full through escrow accounts with the bond trustee. The final payment on the 1999 Revenue Refunding Bonds was made on the bond maturity date of December 1, Lease Revenue Bonds Original Issue $7,630,000 On April 26, 2012, the City issued, through the Camarillo Public Finance Authority (a non-profit benefit corporation), $7,630,000 in Lease Revenue Bonds (Library Refunding Project), 2012 Series, with interest rates ranging from 1.00 to 4.25 percent, with a maturity date of December 1, The proceeds of the 2012 Bonds were used to redeem and defease the 2003 Library Bonds and fund the costs of issuance relating to the 2012 Bonds. With this defeasance, the City realized a net present value savings of approximately $876,000 and annual debt service savings ranging from $49,000 - $55,000 over the remaining life of the bonds. The annual debt service requirements at June 30, 2013, on the 2012 Library Bonds are as follows: Year Ending June 30, Principal Interest Total 2014 $ 265,000 $ 226,769 $ 491, , , , , , , , , , , , , ,540, ,609 2,454, ,775, ,618 2,441, ,110, ,212 2,430, ,000 10, ,094 Total $ 7,275,000 $ 2,990,878 $ 10,265,878 Camarillo Community Development Commission Bonds On February 1, 2012, the City of Camarillo became the Successor Agency to the dissolved Camarillo Community Development Commission (CDC), the City s Redevelopment Agency. As of that date, the CDC Bonds are no longer a Long-Term Debt of the City. See note 18 Successor Agency Trust for more detail. 98

189 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, LONG-TERM DEBT, Continued B. Business-type Activities 1999 Revenue Refunding Bonds Original Issue $11,475,000 On January 1, 1999, the City issued, through the Camarillo Public Finance Authority (a nonprofit benefit corporation), $11,475,000 in Revenue Refunding (Wastewater) Bonds Series 1999, bearing interest rates ranging from 3.5 percent to 5 percent and maturing on December 1, The proceeds were used to defease the outstanding balance of the Certificates of Participation Series 1992 issued by the Camarillo Sanitary District. In November 2005, there was an in-substance defeasance of the Revenue Refunding (Wastewater) Series 1999 Bonds. The funds for the defeasance were placed in an irrevocable escrow account overseen by independent bank fiscal agents. Such funds are generally invested in U.S. Treasury Securities, which, together with interest earned thereon, are intended to provide amounts sufficient for future payments of interest, principal, and redemption premium on these bonds. The defeased bonds were paid in full on the original bond maturity date of December 1, Wastewater Revenue Refunding Bonds Original Issue $23,000,000 On November 30, 2005, the Camarillo Sanitary District issued, through the Camarillo Public Finance Authority (a non-profit benefit corporation), $23,000,000 in Revenue Bonds Series 2005, bearing interest rates ranging from 4 percent to 5 percent and maturing on June 1, The proceeds were used to finance certain improvements to the District s Wastewater Enterprise, to pay for a Reserve Fund surety bond and to pay costs of issuance of the bonds. The bonds are payable from and are a pledge of revenues consisting primarily of payments to be made by the City under an installment sale agreement. As of June 30, 2013, the annual debt service requirements for the Camarillo Sanitary District s 2005 Wastewater Revenue Refunding Bonds are as follows: Year Ending June 30, Principal Interest Total 2014 $ 520,000 $ 918,654 $ 1,438, , ,854 1,437, , ,254 1,436, , ,854 1,438, , ,869 1,439, ,455,000 3,736,279 7,191, ,300,000 2,894,274 7,194, ,390,000 1,797,138 7,187, ,920, ,250 4,318,250 Total $ 19,880,000 $ 13,202,426 $ 33,082,426 99

190 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, DEVELOPER DEPOSITS The City accepts deposits from developers in the form of cash and securities related to developments within the City. Upon completion of required improvements related to the project, outstanding balances are refundable to the developers. Such amounts are included as deposits, payable in the Capital Improvements Projects Capital Project Fund, and amounted to $262,278 at June 30, In addition to the above, the City has collected monies in the form of fees for road improvements, including signals, medians, and widening. Such amounts may ultimately require the City to perform capital improvements or pay developers to perform required improvements. These fees are recorded as revenues in the Capital Improvements Projects Fund upon receipt, and future commitments are recorded as assigned fund balance. 10. FUND BALANCES FOR GOVERNMENTAL FUNDS Effective July 2010, the City implemented the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definition. The objective of the Statement is to enhance the usefulness of fund balance information by providing fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. The City has evaluated the use of the Special Revenue Funds under the criteria set forth in GASB Statement No. 54, and has determined that Community Service Grants, Storm Water Management, and Library Operations Special Revenue Funds continue to not qualify as a special revenue fund, and accordingly are combined with the General Fund for presentation purposes. Governmental funds report fund balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. As of June 30, 2013, fund balance for governmental funds are made up of the following: Nonspendable Fund Balance includes amounts that are (a) not in spendable form, or (b) legally or contractually required to be maintained intact. The not in spendable form criterion includes items that are not expected to be converted to cash, for example: inventories, prepaid amounts, and long-term notes receivable. Restricted Fund Balance includes amounts that are restricted for specific purposes stipulated by external resources provider, constitutionally or through enabling legislation. Restrictions may effectively be changed or lifted only with the consent of resource providers. Committed Fund Balance includes amounts that can only be used for the specific purposes determined by a formal adopted Resolution of the City Council. Commitments may be changed or lifted only by a formal adopted resolution of the City. 100

191 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, FUND BALANCES FOR GOVERNMENTAL FUNDS, Continued Assigned Fund Balance includes amounts intended to be used by the City for specific purposes that are neither restricted nor committed. Intent is expressed by the City Council to which the assigned amounts are to be used for specific purposes; such as, continued capital projects, capital improvement plan, and budget. The City Council did not delegate another body to assign fund balances. Assigned amounts also include all residual amounts in governmental funds (except negative amounts) other than the General Fund that are not classified, restricted or committed. Unassigned Fund Balance the residual classification for the General Fund and includes all amounts not contained in the other classifications. Governmental funds report residual negative balances as unassigned fund balance. When restricted and unrestricted resources are available for expenditure for the same purpose, the City expends restricted resources before unrestricted resources. Within unrestricted resources, the fund balance is depleted in the order of committed, assigned, and unassigned. Fund balances at June 30, 2013, for the governmental funds are nonspendable, restricted, committed, assigned, unassigned for the following purposes: Major Funds Capital Total Major Total Other Total General Library Debt Improvement Governmental Governmental Governmental Fund Service Projects Funds Funds Funds Fund balances: Nonspendable: Long-term receivable $ 11,950,459 $ - $ - $ 11,950,459 $ - $ 11,950,459 Prepaid items 10, , ,186 Deposits 125, , ,000 Subtotal 12,085, ,085, ,086,645 Restricted for: Air quality management , ,048 Capital projects ,569,737 7,569,737 Cable fees , ,092 Community development ,360 59,360 Library operations ,211,202 1,211,202 Maintenance ,744,682 1,744,682 Subtotal ,369,121 11,369,121 Assigned to: General government 10, ,766-10,766 Highway and streets 4, ,872-4,872 Community services 1, ,308-1,308 Culture and recreation 74, ,443-74,443 Capital projects ,661,182 12,661,182 44,107 12,705,289 Debt service - 501, , ,237 Subtotal 91, ,237 12,661,182 13,253,808 44,107 13,297,915 Unassigned: 38,141, ,141,636-38,141,636 Total fund balances $ 50,318,720 $ 501,237 $ 12,661,182 $ 63,481,139 $ 11,414,178 $ 74,895,

192 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, NON-CITY OBLIGATIONS 1915 Act Limited Obligation Improvement Bonds and Bank Notes On July 27, 1989, the City issued $1,325,000 of 1915 Act Limited Obligation Improvement Bonds for Assessment District No (Mission de Camarillo), Series 1989, to provide funds for the purpose of advance refunding the Bond Anticipation Notes, Series , which were called by Security Pacific National Bank (trustee) on December 1, These bonds were refinanced on September 2, This was done to benefit from a lower interest rate (5.1 percent versus 7.2 percent percent) as well as other savings that were realized when the bonds were paid off with the proceeds from a bank note with City National Bank in the amount of $905,000. The source of debt service on the note is from property assessments within the district. The principal amount of debt outstanding on the note at June 30, 2013, is $113,500. The district was renamed District No (from District No. 88-1) with the issuance of the bank note. Neither the 1915 Act Bonds, nor the bank note are general obligations of the City, and neither the faith and credit nor the taxing power of the City, the State of California, nor any political subdivision thereof is pledged to the payment of any debt service for this District. On March 2, 1997, the City issued $3,541,500 of 1915 Act Limited Obligation Improvement Bonds for the Flynn Road Improvement Assessment District. These bonds were refinanced on December 20, This was done to benefit from a lower interest rate (4.65 percent versus percent percent) as well as other savings that were realized when the bonds were paid off with the proceeds from a bank note with City National Bank in the amount of $2,800,000. The source of debt service on the note is from property assessments within the district. The principal amount of debt outstanding at June 30, 2013, is $773,000. The district was renamed District No (from Flynn Road Improvement Assessment District) with the issuance of the bank note. Neither the 1915 Flynn Road Bonds, nor the bank note, are general obligations of the City and neither the faith and credit nor the taxing power of the City, the State of California, nor any political subdivision thereof is pledged to the payment of Flynn Road debt service. Multifamily Housing Revenue Bonds The City issued $19,420,000 of Multifamily Revenue Bonds (Hacienda de Camarillo Project); Series 1996 dated October 1, The City had no direct involvement with the administration of these bonds, except to allow their issuance under the name of the City. These revenue bonds were issued under the provisions of the state law that provide that the bonds do not constitute an indebtedness of the City. The source of debt service is from a letter of credit established by the developer. For this reason, these non-city obligations are not reflected in the accompanying combined financial statements. At June 30, 2013, $19,420,000 was outstanding on the multifamily housing revenue bonds. 102

193 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, NON-CITY OBLIGATIONS, Continued Multifamily Housing Revenue Bonds, Continued The City issued $7,500,000 of Multifamily Revenue Bonds (Park Glenn Apartments); Series 1998 dated February 1, The City had no direct involvement with the administration of these bonds, except to allow their issuance under the name of the City. These revenue bonds were issued under the provisions of the state law that provide that the bonds do not constitute an indebtedness of the City. The source of debt service is from a letter of credit established by the developer. For this reason, these non-city obligations are not reflected in the accompanying combined financial statements. At June 30, 2013, $5,370,000 is outstanding on these multifamily housing revenue bonds. The City issued $1,121,000 of Multifamily Revenue Bonds (Park Glenn Senior Apartments) Series 1999 dated June 1, The City had no direct involvement with the administration of these bonds except to allow their issuance under the name of the City. These revenue bonds were issued under the provisions of the state law that provide that the bonds do not constitute an indebtedness of the City. The source of debt service is from a promissory note established by the developer. For this reason, these non-city obligations are not reflected in the accompanying combined financial statements. At June 30, 2013, $682,471 is outstanding on the multifamily housing revenue bonds. Camarillo Community Facilities District No.1 Mello Roos Bonds The City issued $13,955,000 of Mello Roos bonds dated September 1, 1990, for the Camarillo Community Facilities District No. 1. The facilities constructed included sanitary sewer improvements and appurtenances and appurtenant work, including equipment, real property, and other tangible property. These Mello Roos bonds were refinanced with the issuance of the $11,235,000 West Camarillo Community Facilities District No. 1 Special Tax Refunding Bonds Series The Mello Roos bonds are not a general obligation of the City, and neither the faith nor the taxing power of the City, the State of California, or any political subdivision thereof is pledged to the payment of these bonds. The source of debt service is from property assessments within the district. The 1999 bonds were paid in full on September 1, After the issuance of these bonds and the $8,200,000 bonds issued in September 2004 that are listed below, the City is authorized to issue an additional $7,849,360 in Mello Roos bonds for the acquisition and construction of other facilities within the Camarillo Community Facilities District No. 1, including a bridge at the U.S. 101/Central Avenue interchange, with appurtenance and appurtenant work, including equipment, real property and other tangible property. 103

