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HomeMy WebLinkAbout11 ENV INS CIP 7133 (FINAL)Complete Insurance, Inc. P.O. Box 10418 NewPort Beach, CA 92658-0418 City of Tustin, Tustin 300 Centennial Way Tustin, CA 92780 Invoice City of TUstin, Tustin Community RedeveloPment Agen 11/07/2002 Richard Hyland S,er i, . rro ['~5'~Y'~t for:' Invoice #57613 i TBD - Thankyou Client: City ofTustin, Tustin Community Redevel Policy #TBD 11/08/2002-11/08/2003 Indian Harbor Insurance Co 57613 11/08/2002 New business Pollution - New business 81,400.00 Taxes & Fees 2,646.00 ' ~' ' III i iii III III I1[I ii I iii i  ,TUSTIN PUBLIC WORKS DEPr .... RNANCE RE, D i iii ..... III I[11 IIII I[ I II I i i 84,046.00 lhank you C o m p lete In s u ran c e, I n c. iii!i'~iiiii?:iii~iii!;~t~i?.iiii? ?i 11/07/2002 AGENDA REPORT NO.' 11 '10-07-02 MEETING DATE: OCTOBER 7, 2002 180-05 R=7 TO: FROM: WILLIAM A. HUSTON, CITY MANAGER PUBLIC WORKS DEPARTMENT/ENGINEERING DIVISION SUBJECT: SUMMARY ENVIRONMENTAL INSURANCE FOR THE RED HILL AVENUE WIDENING PROJECT AT THE I-5 FREEWAY (ClP No. 7133) City Council authorization is required to secure environmental insurance coverage for property to be acquired on the southeast corner and southwest comer of the intersection of 'Red Hill Avenue · and El Camino Real (Wendy's and Starbucks, respectively), The City of Tustin is acquiring property at both comers to construct the Red Hill Avenue Widening Project at the I-5 Freeway (ClP No. 7133). RECOMMENDATION It is recommended that the City Council authorize staff to bind environmental insurance coverage from ECS Insurance 'Company for property to be acquired on the southeast and southwest corners of the intersection of Red Hill Avenue and El Camino Real, and to authorize a premium payment in the amount Of $84,046 (which includes taxes and fees), subject to City.Attorney approval of all carrier policy terms and conditions. FISCAL IMPACT The policy premium for environmental insurance coverage is $81,400 plus taxes and fees of $2,646 for a total cost of $84,046. The cost ofthe insurance is funded from CIP No~ 7133. BACKGROUND Construction of the Red Hill Avenue Widening Project at the I-5 Freeway is budgeted for construction in FY 2002-03. The project limits are Red Hill Avenue between El Camino Real and Nisson Road. This project requires right-of-way (ROW)from four parcels in the form of acquisition and/or Temporary Construction.Easements (TCE) as follows: APN 500-142-04 500-021-02 & 04 432-042-05 432-401-08 Owner & Description Makena (Starbucks) Pankey Trust (Wendy's) Mathis (Al's Woodcraft) Chevron (Gas Station) Type of ROW Required Acquisition & TCE Acquisition & TCE Acquisition & TCE TCE During ROW negotiations for the Wendy's site, the property owner (Pankey Trust) has requested that certain language changes be made to the City's standard Purchase .Agreement. The changes are related to the indemnification language under the Environmental Compliance Section of the Purchase Agreement. Since, the property owner is aware that all four comers of the intersection of Red Hill Avenue and El Camino Real are existing or former gas stations, the property owner does not want to indemnify the City for any hazardous materials Environmental Insurance for the Red Hill Avenue Widening Project at the i-5 Freeway October 7, 2002 Page 2 that may exist on his property either from the previous gas station or migration from the three other corners. Currently, a Mobil gas station operates at the-northeast comer, a Shell gas station operates at the northwest comer, the Wendy's site was previously a Chevron gas station and the Starbucks site was previously a Texaco gas station. The Starbucks site is presently owned by the Makena Great Amedcan Red Hill Company, LLC (Makena) and the acquisition required for construction of ClP No. 7133 has already been obtained from the owner. Staff has researched records at the Orange County Health Care Agency (OCHCA) and the available information shows that the OCHCA has active cases for hazardous materials releases for the existing Mobil and Shell gas stations. These materials releases are several feet below street grade level and should not affect construction of the City's widening project~ The OCHCA is actively monitoring the migration of material through the use of monitoring wells. The OCHCA also investigated the Makena and Pankey properties and determined that each of the two sites. was free of contaminated materials and the case files for both properties were closed. Copies of all OCHCA reports were forwarded to Complete InSurance, the broker that provided the Environmental Insurance for MCAS-Tustin. Through their efforts City staff has been given' an estimate for Environmental Insurance for the Red Hill Avenue Widening Project from the same insurance company providing the insurance for MCAS-Tustin, ECS Insurance Company. Because 'of the active cases by the OCHCA involving the Mobil and Shell gas stations, the Panke~ Trust is unwilling to sign a Purchase Agreement without their suggested language modifications to the Environmental Compliance section. The City Attorney has reviewed their suggested revisions and has made a few minor modifications. Based on discussions with the City's ROW agent, Cutler and Associates, the property owner will sign the Purchase Agreement as revised by the City Attorney. However, the City Attorney has recommended that the City obtain environmental insurance to protect the City against any risk. The recommended insurance coverage is for the .property to be acquired at the Wendy's and Starbucks sites and will limit the. City's exposure to any unknown environmental contamination discovered during construction, thus allowing the project to proceed in a timely manner. The insurance policy will also provide the same coverage if any unknown environmental contamination is disCovered after project completion but within the five year term of the policy. ECS Insurance Company has insured numerous projects for environmental contamination and understands thiS business as well or better than any other carrier and they have a lengthy history of performing at an extremely high level for their clients (i.e. claim responses, etc.). The policy is a 5-year policy that would provide $5,000,000 in coverage per occurrence and on the aggregate. Coverage protects the City against third party liability claims including on-site and off- site bodily injury and property damage; remediation expense from pollution conditions on, at or under or emanating from the covered locations; legal defense expenses in connection with remediati0n expenses, and contingent transportation expenses. There is a minimum $100,0¢(, deductible/retention amount per policy. Environmental Insurance for the Red Hill Avenue Widening Project at the !-5 FreeWay October 7, 2002 Page 3 Therefore, it is recommended that the City ·Council authorize staff to bind environmental insurance coverage with ECS Insurance Company for the property to be acquired on the southeast and southwest corners of the intersection of Red Hill Avenue and E! Camino Real for the Red Hill Avenue Widening Project at the I-5 Freeway. Director of Public Works/City Engineer Engineering Services Manager TDS:DRK:ccg:Enviro ins for Red Hill widening proj.doc. Attachments: Location Map Insurance Proposal · I I I 15841 13871 1.5891 ~3so2-15s5° 15852 (I-5) SANTA ANA FREEWAY .SSON ROAD' __ 14011 14021 ,, , 14031 14051 14061 14081. 14091 · 14101 I 14.062 14076 I '1 14O92 14102 ' I 14112 I - 14122 ! I I 14131 14.090 I1' 14108 14141 ,i i1~11 4.145 I '14122 14.151 2002 -' 2003 INSURANCE PROPOSAL FOR THE CITY OF TUSTIN Presented By Richard W. Hyland ~OMPI.~TE INSURANCE INC. California DOI # 04B"/'/62 1500 Qv_~_~! Street, Suite 410 Newport Beach, California 92660 www. completeinsurance.com 949.263.0606 September 16, 2002 THE CITY OF TUSTIN NAMED INSUREDS The City of TUstin ADDITION.a.L INSUREDS I£ required by written contract ~OMPLET~ INSURANCE LNCORPOP, ATED THIS I THIS iS A DISCLAIMER The forms which follow are for illustration purposes only in order to assist clients in purchasing insurance.' This proposal is intended to summ,rize the coverage, limits and deductibles offered by insurers. It is not intended to nor does it alter or amend the policies which are proposed. The policies are contracts which you as the purchaser must read. YOUR OPERATIONS/SERVICES The coverage outlined in the following proposal pages is based on and deteunined by the infonuation provided in the application(s) of insurance and on thc classifications/operationS as ( shown in this proposal. In order to comply with policy conditions that could affect coverage under the policies being quoted it will 'be necessary for you to notify our office if the operations of your company change or you expand the services you provide. Failure to do so could result in an uncovered claim.  OMPLETE INSURANCE INC. Prof~.~ionai Broker~ of Corntnercial insuran~ 'if (~GHLY PROFESSIONAL SERVICE WITH INTEGRITY ~Om~L~r~ INSU~CE INcom'o~Tm:~ WHAT THE INSURANCE BUSINESS RE TIONSHIP ENTAILS Role of Your Insurance Broker As your insurance broker, Complete Insummce Inc. (CII) will become your representative and advocate in the worldwide insurance marketplace. It is our responsibility to understand your operations, suggest insurance coverage~ negotiate your insurance contracts and place your insurance with the proper c, rriers. Additionally, CII assists in problem solving and will help you in the event a claim arises. In placing coverage, it is important to remember that insurance companies are profit- malting institutions and that their premiums are set to properly evaluate and underwrite risks. While k is CII's responsibility to obtain insurance protection for you on favorable terms and conditions, accurate infomtion and realistic goals are essential to successfully placing proper coverage. Purpose of Insurance The most important element of insurance selection is understanding what risks are being insured. ThOroughly identifying exposures and 'selecting proper coverage enables companies to avoid catastrophic loses and meet their fman~ goals. It is equally important to understand wha!i risks polities will not cover. CH recommends carefully reading polities and thoroughly reviewing coverage with your CII broker. In California, it is particul_-rly important to protect individual and company assets from c!,ims and actions by others. CII strongl7 recommends that only quality insurers be used for liability policies. Based on our experience, we also frequently recommend excess or umbrella policies to provide additional l/mits over primary liability coverage, and special policies to protect corporate officers and directors. Role of Your InsuranCe Carrier Your insurance Carrier enters into a contract with you to accept the risk of certain specified losses within the terms and conditions of the insurance policy issued. The following pages detail CII's insurance proposals for your business operations. Your CII broker developed this proposal using the specifications you requested. Please carefully review the proposal to confirm that the coverages are presented accurately. Because these specifications may differ from those provided b7 other brokers, we suggest analysis of coverages and nm merely policy costs. Should you have any'questions, please call your broker at 949.263.0606. FOR YOUR 'COMPANY'S INSURANCE NEEDS: 'COMPLETE INSURANCE INCORPORATED ' The importance of commercial insurance continues to rise as the risks of doing business change and grow. Incorporated in 1972, CII is a highly professional brokerage firm with the talent and depth of experience needed to meet the evolving challenges of business risk management. .. The broad array of insurers and insurance products through which finan~a! losses can be reduced or avoided is constantly changing. We understand the difficulty faced by business owners and managers trying to stay abreast of these developments. We know that the maze of coverage forms and legalese contained in nearly all insurance policies 'can be perplexing. That is why we provide, step-by-steP services to quantify risks, simplify insurance rhetoric, and place value-driven insurance programs designed especi_ully for your business. CII recognizes that risk management and insurance selection are fundamental to the fmanci~l security, and continued success of its clients. By providing professional risk management and insurance services, CII enables client management teams to focus on other factors essential to the growth and success of their businesses..CII is adept at working with companies that face unique exposures and difficult contractual issues. Our brokers and support staff play a important role in helping clients understand how insurance coverage applies and when insurers must respond. Every member of our staff is dedicated to maintuining the superior technical and market skills vital to success in the fast- changing world of commercial insurance. MEETING THE Lnaa3mlTY CHaZamNGE The liabilities assumed by employers and businesses in today's business world are numerous and require thorough consideration. These l/abilities involve claims arising from: bodily injury, property damage, employment practices, activities as a corporate director or officer, product performance, professional or contractual obligations, pollution, employee benefits and a host of other exposures. Business professionals must have confidence in the insurance decisions they make. Our recommendations and service involve professional iudgrnents as well as a defining relationship that goes beyond the initial purchase and premium calculations. CII clients can be assured that their insurance broker and carder(s) will respond promptly and appropriately to a myriad of issues throughout the policy year. We are always mindful that our clients depend upon us for professional work ' not guesswortd The insurance relationship requires that we make good iniri_u_l recommendations in the placement of coverage and continue to act on behalf of our clients and insurers. Our defining element is integrity ... our most valued asset is the mast our clients place in us. ~ol~LEr~ INS~CB L,~CO~)]~.'~i~ and for pzoviding accurate infomtion to all panics involved. As ptofessiona/bzokcrs, WCknOv~ that insurance policies .re legal contracts, which place obligations on both the purchase~ and the insurer. Insurance cannot be a guessing game when it is so crucial to the financial security of those who purchase it. Our standard is to furnish accurate, useful infommtion and advice in every phase of our services. To assure precision and reliability, we approach insurance problems in a step-by-step manner that Pr°duces dependable results for our clients. GROWING COMPANIES NEED COMPI~TE INSURANCE Growing companies need the insights and meticulous approach to insurance issues that CII offers. Our brokers and staff- all characterized by keen attention to detail- are experienced insurance professionals who know risk management and the insurance industry. We never lose sight of the fact that the quality of our work can be crudal at the time of a loss. We act quickly and deci'sively when needed. The challenge of insurance problems and meeting the needs of our clients are not simply chores for which we draw paychecks. Finding solutions for our clients is out passion - it's what makes our business interesting and worthwhile! With more than 1,400 clients, CII is recognized in the insurance industry as one of the leading independent brokerage/irms on the West Coast We are licensed in 16 states and ( routinely place insurance programs for clients with multiple state or worldwide operations. Many of our client companies deal with partio~!arly complex risk management obstacles, difficult product exposures and large construction projects. The confidence these companies have in CII demonstrates our capadty to successfully take on the most difficult insurance and risk issues. Prior to quoting risks, CII welcomes the opportunity to discuss market capabilities and target premiums with you. In doing so, we request assignment of markets preceding the submission of insurance applications. ~0~ INS~C]~ INCORPOI~.TED SPECIAL INSURANCE PROGRAMS Although CII is known for its Indt'~'dualljr Crat~tedinsurance Pmgrams, the company has special expertise in a number of business categories for which k offers spe~l or group insurance programs. In several of these business categories, CII's brokers have hands-on expe~ence actually working in the business or have developed expertise through special warning and knowledge. These categories inclUde: · Construction (general and speci, ky) · Banking · Technology companies [including Intemet Companies) · . Information and' communication systems · Intellectual property risks · Architects, Engineers, and Surveyors · Private schools and institutions · Auto dealers, suppliers and repair · Restaurant and hotel facilities .. · Wholesale food distribution · Crude oil production · Oil products transportation and distribution · Pipeline construction · Environmental remedi,fion activities · Heavy manufacturing · Furniture manufacturing and woodworking · Logis~s/Warehousing · Extended Care facilities for the elderly · Ambulance services · Large property The brokers and staff at Cot~rplete I#~ura#~ start with the premise that they .can meet the needs of clients better than other insurance brokerage Arms. We look forward to working with you and your company! CLIENT SERVICES As your Broker, Rich~d W. Hyland and CII ~epmsent:.The City of Tustin in the world insurance markets. In this role, we will present your interests and coordinate with insurance company underwriters, billing and accounting departments, claims departments and other insurance professionals. Sherrill Barron, Account Administrator, will assist in all day-to-day matters renting to the insurance coverage that has been placed. To assure dependable results, our professional team approaches insurance problems in a step-by-step system. For The City of Tustin, we wilk 1. Carefully review the nature of the financial risks and suggest the correct insurance or other protections which may be required. Please be aware that even the best insurance programs do not elimimte all of the risks. 2. Market your insurance aggressively among the more than eighty insurers with which CII places insurance. 3. Provide formal written proposals which explain the alternatives proposed. These presentations confirm underwri~g information and show the basis for premium determinations. CII prepares the most comprehensive proposals available among insurance brokerage firms. 4. Review insurance contracts to assist in determining whether the proposed insurance program meets the identifiable needs posed by the business risks. 5. Identify the CII staff members who will be servicing your policy needs. These staff members are charged with providing professional and timely responses once insurance is placed for our clients. 6. Schedule periodic stewardship visits with you in order-to review changes and speda! service needs. 7. Keep you abreast of insurance issues through CII's'highly informative newsletters, Risk Ma#ag~ and FinandalAdvisor, and other special topical mailings. Your broker, account administrator, and the talented team at CII tailor their services to meet your specific needs. Many special services are offered, including: Insurance Summaries At your written request, CII will prepare summaries of your insurance policies highlighting the coverage provided by the insurers. These are reference and discussion documents only. It should be noted that the actual policies issued by insurers define the coverage and set forth the terms, conditions and exclusions. Another goal of our service plan is to assist clients by preparation of insurance information documents, such as compute~zed vehicle fleet schedules or special accident reporting forms. · ~Om, LS'm INSm~'~C= INCOm~m~,T=D Certificates of Insurance CII will prepare Certificates of Insurance on your behalf for all parties doing.business with the entities we have insured. Original certificates are mailed to the requesting certificate holder within 24'hours unless specie! provisions are required. Copies are provided to 7ou for reference. Lists of each clients certificate holders are available to them upon request Contract Review As an on-going service, CII will ex~e leases, contracts, covenants, conditions and restrictions, reservations of easements, etc., as they relate to insurance events or liabilities for clients. In doin§ so, we are providing, advice with respect to insurance only. We are unable to provide legal opinions or interpretations. GENERA-L RESPONSE POIJGIES: WRITTEN CONFIRMATIONS ARE ESSENTZnL IN INSURANCE TRANSACTIONS PLAC~G COVERAGE AND AMEND~G POLICIES To the extent possible, CH creates a.written record of all communications regarding the placement of coverage and amendments to insurance policies it places. Please do not attempt to amend polities or provide policy change requests through the voice mail system. Only written recordst~rotect our clients and protect the insurers with whom we place coverage. Therefore, CII will request written confirmation of insurance program changes from our clients. If you require additional copies of our reporting forms, please contact us. Claims Response and Service One of the most important services provided by an insurance, broker is the response to claims. We submit claims forms to insurers and assist our clients in completing reports. Please be aware that certain claims must be submitted within reporting periods spedfied by the policy. Contact us immediately if you or your employees are involved in an acddent or receive a claim by a third party. IVorker's compensation dm'ms must be reported directly to the insurer ~ the employer. Once the initial report of a claim is received by the broker or account administrator, the ( ongoing steps to closing a claim are managed by CII's Claims Department. If you require information about a claim, please contact your account administrator. Written summaries of the status of client claims are avsilable through CII's computerized claims status system. WE'RE ALWAYS AVAILABLE TO SERVE YOU! Monday through Friday 8:30 a.m. to 5:00 p.m. (PST) Phone (949) 263-0606 Main Fax (949) 263-0906 See the Service Team Page for specific e-mail and fax information In case of emergency call the rapid response numbers provided by your broker headache? ha a Nmedy. It's quick, it's easy, and it will make you feel better right away. Now clients of comPlete Insurance Inc. (CII) can receive prompt and reliable answers to a variety of'legal queStions simply by calling our Legal A~sistance Helpline. The Helpline is staffed during busineSs hours MOnday' through Friday by the friendly and competent attorneys at the law Srm of Allie & Schuster. We at CII view this complimentary service as one more way to help you find the answers you need. The attorneys at Allie & Schuster are prepared to help you with: · Concerns related to lease issues · Indemnity.and hold harmless agreements · ' Claims issues induding the obligation to defend and .indemnify · Workers' Compensation discrimination claims ,· Contract review · Construction defect claims/issues · General business law · EmploYment labor issues · Wrongful termination, discrimination and harassment Clrs ~.Assimnce Helpline will provide quick answers to your basic qumTfions on a complimentary basis. More complex issues may req~ in-depth study, requiring that. a fee' be charged. Give our Hdpline a w--and cure your legal h~es today. H'elpline hours are 8:30 am to 4:30 pm (PST) MondaY through Friday. Be pr~ared to' ~tify you~elf as our client and give your company name when you call. Use of this service is reserved exclusively 3Cbr our clientele. Newport Beach, California · Phone 949.263.0606 · www. Completelmsurance. com DOI#0437762 Now our 'clients can receive immediate, personalized cotmseling on questions related to employment procedures and law just by c. lling our new Human Resources Management Helpline. The Helpline is staffed by a team of Human Resources experts (The Human Resources Management Network) and is COmplimentary to our clients. Counselors are prepared to help you with: · Pre-employment practices · Harassment · Compensation and ben~ m Inspection 'of personnel files · Pregnancy leave · Regulation compiJance m Discipline and discharge m ploYee relations · k9 Forms · Disability leave In~ addition, you'll receive access to forms, postings and legal analyses by mail or fax. You'll get professional advice on the implementation of HR programs, policies, procedures, legal trends and management practices~ .And to keep you updated, callers will · ": r ' ~ receive a newsletter containing current ., te~nical and legal information. Using the helpline is simple--so give it a try today! Human Resources Management Heipline 800.945.3812 Available to our clients only. Be prepared to identij) yourself . as our client and give your company name when you call. Then ask your toughest questiord Nc. Profess,onal Brokers of C;mmercial Insurance 1500 Quail Street · Nt'wport Beach, CA 92660 · 949.263.0606 www. C~mpletelnsttrance.com ~OMPL,E'I~ INS~CE INCOR. PORATt~ ACCOST SERVICE TEAM Broker Richaxd W. Hyland Account Manager She~11 Barton Claims Deoartrnent Ingdd Solver Employee Benefits Department Suzanne Pumell Ge~ Magnaghi Backup Assistance Kxisten Kang Bazbaxa Bums Emergency. Access Richaxd Hyland Voice: (949) 263-0606, ext 16 Fax: (949) 809-2334 Emaih RHyland~completeinsurance. com Voice: (949) 263-0606, ext. 19 Fax:' (949) 809-2342 Emaih SBax~on~completeinsurance.com Voice: (949) 263-0606, ext. 54 Fax: (949) 809-2325 Emaik ISeiver~completeinsurance.com Voice: (949) 263-0606, ext 52 Em~il: SPumell~completeinsu~ance.com Voice: (949) 263-0606, ext 58 ~.m.il: GMagnaghi~completeinsutance. corn Voice: Emaih Voice: Emaih (949) 263-0606, ext. 21 KKang~completeinsurance.com (949) 263-0606, ext 33 BBums~completeinsurance.com Home: (949) 551-1250 [ ~OMPLETE INSURANCE INC. i (GHLY PROFESSIONAL SERVICE MTH INTEGILITY ~OMI'LE'rE INSIJRANCI~ INCORPOI1ATIII) THE CITY OF TUSTIN POI.I.UTION AND REMEDIATION LEGAL LIABILITY POLICY CLAIMS MADE INSURER: BEST RATING: POLICY ~: INDIAN HARBOR INSURANCE COMPANY A+XV To BE DETERMINED COVERAGE A - POLLUTION LE~ !JiBILITY (PlJ.) - THIRD PARTY LEGAL LIABILITY CLAIMS INCLUDING ON - SITE AND OFF-SITE BODILY INJURY AND PROPERTY DAMAGE. COVERAGE B - REMEDIATION LEGAL I-IiBILITY- REMEDIATION EXPENSE FROM POLLUTION CONDITIONS ON~ AT~ UNDER OR EMANATING FROM THE COVERED LOCATIONS. COVERAGE C - LEGAL DEFENSE EXPENSE - LRGAL DEFENSE F_XPENSE ARISING FROM ON-SITE AND OFF-SITE LOSS OR IN CONNECTION WITH REMEDIATION EXPENSE. COVERAGE D - CONTINGENT TRANSPORTATION- PAYS FOR LOSS'OR REMEDIATION EXPENSE ASA RESULT OF A CLAIM FROM POLLUTION CONDITIONS ARISING FROM THE INSURED'S PRODUCT/WASTE DURING THE COURSE OF TRANSPORTATION. THE POLICY RESPONDS TO LOSS~ REMEDI~TION EXPENSE OR LEGAL DEFENSE EXPENSE IN EXCESS OF THE RETENTION AMOUNT. This insurance proposal md/or covcn~ summary docs not altcg.extmd ot m-~-nd the policy or pol;c/cs ~s/ssucd. ~:)MPLE'r]~ IN~URtN~ INCORPORATtl) POLICY ~ORM: COVt~RED LocATIONS: LIMITS OF LItBILITY: POLLUTION AND REMEDIATION LEGAL LIABILITY 1) PORTION OF PARCEL #13931 (M~m~NJt PROPERTY, ~J~rHER~ CONSTRUCTION IS CURR.HNTLY UNDERWAY FOR A STARBUCKS COFFEE SHOP) AND 2) PORTION OF pARcEL #13922 (PANm~ PROPERTY, WHERE:THERE IS CURRENTLY A WENDY'S RESTAURANT) OPTION A) $5,000,000 PER OCCURRENCE AND $$,000,000 IN THE AGGREGATE. OPTION B) $ $10,000,000 PER OCCUmU~NCE ~ $10,000,000 IN THE AGGREGATE SELF INSURED RETENTION: $100,000 PER OCCUmtENCE POLICY TERM OPTION- FIVE ($) YE/iRS OPTION - TEN (10) YF_X~S 1. 2. I.irnit of !.i_~bility - Each Loss, $5,000,000' $10,000,000 Remedi~_tion Expense or Legal Defense Expense l.irnit of Liability- total _AJI Losses Remediation .. Expenses or Legal Defense Expenses Retention SI00,000/Occ $100,000/Occ ' Pohcy Premium - 5 Years $81'400' $114,136' ... Policy Premium - 10 'Years $146,692* $205,686.* * Plus Applicable Taxes and Fees ~ 3.25% PREMIUMS ss This inmrmce proposal md/or covc-ra~ swram.~ does not alt~, ~'t~nd o~ s.,ma,.d the pollc~ or pollci~s ss issu~L Premium Indication Notes: · This indication is intended to be peelixninary, subject to xeceipt of review of fixrt, hex engineering data. · This p~emium indication is based on the ?~nl~ey and Makena paxcels being sold "as is". · The property will not be acquired by the City ofTustin tI~ough "eminent domain" ~ight. · An Easement agreement does not exist as respects the acquisition of these Cove~ed Locations. · This coveXage is based on the Wendy's Restaurant and Staxbucks Coffee Shop not being additional insu~eds. · It is XL Envi~onmental's und~standing that the~e is no indemnification agreements between c-~ent owners of Wendy's Kestaurant and the Staxbucks Coffee Shop and the pfio~ gasoline stat/on retailers on these same sims, scpaxate from the paxcels noted above. No~:, is thexe, o~ will thezc, be an7 indemnification between the Wendy's Kcstau~ant and the Staxbucks Co££cc Shop and the City of Tusfin £o~ puxchase o£ these paxcels of land fo~ the Redhill Avenue Koad Widening Project. · Coveeage is intended to apply only to pollution conditions including on-site and off-site remedi~tion expense, thixd part7 on-site and off-site bodily injury and propex'ty damage. · Coverage is not intended fo~ known pollution conditions o~ remedi~tion of fuel constituents at the covered locations. · Covexage is not intended fo~ pm-existing pollution conditions from the Wend7's Kcstauxant, thc Stazbucks Coffee Shop, o~ its prio~ owners. · Coverage does not include ongoing.~ operations performed eithe~ by thc Wendy's Kestau~:ant, the Staxbucks Coffee Shop. · Coverage is not intended to covez any pollution conditions arising from the opexations peffon'ned by the Contractors during the Construction Project, which shall include the act~_~l Redhill Avenue road widening. · _~ retroactive date of policy inception will apply for this project. · The final quotation ~ be valid for thkty (30) days at which time XL Envixonmental has the fight to re-evaluate the proposed program and premiums. · A completed PARIZ application would be needed prior to binding. To develop a more formal quotation, XL Environmental would need the following infOrmation: · Signed Final Copy of the Puxchase Agreement and G~ant Deed executed by the Prope~ Owners(s) and the City of Tustn, o~ as' feasible the Draft Purchase Agreement. · Written documentation that thexe ,re no pfio~ indemnification agreements between the ownexs of the Wendy's Restaurant and the Staxbucks Coffee Shop and the prior respective xetail gasoline station owners. · Legal descriptions of Paxcels comprising the Covered Locations. · Final Indemnification Agreements related to the ,southern paxcels'. · Written documentation that the City of Tustin has not waived any of its subrogation fights against any thixd parties. · Documentation that the City of Tustin has waived its fights of subrogation against the owne~ of the Wendy's and Staxbucks. · Confinnation of the timeframe of the Construction Project~ This insur~ce pxopossl ~nd/oe corel'age sunu-m~ does not ~lte~, extend o= amend the policy o~ policies ~s issued. l~OMPLETE INSURANCE INC. (~GHLY PROFESSIONAL SERVICE WITH INTEGRITY THE CITy OF TUSTIN PREMIUM SUMMARY Pollution and Remediation Legal Liability Policy (Five Years) $5,000,000 per occurrence and $5,000,000 in the Aggregate Additional Options Detuiled in Proposal $81,400 Subtotals: Taxes and Fees: Total Premium: $81,400 $ 2,646 $84,046 '~MI~ INSURANCl~ INCORPORATED BEST~S RATING CII attempts to avoid placing insurance with any insurance company of questionable financial or manage_Hal integ~ty. We use information obt-ined by the A.M. Best Company and other sources to monitor the character of the various companies. The A.M. Best Company, evaluates insurance companies on the basis of general management and assigns one of trine ratings: A++ and A+ = Superior C and C- = A and A- = Excellent D = B++ and B+ = Very Good E = B and B- = Fair F = C++ and C+ = Marginal S = Weak Poor Under Regulatory Supervision In Liquidation Paring Suspended Also considered by A.M. Best Company is the financial size of'insurance companies to which 15 categories are assigned: (In Thousands of Dollars) Class I Up to $1,000. Chss II 1,000. to 2,000. Class III 2,000. to 5,000. Class IV 5,000. to 10,000. Class V 10,000. to 25,000. Class VI 25,000. to 50,000. Class VII 50,000. to 100,000. Chss VIII 100,000. to 250,000. Class IX 250,000. to 500,000. Class X 500,000. to 750,000. Class XI 750,000. to 1,000,000. Class XII 1,000,000. to 1,250,000. Class XIH 1,250,000. to 1,500,000. Class XIV 1,500,000. to 2,000,000. Class XV 2,000,000. and above The size category is based on reported policyholders surplus plus conditional or technical reserve funds such as mandatory securities valuation reserve, other investment and operating contingency funds and miscellaneous voluntary reserves reported as liabilities. To make a clear distinction between a company's Beses Paring and ks Financial Size Category (FCS), the FCS is ( · represented by Roman numerals ranging from Class I (the smallest) to Chss XV (the largest). TI~ insurmce proposal md/or coverage sunmm~ does not ~ker, extra, d o: ~a~end the policy or policies ss issued. ~OMPLETE INSURANCE INCORPORATED THE CITY OF TUSTIN POLLUTION AND REMEDIATION LEGAL LIABILITY POLICY CLAIMS MADE INSURER: BEST tLkTING: POLICY TERM: INDIAN HARBOR INSURANCE COMPANY A+XV To BE DETERMINED COVERAGE A - POLLUTION LEGAL LIABILITY (PLL) - THIRD PARTY LEGAL LIABILITY CLAIMS INCLUDING ON - SITE AND OFF-SITE BODILY INJURY AND PROPERTY DAMAGE. COVERAGE B - REMEDIATION LEGAL LIABILITY - REMEDIATION EXPENSE FROM POLLUTION CONDITIONS ON~ AT~ UNDER OR EMANATING FROM THE COVERED LOCATIONS. COVERAGE C - LEGAL DEFENSE EXPENSE - LEGAL DEFENSE EXPENSE ARISING FROM, ON-SITE AND OFF-SITE LOSS OR IN CONNECTION WITH REMEDIATION EXPENSE. COVERAGE D - CONTINGENT TRANSPORTATION - PAYS FOR LOSS OR REMEDIATION EXPENSE AS A RESULT OF'A CLAIM FROM POLLUTION CONDITIONS ARISING FROM THE INSURED'S PRODUCT/WASTE DURING THE COURSE OF TRANSPORTATION. THE POLICY RESPONDS TO LOSS~ REMEDIATION EXPENSE OR LEGAL DEFENSE EXPENSE IN EXCESS OF THE RETENTION AMOUNT. This insurance proposal and/or coverage summary does not alter, extend or amend the policy or policies as issued. The insurance is subject to actual policy conditions and exclusions. ~OMPLETE INSURANCE INCORPORATED POLICY FORM: POLLUTION AND REMEDIATION LEGAL LIABILITY COVERED LOCATIONS: 1) PORTION OF PARCEL #13931 (1V~Ni PROPERTY, WHERE CONSTRUCTION IS CURRENTLY UNDERWAY FOR A STAR.BUCKS COFFEE SHOP) AND 2) PORTION OF PARCEL #13922 (PANKEY PROPERTY, WHERETHERE IS CURRENTLY A WENDY'S RESTAURANT) LIMITS OF LIABILITY: OPTION A) $5,000,000 PER OCCURRENCE AND $5,000,000 IN THE AGGREGATE. OPTION B) $ $10,000,000 PER OCCURRENCE AND $10,000,000 IN THE AGGREGATE SELF INSURED 'RETENTION: $100,000 PER OCCURRENCE POLICY TERM OPTION- FIVE (5) YEARS OPTION - TEN (10) YEARS 1. 2. Limit of Liability - Each Loss, $5,000,000 $10,000,000 Remediation Expense or Legal Defense Expense Limit of Liability - total All Losses Remediation Expenses or Legal Defense Expenses Retention $100,000/Occ a $100,000/Occ Policy Premium- 5 Years $81,400' -~ $114,136' Policy Premium- 10 Years $146,692' $205,686* * Plus Applicable Taxes and Fees ~ 3.25% This iruqurance proposal and/or coverage summary does not alter, extend or amend the policy or policies as issued. The insurance is subject to actual policy conditions and exclusions. ~OMPLETE INSURANCE INCORPORATED Premium Indication Notes: · This indication is intended to be preliminary, subject to receipt of review of further engineering data. · This premium indication is based on the Pankey and Makena parcels being sold "as is". · The property will not be acquired by the City of Tustin through "eminent domain" fight. · _An Easement agreement does not exist as respects the acquisition of these Covered Locations. · This coverage is based on the Wendy's Restaurant and Starbucks Coffee Shop not being additional insureds. · It is XL Environmental's understanding that there is no indemnification agreements between current owners of Wendy's Restaurant and the Starbucks Coffee Shop and the prior gasoline station retailers on these same sites, separate from the parcels noted above. Nor, is there, or will there, be any indemnification between the Wendy's Restaurant and the Starbucks Coffee Shop and the City of Tustin for purchase of these parcels of land for the 'Redhill Avenue Road Widening Project. · Coverage is intended to apply only to pollution conditions including on-site and off-site remediation expense, third party on-site and off-site bodily injury and property damage. · Coverage is not intended for known pollution conditions or remediation of fuel constituents at the covered locations. · CoVerage is not intended for pre-existing pollution conditions from the Wendy's Restaurant, the Starbucks Coffee Shop, or its prior owners. · Coverage does not include ongoing operations performed either by the Wendy's Restaurant, the Starbucks Coffee Shop. · Coverage is not intended to cover any pollution conditions arising from the operations performed by the Contractors during the Construction Project, which shall include the actual Redhill Avenue road widening. · A retroactive date of policy inception will apply for this project. · The final quotation will be valid for thirty (30) days at which time XL Environmental has the fight to re-evaluate the proposed program and premiums. · A completed PARLL application would be needed prior to binding. To develop a more formal quotation, XL Environmental would need the following information: · Signed Final Copy of the Purchase Agreement and Grant Deed executed by the Property Owners(s) and the City of Tustin, or as feasible the Draft Purchase _Agreement. · Written documentation that there are no prior indemnification agreements between the ' owners of the Wendy's Restaurant and the Starbucks Coffee Shop and the prior respective retail gasoline station owners. · Legal descriptions of Parcels comprising the Covered Locations. · Final Indemnification Agreements related to the "southern parcels". · Written documentation that the City of Tustin has not waived any of its subrogation fights against any third parties. · Documentation that the City of Tustin has waived its fights, of subrogation against the owner of the Wendy's and Starbucks. · Confirmation of the timeframe of the Construction Project. This insurance proposal and/or coverage summary does not alter, extend or amend the policy or policies as issued. The insurance is subject to actual policy condifons and exclusions. · This indication is intended to be pre~, subject to receipt of zeview of engineeri-g · This premium indication is based on the Pankey and Makena parcels being sold "as is". · The property.will not be acquired by the City of Tustin through "eminent domain" fight. · . An Easement agreement does not exist as ~es~ects the acquisition of these Coveted ' Locations. ·This coverage is based o- tiaa Wendy's R.