194 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, NON-CITY OBLIGATIONS, Continued Camarillo Community Facilities District No.1 Mello Roos Bonds, Continued The City issued an additional $8,200,000 of Mello Roos bonds dated September 1, 2004, for the Camarillo Community Facilities District No. 1. The facilities acquired or constructed included a portion of certain drainage and bridge facilities of benefit to the district. The Mello Roos bonds are not a general obligation of the City, and neither the faith nor the taxing power of the City, the State of California, or any political subdivision thereof is pledged to the payment of these bonds. The source of debt service is from property assessments within the district. The principal amount of debt outstanding at June 30, 2013 on the 2004 bonds is $7,430,000. The City is authorized to issue an additional $7,849,360 in Mello Roos bonds for the construction of other facilities within the Camarillo Community Facilities District No. 1, including a bridge at the U.S. 101/Central Avenue interchange, with appurtenance and appurtenant work, including equipment, real property and other tangible property. Camarillo Community Facilities District No.2 Mello Roos Bonds The City issued $2,000,000 of Mello Roos bonds dated December 23, 2009, for the Camarillo Community Facilities District No. 2. The facilities constructed included a portion of a freeway interchange overcrossing over U.S. 101 Freeway between existing interchanges at Las Posas Road and Central Avenue. These Mello Roos bonds are not a general obligation of the City, and neither the faith nor the taxing power of the City, the State of California, or any political subdivision thereof is pledged to the payment of these bonds. The source of debt service is from property assessments within the district. The principal amount of debt outstanding at June 30, 2013, on the 2009 bonds, is $2,000,000. The City is authorized to issue an additional $10,500,000 in Mello Roos bonds for the construction of other facilities within the Camarillo Community Facilities District No. 2, including a freeway interchange overcrossing the U.S. 101 Freeway between existing interchanges at Las Posas Road and Central Avenue. 12. FUND BALANCE DEFICITS/EXPENDITURES IN EXCESS OF APPROPRIATION For the fiscal year ended June 30, 2013, the Transit Fund ending fund balance had a deficit of $36,177. One of the primary revenue sources for this fund is federal operating and maintenance grants. Expenditures exceeded revenue due to a delay in receipt of grant funds. 13. JOINTLY GOVERNED ORGANIZATIONS The City participates in a joint powers agreement, (JPA), with the cities/agencies of Simi Valley, Thousand Oaks, the Camrosa Water District, and Calleguas Municipal Water District known as the Wastewater Treatment JPA. This JPA was formed in an effort of opposing National Pollutant Discharge Elimination Systems (NPDES) permit regulations. The City acts as Treasurer for this JPA; recording agency deposits and the cost of legal expenses, performing technical research, and providing testimony in support of wastewater agencies discharging treated wastewater in Calleguas Creek Watershed area. 104

195 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, JOINTLY GOVERNED ORGANIZATIONS, Continued The City participates in a jointly governed organization with the County of Ventura and the cities of Fillmore, Moorpark, Ojai, Oxnard, Port Hueneme, Santa Paula, San Buenaventura, Simi Valley, and Thousand Oaks, known as the Ventura Council of Governments (VCOG). The purpose of VCOG is to provide a vehicle for the member entities, and other interested persons and organizations to engage in regional, cooperative and comprehensive planning, and for the review of federal and state projects which involve the use of federal and/or state funds. The City participates in a jointly governed organization with the County of Ventura and the cities of Moorpark, Oxnard, Port Hueneme, San Buenaventura, and Thousand Oaks, known as the Ventura County Regional Defense Partnership for the 21 st Century (RDP-21). The purpose of RDP-21 is to promote and ensure economic growth of the area through collaborative efforts to enhance military facilities located in the County area. The City has acted as Treasurer of RDP-21 and maintains a separate agency fund to account for all deposits and recording of expenditures. The City s annual financial responsibility to these joint organizations is budgeted annually and represents the City s share of dues or common project expenses. 14. RISK MANAGEMENT A. Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City of Camarillo is a member of the California Joint Powers Insurance Authority (Authority). The Authority is composed of 122 California public entities and is organized under a joint powers agreement pursuant to California Government Code 6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The California JPIA began covering claims of its members in Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine-member Executive Committee. B. Self-Insurance Programs of the Authority Each member pays an annual contribution to cover estimated losses for the coverage period. This initial funding is paid at the beginning of the coverage period. After the close of the coverage period, outstanding claims are valued. A retrospective deposit computation is then conducted annually thereafter until all claims incurred during the coverage period are closed on a pool-wide basis. This subsequent cost re-allocation among members based on actual claim development can result in adjustments of either refunds or additional deposits required. The total funding requirement for self-insurance programs is estimated using actuarial models and pre-funded through the annual contribution. Costs are allocated to individual agencies based on exposure (payroll) and experience (claims) relative to other members of the risksharing pool. Additional information regarding the cost allocation methodology is provided below. 105

196 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, RISK MANAGEMENT, Continued B. Self-Insurance Programs of the Authority, Continued Liability In the liability program claims are pooled separately between police and non-police exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $30,000 for each occurrence and is evaluated as a percentage of the pool s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $30,000 to $750,000 for each occurrence and is evaluated as a percentage of the pool s total incurred costs within the second layer. (4) Incurred costs in excess of $750,000 up to the reinsurance attachment point of $5 million are distributed based on the outcome of cost allocation within the first and second loss layers. (5) Costs of covered claims from $5 million to $10 million are paid under a reinsurance contract subject to a $2.5 million annual aggregate deductible. Costs of covered claims from $10 million to $15 million are paid under two reinsurance contracts subject to a combined $3 million annual aggregate deductible. The $3 million annual aggregate deductible is fully retained by the Authority. (6) Costs of covered claims from $15 million up to $50 million are covered through excess insurance policies. The overall coverage limit for each member including all layers of coverage is $50 million per occurrence. Costs of covered claims for subsidence losses are paid by reinsurance and excess insurance with a pooled sub-limit of $25 million per occurrence. This $25 million subsidence sub-limit is composed of: (a) $5 million retained within the pool s Self Insured Retention (SIR), (b) $10 million in reinsurance, and (c) $10 million in excess insurance. The excess insurance layer has a $10 million annual aggregate. Workers Compensation In the workers compensation program, claims are pooled separately between public safety (police and fire) and non-public safety exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $50,000 for each occurrence and is evaluated as a percentage of the pool s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated as a percentage of the pool s total incurred costs within the second layer. (4) Incurred costs in excess of $100,000 up to the reinsurance attachment point of $2 million are distributed based on the outcome of cost allocation within the first and second loss layers. (5) Costs of covered claims from $2 million up to statutory limits are paid under a reinsurance policy. Protection is provided per statutory liability under California Workers Compensation Law. Employer s Liability losses are pooled among members to $2 million. Coverage from $2 million to $5 million is purchased as part of a reinsurance policy, and Employer s Liability losses from $5 million to $10 million are pooled among members. 106

197 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, RISK MANAGEMENT, Continued C. Purchased Insurance Pollution Legal Liability Insurance The City of Camarillo participates in the pollution legal liability insurance program (formerly called environmental insurance) which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City of Camarillo. Coverage is on a claims-made basis. There is a $50,000 deductible. The Authority has a limit of $50 million for the 3-year period, from July 1, 2011 through July 1, Each member of the Authority has a $10 million sub-limit during the 3-year term of the policy. Property Insurance The City of Camarillo participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. City of Camarillo property is currently insured according to a schedule of covered property submitted by the City of Camarillo to the Authority. City of Camarillo property currently has all-risk property insurance protection in the amount of $162,776,700. There is a $5,000 deductible per occurrence except for non-emergency vehicle insurance which has a $1,000 deductible. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. Earthquake and Flood Insurance The City of Camarillo purchases earthquake and flood insurance on a portion of its property. The earthquake insurance is part of the property protection insurance program of the Authority. City of Camarillo property currently has earthquake protection in the amount of $159,852,095. There is a deductible of 5% per unit of value with a minimum deductible of $100,000. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. Crime Insurance The City of Camarillo purchases crime insurance coverage in the amount of $1,000,000 with a $2,500 deductible. The fidelity coverage is provided through the Authority. Premiums are paid annually and are not subject to retrospective adjustments. Special Event Tenant User Liability Insurance The City of Camarillo further protects against liability damages by requiring tenant users of certain properties to purchase low-cost tenant user liability insurance for certain activities on agency property. The insurance premium is paid by the tenant user and is paid to the City of Camarillo according to a schedule. The City of Camarillo then pays for the insurance. The insurance is arranged by the Authority. 107

198 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, RISK MANAGEMENT, Continued D. Adequacy of Protection During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in Fiscal Year 2012/ EMPLOYEE RETIREMENT PLANS A. Pension Plan Plan Description The City contributes to the California Public Employees Retirement System (PERS), an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS annual financial report may be obtained from their Executive Office located at 400 P Street, Sacramento, California Funding Policy During the year ended June 30, 2013, the California s Public Employees Pension Reform Act (PEPRA) went into effect. Employees hired after January 1, 2013 who are new to PERS are required to pay half of their plan s normal cost. The new members contribute 6.25% of their annual covered salary. Active plan members who were PERS members before January 1, 2013 are required by state statute to contribute 7 percent of their annual covered salary. The City makes the contributions required of City employees on their behalf and for their account, which amounted to $785,848 for the year ended June 30, Contribution rates for each participating employer are determined based on the benefit structure established. Employers are required to contribute the remaining amounts necessary to finance the coverage of their employees through periodic contributions at actuarially determined rates. The City is required to contribute for Fiscal Year 2012/2013 at an actuarially determined rate of percent of annual covered payroll for miscellaneous employees. 108

199 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, EMPLOYEE RETIREMENT PLANS, Continued A. Pension Plan, Continued Annual Pension Cost For Fiscal Year 2012/2013, the City s annual pension cost of $2,063,178 for PERS was equal to the City s required and actual contributions. The required contribution was determined as part of the June 30, 2010, actuarial valuation using the entry age normal actuarial cost method. The actuarial value of PERS assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a three-year period. PERS unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. The average remaining amortization period at June 30, 2013, was 24 years for prior and current service unfunded liability. THREE - YEAR TREND INFORMATION FOR PERS Annual Percentage of Pension Cost APC Net Pension Fiscal Year Ended (APC) Contributed Obligation 6/30/2011 1,665, % - 6/30/2012 1,991, % - 6/30/2013 2,063, % - The funded status as of the most recent actuarial valuation date is as follows: Entry Age Unfunded Unfunded Normal Actuarial AAL Annual AAL Valuation Actuarial Accrued Value Unfunded Actuarially Funded Covered as a % of Date Liability (AAL) of Assets Accrued Liability Status Payroll Payroll 6/30/2012 $ 82,932,767 $ 64,437,015 $ 18,495, % $ 11,515, % The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AALs for benefits. 109