¢stamant and Sta~bucks Coffee Shop aot..being addidoml · It is ~ En~imnmental's unde.~tan,ti-$ that the~e is no indemnification agreements between cu~ent o~-s of Wendy's Restama~t ~d the Statbucks Coffee_Shop aad the Fio~ paso]ina mtioa ~etaile~s,on these aame skes, separate f~--m the parCels.noted above. Not, is the~e, o= will there, be any ~dcmnification bctwe~ the Wendy's Restamam and the Sta~bucks Shop and the City of Tustin for purchase of these paxce~s of land for the Redhill Avenue, · Coverage is intended to apply only to pollution conditions mom_ ,-g on-sate an. on-sate ~emediation expense, third paxty on-site and off-site bodily inj~a~a_ d_?roperty damage. 3~ · Coverage is not intended t~or known ~ollution conditions o~Z~'~eme~tion of fuel ot me cove=a _,ocauon3. '%~.i-]K~ ur. · , . , 2~ ® Coverage is nor inteaded forgl"L~"xJ~fmg poilu'don conditions fror~ r/;le Wen~cly s [--~. the Starbucks Coffee Shop.~ 'v  . Coverage is not intended to covet ~fiy pollution conditions axisi~ from the operations perfomaed by the Contractors dnring the Co,nsmacJiort Pr, oiect, which shall include the actual Redhill Avenue mad widening. '~ t's i~ ~ · A ~etroactive date of policy inception will apply'for this project. · The final quotation will he valid fo~ thirty (30) days at which time XL Environmental has the right to ~e-evaluate the proposed program and premiums. . A completed PARLL application would be needed pzio~ to binding., To develop a more formal quotation, XL Environmental would need the followin~ ini'ormadon: ' ' ._. ~l · Signed FhaaI Copy of the Purchase Ag~eemeaat and Grant Deed executed by the ~Prop Owners(s) and the City of Tustin~ or as feasible the Draft Purchase Agreement. · .Written documentation that there a~e no prior indemmfication agreements between the owners of the Wendy's Resta~ant and the Starbucks Coffee Shop and the prior, respective retail gasoline station owners. · Legal descriptions of Pa~cel~ comprising the Cove~ed Locations.~-~ · Final Indemnification Agreements ~elated to the "southern parcels".~-'~' · Written doctmaentation that the City of Tustin has_not waived any of its subrogation rights · Do .tion that the Ci of Tu~tin has Ewed i~s riahts of subrogation agaimr the · The/m-aranee b ~lfiee~ to ~c0.~l policy co~di~ and exck~ior~, ~ TOTflL P.05 CITY OF TUSTIN · PUBLIC WORKS DEPARTMENT 300 CENTENNIAL WAY TUSTIN, CA 92780 FAX (714) 734-8991 Letter of Transmittal To: Christine Shingleton Date: October 2, 2002 From: Dana Kasdan ~ Project No. CIP No. 7133 File No. Re: Environmental Insurance Policy for the Red Hill Avenue Widening Project at' the I-5 Freeway WE ARE FORWARDING: STREET IMPROVEMENT PLANS FOR YOUR INFORMATION SIGNAL/STRIPING PLANS r"-] FOR YOUR FILES SPECIFICATIONS [-"]- PERYOUR REQUEST RETURNED' FOR CORRECTIONS FOR YOUR APPROVAL FOR YOUR REVIEW & COMMENT ~ ' FOR PERMIT REMARKS: Attached are comments from Lois Jeffrey on the Premium Indication Notes for the above referenced insurance policy. Her notations indicate that the City should have insurance'coverage for migration of contaminants to the subject sites (property to be acquired at Wendy's and Starbucks). In responseto her other comments: 1) a copy of the Makena Purchase Agreement was given to the broker, Complete Insurance Inc.;-2) the project specifications will include a section outlining the requirement for the Contractor to obtain Pollution Legal Liability insurance similar to the final language approved for the ValenCia/Armstrong project; and 3) Rich Hyland of Complete InSurance Inc., was contacted and it was his interpretation that by waiving rights of subrogation .against the owner of WendY's and Starbucks, the City is waiving its dght to sue both owners. S:\CIP Projects - Active\7133 - Red Hill Widen ECR-NissonV~,q uisition\Environmental Insurance CS 1 .doc WOODRUFF, SPRADLIN & SMART A PROFESSIONAL CORPORATION SUITE 8000 701 SOUTH PARKER STREET ORANGE, CALIFORNIA 92868.4760 TELEPHONE: (714) 558-7000 FACSIMILE: (714) 835-7787 [SENDER'S DIRECT FAX] [SENDER'S E-MAIL] FACSIMILE TRANSMITTAL FORM DATE: October 2, 2002 - FROM: LOIS E. JEFFREY [] CONFIDENTIAL 13 URGENT . ........ . ......, ...... , .,~,,.. .,... , ,. ~.. ~,; , ~ ...... IIII · i III I VENUE .WIDENING PROJECT- PROPOSAL FROM COMPLETE INSURANCE. 1:3 Please review and respond [] [] Pursuant to your request [] E3 For your review and approval [] Service by facsimile For your information and file Transmittal by facsimile CQMMENTS: [Comments]' ORIGINAL WILL BE SENT VIA: [] Mail [] Will not be sent 1:3 Overnigttt Mall CI Messenger -- WARNING TO RECIPIENT -- THIS MESSAGE 18 INTENDED ONLY FOR THE Utile OF THE INDIVIDUAL OR ENTITY TO WHICH IT I~ ADDRESSED.' AND MAY CONTAIN INFORMATION THAT 18 PRMLEGED. CONFIDENTIAL AMI3 E. XEMI~ FROM DISCLOSURE UNDER AINN. ICABLE LAW. IF THE READER OF TMI~ MES6AGE IS HOT THE INTF, NDED RECIPIENT, 'OR THE EMPLOYEE OR AGENT RESI~ONSIBLE FOR I~i. JVERING THE ,U_cSSAGE TO 7111; INTraNOED RECIPIENT, YOU AR~ HERE~Y HOTI~ED THAT ANY DIS,~EMINATION, OlETRIBUllON OR COPYING OF Ti~; COMMUNICATION ;S STRICTLY PROHIBITED. !; YOU HAVE RECEIVED THIS COMMUHICATION IN ERROR. I~LEA~E NOTII~f U~ IMMEDIATELY BY COLLECT CALL. AND RETURN THE ORIGINAL OR THE FACSIMILE TO US AT THE ABOVE AODR~ VIA THE U.8. I;O,TTAL,SERVICE. THANK YOU. Client/Matter Name: _[_Client/Matter Name] Total Pages (Including this form): [Pages] T~me I File No.: [File No.],., NOTE: If you do not receive all pages, please call (714) 558-7000 immediately cn'Y OF TUSTIN PUBLIC WORKS*DEPARTMENT 300 CENTENNIAL WAY TUSTIN,. CA 92780 FAX.(714) 734.8991 Letter of Transmittal - : -- TO: Lois Jeffrey Date: September 25, 2002 From: Dana Kasdan ~ Project No. CIP No. 7133 File No. Re: Environmental InSurance Policy for the Red Hill Avenue Widening Pr, o)e~ at the I-5 Freeway WE ARE FORWARDING: STREET IMPROVEMENT PLANS SIGNAL/STRIPING PLANS' FOR YOUR INFORMATION ; FOR YOUR FILES SPECIFICATIONS PER YOUR REQUEST [-'"] RETURNED FOR CORRECTIONS ~'~ FOR YOUR APPROVAL FOR YOUR REVIEVV & COMMENT ~ FOR pERMIT REMARKS: '. Attached are three pages from the Insurance Proposal from Complete Insurance, Inc. for the above referenced project. Christine Shingleton has' requested that you review and comment on the three pages, especially on the Premium Indication Notes on the last page.- If you require any additional information or have any questions please call me at 714.573,3171. RECEIVED SEP 3 0 Z00Z WOODRUFF, SPRADLIN & 8UART S:~IP Projec~ -'Aclive'~7133- Red Hill W~.,n ECR-Nis~onV~lUisilion~.nvironmen~ Insuranc~ LJ.do~ ~'OM~L~'E I.N'~c~ INCORPO~TT-D THE CITY OF TUSTIN PO!J~UTION AND RI~IVIEDIATION LEGAL LIAItlLITY POLICY CLmMS MADE INSURER: BEST RATING: PoI~CY TERM: INDIAN HARBOR INSURANCE COMPANY A+XV · TO BE DETERMINF. D COVERAGE A - POLLUTION _L~GAL LIABn.rrY (pII,) - THIRD PARTY LEGAL uta~.mrr~ c~s ~cLm~iN~ oN - srr~ m,m om~-srrv. ~onm¥ nvjxmx ara> PROPERTY DAMAGE. COVERAGE B - RI~MEDIATION LEGAL LKABIT.tTY - REMEDIATION EXPOSE FROM, POIJ.IJTION CONDITIONS ON, AT~ UNDER OR EMANAIING FROM TIlE COVF./I~ LOCATIONS. COVERAGE C - Ira-GAL DEFENSE EXPENSE - LEGAL DEI=~BtSE EXPENSE A.RISING FROM ON-SITE AND OFF-SITE LOSS OR IN CONNECTION ~TH REMEDIATION EXPENSE. COFERAGE D - CONTINGENT TRANSPORTATION = PAYS FOR LOSS OR REMI~DIATION EII~ENSE AS A RESET OF A CLAIM FROM POLLUTION CONDITIONS ARISING FROM THE INSURF. D~S PRODUCT/WASTE DURING THE COURSE OF TRANSPORTATION. THE POLICY RESPONDS TO LOSS) REMEDIATION EXPOSE OR LEGAL DEFt~SE EXPENSE IN EXCESS OF THE RETENTION AMOUNT. · __ POLICY FOEM: POLLUTION AND R,E~D~TION LEGAL LIABILITY COVEREDLOCATIONS: · 1) PORTION OF PARCEL ffL3931 (~X PROPERTY, WHERE CONSTRUCTION IS CURRENTLY UNDERWAY ~o~ x ST,~U~C~ COF~.]~ SHOP) re,rD 2) PORT~ON OF PARCEL ~1392,?, (P~Y PttOPF.,Ra'Y, WHERETHERE IS CURRENTLY ~WEI~TDY'$ Lmfl'rs oF L~nxrY: OV'r~ON ~.) $5,000,000 ~'~R OCCtrRRENCZ~ XZ,a) SS,O00,O00 ~ O~zoN a) $ $10,000,000 P£a oceu~ca~ ~ $I0,000,000 IN THE AGGREGATE SELF INSU~]3 RIET~ON: $1.00,000 PER OCCURRIENCE POLICY TERM OmoN- Olr~ION -' 'I~"N (10) ~ Limit of Liability - Each Loss, ' $5,000,006 $10,000,000 Ramaediation Expense or I~,i~ Defense Expense ..... Limit of Liability - total All Losses Remediadon _Expenses or Legal Defense Expcascs . _ Ketendon . $100,000/0cc $100,000/0cc' · -Policy Premium z 5 Years .... $$1,400' , $114,136* _ policy Pxemiurn - 10 Yeaxs $146,692' $205,686*' PREMIUMS- This inmmn~ pmpo~d ~=d/~ cov~m~ ~ do~ ,,,,t ~a~r, ~ m ~ me p.olicr or poti~tes ns ismn~' The inmmice is :ubi~'t to -__~e~__,~! policy c. ondiions ami ~xdu,io~. Premium Indication Notes: ·. This indication is intended to be pre~, subject to receipt of review of gzrrher engmeexi~g This premium indication is based on the Pankey and M~kena parcels being sold "as is". The property will not be acquired by the City of Tustax through "eminent domain" rib4xt, An Easement agreement does not exist as respects the acquisitioa of these Covered ' Locations. This coverage is based on the Wendy's Kestauraar and Starbucks Coffee Shop not.being additional insurers. It is XL Envimnmentars undentandi~ that there is no indmmificafion agmemems between ctu:rent owners of Wendy's Restaurant and thcLStarburks Coffee_Shop and thc prior gasoline station retailers on these s~me sites, separate frt-m the paxcels noted above. Nor, is there, will there, bc an¥indemnificaton between the Wendy's Restaurant and the Staxbucks Coffee Coverage isintended to' ~pply o~y to pollution conditions ificludiag on-site and off-sire remediation expense, third paxty on-site and off-fire bodily injury md property durn~ge. Coverage is not intended for known O°ll,ution conditions or remediation of fuel constituents Co.crage is not inten&a for pretexistiag polI~oa conditions frg~ ~e w~ay's . Restaurant, the starbucks Coffee ShoP, or irs prior owners.'Y~~~w~ '( Coverage'al°es not, elude ongoin,,g op~tiom ~rformea either by the. Wendy's the Starbucks Coffee -Shop.~ '~ ' Coverage is not int~nded to cover ~y pollution cottditions arisitrg from the operations performed by the Conttacto~ &,lng the Conrcructior~ Project, which shall include the actual Redhill Avenue road widvni.g, "~'0~ cs. ~ ~ A retroactive date of policy inception will apply for this project The final quotation will be valid for t. Nny (250)days at wNc. h time XL Eavixonmcaml has the fight ro re-evaluate the proposed program and ptemitum. A completed PARLL application would be needed prior to binding, To develop a more formal quomtion~ XL Environmental would need' the following infommtion: · Signed Final Copy of&e Purchase Agreement and Grant Deed,executed by the Property Owmexs(s) and the ~.ty of Tustin, or as.feasible the Draft.Purchase -Agreement · Written documentatiOn that theae, are no prior indemrdfication agreements between the owners of the Wendy's Restaurant and the Starbucks Coffee'Shop and the prior, respective remi1 gasoline station owners. · Legal descriptions of Parcel~ comprising the Covered Locations. · Find Indernnit:ihafion Agreements related to the "southern parcels". · Written doo'~mentation that the City ofTustin has~ot waived any of its su.brggafion fights Do~n t/fiat the City of Tu~_fin has~~d its fights of subrogan_'on a~inst the ~ o~~__r--oa~h_e~mbuc_~.~../-- , ~s.,t,..~'~ Public Works / Engineering October 1, 2002 City of Tustin 300 Centennial Way Tustin, CA 92780-3715 (714) 573-3150 FAX (714) 734-8991 Mr. Brett McGovern XL Environmental 520 Eagleview Blvd. P.O. Box 636 Exton, PA 19341-0636 Re: Environmental Insurance Policy for the Red Hill Avenue Widening Project at the I-5 Freeway Dear Mr. McGovern: The following information and documentation was requested by XL Environmental for the above referenced insurance policy: . Attached is a signed Final Copy of the Purchase Agreement and Grant Deed executed by the Makena Great American Red Hill Company, LLC for property acquisition at the Starbucks site. . Attached is the Draft Purchase Agreement for property acquisition at the Wendy's site. A signed Purchase Agreement and Grant Deed have not yet been executed by the property owner. , To the best of our knowledge, there are no prior indemnification agreements between the owners of the Wendy's Restaurant and the Starbucks Coffee Shop and the prior respective retail gasoline station owners. 4. Legal Descriptions for the Wendy's and Starbucks sites are attached. , Reference is made to Final Indemnification Agreements related to the "southern parCels''. We understand these to be the Chevron Gas Station and Al's Woodcraft located at the intersection of Red Hill Avenue and Nisson Road. No acquisition is required at the Chevron Gas Station. Therefore, we do not have a Final Indemnification Agreement for this property. A signed Purchase Agreement and Grant Deed for the Al's Woodcraft property have not yet been executed by the property owner. We have attached a copy of the Draft Purchase Agreement. Mr. Brett McGovern Environmental Insurance Policy for the Red Hill Avenue Widening Project at the I-5 Fwy October 1, 2002 Page 2 , , The City of Tustin has not waived any of its subrogation rights against any third parties. The City of Tustin has waived its rights of Subrogation against the owners of Wendy's and Starbucks. , It is anticipated that construction of the Red Hill Avenue Widening Project at the I-5 Freeway will begin in February 2003 and' continue to the end of May 2003. If you require any additional information or have any questions please contact me at 714.573.3171. Sincerely, , ,,2 ~ Dana R. Kasdan Engineering Services Manager C: Christine A. Shingleton Lois Jeffrey Tim D. Serlet Dennis Jue S:\CIP Projects -Active\7133 - Red Hill Widen ECR-NissonV~quisition\Environmental Insurance XL Environ.doc AGREEMENT-TO PURCHASE REAL PROPERTY TUSTIN, CALIFORNIA THIS AGREEMENT is entered into'this [c-~~ day offj~Zj~ ., 20D~, by and among the City of Tustin, a municipal corporation (h~r~inafter "City"), and The MAKENA GREAT AMERICAN RED HILL CO., LLC, a CALIFORNIA LIMITED LIABILITY COMPANY (hereinafter "Seller"). RECITALS 1. Seller owns improved real property at .1450 El 'Camino Real, Tustinl California, which is shown on Exhibit "A" (hereinafter referred to as the "Property"). Exhibit "A" is attached hereto and is incorporated herein by this reference. 2. The City desires to. acquire the Property fora potential future public purpose. 3. The Seller desires to sell the Property to the City. NOW, THEREFORE, in view of the above-recitals and mutual promises and covenants contained herein, the parties agree as follows: AGREEMENT Section 1. Sale/Purchase of Property On the terms and Conditions set forth herein, - Seller agrees to sell the Property to City and City agrees to purchase the Property from Seller. The total purchase price, payable in cash through escrow, shall be Ninety Two Thousand Three Hundred. Twenty Seven and No/100 Dollars ($92.,327.00). In exchange for receipt of this amount,' Seller releases City of any and all claims by Seller under the United States Constitution Amendments 5 and 14, and for any and ali claims under state iaw~ including but not limited to claims for relocation benefits and loss of goodwill. Section 2. Timeframe for ComPletion..ofObligations/Escrow This sale shall be consummated.through an escrow. As soon as poSsible after this Agreement is executed, City and Seller shall open an escrow in accordance with this Agreement at First American Title Insurance Company ("EScrow Holder") ("Open EscroW"), 2 First American Way, Santa Ana, California, 92707, Attention: Maria Mena ("Escrow Officer"). This Agreement, along with Exhibits "A,"-"B," and "C" attached hereto, constitutes the joint escrow instructions of City and SelLer to the EsCrow Holder, which may be supplemented by escrow holders form agreement. As soon as possible after opening of escrow, Seller shall execute the grant deed attached hereto as Exhibit "C" and inCorporated herein by this reference, and shall deposit the deed with the Escrow Officer. N:\WP\DOC\ I 11/12/01 Subject to the conditions described in'Section 8; City shall deposit into escrow the sum set forth in Section I above, payable to Seller. The closing date for the escrow shall be no later than thirty (30) days after opening of escrow, unless such date is extended by written agreement of the parties. "Close of Escrow" shall be the date when.the grant deed to the City is recorded. Except as provided in Section 8, City shall pay escrow and closing costs. City shall also pay the costs of the ALTA title insurance referenced in Section 8.1. Section 3. Warranty Against Easements Not of Record To the current, actual knowledge of Seller, Seller warrants to City that asof the date of this Agreement-and as of the date of close of escrow, Seller has not granted any unrecorded easements or licenses on the Property. Section 4. Warranty of No Governmental Action To the current, actual knowledge of Seller, Seller Warrants that there is not now, and .as of close 'of escrow, there will not be, any violation of any law, ordinance, rule, or administrative or judicial order affecting the Property, nor is there any judicial order affecting the Property, nor is there' any condemnation, zoning change, or other proceeding or action (including legislative action) pending, threatened, or contemplated by any governmental body, except City, authority, or agency that will in any way affect the size or use of, improvements or construction on, or access to the Property by City. This warranty does not apply to governmental action where notice has not been provided to Seller. Section 5. Warranty Against Contracts Concerning Property To the current, actual knowledge of Seller, Seller warrants that as of the date of this Agreement and as of close of escrow, Seller has not entered into any contracts, leases, licenses, commitments, or undertakings respecting the Property, or for the performance of services on the Property, or for the use of the Property or any part of it or any agreement or · contract of any kind pertaining to the Property by which City would become obligated or liable .to 'anyone. SectiOn 6. Warranty Against Violations To the current, actual knowledge of Seller, Seller warrants and represents that as of the date of this Agreement and as of close of escrow, Seller has no notice or knowledge of any violation of any statute, ordinance, regulation or administrative or judicial order or holding, whether or not appearing.in public records, with respect to the Property or any improvements on the Property. N:\WP\DOC\ 2 11/12/01 Section 7. 'Environmental Complian'ce ' 7.1 Seller warrants.and represents that, du. ring the time in which Seller has owned the Property, neither Seller nor, to the current, actual knowledge of Seller, any third party, has used, generated, manufactured, produced, stored or disposed of, on, under, or about the Property or transported .to or from the Property any hazardous materials, including .without limitation, flammable materials, explosives, asbestos, radioactive materials, hazardoUs wastes, toxic substances, or related injurious materials, whether injurious by themselves or in combination with other materials. To the current, actual knowledge of Seller there is no proceeding or inquiry by' any governmental authority, including without limitation, the California or Federal Environmental Protection Agency or the California State' Department of Toxic Control, or state or regional water quality board, · .with respect to the presence of such hazardous materials on the Property ortheir migration from orto other property. For purposes of this Agreement, the term "hazardous materials" shall include but not be limited to substances defined as "hazardous substance," "hazardous materials," or "toxic substances" in the Comprehensive Environmental Response, COmpensation, and Liability Act of 1980, as amended (Title 42 United States Code Sections 9601-9675); the Hazardous Materials Transportation Act, as amended (Title 49 United States Code Sections 1801-1819); the Resource Conservation and Recovery Act of 1976, as amended (Title 42 United .States Code Section 6901-6992k); and any substance defined as "hazardoUs waste" in .Health and Safety Code Section 25117 or as "hazardous substance" in Health and Safety Code Section 25316, and in the regulations adopted and publications promulgated underrthese laws. 7.2 Seller hereby agrees to indemnify; protect, hold harmless, and defend City, its council members, officers, employees, agents, from and against any and all loss, expense, damage and liability, including-without limitation (1) all foreseeable and unforeseeable consequential damages, directly or indirectly arising' from the use, generation, storage, or disposal of hazardous material on the Property by Seller, Seller's tenants, or other person using the Property with Seller, s actUal knowledge or consent; and (2) the cost of any required or necessary repair, cleanup, or detoxification and the preparation of any closure or other required plans., regardless, of whether'such action is required before or after the close of escrow, but only to the extent that such liability is attributable, directly or indirectly, to the presence or use, generation, storage, release, threatened release, or disposal of hazardous materials by Seller, Seller's tenants, or other person using the Property with Seller's consent or' actual knowledge that occurred while Seller owned the Property. Seller's indemnity shall Survive close of escrow. 3 11/12/01 N:\WP\DOC\ 7,3 From and after Close of Escrow', City agrees to indemnity, protect, hold harmless and defend Seller from and against any and all loss, expense, damage and liability, including without limitation (1) all foreseeable and unforeseeable consequential damages, directly or indirectly arising from the use, 'generation, storage, or disposal of hazardous material on the Property by City; and (2) the cost of any required or necessary repair, cleanup, Or detoxification and. the preparation of any closure or other required plans, -but only to the extent that such liability is attributable, directly or indirectly, to the presence or use, generation, storage, release, threatened release, or disposal of hazardous materials on the Property by City. City's indemnity shall survive close of escrow. Section 8. City's Obligations is Subject to 'Conditions City's obligation to perform this Agreement is subject to City's approval of the condition of title, described in Sections 8.1 and 8.2, City's approval of the condition of the Property described in Sections 8.3, and no breach of representations, as described in Section 8.4. 8.1 First American Title Insurance Company shall be able to issue in favor of City an ALTA standard owner's policy of title insurance dated as of close of escrow with liability not less than the purchase price, covering the Property, showing title vested in City, and showing as exceptions only current general and special real property taXes, bonds and assessments not yet delinquent, and the exceptions to title that City has approved. 8.2 Promptly, upon opening of escrow, Escrow Holder shall furnish City with a title commitment for an ALTA title policy and legible copies of all documents reported as exceptions in it ("Title Documents"). City shall notify Seller and Escrow Holder in writing within ten (10) days after receipt of the title commitment'and the Title Documents of City's disapproval of any exception in those documents. If any supPlemental title commitment or supplemental Title Documents are submitted,' then City shall notify Seller and Escrow Holder in writing within ten (10) days after City's receipt of such items, but not later than the date mutually agreed upon by the parties in writing for the Close of Escrow, of City's disapproval of any title exception set forth therein. Failure of City to notify Seller and Escrow Holder in writing of City's disapproval of any' title exceptions shall conclusively be considered as City's approval of same. If City disapproves any title matter referred to in this paragraph, then, at City's option, this Agreement and the escrow shall be canceled, and in such event all funds or other things deposited by City shall be returned to City immediately on demand, and City shall pay all title company and escrow charges. 8.3 City shall pay for a Property Condition Inspection by a competent inspector selected by the City. City's obligation to close escrow is contingent upon City's approval of the condition of the Property at it's sole discretion.' N :\WP\DOC\ 4 11/12/01 8.4. If there is a breach of any represehtation or warranty given by Seller pursuant to this 'Agreement that is discovered by City before close of escrow, then City may nevertheless elect to proceed to close the escrow, in which event City shall be deemed to have elected to waive such breach, or City may elect to terminate this Agreement and.the escrow, in which event this Agreement shall be canceled. If this Agreement and the escrow are terminated by City's election underthis paragraph, then all funds or other things deposited by City,.if any, shall be returned to City immediately on demand, and Seller shall pay all title company and escrow charges. Section 9. Warranty Against Litigation Concerning the Property 'Fo Seller's current, actual knowledge, as of the date of this Agreement and as of Close of Escrow, no litigation is or will be pending against Seller regarding the use, operation, development, condition or improvement of the Property, or regarding any right, title or interest in the Property. Section 10. Threat of Condemnation · Seller and City acknowledge that the purchase and sale of the Property has been negotiated under the threat of condemnation of the Property by the City. In the event of Seller default,'.City's ability t© perform is prejudiced. Accordingly, in the event the escrow fails to close by reason of a default by Seller, Seller agrees: A. That the public interest and necessity requires the acquisition ofthe Property. B. That the Seller waives any claim to' severance damages and goodwill under any eminent domain proceedings commenced at any time hereafter by the City of Tustin with respect to the Property. C. That the Seller waives any claim to any relocation assiStance in any eminent domain proceedings commenced by the City of Tustin with respect to the Property. D. Seller acknowledges that in waiving these claims they have not~elied on any representations or statements' made or said by-City, its agents, attorneys or other representatives. Section 11. Attorneys' Fees If any party files an action or brings any proceeding against the other arising from this Agreement, or is made a party to any action or proceeding brought by the Escrow Holder, then as between City and Seller and City, the prevailing .party shall be entitled to recover as an element of its costs of suit, and not as damages, reasonable attorneys' fees to be fixed.by the court. The "prevailing party" shall be the party.who is entitled to recover its costs of suit, whether or not suit, proceeds to final judgment. N:\WP~0C\ 5 11/12/01 A party, not entitled to recover its costs sh~ll not recover attorneys' fees. No sum for attorneys' fees shall be included in calculating the amount of a judgment for purposes of deciding whether a party is entitled to its costs or attorneys' fees. Section 12. Warranties to Survive Close of Escrow All warranties, covenants, and other obligations stated in this Agreement shall survive close of escrow. All warranties, covenants, and other obligations that the City discovem to be breached befOre tender of the deed, and'that City either expressly waives or does not object to .before such tender, shall not survive tender of the deed. Section 13. Binding on Successors. Except as otherWise provided herein, this Agreement inures to the benefit of, and is binding on, the parties, their respective heirs, personal representatives, successors, and assigns. Section 14. Integration Clause This Agreement constitutes the entire agreement among the parties and supersedes all prior discussion, negotiations., and agreements whether oral or written. Any amendment to this Agreement, including an oral modification supported by new consideration, must be reduced to writing and signed by all of the parties before it will be effective. Section 15. No Representation Regarding Legal Effect' of Document No representation, warranty, or recommendation 'is made by Seller or City or their respective agents, employees, or attorneys regarding the legal sufficiency, legal effect, or tax consequences of this Agreement or the transaction, and each signatory is advised to submit this Agreement to his or her respective attorney before signing it. Section 16. Counterparts This Agreement may be eXecuted in counterparts, each of which so executed shall, irrespective of the date of its execution .and .delivery, be deemed an original, and all such counterparts together shall constitute one and the same instrument: N:\WP\DOCi 6 11/12/01 Section 17. Time.is of the Essence Time is of the essence of this Agreement, and failure to comply with the time provisions of this Agreement shall be a material breach of this Agreement. Executed on the date first above written. ATTEST: .~~'~l~tym~ll~t°ke r APPROVED AS TO FORM: City Attorney CITY OF TUSTIN SELLER THE MAKENA GREAT AMERICAN RED HILL COMPANY, LLC, A CALIFORNIA '11/12/01 7 N:\WP~DOC\ EXHIBIT A Legal Description of Property 11/12/01' 8 N:kWP~DOC\ · Ex im ' "A" LEGAL DESCRIPTION. o' THAT PORTION OF THE SOUTHWESFI'ERLY HALF OF.LOT 31 OF PLAT NO. 1 .OF THE RANCHOS ' 'SANTIAGO .DE SANTA ANA" AND 'SAN JOAQUIN," AS SHOWN ON MAP RECORDED IN BOOI~$, PAGE 7 OF. MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, 'CALIFORNIA, INCLUDED' · WrrHIN'.THE EXCEPTION DESCRIBED IN'DEED TO THE STATE OF'CALIFORNIA, (PARCEL 251) RECORDED IN BOOK 2~!24, PAGE 52;~ OF OFFICIAL RE. CORDS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTy., CALIFORNIA, LYING SOUTHERLY, SOUTHEASTERLY, AND EASTERLY OF THE. FOLLOWING DESCRIBED LINE: . - BEGINNING AT THE. NORTHWESTERLY TERMINUS OF THAT CERTAIN COURSE AS 'NORTH a1°38'~5" WEST.15.630 METERS {51.28 FEET)," IN THA3~ CERTAIN FINAL ORDER OF CONDEMNATIO.N, SUPERIOR COURT CASE 581870, AS RECORDED SEPTEMBER 15, .1.gU3 AS INSTRUMENT, NO. g3-06267;a7. OF .OFFICIAL RECORDS OF ORANGE COUNTY, AS SAID COURSE HAVING A BEARING OF NORTH $1~37'46" WEST, FOR THE .PURPOSES OF THIS DESCRIPTION~. THENCE NORTH 74°59'50" EAST 11,570 METERS (37,1;16 FEET) TO A LINE PARALLEl' TO AND 24,1~9 METERS (81 FEET) NORTHWES'TERLY FROM THE CENTERLINE OF RED HILL AVENUE; THENCE ALONG SAID PARALLEL LINE NORTH 40=4.1'10" EAST 22.045 METERS (72,33 .FEET); THENCE k.~AVING 8AID PARALLEL I'INE NORTH 07~14'19" WEST .12',255 METERS (40.24 FEET). TO A POINT ON THE SOU'I:HWESTERLY LINE OF EL CAMINO REAl_ 24.364 METERS (50.FEET) WIDE, PER DEEO RECOR. DED IN BOOK 7829, PAGE lg3 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. · ' , EXCEPTING THEREFROM THAT PORTION. DESCRIBED AS PARCEL 72a47.1 IN THAT: CERTAIN FINAL ORDER OF CONDEMNATION, SUPERIOR COURT CASE 5818'70, AS RECORDED aEPTEMBER 15, I,ggS'.AS INSTRUMENT NO. 93-0626.737 OF OFFICIAL RECORDS OF ORANGE'COUNTY. ALSO EXCEPTING THEREFROM THAT PORTION OF LAND CONVEYED TO THE CITy oFTUs'rlN,' FOR STREET AND HIGHWAY PURPOSES BY DEED. RECORDED IN BOOK 7829, PAGIE 193 OF I~AID OFFICIAL RECORDS. ' · · . TOGETHER WITH THE EXTINGUISHMENT OF ALL EASEMENTS OF VEHICULAR ACCESS APPURTENANT TO THE REMAINING' LANDS IN AND TO RED HILL'A.VENUE OVER AND ACRQSS'THE SOUTHWESTERLY 15.24 METERS (50.00 FEET') OF THAT CERTAIN COURSE HEREINABOVE DESCRIBED AS HAVING A LENGTH OF 22,045 METERS (72,33 FEET). · THE. ABOVE DESCRIBED AREA CONTAINS AN AREA. OF 282.1 SQUARE METERS (3,036 SQUARE FEET), MORE OR LESS, 'SUBJECT TO ANY AND ALL EASEMENTS OR AGREEMENTS, IF ANY, OF RECORD AND/OR FACT. · ALL AS SHOWN ON EXHIBIT 'Bm, ATTACHED HERETO 'AND BY "THIS REFEREHCE MADE A PART 'HEREOF. · · . DATE JOE I~UCKNER, L'~ NO. 7206 RE~._~ION EXPIRES. 3/31/2004 K'~?,,2S.04~.'EG~014204. DOC: ·., PLAT O~' THE PART' TAKEN POR BW'LY 1/2, LOT ;51 PL.AT NO, 'J OF THE R.ANCHOB B,ANTIAGiD DE BANTA ANA AND BAN JOAG),UIN 5Y7 ,MR OF LOB .AN~ELEB AP NO. 500--142--O4. 'N4.0'4-~"~O"E 2~045 (?~..33') PCL. 7:2B47-S '9'd-08215737 OR Na,-4.'10'15"E, 23.759 RED HILL AVE.'- N40'4.1'10"E I I I ..j / I / I 13: .,' I I ,,, 0 ~ (~= 03~25'47" ' ~,~ CiYY. OF 'I'USTIN RIGHT-OF-WAY EXHIBIT 'B' APN # 500-142-04 DRAWN BY: EA CHECKED BY: JRB SCALE 1:300 DATE: 06/99 ' CONTAINING: 21S2.1m'2 (3,036 sF) EXHIBITiB Escrow. Instructions 1. EsCrow City and Seller agree to open escrow in accordance with Section 2 of this Agreement. This Agreement constitutes the joint escrow instructions of City and Seller, and Escrow Agent to whom these escrow instructions are delivered is hereby empowered to act under this Agreement. The'parties hereto agree to do all actS necessary to close this'escrow in 'the shortest possible .time. As soon as possible after open of escrow, Seller will execute the Grant Deed attached to this Agreement as Exhibit "C" and deposit the executed deed with Escrow Agent on City's behalf. City agrees to deposit the purchase price upon demand of Escrow Agent. City and Seller.agree to deposit with Escrow Agent any additional instruments as may b'e necessary to complete this. transaction. .' Insurance policies for fire or casualty are not to be transferred, and Sellerwill cancel Seller's own policies after close of escrow. All funds received in this escrow shall be deposited with other escrow funds in a general escrow account(s) and may be transferred to any other such escrow trust account in any state Or National Bank doing business in the State of California. All. disbursements shall be made by check from such account. Escrow Agent is Authorized and is Instructed to Comply with the FolloWing Tax Adjustment.Procedure: Ao · Pay and charge Seller for any unpaid delinquent taxes and/or penalties and interest thereon, and for any delinquent or non-delinquent assessments or bonds against the Property. in the event this escrow closes between July 1 .and November 1, and the current tax information is not available from title insurer, EscrOw Agent is 'instructed to withhold from Seller's proceeds an amount equal to 120% of the prorated amount due based upon the previous fiscal year's second half tax bill. At such time that the tax information is available, Escrow Agent shall make a check payable to the County Tax Collector for Seller's prorated portion of taxes and forward same to the City and shall refund any difference to the Seller. In the event the amount withheld is not sufficient to pay Seller's prorated portion of taxes due, the Seller herein agrees to immediately pay the difference. N:\WP\DOC\ 9 11/12/Ol In the event said tax 'information is available, Seller'.s taxes shall be prorated in accordance with paragraph "C" below.' C. · From the date that tax information is. available, as per paragraph "B," up to and.including June 30% Seller's current taxes, if unpaid, shall be prorated to date of close of escroTM on the basis of a 365. day year in accordance.with Tax Collector's proration requirements, together with penalties and interest, if said current taxes are unpaid after December 10 and/or April 10. At close of escrow, check payable to the County Tax Collector for.Seller's pro-rata portion of taxes shall be forwarded to City With closing statement. · D. Any taxes which have. been paid by Seller, prior to opening of this escrow, shall not be prorated between City and Seller, but Seller shall have the sole right, after close of escrow, to apply to the County Tax Collector of said county 'for refund. This refund would apply to the period after City's acquisition,'pursuant.to Revenue and Taxation Code Section 5096.7. 3. EsCrow Agent is Authorized to and Shall: A. Pay .and charge. Seller for any amount necessary to place title.in the condition necessary to satisfy this Agreement. B, Pay and charge City for escrow fees and. closing costs payable under this Agreement. C, Disburse funds'and deliver deed .when conditions of this escrowhave'been fulfilled by City and Seller. The Term "close of escrow", if and where written in these instructions, shall mean the date necessary instruments of conveyance are recorded in the office of the County Recorder. RecOrdation of instruments delivered through this escrow is auth°rized if necessary or-proper in the .isSuance of said policy of title insurance. All time limits within which any matter herein specified is to be performed may be extended by mutual agreement of the parties hereto. Any amendment of, or supplement to, any,instructions must be in writing. ~, N:\WP\DOC\ 4, Time is of the Essence in these InStru'Ctions and .Escrow is to Close as Soon as Possible ' .