200 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, EMPLOYEE RETIREMENT PLANS, Continued A. Pension Plan, Continued Additional information as of the latest actuarial valuation follows: Valuation date June 30, 2012 Actuarial cost method Entry Age Actuarial Cost Method Normal Cost Amortization method Level Percent of Payroll Remaining amortization 24 Years as of the Valuation Date period Asset valuation method 15 Year Smoothed Market Actuarial assumptions: Discount Rate 7.50% (net of administrative expenses) Projected salary increases 3.30 % to 14.20% depending on age, service, and type of employment Inflation 2.75% Payroll Growth 3.00% Individual Salary Growth A merit scale varying by duration of employment coupled with an assumed annual inflation growth of 2.75% and an annual production growth of.25% B. Defined Contribution Plan Plan Description The City established with the International City Managers Association (ICMA) an additional pension plan for all its employees through a 401(a) Defined Contribution Plan (Plan). In a defined contribution plan, benefits depend solely on amounts contributed to the Plan plus investment earnings. Employees are participants from the date of employment. Benefit provisions, and all other requirements, are established by the Plan and City ordinance. Information regarding this 401(a) Defined Contribution Plan may be obtained from ICMA Retirement Corporation at 777 North Capital Street NE, Washington, DC Funding Policy For regular full-time and part-time employees, the Plan is totally contributory on the part of the City in an amount equal to 7 percent of the employee s base pay each payroll period. The City s total payroll for the Fiscal Year 2012/2013 was $14,317,102. The City s contributions were calculated using the base salary amount of $12,142,584 at 7 percent, amounting to $849,982. Employees not covered by PERS are contributing 0.5 percent of their pay to the Plan, in addition to the 7 percent City contribution, for a total contribution of 7.5 percent. Employees contributed $1,355 in Fiscal Year 2012/2013. All employees are fully vested upon enrollment. Employees hired after 1986 also contribute to Medicare. 110

201 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, EMPLOYEE RETIREMENT PLANS, Continued B. Defined Contribution Plan, Continued The assets of the Plan are held for the exclusive benefit of the plan participants and their beneficiaries, and the assets shall not be diverted for any other purpose. Each participant directs the investments in the participant s separate accounts. The City has no liability for any losses that may be incurred by the Plan. Accordingly, these assets are not included in the basic financial statements. C. Postemployment Healthcare Benefits Plan Description The City participates in the CalPERS medical program, which is a costsharing multiple employer defined benefit healthcare plan administered by CalPERS. CalPERS established the plan under the Public Employee s Medical and Hospital Care Act (PEMCHA) as of July 1, Health insurance premiums of the plan are established and amended by the CalPERS Board. Employees who retire from the City and receive a CalPERS pension are eligible to participate in the PEMCHA health insurance plans for postemployment medical benefits. As a condition to the City s contract for health insurance for its active employees, CalPERS requires a minimum contribution for retirees who participate in a health insurance plan. Retirees can enroll in any of the available CalPERS medical plans. This benefit continues for the life of the retiree and surviving spouse. Benefit provisions for CalPERS are established by the Public Employees Retirement Law (Part 3 of the California Government Code, Section et seq.). In order to fund the retirees benefit, the City established an irrevocable trust with Public Agency Retirement Services (PARS). PARS issues a separate annual financial report, and copies of the report may be obtained by writing to PARS at 4350 Von Karman Ave., Suite 100, Newport Beach, CA 92660, or by calling Funding Policy Retirees participating in PEMCHA are responsible for the payment of their medical insurance premiums except the City s contribution of the minimum amount provided under Government Code Section of the Public Employees Medical and Hospital Care Act. The City s required monthly contribution per retiree during calendar year 2012 was $112 per month and $115 per month during calendar year The amount contributed by the City during the fiscal year was $181,339. In order to fund the retirees benefit, the City established an irrevocable trust with Public Agency Retirement Services (PARS). 111

202 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, EMPLOYEE RETIREMENT PLANS, Continued C. Postemployment Healthcare Benefits, Continued The City s annual OPEB cost, equal to the annual required contribution (ARC), the percentage of OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2012/2013 as follows: 2013 Annual Required Contribution (ARC) $ 181,843 Interest on net OPEB Obligation - Adjustments to Annual Required Contribution - Annual OPEB Cost 181,843 Contributions Made (181,339) Increase/(Decrease) in Net OPEB Obligation 504 Net OPEB Obligation (Asset), Beginning of the Year (252) Net OPEB Obligation (Asset), End of the Year $ 252 Annual Other Postemployment Benefit (OPEB) Cost and Net OPEB Obligation The City s annual other postemployment benefit cost is calculated based on the ARC of the employer, an amount actuarially determined in accordance with the parameters of GASB 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City s net OPEB obligation. The City s annual OPEB cost and the percentage of the annual OPEB cost contributed for the fiscal year ended June 30, 2013, was as follows: Annual Annual OPEB Employer Percentage Net OPEB Year Ended Cost Contribution Contributed Obligation 6/30/2011 $ 167,135 $ 167, % $ (252) 6/30/2012 $ 174,331 $ 174, % $ (252) 6/30/2013 $ 181,843 $ 181, % $

203 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, EMPLOYEE RETIREMENT PLANS, Continued C. Postemployment Healthcare Benefits, Continued Funded Status and Funding Progress As of July 1, 2013, the most recent actuarial valuation date, the funded status of the plan, was as follows: Actuarial Accrued Liability (AAL) $ 2,946,494 Actuarial Value of Plan Assets $ 3,082,650 Unfunded Actuarial Accrued Liability (UAAL) $ (136,156) Funded Ratio (Actuarial Value of Plan Assets/AAL) 104.6% Covered Payroll (Active Plan Members) n/a UAAL as Percentage of Covered Payroll n/a Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. 113

204 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, EMPLOYEE RETIREMENT PLANS, Continued C. Postemployment Healthcare Benefits, Continued As of the July 1, 2013 actuarial valuation (latest available), the following actuarial assumptions were used: Actuarial cost method Entry Age Normal Actuarial Cost Method Amortization method Level Percent of Payroll Remaining amortization period 25 Years of the Valuation Date, on a closed basis Actuarial assumptions: Investment rate of return 6.3% Healthcare cost rate trend 4.0% 16. COMMITMENTS AND CONTINGENCIES A. Lawsuits in the Normal Course of Business The City is presently involved in certain matters of litigation that have arisen in the normal course of conducting City business. City management believes, based upon consultation with the City Attorney, that these cases, in the aggregate, are not expected to result in a material adverse financial impact on the City. Additionally, City management believes that the City s insurance programs are sufficient to cover any potential losses should an unfavorable outcome materialize. B. Federal and State Grant Programs The City participates in several federal and state grant programs. These programs have been audited by the City s independent auditors in accordance with the provisions of the federal Single Audit Act, as amended, and applicable state requirements. No cost disallowances were proposed as a result of these audits. However, these programs are still subject to further examination by the grantors, and the amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time. The City expects such amounts, if any, to be immaterial. C. Construction Commitments The City had several outstanding or planned construction projects as of June 30, These projects are evidenced by contractual commitments with contractors, and include the following major projects: 114

205 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, COMMITMENTS AND CONTINGENCIES, Continued C. Construction Commitments, Continued Spent Commitment Source Project Description to Date Remaining Name of Funds Committed of Funds Ponderosa-Camarillo Hills Drain Landscape $ 709,586 $ 271,461 Capital Improvement Projects Fund (1) Ponderosa Drive Landscaping Phase III 353,078 1,084,116 Capital Improvement Projects Fund (2) Central Avenue Freeway Landscaping 29,319 58,614 Capital Improvement Projects Fund (3) Santa Rosa Road Widening 382,983 48,600 Capital Improvement Projects Fund (4) Calleguas Creek Bike Trail Phase II 1,984,418 37,605 Capital Improvement Projects Fund (5) Calleguas Creek Bike Trail Phase III 79,460 23,923 Capital Improvement Projects Fund (5) Calleguas Creek Bike Trail Phase IV 61,853 24,649 Capital Improvement Projects Fund (5) Lewis Road Monument 200,076 30,354 Capital Improvement Projects Fund (6) Flynn Road Sidewalk North of Adolfo Rd 44,761 17,210 Capital Improvement Projects Fund (7) Metrolink Undercrossing 22,930 32,910 Capital Improvement Projects Fund (8) Pancho Road Pavement Rehabilitation 51,363 70,938 Capital Improvement Projects Fund (9) Annual Overlay & Slurry ,894, ,704 Capital Improvement Projects Fund (10) Annual Overlay & Slurry , ,449 Capital Improvement Projects Fund (10) Annual Overlay & Slurry ,689 23,553 Capital Improvement Projects Fund (10) Springville Dr Interchange 31,867,123 49,769 Capital Improvement Projects Fund (11) Airport Water Improvements Phase III 204,173 38,850 Water Capital Projects Fund User Fees Water Main Replacements 258,955 50,156 Water Capital Projects Fund User Fees WWTP Diversion to Camrosa 5,507,773 95,244 CSD Capital Projects Fund (12) SSMP Future Sewer Improvements 2,330,336 35,422 CSD Capital Projects Fund User Fees Daily Drive Sewer 76,037 11,563 CSD Capital Projects Fund User Fees Pump Station #2 Rehabiliation 528,602 26,600 CSD Capital Projects Fund User Fees Carmen Drive Sewer 514,244 15,168 CSD Capital Projects Fund User Fees WWTP Salts Management 154,360 15,367 CSD Capital Projects Fund User Fees Pleasant Valley Monitoring Wells 48,535 42,276 CSD Capital Projects Fund User Fees Total $ 49,430,105 $ 2,472,501 (1) The Ponderosa-Camarillo Hills Drain Landscape project is funded by the General Fund and a federal grant. (2) The Ponderosa Drive Landscape Phase II project is funded by the General Fund and a federal grant. (3) The Central Avenue Freeway Landscaping project is funded by the General Fund and a federal grant. (4) The Santa Rosa Road Widening project is funded by developer fees and a federal grant. (5) The Calleguas Creek Bike Trail Phase II, Phase III, and Phase IV projects are funded by the General Fund and a federal grant. (6) The Lewis Road Monument project is funded by the former Community Development Commission and developer fees. (7) The Flynn Road Sidewalk North of Adolfo Rd project is funded by developer fees. (8) The Metrolink Undercrossing project by the Transit Fund. (9) The Pancho Road Rehabilitation project is funded by the Water Fund. (10) The 2012, 2013, and 2014 Overlay and Slurry Seal Projects are funded by the General Fund and Transportation Development Act monies received from the State of California. (11) The Springville Drive Interchange Project is funded by the former Community Development Commission debt financing, developer fees and contributions. (12) Wastewater Treatment Plant facility improvements are financed by 2005 sewer bonds As of June 30, 2013 in the opinion of City management, there were no additional outstanding matters that would have a significant effect on the financial position of the funds of the City. 115

206 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, RESTATEMENT OF BEGINNING NET POSITION In fiscal year 2012/2013, the City implemented GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. This statement established accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities. Due to the implementation of this statement, deferred bond costs, which should be recognized as an expense in the period incurred, were eliminated. Accounting changes adopted to conform to the provisions of this statement should be applied retroactively. The net position reported in the government-wide financial statements as of July 1, 2012 were restated as follows: Governmental Business-Type Fiduciary Activities Activities Activities Net position as previously reported July 1, 2012 $375,996,482 $116,997,502 $(39,028,961) Adjustment to accumulated depreciation for prior periods 1,687,212 - (202,543) Reduction in net position of Sanitary District net - (371,681) (2,273,328) position to remove unamortized bond issuance costs for the implementation of GASB Statement 65 Net position as restated July 1, 2012 $377,683,694 $116,625,821 $(41,504,832) 18. SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY A. Summary of Creation of Successor Agency Private-Purpose Trust Fund On June 27, 2012, as part of the FY 2012/13 state budget package, the Legislature passed and the Governor signed AB 1484, which made technical and substantive amendments to the Dissolution Act Assembly Bill X1 26 that was enacted on June 29, 2011, as part of the fiscal year 2011/12 State Budget Passage, based on experience to-date at the state and local level in implementing the Dissolution Act. Under the Dissolution Act, each California redevelopment agency (each a Dissolved RDA ) was dissolved as of February 1, 2012, and the sponsoring community that formed the Dissolved RDA, together with other designated entities, have initiated the process under the Dissolution Act to unwind the affairs of the Dissolved RDA. A Successor Agency was created for each Dissolved RDA which is the sponsoring community of the Dissolved RDA unless it elected not to serve as the Successor Agency. On January 11, 2012, the City elected to serve as the Successor Agency to the Camarillo Community Redevelopment Commission. 116

207 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY, Continued A. Summary of Creation of Successor Agency Private-Purpose Trust Fund, Continued The Dissolution Act also created oversight boards which monitor the activities of the successor agencies. The roles of the successor agencies and oversight boards is to administer the wind down of each Dissolved RDA which includes making payments due on enforceable obligations, disposing of the assets (other than housing assets) and remitting the unencumbered balances of the Dissolved RDAs to the County Auditor-Controller for distribution to the affected taxing entities. The Dissolution Act allowed the sponsoring community that formed the Dissolved RDA to elect to assume the housing functions and take over certain housing assets of the Dissolved RDA. If the sponsoring community does not elect to become the Successor Housing Agency and assume the Dissolved RDA s housing functions, such housing functions and all related housing assets will be transferred to the local housing authority in the jurisdiction. AB 1484 modified and provided some clarifications on the treatment of housing assets under the Dissolution Act. The City elected on January 11, 2012, to serve as the Housing Successor Agency. B. City of Camarillo as Successor Agency In fiscal year 2011/12, the City transferred select assets of the CDC to the City, prior to the California Supreme Court s action related to the Dissolution Act and Assembly Bill x1 27, for safekeeping purposes. With the implementation of Assembly Bill 1484, and completion of Due Diligence Reviews (DDR) for both Housing and Non-Housing purposes, the Council provided direction to transfer those assets back to the Successor Agency in fiscal year 2012/13. The transfer of the assets back to the Successor Agency has been reported as a special item in the financial statements. Also as a result of the DDR, the City was to reverse the loan repayment of $11.8 million that consisted of $11.3 million from bond proceeds and $578 thousand from other funds. The majority of these funds were deposited with the bond trustees and the balance was used to service bond debt in fiscal year 2013/14. The City has re-established the Long Term Advance for $11.9 million to include interest due and will seek repayment from the Successor Agency through the AB 1484 process. Because of the different measurement focus of the governmental funds (current financial resources measurement focus) and the measurement focus of the fiduciary private-purpose trust fund (economic resources measurement focus), the special item reported in the governmental funds was not the same amount as the special item that was reported in the fiduciary fund financial statements. 117

208 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY, Continued B. City of Camarillo as Successor Agency, Continued The difference between the special item reported in the fund financial statements and the extraordinary gain special item reported in the fiduciary fund financial statements is reconciled as follows: Transfer of assets reported in governmental funds increase to net position of the Successor Agency Private-Purpose Trust Fund $16,901,071 Capital assets transferred in the government-wide financial statements increase to net position of the Successor Agency Private-Purpose Trust Fund Net increase to net position of the Successor Agency Private-Purpose Trust Fund as a result of the asset transfers (equal to amount of special item reported in the government-wide financial statements of the City) 26,512,992 $43,414,063 C. Recognized Obligation Payment Schedule The Dissolution Act and AB 1484 also establish roles for the County Auditor-Controller, the California Department of Finance (the DOF ) and the California State Controller s office in the dissolution process and the satisfaction of enforceable obligations of the Dissolved RDAs. The County Auditor-Controller is charged with establishing a Redevelopment Property Tax Trust Fund (the RPTTF ) for each Successor Agency and depositing into the RPTTF for each six-month period, the amount of property taxes that would have been redevelopment property tax increment had the Dissolved RDA not been dissolved. The deposit in the RPTTF fund is to be used to pay the Successor Agency the amounts due on the Successor Agency s enforceable obligations for the upcoming six-month period. The Successor Agency is required to prepare a recognized obligation payment schedule (the ROPS ) approved by the oversight board setting forth the amounts due for each enforceable obligation during each six month period. The ROPS is submitted to the DOF for approval. The County Auditor-Controller will make payments to the Successor Agency from the RPTTF fund based on the ROPS amount approved by the DOF. The ROPS is prepared in advance for the enforceable obligations due over the next six months. The Successor Agency received $2.6 million from the County Auditor-Controller on June 13, 2012, for ROPS II (July 1, - December 30, 2012) and $1.7 million on January 2, 2013, for ROPS III (January 1 June 30, 2013). An additional $1.4 million was received on June 4, 2013 for ROPS 13-14A (July 1 - December 31, 2013). The process of making RPTTF deposits to be used to pay enforceable obligations of the Dissolved RDA will continue until all enforceable obligations have been paid in full and all non-housing assets of the Dissolved RDA have been liquidated. 118

209 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY, Continued C. Recognized Obligation Payment Schedule, Continued The State Controller s Office of the State of California, through an Asset Review, was directed to review any transfer of assets between Dissolved RDA and other public bodies, which occurred after January 1, If the public body that received such transfers is not contractually committed to a third-party for the expenditure or encumbrance of those assets, the State Controller would then require to order the available assets be transferred back to the public body designated as the Successor Agency. On July 16, 2013, the City of Camarillo as Successor Agency was notified of the Asset Review that would begin on July 22, The examination period identified in AB 1484 provided a look back that covered transactions from January 1, 2011, through January 31, 2012, time period. Prior to the passage of AB 1484, while still under the provisions of the Dissolution Act, the Dissolved RDA did transfer assets to the City of Camarillo. A preliminary report has been prepared detailing all of the assets transferred from and to the Successor Agency in fiscal year After reviewing that preliminary report with Legal Counsel, City Council, and Management Staff, the assets were transferred back to the Successor Agency within the fiscal year 2012/13. While the Asset Review is yet to be finalized, the State Controller s Office is aware of the transfer of assets back to the Successor Agency in fiscal year 2012/13, and will reflect such in the completed report. The projected timeframe for completion of this Asset Review is December, Management believes, in consultation with legal counsel, that the obligations of the Dissolved RDA due to the City are valid enforceable obligations payable by the Successor Agency under the requirements of the Dissolution Act and AB The City s position on this issue is not a position of settled law and there is considerable legal uncertainty regarding this issue. It is reasonably possible that a legal determination may be made at a later date by an appropriate judicial authority that would resolve this issue unfavorably to the City. D. Long-Term Debt Following is a summary of long-term debt transactions for the fiscal year ended June 30, 2013: Amount Due Balance Balance Within July 1, 2012 Additions Deletions June 30, 2013 One Year 2004 CDC Refunding Bonds $ 19,600,000 $ - $ 470,000 $ 19,130,000 $ 485,000 Premium on 2004 CDC Bonds 36, ,311 - Deferred Loss on Refunding Bonds (349,364) 31,287 - (318,077) CDC Bonds: Parity Bonds 15,990, ,000 15,845, ,000 Discount on Parity Bonds (55,331) 1,867 - (53,464) - Non-Taxable Housing Bonds 5,050,000-25,000 5,025,000 25,000 Discount on Non-Taxable Housing Bonds (52,992) 1,806 - (51,186) - Taxable Housing Bonds 5,095, ,000 4,975, , CDC Parity Bonds 16,720, ,000 16,470, ,000 Discount on Parity Bonds (238,327) 8,080 - (230,247) - Total Fiduciary Activities $ 61,795,663 $ 43,674 $ 1,010,000 $ 60,829,337 $ 1,045,

210 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY, Continued D. Long-Term Debt, Continued 2004 CDC Tax Allocation Refunding Bonds Original Issue $22,500,000 On September 1, 2004, the Camarillo Community Development Commission (CDC) issued $22,500,000 in Tax Allocation Refunding Bonds Series 2004, bearing interest rates ranging from 2.75 to percent and maturing on September 1, In addition to providing the funds to advance refund the $6,345,000 outstanding principal plus interest on the Series 1999 Bonds, the proceeds were used to finance certain redevelopment projects within the Camarillo Corridor Project Area, to fund a reserve account for the bonds, and to pay bond issuance costs. The City, as Successor Agency to the CDC, will pay all future bond obligations with Redevelopment Property Tax Trust Fund (RPTTF) distributions to service enforceable obligations. The annual debt service requirements at June 30, 2013, are as follows: Year Ending June 30, Principal Interest Total 2014 $ 485,000 $ 855,139 $ 1,340, , ,636 1,338, , ,124 1,336, , ,414 1,337, , ,311 1,337, ,115,000 3,558,595 6,673, ,835,000 2,815,194 6,650, ,810,000 1,811,962 6,621, ,780, ,500 5,272,500 Total $ 19,130,000 $ 12,777,875 $ 31,907,875 Health and Safety Code Section requires the City of Camarillo in the Capacity of Successor Agency to the Camarillo Community Development Commission continue to make payments due for enforceable obligations (i.e. debt service). Redevelopment Property Tax Trust Fund (RPTTF) distributions will continue to repay the CDC Tax Allocation Refunding Bonds Series Total principal and interest remaining on the bond totals $31,907,875 and is payable through fiscal year For the current year, the total of principal and interest paid was $1,340,

211 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY, Continued D. Long-Term Debt, Continued 2006 CDC Tax Allocation Parity Bonds Original Issue $16,805,000 On November 10, 2006, the Camarillo Community Development Commission issued $16,805,000 in Tax Allocation Parity Bonds Series 2006, bearing interest rates ranging from 4 to 5 percent and maturing on September 1, The proceeds of the Series 2006 Bonds were used to finance certain redevelopment projects within the Camarillo Corridor Project Area, to fund a reserve insurance policy for the bonds, and to pay bond issuance costs. The City, as Successor Agency to the CDC, will pay all future bond obligations with Redevelopment Property Tax Trust Fund (RPTTF) distributions to service enforceable obligations. The annual debt service requirements at June 30, 2013, are as follows: Year Ending June 30, Principal Interest Total 2014 $ 155,000 $ 698,637 $ 853, , , , , , , , , , , , , ,025,000 3,224,706 4,249, ,260,000 2,985,903 4,245, ,555,000 2,680,703 4,235, ,275,000 2,270,537 5,545, ,900, ,800 8,630,800 Total $ 15,845,000 $ 15,317,287 $ 31,162,287 Health and Safety Code Section requires the City of Camarillo in the Capacity of Successor Agency to the Camarillo Community Development Commission to continue to make payments due for enforceable obligations (i.e. debt service). Redevelopment Property Tax Trust Fund (RPTTF) distributions will continue to repay the 2006 CDC Tax Allocation Parity Bonds. Total principal and interest remaining on the bond totals $31,162,287 and is payable through fiscal year For the current year, the total of principal and interest paid was $849,