~ If (except for deposit of money by City, which shall be made by City upon-demand of Escrow Agent before close of escrow) this escrow is not in condition to close within thirty (30) days from date of these instructions, any party who thenshall have fully complied With these instructions may, in writing, demand the return of their money or property; but if none have complied, no demand for return thereof shall be recognized until five (5) days after EScrow Agent shall have mailed copies of such demand to all other parties 'at the respective addresses shown-in these escrow instructions, and if any objections are raised within said five (5) day period, Escrow Agent is authorized to hold all papers and documents until instructed by a court of competent jurisdiction or mutual instructions. If no demands are made,, proceed with closing of this escrow as soon as Possible. 5. ·Permission to Enter on Premises Seller hereby grants to City, or its authorized agents., permission tO-enter upon the Property at all reasonable times prior to close of escrow for the purpose of making necessary or appropriate inspections. 6. Loss or Damage to Improvements LOss or damage to the real property or any improvements thereon, by fire or other · casualty, occurring prior to the recordation of the Deed shall be at the risk of Seller. in the event that loss or damage to the real property or any improvements thereon, by fire or other casualty, occurs prior to the recordation of the Deed, City may elect to require that the Seller pay to City the proceeds of any policy of insurance which may become payable to Seller by reason thereof, or to permit such proceeds to be used.for the restoration of the damage done, or to reduce the total price by an amount equal to the diminution in value of said Property by reason of such loss or damage or the amount of insurance payable to Seller, whichever is greater. 7. Closing Statement Seller instructs Escrow. Agent to release a copy of Seller's statement to City; the purpose is to ascertain if any reimbursements are due Seller. N:\WP\DOC\ 11 11/12/01 EXHIBIT C Form of Grant Deed 11/12/01 N:~VVP~DOC~ 12 Escrow No. Loan No. VVHEN RECORDED MAIL TO: CITY OF TUSTIN 300 .CENTENNIAL WAY TUSTIN, CALIFORNIA 92780 DOCUMENTARY TRANSFER TAX ( FREE RECORDING REQUESTED Essential to acquisition by the City of Tuatin, California See Govt. Code 6103)' Computed on the consideration or value of property conveyed;. OR Computed on the consideration or value less liens or encumbrances remaining at time of sale. SPACE ABOVE THIS LINE FOR RECORDER'S USE Signature of Declarant or Agent determining tax .- Firm Name GRANT DEED FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, THE MAKENA GREAT AMERICAN RED HILL COMPANY, A CALIFORNIA LIMITED LIABILITY COMPANY hereby GRANT(S) to the CITY OF TUSTIN, A MUNICIPAL CORPORATION the real propeity in the City of TUSTIN, County of ORANGE, State.of California, described as: SEE EXI-IIBIT "A" ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEP_EOF · Dated ) STATE OF.cALIFORNIA } ss. COUNTY OF ) On before me, ! personally appeared THE-MAKENA GREAT AMERICAN RED CALIFORNIA LIMITED LIABILITY COMPANY BY: HILL COMPANY, BY: personally known to me (or proved to me on the basis ef satisfactory evidence) to be' the person(s) whose name(s) islare subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capaclty(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrumenL ., WITNESS my hand and official seal. Signature MAIL TAX STATEMENTS TO: (This area for official notarial seal) N :\WP~OC\ Order No. S--~.~ ;_~-~--'-- Escrow No. Loan No.. WHEN RECORDED MAIL TO: CITY OF TUSTIN 300 CENTENNIAL WAY TUSTIN, CALIFORNIA 92780 .~, DOCUMENTARY TRANSFER TAX ( FREE RECORDING REQUESTED "~" s~.~al to acquisition by Ihe City of Tustin, California See Govt. Code 6103) · , computed on the consideration or value of property conveyed; OR , Computed on the consideration or value less liens or encumbrances remaining at time of sale. Recorded in Official Records,County Of Orange Darlene Bloom, Interim O{erk-Recorder Iltlllllllllll~llllllllllllillllllllllll N 0 FEE 200204~7666 '1 '1:20am 06104/0 11942002A044 . 0.00 0.00 0.00 0.00 0.00 0.00 O.O0 0.00 SPACE ABOVE THIS LINE FOR RECORDER'S USE Signature of Declarant o,.~gent determining tax ,-- Firm Name GRANT DEED ~amler 6ovem~--:--"-' '-'fi]g, THE M~ENA GR~T ~ERI~N RED HILL COMPANY, A C~IFORN~ LIMI~D LIABILI~ COMPANY hereby GRANT(S) to the CITY OF TUSTIN, A MUNICIPAL CORPORATION the real property In the Cily of TUSTIN, county of ORANGE, State of California, described as: SEE EXHIB1T "A" ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEREOF Dated ~=~ ! %\'~'z__ } STATE OF CALIFORNIA } ss. COUNTY OF __ C~::~'x--~-.~.j~.__ - -~~ ~ before me, .... ,. , personally ap~ar~ ~r Foved to me on I~ basis of e~den~) Io ~ the ~on~ ~ose name(~ subs~ to ~ .  thh Inl~l and a~l~ged ~ th~~ey exe~l~ [ e same i~r~ir a~ho~ze~pa~, and 1~1 b~ertlhair · signa~on the i~me~l ~e;~e~on(s) o~l~ en[ff upon ~haif of ~i~ ~e ~mon(s~ed, exe~d t~ ~TNESS my hand and offidal s~al~ THE MAKENA GREAT AMERICAN RED HILL COMPANY, CALl FO ~J~~ED L~IA~~OM PANY BY: /vIA ~ ~'~t~"~'l.. L.~, .¢.. I ~k.~..a~8~:v~. COMM.,. 11~3970 NOTARY PUBLIC-CALIFORNIA ORANG5 COUNTY My Term Exp Aug 20 2002 My Term Exp. Aug. 20, 2002 (This area for official notarial seal) N:~WP~3OC~ MAIL TAX STATEMENTS TO R. ETURN ADDRESS ABOVE. AGREEMENT TO PURCHASE REAL PROPERTY TUSTIN, CALIFORNIA THIS AGREEMENT is entered into this day of ,20 , by and among the City of Tustin, a municipal corporation (hereinafter "City"), and EDGAR E. PANKEY, TRUSTEE UNDER 'DECLARATION OF TRUST DATED DECEMBER 6, 1985 (hereinafter "Seller"). RECITALS 1. Seller owns improved real property at 1542 El Camino Real, Tustin, California, which is shown on Exhibit "A" (hereinafter referred to as the "Property"). Exhibit "A" is attached hereto and is incorporated herein by this reference. . purpose. The City desires to acquire the Property for a potential future public 3. The Seller desires to sell the Property to the City. NOW, THEREFORE, in view of the above-recitals and mutual promises and covenants contained herein, the parties agree as follows: AGREEMENT Section 1. Sale/Purchase of Property On the terms and conditions set forth herein, Seller agrees to sell the Property to City and City agrees to purchase the Property from Seller. The total purchase price, payable in cash through escrow, shall be Sixty Five Thousand Seven Hundred Eighty Two and No/100 Dollars ($65,782.00). In exchange for receipt of this amount, Seller releases City of any and all claims by Seller under the United States Constitution Amendments 5 and 14, and for any and all claims under state law, including but not limited to claims for relocation benefits and loss of goodwill. Section 2. Timeframe for Completion of Obligations/Escrow This sale shall be consummated through an escrow. As soon as possible after this Agreement is executed, City agrees to open an escrow in accordance with this Agreement at First American Title Insurance Company ("Escrow Holder") ("Open Escrow"), 114 East Fifth Street, Santa Ana, California, 92701, Attention: Katharine Shannon ("Escrow Officer"). This Agreement, along with Exhibits "A," "B," and "C" attached hereto, constitutes the joint escrow instructions of City and Seller to the Escrow Holder, which may be supplemented by escrow holders form agreement. As soon as possible after opening of escrow, Seller shall execute the grant deed attached 09/27/02 hereto as Exhibit "C" and incorporated herein by this reference, and shall deposit the deed with the Escrow Officer. Subject to the conditions described in Section 8, City shall deposit into escrow the sum set forth .in Section 1 above, payable to Seller. The closing date for the escrow shall be no later than thirty (30) days after opening of escrow, unless such date is extended by written agreement of the parties. "Close of Escrow" shall be the date when the grant deed to the City is recorded. Except as provided in Section 8, City shall pay escrow and closing costs. City shall also pay the costs of the ALTA title insurance referenced in Section .8.1. Section 3. Warranty Against Easements Not of Record To the current, actual knowledge of Seller, Seller warrants to City that as of the date of this Agreement and as of the date of close of escrow, Seller has not granted any unrecorded easements or licenses on the Property. Section 4. Warranty of No Governmental Action To the current, actual knowledge of Seller, Seller warrants that there is not now, and as of close of escrow, there will not be, any violation of any law, ordinance, rule, or administrative or judicial order affecting the Property, nor is there any judicial order affecting the Property, nor is there any condemnation, zoning change, or other proceeding or action (including legislative action) pending, threatened, or contemplated by any governmental body, except City, authority, or agency that will in any way affect the size or use of, improvements or construction on, or access to the Property by City. This warranty does not apply to governmental action where notice has not been provided to Seller. Section 5. Warranty Against Contracts Concerning Property To the current, actual knowledge of Seller, Seller warrants that as of the date of this Agreement and as of close of escrow, Seller has not entered into any contracts, leases, licenses, commitments, or undertakings respecting the Property, or for the performance of services on the Property, or for the use of the Property or any part of it or any agreement or contract of any kind pertaining to the Property by which City would become obligated or liable to anyone. Section 6. Warranty Against Violations To the current, actual knowledge of Seller, Seller warrants and represents that as of the date of this Agreement and as of close of escrow, Seller has no notice or knowledge of any violation of any statute, ordinance, regulation or administrative or judicial order or holding, whether or not appearing in public records, with respect to the Property or any improvements on the Property. 2 09~27~02 Section 7. Environmental Compliance A. Seller warrants and represents that, during the time in which Seller has owned the Property, neither Seller nor, to the current, actual knowledge of Seller, any third party, has used, generated, manufactured, produced, stored or disposed of, on, under, or about the Property or transported to or from the Property any hazardous materials, including without limitation, flammable materials, explosives, asbestos, radioactive materials, hazardous wastes, toxic substances, or related injurious materials, whether injurious by themselves or in combination with other materials. To the current, actual knowledge of Seller there is no proceeding or inquiry by any governmental authority, including without limitation, the California or Federal Environmental Protection Agency or the California State Department of Toxic Control, or state or regional water quality board, with respect to the presence of such hazardous materials on the Property or their migration from or to other property. For purposes of this Agreement, the term "hazardous materials" shall include but not be limited to substances defined as "hazardous substance," "hazardous materials," or "toxic substances" in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (Title 42 United States Code Sections 9601-9675); the Hazardous Materials Transportation Act, as amended (Title 49 United States Code Sections 1801-1819); the Resource Conservation and Recovery Act of 1976, as amended (Title 42 United States Code Section 6901-6992k); and any substance defined as "hazardous waste" in Health and Safety Code Section 25117 or as "hazardous substance" in Health and Safety Code Section 25316, and in the regulations adopted and publications promulgated under these laws. B. Seller hereby agrees to indemnify, protect, hold harmless, and defend City, its council members, officers, employees, agents, from and against any and all loss, expense, damage and liability, including without limitation (1) all foreseeable and unforeseeable consequential damages, directly or indirectly arising from the use, generation, storage, or disposal of hazardous material on the Property by Seller, Seller's tenants, or other person using the Property with Seller's actual knowledge Or consent; and (2) the cost of any required or necessary repair, cleanup, or detoxification and the preparation of any closure or other required plans, regardless of whether such action is required before or after the close of escrow, but only to the extent that such liability is attributable, directly or indirectly, to the presence or use, generation, storage, release, threatened release, or disposal of hazardous materials by Seller, Seller's tenants, or other person using the Property with Seller's consent or actual knowledge that occurred while Seller owned the Property. Seller's indemnity shall survive close of escrow. C. From and after Close of Escrow, City agrees to indemnity, protect, hold harmless and defend Seller from and against any and all loss, expense, damage and liability, including without limitation (1) all foreseeable and unforeseeable consequential damages, directly or indirectly arising from the use, generation, storage, or disposal of hazardous material on the Property by City; and (2) the cost of any required or necessary repair, cleanup, or detoxification and the preparation of any closure or other required plans, but only to the extent that such liability is attributable, directly or indirectly, to the presence or Use, generation, storage, release, threatened release, or 3 09/27~02 'dispoSal of hazardous materials on the Property by City. City's indemnity shall survive close of escrow. Section 8. City's Obligations is Subject to Conditions City's obligation to perform this Agreement is subject to City's approval of the condition of title, described in Sections 8.1 and 8.2, City's approval of the condition of the Property described in Sections 8.3 and 8.4, and no breach of representations, as described in Section 8.5. 8.1 First American Title Insurance Company shall be able to issue in favor of City an ALTA standard owner's policy of title insurance dated as of close of escrow with liability not less than the purchase price, covering the Property, showing title vested in City, and showing as exceptions only current general and special real property taxes, bonds and assessments not yet delinquent, and the exceptions to title that City has approved. 8.2 Promptly, upon opening of escrow, Escrow Holder shall furnish City with a title commitment for an ALTA title policy and legible copies of all documents reported as exceptions in it ("Title Documents"). City shall notify Seller and Escrow Holder in writing within ten (10) days after receipt of the title commitment and the Title Documents of City's disapproval of any exception in those documents. If any supplemental title commitment or supplemental Title Documents are submitted, then City shall notify Seller. and Escrow Holder in writing within ten (10) days after City's receipt of such items, but not later than the date mutually agreed upon by the parties in writing for the Close of Escrow, of City's disapproval of any title exception set forth therein. Failure of City to notify Seller and Escrow Holder in writing of City's disapproval of any title exceptions shall conclusively be considered as City's approval of same. If City disapproves any title matter referred to in this paragraph, then, at.City's option, this Agreement and the escrow shall be canceled, and in such event all funds or other things deposited by City shall be returned to City immediately on demand, and City shall pay all title company and escrow charges. 8.3 City shall pay for a Property Condition Inspection by a competent inspector selected by the City. City's obligation to close escrow is contingent upon City's approval of the condition of the Property at it's sole discretion. 8.4 If there is a breach of any representation or warranty given by Seller pursuant to this Agreement that is discovered by City before close of escrow, then City may nevertheless elect to proceed to close the escrow, in which event City shall be deemed to have elected to waive such breach, or City may elect to terminate this Agreement and the escrow, in which event this Agreement shall be canceled. If this Agreement and the escrow are terminated by City's election under this paragraph, then all funds or other things deposited by City, if any, shall be returned to City immediately on demand, and Seller shall pay all title company and escrow charges. 4 09~7~2 Section 9. Warranty Against Litigation Concerning the Property To Seller's current, actual knowledge, as of the date of this Agreement.and as of Close of Escrow, no litigation is or will be pending against Seller regarding the use, operation, development, condition or improvement of the Property, or regarding any right, title or interest in the Property. Section '10. Threat of Condemnation Seller and City acknowledge that the purchase and sale of the Property has been negotiated under the threat of condemnation of the Property by the City. In the event of Seller default, City's ability to perform is prejudiced. Accordingly, in the event the escrow fails to'close by reason of a default by Seller, Seller agrees: A. Property. That the public interest and necessity requires the acquisition of the B. That the Seller waives any claim to severance damages and goodwill under any eminent domain proceedings commenced at any time hereafter by the City of Tustin with respect to the Property. C. That the Seller waives any claim to any relocation assistance in any eminent domain proCeedings commenced by the City of Tustin with respect to the Property. D. Seller acknowledges that in waiving these claims they have not relied on any representations or statements made or said by City, its agents, attorneys or other representatives. Section '11. Attorneys' Fees If any party files an action or brings any proceeding against the other arising from this Agreement, or is made a party to any action or proceeding brought by the Escrow Holder, then as between City and Seller and City, the prevailing party shall be entitled to recover as an element of its costs of suit, and not as damages, reasonable attorneys' fees to be fixed by the court. The "prevailing party" shall be the party who is entitled to recover its costs of suit, whether or not suit, proceeds to final judgment. A party not entitled to recover its costs shall not recover attorneys' fees. No sum for attorneys' fees shall be included in calculating the amount of a judgment for purposes of deciding whether a party is entitled to its costs or attorneys' fees. 5 o9/27/02 Section 12. Warranties to Survive Close of Escrow All warranties, covenants, and other obligations stated in this Agreement shall survive close of escrow. All warranties, covenants, and other obligations that the City discovers to be breached before tender of the deed, and that City either expressly waives or does not object to before such tender, shall not survive tender of the deed. Section 13. Binding on Successors. Except as otherwise provided herein, this Agreement insures to the benefit of, and is binding on, the parties, their respective heirs, personal representatives, successors, and assigns. Section 14. Integration Clause This Agreement constitutes the entire agreement among the parties and supersedes all prior discussion, negotiations, and agreements whether oral or written. Any amendment to this Agreement, including an oral modification supported by new consideration, must be reduced to writing and signed by all of the parties before it will be effective. Section 15. No Representation Regarding Legal Effect of Document No representation, warranty, or recommendation is made by Seller or City or their respective agents, employees, or attorneys regarding the legal sufficiency, legal effect, or tax consequences of this Agreement or the transaction, and each signatory is advised to submit this Agreement to his or her respective attorney before signing it. Section 16. Counterparts This Agreement may be executed in counterparts, each of which so executed shall, irrespective of the date of its execution and delivery, .be deemed an original, and all such counterparts together shall constitute one and the same instrument. Section 17. Time is of the Essence Time is of the essence of this Agreement, and failure to comply with the time provisions of this Agreement shall be a material breach of this Agreement. 6 09/27~02 Executed on the date first above written. CITY OF TUSTIN By: ATTEST: Pamela Stoker City Clerk APPROVED AS TO FORM' Lois E. Jeffrey City Attorney SELLER By: Edgar E. Pankey, Trustee Under Declaration of Trust dtd. 12-06-85 7 09~27~02 EXHIBIT A Legal Description of Property 8 09/27/02 EXHIBIT B Escrow Instructions 1. Escrow City and Seller agree to open escrow in accordance with Section 2 of this Agreement. This Agreement constitutes the joint escrow instructions of City and Seller, and Escrow Agent to whom these escrow instructions are delivered is hereby empowered to act under this Agreement. The parties hereto agree to do all acts necessary to close this escrow in the shortest possible time. As soon as possible after open of escrow, Seller will execute the Grant Deed attached to this Agreement as Exhibit "C" and deposit the executed deed with Escrow Agent on City's behalf. City agrees to deposit the purchase price upon demand of Escrow Agent. City and Seller agree to deposit with Escrow Agent any additional instruments as may be necessary to complete this transaction. Insurance policies for fire or casualty are not to be transferred, and Seller will cancel Seller's own policies after close of escrow. All funds received in this escrow shall be deposited with other escrow funds in a general escrow account(s) and may be transferred to any other such escrow trust account in any State or National Bank doing business in the State of California. All disbursements shall be made by check from such account. = Escrow Agent is Authorized and is Instructed to Comply with the Following Tax Adjustment Procedure: A. Pay and charge Seller for any unpaid delinquent taxes and/or penalties and interest thereon, and for any delinquent or non-delinquent assessments or bonds against the Property. B. In the event this escrow closes between July 1 and November 1, and the current tax information is not available from title insurer, Escrow Agent is instructed to withhold from Seller's proceeds an amount equal to 120% of the prorated amount due based upon the previous fiscal year's second half tax bill. At such time that the tax information is available, Escrow Agent shall make a check payable to the County Tax Collector for Seller's prorated portion of taxes and forward same to the City and shall refund any difference to the Seller. In the event the amount withheld is not sufficient to pay Seller's prorated portion of taxes due, the Seller herein agrees to immediately pay the difference. 9 09/27/02 In the event said tax information is available, Seller's taxes shall be prorated in accordance with paragraph "C" below. Co From the date that tax information is available, as per paragraph "B," up to and including June 30th, Seller's current taxes, if unpaid, shall be prorated to date of close of escrow on the basis of a 365 day year in accordance with Tax Collector's proration requirements, together with penalties and interest, if said current taxes are unpaid after December 10 and/or April 10. At close of escrow, check payable to the County Tax Collector for Seller's pro-rata portion of taxes shall be forwarded to City with closing statement. D, Any taxes which have been paid by Seller, prior to opening of this escrow, shall not be prorated between City and Seller, but Seller shall have the sole right, after close of escrow, to apply to the County Tax Collector of said county for refund. This refund would apply to the period after City's acquisition, pursuant to Revenue and Taxation Code Section 5096.7. 3. Escrow Agent is Authorized to and Shall: A, Pay and charge Seller for any amount necessary to place title in the condition necessary to satisfy this Agreement, B, Pay and charge City for escrow fees and closing costs payable under this Agreement, Co Disburse funds and .deliver deed when conditions of this escrow have been fulfilled by City and Seller. The Term "close of escrow", if and where written in these .instructions, shall mean the date necessary instruments of conveyance are recorded in the office of the County Recorder. Recordation of instruments delivered through this escrow is authorized if necessary or proper in the issuance of said policy of title insurance. All time limits within which any matter herein specified is to be performed may be extended by mutual agreement of the parties hereto. Any amendment of, or supplement to, any instructions must be in writing. 1 0 09/27/02 w Time is of the Essence in these Instructions and Escrow is to Close as Soon as Possible If (except for deposit of money by City, which shall be made by City upon demand of Escrow Agent before close of escrow) this escroW is not in condition to close within thirty (30) days from date of these instructions, any party who then shall have fully complied with these instructions may, in writing, demand the return of their money or property; but if none have complied, no demand for return thereof shall be recognized until five (5) days after Escrow Agent shall have mailed copies of such demand to all other parties at the respective addresses shown in these escrow instructions, and if any objections are raised within said five (5) day period, Escrow Agent is authorized to hold all papers and documents until instructed by a court of competent jurisdiction or mutual instructions. If no demands are made, proceed with closing of this escrow as soon as possible. 5. Permission to Enter on Premises Seller hereby grants to City, or its authorized agents, permission to enter upon the Property at all reasonable times prior to close of escrow for the purpose of making necessary or appropriate inspections. 6. Loss or Damage to Improvements Loss or damage to the real property or any improvements thereon, by fire or other casualty, occurring prior to the recordation of the Deed shall be at the risk of Seller. In the event that loss or damage to the real property or any improvements thereon, by fire or other casualty, occurs prior to the recordation of the Deed, City may elect to require that the Seller pay to City the proceeds of any policy of insurance which may become payable to Seller by reason thereof, or to permit such proceeds to be used for the restoration of the damage done, or to reduce the total price by an amount equal to the diminution in value of said Property by reason of suCh loss or damage or the amount of insurance payable to Seller, whichever is greater. 7. Closing Statement Seller instructs Escrow Agent to release a copy of Seller's statement to City; the purpose is to ascertain if any reimbursements are due Seller. 1 1 09~27~02 EXHIBIT C Form of'Grant Deed O9~27~O2 .Orde~r No. 9931655 Escrow No. Loan No. WHEN RECORDED MAIL TO: CITY OF TUSTIN 300 CENTENNIAL WAY TUSTIN, CA 92780 DOCUMENTARY TRANSFER TAX ( FREE RECORDING REQUESTED Essential to acquisition by the City of Tustin, California See Govt. Code 6103) Computed on the consideration or value of property conveyed; OR Computed on the consideration or value less liens or encumbrances remaining at time of sale. SPACE ABOVE THIS LINE FOR RECORDER'S USE Signature of Declarant or Agent determining tax - Firm Name GRANT DEED FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, EDGAR E. PANKEY, TRUSTEE UNDER DECLARATION OF TRUST DATED DECEMBER 6, 1985 hereby GRANT(S) to the CITY OF TUSTIN, A MUNICIPAL CORPORATION the real property in the City of TuStin, County of Orange, State of California, described as SEE EXHIBIT "A" ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEREOF Dated } STATE OF CALIFORNIA } ss. COUNTY OF } On before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature EDGAR E. PANKEY, TRUSTEE UNDER DECLARATION OF TRUST DATED DECEMBER 6, 1985 (This area for official notadal seal) 13 "EXHIBIT, "A" LEGAL DESCRIPTION BEING A PORTION OF PARCEL MAP 99-197, IN THE CITY OF TUSTIN, COUNTY OF ORANGE, STATE OF CALIFORNIA. AS SHOWN ON A MAP FILED .IN' BOOK 315 PAGES 8.10 OF PARCEL MAPS, RECORDS OF SAID ORANGE COUNTY MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE CENTERLINE INTERSECTION OF RED HILL AVENUE AND EL CAMINO REAL AS SHOWN ON SAID PARCEL MAP; THENCE ALONG THE CENTERLINE OF SAID RED HILL AVENUE SOUTH 40°41'23" WEST,' 21.342 METERS (70.02 FEET); THENCE LEAVING SAID CENTERLINE AT RIGHT ANGLES SOUTH 49°18'37" EAST, 16.572 METERS (54.37 FEET) TO A POINT ON THE NORTHWESTERLY BOUNDARY OF SAID PARCEL MAP 99-197 SAID POINT ALSO-.BEING A POINT ON THE SOUTHEASTERLY RIGHT-OF-WAY LINE OF'RED HILL AVENUE' AS ESTABLISHED BY D.EED RECORDED FEBRUARY 19, 1992 AS INSTRUMENT NO. 92-097801 OF,OFFICIAL RECORDS OF SAID COUNTY; SAID POINT ALSO BEING THE POINT oF BEGINNING; THENCE ALONG THE NORTHWESTERLY. AND SOUTHWESTERLY BOUNDARY OF SAID PARCEL MAP THE FOLLOWING COURSES; SOUTH 37°16'24" WEST 25.881 METERS (84.91 FEET), SOUTH 19°20'02" EAST,. 14.219 METERS (46.65 FEET). SOUTH 45038'27'' EAST; 5.752 METERS (18:87.FEET); THENCE LEAVING THE SOUTHWESTERLY BOUNDARY OF SAID PARCEL MAP NORTH 01 °58,12" WEST 21.891 METERS (71.82 FEET) TO .A LINE PARALLEL WITH AND 21.336 METERS (70 FEET) SOUTHEASTERLY FROM THE CENTERLINE OF RED HILL AVENUE; THENCE ALONG SAID-PARALLEL LINE NORTH 40°41'23" EAST 17:209 METERS (56.46 FEET); THENCE LEAVING SAID PARALLEL LINE AT RIGHT ANGLES TO SAID CENTERLINE OF RED .HILL AVENUE NORTH 49°18'37'' WEST 4.764 METERS (15.63 FEET) TO THE POINT OF BEGINNING. TOGETHERWITH THE EXTINGUISHMENT OF ALL EASEMENTS OF VEHICULAR ACCESS APPURTENANT TO'THE REMAINING LANDS IN AND TO RED HILL AVENUE OVER AND ACROSS THE SOUTHWESTERLY 15.240 METERS (50.00 FEET) OF THAT CERTAIN COURSE HEREINABOVE DESCRIBED AS HAVING A LENGTH OF17.209 METERS (56.46 FEET). THE ABOVE DESCRIBED AREA CONTAINS AN AREA OF 197.1 SQUARE METERS (2,122 SQUARE FEET), MORE OR LESS. .- SUBJECT TO ANY AND ALL EASEMENTS OR AGREEMENTS, IF ANY, OF RECORD AND/OR FACT. ALL AS SHOWN ON "EXHIBIT "B", ATTACHED HERETO AND. BY THIS REFERENCE MADE A PART HEREOF. - EUGEN~SHAFFER, L.S. LICENSE EXPIRES DATE \\10.20.0.55\P rojects~aslce\226.04\LEGALS\50002104_REV,.DOC 07/16/02 N 4.5°38'27"W 5.752m (1 19m (58.79': 2.168m (39. N19'19'57"W 14.219m (4-6.65') PER 92'097801.0.R. AP NO. 500-021' 04- · / RIGHT OF WAY' ' P..Mo B. 3]]..~/8-~.0 21.336m (70') VEHI'CULAR ACCESS RIGHTS RELINQUISHED TO THE CITY OF .TUSTIN E UJ CC P.O.C. CAMINO_REAL"~ PREPARED UNDER THE DIRECTION OF Eti~NE A."TSHAFFE~',~, .S. 46¢4 DATE LICENSE EXPIRES ~ CITY OF TUSTIN RIGHT-OF-WAY "EXHIBIT B" APN # 500'021-04 DRAWN BY: "MDM CHECKED BY: JRB SCALE 1:500 DATE:, 9/01 CONTAINING ' 197.1 m"2 (2,122 SF) 226.04 .50002104_RE'V. DWG: EXHJI~I~' "A" LEGAL DESCRIPTION THAT PORTION OF THI='SOUTHWEI~T'ERLY HALF OF.LOT'31 OF PLAT NO, 1 .OF THE RANCHOS ' 'SANTIAGO .DE SANTA ANA" AND 'SAN JOAQUIN," AS SHOWN ON MAP RECORDED-IN BOOK'S,. PAGE'7 OF'MISCELLANEOUS RECORDS OF LOS ANG.ELEB COUNTY, 'CALIFORNIA, INCLUDED .WITHIN.'rHE EXCEPTION. DESCRIBED IN'DEED TO THE ~TATE OF'CALIFORNIA, (PARCEL 251) RECORDED IN BOOK 2824, PAGE B23 OF OFFICIAL RE. CORDS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTy., CALIFORNIA, LYING SOUTHERLY, SOUTHEASTERLY, AND . F_.ASTEF~LY OF THE-FOLLOWING DESCRIBED LINE: · · · , BEGINNING AT THENORTHWESTERLY TERMINUS OF THAT CERTAIN COURSE AS "NORTH EI1~38'25'" WEST:IS.630 METERS (51'.28 'FEET)," IN THAI': CERTAIN FINAL ORDER OF CONDEMNATIQN, SUPERIOR COURT CASE 581B70, AS RECORDED SEPTEMBER 15, .'1.993 IN,~,TRUMENT.'NO. g3'O6267.37. OF OFFICIAL RECORDS OF ORANGE COUNTY, AS SAID COURSE HAVING A BEARING OF NORTH 61"37'46" ,WEST, FOR THE .PURPOSES OF THIS DE~ICRIPTtON~' THENCE NORTH 74~,59'50" EAST 11.570 METERS (37.g$ FEET.)TO A LINE PARALLEL TO AND 24.869 METERS (1tl FEET) NORTHWES'rERLY.FROM THE CENTERLINE OF RED HILL AVENUE; THENCE. ALONG SAID PAI=IAI.~EL LINE NORTH 40=4.'1'10" EAST 22.045 METERS, (72,33 .FEET); THENCE .LEAVING SAID PARALLEL I'INE NORTH 07~14'1g'' WEST..12'~265 METERS (40.24 FEET). TO A POINT ON THE S(::)Iff'i':.HWESTERLY LINE OF EL CAMINO REAL. 24,3E~1 METERS (80.FEE-T) WIDE, PER DEED RECORDED IN BOOK 7829, PAGE lg3 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. , ' ' , EXCEPTING THEREFROM THAT PORTION.DEscRIBED AS PARCEL 72B47-1 IN THAT CERTAIN FINAL ORDER OF CONDEMNATION, SUPERIOR COURT CASE 5BLS70,. AS RECORDED SEPTEMBER · 1.993.A$ INSTRUMEI,,IT NO. 93.0626.737 OF OFFICIAL RECORDS OF ORANGE'COUNTY. AL`SO EXCEPTING THEREFROM THAT pORTION 'OF LAND-CONVEYED TO THE CITy oFTu's-i, iN,' FOR .STREET AND HI(3HWA¥ PURPOSES BY DEED-RECORDED IN BOCK'TS29, PAGE 193 OF SAID OFFICIAL RECORDS. ' -. TOGETHER WITH THE EXTINGUISHMENT OF ALL EASEMENTS OF' VEHICULAR ACCESS .APPURTENANT TO THE REMAINING' LANDI~ IN AND TO RED HILL'A.VENUE OVER AND ACROSS'THE SOUTHWESTERLy 15.~4 METERS (SD.00 FEET) OF THAT CEFITAIN COURSE HER EINABOVE ' DESCRIBED AS HAVING A LENGTH. OF 2..2.045 METERS (7'2,33 FEET), . THE. ABOVE DESCRIBED AREA'CONTAINS AN AREA. OF 282.1 SQUARE METERS ;(8,036 S;QUARE FEET), MORE 'OR' LESS, · , . . 'SUBJECT TO 'ANY AND ALL EASEMENTS OR AGREEMENTS, IF ANY, OF RECORD AND/OR FACT. · ALE .AB SHOWN ON EXHIBIT 'Bi', AT'i'ACHED HERETO 'AND BY "THIS REFEREHCE MADE A PART 'HEREOF. RE.~ION EXPI,ES 3/31/,?.0m ~t~*L' E~p. 3/31/04" 4204. DOC ·., PLAT OF",THE PART TA:KEN · ~. -- .. . ~ ~ " 'PLAT NO, I OF THE RANCHOS BANTIAaO ~ - I ~ ' DE BANTA .ANA. AND BAN JOAaUIN . ~ t ~ 5/7 MR OF' LOB ANBELEB. ' : ~~ ~%~- &- -s - - ~ ' ~ Z. ' ,¢~. ~4~-~ ' ' .... :7 ---=': .... 7~ ..... - . . .--.. , ~ ' ..- . . . · ". ~ ~ , ~ , ~ ~ , .. ~ N 40'41 '1 . . " ,CiTy.OF RIGHT-OF-WAY EXHIBIT'B' D~W. ~: ~ ICUECKm m: aRB S~ 1:300J DA~: 06/99 ApN · 500-142-04 CO~NNING: AGREEMENT TO PURCHASE REAL PROPERTY 1471 NISSON ROAD,TUSTIN, CALIFORNIA THIS AGREEMENT is entered into this day of ,20__, by and among the City of Tustin, a municipal corporation (hereinafter "City"), and Billy F. Mathis, Inc., dba Al's Woodcraft (hereinafter "Seller"). RECITALS 1. Seller owns improved real property at 1471 Nisson Road, Tustin, California, which is shown on Exhibit "A" (hereinafter referred to as the "Property"). Exhibit "A" is attached hereto and is incorporated herein by this reference. 2. The City desires to acquire the Property for a potential future public purpose. 3. The Seller desires to sell the Property to the City. NOW, THEREFORE, in view of the above-recitals and mutual promises and covenants contained herein, the parties agree as follows: AGREEMENT Section 1. Sale/Purchase of Property On the terms and conditions set forth herein, Seller agrees to sell the Property to City and City agrees to purchase the Property from Seller. The total purchase price, payable in cash through escrow, shall be Eighty-Seven Thousand Three Hundred and No/100 Dollars ($87,300.00). In exchange for receipt of this amount, Seller releases City of. any and all claims by Seller under the United States Constitution Amendments 5 and 14, and for any and all claims under state law, including but not limited to claims for relocation benefits and loss of goodwill. Section 2. Timeframe for Completion of Obligations/Escrow This sale shall be consummated through an escrow. As soon as possible after this Agreement is executed, City agrees to open an escrow in accordance with this Agreement at First American Title Insurance Company (Escrow Holder") ("Open Escrow"), 114 East Fifth Street, Santa Ana, California, 92701, Attention: Robert Benavente (Escrow Officer"). This Agreement, along with Exhibits "A," "B," and "C" attached hereto, constitutes the joint escrow instructions of City and Seller to the Escrow Holder, which may be supplemented by escrow holders form agreement. As soon as possible after opening of escrow, Seller shall execute the grant deed attached hereto as Exhibit "C" and incorporated herein by this 1 09/27/O2 N:\WP\DOC\ reference, and shall deposit the deed with the Escrow Officer. Subject to the conditions described in Section 8, City shall deposit into escrow the sum set forth in Section 1 above, payable to Seller. The closing date for the escrow shall be no later than thirty (30) days after opening of escrow,, unless such date is extended by written agreement of the parties. "Close of Escrow" shall be the date when the grant deed to the City is recorded. Except as provided in Section 8, Seller shall pay escrow fees and closing costs. City shall also pay the costs of the ALTA title insurance referenced in Section 8.1. Section 3. Warranty Against Easements NOt of Record To the current, actual knowledge of Seller, Seller warrants to City that as of the date of this Agreement and as of the date of close of escrow, Seller has nOt granted any unrecorded easements or licenses on the Property. Section 4. Warranty of No Governmental Action To the current, actual knowledge of Seller, Seller warrants that there is not now, and as of close of escrow, there will not be, any violation of any law, ordinance, rule, or administrative or judicial order affecting the Property, nor is there any judicial order affecting the Property, nor is there any condemnation, zoning change, or other proceeding or action .(including legislative action) pending, threatened, or contemplated by any governmental body, except City, authority, or agency that will in anyway affect the size or use of, improvements or construction on, or access to the Property by City. This warranty does not apply to governmental action where notice has not been provided to Seller. Section 5. Warranty Against Contracts Concerning Property To the current, actual knowledge of Seller, Seller warrants that as of the date of this Agreement and as of close of escrow, Seller has not entered into any contracts, leases, licenses, commitments, or undertakings respecting the Property, or for the performance of services on the Property, or for the use of the Property or any part of it or any agreement or contract of any kind pertaining to the Property by which City would become obligated or liable to anyone. Section 6. Warranty Against Violations To the current, actual knowledge of Seller, Seller warrants and represents that as of the date of this Agreement and as of close,of escrow, Seller has no notice or knowledge of any violation of any statute, ordinance, regulation or administrative or judicial order or holding, whether or not appearing in public records, with respect to the Property or any improvements on the Property. 2 09~27~02 N:\WP\DOC\ Section 7. Environmental Compliance Ao Seller warrants and represents that, during the time in which Seller has owned the Property, neither Seller nor, to the current, actual knowledge of Seller, any third party, has used, generated, manufactured, produced, stored or disposed of, on, under, or about the Property or transported to or from the Property any hazardous materials, including without limitation, flammable materials, explosives, asbestos, radioactive materials, hazardous wastes, toxic substances, or related injurious materials, whether injurious by .themselves or in combination with other materials. To the current, actual knowledge of Seller there is no proceeding or inquiry by any governmental authority, including without limitation, the California or Federal Environmental Protection Agency or the California State Department of Toxic Control, or state or regional water quality board, with respect to the presence of such hazardous materials on the Property or their migration from or to other property. For purposes of this Agreement, the term "hazardous materials" shall include but not be limited to substances defined as "hazardoUs substance," "hazardous materials," or "toxic substances" in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (Title 42 United States Code Sections 9601-9675); the Hazardous Materials Transportation Act, as amended (Title 49 United States Code Sections 1801-1819); the Resource Conservation and Recovery Act of 1.976, as amended (Title 42 United States Code Section 6901-6992k); and any substance defined as "hazardous waste" in Health and Safety Code Section 25117 or as "hazardous substance" in Health and Safety Code Section 25316, and in the regulations adopted and publications promulgated under these laws. It is understood between the Buyer and Seller that nothing in this agreement shall limit or diminish any and all obligations or liabilities that Seller may have under State, Federal and Local laws, statues, and regulations, with regard to any and alt soil, water and other contamination. B. From and after Close of Escrow, City agrees to indemnity, protect, hold harmless and defend Seller from and against any and all loss, expense, damage and liability, including without limitation (1) all foreseeable and unforeseeable consequential damages, directly or indirectly arising from the use, generation, storage, or disposal of hazardous material on the Property by City; and (2) the cost of any required or necessary repair, cleanup, or detoxification and the preparation of any closure or other required plans, but only to the extent that such liability is attributable, directly or indirectly, to the presence or use, generation, storage, release, threatened release, or disposal of hazardous materials on the Property by City. City's indemnity shall survive close of escrow. N:\WP\DOC\ 3 09/27/02 Section 8. City,s Obligations is Subject to Conditions City's obligation to perform this Agreement is subject to City's approval of the condition of title, described in Sections 8.1 and 8.2, City's approval of the condition of the Property described in Sections 8.3 and 8.4. 8.1 First American Title Insurance Company shall be able to issue in favor of City an ALTA standard owner's policy of title insurance dated as of close of escrow with liability not less than the purchase price, covering the Property~ showing title vested in City, and showing as exceptions only current general and special real property taxes, bonds and assessments not yet delinquent, and the exceptions to title that City has approved. ' 8.2 Promptly, upon ,opening of escrow, Escrow Holder shall furnish City with a title commitment for an ALTA title policy and legible copies of all documents reported as exceptions in it ("Title Documents"). City shall notify Seller and Escrow Holder in writing within ten (10) days after receipt of the title commitment and the Title Documents of City's disapproval of any exception in those documents. If any supplemental title commitment or supplemental Title Documents are submitted, then City shall notify Seller and Escrow Holder in writing within ten (10) days after City's receipt of such items, but not later than the date mutually agreed upon by the parties in writing for the Close of EscroTM, of City's disapproval of any title exception set forth therein. Failure of City to notify Seller and Escrow Holder in writing of City's disapproval of any title exceptions shall conclusively be considered as City's aPproval of same. If City disapproves any title matter referred to in this paragraph, then, at City's option, this Agreement and the escrow shall be canceled, and in such event all funds or other things deposited by City shall be returned to City immediately on demand, and City shall pay all title company and escrow charges. 8.3 City shall pay for a Property Condition Inspection by a competent inspector selected by the City. City's obligation to close escrow is contingent upon City's approval of the condition of the Property at it's sole discretion. 8.4 If there is a breach of any representation or warranty given by Seller pursuant to this Agreement that is discovered by City before close of escrow, then City may nevertheless elect to proceed to close the escrow, in which'event City shall be deemed to have elected to waive such breach, or City may elect to terminate this Agreement and the escrow, in which event this Agreement shall be canceled. If this Agreement and the escrow are terminated by City's election under this paragraph, then all funds or other things deposited by City, if any, shall be returned to City immediately on demand, and Seller shall pay all title company and escrow charges. N:\WP\DOC\ 4 09/27~02 Section 9. WarrantY Against Litigation Concerning the Property To Seller's current, actual knowledge, as of the date of this Agreement and as of Close of' Escrow, no litigation is or will be pending against Seller regarding the use, operation, development, condition or improvement of the Property, or regarding any right, title or interest in the Property. Section 10. Threat of Condemnation Seller and City acknowledge that the purchase and sale of the Property has been negotiated under the threat of condemnation of the Property by the City. In the event of Seller default, City's ability to perform is prejudiced. Accordingly, in the event the escrow fails to close by reason of a default by Seller, Seller agrees: A. That the public interest and necessity requires the acquisition of the Property. B. That the Seller waives any claim to severance damages and goodwill under any eminent domain proceedings commenced at any time hereafter by the City of Tustin with respect to the Property. C. That the Seller waives any claim to any relocation assistance in any eminent domain proceedings commenced by the City of Tustin with respect to the Property. D. Seller acknowledges that in waiving these claims they have not relied on any representations or statements made or said by City, its agents, attorneys or other representatives. Section 11. Attorneys' Fees If any party files an action or brings any proceeding against the other arising from this Agreement, or is made a party to any action or proceeding brought by the Escrow Holder, then as between City and Seller, the prevailing party shall be entitled to recover as an element of its costs of suit, and not as damages, reasonable attorneys' fees to be fixed by the court. The "prevailing party" shall be the party who is entitled to recover its costs of suit, whether or not suit, proceeds to final judgment. A party not entitled to recover its costs shall not recover attorneys' fees. No sum for attorneys' fees shall be included in calculating the' amount of a judgment for purposes of deciding whether a party is entitled to its costs or attorneys' fees. Section 12. Warranties to Survive Close of Escrow All warranties, covenants, and other obligations stated in this Agreement shall survive close of escrow. All warranties, covenants, and other obligations that the City discovers to be breached before tender of the deed, and that City either expressly waives or does not object to before such tender, shall not survive tender of the deed. 5 09/27/02 N:\WP\DOC\ Section 13. Binding on Successors. Except as otherwise provided herein, this Agreement inures to the benefit of, and is binding on, the parties, their respective heirs, personal representatives, successors, and assigns. Section '14. Integration Clause This Agreement constitutes the entire agreement among the parties and supersedes all prior discussion, negotiations, and agreements whether oral or written. Any amendment to this Agreement, including an oral modification supported by new consideration, must be reduced to writing and signed by all of the parties before it will be effective. Section '15. No Representation Regarding Legal Effect of Document No representation, warranty, or recommendation is made by Seller or City or their respective agents, employees, or attorneys regarding the legal sufficiency, legal effect, or tax consequences of this Agreement or the transaction, and each signatory is advised to submit this Agreement to his or her respective attorney before signing it. Section 16. Counterparts This Agreement may be executed in counterparts, each of which so executed shall, irrespective of the date of its execution and delivery, be deemed an original, and all such counterparts together shall constitute one and the same instrument. Section '17. Time is of the Essence Time is of the essence of this Agreement, and failure to comply with the time provisions of this Agreement shall be a material breach of this Agreement. N:\WP\DOC\ 09/27/02 Executed on the date first above written. CITY OF TUSTIN By: ATTEST: Pamela Stoker City Clerk APPROVED AS TO FORM: Lois E. Jeffrey City Attorney SELLER Billy F. Mathis, Inc., dba Al's Woodcraft By: 09~27~02 7 N:\WP\DOC\ EXHIBIT A Legal Description of Property 09/27/02 N:\WP\DOC\ 8 "EXHIBIT "A" LEGAL DESCRIPTION BEING A PORTION-OF PARCEL MAP 99-197, IN THE CITY OF TUSTIN, COUNTY OF ORANGE, STATE OF CALIFORNIA. AS SHOWN ON A MAP FILED IN BOOK 315 PAGES 8-10 OF PARCEL MAPS, RECORDS OF SAID ORANGE COUNTY MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE CENTERLINE INTERSECTION OF RED HILL AVENUE AND EL CAMINO REAL AS SHOWN ON SAID PARCEL MAP; THENCE ALONG THE CENTERLINE OF SAID RED HILL AVENUE SOUTH 40°41'23" WEST,'21.342 METERS (70.02 FEET); THENCE LEAVING SAID CENTERLINE AT RIGHT ANGLES SOUTH 49°18'37" EAST, 16.572 METERS (54.37 FEET) TO A POINT ON THE NORTHWESTERLY BOUNDARY OF SAID PARCEL MAP 99-197 SAID POINT ALSO BEING A POINT ON THE SOUTHEASTERLY RIGHT-OF-WAY LINE OF RED HILL AVENUE AS ESTABLISHED BY D.EED RECORDED FEBRUARY 19, 1992 AS INSTRUMENT NO. 92-097801 OF OFFICIAL RECORDS OF SAID COUNTY; SAID POINT ALSO BEING THE POINT OF BEGINNING; THENCE ALONG THE NORTHWESTERLY AND SOUTHWESTERLY BOUNDARY OF SAID PARCEL MAP THE FOLLOWING COURSES; SOUTH 37°16'24" WEST 25.881 METERS (84.91 FEET), SOUTH 19020'02.' EAST, 14.219 METERS (46.65 FEET). SOUTH 45°38'27" EAST, 5.752 METERS (18'.87 FEET); THENCE LEAVING THE SOUTHWESTERLY BOUNDARY OF SAID PARCEL MAP NORTH 01 °58'12" WEST 21.891 METERS (71.82 FEET) TO A LINE PARALLEL WITH AND 21.336 METERS (70 FEET) SOUTHEASTERLY FROM THE CENTERLINE OF RED HILL AVENUE; THENCE ALONG SAID-PARALLEL LINE NORTH 40°41'23" EAST 17:209 METERS (56.46 FEET); THENCE LEAVING SAID PARALLEL LINE AT RIGHT ANGLES TO SAID CENTERLINE OF RED HILL AVENUE NORTH 49o18'37'. WEST 4.764 METERS (15.63 FEET)TO THE POINT OF BEGINNING. TOGETHERWITH THE EXTINGUISHMENT OF ALL EASEMENTS OF VEHICULAR ACCESS APPURTENANT TOTHE REMAINING LANDS IN AND TO RED HILL AVENUE OVER AND ACROSS THE · SOUTHWESTERLY 15.240' METERS (50.00 FEET) OF THAT CERTAIN COURSE HEREINABOVE DESCRIBED AS HAVING A LENGTH OF 17.209 METERS (56.46 FEET). THE ABOVE DESCRIBED AREA CONTAINS AN AREA OF 197.1 SQUARE METERS (2,122 SQUARE FEET), MORE OR LESS. SUBJECT TO ANY AND ALL EASEMENTS OR AGREEMENTS, IF ANY, OF RECORD AND/OR FACT. ALL AS SHOWN ON "EXHIBIT "B", ATTACHED HERETO AND. BY THIS REFERENCE MADE A PART HEREOF. DATE \\10.20.0.55\P rojects\astce~26.04\LEGALS\50002104_REV. DOC . 07/16/02 N45°38'27"W 5.752m (18. 919m ('58.79 2.168 m"-" ('"'~9. AP NO. 500-021-04 RIGHT OF WAY- .,<, .... N4.9o18,57,,w 4-.764m (~15.6 / / P.O.B. I I I I I I I VEH,CULAR ACCESS RIGHTS OF TUSTIN N19'19'57"W 14.219m (4-6.65') PER 92-097801 O.R. 21.536m (70') I I I 12.192m (4-0') S49°18'57"E 16.572m (54.37') ?CL E EL P.O.C. C^MI~O RE^~ PREPARED UNDER THE DIRECTION OF E A. SHAFFEE LICENSE EXPIRES 4644 DATE CITY OF TUSTIN RIGHT-OF-WAY "EXHIBIT B" APN # 500'021-04 J,N. 22~.0~..9/0a/02 FIl.~ . 50002~O4_REV. DW~ DRAWN BY: MDM CHECKED BY:. JRB SCALE 1:.300 DATE: 9/0'1 CONTAININO · 197.1 m"2 (2,122 SF) EXHIBIT B Escrow InstruCtions 1. Escrow City and Seller agree to open escrow in accordance with Section 2 of this Agreement. This Agreement constitutes the joint escrow instructions of City and Seller, and Escrow Agent to whom these escrow instrUctions are delivered is hereby empowered to act under this Agreement. The parties hereto agree to do all acts necessary to close this escrow in the shortest possible time. As soon as possible after open of escrow, Seller will execute the Grant Deed attached to this Agreement as Exhibit "C" and deposit the executed deed with Escrow Agent on City's behalf. City agrees to deposit the purchase price upon demand of Escrow Agent. City and Seller agree to deposit with Escrow Agent any additional instruments as may be necessary to complete this transaction. Insurance policies for fire or casualty are not to be transferred, and Seller will cancel Seller's own policies after close of escrow. All funds received in this escrow shall be deposited with other escrow funds in a general escrow account(s) and may be transferred to any other such escrow trust account in any State or National Bank doing business in the State of California. All disbursements shall be made by check from such account. w Escrow Agent is Authorized and is Instructed to Comply with the Following Tax Adjustment Procedure: A. Pay and charge Seller for any unpaid delinquent taxes and/or penalties and interest thereon, and for any delinquent or non-delinquent assessments or bonds against the Property. B. In the event this escrow closes between July '1 and November 1, and the current tax information is not available from title insurer, Escrow Agent is instructed to withhold from Seller's proceeds an amount equal to 120% of the prorated amount due based upon the previous fiscal year's second half tax bill. At such time that the tax information is available,. Escrow Agent shall make a check payable to the County Tax Collector for Seller's prorated portion of taxes and forward same to the City and shall refund any difference to the Seller. In the event the amount withheld is not sufficient to pay Seller's 9 09/27~02 N:\WP\DOC\ prorated portion of taxes due, the Seller herein agrees to immediately pay the difference. In the event said tax information is available, Seller's taxes shall be prorated in accordance with paragraph "C" below. C. From the date that tax information is available, as per paragraph "B," up to and including June 30th, Seller's current taxes, if unpaid, shall be prorated to date of close of escrow on the basis of a 365 day year in accordance with Tax Collector's proration requirements, together with penalties and interest, if said current taxes are unpaid after December 10 and/or April 10.. At close of escrow, check payable to the County Tax Collector for Seller's pro-rata portion of taxes shall be forwarded to City with closing statement. Do Any taxes, which have been paid by Seller, prior to opening of this escrow, shall not be prorated between City and Seller, but Seller shall have the sole right, after close of escrow, to apply to the County Tax Collector of said county for refund. This refund would apply to the period after City's acquisition, pursuant to Revenue and Taxation Code Section 5096.7. 3. Escrow Agent is Authorized to and Shall: A. Pay and charge Seller for any amount necessary to place title in the condition necessary to satisfy this Agreement. S. Pay and charge City for escrow fees and closing costs payable under this Agreement. C. Disburse funds and deliver deed when conditions of this escrow have been fulfilled by City and Seller. The Term "close of escrow", if and where written in these instructions, shall mean the date necessary instruments of conveyance are recorded in the office of the County Recorder. Recordation of instruments delivered through this escrow is authorized if necessary or proper in the issuance of said policy of title insurance. All time limits within which any matter herein specified is to be performed may be extended by mutual agreement of the parties hereto. Any amendment of, or supplement' to, any instructions must be in writing. 1 0 09/27/02 N:\WP\DOC\ w Time is of the Essence in these Instructions and Escrow is to 'Close as Soon as Possible If (except for deposit of money by City, which shall be made by City upon demand of Escrow Agent before close of escrow) this escrow is not in condition to close within thirty (30) days from date of these instructions, any party who then shall have fully complied with these instructions may, in writing, demand the return of their money or property; but if none have complied, no demand for return thereof shall be recognized until five (5) days after Escrow Agent shall have mailed copies of such demand to all other parties at the respective addresses shown in these escrow instructions, and if any objections are raised within said five (5) day period, Escrow Agent is authorized to hold all papers and documents until instructed by a court of competent jurisdiction or mutual instructions. If no demands are made, proceed with closing of this escrow as soon as possible. 5. Permission to Enter on Premises Seller hereby grants to City, or its authorized agents, permission .to enter upon the Property at all reasonable times prior to close of escrow for the purpose of making necessary or appropriate inspections. 6. Loss or Damage to Improvements Loss or damage to the real property or any improvements thereon, by fire or other casualty, occurring prior to the recordation of the Deed shall be at the riSk of Seller. In the event that loss or damage to the real property or any improvements thereon, by fire or other casualty, occurs prior to the recordation of the Deed, City may elect to require that the Seller pay to City the proceeds of any policy of insurance which may become payable to Seller by reason thereof, or to permit such proceeds to be used for the restoration of the damage done, or to reduce the total price by an amount equal to the diminution in value of said Property by reason of such loss or damage or the amount of insurance payable to Seller; whichever is greater. 7. Closing Statement Seller instructs Escrow Agent to release a copy of Seller's statement to City; the purpose is to ascertain if any reimbursements are due Seller. N:\WP\DOC\ 11 09/27/02 EXHIBIT C Form of Grant Deed 09/27~02 N:\WP\DOC\ 12 ~Order No. 9931654 Escrow No. Loan No. WHEN RECORDED MAIL TO: CITY OF TUSTIN 300 CENTENNIAL WAY TUSTIN, CALIFORNIA 92780 ATTN' PUBLIC WORKS DOCUMENTARY TRANSFER TAX FREE RECORDING REQUESTED Essential to acquisition by the City of Tustin, CA See Govt. Code 6103) SPACE ABOVE THIS LINE FOR RECORDER'S USE Signature of Declarant or Agent determining tax - Firm Name GRANT DEED FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, BILLY F. MATHIS, INC., DBA AL'S WOODCRAFT hereby GRANT(S) to the CITY OF TUSTIN, A MUNICIPAL CORPORATION the real property in the City of TUSTIN, County of ORANGE, State of California, described as SEE EXHIBIT .... a" ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEREOF Dated BY: } STATE OF CALIFORNIA } ss. COUNTY OF } On before me, personally appeared BILLY F. MATHIS, INC. DBA AL'S WOODCRAFT personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the'instrument. WITNESS my hand and official seal. Signature MAIL TAX STATEMENTS TO: (This area for official notarial seal) N:\WP\DOC\ 1 3 CITY OF TUSTIN PUBLIC WORKS DEPARTMENT 300 CENTENNIAL WAY TUSTIN, CA 92780 FAX (714) 734-8991 Letter of Transmittal i SEP ,.,-1 0 ;:'.;.'..2 To: Christine Shingleton Date: September30, 2002 From' Dana Kasdan ~ Project No. CIP No. 7133 File No. Environmental Insurance Policy for the Red Hill Avenue Widening Re: Project at the I-5 Freeway WE ARE FORWARDING: ~ STREET IMPROVEMENT PLANS ~ F--] SIGNAL/STRIPING PLANS ~-~ ~ SPECIFICATIONS F'~ REMARKS: FOR YOUR INFORMATION FOR YOUR FILES PER YOUR REQUEST FOR YOUR APPROVAL FOR PERMIT Attached is the draft letter responding to the additional information request from XL Environmental for the above referenced subject. Mr. Rich Hyland of Complete Insurance, Inc. was contacted regarding XL Environmental's request and his suggestions were incorporated in the letter of response. If the letter is acceptable we will final the letter, include the attachments and forward to Mr. Hyland for transmittal to XL Environmental. S:\ClP Projects - Active\7133 - Red Hill Widen ECR-NissonV~quisition\Environmental Insurance CS.doc 24. 2002 Ii'ItAM COMPLETE INSURANCE(949)263-0906 NO. 6115 P. 2 ~OMPLETE IN~URAlXICI~ INCOI~ORATED P~emium Indication Notes: This indication is intended to be preliminary, subject to zece/pt of review of further engineexing data. This premium indication is based on the Pankey axed Makena parcels being sold "as is". Thc property will not be acquired by the City ofTusdn r.l~°ugh "eminent domain" right.' · _An Easement agreement does not extst as respects the acquisition of these Covezed l,ocations. · This cove~:age is based on the Wendy's Kestauzant and Sta~:bucks Coffee Shop not being additional insm:eds. · It is XL Environmental's understanding that the. re is no indemnification ag~ements between current ov~ets of Wendy's Restaurant and the Stazbucks Coffee Shop and the prior ~soline station =etailers on these same sites, separate from the pazcels noted above. No~:, is the=e, will thexe, be any indemnification between the Wendy's Restau.tant a~d the Sta~:bucks Coffee Shop and the Cit7 of Tustin foz pm:chase of these pazcels of land for the Redhill Avenue Road Widening ?~oject. · Covera~ is intended to apply only to pollution conditions including on-site and off-site =emediation expense, thkd pa~:ty on-site and off-site bodily injuxy and property damage. · Covexage is not intended for known pollution conditions o~: remediafion of fuel constituents at the covered locations. · Cove=age is not intended for p~:c-existing pollution conchtions fzom the Wendy's Restaurant, the Starbucks Coffee Shop, or its prior owners. · Coverage does not include ongoing operations perfon'ned eithe.t by the Wendy's Restaurant, the Sta=bucks Coffee Shop. · Coverage is not intended to cove= any pollution conclltions arising f~om the operations performed by the Contzacm~ duxing zhe Construction ?zoject, which shall include thc actual Redhill Avenue road widening. · A retroactive date of policy inception will apply fo= this pzoject. - The final quotation will be valid fo~ thirty (30) days at which time XL Environmental has the right to re-evaluate the p~:oposed program and premiums. · A completed ?AKLL application would be needed pfioz to binding. To develop a more formal quotation, XL Environmental would need the following ~'~ information: Signed Final Copy of the Pu.tchase A. g=e~ment and Gzant Deed executed by the Pzoperty Owncxs(s) and the City of'~fusfin, o~ as feasible the Draft ?uzchase Agreement. Written documentation that there ate no prior indemnificafio= ag~:eements between the owners of the Wendy's Kesmunmt and the Stazbucks Coffee Shop and the prior: ~:espective ~:etail gasoline station ownezs. · Legal descriptions of Parcels comprising the Covezed Locations. · Final Indemnification Agzeements ~e2atcd to the "southern paxcels". · Written documentation that the City of Tusfin has not waived any of its sub~:ogadon tights against any thizd patties. · Documentation that the City of Tusfin has waived its fights of sub~:ogation against the ownez of the Wendy's and Starbucks. · Confizmafion of the timefzame of the Construction P~:ojec~. This insunme~ p~opolal sad/at cnvcn~ summsv/docs not alto=, extend o£ amend the policy ot pnlleies as issued. 'l~c insur~nc~ is ~ubjuct to actual policy eondition~ ~nd SEP-24-2002 &1:32 949 263 0906 P.02 CITY OF TUSTIN PUBLIC WORKS DEPARTMENT 300 CENTENNIAL WAY TUSTIN, CA 92780 FAX (714) 734-8991 Letter of Transmittal To: Lois Jeffrey Date: September 25, 2002 From: Dana Kasdan ~ Project No. CIP No. 7133 File No. Re: Project at the I-5 Freeway WE ARE FORWARDING: Environmental Insurance Policy for the Red Hill Avenue Widening ~ STREET IMPROVEMENT PLANS ~ ~ SIGNAL/STRIPING PLANS [--~ r-"] SPECIFICATIONS ~ ~--~ RETURNED FOR CORRECTIONS F--1 [~ FOR YOUR REVIEW & COMMENT ~ REMARKS: FOR YOUR INFORMATION FOR YOUR FILES PER YOUR REQUEST FOR YOUR APPROVAL FOR PERMIT Attached are three pages from the Insurance Proposal from Complete Insurance, Inc. for the above referenced project. Christine Shingleton has requested that you review and comment on the three pages, especially on the Premium Indication Notes on the last page. If you require any additional information or have any questions please call me at 714.573.3171. S:\CIP Projects - Active\7133 - Red Hill Widen ECR-Nisson~quisition\Environmental Insurance LJ.doc ~OMPLETE INSURANCE INCORPORATED THE CITY OF TUSTIN POLLUTION AND REMEDIATION LEGAL LIABILITY POLICY CLAIMS MADE INSURER: BEST RATING: POLICY TERM: INDIAN HARBOR INSURANCE COMPANY A+XV To BE DETERMINED COVERAGE A - POLLUTION LEGAL LIABILITY (PI.L) - THIRD PARTY LEGAL LIABILITY CLAIMS INCLUDING ON - SITE AND OFF-SITE BODILY INJURY AND PROPERTY DAMAGE. COVERAGE B - REMEDIATION LEGAL LIABILITY - REMEDIATION EXPENSE FROM POLLUTION CONDITIONS ON~ AT~ UNDER OR EMANATING FROM THE COVERED LOCATIONS. COVERAGE C - LEGAL DEFENSE EXPENSE - LEGAL DEFENSE EXPENSE ARISING FROM ON-SITE AND OFF-SITE LOSS OR IN CONNECTION WITH REMEDIATION EXPENSE. COVERAGE D - CONTINGENT TRANSPORTATION - PAYS FOR LOSS OR REMEDIATION EXPENSE AS A RESULT OF A CLAIM FROM POLLUTION CONDITIONS ,ARISING FROM THE INSURED'S PRODUCT/WASTE DURING THE COURSE OF TRANSPORTATION. THE POLICY RESPONDS TO LOSS~ REMEDIATION EXPENSE OR LEGAL DEFENSE EXPENSE IN EXCESS OF THE RETENTION AMOUNT. This insurance proposal md/or coverage summary does not alter, extend or amend the policy or policies as issued. The insurance is subject to actual policy conclifions md exclusions. ~OMPLETE INSURANCE INCORPORATED POLICY FORM: POLLUTION AND REMEDIATION LEGAL LIABILITY COVERED LOCATIONS: 1) PORTION OF PARCEL #13931 (M. AKENA PROPERTY, WHERE CONSTRUCTION IS CURRENTLY UNDERWAY FOR A STARBUCKS COFFEE SHOP) AND 2) PORTION OF PARCEL #13922 (PANKE¥ PROPERTY, WHERETHERE IS CURRENTLY A WENDY'S RESTAURANT)' LIMITS OF LIABILITY: OPTION A)$5,000,000 PER OCCURRENCE AND $5,000,000 IN THE AGGREGATE. OPTION B) $ $10,000,000 PER OCCURRENCE AND $10,000,000 IN THE AGGREGATE SELF INSURED RETENTION: $100,000 PER OCCURRENCE POLICY TERM OPTION- FIVE ($) YEARS OPTION - TEN (10) YEARS 1. 2. Limit of Liability- Each Loss, $5,000,000 $10,000,000 Remediation Expense or Legal Defense Expense L'ma/t of Liability - total All Losses Remediation Expenses or Legal Defense Expenses · Retention $100,000/Occ $100,000/Occ -Policy Premium - 5 Years $81,400' $114,136' Policy Premium - 10 Years' $146,692* $205,686* * Plus Applicable Taxes and Fees ~ 3.25% PREMIUMS SB This insurance proposal and/or coverage summary does not alter, extend or amend the policy or policies as, issued. The insurance is subject to actual policy conditions and exclusions. ~OMPLETE INSURANCE INCORPORATED Premium Indication Notes: · ThiS indication is intended to be preliminary, subject to receipt of review of further engineering data. · This premium indication is based on the Pankey and Makena parcels being sold "as is". · The property will not be acquired by the City of Tusfin through "eminent domain" fight. An Easement agreement does not exist as respects the acquisition of these Covered Locations. · This coverage is based on the Wendy's Restaurant and Smrbucks Coffee Shop not being additional insureds. · It is XL Environmental's understanding that there is no indemnification agreements between current owners of Wendy's Restaurant and the Starbucks Coffee Shop and the prior gasoline station retailers on these same sites, separate from the parcels noted above. Nor, is there, or will there, be any indemnification between the Wendy's Restaurant and the Starbucks Coffee Shop and the City of Tustin for purchase of these parcels of land 'for the Redhill Avenue Road Widening Project. · Coverage is intended to apply only to pollution conditions including on-site and off-site remediation expense, third party on-site and off-site bodily injury and property damage. · Coverage is not intended for known pollution conditions or remediation of fuel constituents at the covered locations. · Coverage is not intended for pre-existing pollution conditions from the Wendy's Restaurant, the Starbucks Coffee Shop, or its prior owners. · Coverage does not include ongoing operations performed either by the Wendy's Restaurant, the Starbucks Coffee Shop. · Coverage is not intended to cover any pollution conditions arising from the operations performed by the Contractors during the Construction Project, which shall include the actual Redhill Avenue road widening. · A retroactive date of policy inception will apply for this project. · The final quotation will be valid for thirty (30) days at which time XL Environmental has the right to re-evaluate the proposed program and premiums. · A completed PARLL application would be needed prior to binding. To develop a more formal quotation, XL Environmental would need the following information: · Signed Final Copy of the Purchase Agreement and Grant Deed executed by the Property Owners(s) and the City of Tustin, or as feasible the Draft Purchase Agreement. · Written documentation that there are no prior indemnification agreements between the owners of the Wendy's Restaurant and the Starbucks Coffee Shop and the prior, respective retail gasoline station owners. · Legal descriptions of Parcels comprising the Covered Locations. · Final Indemnification Agreements related to the "southern parcels". · Written documentation that the City of Tustin has not waived any of its subrogation rights against any third parties. · Documentation that the City of Tustin has waived its fights of subrogation against the owner of the Wendy's and Starbucks. · Confim'~ation of the timeframe of the Construction Project. SB This insurance proposal and/or coverage summary does not alter, extend or amend the policy or policies as issued. The insurance is subject to actual policy conditions and exclusions. INSURANCE XI. Environmental, Inc, 520 Eeglevlew Bouleverd PO Box 636 Extort, PA 19341-0636 USA Tel: 800-327-1414 610-458-0570 Fax: 610-458.8667 www.xlenvironmental.com INDUSTRIAL & COMMERCIAL/ENVIRONMENTAL FACILITIES APPLICATION APPLICANT INSTRUCTIONS: 1. Answer all questions; leave no blank spaces. 2. If any questions do not apply, or the answer is ..o, please indicate. 3. If multiple locations, answer the questions that pertain to any of the properties and attach a property schedule that lists location, description . and use. Please attach the following information, if available: · Past five (5) years loss runs history. · Past two (2) years audited financial statements. ICEF1A (5/02) Page 1 SERIES 2000 INSURANCE Xi. Environmental, Inc. 52~0 Eaglevlew Boulevard PO Box 636 Exton, PA 19341-0636 USA Tel: 800-327-1414 610-458-0570 Fax: 610-4.58-8667 www.xlenvironmental.com INDUSTRIAL & COMMERCIAL I ENVIRONMENTAL FACILITIES APPLICATION This Application Is For An "Occurrence" Or A "Claims-Made and Reported" General Uability Policy And/Or A "Claims-Made and Reported" Pollution and Remediation Legal Liability Policy Or A "Claims-Made and Reported" Pollution Legal Liability Policy-PLEASE READ IT CAREFULLY. 1. APPLICANT: Address: Contact: Telephone: Federal Employer Identification Number: 2. FIRM IS: ["'] Partnership I---] Corporation Public or Private: Does the applicant have any facilities in Mexico, the United Kingdom or Europe? If yes, does the applicant desire information on coverages available in those locations? Title: Fax: EPA Identification Number: Joint Venture [--~ Other I-"] Yes !'-'] Yes I-'] No I-'1 No 3. REVENUES: Estimated (Ensuing Year): 19 $ Previous Year: 19 $ . PROPERTY DESCRIPTION: Name: Address: Total acreage: . WHAT STRUCTURES ARE CURRENTLY ON THIS PROPERTY (I.E. TYPE OF BUILDING, SQUARE FOOTAGE, AGE, ETC.)? 6. LIST THE CURRENT OCCUPANTS AND THE CURRENT OPERATIONS ON THIS PROPER'FY: ICEF1A (5/02) Page 2 SERIES 2000 7. HOW LONG HAS .PRESENT OWNER CONTROLLED OR OWNED THIS PROPERTY? 8. WHAT WERE THE PAST USES OF THIS PROPERTY? RECORD: a. Have you during the last five (5) years been cited and/or prosecuted for contravention or violation of any standard or law relating to the any release from the location(s) of any substance into sewers, rivers, seas, air or onto land? I-'-I Yes I--] No If yes, give details: Please describe any pollution claims during the last five (5) years (if none, please so state): At the time of signing this Application, are you aware of any circumstances which may reasonably be expected to give rise to a claim under the pollution liability or general liability policy? I-'1 Yes I-'1 No If yes, give details: do Has any insurance carrier canceled or nonrenewed pollution liability or general liability coverage? I-'! Yes I-'! No If yes, give details: 10. COVERAGE REQUESTED: Policy Term: 1 year 2 years 3 years Limits of Liability: $ Per Loss, Remediation Expense or Legal Defense Expense $ Aggregate Prospective Additional Insured (if any): 11. PROPERTY SETTING: (Attach Plot Plan) a. Provide a description of adjacent land use (North, East, South and West): b. Identify nearby surface water bodies (i.e. streams, lakes, wetlands): c. Descdbe any protected environments in the area (parks, wildlife reserves, etc.): d. Identify any surface or groundwater uses in the area (drinking wells, etc.): e. Is public water and sewer used on site? I--i Yes i-'] No If no, identify what is used in its place: ICEF1A (5/02) Page 3 SERIES 2000 12. ON-SITE MATERIALS: a. LIST: A: RAW MATERIALS USED AT LOCATION: B: PROCESS MATERIALS USED AT LOCATION: (Plating agents, degreasers, cleaning solvents, etc.) b. Describe any change in process during the last five (5) years that has altered (lessened or increased) the risk of environmental liability: 13. TAN~< STORAGE: Does this p~'o.p, ert~ have an/above~rouncl or unae~rouna s~ora te tanKs¥ L_I '~s I_J mu Example: Diesel Bare Steel 5T0(X) gal 5 yrs AST 110% Volume - Poured Concrete ...... Explain any tank inventory control and/or testing methods used (Attach latest tank test results): 14. DOES THIS PROPERTY GENERATE, HANDLE, STORE OR DISPOSE OF ANY HAZARDOUS WASTE OR MATERIALS? I'-] Yes I-'1 No a. Describe the on-site storage practices (i.e. descdbe storage areas, secondary containment, etc.): If TSD Facility: Permitted Acreage Filled Acreage Closed Acreage b. Describe the dis 3osal methods used: Co Identify any past storage or disposal practices at the site, including any inactive disposal areas: d. Describe the waste treatment practices used: ICEF1A (5/02) Page 4 SERIES 2000 e. Identify effluent discharge points for wastewater and stormwater (Attach discharge monitoring results): f. Identify types of air emissions (i.e. toxic gases, vapors, dust, etc.) and volume per year: g. Describe methods and equipment used for collection and treatment of polluting air emissions: h. Describe any groundwater monitoring activities at the location(s) (Attach monitoring results for'the past year): 15. ARE THERE ANY STATUTES, STANDARDS, OR OTHER CITY, STATE AND/OR FEDERAL REGULATIONS RELATING TO THE PROTECTION OF THE ENVIRONMENT WHICH APPLY TO ANY LOCATION WITH WHICH YOU CANNOT AT PRESENT COMPLY? ['-] Yes I"'] No If yes, please explain: 16. HAVE ANY PRIOR ENVIRONMENTAL AUDITS OR STUDIES BEEN DONE FOR THIS PROPERTY? (Attach copies) !--1 Yes !--] No Provide full details as to any recommendations made and the status of compliance: 17. DETAIL ANY FIRE DETECTION/SUPPRESSION SYSTEMS: 18. DESCRIBE ANY OF YOUR PRODUCTS THAT REQUIRE SEGREGATED STORAGE: 19. ARE YOUR EMPLOYEES TRAINED IN FIRE/SPILL RESPONSE AND THE USE OF PERSONAL PROTECTIVE EQUIPMENT? r-] Yes I-'] No 20. Do you maintain an employee safety manual ? (Attach copies) I--! Yes I--i No 21. PLEASE PROVIDE THE APPROPRIATE ACORD APPLICATIONS FOR THE BELOW REFERENCED LINES: SERIES 2000 ICEF1A (5/02) Page 5 22. DESCRIBE YOUR PRODUCTS AND/OR OPERATIONS: 23. NAME ALL PRODUCTS WHICH YOU HAVE CEASED TO HANDLE DURING THE PAST FIVE (5) YEARS: 24. PRODUCTION I QUALITY CONTROL: a Do others manufacture, assemble, package or install products under your name/label? b Do you manufacture, assemble, package or install products under another's name/label? c. Do your employees perform any installation services? d. Are all products labeled in compliance with all regulations and with appropriate warnings? e. Have any of your products been subject to inquiry by a governmental agency? f. Have you been involved in a recall of any products you have sold? g. Do you maintain complete inventory records on shipments and deliveries? If yes, for how long? I'-] Yes I-'1 Yes !