212 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY, Continued D. Long-Term Debt, Continued 2006 CDC Housing Set-Aside Tax Allocation Bonds, Series 2006A Original Issue $5,110,000 On November 10, 2006, the Camarillo Community Development Commission issued $5,110,000 in Housing Set-Aside Tax Allocation Bonds Series 2006A, tax-exempt bonds bearing interest rates ranging from 4.5 to 4.6 percent and maturing on September 1, The proceeds of the Series 2006A Bonds were used to finance certain low and moderate income housing projects and programs, to fund a debt service reserve account for the bonds, to fund the purchase of a surety and to pay bond issuance costs. The City, as Successor Agency to the CDC, will pay all future bond obligations with Redevelopment Property Tax Trust Fund (RPTTF) distributions to service enforceable obligations. The annual debt service requirements at June 30, 2013, are as follows: Year Ending June 30, Principal Interest Total 2014 $ 25,000 $ 226,965 $ 251, , , , , , , , , , , , , ,000 1,088,365 1,253, ,000 1,045,240 1,255, , ,190 1,251, ,870, ,093 2,672, ,385, ,817 2,605,817 Total $ 5,025,000 $ 5,270,570 $ 10,295,570 Health and Safety Code Section requires the City of Camarillo in the Capacity of Successor Agency to the Camarillo Community Development Commission to continue to make payments due for enforceable obligations (i.e. debt service). Redevelopment Property Tax Trust Fund (RPTTF) distributions will continue to repay the 2006A CDC Housing Set-Aside Tax Allocation Bonds. Total principal and interest remaining on the bond totals $10,295,570 and is payable through fiscal year For the current year, the total of principal and interest paid were $253,

213 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY, Continued D. Long-Term Debt, Continued 2006 CDC Housing Set-Aside Tax Allocation Bonds, Series 2006A-T Original Issue $5,715,000 On November 10, 2006, the Camarillo Community Development Commission issued $5,715,000 in Housing Set-Aside Tax Allocation Bonds Series 2006A-T, taxable bonds bearing interest rates ranging from 5.26 to 5.91 percent and maturing on September 1, The proceeds of the Series 2006A-T Bonds were used to finance certain low and moderate income housing projects and programs, to fund a debt service reserve account for the bonds, to fund the purchase of a surety and to pay bond issuance costs. The City, as Successor Agency to the CDC, will pay all future bond obligations with Redevelopment Property Tax Trust Fund (RPTTF) distributions to service enforceable obligations. The annual debt service requirements at June 30, 2013, are as follows: Year Ending June 30, Principal Interest Total 2014 $ 125,000 $ 284,625 $ 409, , , , , , , , , , , , , ,000 1,127,033 2,037, ,205, ,552 2,028, ,605, ,848 2,018, ,000 27, ,186 Total $ 4,975,000 $ 3,743,331 $ 8,718,331 Health and Safety Code Section requires the City of Camarillo in the Capacity of Successor Agency to the Camarillo Community Development Commission to continue to make payments due for enforceable obligations (i.e. debt service). Redevelopment Property Tax Trust Fund (RPTTF) distributions will continue to repay the 2006A Taxable CDC Housing Set-Aside Tax Allocation Bonds. Total principal and interest remaining on the bond totals $8,718,331 and is payable through fiscal year For the current year, the total principal and interest paid were $411,

214 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY, Continued D. Long-Term Debt, Continued 2009 CDC Tax Allocation Parity Bonds Original Issue $17,490,000 On December 23, 2009, the Camarillo Community Development Commission issued $17,490,000 in Tax Allocation Parity Bonds Series 2009, bearing interest rates ranging from 2 percent to 6 percent and maturing on September 1, The proceeds of the Series 2009 Bonds were used to finance certain redevelopment projects within the Camarillo Corridor Project Area, to fund a reserve insurance policy for the bonds, and to pay bond issuance costs. The City, as Successor Agency to the CDC, will pay all future bond obligations with Redevelopment Property Tax Trust Fund (RPTTF) distributions to service enforceable obligations. The annual debt service requirements at June 30, 2013, are as follows: Year Ending June 30, Principal Interest Total 2014 $ 255,000 $ 928,037 $ 1,183, , ,913 1,183, , ,737 1,181, , ,612 1,182, , ,863 1,177, ,760,000 4,132,781 5,892, ,280,000 3,600,944 5,880, ,970,000 2,875,637 5,845, ,965,000 1,855,350 5,820, ,110, ,200 4,621,200 Total $ 16,470,000 $ 17,500,074 $ 33,970,074 Health and Safety Code Section requires the City of Camarillo in the Capacity of Successor Agency to the Camarillo Community Development Commission to continue to make payments due for enforceable obligations (i.e. debt service). Redevelopment Property Tax Trust Fund (RPTTF) distributions will continue to repay the 2009 CDC Tax Allocation Parity Bonds. Total principal and interest remaining on the bond totals $33,970,074 and is payable through fiscal year For the current year, the total of principal and interest paid were $1,185,

215 City of Camarillo Notes to Basic Financial Statements For the Fiscal Year Ended June 30, SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY, Continued D. Long-Term Debt, Continued Pledged Revenue Health and Safety Code Section requires the City of Camarillo in the Capacity of Successor Agency to the Camarillo Community Development Commission continue to make payments due for enforceable obligations (i.e. debt service). Redevelopment Property Tax Trust Fund (RPTTF) distributions will continue to repay the tax allocation bonds of the City of Camarillo as the Successor Agency to the former Camarillo Community Development Commission. Total principal and interest remaining on the allocation bonds totals $116,054,137, payable through Current year bond principal and interest paid with RPTTF were as follows: Principal Bond Series and Interest 2004 CDC Tax Allocation Refunding Bonds $ 1,340, CDC Tax Allocation Parity Bonds 849, Housing Set-Aside Tax Allocation Bonds 253, CDC Housing Set-Aside Tax Allocation Bonds, Series 2006-A-T 411, CDC Tax Allocation Parity Bonds $ 1,185,613 4,040,095 Tax Increment Revenue Redevelopment Property Tax Trust Fund distribution paid to the Successor Agency 3,061,918 Reserve Balance from Due Diligence Review 978,177 Net Amount Available to pay Enforceable Obligations $ 4,040,

216 126

217 APPENDIX F CITY OF CAMARILLO SUPPLEMENTAL INFORMATION The following information concerning the City of Camarillo and surrounding areas is included only for the purpose of supplying general information regarding the community. The Bonds are not a debt of the City, the County, the State or any of its political subdivisions (other than the Successor Agency), and neither the City, the County, the State nor any of its political subdivisions (other than the Successor Agency) is liable therefor. General The City of Camarillo (the City ) is located in southern Ventura County (the County ). The City is located in Pleasant Valley at the eastern end of the Oxnard Plain, with the Santa Susana Mountains to the north, the Camarillo Hills to the northwest, the Conejo Valley to the east, and the western reaches of the Santa Monica Mountains to the south. The City has a total area of 19.5 square miles (51 km 2 ) square miles (0.039 km 2 ) of the area (0.08%) is water. The County has a total area of 2,208 square miles (5,720 km 2 ), of which 1,843 square miles (4,770 km 2 ) is land and 365 square miles (950 km 2 ) (16.5%) is water. Anacapa Island of Channel Islands National Park and San Nicolas Island are located in the county. Most of the population of Ventura County lives in its southern portion. The major population centers are the Oxnard Plain and the Simi and Conejo Valleys. In local media, the county is usually split between the eastern portion, generally associated with the San Fernando Valley, and the western portion, often referred to as "Oxnard-Ventura." North of Highway 126, the county is mountainous and mostly uninhabited. Most of this land is in the Los Padres National Forest. Organization The City was incorporated in October 22, 1964 as a general law city. The City operates under a Council/Manager form of government. The five City Council members are elected at large. The Mayor is selected by the Council from among its members. The policies of the City Council are carried out by the appointed City Manager. Population The table below summarizes population of the City and the County for the past five years. POPULATION City of Camarillo and Ventura County Year City of Camarillo Ventura County , , , , , , , , , ,967 Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties, and the State, , with 2010 Census Benchmark. Sacramento, California, May Appendix F Page 1

218 Employment The following table summarizes the historical numbers of workers by industry in Ventura County for the last five years: VENTURA COUNTY Oxnard Thousand Oaks Ventura MSA Labor Force and Industry Employment Annual Averages by Industry (1) Total, All Industries 300, , , , ,300 Total Farm 24,000 24,400 25,200 27,100 27,700 Total Nonfarm 276, , , , ,600 Goods Producing 47,100 44,000 43,200 42,900 43,400 Mining and Logging 1,200 1,200 1,300 1,300 1,200 Construction 13,200 11,300 11,300 11,800 12,400 Manufacturing 32,600 31,500 30,600 29,900 29,800 Service Providing 229, , , , ,200 Private Service Providing 186, , , , ,600 Trade, Transportation & Utilities 52,500 53,100 54,200 55,600 57,100 Wholesale Trade 12,000 12,300 12,400 12,600 12,800 Retail Trade 35,100 35,500 36,300 37,300 38,500 Information 5,300 5,100 4,900 5,100 5,100 Financial Activities 20,500 20,300 20,400 19,600 18,900 Professional & Business Services 35,100 33,600 33,200 34,800 36,200 Educational & Health Services 34,300 34,700 35,500 37,500 39,000 Leisure & Hospitality 29,800 30,300 31,400 32,700 33,700 Other Services 9,300 9,200 9,200 9,400 9,600 Government 42,900 44,200 44,400 43,600 43,600 Source: California Employment Development Department based on March 2013 benchmark. (1) Last available full year data. Note: Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households, and persons involved in labor/management trade disputes. Employment reported by place of work. Items may not add to totals due to independent rounding. Appendix F Page 2

219 The following tables summarize historical employment and unemployment for Ventura County, the State of California and the United States for the past five years: Ventura COUNTY, CALIFORNIA, AND UNITED STATES Civilian Labor Force, Employment, and Unemployment (Annual Averages) Unemployment Year Area Labor Force Employment Unemployment Rate (1) 2009 Ventura County 430, ,100 42, % California 18,208,300 16,144,500 2,063, United States 154,142, ,877,000 14,265, Ventura County 432, ,600 47, % California 18,316,400 16,051,500 2,264, United States 153,889, ,064,000 14,825, Ventura County 434, ,200 44, % California 18,384,900 16,226,600 2,158, United States 153,617, ,869,000 13,747, Ventura County 437, ,200 39, % California 18,494,900 16,560,300 1,934, United States 154,975, ,469,000 12,506, Ventura County 434, ,100 33, % California 18,596,800 16,933,300 1,663, United States 155,389, ,929,000 11,460, Source: California Employment Development Department, based on March 2013 benchmark and US Department of Labor, Federal Bureau of Labor Statistics (1) The unemployment rate is computed from unrounded data, therefore, it may differ from rates computed from rounded figures available in this table. Major Employers The table below sets forth the principal employers of the City and the County. CITY OF CAMARILLO 2013 Principal Employers Employer Employees Percentage of Total Employment Pleasant Valley School District % Hi-Temp Insulation St. John s Pleasant Valley Hospital Ventura County Star Technicolor Video Services Teledyne Scientific & Imaging Data Exchange Corp Semtech Harbor Freight Tools Vitesse Semiconductor Corp SolarWorld Industries Total 3, % Source: City of Camarillo 2013 Comprehensive Annual Financial Report. Appendix F Page 3

220 VENTURA COUNTY 2014 Major Employers Company Location Industry Air National Guard Port Hueneme State Government-National Security Amgen Inc Thousand Oaks Biological Specimens-Manufacturers Bankers Capital Financial Inc Westlake Village Real Estate Loans Baxter Healthcare Westlake Village Physicians & Surgeons Equip & Supls-Mfrs Boskovich Farms Inc Oxnard Fruits & Vegetables-Growers & Shippers California State University Ventura Schools-Universities & Colleges Academic Coleman Welding Ventura Steel-Structural (Mfrs) Community Memorial Hospital Ventura Hospitals Farmers Insurance Simi Valley Insurance Haas Automation Inc Oxnard Machinery-Manufacturers Harbor Freight Tools USA Inc Camarillo Tools-New & Used Hossein Tarani Oak Park Oils-Fuel (Whls) Iyogi Computer Support Oak Park Computers-Service & Repair Los Robles Hospital & Med Ctr Thousand Oaks Hospitals Moorpark College Moorpark Schools-Universities & Colleges Academic Nancy Reagan Breast Ctr Simi Valley Diagnostic Imaging Centers Naval Air Warfare Ctr Weapons Point Mugu Nawc Federal Government-National Security Naval Base Ventura County Point Mugu Nawc Military Bases Naval Construction Battalion Point Mugu Nawc Federal Government-National Security Oxnard College Oxnard Schools-Universities & Colleges Academic Penny Mac Mortgage Investment Moorpark Real Estate Investment Trusts Sheriff's Department-Jails Ventura Sheriff Simi Valley Hospital Simi Valley Hospitals St John's Regional Medical Ctr Oxnard Hospitals Technicolor Inc Camarillo Motion Picture Producers & Studios Source: California Employment Development Department. Data retrieved August 26, Appendix F Page 4

221 Construction Activity The following tables reflects the five-year history of building permit valuation for the City and the County: CITY OF CAMARILLO Building Permits and Valuation (Dollars in Thousands) Permit Valuation: New Single-family 0 2, New Multi-family ,229 Res. Alterations/Additions 3,959 4,248 5,772 3,844 4,360 Total Residential 3,959 6,296 6,203 3,993 27,895 Total Nonresidential 26,479 13,189 11,890 19,022 40,044 Total All Building 30,438 19,486 18,093 23,015 67,939 New Dwelling Units: Single Family Multiple Family Total VENTURA COUNTY Building Permits and Valuation (Dollars in Thousands) Permit Valuation: New Single-family 81,959 68,191 65,286 62, ,009 New Multi-family 32,433 52,395 67,765 23, ,304 Res. Alterations/Additions 60,450 61,349 83,791 56,288 53,255 Total Residential 174, , , , ,569 Total Nonresidential 153, , , , ,036 Total All Building 328, , , , ,606 New Dwelling Units: Single Family Multiple Family Total Sources: Construction Industry Research Board: Building Permit Summary. Note: Totals may not add due to independent rounding. Appendix F Page 5

222 Commercial Activity Taxable sales in the City and County are shown below. Beginning in 2009, reports summarize taxable sales and permits using the NAICS codes. As a result of the coding change, however, industrylevel data for 2009 are not comparable to that of prior years. TAXABLE SALES, CITY OF CAMARILLO (dollars in thousands) 2008 Retail Stores Apparel Stores $ 201,644 General Merchandise 91,957 Food Stores 42,673 Eating and Drinking 115,572 Household Group 27,258 Building Material Group 65,951 Automotive Group 67,331 Service Stations 112,921 All Other Retail Stores 158,310 Retail Stores Totals 883,616 All Other Outlets 271,539 Total All Outlets (2) $1,155, (1) 2010 (1) 2011 (1) 2012 (1)(3) Retail and Food Services Motor Vehicles and Parts Dealers $ 54,114 $ 59,094 $ 55,508 $ 62,619 Furniture and Home Furnishings Stores 26,665 29,219 26,697 20,687 Bldg Mtrl. and Garden Equip. and Supplies 69,243 73,605 74,046 79,899 Food and Beverage Stores 45,917 45,527 47,628 50,266 Gasoline Stations 92, , , ,478 Clothing and Clothing Accessories Stores 259, , , ,555 General Merchandise Stores 76,785 79,275 80,791 81,421 Food Services and Drinking Places 111, , , ,624 Other Retail Group 74,886 80,879 89,005 89,517 Total Retail and Food Services 810, , ,854 1,028,065 All Other Outlets 223, , , ,911 Totals All Outlets (2) $ 1,034,223 $ 1,137,100 $ 1,229,646 $ 1,253,976 Source: California Board of Equalization, Taxable Sales in California (Sales & Use Tax). (1) Starting in 2009, categories were revised from prior years. (2) Totals may not add up due to independent rounding. (3) Last available full year data. Appendix F Page 6

223 TAXABLE SALES, VENTURA COUNTY (dollars in thousands) 2008 Retail Stores Apparel Stores $ 597,268 General Merchandise 1,225,854 Food Stores 476,367 Eating and Drinking 1,063,774 Household Group 396,275 Building Material Group 600,326 Automotive Group 1,495,331 Service Stations 1,065,992 All Other Retail Stores 1,154,564 Retail Stores Totals 8,075,751 Business & Personal Services 418,671 All Other Outlets 2,827,988 Total All Outlets (2) $ 11,322, (1) 2010 (1) 2011 (1) 2012 (1)(3) Retail and Food Services Motor Vehicles and Parts Dealers $ 1,285,749 $ 1,351,557 $ 1,493,652 $ 1,711,680 Furniture and Home Furnishings Stores 178, , , ,384 Electronics and Appliance Stores 296, , , ,023 Bldg Mtrl. and Garden Equip. and Supplies 567, , , ,660 Food and Beverage Stores 517, , , ,619 Health and Personal Care Stores 207, , , ,123 Gasoline Stations 809, ,689 1,184,899 1,248,682 Clothing and Clothing Accessories Stores 699, , , ,178 Sporting Goods, Hobby, Book and Music Stores 260, , , ,960 General Merchandise Stores 1,008,611 1,044,770 1,083,396 1,112,454 Miscellaneous Store Retailers 261, , , ,115 Nonstore Retailers 93,138 91,587 87, ,840 Food Services and Drinking Places 1,025,568 1,053,007 1,115,328 1,193,290 Total Retail and Food Services 7,213,606 7,546,960 8,156,404 8,700,010 All Other Outlets 2,670,248 2,678,528 2,863,777 3,258,250 Totals All Outlets (2) $ 9,883,853 $ 10,225,488 $ 11,020,181 $ 11,958,260 Source: California Board of Equalization, Taxable Sales in California (Sales & Use Tax). (1) Starting in 2009, categories were revised from prior years. (2) Totals may not add up due to independent rounding. (3) Last available full year data. Appendix F Page 7

224 Median Household Income The following table summarizes the median household effective buying income for the City, the County, the State of California and the nation for the years 2008 through CITY OF CAMARILLO, VENTURA COUNTY, STATE AND UNITED STATES Effective Buying Income Year Area Total Effective Buying Income (000 s Omitted) Median Household Effective Buying Income 2008 City of Camarillo $ 1,912,420 $ 61,983 Ventura County 19,931,933 59,275 California 844,823,319 49,736 United States 6,571,536,768 43, City of Camarillo $ 1,958,193 $ 64,909 Ventura County 20,448,570 62,193 California 844,823,319 49,736 United States 6,571,536,768 43, City of Camarillo $ 1,881,183 $ 61,781 Ventura County 19,427,353 58,583 California 801,393,028 47,177 United States 6,365,020,076 41, City of Camarillo $ 1,895,653 $ 62,046 Ventura County 19,920,950 58,300 California 814,578,457 47,062 United States 6,438,704,663 41, City of Camarillo $ 2,078,023 $ 62,659 Ventura County 21,829,753 59,284 California 664,088,827 47,307 United States 6,737,867,730 41,358 Source: The Nielsen Company (US), Inc. Appendix F Page 8

225 APPENDIX G FISCAL CONSULTANT S REPORT Appendix G

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227 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION FISCAL CONSULTANT REPORT FISCAL CONSULTANT REPORT 2014 TAX ALLOCATION REFUNDING BONDS Camarillo Corridor Redevelopment Project Successor Agency to the Camarillo Community Development Commission September 26, 2014 ROSENOW SPEVACEK GROUP, INC.

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229 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION FISCAL CONSULTANT REPORT TABLE OF CONTENTS INTRODUCTION... 1 BACKGROUND... 3 RECENT CHANGES TO REDEVELOPMENT LAW... 4 ABOLITION OF LOW AND MODERATE INCOME HOUSING SET-ASIDE... 4 TAX INCREMENT REVENUE VERSUS PROPERTY TAX REVENUE... 4 REDEVELOPMENT PLAN LIMITATIONS... 5 HISTORICAL ASSESSED VALUATION & REVENUES... 6 TOP 10 TAXPAYERS... 9 SECURED ASSESSED VALUATION BY LAND USE TAX REVENUE PROJECTIONS METHODOLOGY & GENERAL ASSUMPTIONS GROWTH ASSUMPTIONS ARTICLE XIIIA (PROPOSITION 13) INFLATIONARY ADJUSTMENTS CHANGES IN VALUATION FROM SALES VALUE FROM NEW CONSTRUCTION SUPPLEMENTAL ROLL REVENUE PROPOSITION 8 REASSESSMENTS & ASSESSMENT APPEALS TAX RATES PAYMENT TO AFFECTED TAXING ENTITIES DISTRICT AGREEMENTS OTHER AGREEMENTS SUBORDINATION TO DEBT SERVICE... 22

230 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION FISCAL CONSULTANT REPORT TAX COLLECTION FEE DISCLAIMER TAX REVENUE PROJECTIONS AND STATUTORY TAXING AGENCY PAYMENTS APPENDIX: CAMARILLO PREMIUM OUTLET TENANTS... 26