--] Yes r-] Yes !'-] Yes I-'] Yes !--'1 Yes r--] No !--i No r-I No I-'1 No r-I No I-i No !-] No Please detail any yes responses: 25. DO YOU HAVE THE FOLLOWING WRITTEN QUALITY CONTROL PROCEDURES? (If yes, attach copies) Raw Materials I--] Yes I-'] No Work in Process !-'] Yes r-] No Finished Product r'-] Yes [-! No ICEFIA (5/02) Page 6 SERIES 2000 FRAUD WARNINGS NOTICE TO ARKANSAS APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment for a loss or beneffi or knowingly presents false information in an application for insurance is guilty of a cdme and may be subject to fines and confinement in pdson. NOTICE TO CALIFORNIA APPLICANTS: Pursuant to California Insurance Law, Sec. 1623, this application for insurance is being submitted by an insurance broker who is acting on behalf of an insured. NOTICE TO COLORADO APPLICANTS: It is unlawful to knowingly provide false, incomplete, or misleading facts or information to an insurance company for the purpose of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines, denial of insurance, and civil damages. Any insurance company or agent of an insurance company who knowingly provides false, incomplete, or misleading facts or information to a policy holder or claimant for the purpose of defrauding or attempting to defraud the policy holder or claimant with regard to a settlement or award payable from insurance proceeds shall be reported to the Colorado Division of Insurance within the Department of Regulatory Agencies. NOTICE TO D.C. APPLICANTS: WARNING: It is a crime to provide false or misleading information to an insurer for the purpose of defrauding the insurer or any other person. Penalties include imprisonment and/or fines. In addition, an insurer may deny insurance benefits if false information materially related to a claim was provided by the applicant. NOTICE TO FLORIDA APPLICANTS: Any person who knowingly and with intent to injure, defraud, or deceive any insurance company files a statement of claim or an application containing any false, incomplete, or misleading information is guilty of a felony of the third degree. NOTICE TO HAWAII APPLICANTS: For your protection, Hawaii law requires you to be informed that presenting a fraudulent claim for payment of a loss or benefit is a crime punishable by fines or imprisonment or both. NOTICE TO KENTUCKY APPLICANTS: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance containing any materially false information or conceals for the purpose of misleading, information concerning any fact matedal thereto commits a fraudulent insurance act, which is a cdme. NOTICE TO LOUISIANA APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false information in an application for insurance is guilty of a cdme and may be subject to fines and confinement in pdson. NOTICE TO MAINE APPLICANTS: It is a cdme to knowingly provide false, incomplete or misleading information to an insurance company for purposes of defrauding the company. Penalties may include imprisonment, fines or a denial of insurance benefits. NOTICE TO MARYLAND APPLICANTS: Any person who, with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement may be guilty of insurance fraud. NOTICE TO MINNESOTA APPLICANTS: A person who submits an application or files a claim with intent to defraud or helps commit a fraud against an insurer is guilty of a crime. NOTICE TO NEW JERSEY APPLICANTS: Any person who includes any false or misleading information on an application for an insurance policy is subject to criminal and civil penalties. NOTICE TO NEW MEXICO APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to civil fines and criminal penalties. NOTICE TO NEW YORK APPLICANTS: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact matedal thereto commits a fraudulent insurance act, which is a cdme, and shall be also subject to a civil penalty not to exceed five thousand dollars and the stated value of the claim for each such violation. ICEF1A (5/02) Page 7 SERIES 2000 NOTICE TO OHIO APPLICANTS: Any person who, with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement is guilty of insurance fraud. NOTICE TO OKLAHOMA APPLICANTS: WARNING: Any person who knowingly, and with intent to injure, defraud or deceive any insurer, makes any claim for the proceeds of an insurance policy containing any false, incomplete or misleading information is guilty of a felony. NOTICE TO OREGON APPLICANTS: Any person who makes an intentional misstatement that is matedal to the dsk may be found guilty of insurance fraud by a court of law. NOTICE TO PENNSYLVANIA APPLICANTS: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact matedal thereto commits a fraudulent insurance act, which is a cdme and subjects such person to criminal and civil penalties. NOTICE TO TENNESSEE APPLICANTS: It is a cdme to knowingly provide false, incomplete or misleading information to an insurance company for the purpoSe of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits. NOTICE TO TEXAS APPLICANTS: Any person who makes an intentional misstatement that is matedal to the dsk may be found guilty of insurance fraud by a court of law. NOTICE TO VIRGINIA APPLICANTS: It is a cdme to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance beneffis. . NOTICE TO ALL OTHER STATE APPLICANTS: Any person who knowingly includes any false or misleading information on an application for an insurance policy is subject to cdminal and civil penalties. THE APPLICANT REPRESENTS THAT THE ABOVE STATEMENTS AND FACTS ARE TRUE AND THAT NO MATERIAL FACTS HAVE BEEN SUPPRESSED OR MISSTATED. COMPLETION OF THIS FORM DOES NOT BIND COVERAGE. APPLICANT'S ACCEPTANCE OF THE COMPANY'S QUOTATION IS REQUIRED PRIOR TO BINDING COVERAGE AND POLICY ISSUANCE. ALL WRITTEN STATEMENTS AND MATERIALS FURNISHED TO THE COMPANY IN CONJUNCTION WITH THIS APPLICATION ARE HEREBY INCORPORATED BY REFERENCE INTO THIS APPLICATION AND MADE A PART HEREOF. Applicant: Title: Applicant's Signature: Date: Agent/Broker Name: (Fraud Language Revised 12/0'1) ICEF1A (5/02) Page 8 SERIES 2000 INSURANCE XI. Enviro~me~tal, Inc. 520 Eaglevlew Boulevard PO Box 636 Exton, PA 19341-0636 USA Tel: 800-327-1414 610-458-0570 Fax: 610-458-8667 www.xlenvironmental.corn INDUSTRIAL & COMMERCIAL FACILITIES QUESTIONNAIRE* POLLUTION & REMEDIATION LEGAL LIABILITY (PARLL) Name: Covered Location Address: Estimated Revenues/Rents for upcoming year: Age of Existing Buildings: Building Square Footage: What is the property currently used for?. Is the property: r-]Owned r-]Leased Acreage: NOTE: For multiple locations, attach property listing including: names, addresses, property use and size (i.e., acreage, square footage) What were the previous uses of this property? Does this property have any aboveground storage tanks? r-lYes r-INo Does this property have any underground storage tanks? I-lYes r--INo If yes, do the underground storage tanks meet the 1998 EPA Standards? r-lYes I-]No Has this property had previous underground storage tanks? r-]Yes I-]No Provide details of any known pollution conditions or claims: Have any environmental audits or studies been completed in the past five years for this property? r-lYes r-]No If yes, provide name of consultant, type of report and date of report: *Please note that a completed Master Pollution Application will be required to bind coverage. ICFQUES (10/99) Page 1 SERIES 2000 FRAUD WARNINGS NOTICE TO ARKANSAS APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment for a loss or beneffi or knowingly presents false information in an application for insurance is guilty of a cdme and may be subject to fines and confinement in pdson. NOTICE TO CALIFORNIA APPLICANTS: Pursuant to California Insurance Law, Sec. 1623, this application for insurance is being submitted by an insurance broker who is acting on behalf of an insured. NOTICE TO COLORADO APPLICANTS: It is unlawful to knowingly provide false, incomplete, or misleading facts or information to an insurance company for the purpose of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines, denial of insurance, and civil damages. Any insurance company or agent of an insurance company who knowingly provides false, incomplete, or misleading facts or information to a policy holder or claimant for the purpose of defrauding or attempting to defraud the policy holder or claimant with regard to a settlement or award payable from insurance proceeds shall be reported to the Colorado Division of Insurance within the Department of Regulatory Agencies. NOTICE TO D.C. APPLICANTS: WARNING: It is a crime to provide false or misleading information to an insurer for the purpose of defrauding the insurer or any other person. Penalties include imprisonment and/or fines. In addition, an insurer may deny insurance beneffis if false information materially related to a claim was provided by the applicant. NOTICE TO FLORIDA APPLICANTS: Any person who knowingly and with intent to injure, defraud, or deceive any insurance company files a statement of claim or an application containing any false, incomplete, or misleading information is guilty of a felony of the third degree. NOTICE TO HAWAII APPLICANTS: For your protection, Hawaii law requires you to be informed that presenting a fraudulent claim for payment of a loss or benefit is a crime punishable by fines or imprisonment or both. NOTICE TO KENTUCKY APPLICANTS: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a cdme. NOTICE TO LOUISIANA APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benef~ or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in pdson. NOTICE TO MAINE APPLICANTS: It is a cdme to knowingly provide false, incomplete or misleading information to an insurance company for purposes of defrauding the company. Penalties may include imprisonment, fines or a denial of insurance beneffis. NOTICE TO MARYLAND APPLICANTS: Any person who, with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement may be guilty of insurance fraud. NOTICE TO MINNESOTA APPLICANTS: A person who submits an application or files a claim with intent to defraud or helps commit a fraud against an insurer is guilty of a crime. NOTICE TO NEW JERSEY APPLICANTS: Any person who includes any false or misleading information on an application for an insurance policy is subject to criminal and civil penalties. NOTICE TO NEW MEXICO APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment of a loss or beneffi or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to civil fines and cdminal penalties. NOTICE TO NEW YORK APPLICANTS: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a cdme, and shall be also subject to a civil penalty not to exceed five thousand dollars and the stated value of the claim for each such violation. ICFQUES (10/99) Page 2 SERIES 2000 NOTICE TO OHIO APPLICANTS: Any person who, with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement is guilty of insurance fraud. NOTICE TO OKLAHOMA APPLICANTS: WARNING: Any person who knowingly, and with intent to injure, defraud or deceive any insurer, makes any claim for the proceeds of an insurance policy containing any false, incomplete or misleading information is guilty of a felony. NOTICE TO OREGON APPLICANTS: Any person who makes an intentional misstatement that is matedal to the dsk may be found guilty of insurance fraud by a court of law. NOTICE TO PENNSYLVANIA APPLICANTS: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact matedal thereto commits a fraudulent insurance act, which is a cdme and subjects sUch person to cdminal and civil penalties. NOTICE TO TENNESSEE APPLICANTS: It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance benef~s. NOTICE TO TEXAS APPLICANTS: Any person who makes an intentional misstatement that is matedal to the dsk may be found guilty of insurance fraud by a court of law. NOTICE TO VIRGINIA APPLICANTS: It is a cdme to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits. NOTICE TO ALL OTHER STATE APPLICANTS: Any person who knowingly includes any false or misleading information on an application for an insurance policy is subject to cdminal and civil penalties. THE APPLICANT REPRESENTS THAT THE ABOVE STATEMENTS AND FACTS ARE TRUE AND THAT NO MATERIAL FACTS HAVE BEEN SUPPRESSED OR MISSTATED. COMPLETION OF THIS FORM DOES NOT BIND COVERAGE. APPLICANT'S ACCEPTANCE OF THE COMPANY'S QUOTATION IS REQUIRED PRIOR TO BINDING COVERAGE AND POLICY ISSUANCE. ALL WRITTEN STATEMENTS AND MATERIALS FURNISHED TO THE COMPANY IN CONJUNCTION WITH THIS APPLICATION ARE HEREBY INCORPORATED BY REFERENCE INTO THIS APPLICATION AND MADE A PART HEREOF. Applicant: Title: Applicant's Signature: Date: Agent/Broker Name: (Fraud Language Revised 12/01) ICFQUES (10/99) Page 3 SERIES 2000 INSURANCE XL Environmental, Inc. 520 Eaglevlew Boulevard PO Box 636 Exton, PA 19341-0636 USA Tel: 800-327-1414 610-458-0570 .Fax: 610-458-8667 www.xlenvironmental.com INDUSTRIAL & COMMERCIAL/ENVIRONMENTAL FACILITIES APPLICATION APPLICANT INSTRUCTIONS: 1. Answer all questions; leave no blank spaces. 2. If any questions do not apply, or the answer is "no", please indicate. 3. If multiple locations, answer the questions that pertain to any of the properties and attach a property schedule that lists location, description , and use. Please attach the following information, if available: · Past five (5) years loss runs history. · Past two (2) years audited financial statements. 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Nault Director of Finance CITy OF TUSTIN TABLE OF CONTENTS June 30, 2000 INTRODUCTORY SECTION: Table of Contents Elected and Administrative Officials Letter of Transmittal Organization Chart GFOA Certificate of Achievement for Excellence in Financial Reporting CSMFO Certificate of Award for Outstanding Financial Reporting FINANCIAL SECTION: Independent Auditors' Report Combined Balance Sheet - All Fund Types and Account Groups Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental and Fiduciary Fund Types Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General and Special Revenue Fund Types Comparative Statement of Revenues, Expenses and Changes in Retained Earnings - Proprietary Fund Type- Water Enterprise Fund Comparative Statement of Cash Flows - Proprietary Fund Type - Water Enterprise Fund Notes to Financial Statements SUPPLEMENTARY INFORMATION - COMBINING INDIVIDUAL FUND AND ACCOUNT GROUP FINANCIAL STATEMENTS AND SCHEDULES: General Fund: Comparative Balance Sheets Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Special Revenue Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Page Number i iv V xxi xxii 3 4-5 6-7 8-9 10 11 12- 38 39 41 42 43 45 46 - 47 48 -49 -i- CITY OF TUSTIN TABLE OF CONTENTS (CONTiNUED) June 30, 2000 SUPPLEMENTARY INFORMATION - COMBINING INDIVIDUAL FUND AND ACCOUNT GROUP FINANCIAL STATEMENTS AND SCHEDULES: (CONTINUED): Special Revenue Funds (Continued): Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Gas Tax Fund Park Acquisition and Development Fund Asset Forfeiture Fund Air Quality Fund Marine Base Closure Fund Measure M Fund Supplemental Law Enforcement Debt Service Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Capital Projects Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Water Enterprise Fund: Comparative Balance Sheets Trust and Agency Funds: Combining Balance Sheet - All Trust and Agency Funds Statement of Revenues, Expenditures and Changes in Fund Balance - Deferred Compensation Expendable Trust Fund Combining Statement of Changes in Assets and Liabilities - All Agency Funds Account Groups: Comparative Schedule of General Fixed Assets by Source Schedule of General Fixed Assets by Function and Activity Schedule of Changes in General Fixed Assets by Function and Activity Comparative Schedule of General Long-Term Debt Page Number 5O 51 52 53 54 55 56 57 58- 59 60-61 '63 64 - 65 66 - 67 69 70 71 72 73 74 75 76 77 78 79 - ii- CITY OF TUSTIN TABLE OF CONTENTS (CONTINUED) June 30, 2000 STATISTICAL SECTION: General Governmental Expenditures by Function - Last Ten Fiscal Years General Governmental Revenues by Source - Last Ten Fiscal Years Property Tax Levies and Collections - Last Ten Fiscal Years Assessed Value of Taxable Property - Last Ten Fiscal Years Property Tax Rates - Direct and Most Common Overlapping Governments - Last Ten Fiscal Years Principal Taxpayers Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita - Last Ten Fiscal Years Special Assessment Billings and Collections - Last Seven Fiscal Years Computation of Legal Debt Margin Schedule of Direct and Overlapping Bonded Debt Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Govemmental Expenditures - Last Ten Fiscal Years Revenue Bond Coverage - Water Bonds - Last Ten Fiscal Years Property Value, Construction, and Bank Deposits - Last Ten Fiscal Years Demographic Statistics- Last Ten Fiscal Years Miscellaneous Statistics - Statistical Data Page Number 81 82- 83 84 - 85 86-87 89 90 91 92- 93 94 95 96 97 98 - 99 100- 101 102 103 - 111 - CITY OF TUSTIN Elected And Administrative Officials MAYOR Jeffery M. Thomas CITY COUNCIL Tracy Wills Worley, Mayor Pro Tem Mike Doyle Jim Potts Thomas R. Saltarelli AUDIT COMMITTEE Donnie L. Smith, Chairperson Maureen Gallogly John R. Garner Walter T. Sullens Sheldon Weiner CITY MANAGER William A. Huston Lois E. Jeffrey City Attorney Pamela Stoker City Clerk George W. Jeffries City Treasurer Christine A. Shingleton Assistant City Manager Tim D. Serlet Director, Public Works/ City Engineer Elizabeth A. Binsack Director, Community Development Steve Foster Chief of Police Ronald A. Nault Director, Finance Patrick Sanchez Director, Parks and Recreation Services - iV - Finance Department December 6, 2000 City o HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL City of Tustin Tustin, California 92780 f Tustin 300 Centennial Way Tustin, CA 92780 Director (714) 573-3061 Secretary (714) 573-3060 Water Billing (714) 573-3075 FAX (714) 832-0825 Submitted for your information and consideration is the June 30, 2000 Comprehensive Annual Financial Report for the City of Tustin. Responsibility for both the accuracy of the data presented and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the data as presented is accurate in all material aspects; that it is presented in a manner designed to fairly set forth the financial position and results of operations of the City, as measured by the fmanciaI activity of its various funds; and that all disclosures necessary to enable the reader to gain maximum understanding of the City's financial affairs have been included. The significant accounting policies of the City are described in the notes to the Financial Statements. These accounting policies have been reviewed by the City's independent certified public accountants and are in conformance with the recommendations of the American Institute of Certified Public Accountants and the Governmental Accounting Standards Board. This report has been examined by independent auditors Diehl, Evans & Company, LLP. Their report is included on page three. Introduction The City of Tustin is located in the central part of Orange County, about 40 miles southeast of Los Angeles and 80 miles north of San Diego, at the intersection of the 5 and 55 Freeways. Tustin covers over 11 square miles and adjoins the Cities of Orange, Santa Ana and Irvine. The State of Califomia Department of Finance has certified the City's January 1, 2000 population at 68,316, which represents an increase of 2.2 percent from 1999, and an increase of 46 percent for the ten years begirm/ng in January, 1991. -V- General History and Description Columbus Tustin, the City's founder and namesake, came to California by way of Oregon during the Gold Rush. After settling in Sonoma County for 20 years, he and his partner, Nelson Oscar Stafford, purchased 1,300 acres of Rancho Santiago de Santa Ana, an original Spanish Land Grant, in 1868. Tustin and stafford divided their purchase and Tustin started "Tustin City" on his portion, which is the current Old Town section surrounding E1 Camino Real. To encourage setters, Tustin offered a free lot to all who would settle on it and an entire block to families with several children. A rivalry grew up between Tustin City and nearby Santa Ana, which culminated in a straggle over the terminus of the Southern Pacific Raikoad spur. The raikoad demanded a considerable subsidy for the extension and only Santa Ana was able to raise the money, so the rails went no further than Santa Ana. The City was incorporated under the General Laws of the State of California in 1927 as the "City of Tustin". Government was by a five member elected City Council. The Council/Administrator form of City Government was adopted in 1965 and was modified to the Council/Manager form in 1981. Tustin is in the center of Orange County and, while' surrounded by much of the County's main industrial employment, it is essentially a residential community. The Financial Reporting Enti _ty As required by generally accepted accounting principles, these financial statements present the City of Tustin (the primary government) and its component units. The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationship with the City. These entities are legally separate from each other. However, the City of Tustin elected officials have a continuing full or partial accountability for fiscal matters of the other entities. The financial reporting entity consists of: (1) the City (2) organizations for which the City is financially accountable and (3) organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval by the primary government. In a blended presentation, a component unit's balances and transactions are reported in a manner similar to the balances and transactions of the City. Component units are presented on a blended basis when the component unit's governing body is substantially the same as the City's or the component unit provides services almost entirely to the City. - vi - Blended Component Units The Tustin Community Redevelopment Agency was established October 20, 1976 pursuant to the State of California Health and Safety Code, Section 33000, entitled "Community Redevelopment Law". Its purpose is to prepare and carry out plans for improvement, rehabilitation and redevelopment of blighted areas within the territorial limits of the City of Tustin. The City provides management assistance to the Agency, and the members of the City Council also act as the governing body of the Agency. The separate financial statements of the Tustin Community Redevelopment Agency component unit may be obtained from the City Finance Department located in the Tustin Civic Center. The Tustin Public Financing AuthoriW is a joint powers authority organized pursuant to the State of California Government Code, Section 6500. The Authority exists under a Joint Exercise of Power Agreement dated May 1, 1995, by and between the City of Tustin and the Redevelopment Agency of the City of Tustin. The members of the City Council constitute the members of the Board of Directors of the Authority. The Authority is authorized to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations of, or for the purpose of making loans to the City and/or to refinance outstanding obligations of the City or Assessment Districts of the City. Separate component unit financial statements for the Tustin Public Financing Authority are not issued. The Re_oorting Entity_ and Its Services The City provides the following services: public safety (police), parks and recreation services, engineering services, planning services, public works, general administrative services, and capital improvements. The City contracts for fire protection from the Orange County Fire Authority. The Tustin Community Redevelopment Agency was established in 1976, pursuant to the State of Califomia Health and Safety Code, Section 33000, entitled "Community Redevelopment Law". Its purpose is to eliminate blighted areas by encouraging the development of residential, commercial, industrial, recreational and public facilities. - vii - Financial Statement Format This report is organized into three main sections: Introductory, Financial and Statistical. The Introductory Section includes a Table of Contents, this Transmittal Letter, the City's principal officers and its Table of Organization. The Financial Section includes: (1) a "liftable" General Purpose Financial Statement comprised of the Auditor's Report and five combined statements which provide an overview of the City's financial position and result of operations along with "notes" developed to insure full disclosure and fair presemation, and (2) Combining and Individual Fund and Account Group statements and schedules designed to present detailed information on individual funds to demonstrate compliance with finance-related legal and contractual requirements, and to assure adequate disclosure at the individual fund entity level. The Statistical Section provides financial data usually covering ten years and other non-accounting data. The tables reflect social and economic data, financial trends and fiscal capacity of the City government. Fund Descriptions The various fund types and account groups used by the City and included in this report are as follows: Fund & Account Group Category_ Fund Type Governmental Funds Proprietary Funds Fiduciary Funds Account Groups General Fund Special Revenue Funds Debt Service Funds Capital Projects Funds Enterprise Funds Agency Funds General Fixed Assets General Long-Term Debt A description of funds and account groups is included in the "Notes to the Financial Statements", while a listing and purpose of the individual funds established by the City is included on the divider pages preceding each section of Combining and Individual Statements by Fund Type. - viii- Internal Control, Budgetary_ Control and Accounting Basis In developing and modifying the City's accounting system, consideration has been given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding the safeguarding of assets and the reliability of financial records and maintaining accountability of assets. The concept of reasonable assurance recognizes that: the cost of a control should not exceed its benefits. The evaluation of this cost benefit relationship rests with Management. All intemal control evaluations occur within the bounds as described. We believe that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. The annual budget adopted by the City Council provides for the general operation of the City. It includes proposed expenditures and the means of financing them. The City Council approves total budgeted appropriations and any amendments to appropriations throughout the year. The "appropriated budget" covers substantially all City expenditures, with the exception of capital improvement projects carried forward from prior years, which expenditures constitute legally authorized "non-appropriated budget". There were no significant non-budgeted financial activities. Actual expenditures may not exceed budgeted appropriations at the functional or program level. The City has the following programs accounted for through its governmental funds - general government, public safety, public works, community services and capital expenditures. Budgets for the General and Special Revenue Funds are adopted on a basis substantially consistent with generally accepted accounting principles. Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant reconciling items. No budgetary comparisons are presented for the Capital Projects, Debt Service and Proprietary Funds, as the City does not adopt annual budgets for these types of funds. Formal budgetary integration is employed as a management control device. Commitments for materials and services, such as purchase orders and contracts, are recorded during the year as encumbrances to assist in controlling expenditures. Encumbrances at year-end lapse, then are added to the following year's budgeted appropriations. Encumbrances are not carried forward at year-end. Governmental fund types and Agency funds use a modified accrual basis of accounting, except those assets of the Employee Deferred Compensation Agency Fund are reported at fair value rather than cost, in accordance with GASB Statement No. 2. The City has implemented GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Pools in fiscal year 98-99. Revenues are recognized when they are "susceptible to accrual", that is, measurable and available to finance expenditures of the current period. Accrued revenues include property taxes received within 60 days after year-end, Federal and State Grants and subventions, interest, and certain charges for current services. Revenues that are not considered susceptible to accrual include certain licenses, permits, fines, forfeitures and penalties. - ix - Expenditures, other than principal and interest on long-term debt and employee compensated absences (general leave), are recorded when the liability is incurred. Proprietary fund types are accounted for on the accrual basis. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when the liability is incurred. Governmental Funds Revenues for the governmental fund types totaled $44,509,485 for fiscal year 1999-00, which is a decrease of $4,064,618 from fiscal year 1998-99. Property taxes, sales taxes, special assessments, and other taxes remain the largest source of revenue for City governmental funds. The $32,203,430 total taxes collected during fiscal 1999-00 represents 72.4 percent of total governmental fund type revenues. The $278,501 increase in Taxes is less than one percent change from the prior fiscal year. County Assessor records show that the City of Tustin's AV increased 9.7% to $4,518,236,272 while AV countywide increased approximately 8.6 percent. Intergovernmental Revenues may vary dramatically from year to year due to their source. Most intergovernmental revenues are received from county, state, Federal agencies for funding or reimbursement of' capital projects. In fiscal year 1999-00, intergovernmental revenues decreased by 56.7%, or $5.7 million. Intergovernmental revenues for 1998-99, 1997-98, and 1996-97 are $10,109,179, $4,544,572, and $7,278,732 respectively. The amount of' revenues from various sources and the change over last year are shown in the following tabulation. Please note that capital improvement revenues and expenditures may skew comparisons from one fiscal year to the next. Revenue Source Percent Changes Amount of Total From 6-30-99 Taxes License & Permits Fines & Forfeitures Use of Money & Property Intergovernmental Revenues Charges for Services Other Revenues $32,203,430 72.4% $278,501 650,518 1.5 163,593 688,362 1.5 <53,241> 3,611,310 8.1 705,868 4,375,242 9.8 <5,733,937> 1,318,103 3.0 114,123 1,662,520 3.7 460,475 TOTAL: $44,509,485 100.0% <$4,064,618> In order to provide flexibility in dealing with economic uncertainty and to provide for the cash flow needs of the City, it is important to maintain adequate reserves and liquidity in the City's General Fund. The City's Non Consolidated General Fund Balance at June 30, 2000 is $14,237,197, up from $13,199,697 in the previous fiscal year. This audited Balance exceeds the City Council's policy of 15% General Fund Reserves. -X- Expenditures for the governmental fund types totaled $40,175,456 for fiscal year 1999-00, a decrease of 14.6% from the previous year. Changes in levels of expenditures for major general operating functions of the City over the preceding year are shown in the following tabulation: Percent Changes Functions Amount of Total from 6-30-98 General Government Public Safety Public Works Recreation and other Community Services Capital Outlay Debt Service: Principal Retirement Interest & Fiscal Charges Cost of Issuance Advance Refunding Escrow $7,278,886 18.1% $1,741,888 15,826,727 39.4 423,371 8,329,989 20.7 <5,767,611> 2,470,250 6.1 <42,405> 3,944,277 9.8 <2,207,677> 1,154,406 .2.9 125,707 1,170,921 2.9 194,518 0 0.0 <522,424> 0 0.0 <805,500> TOTAL: $40,175,456 100.0% <$6,860,133> This $1.7 million increase in general government and $423,371 increase in public safety expenditures is attributable to increasing salary and benefit expenses and technology investments. Within this fiscal year, Tustin contracted with consultants to assist with software conversion and implementation of three sof~ware systems: the City Clerk's imaging system, Finance Department's financial management system, and Community Development's permittif~g sofbvare system. Public Works showed a significant decrease of $5.8 million, due to less capital project activity as scheduled in the city's Seven Year CIP Plan. Recreation decreased slightly due to temporary staff vacancies. Debt Administration Debt Service expenditures were $2,161,871 an increase of $114,859 from fiscal year 1998-99, and included the following activity. Interest/ Fiscal Obligation Principle Charges Total Capitalized Leases Countywide Revenue Bonds Tax Allocation Bonds $169,610 -0- $169,610 345,435 383 345,818 1,802,927 6,972 1,809,899 TOTAL: $2,317,972 $7,355 $2,325,327 - xi - Tax Allocation Bonds No tax allocation bonds were issued in 1999-00. On July 1, 1998, the Tustin Community Redevelopment Agency issued $20,805,000 in Tax Allocation Refunding Bonds with interest rates ranging from 3.50 percent to 5.00 percent to refund the Agency's Town Center Area Redevelopment Project Tax Allocation Refunding Bonds Series 1987, in aggregate principal amount of $5,145,000, and the Agency's Town Center Area Redevelopment Project Subordinate Tax Allocation Bonds Series 1991 in aggregate principal amount of $12,880,000. The 1987 bonds were fully redeemed and securities for 1991 bonds were deposited in an irrevocable trust with an escrow agent to provide for all future payments when Tax Allocation Bonds, Series 1991 are called for redemption. Cash Management Cash temporarily idle during the year was invested in various securities as authorized in the Cityts adopted Investment Policy. The average yield on maturing investments during the fiscal year was 5.24 percent, down .27 percent from last year, total interest received was $4,570,132, down $58,218 from the previous year. Several global factors have caused a significant reduction in U.S. interest rates since the beginning of the year. While Tustin has managed to maintain a positive spread between the current market rates and what the City is yielding on its investments, we are well aware of the yields that can be expected when the present investments mature. We are not expecting any future growth in investment income to be significant. At June 30, 2000 the City prepared schedules in compliance with Government Accounting Standards Board (GASB) Statement No. 31, Accounting and Financial Reporting for Certain InVestments and for External Pools. This new statement requires public agencies to account for and record material market value changes in their 'investments at year-end. The difference between the cost and market value of investments was not material at June 30, 2000. Orange Coun .ty Bankruptcy On December 6, 1994, the County of Orange and the Orange County Investment Pool filed for protection under Chapter 9 of the United States Bankruptcy Code. The bankruptcy followed losses in the investment pool that approximated $1.7 billion. The ramifications of the bankruptcy not only impacted the County of Orange and some 200 non-County governmental agencies, but several non- County agencies as far north as Mountain View also suffered from the losses in the County administered investment pool. The City has received the county's final distribution of bankruptcy proceeds under previous agreements. The city recovered 95% of the less than $200,000 held by the County at the time of the bankruptcy. - xii - Water Utili~ System For information purposes only, the following states the operating income and expenses of the Water Utility System. The city is continuing its feasibility analysis of water services to the City of Tustin. Year Ended Year Ended 6-30-00 6-30-99 Operating Revenues Operating Expenses Operating Income Non-Operating Revenue (Expenses) Operating Transfers 9,045,773 $ 9,046,382 5,960,562 5,493,255 3,085,211 3,553,127 169,429 <30,676> <736,313> .<811,760>.. NET INCOME: $ 2,518,327 $ 2,710,691 Changes in long-term debt of the Water Enterprise Fund consisted of the following: 1993 Certificates of Participation OCWD Note Payable Compensated Absences Balance Balance July 1, 1999 Additions Payments June 30, 2000 $ 9,475,000 -0- $425,000 $ 9,050,000 6,409,558 - 0 - 569,082 5,840,476 75,113 - 0 - 15,193 59,920 TOTAL: $15,959,671 - 0 - ..$...1,009,275$14,950,396 Capital Projects Fund The Capital Projects Funds of the City include the Town Center and South Central Project Areas of the Tustin Community Redevelopment Agency, the Refunded Assessment District 95-1, the low income housing funds, and other Capital Projects. Capital Improvement Projects initiated and/or completed during fiscal 99-00 totaled $7,610,540 from all funds. Significant capital improvement projects completed in fiscal year 1999-00 include: Peppertree and Magnolia Tree parks restroom rehabilitation, picnic shelter improvements, and playground apparatus replacement; Jamboree Road grade separation at Edinger Ave and improvements between Edinger and Barranca; fuel tank removal and replacement at Field Services; construction of the Rawlings Booster Station to pump well water as an alternative to purchasing imported water; and installation of automated chlorination and electrical equipment at ail wellsites. The combined 19 capital projects completed totaled $3,968,583 in 99-00fy and $23,232,796 from implementation through completion. - xiii- Capital improvement projects started or in progress during the year include: the Tustin Commuter Rail Station at the northwest comer of Jamboree Road and Edinger Avenue; rehabilitation of Red Hill Avenue between Walnut Ave and Edinger Ave; realignment of Valencia North Loop Road and Armstrong Avenue; and extension of Newport Avenue fi.om its current terminus, south to Edinger Avenue. Tustin Community Redevelopment Agency There was significant activity in the Tustin's Community Redevelopment Agency last year. Both the Town Center Redevelopment Project Area and the South Central Redevelopment Project Area experienced a great deal of positive activity. Like other Orange County cities, Tustin found that housing prices often exceed the'ability of many in the community to afford home ownership. To address this situation, the Redevelopment Agency developed the City's First Time Homebuyer program. Redevelopment Agency Low and Moderate- Income Housing Set-Aside funds are used to provide "silent" second trust deed loans, subordinated to market issued first trust deed loans. The Agency loan in an amount up to Thirty Thousand Dollars can be used for down payment and closing cost assistance. The loan serves to reduce the size of monthly mortgage payments for qualified first time homebuyers having household incomes less than 120% of the area median income. The program allows qualified first time homebuyers to afford home ownership consistent with their income level. During the past year, the Agency assisted 12 new homebuyers purchase their frrst home in Tustin. The following summarizes the Agency's activities and accomplishments in the project areas during the past year. Town Center Redevelopment Proiect Area Old Town Diagonal Parking--To recreate the historic feel of the area, Tustin installed diagonal parking in Old Town on a temporary test basis. Working with the Tustin Old Town Association, parallel parking along E1 Camino Real was removed and replaced with diagonal parking. The test was successful, and the City Council authorized the solicitation of bids for the permanent installation of diagonal parking. In addition, the Agency and Public Works Department solicited bids for a streetscape improvement program that is designed to improve the historic heart of the city. Streetscape improvements are anticipated to start in elate Spring 2000. Utt Juice Factory Project--The Redevelopment Agency solicited Requests for Qualifications and Proposals for the redevelopment of the Utt Juice Property, which the Agency acquired in April 1999 through eminent domain. The site is approximately one acre located in the heart of the Tustin Old Town District. The Agency has entered into exclusive negotiations for a Disposition and Development Agreement (DDA) and Ground Lease with a qualified developer. The development plan calls for approximately 25,000 square feet of commercial and retail uses at the property. - xiv - Ambrose Lane/Warming, ton Homes~The Redevelopment Agency entered into a Disposition and Development Agreement in late 1998 with Warmington Homes for the redevelopment of a dilapidated 56-unit apartment complex in the old town area of the city. During the period between January 1999 and April 1999, the Agency completed the relocation of 36 low to moderate-income tenant households from the apartment project. The relocation process resulted in 9 of the tenants (25%) purchasing homes and the balance of the tenants moving to suitable rental apartments in the area. Construction was commenced in June 1999 for the thirty-eight (38) small-lot, detached single family home project called Ambrose Lane. The DDA provided for restricting 8 of the homes (21%) for low to moderate-income homebuyers. The first homes were completed in February 2000 and the last of the 38 homes closed escrow on September 21, 2000, two years to the day after the execution of the DDA. Ford Retail Rehabilitation--In conjunction with the Warmington Homes Ambrose Lane project a substantial rehabilitation project was completed on the retail commercial property located at 715- 765 E1 Cam/no Real. Under the terms of the DDA with the Ford Family Trust, the property's owner, the Agency provided a 2 for 1 financial match for the construction of the rehabilitation improvements. The rehabilitation improvements were completed in January 2000 and provided a complete fagade redesign and renovation of the buildings on the property along with re-paving and re-landscaping the site. South Central Project Area Housing Rehabilitation Program--The Tustin Community Redevelopment Agency continued to administer the City's Housing Rehabilitation Program. The Housing Rehabilitation Program provides financial assistance to property owners of single family homes and small-scale multifamily rental apartments in target areas of the city. The program serves to stimulate rehabilitation of residential properties occupied by low to moderate-income households. Activity in the program continued to be strong and the housing in Tustin's Southwest neighborhood continued to be improved. State Route 55 Ramp Construction Project--The Agency will be funding an environmental study, right-of-way acquisition, engineering and construction for the redesign and construction of the ramps at the northbound SR-55 Freeway and Edinger Avenue. The ramps will provide for greater penetration and traffic circulation in the Pacific Center Specific Plan Area and assist in the redevelopment of the area. The project calls for the total cost to be shared between the Agency and the owner/developers of Pacific Center East. During the past year the Agency was able to work with CalTrans in getting the project approved and about 75% of the civil engineering design work has been completed for the project. Newport Avenue Extension Project--The two-phase project will extend Newport Avenue south from its existing terminus, to under the railroad tracks to Edinger Avenue and on to Valencia Avenue. The first phase will involve improvements south of Edinger Avenue including realignment of Del Arno Avenue. The second phase involves improvements north of Edinger Avenue and the intersection with Edinger Avenue/Del Amo Avenue. A large portion of the easterly fight-of-way has already been obtained through the Shea Homes Development Agreement, and the Agency has obtained property along Edinger Avenue through the purchase and demolition of the Case Swayne warehouse building. This project will be done after the SR-55 Freeway/Edinger Avenue ramp redesign project. - XV - Edinger Avenue/Pacific Center EastmAnother major project the Redevelopment Agency is continuing work on is the redevelopment of the area known as the Pacific Center East Specific Plan area. The Agency solicited proposals and qualifications from current property owners and development entities experienced in the construction and operation of retail commercial projects. The Agency will be identifying one or more qualified property owners or other qualified firms with whom to negotiate specific development proposals for an approximately 6.9-acre site identified as Planning Area 2. The site is located on the north side of Edinger Avenue extending west from the proposed southerly extension of Newport Avenue approximately 1,000 feet. As identified above, the Agency had previously acquired the former Case-Swayne industrial property for the purpose of improving the circulation in the area by eXtending Newport Avenue south to Edinger Avenue. A remainder parcel after the roadway project from the Case-Swayne property is anticipated to be combined with the other adjacent parcels comprising Planning Area 2 to create a viable community retail commercial site. Portions of the adjacent parcels are currently improved with three separate one-story industrial buildings with remaining portions of the site consisting of concrete slabs, asphaltic concrete paving and unpaved areas. The Agency seeks to redevelop the combined properties into a unified community serving retail project. Future Projects MCAS-Tustin--The largest and most complex project on the horizon for the Tustin Community Redevelopment Agency is the redevelopment of the approximately 1,600-acre former Marine Corps Air Station, MCAS-Tustin. In late 1999 the City of Tustin was be able to sublease a portion of the base to providers who will be providing transitional housing to specific segments of the community. Also in late 1999 was the substantial completion of'the design of the first phase of the backbone roadway and infrastructure system for the westerly portion of the base. The City of Tustin and the Marine Corps anticipate certification of Environmental Impact Report/Environmental Impact Statement (EIR/EIS) that had been prepared for this project in late 2000. Also in late 2000, the City anticipates that the redevelopment plan for MCAS-Tustin will be completed. The redevelopment plan will allow for the formation of a redevelopment project area at MCAS-Tustin and this will, in mm, provide funding for the substantial infrastructure improvements required for redevelopment of the site. To facilitate the rapid redevelopment of the base and job creation that will come as a result, the City is pursuing the acquisition of the developable portion of the base through an Economic Development Conveyance (EDC) with the Navy. Approval of the City's EDC application will ensure that private developers of proven quality and experience will receive and develop the base property consistent with the goals and objectives of the MCAS-Tustin Reuse Plan. Private developer interest was solicited in late 1999 through a competitive Request for QualifiCations/Proposals (RFQ/RFP) process. Selection of the qualified developers for the first three disposition packages was accomplished in early of 2000 with the subsequent proposals being requested by Summer 2000. Prospects for the Future The Tustin Market Place and Tustin Auto Center should continue to provide revenue stability to Tustin. We are projecting a continuing 3.5% growth in sales tax revenue for fiscal 2000-01, and the City is continuing to seek out new business to open or relocate to Tustin to enhance our already strong sales tax base. We are expecting to see net real growth in the City's assessed property, which should mean an increase in property tax income. But while property tax income is the second largest revenue source to the General Fund, it is only 25-30% of sales tax revenue. The City's Consolidated General Funds ended the fiscal year with a fund balance of $14,237,179; of which $608,448 is reserved for prepaid items and long-term loan receivables. Unreserved but designated balances are for capital outlay, $5,328,066; self-insurance, $1,974,444; and contingencies, $6,326,221. Revenues for the General Fund are projected to remain the same for the 2000-01 fiscal year, with a 3% overall increase. Sales taxes generated by the Tustin Market Place and Tustin Auto Center continue to grow at a comfortable level, and so far we do not see a material impact on sales tax income since the opening of the Market Place across Jamboree Road. We will continue to monitor this very closely. At this time sales tax revenue is 52 percent of the total General Fund Revenue. Like other governmental entities in the State of California, we must contend with the tax limitation initiatives, now Article XIII A and B of the State Constitution. These limits are among the most stringent in the nation. Article XIII A (Prop 13) places an absolute limit on the level of the Property Tax rate and limits the rate of growth of property assessed value. Article XIII B (Prop 4) restricts appropriations from the proceeds of taxes by imposing a limit based upon the 1979 fiscal year adjusted for inflation and population growth. Prop 13 curtailed our ability to generate revenues through the property tax rate structure for new programs, reserves and other needs, or to meet debt service on General Obligation Bonds. Prop 4 curtails growth of all tax revenues. The City of Tustin is not experiencing problems with its Proposition 4 limitation. Due to the growth in population as a result of the Tustin Ranch development keeping pace with increased revenues, we are maintaining a comfortable cushion between annual appropriations and our mandated appropriation limit. The City of Tustin 1999-00 appropriation limit was $38,112,465. Net appropriations subject to the limit were $29,434,084. At this time the City is $8,678,381 below its limit. Given that the population growth in Tustin Ranch will continue to increase in pace with the revenue generated, it is projected that the appropriation limit for the City of Tustin should not be a problem for many years to come. Self Insurance At June 30, 2000 the City was insured for excess Worker's Compensation, General Liability and Auto Liability as a member of the Orange County Cities Risk Management Authority. The Authority is composed of thirteen Orange County member cities and is organized under a Joint Powers Agreement pursuant to the California Government Code. The purpose of the Authority is to arrange and administer programs of insurance for the pooling of self-insured losses and to purchase excess insurance coverage. - xvii - The City's self insured portion of Worker's Compensation is the first $275,000, with excess mounts presently insured to the statutory requirements of the State of California. General and Auto Liability is self-insured for the first $250,000 per occurrence, with excess mounts presently insured to $5 million and a pooled liability program to a maximum of $20 million. Single Audit During fiscal 2000, the City has participated in an audit of all funds and account groups meeting the definition of GASB, and accordingly included the Tustin Community Redevelopment Agency in addition to the regular funds, grants and accounts of the City. These funds and account groups were further exposed to audit requirements of the Office of Management and Budget Circular A-128, Audits of State and Local Governments, which in addition to the requirements for an organization-wide examination of financial operations, requires tests of compliance with the major provisions of Federal law and regulations. The results of this expanded audit of grant activity are provided under separate cover. General Fixed Assets The general fixed assets of the City are those fixed assets used in the performance of general governmental functions and exclude the fixed assets of the Water Utility Fund. As of June 30, 2000, the general fixed assets of the City totaled $49,383,677 which includes $4,987,457 of construction of progress. This amount represents the original cost of the assets, or estimated historical cost if actual historical cost is not available. Additions to fixed assets were $3,025,097 and deletions were $1,153,387, for a net increase of $1,871,710. Depreciation of general fixed assets is not recognized in the City's accounting system. Audit Committee The City of Tustin's Audit Committee is made up of five members chosen from residents and business members of the community. The Audit Committee is charged with oversight of the audit process. They are involved with the selection of the external auditors and they monitor the audit process. They have reviewed this document and any and all concerns that may have been addressed by the auditors. They will submit a report of their actions during the year to the City Council without comment regarding the numbers as they appear herewith. Certificate of Achievement for Excellence in Financial Reportin~ The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Tustin for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 1999. - xviii- In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to the Certificate of Achievement Program requirements, and we are submitting it to GFOA. The City also received an award for "Outstanding Financial Reporting" for the same report from the California Society of Municipal Finance Officers and the Award of Excellence for the City's Investment Policy from the Municipal Treasurers Association of North America and Canada. Acknowledgments I wish to express my appreciation to the entire Finance Department staff for their contribution to the department during the year. Their efforts are reflected in this report and in other documents resulting from the annual audit process. Special thanks are due to Larry Schutz, Assistant Finance Director and his staff. His efforts in preparing the final financial documents contribute significantly to the quality of this report. The Mayor and members of the City Council are to be commended for their interest and support in conducting the financial operations of the City in a responsible and progressive manner. Ronald A. Nault Finance Director - xix- -- XX: Certificate of Achievement for Excellence in Financial Reporting Presented to City of Tustin, California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 1999 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. President Executive Director - xxi - - xxii - FINANCIAL SECTION -1- THIS PAGE LEFT BLANK INTENTIONALLY -2- DIEHL, EVANS (ST COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS ~ CONSULTANTS A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS 2121 ALTON PARKWAY, SUITE 100 IRVINE, CALIFORNIA 92606-4906 (949) 399-0600 · FAX (949) 399-0610 MICHAEL R. LUDIN, CPA CRAIG W. SPRAKER, CPA NITIN P. PATEL, CPA * PHILIP H. HOLTKAMR CPA * THOMAS M. PERLOWSKI, CPA * HARVEYJ. SCHROEDER, CPA ' A PROFESSIONAL CORPORATION October 5, 2000 INDEPENDENT AUDITORS' REPORT The Honorable City Council of the City of Tustin Tustin, California We have audited the general purpose financial statements of the City of Tustin, California as of and for the year ended June 30, 2000 as listed in the accompanying table of contents. These general purpose financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standard~, 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 general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Tustin, California, as of June 30, 2000 and the results of its operations and cash flows of its proprietary fund type for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated October 5, 2000 on our consideration of the City of Tustin's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The financial statements of the combining individual funds and account group statements listed in the table of contents under supplementary information are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the City of Tustin. The information has been subjected to the auditing procedures applied in the audit of the general purpose'financial statements and, in our opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. The statistical information listed in the table of contents is not a required part of the basic general purpose financial statements, and we did not audit or apply limited procedures to such information and do not express any assurance on such information. -3- OTHER OFFICES AT: 2965 ROOSEVELT STREET CARLSBAD, CALIFORNIA 92008-2389 (760) 729-2343 . FAX (760) 729-2234 613 W. VALLEY PARK%VAY. SUITE 330 ESCONDIDO, CALIFORNIA 92025-2598 (760) 741-3141 · FAX (760) 741-9890 CITY OF TUSTIN COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS June 30, 2000 With comparative totals for June 30, 1999 ASSETS AND OTHER DEBITS Cash and investments (Note 2) Cash and investments with fiscal agents (Note 2) Taxes receivable Interest receivable Accounts receivable Due from other governments Due from other funds (Note 3) Deposits Prepaid items Loans receivable (Note 8) Deferred bond issue costs Land held for resale Property, plant and equipment, net of accumulated depreciation (Note 4) Amount available in debt service funds Amount to be provided for the retirement of general long - term debt TOTAL ASSETS AND OTHER DEBITS Govemmental Fund Types Special Debt Capital General Revenue Service Projects $ 9,769,011 $ 9,757,615 $ 6,305,544 1,717,470 - 1,685,304 104,258 - 55,525 448,943 - - 4,885,904 ' 137,685 - - 155,002 - 3,565,956 - 320,562 596,428 - - 12,020 - - LIABILITIES, FUND EQUITY AND OTHER CREDITS LIABILITIES: Accounts payable and accrued liabilities Interest payable Due to other funds (Note 3) Deposits Deferred revenue (Note 13) Due to bondholders Long - term debt (Note 9) TOTAL LIABILITIES $ 21,099,990 $ 10,050,302 $ 8,366,935 FUND EQUITY AND OTHER CREDITS: Investment in general fixed assets Contributed capital (Note 15) Retained Earnings - Unreserved Fund Balances: Reserved (Note 12) Unreserved - Designated (Note 12) Unreserved - Undesignated TOTAL FUND EQUITY AND OTHER CREDITS $ 26,264,793 3,725,403 23,373 248,315 107,462 30,000 188,951 2,905,000 $ 33,493,297 TOTAL LIABILITIES, FUND EQUITY AND OTHER CREDITS $ 2,069,806 $ 154,842 $ 1,362 924,159 - 219,900 3,594,000 - - 274,846 315,557 - 6,862,811 470,399 221,262 3,320,883 608,448 13,628,731 - 8,199,353 9,579,903 (53,680) 9,579,903 8,145,673 $ 10,050,302 $ 8,366,935 14,237,179 $ 21,099,990 512,723 See independent auditors' report and notes to financial statements. -4- 2,808,160 8,264,296 22,110,296 (202,178) 30,172,414 $ 33,493,297 Proprietary Fiduciary Totals Fund Type Fund Types Account Groups (Memorandum Only) Trust General General and Fixed Long - Term Enterprise Agency Assets Debt 2000 1999 14,485,960 $ 2,390,845 $ $ - $ 68,973,768 $ 68,396,605 1,069,677 8,717,930 - - 16,915,784 14,722,127 - 61,764 - 244,920 318,042 ' - - 448,943 396,441 1,351,871 - - 6,623,775 8,049,627 - - 155,002 321,255 1,058,244 - 5,052,224 2,744,867 - - 30,000 30,000 - - 596,428 226,959 - - 200,971 23,755 173,755 - - 173,755 187,381 - - 2,905,000 2,200,000 29,431,315 - 49,383,677 - 78,814,992 75,108,274 - 8,145,673 8,145,673 6,406,686 - - 15,286,367 15,286,367 17,988,515 $ 46,512,578 $ 12,228,783 $ 49,383,677 $ 23,432,040 $ 204,567,602 $ 197,120,534 1,320,251 $ 1,611 $ - $ - $ 4,060,595 $ 7,555,688 124,212 - - - 124,212 132,925 41,761 1,058,244 - - 5,052,224 2,744,867 90,546 406,834 - - 4,091,380 4,587,703 - - - 590,403 731,882 - 10,525,582 - - 10,525,582 8,942,478 14,950,396 - 23,432,040 38,382,436 40,354,872 16,527,166 11,992,271 - 23,432,040 62,826,832 65,050,415 - 49,383,677 - 49,383,677 47,511,967 2,185,039 - 2,185,039 2,029,462 27,800,373 - 27,800,373 25,282,046 - 236,512 - 17,308,609 13,962,064 - - 35,739,027 34,505,732 - - - 9,324,045 8,778,848 29,985,412 236,512 49,383,677 - 141,740,770 132,070,119 $ 46,512,578 $ 12,228,783 $ 49,383,677 $ 23,432,040 $ 204,567,602 $ 197,120,534 -5- CITY OF TUSTIN COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL AND FIDUCIARY FUND TYPES For the year ended June 30, 2000 With comparative totals for the year ended June 30, 1999 Governmental Fund Special Debt General Revenue Service REVENUES: Taxes $ 27,721,633 $ - Licenses and permits 650,518 - Fines and forfeitures 688,362 - Use of money and property 739,893 600,647 Intergovernmental revenue 1,401,888 2,429,598 Charges for services 1,318,103 - Other revenues 1,372,167 204,882 TOTAL REVENUES 33,892,564 3,235,127 EXPENDITURES: Current: General government 5,553,758 Public safety 15,826,727 Public works 6,805,789 Community services 2,470,250 Capital outlay 694,666 Debt service: Principal retirement 154,406 Interest and fiscal charges 15,204 Costs of issuance - Advance refunding escrow - TOTAL EXPENDITURES 31,520,800 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 2,371,764 OTHER FINANCING SOURCES (USES): Proceeds from long-term debt Operating transfers in Operating transfers out Paid to advance refunding escrow TOTAL OTHER FINANCING SOURCES (USES) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES AT BEGINNING OF YEAR FUND BALANCES AT END OF YEAR 45,298 2,864,031 (4,243,611) - (1,334,282) 1,037,482 13,199,697 $ 14,237,179 See independent auditors' report and notes to financial statements. -6- 95,727 1,524,200 572,576 2,192,503 1,042,624 992,811 (1,050,096) (57,285) 985,339 8,594,564 $ 9,579,903 $ 3,585,025 445,997 . 4,031,022 24,122 760,000 1,049,899 1,834,021 2,197,001 (458,014) (458,014) 1,738,987 6,406,686 $ 8,145,673 Types Capital Projects $ 896,772 . 1,810,255 543,756 . 85,471 3,336,254 Fiduciary Fund Type Expendable Trust 14,518 Totals (Memorandum Only) 2000 1999 32,203,430 $ 31,924,929 650,518 486,925 688,362 741,603 3,611,310 2,905,442 4,3.75,242 10,109,179 1,318,103 1,203,980 1,662,520 1,202,045 14,518 44,509,485 48,574,103 1,567,628 - 2,677,035 240,000 105,818 4,590,481 (1,254,227) 37,651 7,278,886 5,536,998 - 15,826,727 15,403,356 - 8,329,989 14,097,600 - 2,470,250 2,512,655 3,944,277 6,151,954 37,651 (23,133) 1,154,406 1,170,921 40,175,456 4,334,029 1,028,699 976,403 522,424 805,500 47,035,589 1,538,514 2,730,589 (90,000) 2,640,589 45,298 6,587,431 (5,841,721) 791,008 20,744,596 5,449,255 (4,637,495) (18,545,159) 3,011,197 1,386,362 28,786,052 $ 30,172,414 (23,133) 259,645 5,125,037 57,246,644 $ 236,512 $ 62,371,681 4,549,711 52,696,933 $ 57,246,644 -7- CITY OF TUSTIN COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES 1N FUND BALANCES - BUDGET AND ACTUAL GENERAL AND SPECIAL REVENUE FUND TYPES For the year ended June 30, 2000 REVENUES: Taxes (Note 5) Licenses and permits Fines and forfeitures Use of money and property Intergovernmental revenue Charges for services Other revenues TOTAL REVENUES EXPENDITURES: Current: General government Public safety Public works Community services Capital outlay Debt Service: Principal retirement Interest and fiscal charges TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from long-term debt Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES AT BEGINNING OF YEAR FUND BALANCES AT END OF YEAR Budget $ 26,612,600 262,100 445,000 452,000 232,000 1,226,000 1,562,131 30,791,831 5,651,833 15,674,161 7,405,001 3,315,638 1,609,908 217,000 128,000 34,001,541 (3,209,710) 3,026,800 (4,595,800) (1,569,000) (4,778,710) 13,199,697 $ 8,420,987 General Fund A~ual $ 27,721,633 650,518 688,362 739,893 1,401,888 1,318,103 1,372,167 33,892,564 5,553,758 15,826,727 6,805,789 2,470,250 694,666 154,406 15,204 31,520,800 2,371,764 45,298 2,864,031 (4,243,611) (1,334,282) 1,037,482 13,199,697 $ 14,237,179 Variance Favorable (Unfavorable) $ 1,109,033 388,418 243,362 287,893 1,169,888 92,103 (189,964) 3,100,733 98,075 (152,566) 599,212 845,388 915,242 62,594 112,796 2,480,741 5,581,474 45,298 (162,769) 352,189 234,.718 5,816,192 $ 5,816,192 See independent auditors' report and notes to financial statements. -8- Special Revenue Funds Budget Actual Variance Favorable (Unfavorable) $ - $ 372,500 600,647 228,147 9,078,287 2,429,598 (6,648,689) 15,000 204,882 189,882 9,465,787 3,235,127 (6,230,660) Totals (Memorandum Only) Budget Actual Variance Favorable (Unfavorable) $ 26,612,600 $ 27,721,633 $ 1,109,033 262,100 650,518 388,418 445,000 688,362 243,362 824,500 1,340,540 516,040 9,310,287 3,831,486 (5,478,801) 1,226,000 1,318,103 92,103 1,577,131 1,577,049 (82) 40,257,618 37,127,691 (3,129,927) 370,580 95,727 274,853 9,394,174 1,524,200 7,869,974 1,480,103 572,576 907,527 11,244,857 2,192,503 9,052,354 6,022,413 5,649,485 3 72,928 15,674,161 15,826,727 (152,566) 16,799,175 8,329,989 8,469,186 3,315,638 2,470,250 845,388 3,090,011 1,267,242 1,822,769 217,000 154,406 62,594 128,000 15,204 1 12,796 45,246,398 33,713,303 11,533,095 (l,779,070) 1,042,624 2,821,694 (4,988,780) 3,414,388 8,403,168 945,000 992,811 47,811 (986,000) (1,050,096) (64,096) - 45,298 45,298 3,971,800 3,856,842 (1 14,958) (5,581,800) (5,293,707) 288,093 (41,000) (57,285) (16,285) (1,610,000) (1,391,567) 218,433 (1,820,070) 985,339 2,805,409 (6,598,780) 2,022,821 8,621,601 8,594,564 8,594,564 $ 6,774,494 $ 9,579,903 $ 2,805,409 21,794,261 21,794,261 $ 15,195,481 $ 23,817,082 $ 8,621,601 -9- CITY OF TUSTIN COMPARATIVE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS - PROPRIETARY FUND TYPE WATER ENTERPRISE FUND For the year ended June 30, 2000 With comparative totals for the year ended June 30, 1999 OPERATING REVENUES: Charges for services OPERATING EXPENSES: Personal services Purchased water and power Maintenance and operations Depreciation and amortization TOTAL OPERATING EXPENSES OPERATING INCOME NONOPERATING INCOME (EXPENSES): Interest income Interest expense Loss from disposition of assets TOTAL NONOPERATING INCOME (EXPENSES) NET INCOME BEFORE OPERATING TRANSFERS OPERATING TRANSFERS: Operating transfers in Operating transfers out NET INCREASE IN RETAINED EARNINGS RETAINED EARNINGS AT BEGINNING OF YEAR RETAINED EARNINGS AT END OF YEAR 2000 9,045,773 1,799,483 794,375 2,300,347 1,066,357 5,960,562 3,085,211 958,822 (786,914) (2,479) 169,429 3,254,640 (736,313) 2,518,327 25,282,046 $ 27,800,373 1999 9,046,382 1,372,177 684,513 2,654,448 782,117 5,493,255 3,553,127 877,072 (842,114) (65,634) (30,676) 3,522,451 45,234 (856,994) 2,710,691 22,571,355 25,282,046 See independent auditors' report and notes to financial statements. CITY OF TUSTIN COMPARATIVE STATEMENT OF CASH FLOWS PROPRIETARY FUND TYPE - WATER ENTERPRISE FUND For the year ended June 30, 2000 With comparative totals for the year ended June 30, 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Operating income Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in prepaids Increase (decrease) in accounts payable and accrued liabilities Increase (decrease) in due to other funds Increase (decrease) in deposits payable Increase (decrease) in compensated absences TOTAL ADJUSTMENTS NET CASH PROVIDED BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Operating transfers in Operating transfers out NET CASH USED BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of property, plant and equipment Principal paid on bonds payable Principal paid on notes payable Interest paid NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Interest received NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR 2000 1999 3,085,211 $ 3,553,127 1,066,357 782,117 138,044 (231,827) - 172 I10,807 149,477 41,761 (803,146) 3,016 (39,070) (15,193) 9,951 1,344,792 (132,326) 4,430,003 3,420,801 - 45,234 (736,313) (856,994) (736,313) (811,760) (2,734,641) (1,963,348) (425,000) (400,000) (569,082) (547,195) (795,627) (850,314) (4,524,350) (3,760,857) 958,822 877,072 128,162 (274,744) 15,427,475 15,702,219 $ 15,555,637 $ 15,427,475 RECONCILIATION OF CASH AND CASH EQUIVALENTS ON STATEMENT OF CASH FLOWS TO THE BALANCE SHEET: Cash and investments Cash and investments with fiscal agents Cash and Cash Equivalents on Statement of Cash Flows See independent auditors' report and notes to financial statements. -I1 - $ 14,485,960 $ 14,374,926 1,069,677 1,052,549 $ 15,555,637 $ 15,427,475 CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS June 30, 2000 1. SUMMAKY OF SIGNIFICANT ACCOUNTING POLICIES: The Financial Reporting Entity: The City of Tustin was incorporated in 1927 as a "General Law" City govemed by an elected five- member city council. As required by generally accepted accounting principles, these financial statements present the City of Tustin (the primary government) and its component units. The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationship with the City. These entities are legally separate from each other. However, the City of Tustin elected officials have a continuing full or partial accountability for fiscal matters of the other entities. The financial reporting entity consists of: (1) the City (2) organizations for which the City is financially accountable and (3) organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. An organization is fiscally dependent on the primary government if it is unable to adopt ks budget, levy taxes or set rates or charges, or issue bonded debt without approval by the primary government. In a blended presentation, a component unit's balances and transactions are reported in a manner similar to the balances and transactions of the City. Component units are presented on a blended basis when the component unit's governing body is substantially the same as the City' s or the component unit provides services almost entirely to the City. Blended Component Units: The Tustin Community Redevelopment Agency was established October 20, 1976 pursuant to the State of California Health and Safety Code, Section 33000, entitled "Community Redevelopment Law". Its purpose is to prepare and carry out plans for improvement, rehabilitation and redevelopment of blighted areas within the territorial limits of the City of Tustin. The City provides management assistance to the Agency, and the members of the City Council also act as the governing body of the Agency. The Agency's financial data and transactions are included with the debt service fund type, capital projects fund type, general fixed assets account group, and general long-term debt account group. The separate financial statements of the Tustin Community Redevelopment Agency component unit may be obtained from the City of Tustin Finance Department located in the Tustin Civic Center. See independent auditors' report. -12- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): Blended Component Units (Continued): The Tustin Public Financing Authority is a joint powers authority organized pursuant to the State of California Government Code, Section 6500. The Authority exists under a Joint Exercise of Power Agreement dated May 1, 1995, by and between the City of Tustin and the Redevelopment Agency of the City of Tustin. The members of the City Council constitute the members of the Board of Directors of the Authority. The Authority is authorized to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations of, or for the purpose of making loans to the City and/or to refinance outstanding obligations of the City or Assessment Districts of the City. Currently the Authority has only issued debt to purchase the limited obligation bonds of Reassessment Districts 95-1 and 95-2. (See Note 10). Separate component unit financial statements for the Tustin Public Financing Authority are not issued. Description of Funds and Account Groups: The accounts of the City are organized on the basis of funds or account groups, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts which comprise its assets, liabilities, equity, revenues and expenditures. The various funds and account groups are defined as follows: Governmental Fund Types: The General Fund is used to account for all financial resources except those required to be accounted for in another fund. Special Revenue Funds are used to account for the proceeds of specific revenue sources that are restricted by law or administrative action for specified purposes. Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related fiscal agent costs. Capital Proiects Funds are used to account for the financial resources to be used for the acquisition or construction of major capital facilities, and for the improvement, rehabilitation and redevelopment of the Community Redevelopment Agency project areas. See independent auditors' report. CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): Proprietary Fund Type: The Enterprise Fund is used to account for operations that are financed and operated in a manner similar to private business enterprises. The intent of the governing body is that the costs of providing services to the general public on a continuing basis be financed or recovered through user charges. Fiduciary_ Fund Types: Expendable Trust Fund is used to account for deferred compensation assets for which the City has retained fiduciary responsibility. Agency Funds are used to account for assets held by the City as an agent for individuals, other governments and other entities. Account Groups: The General Fixed Assets Account Group. is used to account for capital assets of the City which are long-term in nature, and used in the operation of the City, other than those which are capitalized in the proprietary fund. The General Long Term Debt Account Group is used to account for the City's outstanding long-term obligations, other than those of the proprietary fund. Basis of Accounting: The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds and the expendable trust fund are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. The proprietary fund is accounted for on a flow of economic resources measuremem focus. With this measurement focus, all assets and all liabilities associated with the operation of this fund are included on the balance sheet. See independent auditors' report. -14- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): Basis of Accounting (Continued): Fund equity (net total assets) is segregated into contributed capital and retained earnings components. The proprietary fund-type operating statement presents increases (revenues) and decreases (expenses) in net total assets. The modified accrual basis of accounting is followed for the governmental and fiduciary fund types (General, Special Revenue, Debt Service, Capital Projects, Expendable Trust and Agency Funds). Under the modified accrual basis of accounting, revenues are recognized when they become susceptible to accrual; i.e., when they become measurable and available to finance expenditures of the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers property taxes as available if they are remitted within 60 days after the year end. Other revenues considered susceptible to accrual include sales tax, gas tax, motor vehicle license fees, franchise fees, interest income and charges for services. Licenses and permits, fines and forfeitures and other taxes are not susceptible to accrual because they are not measurable until received in cash. Grant revenues have been recorded according to the provisions of GASB Code Section G60, whereby grant funds earned but not received are recorded as a receivable, and grants received before the related revenue recognition criteria have been met are reported as deferred revenues. Expenditures are recorded when the related fund liability is incurred, except that principal and interest on general long- term debt is recognized when due. The long-term liability to be paid from governmental funds' resources for accumulated unpaid vacation and compensatory leave time is recorded in the General Long-Term Debt Account Group as it is expected to be paid from future resources. The accrual method of accounting is followed by the City's proprietary fund type (Enterprise Fund). Proprietary fund types are accounted for on an "income determination" or "cost of service" measurement focus. Accordingly, all assets and liabilities are included in their respective balance sheets, and the reported fund equity (total reported assets, less total reported liabilities) provides an indication of the economic net worth of the fund. Operating statements for proprietary fund types (on an income determination measurement focus) report increases (revenues) and decreases (expenses) in determining total economic net worth. Under this determination, unbilled service receivables are recorded at year-end. In accordance with Government Accounting Standards Board (GASB) Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the City applies all GASB pronouncements currently in effect as well as Financial Accounting Standard Board Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins of the Committee on Accounting Procedure issued on or before November 30, 1989. See independent auditors' report. -15- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): Budgetary Data: The City follows these procedures in establishing the budgetary data reflected in the financial statements. a. The annual budget is adopted by the City Council after the holding of a hearing and provides for the general operation of the City. The operating budget includes proposed expenditures and the means of financing them. be The City Council approves total budgeted appropriations and any amendments to appropriations throughout the year. This "appropriated budget" (as defined by GASB Code Section 2400.109) covers City expenditures in all governmental funds, except for debt service and capital improvement projects carded forward from prior years. The City Manager is authorized to transfer budgeted amounts between departments. Actual expenditures may not exceed budgeted appropriations at the fund level. Budget figures used in the accompanying financial statements are the final adjusted amounts. Supplemental appropriations authorized during the fiscal year ended June 30, 2000 were $195,415 in the General Fund and $305,000 in the Special Revenue Fund. Co Formal budgetary integration is employed as a management control device during the year. Commitments for materials and services, such as purchase orders and contracts, are recorded as encumbrances to assist in controlling expenditures. Capital projects appropriations are an automatic supplemental appropriation for the next year. All others lapse unless they are encumbered at year end or re-appropriated through the formal budget process. There were no outstanding encumbrances at year end. d. Annual budgets are adopted for the General and Special Revenue Funds on a basis substantially consistent with Generally Accepted Accounting Principles (GAAP). Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant reconciling items. Revisions to the originally adopted budget were made during the year and have been incorporated into budgetary amounts presented within these financial statements. No budgetary comparisons are presented for the Debt Service, Capital Projects, Expendable Trust and Proprietary Funds as the City is not legally required to adopt budgets for these fund types. See independent auditors' report. -16- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): Investments: Investments are stated at fair value (the value at which a financial instrument would be exchanged in a current transaction between willing parties other than a forced or liquidation sale), except for certain investments which have a remaining life of less than one year when purchased, which are stated at amortized cost. Those investments are short-term, highly liquid debt instruments including commercial paper, bankers' acceptances, and U.S. Treasury and agency obligations. General Fixed Assets: General fixed assets are recorded as expenditures in the various governmental funds at the time of purchase. Such assets include land, buildings, building improvements, furniture, fixtures, and equipment and are capitalized at cost in the General Fixed Assets Account Group. Donated fixed assets are recorded at their fair market value on the date donated. The cost of roads and streets, bridges, curbs and gutters, and lighting systems are not capitalized. No depreciation is provided on general fixed assets. Proprietary_ Fund Fixed Assets: Fixed assets purchased by the enterprise fund are capitalized at cost, while contributed assets are recorded at fair market value at the date of receipt. Depreciation has been provided on a straight-line basis over the following useful lives: Type of Asset Life'In Years Plant 5 - 40 Equipment 4 - 10 Land Held for Resale: Land held for resale is carried at the lower of cost or estimated realizable value. Fund balances are reserved in amounts equal to the carrying value of land held for resale because such assets are not available to finance the City's current operations. Property Taxes: Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters. The property taxes go into a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City of Tustin accrues only those taxes which are received within 60 days after year end. See independent auditors' report. -17- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): Property Tax Calendar: Property taxes are assessed and collected each fiscal year according to the following property tax calendar: Lien date Levy date Due date Collection date January 1 July 1 to June 30 November 1 - 1st installment February 1 - 2na installment December 10- 1st installment April 10- 2nd installment Compensated Absences: All vested vacation and compensatory leave time is recognized as an expense and as a liability in the proprietary type fund at the time the liability vests. Governmental fund types recognize the vested vacation and compensatory time as an expenditure in the current year to the extent it is paid during the year. Accrued vacation and compensatory time relating to governmental funds is included as a liability in the General Long-Term Debt Account Group as those amounts are payable from future resources (See Note 9), and within the balance sheet for amounts relating to the proprietary fund type. Cash and Cash Equivalents: All cash and investments of the proprietary fund are pooled with the City's pooled cash and investments and is therefore considered cash equivalents for purposes of the statement of cash flows. Comparative Data: Comparative total data for the prior year have been presented in the accompanying financial statements in order to provide an understanding of changes in the City's financial position and operations. However, comparative data by fund type have not been presented in each of the statements since their inclusion would make the statements unduly complex and difficult to read. Certain prior year balances have been reclassified in order to conform with the current year's presentation. Total Column on Combined Statements: The total column on the Combined Financial Statements in captioned "Memorandum Only" to indicate that it is presented only to facilitate financial analysis and such data is not comparable to a consolidation. Data in this column does not present financial position, results of operations, or cash flows in conformity with generally accepted accounting principles. Interfund eliminations have not been made in the aggregation of this data. See independent auditors' report. -18- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 2. CASH AND INVESTMENTS: Authorized Investments: Under provision of the City's investment policy, and in accordance with Section 53601 of the California Government Code, the City may invest in the following types of investments: Certificates of Deposit (or Time Deposits) placed with commercial banks and/or savings and loan associations · Bankers' Acceptances · Medium-Term Corporate Notes · Commercial Paper · Local Agency Investment Fund (LAIF) · U.S. Treasury securities with a maturity of five years or less · State of California and local agency bonds · Federal agency short-term bonds or notes with a maturity of five years or less · Money market mutual funds The City has monies held by trustees or fiscal agents pledged to the payment or security of certain bonds or for employees' deferred compensation plan. The California Government Code provides that these monies, in the absence of specific statutory provisions governing the issuance of bonds, may be invested in accordance with the ordinance, resolutions or indentures specifying the types of investments its trustees or fiscal agents may make. Pooled Deposits/Credit Risk: The California Government Code requires California banks and savings and loan associations to secure a City's deposits by pledging government securities as collateral. The market value of pledged securities must equal at least 110% of a City's deposits. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City's total deposits. The City may waive collateral requirements for deposits which are fully insured up to $100,000 by federal depository insurance. See independent auditors' report. -19- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 2. CASH AND INVESTMENTS (CONTINUED): Pooled Deposits/Credit Risk (Continued): In accordance with GASB Statement No. 3, deposits are classified as to credit risk by three categories as follows: Category 1 - Insured or collateralized with securities held by the City or by its agent in the City's name. Category 2 - Category 3 - Collateralized with securities held by the pledging financial institution's trust department or agent in the City's name. Uncollaterali'zed Investmems that are represented by specific identifiable investment securities are classified as to credit risk by three categories as follows: Category 1 - Insured or registered, or securities held by the City or its agent in the City's name. Category 2 - Uninsured and unregistered with securities held by the counterparty's trust department or agent in the City's name. Category 3 - Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the City's name. Deposits were categorized as follows at June 30, 2000: Demand accounts (overdraft) Not Required Categow to be Bank Carrying 1 2 3 Categorized Balances Amount $ -$ -$ -$ - $ (353,098) $(1,254,55.4) The difference between the bank balances and carrying amount of the deposits is due to outstanding checks in the amount of $1,555,390 and deposits in transit of $653,934. See independent auditors' report. -20- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 , CASH AND INVESTMENTS (CONTINUED): Investments at June 30, 2000 are categorized as follows: State of California Local Agency Investment Fund State of California Bonds Bankers Acceptances Federal Agency Investments: Federal Home Loan Mortgage Corporation Notes Student Loan Mortgage Association Notes Federal Home Loan Bank Notes Freddie Mac Notes U.S. Treasury Notes Held by fiscal agent: Money Market Mutual Funds Investment Agreements Commercial Paper Not Required Category_ to be 2 3 Categorized $ - $ $ - $ 34,756,944 2,650,900 3,004,705 5,829,672 5,001,367 13,003,762 2,981,719 2,994,000 Total Investments $ 35,466,125 $ See independent auditors' report. - 207,898 7,079,417 9,628,472 - $ 207,898 $ 51,464,833 -21 - Fair Value $ 34,756,944 2,650,900 3,004,705 5,829,672 5,001,367 13,003,762 2,981,719 2,994,000 7,079,417 9,628,472 207,898 $ 87,138,856 CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 2. CASH AND INVESTMENTS (CONTINUED): Cash and investments at June 30, 2000 consisted of the following: Demand accounts (overdraft) Petty cash Investments $ (1,254,554) 5,250 87,138,856 Total Cash and Investments $ 85,889,552 The City follows the practice of pooling cash and investments of all funds except for funds required to be held by outside fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated monthly to the various funds based on the month-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund. Investments Not Subject to Categorization: Investments in the California Local Agency Investment Fund (LAIF) are not categorized, as GASB 3 does not require categorization of investment pools managed by another government. Local Agency Investment Fund (LAIF): The LAIF is a voluntary program created by statute in 1977 as an investment alternative through which local governments may pool investments. The LAIF has oversight by the Local Agency Investment Advisory Board, which consists of five members as designated by state statute. Each city may invest up to $30,000,000 each in the Fund for the city and redevelopment agency and may also invest Without limitation in special bond proceeds accounts. Investments in LAIF are highly liquid, as deposits can be converted to cash within twenty-four hours without loss of interest. The City's proportionate share of the fair value of its investment in LAIF amounted to $34,756,944. Included in LAIF's investment portfolio are certain derivative securities or similar products such as structured notes totaling $1,909,398,000 and asset-backed securities totaling $770,758,000. LAIF's, and the City's, exposure to credit, market or legal risk is not available. Structured Notes: Included in the City's investment portfolio are $5,968,126 of Federal Agency callable issued, which are defined as structured notes. These notes are callable on the quarter (within five to ten business days notice) throughout the life of the notes. See independent auditors' report. -22- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 3. DUE TO/DUE FROM OTHER FUNDS/INTERFLrND TRANSFERS: General Fund Debt Service Funds: South Central Project Area Town Center Project Area Marine Base Project Area Capital Projects Funds: South Central Project Area Town Center Project Area Marine Base Project Area Low Income Housing Enterprise Fund Fiduciary Funds: Assessment District 95 - 1 Assessment District 95 - 2 Due From $ 3,565,956 320,562 107,462 1,058,244 $ 5,052,224 Interfund transfers were as follows: Due To $ 924,159 1,499 164,721 53,680 2,000,000 107,463 700,000 697 41,761 1,058,244 $ 5,O52,224 General Fund Special Revenue Funds: Gas Tax Park Acquisition and Development Asset Forfeiture Measure M Supplemental Law Enforcement Debt Service Funds: South Central Project Area Town Center Project Area Marine Base Project Area Capital Projects Funds: Other Capital Projects Construction 95-1 Town Center Project Enterprise Fund Agency Fund: Assessment District 95 - 1 See independent auditors' report. -23- Operating Transfers In $ 2,864,031 992,811 2,721,191 9,398 $ 6,587,431 Operating Transfers Out $ 4,243,611 569,000 321,765 10,739 148,592 189,438 253,431 15,145 90,000 736,313 9,397 .$. 6,587,431 CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 4. PROPERTY, PLANT AND EQUIPMENT: Changes in the components of the General Fixed Assets Account Group for the year ended June 30, 2000 were as follows: Balance at Balance at June 30, 1999 Additions Deletions .June 30, 2000 Land and improvements Buildings and improvements Machinery and equipment Construction in progress $ 8,840,418' $ - $ - $ 8,840,418 26,085,066 28,555 - 26,113,621 8,311,396 1,649,589 518,804 9,442,181 4,275,087 1,346,953 634,583 4,987,457 $ 47,511,967 $ 3,025,097 $ 1,153,387 $ 49,383,677 Components of the property, plant, and equipment of the Water Enterprise Fund as of June 30, 2000 are as follows: Land Machinery and equipment Construction in progress 820,222 33,081,699 3,266,800 Total Less: accumulated depreciation 37,168,721 (7,737,406) Net $ 29,431,315 5. RETIREMENT PLAN: Plan Description: The City of Tustin 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 the State of 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: 400 P Street, Sacramento, CA 95814. See independent auditors' report. -24- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 5. RETIREMENT PLAN (CONTINUED): Funding Policy: Participants are required to contribute 7% (9% for safety employees) of their annual covered salary. The City makes the contributions required of City employees on their behalf and for their account. The City is required to contribute the remaining amount necessary to fund the benefits for its members, using the actuarial losses recommended by the PERS actuaries and actuarial consultants and adopted by the Board of Administration. Annual Pension Cost: For 2000, the City's annual pension cost of $1,543,645 for PERS was equal to the City's required and actual contributions. The required contribution was determined as part of the June 30, 1998 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 8.25% investment rate of return (net of administrative expenses), (b) projected annual salary increases that vary by duration of service, and (c) 3.75% per year cost-of-living adjustments. Both (a) and (b) included an inflation component of 3.5%. 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 four-year period (smoothed market value). PERS unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. The remaining amortization period as of the actuarial valuation date was 24 years for the miscellaneous employee plan and 16 years for the public safety plan. Three-Year Trend Information For PERS Fiscal Annual Pension Percentage of Net Pension Year Cost (APC) APC Contributed Obligation 6/30/1998 $ 2,165,017 100% 6/30/1999 2,111,964 100% 6/30/2000 1,543,645 100% See independent auditors' report. -25- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 5. RETIREMENT PLAN (CONTINUED): Annual Pension Cost (Continued): Schedule of Funding Progress For PERS Actuarial Accrued UAAL as a Actuarial Actuarial Liability Unfunded % of Valuation Value of (AAL) AAL Funded Covered Covered Date Assets Entry Age (UAAL) Ratio Payroll Payroll (A) (B) (B-A) (A/B) (C) [(B-A/C] 6/30/96 Misc. $19,065,449 $ 17,102,259 $ (1,963,190) 111.5 % $ 6,826,925 (28.757) % Safety 19,118,600 20,476,953 1,358,353 93.7 % 4,669,92..0. 29.087 % Total $ 38,184,049 $ 37,579,212 $ (604,837) 101.6 % $11,496,845 (5.260) % 6/30/97: Misc. $22,590,044 $ 17,943,819 $ (4,646,225) 125.9% $ 7,218,603 (64.365)% Safety 23,015,226 21,621,512 (1,393,714) 106.4 % 5,215,299 (26.724) % Total $ 45,605,270 $ 39,565,331.. $ (6,039,939) 115.3 % $12,433,902 (48.576) % 6/30/98: Misc. $28,914,224 $ 21,382,925 $ (7,531,299) 135.2% $ 7,267,512 (103.630)% Safety 28,288,600 24,422,613 (3,865,987) 115.8 % 5,207,724 (74.236) % Total $ 57,202,824 $ 45,805,538 $ (11,397,286) 124.9 %' $12,475,236 (91.380) Post-Employment Health Care Benefits: In addition to the pension benefits described above, the City provides certain health insurance benefits. In accordance with the plan, which was approved by the City Council, these benefits are available to all employees who are eligible for normal PERS retirement and who retire after January 1, 1990. The City pays the full amount of the insurance premiums or a "not-to-exceed" amount, whichever is less, based on the current Memorandum of Understanding. These premiums are recorded as current expenditures in the General Fund. The cost for 33 retirees was $6,727 in fiscal year 1999-2000. See independent auditors' report. -26- CITY OF TUST1N NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 6. DEFERRED COMPENSATION: The City offers its employees deferred compensation plans created in accordance with Internal Revenue Code Section 457. The City has two plans; one is available to all City employees and the other for certain named employees that permitted them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. In fiscal year 1998-99, the plans were amended so that the assets of the plans are now held in trust for the exclusive benefit of the participants and their beneficiaries and no longer subject to the claims of the City's general creditors. The plan assets that are administered by an outside party in accordance with Governmental Accounting Standards Board Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 45 7 Deferred Compensation Plans, have been removed from the financial statements of the City. The assets for the plan for which the City performs the investment function and administration are recorded in the Expendable Trust Fund in the amount of $236,512. 7. SELF-INSURANCE PROGRAM/RISK POOL: The City maintains self-insurance programs for workers' compensation, general public liability, and auto liability. Claims are processed by an outside insurance service which administers the programs. The general and auto liability and workers' compensation program provides for self-insurance up to a maximum of $250,000 and $275,000, per incident, respectively. General liability claims which exceed the limit are insured through Orange County Cities Risk Management Authority (OCCRMA) up to a maximum per incident of $10,000,000 and $20,000,000 annual aggregate (See below). Workers' compensation claims which exceed the limit are insured by OCCRMA up to the California statutory limits for workers' compensation. Estimates for all general liabilities, up to the self-insured levels, have been recorded in the General Long-Term Debt Account Group. At June 30, 2000, total estimated general claims payable, including a provision for incurred but not reported claims, were $305,239 (See Note 9). Workers' Compensation claims of $489,343 (including IBNR's) are recorded in the General Fund. Changes in the balances of claims liabilities for the years ended June 30, 2000 and 1999 including a provision for incurred but not reported claims were as follows: Claims Claims and Claims Year Ended Payable Changes in Claims Payable June 30, July 1 Estimates Payments June 30 1999 $ 937,420 $ 491,408 $ (727,074) $ 701,754 2000 701,754 425,186 (332,358) 794,582 See independent auditors' report. -27- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 7. SELF-INSURANCE PROGRAM/R/SK POOL (CONTINUED): There have been no significant changes in insurance coverage as compared to last year and the City has not experienced settlements in excess of insurance coverage during the past three fiscal years. Orange County Cities Risk Management Authority_: The City of Tustin is a member of the Orange County Cities Risk Management Authority (OCCRMA). OCCRMA, a consortium of 13 cities in Orange County, California, was established to pool resources, share risks, purchase excess insurance, and to share costs for professional risk management and claims administration. Member cities may be assessed the difference between funds available and the $20,000,000 annual aggregate in proportion to their annual premium. 8. LOANS RECEIVABLE: The Tustin Community Redevelopment Agency has provided a commercial loan program to small businesses for making improvements. These loans are non-interest bearing. Due to the long-term nature of the loans, the Agency has reserved fund balance. $ 188,951 The City has advanced disability payments to police officers. Repayment of the advances is to be made through PERS. The City has also made loans to certain community organizations. Due to the long-term nature of these loans, the City has reserved fund balance. Total Loans Receivable 12,020 $ 200,971 9. CHANGES IN LONG-TERM DEBT: The following is a summary of the changes in the General Long-Term Debt Account Group for the year ended June 30, 2000: Balance at Balance at July 1, 1999 Additions Retirements June 30, 2000 Tax allocation bonds Countrywide revenue bonds Cl'aims and judgments (Note 7) Compensated absences Capitalized leases $ 20,030,000 $ - $ 760,000$ 19,270,000 2,250,000 - 240,000 2,010,000 326,878 244,191 265,830 305,239 1,510,803 167,586 - 1,678,389 277,520 45,298 154,406 168,412 Total $ 24,395,201 $ 457,075 $ 1,420,236 $ 23,432.040 See independent auditors' report. -28- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 9. CHANGES IN LONG-TERM DEBT (CONTINUED): Tax Allocation Bonds: · On July 1, 1998, the Tustin Community Redevelopment Agency issued $20,805,000 Tax Allocation Refunding Bonds to refund the Agency's Town Center Area Redevelopment Project Tax Allocation Refunding Bonds, Series 1987 in aggregate principal amount of $5,145,000 and the Agency's Town Center Area Redevelopment Project Subordinate Tax Allocation Bonds, Series 1991 in aggregate principal amount of $12,880,000. The net proceeds of $20,192,172 (after payment of $552,424 in underwriting fees, insurance, and other issuance costs) plus an additional $805,500 of 1987 Series sinking fund monies were used to purchase U.S. government securities. Securities for 1987 and 1991 bonds were deposited in an irrevocable trust with an escrow agent to provide for all future payments when Tax Allocation Bonds, Series 1987 and 1991 are called for redemption. As a result, the 1987 Tax Allocation Bonds have been removed from the general long-term debt account group. As of June 30, 2000, the 1987 bonds have been fully redeemed and $12,775,000 of the defeased 1991 bonds are outstanding. Serial bonds are payable in annual installments ranging from $775,000 commencing on December 1, 1998. Interest is payable semiannually on June 1 and December 1, with rates ranging from 3.5% to 5.0% per annum. The bonds maturing on or after December 1, 2009, are subject to redemption prior to maturity as a whole or in part, at the option of the Agency, on any date on or after December 1, 2008 at prices ranging from 100% to 101% of principal. $ 19,270,000 The annual requirements to amortize the tax allocation refunding bonds are as follows: Year Ending June 30, Principal Interest Total 2001 $ 795,000 2002 825,000 2003 850,000 2004 890,000 2005 920,000 Thereafter 14,990,000 $ 864,929 $ 833,537 800,450 765,205 727,640 4,719,129 1,659,929 1,658,537 1,650,450 1,655,205 1,647,640 19,709,129 Total $ 19,270,000 $ 8,710,890 $ 27,980,890 See independent auditors' report. -29- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 9. CHANGES IN LONG-TERM DEBT (CONTINUED): Count _rywide Revenue Bonds: In June 1996, the City, joining with eight other cities created a Countrywide Joint Powers Authority (CJPA) for the purpose of financing the cost of an 800 MHz Radio System used among all County public safety agencies and public works, and other municipal capital improvement. In July 1996, CJPA issued a lease revenue bond in the amount of $27.725 million, at interest rates ranging from 4.1% to 5.75%. Under a lease and lease-back agreement, the City received a prepaid rent in the amount of $2.7 million to upgrade the radio system and to finance construction of a new park. Principal is payable in annual installments ranging from $220,000 to $330,000 commencing on August 1, 1997. Interest is payable semiannually on February 1 and August 1 with rates ranging from 4.1% to 5.3%. The bonds maturing on or after August 1, 2007 are subject to redemption prior to maturity as a whole or in part on any date on or after August 1, 2006 at prices ranging from 100% to 102% or principal. The annual requirements to amortize the bonds are as follows: Year Ending June 30, Principal Interest 2001 $ 25O,000 2002 260,000 2003 270,000 2004 285,000 2005 300,000 Thereafter 645,000 94,908 82,983 70,193 56,453 41,678 34,501 Total $ 2,010,000 $ 380,716 $ 2,010,000 Total 344,908 342,983 340,193 341,453 341,678 679,501 2,390,716 See independent auditors' report. -30- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 9. CHANGES IN LONG-TERM DEBT (CONTINUED): Capitalized Leases: The City has entered into lease agreements for copiers and computer equipment which qualify as capital leases. Future minimum payments relating to the leases are as follows: Year Ending June 30, Amount 2001 $ 151,240 2002 12,891 2003 9,324 2004 745 Total minimum lease payments Lease amount representing interest 174,200 (5,788) Present value of minimum lease payments .$ 168,412 The original cost of the equipment, aggregating $517,557 has been capitalized in the General Fixed Assets Account Group. The following is a summary of the changes in long-term debt of the Water Enterprise Fund for the year ended June 30, 2000: Balance at Balance at _July 1, 1999 Additions Retirements June 30, 2000 Certificates of participation Notes payable Compensated absences $ 9,475,000 $ - $ 425,000$ 9,050,000 6,409,558 - 569,082 5,840,476 75,113 - 15,193 59,920 Total $ 15,959,671 $ - $ 1,009,275 $ 14,950,396 See independent auditors' report. -31 - CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 9. CHANGES IN LONG-TERM DEBT (CONTINUED): Certificates of Participation: On April 21, 1993, the Tustin Water Corporation issued $11,500,000 1993 Certificates of Participation in order to pay for the design and construction cost of water system improvements and also to advance refund the remaining $3,650,000 of the 1983 Water Revenue Bonds. During the year ended June 30, 1997, the Corporation was dissolved and the debt was transferred to the City. The 1983 bonds have been fully retired. Serial bonds are payable in annual installments ranging from $275,000 to $825,000 commencing April 1, 1994. Term bonds of $2,800,000 are due on April 1, 2013.. Interest on all bonds is payable semiannually on October 1 and April 1 with rates ranging from 8.20% to 5.20% per annum. The bonds maturing on or after April 1, 2004 are subject to redemption prior to maturity as a whole or in part on any date on or after April 1, 2003 at prices ranging from 100% to 102% of principal. 9,050,000 The annual requirements to amortize the certificates of participation are as follows: Year Ending June 30, Principal Interest Total 2001 $ 450,000 2002 500,000 2003 525,000 2004 550,000 2005 600,000 Thereafter 6,425,000 $ 496,850 $ 459,950 421,200 393,900 365,300 1,617,200 946,850 959,950 946,200 943,900 965,300 8,042,200 Total $ 9,050,000 $ 3,754,400 $ 12,804,400 Notes Payable: In September 1996, the City of Tustin entered into an agreement with the Orange County Water District for the acquisition, construction, installation and operation of well facilities to improve water supply facilities and executed a note payable of $750,000. Interest on the note is 3.50% per annum with annual payments of $52,771 due through September 30, 2015 commencing September 30, 1996. $ 638,216 See independent auditors' report. -32- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 9. CHANGES IN LONG-TERM DEBT (CONTINUED): Notes Payable (Continued): The annual requirements to amortize the note payable are as follows: Year Ending June 30, Principal Interest 2001 $ 30,433 $ 22,338 2002 31,498 21,273 2003 32,601 20,170 2004 33,742 19,029 2005 34,923 17,848 Therea~er 475,019 105,462 Total ...$. 638,216 $ 206,120 In February 1992, the City of Tustin entered into an agreement with the Orange County Water District for the design, construction and operation of a desalination treatment facility for the purpose of removing nitrates and total dissolved solids (TDS) from ground water. In 1997-98 the City executed the note payable of $6,759,562. Interest on the note is 7% per annum with annual payments of $780,238 due through June 30, 2008 commencing June 30, 1998. The annual requirements to amortize the note payable are as follows: Year Ending June 30, Principal Interest 2001 $ 561,571 2002 584,519 2003 608,583 2004 633,826 2005 660,315 Therea~er 2,153,446 218,667 195,719 171,655 146,412 119,923 187,268 Total $ 5,202,260 $ 1,039,644 Total 52,771 52,771 52,771 52,771 52,771 580,481 844,336 $'5,202,260 Total 780,238 780,238 780,238 780,238 780,238 2340,714 6,241,904 See independent auditors' report. CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 10. SPECIAL ASSESSMENT DISTRICTS BONDS: Special assessment districts exist in various parts of the City to provide improvements to properties located in those districts. Properties are assessed for the cost of improvements; these assessments are payable over the term of the debt issued to finance the improvements and must be sufficient to repay this debt. The bonds listed below were issued pursuant to the Refunding Act of 1984 for the 1915 Improvement Act Bonds and the Improvement Bond Act of 1915 and are the liabilities of the property owners and are secured by liens against the assessed property. The City Treasurer acts as an agent for collection of principal and interest payments by the property owners and remittance of such monies to bondholders. Neither the faith and credit nor the general taxing power of the City of Tustin have been pledged to the payment of the bonds. Therefore, none of the following special assessment bonds have been included in the accompanying financial statements. Amount Outstanding District Bonds of Issue June 30, 2000 Reassessment District 95-1 Reassessment District 95-2, 1996 Reassessment District 95-2, 1997 Reassessment District 95-2, 1998 Reassessment District 95-2, 1999 $ 35,705,000 $ 31,105,000 41,500,000 30,366,000 3,300,000 2,990,000 4,185,000 3,950,000 4,995,000 4,995,000 Total $ 89,685,000 $ 73,406,000 Tustin Public Financing Authority: In February 1996, the Tustin Public Financing Authority (PFA)issued $35,705,000 of Revenue Bonds, Series A, to facilitate the issuance of the $35,705,000 of Assessment District Bonds for Reassessment District 95-1. The proceeds of the PFA bonds were used to purchase certain limited obligation bonds of Reassessment District 95-1. At June 30, 2000, the amount of the PFA Revenue Bonds, Series A outstanding was $31,105,000. In October 1997, the PFA issued $3,300,000 of Revenue Bonds, Series B, to facilitate the issuance of the $3,300,000 of Assessment District bonds for Reassessment District 95-2. The proceeds were used to purchase the entire issue of limited obligation bonds of the Reassessment District 95-2. The 95-2 Assessment bonds (issued October, 1997 and concurrently sold to the PFA) were issued for the purpose of refunding a portion of the 1996 Assessment Bonds 95-2. At June 30, 2000, the amount of the PFA Revenue Bonds, Series B outstanding was $2,900,000. See independent auditors' report. -34- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 10. SPECIAL ASSESSMENT DISTRICTS BONDS (CONTINUED): Tustin Public Financing Authority (Continued) In December 1998, the PFA issued $4,185,000 of Revenue Bonds, Series C to facilitate the issuance of the $4,185,000 of Assessment District bonds for reassessment District 95-2. The proceeds were used to purchase the entire issue of limited obligation bonds of the Reassessment District 95-2. The 95-2 Assessment bonds (issued December, 1998 and concurrently sold to the PFA) were issued for the purpose of refunding a portion of the 1996 Assessment Bonds 95-2. The net proceeds of $4,135,943 were used to refund $3,648,000 of Assessment District 95-2 bonds. As a result, a portion of the Assessment District 95-2 Bonds are considered to be defeased. At June 30, 2000, the amount of the PFA Revenue Bonds, Series C outstanding was $3,950,000. In November 1999, the PFA issued $4,995,000 of Revenue Bonds, Series D to facilitate the issuance of the $4,995,000 of Assessment District bonds for reassessment District 95-2. The proceeds were used to purchase the entire issue of limited obligation bonds of the Reassessment District 95-2. The 95-2 Assessment bonds (issued November, 1999 and concurrently sold to the PFA) were issued for the purpose of refunding a portion of the 1996 Assessment Bonds 95-2. The net proceeds of $4,937,880 were used to refund $4,323,000 of Assessment District 95-2 bonds. As a result, a portion of the Assessment District 95-2 Bonds are considered to be defeased. At June 30, 2000, the amount of the PFA Revenue Bonds, Series D outstanding was $4,995,000. Neither the general taxing power of the City nor the faith or credit of the PFA or the City have been pledged to the payment of the bonds. Therefore, the bonds have not been included in the accompanying financial statements. 11. JOINT VENTURES: Orange County Fire Authority: In January 1995, the City of Tustin entered into a joint powers agreement with the Cities of Buena Park, Cypress, Dana Point, Irvine, Laguna Hills, Laguna Niguel, Lake Forest, La Palma, Los Alamitos, Mission Viejo, Placentia, San Clemente, San Juan Capistrano, Seal Beach, Stanton, Villa Park and Yorba Linda and the County of Orange to create the Orange County Fire Authority. The purpose of the Authority is to provide for mutual fire protection, prevention and suppression services and related and incidental services including, but not limited to, emergency medical and transport services, as well as providing facilities and personnel for such services. The effective date of formation was March 1, 1995. The Authority's governing board consists of one representative from each City and two from the County. The operations of the Authority are funded with structural fire fees collected by the County through the property tax roll for the unincorporated area and on behalf of all member Cities except for the Cities of Stanton, Tustin, San Clemente, Buena Park, Placentia and Seal Beach. The County pays all structural fees it collects to the Authority. The Cities of Stanton, Tustin, San Clemente, Buena Park, Placentia and Seal Beach are considered "cash contract Cities" and accordingly make cash contributions based on the Authority's annual budget. See independent audkors' report. -35- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 11. JOINT VENTURES (CONTINUED): Countywide Joint Powers Authority: In June 1996, the City, joining with eight other cities created a Countywide Joint Powers Authority (CJPA) for the purpose of financing the cost of an 800 MHz Radio System used among all County public safety agencies and public works, and other municipal capital improvements. In July 1996, CJPA issued a lease revenue bond in the amount of $27.725 million, at interest rates ranging from 4.1% to 5.75%. Under a lease and lease-back agreement, the City received a prepaid rent in the amount of $2.7 million to upgrade the radio system and to finance construction of a new park. 12.RESERVED AND DESIGNATED FUND EQUITIES: Fund balances at June 30, 2000 are reserved as follows: General Fund: Prepaid items Long-term loans receivable Debt Service Funds: Retirement of general long-term debt $ 596,428 12,020 608,448 8,199,353 Capital Projects Funds: Long,term loans receivable Low income housing Land held for resale Deposits 188,951 5,140,345 2,905,000 30,000 8,264,296 Trust and Agency Funds: Reserved for retiree benefits _.. 