231 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION FISCAL CONSULTANT REPORT INTRODUCTION The City of Camarillo is the Successor Agency to the Camarillo Community Development Commission ( Agency ). This Fiscal Consultant Report ( Report ) has been prepared by Rosenow Spevacek Group, Inc. ( RSG ) at the request of the Agency 1 in order to substantiate available tax revenues to be generated from the Camarillo Corridor Redevelopment Project ( Project Area ) for the proposed Series 2014 Refunding Tax Allocation Bonds ( 2014 TABS ). The 2014 TABS will refinance all of the currently outstanding bonded indebtedness incurred by the former Camarillo Community Development Commission ( Commission ) for its Series 2004 Tax Allocation Bonds, thus reducing the total amount of the Agency s debt service. The further purpose of this Report is to estimate future tax revenues from the Project Area that will be available to pay debt obligations. Future revenue has been estimated based upon the construction of a tax revenue projection model ( Revenue Projections ) included within this Report. The Report also includes and describes the general methodology and assumptions used to prepare the Revenue Projections, as well as provides historical assessed valuation and revenue information and other pertinent information pertaining to the Project Area. The following tables and graphs are provided as back-up and support for the Revenue Projections. Table Number Table Description Page Number Table 1: Tax Revenue Projections Summary... 2 Figure 1: Project Area Boundaries Map... 3 Table 2: Redevelopment Plan Limitations... 5 Table 3: Historical Assessed Valuations... 6 Table 4: Historical Assessed Valuations & Tax Revenues... 8 Table 5: Top 10 Taxpayers... 9 Table 6: Top Taxpayer Historical Assessed Valuations Figure 2: Remaining Lease Terms of Top Taxpayer Tenants Table 7: Secured Assessed Valuation by Land Use Table 8: Change in Assessed Value Due to Sales Table 9: Building Permit Activity Table 10: Four-Year Assessment Appeals History Table 11: Taxing Agency Shares Table 12A: Tax Revenue Projections Table 12B: Statutory Taxing Agency Payments The Project Area s total assessed value for Fiscal Year ( FY ) is $1,183,256,279, representing an increase of 1.7% over FY assessed valuations. Gross tax revenue for FY is estimated to be $7,111,900. Table 1, on the following page, summarizes the overall findings of this Report, including Revenue Projections illustrating the amount of net tax revenue available to the Agency for the 2014 TABS. 1 Compensation paid to RSG by the Agency for preparation of this FCR is not contingent upon the sale of bonds. 1

232 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION FISCAL CONSULTANT REPORT Tax Revenue Projections Summary Table 1 Camarillo Corridor Redevelopment Project Bond Fiscal Total Incremental Estimated County Net Tax Year Year Assessed Valuation Gross Tax Admin Revenue Valuation Revenue Fee Available for Debt Service 1 1% 1.5% BY Value: $ 472,066, $1,183,256,279 $711,189,963 $7,111,900 $106,678 $7,005, ,198,757, ,691,463 7,266, ,004 7,157, ,219,736, ,670,159 7,476, ,151 7,364, ,241,134, ,068,429 7,690, ,360 7,575, ,262,960, ,894,664 7,908, ,634 7,790, ,285,223, ,157,424 8,131, ,974 8,009, ,307,931, ,865,439 8,358, ,380 8,233, ,331,093, ,027,615 8,590, ,854 8,461, ,354,719, ,653,034 8,826, ,398 8,694, ,378,817, ,750,961 9,067, ,013 8,931, ,403,397, ,330,847 9,313, ,700 9,173, ,428,468, ,402,331 9,564, ,460 9,420, ,454,041, ,975,244 9,819, ,296 9,672, ,480,125,932 1,008,059,616 10,080, ,209 9,929, ,506,731,991 1,034,665,675 10,346, ,200 10,191, ,533,870,171 1,061,803,855 10,618, ,271 10,458, ,561,551,115 1,089,484,799 10,894, ,423 10,731, ,589,785,678 1,117,719,362 11,177, ,658 11,009, ,618,584,932 1,146,518,616 11,465, ,978 11,293, ,647,960,171 1,175,893,855 11,758, ,384 11,582, ,677,922,915 1,205,856,599 12,058, ,878 11,877, ,708,484,914 1,236,418,598 12,364, ,463 12,178, ,739,658,153 1,267,591,837 12,675, ,139 12,485, ,771,454,856 1,299,388,540 12,993, ,908 12,798, ,803,887,494 1,331,821,178 13,318, ,773 13,118, ,836,968,784 1,364,902,468 13,649, ,735 13,444, ,870,711,700 1,398,645,384 13,986, ,797 13,776, ,905,129,475 1,433,063,159 14,330, ,959 14,115, $1,940,235,605 $1,468,169,289 $14,681,693 $220,225 $14,461,467 $305,526,804 $4,582,902 $300,943,902 1 The amount shown as net tax revenue for debt service is not net of pass-through payments, which are subordinate to the debt service. 2

233 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION FISCAL CONSULTANT REPORT BACKGROUND The Project Area is located in the City of Camarillo ( City ) in Ventura County, California. The City is approximately 45 miles southeast of the City of Santa Barbara and 50 miles northwest of the City of Los Angeles. The City was incorporated in 1964 and encompasses an area of nearly 12,800 acres of land. According to ESRI Business Analyst and the U.S. Census, as of 2010, the City had a total of 65,201 residents and 25,702 housing units. The City Council of the City of Camarillo ( City Council ) adopted the Redevelopment Plan ( Plan ) for the Project Area on June 19, The Project Area is primarily comprised of commercial, industrial, and residential land uses. The total acreage of the Project Area is approximately 1,019 acres, nearly 8% of the City. The boundaries of the Project Area are illustrated in Figure 1 below. The Project Area includes the Ventura Boulevard commercial corridor (generally located between the Camarillo Town Center and Lewis Road), the industrial/manufacturing district located north of Pleasant Valley Road, and the Arneill Road commercial corridor (between Fiesta Avenue and the Ventura Freeway). The industrial district along Mission Oaks Boulevard and Lewis Road is also located in the Project Area. Project Area Boundaries Map Figure 1 Camarillo Corridor Redevelopment Project 3

234 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION FISCAL CONSULTANT REPORT RECENT CHANGES TO REDEVELOPMENT LAW Due to Assembly Bill x1 26 ( ABx1 26 ), upheld by the California State Supreme Court in December 2011, all redevelopment agencies were dissolved on February 1, This action implemented significant changes to the Health & Safety Code ( H&S Code ), including severe restrictions on any redevelopment activities, as well as changes to the method for collection and distribution of tax increment. For each dissolved redevelopment agency, a successor agency was created to wind down redevelopment activities and oversee payment of all valid debts, including bond indebtedness. When the Camarillo Community Development Commission was dissolved, the City of Camarillo elected to become the Successor Agency. Unlike redevelopment agencies, successor agencies are not allocated all tax increment generated by a project area. Instead, successor agencies are allocated available revenues in amounts necessary to pay valid debts, or recognized enforceable obligations, according to schedules created by the successor agency every six months. These schedules are known as Recognized Obligation Payment Schedules, or ROPS. All property tax formerly known as tax increment amounts are now collected by the Ventura County Auditor-Controller ( Auditor or Auditor- Controller ) and distributed pursuant to H&S Code Section Former tax increment is distributed in the following priority: (1) County and State administrative fees; (2) taxing agency ( pass-through ) payments; (3) successor agency debts, including bond debt, as identified on the ROPS; (4) successor agency administrative costs; and (5) remaining money is shared among the project area s affected taxing agencies. It should be noted that pass-through payments that were subordinated to bond issues remain subordinate under ABx1 26; however, an agency is required to demonstrate that funds are insufficient to otherwise make debt service payments in order to redirect those subordinated pass-through amounts to debt service. ABOLITION OF LOW AND MODERATE INCOME HOUSING SET-ASIDE Under ABx1 26 and Assembly Bill 1484 ( AB 1484 ) (together, the Dissolution Act ), the requirement for redevelopment agencies to set aside 20% of their annual tax increment revenue for affordable housing has been abolished. Only in the circumstance in which a successor agency has loans outstanding against their housing fund is it required that property tax revenues flow back to the successor agency s housing entity to be reserved for affordable housing. The effect of the abolition of the housing set-aside requirement in the Agency s case is to increase the available property tax revenue by the previously required 20% deposit. Pursuant to the Dissolution Act, 100% of the property tax revenue generated by the Project Area now goes into the Agency s Redevelopment Property Tax Trust Fund (RPTTF), thereby increasing the available revenue to cover debt service payments. TAX INCREMENT REVENUE VERSUS PROPERTY TAX REVENUE On a technical note, the Dissolution Act essentially eliminated the term tax increment and refers instead only to property taxes, though the process for determining the property tax amounts subject to the Dissolution Act is still determined in the same way as it was prior to dissolution, where a base year value is subtracted from a current year value. For the purpose of consistency with the Official Statement and Indenture, this Report uses the term tax revenue to refer to those property taxes generated in the Project Area from the assessed value above the established base year value. 4

235 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION FISCAL CONSULTANT REPORT REDEVELOPMENT PLAN LIMITATIONS The Plan contains certain time and financial limitations regarding the collection of tax revenue, incurring bonded indebtedness, and redevelopment plan effectiveness. These limits are identified in Table 2. Redevelopment Plan Limitations Table 2 Camarillo Corridor Redevelopment Project Plan Adoption June 19, 1996 Time Limitations Incur Debtedness June 19, 2016 Redevelopment Plan Effectiveness June 19, 2028 Increment Collection June 19, 2043 Financial Limitations Bonded Indebtedness Limit $151,877,460 (adjusted for CCPI through 2013) Source: Camarillo Corridor Redevelopment Plan, U.S. Bureau of Labor Statistics It is unclear whether the adopted limitations remain in effect, given the dissolution of redevelopment agencies. The conservative assumption is that the limitations do remain in effect. In a letter dated April 2, 2014, the California Department of Finance ( DOF ) stated that it considers limitations on the amount of tax increment revenue collected no longer applicable, but the letter made no mention of other time and financial limitations established in former redevelopment agencies project area plans, such as bonded indebtedness limits or time limits to collect tax revenue. Furthermore, county auditor-controllers ultimately determine whether to apply time and financial limitations; the DOF s authority allows them to only provide recommendations to county auditor-controllers on this matter. Pursuant to a Plan amendment in February 2008 that extended the time limit to incur debt and the Plan effectiveness time limit by two years, the time limit to incur debt is June 19, 2016 and the Plan effectiveness time limit is June 19, Consistent with H&S Code Section , the Agency shall not receive tax increment revenue to repay indebtedness after June 19, It is anticipated that 2014 TABS will be repaid by this date as detailed in the bond documents. Furthermore, the Plan for the Project Area establishes a limit of $100 million in principal amount on the amount of bonded indebtedness that may be outstanding at one time. This limit is adjusted annually by the Consumer Price Index ( CPI ) inflationary index; based on the changes in the Los Angeles-Riverside-Orange County (California) CPI for all items between 1996 (157.5) and 2013 ( ); the aggregate adjustment to this limit is approximately 51.88%, increasing the annual tax revenue limit to $151,877,460 as of As of the date of this Report, the Agency has a total of $59,320,000 in outstanding bond debt principal amount - $18,145,000 from the Series 2004 Tax Allocation Bonds, $25,225,000 from the Series 2006 Tax Allocation Bonds, and $15,950,000 from the Series 2009 Tax Allocation Bonds. Thus, the Agency s outstanding debt is $92,557,460 below this constraint. The Plan does not have a limit for the amount of tax increment revenue that may be collected by the Agency. 5

236 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION FISCAL CONSULTANT REPORT HISTORICAL ASSESSED VALUATION & REVENUES The ad valorem property tax system in California dictates that property taxes be based upon a 1% general levy tax rate applied to non-exempt local and state secured and unsecured assessed valuations. In accordance with the H&S Code and the Plan, the Agency collects tax revenue generated by increases in assessed valuation above the base year assessed valuation, or the assessed valuation at the time a project area is adopted. Each year, the local roll is released by the Ventura County Assessor ( Assessor ) to the Ventura County Auditor-Controller, who establishes the equalized assessment roll and provides a report of Project Area assessed valuations for the current fiscal year and base year. As reported by the County Auditor in , the FY base year assessed valuation for the Project Area is $472,066,316. Base year assessed valuations can occasionally fluctuate, often due to formerly exempt land uses being sold for private purposes or, conversely, private property purchased by a government becoming exempt. For example, in 2007, the base year value in the Project Area decreased from $472,197,182 to the current amount of $472,066,316 as a result of the removal of railroad unitary property from specific Tax Rate Areas in the Project Area, per Assembly Bill For the purposes of this Report, the Agency s tax revenues are projected based upon future assessed valuation in excess of the base year assessed value currently in use by the County Auditor. Table 3 provides a 10-year historical summary of assessed valuations in the Project Area. FY assessed value in the Project Area is 40% higher than it was in In the last five years, however, assessed values have changed only marginally; assessed values decreased slightly in FY and and increased slightly in FY , , and Historical Assessed Valuations Table 3 Camarillo Corridor Redevelopment Project Year Total %Δ from Prior Year %Δ from FY $845,083, ,855, % 7.2% ,065,818, % 26.1% ,103,242, % 30.5% ,169,001, % 38.3% ,151,787, % 36.3% ,180,925, % 39.7% ,152,615, % 36.4% ,163,489, % 37.7% $1,183,256, % 40.0% Source: County of Ventura Auditor-Controller 6

237 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION FISCAL CONSULTANT REPORT Table 4 on the following page provides a six-year historical summary of assessed valuations and tax revenues generated from the Project Area. Based upon current and base year assessed valuations provided in Table 4, the FY incremental assessed valuation is $711,189,963, which serves as the basis for the Revenue Projections. Note that, although the Project Area is not on the County s Teeter Plan (under which the County Auditor distributes billed amounts prior to full collections), the Project Area is paid 100% of their levy, according to the Auditor s office. Thus, the Project Area is not affected by delinquent tax payments. However, as Table 4 shows, gross actual revenue is typically not equal to gross estimated revenue; in some years, gross actual revenue exceeds gross estimated revenue, and in other years, the inverse occurs. According to the Auditor s office, this discrepancy is due to supplemental revenue and assessment roll corrections (ARCs). Supplemental revenue is the revenue generated from supplemental tax bills, which are issued when a property sale occurs or construction is completed after January 1 st (the Assessor s cut-off date for the next year s assessment roll). ARCs relate to values that were added to the assessment roll after it was finalized on August 20, the date by which the roll is required by law to be equalized; these roll corrections occur for any of a variety of reasons, including corrected exemptions and errors by the Assessor. Additionally, it should be noted that the pass-through payments (which are shown in Table 4 in order to calculate net actual revenue ) are subordinate to debt service. Thus, when submitting its ROPS to DOF for the ROPS B periods (during which tax revenue collected primarily in the first half of the fiscal year is spent in the second half of the same fiscal year following the County distribution on or around January 2 nd ), the Agency will request the entire amount needed to pay debt service to comply with covenants in the Bond Indenture. The County will subsequently need to pay pass-through payments and other enforceable obligations (and any amount of debt service requested for the prior period but denied due to a lack of sufficient tax revenue) during the ROPS A periods (during which tax revenue collected primarily in the second half of the fiscal year is spent in the first half of the following fiscal year following the County distribution on or around June 1 st ). Each year, the Agency receives about 68% of their tax revenue for expenditures during the ROPS B periods and 32% for expenditures during the ROPS A periods. 7

238 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION FISCAL CONSULTANT REPORT Historical Assessed Valuations & Tax Revenues Table 4 Camarillo Corridor Redevelopment Project %Δ %Δ %Δ %Δ %Δ %Δ from FY Secured 1 $979,964,467 $986,950,228 $1,019,076,742 $995,220,315 $1,013,040,560 $1,033,899,726 Unsecured 189,036, ,837, ,849, ,395, ,448, ,356,553 Total Assessed Value 1,169,001, % 1,151,787, % 1,180,925, % 1,152,615, % 1,163,489, % 1,183,256, % Less: Base Year 2 (472,066,316) (472,066,316) (472,066,316) (472,066,316) (472,066,316) (472,066,316) Incremental Assessed Value $696,934, % $679,721, % $708,859, % $680,549, % $691,422, % $711,189, % Tax Levy Rate 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Gross Estimated Revenue $6,969,350 $6,797,214 $7,088,595 $6,805,491 $6,914,228 $7,111, % Gross Actual Revenue $6,639, % $7,492, % $6,770, % $6,543, % $7,158,057 N/A Supplemental Revenue 1,449, , ,240 (355,920) 108,728 N/A Less: County Admin Fee (114,834) (102,017) (90,062) (102,622) (110,125) N/A Less: Subordinated Pass-throughs 3 (1,705,206) (1,924,713) (1,630,385) (1,926,501) (2,001,174) N/A Net Actual Revenue 4 $6,268, % $5,996, % $5,274, % $4,158, % $5,155,487 N/A % of Gross Estimated vs. Actuals 5 95% 110% 96% 96% 104% N/A 1 Secured values are net of non-homeowner exemptions and inclusive of $466,424 in public utility value. 2 In 2007, the Project Area's base year value decreased from $472,197,182 to $472,066,316 as a result of the removal of railroad unitatary property from certain TRAs per Assembly Bill The pass-through payments are subordinate to debt service. 4 Prior to dissolution, amounts shown were allocated to the Camarillo Corridor Redevelopment Project. Post dissolution, amounts are deposited into the Redevelopment Property Tax Trust Fund (RPTTF). 5 Although the Project Area is paid 100% of their levy, gross actual revenue is not equal to 1% of increment assessed value most fiscal years due to roll corrections and supplemental revenue. 6 Amount is not net of July 2012 AB 1484 tax increment true-up payment ($932,115). Sources: City of Camarillo, Ventura County Auditor-Controller 8

239 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION FISCAL CONSULTANT REPORT TOP 10 TAXPAYERS A significant concentration of assessed value in the Project Area is among the top 10 taxpayers. Top taxpayers were identified based upon property owners with the largest taxable assessed valuation recorded on the County Assessor s Equalized Assessment Roll. In the Project Area, the 10 largest taxpayers (shown in Table 5) own 43 parcels with a combined value of approximately $578 million, or 48.85% of the area s FY total taxable assessed valuation. Top 10 Taxpayers Table 5 Camarillo Corridor Redevelopment Project Taxpayer # of Parcels Land Use(s) Total Secured Assessed Value Total Unsecured Assessed Value Total Assessed Value % of Project Area FY Total Assessed Value % of Project Area FY Incremental Assessed Value 1 Chelsea Property Group 1 6 Commercial $271,039,020 $135,800 $271,174, % 38.13% Mission Oaks Blvd LLC 2 4 Industrial 60,782,589 97,500 60,880, % 8.56% 3 MF Daily Corporation 3 14 Commercial 56,581,775 1,214,200 57,795, % 8.13% 4 ESJ Centers LLC 4 10 Commercial 41,256,809 1,917,900 43,174, % 6.07% 5 WNG Camarillo 165 LLC 1 Multi-Family Residential 39,685, ,685, % 5.58% 6 Sphear Investments LLC 2 Industrial, Residential 30,622,034 22,000 30,644, % 4.31% 7 John P Scripps Newspapers 1 Industrial 17,691,648 7,753,100 25,444, % 3.58% 8 Edwards Theatre 2 Commercial, Parking Lot/Garage 16,630, ,630, % 2.34% 9 Palmetto Hospitality 1 Commercial 15,852, ,500 16,471, % 2.32% 10 Summit Hotel Properties 2 Commercial, Parking Lot/Garage $16,129,270 $0 $16,129, % 2.27% Subtotal 43 $578,031, % 81.28% Project Area FY Total Assessed Value $1,183,256,279 Project Area FY Incremental Assessed Value $711,189,963 1 Listed as CHELSEA GCA REALTY PART and CPG PARTNERS LP 2 Also listed as 3001 MISSION OAKS BLVD LLC and 3233 MISSION OAKS BLVD LLC 3 Listed as LAS POSAS PLAZA LP, CAMARILLO FINANCIAL PLAZA, DAILY PLAZA LLC, LAS POSAS PLAZA LP LESSOR, and PICKWICK FINANCIAL LLC 4 Also listed as ESJ CENTERS LLC LESSOR, ESJ CENTERS LLC LESSORS and ESJ CENTERS LLC LESSOR ET AL Note: Total values are exclusive of non-homeowner exemptions. (None of the top 10 taxpayers are currently subject to an exemption.) Source: County of Ventura Equalized Property Tax Roll (Received August 22, 2014) Descriptions of these taxpayers are presented below: 1. Chelsea Property Group is the taxpayer for six commercially zoned parcels within the Project Area. The 87-acre Camarillo Premium Outlets are located on these parcels, which have a total FY assessed value of over $271 million. The Camarillo Premium Outlets first opened in February 1995 and has been expanded six times, including in 2009, when the 242,000-square foot addition known as Camarillo Promenade was completed. The property currently includes about 674,000 square feet of retail space and 160 stores, including Neiman Marcus Last Call, Saks Fifth Avenue Off 5 th, and Barneys New York (please see the Appendix for a complete list of tenants). Chelsea Property Group is a real estate investment trust headquartered in New Jersey and is the leading owner, developer, and manager of Premium Outlet centers in the U.S. and Asia. In 2004, Chelsea Property Group was acquired by Simon Property Group, the largest real estate investment trust and shopping mall owner in the U.S. and a Standard & Poor s 500 company. Since then, Chelsea Property Group has operated as a subsidiary of Simon Property Group. Table 6 on the following page shows the total assessed value of the parcels in the project area owned by Chelsea Property Group since FY (the earliest year for which data is readily available). Since FY , the value of the parcels has increased each year. The FY total assessed value of the parcels is 35.8% higher than the 9

240 SUCCESSOR AGENCY TO THE CAMARILLO COMMUNITY DEVELOPMENT COMMISSION FISCAL CONSULTANT REPORT total assessed value in FY As of September 10, 2014, Chelsea Property Group has no outstanding assessment appeals that may alter the values in Tables 5 and 6. Top Taxpayer Historical Assessed Valuations Table 6 Camarillo Corridor Redevelopment Project Year Total %Δ from Prior Year %Δ from FY $199,683, ,726, % 2.0% ,920, % 14.1% ,400, % 27.9% ,997, % 30.2% ,231, % 32.8% ,575, % 35.5% $271,174, % 35.8% Source: City of Camarillo Comprehensive Annual Financial Reports ( through data), Ventura County Auditor-Controller ( data) Figure 2 below provides a summary of the remaining lease terms of all Camarillo Premium Outlet tenants. As shown, over 60% of the tenants have a remaining lease term of over four years. Remaining Lease Terms of Top Taxpayer Tenants Figure 2 Camarillo Corridor Redevelopment Project Less than 2 years 20% More than 4 years 62% 2-4 years 18% Source: Simon Premium Outlets 10