23.6,512 Total Governmental Funds $. 17,3O8,609 Unreserved fund balances at June 30, 2000 are designated as follows: General Fund: Capital outlay Self-insurance Contingencies Capital Projects Funds: Specific projects and programs $ 5,328,066 1,974,444 6,326,221 13,628,731 22,110,296 Total Governmental Funds $ 35,739,027 See independent auditors' report. -36- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 13. DEFERRED REVENUE: Deferred revenue at June 30, 2000 consists of the follOwing: General Fund: Street development Special Revenue Fund: Marine base closure $ 274,846 315,557 14. SEGMENT INFORMATION: $ 590,4O3 Net working capital of the Water Enterprise Fund at June 30, 2000 was as follows: Current assets Current liabilities payable from current assets Net working capital 15. CONTR/BUTED CAPITAL: $15,837,831 .... (2,608,794) $13,229,037 Changes in Enterprise Fund contributed capital during 1999-2000 were as follows: Beginning balance, July 1, 1999 Change during the year Ending balance, June 30, 2000 16. OTHER REQUIRED INDIVIDUAL FUND DISCLOSURES: $ 2,029,462 155,577 $ 2,185,039 The Marine Base Debt Service Fund and Capital Projects Fund had deficit fund balances of $53,680 and $202,178, respectively. These deficits are expected to be relieved fromfuture revenues or transfers from other funds. Expenditures exceeded appropriations by $142,996 in the Asset Forfeiture Special Revenue Fund. See independent auditors' report. -37- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2000 17. COMMITMENTS AND CONTINGENCIES: There are certain legal actions pending against the City which have arisen in the normal course of operations. In the opinion of management and the City Attorney, the ultimate resolution of such actions is not expected to have a significant impact, if any, on the financial statements or operations of the City. AB265 requires redevelopment agencies to set aside 20 percent of their tax increment from project areas established before 1976 for low and moderate income housing. Between fiscal years 1985-86 and 1991-92, the Tustin Community Redevelopment Agency deferred a total of $2,776,042 from its low and moderate housing obligation. On February 1, 1993, the Agency adopted a plan to eliminate the deficit in subsequent years. 18. PROPOSITION 218: Proposition 218, which was approved by the voters in November 1996, will regulate the City's ability to impose, increase and extend taxes, assessments and fees. Certain language in the initiative is unclear as to the scope and impact of the proposition. Future court rulings or state legislation may clarify these issues. At this time it is uncertain as to the effect that Proposition 218 will have on the City's ability to maintain or increase the revenue it receives from taxes, assessments, property-related fees and charges. Any new, increased, or extended taxes, assessments, certain property-related fees and charges subject to the provisions of Proposition 218, require voter or property owner approval before they can be implemented. Additionally, Proposition 218 provides that these taxes, assessments, and fees are subject to the voter initiative process and may be rescinded in the future by the voters. Also, unclear is the extent to which a 1995 California Supreme Court ruling (the Guardino case) upholding the voter approval requirements of a previously enacted state initiative (Proposition 62) are applicable to prior periods. See independent auditors' report. -38- SUPPLEMENTARY INFORMATION - COMBINGING INDIVIDUAL FUND AND ACCOUNT GROUP FINANCIAL STATEMENTS -39- THIS PAGE LEFT BLANK INTENTIONALLY GENERAL FUND The General Fund is used to account for all revenues and expenditures of the City which are not required to be accounted for in other special purpose funds. -41 - CITY OF TUSTIN COMPARATIVE BALANCE SHEETS GENERAL FUND June 30, 2000 and 1999 ASSETS Cash and investments Cash and investments with fiscal agent Taxes receivable Interest receivable Accounts receivable Due from other funds Prepaid items Loans receivable TOTAL ASSETS LIABILITIES AND FUND BALANCE LIABILITIES: Accounts payable and accrued liabilities Due to other funds Deposits Deferred revenue TOTAL LIABILITIES FUND BALANCE: Reserved for: Prepaid items Long-term loans receivable Unreserved - Designated for: Capital outlay Self-insurance Contingencies TOTAL FUND BALANCE TOTAL LIABILITIES AND FUND BALANCE 2OOO $ 9,769,011 1,717,470 104,258 448,943 4,885,904 3,565,956 596,428 12,020 $ 21,099,990 $ 2,069,806 924,159 3,594,000 274,846 6,862,811 596,428 12,020 5,328,066 1,974,444 6,326,221 14,237,179 $ 21,099,990 1999 $ 11,841,851 96,241 194,259 6,412,891 2,656,056 226,959 10,195 $ 21,438,452 $ 3,657,121 292,867 4,010,240 278,527 8,238,755 226,959 10,195 4,839,545 1,854,214 6,268,784 13,199,697 $ 21,438,452 See independent auditor's report. - 42 - CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND For the year ended June 30, 2000 With comparative actual amounts for the year ended June 30, 1999 REVENUE S: Taxes Licenses and permits Fines and forfeitures Use of money and property Intergovernmental revenue Charges for services Other revenue TOTAL REVENUES EXPENDITURES: Current: General government Public safety Public works Community services Capital outlay Debt service: Principal retirement Interest and fiscal charges TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from long-term debt Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE AT END OF YEAR See independent auditors' report. 2000 Budget Actual $ 26,612,600 $ 27,721,633 262,100 650,518 445,000 688,362 452,000 739,893 232,000 1,401,888 1,226,000 1,318,103 1,562,131 1,372,167 Variance Favorable (Unfavorable) $ 1,109,033 388,418 243,362 287,893 1,169,888 92,103 (189,964) I999 Actual $ 27,747,379 486,925 741,603 467,448 1,276,706 1,203,980 1,003,761 30,791,831 33,892,564 3,100,733 32,927,802 5,651,833 5,553,758 98,075' 3,765,138 15,674,161 15,826,727 (152,566) 15,403,356 7,405,001 6,805,789 599,212 8,227,532 3,315,638 2,470,250 845,388 2,512,655 1,609,908 694,666 915,242 373,847 217,000 154,406 62,594 253,699 128,000 15,204 112,796 120,422 34,001,541 31,520,800 2,480,741 30,656,649 (3,209,710) 2,371,764 5,581,474 2,271,153 - 45,298 45,298 3,026,800 2,864,031 (162,769) (4,595,800) (4,243,611) 352,189 2,499,495 (2,944,278) (1,569,000) (1,334,282) 234,718 (444,783) (4,778,710) 1,037,482 5,816,192 1,826,370 13,199,697 13,199,697 $ 8,420,987 $ 14,237,179 $ 5,816,192 11,373,327 $ 13,199,697 - 43 - THIS PAGE LEFT BLANK INTENTIONALLY -44 - SPECIAL REVENUE FUNDS Gas Tax - This fund accounts for revenues and expenditures apportioned under the Street and Highways Code of the State of Califomia. Expenditures may be made for any street-related purpose allowable under the Code. Park Acquisition and Development - This fund is used to accounts for fees received from developers to develop the City's park system. Asset Forfeiture - This fund is used to account for monies received from the Federal government that are used for special law enforcement purchases. Air OualiW - This fired used to account for funds received from South Coast Air Quality Management District to be used for reducing pollution. Marine Base Closure - This fund is used for account for federal funds received for studying the reuse of the Marine Base after closure. Measure M - This fund is used to account for monies received from the County for street projects. Sup?lemental Law Enforcement - This law was established under Government Code Section 30061 enacted by A.B. 3229, Chapter 134, of the 1996 Statues and is appropriation from the State Budget for the "Citizens Option for Public Safety Program". These funds can only be used for police front line municipal activities that provide police services to the City in prevention of drug abuse, crime prevention and community awareness programs. -45 - CITY OF TUSTIN COMBINING BALANCE SHEET ALL SPECIAL REVENUE FUNDS June 30, 2000 With comparative totals for June 30, 1999 ASSETS Cash and investments Accounts receivable Due from other governments Due from other funds TOTAL ASSETS Gas Tax Park Acquisition and Development 3,312,088 $ 4,009,076 118,662 - 3,430,750 $ 4,009,076 Asset Forfeiture $ 27,310 $ 27,310 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Due to other funds Deferred revenue TOTAL LIABILITIES FUND BALANCES: Unreserved: Undesignated TOTAL LIABILITIES AND FUND BALANCES $ 22,204 . 22,204 3,408,546 $ 3,430,750 $ 22,071 22,071 3,987,005 $ 4,009,076 $ 2,280 - 2,280 25,030 $ 27,310 See independent auditors' report. - 46 - Air Quality Marine Base Closure 572,131 $ 315,557 19,023 - - $ 591,154 $ 315,557 Measure M Supplemental Law Enforcement $ 1,521,453 $ - 155,002 - $ 1,676,455 Totals 2000 1999 $ 9,757,615 $ 10,207,008 137,685 18,652 155,002 321,255 - 88,811 $ 10,050,302 $ 10,635,726 - $ 315,557 315,557 $ 108,287 108,287 154,842 $ 1,239,218 550,000 315,557 251,944 470,399 2,041,162 591,154 $ 591,154 $ 315,557 1,568,168 $ 1,676,455 9,579,903 8,594,564 $ 10,050,302 $ 10,635,726 - 47 - CITY OF TUSTIN COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL SPECIAL REVENUE FUNDS For the year ended June 30, 2000 With comparative totals for the year ended June 30, 1999 REVENUES: Use of money and property Intergovernmental revenue Other revenue TOTAL REVENUES EXPENDITURES: Current: General government Public works Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES AT BEGINNING OF YEAR FUND BALANCES AT END OF YEAR Gas Tax $ 203,304 1,227,566 1,430,870 113,131 113,131 1,317,739 (569,000) (569,000) 748,739 2,659,807 $ 3,408,546 Park Acquisition and Development $ 246,087 204,882. 450,969 250,566 250,566 200,403 992,811 992,811 1,193,214 2,793,792 $ 3,987,006 Asset Forfeiture $ 1,534 50,180 51,714 319,496 319,496 (267,782) (321,765) (321,765) (589,547) 614,577 $ 25,030 See independent auditors' report. - 48 - Air Quality 35,119 73,693 108,812 Marine Base Closure $ 19,370 75,915 95,285 Measure M 95,233 853,652 . 948,885 Supplemental Law Enforcement 148,592 148,592 Totals 2000 1999 600,647 2,429,598 204,882 487,241 8,677,945 55,113 3,235,127 9,220,299 1,062 1,894 2,956 94,665 620 95,285 1,411,069 1,411,069 95,727 1,524,200 572,576 2,192,503 421,095 5,870,068 397,624 6,688,787 105,856 (462,184) 148,592 1,042,624 2,531,512 (10,739) (148,592) 992,811 (1,050,096) 644,278 (1,091,695) (10,739) (148,592) (57,285) (447,417) 105,856 485,298 591,154 (472,923) 2,041,090 $ 1,568,167 985,339 8,594,564 $ 9,579,903 2,084,095 6,510,469 $ 8,594,564 - 49 - CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GAS TAX SPECIAL REVENUE FUND For the year ended June 30, 2000 With comparative actual amounts for the year ended June 30, 1999 REVENUES: Use of money and property Intergovernmental revenue TOTAL REVENUES EXPENDITURES: Current: Public works EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Operating transfers out EXCESS OF REVENUES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES AT BEGINNING OF YEAR FUND BALANCES AT END OF YEAR 2000 1999 Variance Favorable Budget Actual (Unfavorable) Actual $ 150,000 $ 203,304 $ 53,304 $ 142,574 1,238,500 1,227,566 (10,934) 1,233,187 1,388,500 1,430,870 42,370 1,375,761 1,800,000 113,131 1,686,869 33,468 (411,500) 1,317,739 1,729,239 1,342,293 (569,000) (569,000) - (546,567) (980,500) 748,739 1,729,239 795,726 2,659,807 2,659,807 - 1,864,081 $ 1,679,307 $ 3,408,546 $ 1,729,239 $ 2,659,807 See independent auditors' report. - 50 - CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PARK ACQUISITION AND DEVELOPMENT SPECIAL REVENUE FUND For the year ended June 30, 2000 With comparative actual amounts for the year ended June 30, 1999 REVENUES: Use of money and property Other revenue TOTAL REVENUES EXPENDITURES: Capital outlay EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES: Operating transfers in EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES FUND BALANCES AT BEGINNING OF YEAR FUND BALANCES AT END OF YEAR 20O0 Budget Actual Variance Favorable (Unfavorable) $ 90,000 $ 246,087 $ 156,087 15,000 204,882 189,882 1999 Actual $ 141,218 55,113 105,000 450,969 345,969 196,331 919,000 250,566 668,434 51,042 (814,000) 200,403 1,014,403 145,289 945,000 992,811 47,811 644,278 131,000 1,193,214 1,062,214 789,567 2,793,792 2,793,792 2,004,225 $ 2,924,792 $ 3,987,006 $ 1,062,214 $ 2,793,792 See independent auditors' report. -51 - CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ASSET FORFEITURE SPECIAL REVENUE FUND For the year ended June 30, 2000 With comparative actual amounts for the year ended June 30, 1999 REVENUES: Use of money and property Intergovernmental revenue TOTAL REVENUES EXPENDITURES: Capital outlay EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Operating transfers out EXCESS OF REVENUES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES AT BEGINNING OF YEAR FUND BALANCES AT END OF YEAR 2000 Budget Actual Variance Favorable (Unfavorable) 30,000 $ 1,534 $ (28,466) 45,000 50,180 5,180 1999 Actual $ 36,094 158,325 75,000 51,714 (23,286) 194,419 176,500 319,496 (142,996) 346,582 (101,500) (267,782) (166,282) (152,163) (217,000) (321,765) (104,765) (200,450) (318,500) (589,547) (271,047) (352,613) 614,577 614,577 $ 296,077 $ 25,030 $ (271,047) 967,190 $ 614,577 See independent auditors' report. - 52 - CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL AIR QUALITY SPECIAL REVENUE FUND For the year ended June 30, 2000 With comparative actual amounts for the year ended June 30, 1999 REVENUES: Use of money and property Intergovemmental revenue TOTAL REVENUES EXPENDITURES: Current: General government Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Operating transfers out EXCESS OF REVENUES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES AT BEGINNING OF YEAR FUND BALANCES AT END OF YEAR 2000 Budget Actual $ 10,000 $ 35,119 70,000 73,693 Variance Favorable (Unfavorable) $ 25,119 3,693 1999 Actual $ 25,751 71,217 80,000 108,812 28,812 96,968 - 1,062 (1,062) 384,603 1,894 382,709 384,603 2,956 381,647 (304,603) 105,856 410,459 96,968 (230) (304,603) 105,856 410,459 96,738 485,298 485,298 $ 410,459 $ 180,695 $ 591,154 388,560 $ 485,298 See independent auditors' report. -53 - CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL MARINE BASE CLOSURE SPECIAL REVENUE FUND For the year ended June 30, 2000 With comparative actual amounts for the year ended June 30, 1999 REVENUES: Use of money and property Intergovernmental revenue TOTAL REVENUES EXPENDITURES: Current: General government Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCES AT BEGINNING OF YEAR FUND BALANCES AT END OF YEAR 2000 Budget Actual $ 10,000 $ 19,370 243,000 75,915 Variance Favorable (Unfavorable) $ 9,370 (167,085) 1999 Actual $ 17,539 405,998 253,000 95,285 ( 157,715) 423,537 370,580 94,665 275,915 421,095 620 (620) 2,442 370,580 95,285 275,295 423,537 117,580 (117,580) $ (117,580) $ 117,580 See independent auditors' report. - 54 - CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL MEASURE M SPECIAL REVENUE FUND For the year ended June 30, 2000 With comparative actual amounts for the year ended June 30, 1999 REVENUES: Use of money and property Intergovemmental revenue TOTAL REVENUES EXPENDITURES: Current: Public works EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Operating transfers out EXCESS OF REVENUES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES AT BEGINNING OF YEAR FUND BALANCES AT END OF YEAR 2000 1999 Variance Favorable Budget Actual (Unfavorable) Actual $ 75,000 $ 95,233 $ 20,233 $ 103,199 7,331,787 853,652 (6,478,135) 6,659,454 7,406,787 948,885 (6,457,902) 6,762,653 7,594,174 1,411,069 6,183,105 5,834,158 (187,387) (462,184) (274,797) 928,495 (50,000) (10,739) 39,261 (23,076) (237,387) (472,923) (235,536) 905,419 2,041,090 2,041,090 - 1,135,671 $ 1,803,703 $ 1,568,167 $ (235,536) $ 2,041,090 See independent auditors' report. -55 - CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL SUPPLEMENTAL LAW ENFORCEMENT SPECIAL REVENUE FUND For the year ended June 30, 2000 With comparative actual amounts for the year ended June 30, 1999 REVENUES: Use of money and property Intergovernmental revenue TOTAL REVENUES EXPENDITURES EXCESS OF REVENUES OVER (UNDER) ExpENDITURES OTHER FINANCING USES: Operating transfers out EXCESS OF REVENUES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES AT BEGINNING OF YEAR FUND BALANCES AT END OF YEAR 2OOO Budget Actual $ 7,500 $ - 150,000 148,592 Variance Favorable (Unfavorable) $ (7,500) (1,408) 1999 Actual $ 20,866 149,764 157,500 148,592 (8,908) 170,630 157,500 148,592 (8,908) 170,630 (150,000) (148,592) 1,408 (7,500) 7,500 . $ - $ (7,500) $ 7,500 (321,372) (150,742) 150,742 See independent auditors' report. -56 - DEBT SERVICE FUNDS South Central Proiect Area - This fund records the accumulation and disbursement of monies to meet the debt service requirements of the South Central Redevelopment Project Town Center Proiect Area- This fund records the accumulation and disbursement of monies to meet the debt service requirements of the Town Center Redevelopment Project Area. Marine Base Project Area - This fund records the accumulation and disbursement of monies to meet the debt service requirements of the Marine Base Redevelopment Project Area. -57- CITY OF TUSTIN COMBINING BALANCE SHEET ALL DEBT SERVICE FUNDS June 30, 2000 With comparative totals for June 30, 1999 ASSETS Cash and investments Cash and investments with fiscal agents Taxes receivable Due from other funds TOTAL ASSETS South Central Project Area $ 3,798,147 11,141 320,562 $ 4,129,850 Town Center Project Area $ 2,507,397 1,685,304 44,384 $ 4,237,085 Marine Base Project Area LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Due to other funds TOTAL LIABILITIES FUND BALANCES: Reserved for debt service Unreserved and undesignated TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES 1,499 1,499 4,128,351 4,128,351 $ 4,129,850 $ 1,362 164,721 166,083 4,071,002 4,071,002 $ 4,237,085 53,680 53,680 (53,680) (53,680) $ - See independent auditors' report. -58 - Totals 2000 1999 6,305,544 $ 5,006,903 1,685,304 1,677,364 55,525 137,309 320,562 - $ 8,366,935 $ 6,821,576 $ 1,362$ 414,890 219,900 221,262 414,890 8,199,353 6,406,686 (53,680) - 8,145,673 6,406,686 $ 8,366,935 $ 6,821,576 -59- CITY OF TUSTIN COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL DEBT SERVICE FUNDS For the year ended June 30, 2000 With comparative totals for the year ended June 30, 1999 REVENUES: Taxes Use of money and property TOTAL REVENUES EXPENDITURES: Current: General government Debt service: Principal retirement Interest and fiscal charges Costs of issuance Advance refunding escrow TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Long-term debt proceeds Operating transfers in Operating transfers out Paid to advance refunding escrow agent TOTAL OTHER FINANCING SOURCES (USES) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES AT BEGINNING OF YEAR FUND BALANCES AT END OF YEAR South Central Project Area $ 1,568,515 205,462 1,773,977 20,000 110,100 . - 130,100 1,643,877 (189,438) (189,438) 1,454,439 2,673,912 $ 4,128,351 Town Center Project Area $ 2,016,510 240,535 2,257,045 4,122 760,000 901,264 1,665,386 591,659 (253,431) (253,431) 338,228 3,732,774 $ 4,071,002 Marine Base Project Area 38,535 38,535 (38,535) (15,145) (15,I45) (53,680) (53,680) See independent auditors' report. - 60 - Totals 20OO 1999 3,585,025 445,997 3,341,818 331,243 4,031,022 3,673,061 24,122 760,000 1,049,899 1,834,021 41,910 775,000 855,981 522,424 805,500 3,000,815 2,197,001 672,246 (458,014) (458,014) 20,744,596 5,482 (596,040) (18,545,159) 1,608,879 1,738,987 6,406,686 $ 8,145,673 2,281,125 4,125,561 $ 6,406,686 -61 - THIS PAGE LEFT BLANK INTENTIONALLY -62- CAPITAL PROJECTS FUNDS Other Capital Proiects - This fund accounts for all capital projects which are not funded by a specific source. Construction 95-1 - This fund accounts for infrastructure improvements to the Tustin 95-1 Area. South Central Project Area - This fund accounts for acquisition and construction activity in the South Central Redevelopment Project Area. Town Center Project Area- This fund accounts for acquisition and construction activity in the Town Center Redevelopment Project Area. Marine Base Proiect Area- This fund accounts for acquisition and construction activity in the Marine Base Redevelopment Project Area. Low Income Housing - This fund accounts for acquisition and construction activity for low income housing. As prescribed by the California Heath and Safety Code, 20% of Redevelopment Agency tax increment revenue is set aside in this fund for the purpose of low income housing development. -63 - CITY OF TUSTIN COMBINING BALANCE SHEET ALL CAPITAL PROJECTS FUNDS June 30, 2000 With comparative totals, for June 30, 1999 Other Capital Projects Construction 95- 1 South Central Project Area ASSETS Cash and investments $ 9,398,035 $ 549,026 $ 9,354,938 Cash and investments with fiscal agents 323,662 3,401,741 Taxes receivable - - - Interest receivable - - - Accounts receivable - - 301 Due from other funds 107,462 - - Deposits - - - Loans receivable - - - Land held for resale - - 2,050,000 TOTAL ASSETS $ 3,950,767 $ 9,829,159 $ 11,405,239 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Due to other funds Deferred revenue TOTAL LIABILITIES FUND BALANCES: Reserved: Long-term loans receivable Low income housing Land held for resale Deposits Unreserved: Designated for capital projects Undesignated TOTAL FUND BALANCES (DEFICIT) TOTAL LIABILITIES AND FUND BALANCES $ 185,109 - . 185,109 9,644,050 9,644,050 $ 9,829,159 3,950,767 3,950,767 $ 3,950,767 $ 237,194 2,000,000 2,237,194 2,050,000 7,118,045 9,168,045 .$ 11,405,239 See independent auditors' report. - 64 - Town Center Project Area 1,287,957 248,014 = 188,951 855,000 2,579,922 Marine Base Project Area 536,682 9,493 $ 546,175 Low Income Housing 5,138,155 13,880 30,000 $ 5,182,035 Totals 2000 1999 26,264,793 $ 24,551,237 3,725,403 4,779,256 23,373 7,669 - 202,182 248,315 128,169 107,462 - 30,000 30,000 188,951 13,560 2,905,000 2,200,000 $ 33,493,297 $ 31,912,073 31,074 107,463 $ 48,353 700,000 $ 10,993 697 512,723 $ 1,022,610 2,808,160 1,902,000 - 201,411 138,537 748,353 11,690 3,320,883 3,126,021 188,951 855,000 1,397,434 2,441,385 $ 2,579,922 (202,178) (202,178) $ 546,175 - 188,951 13,560 5,140,345 5,140,345 5,074,664 - 2,905,000 2,200,000 30,000 30,000 30,000 5,170,345 $ 5,182,035 22,110,296 21,543,189 (202,178) (75,361) 30,172,414 28,786,052 33,493,297 $ 31,912,073 - 65 - CITY OF TUSTIN COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL CAPITAL PROJECTS FUNDS For the year ended June 30, 2000 With comparative totals for the year ended June 30, 1999 REVENUES: Taxes Use of money and property Intergovemmental revenue Other revenue TOTAL REVENUES EXPENDITURES: Current: General government Capital outlay ' Debt service: Principal retirement Interest and fiscal charges TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES (DEFICIT) AT BEGINNING OF YEAR FUND BALANCES (DEFICIT) AT END OF YEAR Other Capital Projects 641,418 543,756 1,185,174 1,505,772 240,000 105,818 1,851,590 (666,416) 2,721,191 2,721,191 2,054,775 7,589,275 $ 9,644,050 Construction 95 - 1 211,142 211,142 6,692 6,692 204,450 9,398 . 9,398 213,848 3,736,919 $ 3,950,767 South Central Project Area 563,974 563,974 202,323 933,232 1,135,555 (571,581) (571,581) 9,739,626 $ 9,168,045 See independent auditors' report. -66 - Town Center Project Area 145,109 - 18,299 163,408 Marine Base Project Area 55,007 55,007 Low Income Housing $ 896,772 248,612 12,165 1,157,549 Totals 2000 1999 896,772 1,810,255 543,756 85,471 835,732 1,604,059 154,528 143,171 3,336,254 2,737,490 91,613 231,339 322,952 181,824 181,824 1,091,868 1,091,868 1,567,628 2,677,035 240,000 105,818 4,590,481 1,308,855 5,380,483 6,689,338 (159,544) (126,817) 65,681 (1,254,227) (3,951,848) (90,000) (90,000) 2,730,589 (90,000) 2,640,589 2,300,000 (5,482) 2,294,518 (249,544) 2,690,929 $ 2,441,385 (126,817) (75,361) $ (202,178) 65,681 5,104,664 $ 5,170,345 1,386,362 28,786,052 $ 30,172,414 (1,657,330) 30,443,382 $ 28,786,052 - 67 - THIS PAGE LEFT BLANK INTENTIONALLY -68 - ENTERPRISE FUNDS Water Enterprise - This fund accounts for the City's water service operations to residents and businesses. -69- CITY OF TUSTIN COMPARATIVE BALANCE SHEETS WATER ENTERPRISE FUND June 30, 2000 and 1999 ASSETS CURRENT ASSETS: Cash and investments Accounts receivable TOTAL CURRENT ASSETS RESTRICTED ASSETS: Cash and investment with fiscal agents Deferred bond issuance costs TOTAL RESTRICTED ASSETS PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation TOTAL ASSETS LIABILITIES AND FUND EQUITY CURRENT LIABILITIES: Accounts payable and accrued liabilities Interest payable Due to other funds Deposits Current portion - notes payable Current portion - bonds payable TOTAL CURRENT LIABILITIES NONCURRENT LIABILITIES: Compensated absences Notes payable Bonds payable TOTAL NONCURRENT LIABILITIES TOTAL LIABILITIES FUND EQUITY: Contributed capital Retained earnings TOTAL FUND EQUITY TOTAL LIABILITIES AND FUND EQUITY 2000 $ 14,485,960 1,351,871 15,837,831 1,069,677 173,755 1,243,432 29,431,315 $ 46,512,578 $ 1,320,251 124,212 41,761 90,546 582,024 450,000 2,608,794 59,92O 5,258,452 8,600,000 13,918,372 16,527,166 2,185,039 27,800,373 29,985,412 $ 46,512,578 1999 $ 14,374,926 1,489,915 15,864,841 1,052,549 187,381 1,239,930 27,596,307 $ 44,701,078 $ 1,209,444 132,925 87,530 569,082 425,000 2,423,981 75,113 5,840,476 9,050,000 14,965,589 17,389,570 2,029,462 25,282,046 27,311,508 $ 44,701,078 See independent auditors' report. - 70 - TRUST AND AGENCY FUNDS EXPENDABLE TRUST FUND Deferred Compensation - This fund accounts for the assets held for employees in accordance with the provisions of Internal Revenue Code Section 457 for which the City has retained fiduciary responsibility for the assets. AGENCY FUNDS Assessment District 95-1 - This fund records the deposit of monies held to pay the debt service requirements of the assessment district. Assessment District 95-2 - This fund records the deposit of monies held to pay the debt service requirements of the assessment district. -71- CITY. OF TUSTIN COMBINING BALANCE SHEET- ALL TRUST AND AGENCY FUNDS June 30,2000 'ASSETS Cash and investments Cash and investments with fiscal agents Taxes receivable Due from other funds TOTAL ASSETS Expendable Trust Agency Funds Deferred Assessment Assessment Compensation District 95 - 1 District 95 - 2 $ 236,512 $ 2,154,333 $ - 6,069,428 2,648,502. 61,764 - 1,058,244 $ 236,512 $ 9,343,769 $ 2,648,502 Totals 2000 $ 2,390,845 8,717,930 61,764 1,058,244 $ 12,228,783 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Due to other funds Deposits payable Due to bondholders TOTAL LIABILITIES FUND BALANCES Reserved for employee benefits TOTAL LIABILITIES AND FUND BALANCES 1,611 $ - - 1,058,244 406,834 - 8,935,324 1,590,258 $ 1,611 1,058,244 406,834 10,525,582 236,512 9,343,769 2,648,502 11,992,271 $ 236,512 $ 9,343,769 $ 2,648,502 236,512 $ 12,228,783 See independent auditors' report. - 72 - CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE DEFERRED COMPENSATION EXPENDABLE TRUST FUND For the Year Ended June 30, 2000 REVENUES: Use of money and property 14,518 EXPENDITURES: Distribution to the employee (37,65 I) FUND BALANCE AT BEGINNING OF YEAR 259,645 FUND BALANCE AT END OF YEAR $ 236,5'12 See independent auditors' report. - 73 - CITY OF TUSTIN COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS For the year ended June 30, 2000 ASSESSMENT DISTRICT 95 - 1 ASSETS: Cash and investments Cash and investments with fiscal agents Taxes receivable Due from other funds TOTAL ASSETS LIABILITIES: Accounts payable and accrued liabilities Deposits payable Due to bondholders TOTAL LIABILITIES ASSESSMENT DISTRICT 95 - 2 ASSETS: Cash and investments Cash and investments with fiscal agents TOTAL ASSETS LIABILITIES: Due to other funds Due to bondholders TOTAL LIABILITIES TOTAL - ALL AGENCY FUNDS ASSETS: .................................................. Cash" 'and'investments Cash and investments with fiscal agents Taxes receivable Due from other funds TOTAL ASSETS LIABILITIES: Accounts payable and accrued liabilities Due to other funds Deposits payable Due to bondholders TOTAL LIABILITIES Balance July 1, 1999 Additions Deletions Balance June 30, 2000 $ 868,448 $ 7,035,175 $ 5,749,290 $ 2,154,333 5,414,876 14,730,627 14,076,075 6,069,428 76,823 61,764 76,823 61,764 - 1,058,244 - 1,058,244 $ 6,360,147 $ 22,885,810 "$ 19,902,188 $ 9,343,769 $ 12,405 $ 6,300,774 $ 6,311,568 489,933 11,419 94,518 5,857,809 16,207,610 13,130,095 $ 6,360,147 $ 22,519,803 $ 19,536,181 $ 1,286,587 $ 1,058,244 $ 2,344,831 1,798,082 10,819,361 9,968,941 $ 3,084,669 $ 11,877,605 $ 12,313,772 $ $ 1,058,244 $ 3,084,669 6,607,381 8,101,792 $ 3,084,669 $ 7,665,625 $ 8,101,792 $ 1,611 406,834 8,935,324 $ 9,343,769 2,648,502 $ 2,648,502 $ 1,058,244 1,590,258 $ 2,648,502 $ 2,155,035 $ 8,093,419 $ 8,094,121 $ 2,154,333 7,212,958 25,549,988 24,045,016 8,717,930 76,823 61,764 76,823 61,764 1,058,244 - 1,058,244 $ 9,444,816 $ 34,763,415 $ 32,215,960 $ 11,992,271 $ 12,405 $ 6,300,774 $ 6,311,568 1,058,244 - 489,933 11,419 94,518 8,942,478 22,814,991 21,231,887 $ 1,611 1,058,244 406,834 10,525,582 $ 9,444,816 $ 30,185,428 $ 27,637,973 $ 11,992,271 See independent auditors' report. - 74 - ACCOUNT GROUPS General Fixed Assets - Used to account for the costs of fixed assets that are used in the performance of general government functions and that are not accounted for in the proprietary funds. The General Long-Term Debt - Used to account for matured long-term indebtedness of the City and Kedevelopment Agency not accounted for in the proprietary funds. -75- CITY OF TUSTIN COMPARATIVE SCHEDULE OF GENERAL FIXED ASSETS BY SOURCE GENERAL FIXED ASSETS ACCOUNT GROUP June 30, 2000 and 1999 GENERAL FIXED ASSETS: Land Buildings and improvements Machinery and equipment Construction in progress TOTAL GENERAL FIXED ASSETS 2000 $ 8,840,418 26,113,621 9,442,181 4,987,457 $ 49,383,677 1999 $ 8,840,418 26,085,066 8,3.11,396 4,275,087 $ 47,511,967 INVESTMENT IN GENERAL FIXED ASSETS: General and special revenue funds Capitalized lease obligations Redevelopment Agency TOTAL INVESTMENT IN GENERAL FIXED ASSETS $ 37,229,273 517,557 11,636,847 $ 49,383,677 $ 35,396,649 472,280 11,643,038 $ 47,511,967 See independent auditors' report. - 76 - CITY OF TUSTIN SCHEDULE OF GENERAL FIXED ASSETS BY FUNCTION AND ACTIVITY GENERAL FIXED ASSETS ACCOUNT GROUP June 30, 2000 Function General government: Legislative Data processing Administration Community development Nondepartmental Public safety Public works Community services Total Land '968,321 1,523,731 6,348,366 $ 8,840,418 Buildings Machinery Construction and and in Improvements Equipment Progress $ - $ 53,493 $ - - 732,557 - 5,487,512 1,017,851 - - 392,719 - 2,886,933 158,686 - 5,905,607 3,675,345 1,915,341 2,242,098 967,260 566,272 9,59 ! ,471 2,444,270 2,505,844 $ 26,113,621 $ 9,442,181 $ 4,987,457 Total $ 53,493 732,557 6,505,363 392,719 4,013,940 11,496,293 5,299,361 20,889,951 $ 49,383,677 See independent auditors' report. - 77 - CITY OF TUSTIN SCHEDULE OF CHANGES IN GENERAL FIXED ASSETS BY FUNCTION AND ACTIVITY GENERAL FIXED ASSETS ACCOUNT GROUP For the year ended June 30, 2000 General government: Legislative Data processing Administration Community development Nondepartmental Total General Government Public safety' Public works Community services TOTALS Balance July 1, 1999 Additions Deletions $ 27,276 $ 30,321 $ 4,104 717,935 14,621 5,984,132 912,948 391,717 398,910 15,993 22,184 4,013,940 - Balance June30,2000 $ 53,493 732,556 6,505,363 392,719 4,013,940 11,142,193 973,883 418,005 11,698,071 11,296,966 579,620 380,293 11,496,293 6,686,254 780,876 313,707 7,153,423 18,386,554 690,718 41,382 19,035,890 $ 47,511,967 $ 3,025,097 $ 1,153,387 $ 49,383,677 See independent auditors' report. - 78 ~ CITY OF TUSTIN COMPARATIVE.SCHEDULE OF GENERAL LONG-TERM DEBT GENERAL LONG-TERM DEBT ACCOUNT GROUP June 30,2000 and 1999 AMOUNTS AVAILABLE AND TO BE PROVIDED FOR THE PAYMENT OF GENERAL LONG-TERM DEBT: Amount available in debt service funds Amount to be provided: Tax allocation and countrywide bonds Claims and judgments Compensated absences Capitalized leases TOTAL AMOUNT AVAILABLE AND TO BE PROVIDED FOR THE PAYMENT OF GENERAL LONG-TERM DEBT 2000' $ 8,145,673 13,134,327 305,239 1,678,389 168,412 $ 23,432,040 1999 $ 6,406,686 15,873,314 326,878 1,510,803 277,520 $ 24,395,201 GENERAL LONG-TERM DEBT PAYABLE: 1998 tax allocation refunding bonds 1996 countywide bonds Claims and judgments Compensated absences Capitalized leases TOTAL GENERAL LONG-TERM DEBT PAYABLE $ 19,270,000 2,010,000 305,239 1,678,389 168,412 $ 23,432,040 $ 20,030,000 2,250,000 326,878 1,510,803 277,520 $ 24,395,201 See independent auditors' report. - 79 - THIS PAGE LEFT BLANK INTENTIONALLY -80- STATISTICAL SECTION -81 - CITY OF TUSTIN GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION LAST TEN FISCAL YEARS Fiscal Year General Public Public Government Safety Works Recreation and Other Community Services 1991 $ 3,817,022 $ 10,647,62I $ 5,471,841 $ 914,022 1992 3,886,347 11,982,825 5,440,981 1,112,690 1993 3,982,164 11,598,821 6,245,346 1,239,028 1994 4,015,043 12,124, 822 6,028,954 1,212, 653 1995 3,367,706 13,146,028 8,517,702 1,217,100 1996 4,149,544 13,445,073 9,423,516 1,376,938 1997 5,619,688 14,120,461 8,630,457 2,210,231 1998 4,857,344 14,846,971 9,861,522 1,920,842 1999 5,536,998 15,403,356 14,097,600 2,512,655 2000 7,278,886 15,826,727 8,329,989 2,470,250 Includes all governmental fund types. Source: City Finance Department - 82 - TABLE I Capital Expenditures Other Departmental Debt Service Totals $ 20,065,984 $ 1,237,946 $ 1,884,729 $ 44,039,165 13,222,161 1,296,116 3,624,466 40,565,586 10,597,372 773,718 6,714,588 41,151,037 7,282,697 986,162 5,657,165 37,307,496 7,494,430 250,738 5,354,039 39,347,743 4,216,235 2,384,482 34,995,788 4,623,976 2,410,774 37,615,587 4,864,589 2,196,917 38,548,185 6,151,954 3,333,036 47,035,599 3,944,277 2,325,127 40,175,256 - 83 - CITY OF TUSTIN GENERAL GOVERNMENTAL REVENUES BY SOURCE LAST TEN FISCAL YEARS' Fiscal Year Taxes 1991 $ 20,623,081 Licenses Fines Interest Intergovern- and and and mental Permits Forfeitures Rentals Revenues $ 319,927 $ 585,126 $ 4,808,923 $ 8,135,466 1992 19,857,860 296,516 420,302 4,578,698 5,455,300 1993 20,329,102 331,201 371,997 3,854,543 5,997,411 1994 22,664,574 390,596 435,460 2,650,048 4,653,858 1995 23,086,805 421,046 487,694 3,306,191 4,419,831 1996 23,003,112 511,318 441,044 3,403,069 5,288,806 1997 25,472,800 538,278 458,262 2,391,642 7,278,732 1998 30,681,614 433,606 429,926 2,761,166 4,544,572 1999 31,924,929 486,925 741,603 2,905,442 10,109,179 2000 32,203,430 650,518 688,362 3,611,310 4,375,242 Includes all governmental fund types. Source: City Finance Department - 84- TABLE 2 Charges for Services Sale of Property Developer Fees Other Totals $ 1,531,978 $ 32,027 $ 2,987,052 $ 2,072,251 $ 41,095,831 1,724,155 56,665 1,884,487 1,713,I85 35,987,168 1,568,677 10,000 1,088,460 33,551,391 1,520,077 60,862 55,153 1,212,898 33,643,526 1,064,018 1,430,746 34,216,331 1,087,533 2,828,645 1,266,459 37,829,986 1,195,462 1,286,986 38,622,162 1,210,724 1,148,071 41,209,679 1,203,980 1,202,045 48,574,103 1,318,103 1,662,520 44,509,485 -85 - CITY OF TUSTIN PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Total Fiscal Tax Year Levy Current Percent Delinquent Total Tax of Levy Tax Tax Collections Collected Collections Collections 1991 $ 9,269,103 $ 9,080,606 97.97% $ 78,932 $ 9,159,538 1992 9,704,763 9,500,394 97.89% 167,617 9,668,011 1993 10,592,679 9,968,598 94.11% 293,422 10,262,020 1994 10,285,757 9,791,553 95.20% 291,365 10,082,918 1995 10,835,271 10,116,251 93.36% 221,798 10,338,049 1996 11,022,917 10,556,309 95.77% 488,882 11,045,191 1997 13,727,024 13,010,051 94.78% 420,618 13,430,669 1998 13,709,660 13,299,663 97.01% 261,410 13,561,073 1999 14,657,444 14,330,209 97.77% 205,914 14,536,123 2000 11,551,531 11,436,631 99.01% 141,957 11,578,588 Includes impounds not reflected in prior years. Includes Assessment for AD 95 - 2. Source: Orange County Auditor Controller's Office - 86- TABLE 3 Percent of Percent of Outstanding Delinquent Total Tax Delinquent Taxes/ Collections Taxes/ Impounds to Tax Levy Impounds to Tax Levy 98.82% $ 109,565 1.18% 99.62% 36,752 0.38% 96.88% 689,443 6.51% 98.03% 311,017 3.02% 95.41% 455,004 4.20% 100.20% 233,740 2.12% 97.84% 236,355 1.72% 98.92% 386,633 2.82% 99.17% 370,306 2.53% 100.23% 47,963 0.42% - 87- THIS PAGE LEFT BLANK INTENTIONALLY CITY OF TUSTIN TABLE 4 ASSESSED VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Real Property Personal Property Fiscal Assessed Assessed Assessed Year Value Value Value Total Percent Change From Previous Year 1991 $ 2,560,822,523 $ 350,402,084 $ 2,911,224,607 6.16% 1992 2,612,038,983 357,410,126 2,969,449,109 2.00% 1993 2,915,855,595 365,032,361 3,280,887,956 10.49% 1994 2,967,612,592 227,175,851 3,194,788,443 -2.62% 1995 2,923,543,175 321,567,540 3,245,110,715 1996 2,927,828,605 324,557,015 3,252,385,620 1.58% 0.22% 1997 2,939,121,396 342,961,655 3,282,083,051 0.91% 1998 3,017,259,205 317,971,678 3,335,230,883 1.62% 1999 3,246,774,384 423,440,428 3,670,214,812 10.04% 2000 3,639,036,716 400,433,213 4,039,469,929 10.06% Source: County of Orange Assessor's Office - 89 - CITY OF TUSTIN TABLE 5 PROPERTY TAX RATES - DIRECT AND MOST COMMON OVERLAPPING GOVERNMENTS (PER $100 OF DIRECT AND ASSESSED VALUE) LAST TEN FISCAL YEARS Debt County/ Countywide Fiscal Service Other Basic Year Funds Districts County Total 1991 0.01654 0.01210 1.00000 1.02864 1992 0.01485 0.01060 1.00000 1.02545 1993 0.01316 0.00890 1.00000 1.02206 1994 0.00767 0.00890 1.00000 1.01657 1995 0.00387 0.00890 1.00000 1.01277 1996 0.00050 0.00890 1.00000 1.00940 1997 0.00012 0.00890 1.00000 1.00902 1998 - 0.00890 1.00000 1.00890 1999 - 0.00890 1.00000 1.00890 2000 - 0.00890 1.00000 1.00890 Source: Orange County Auditor Controller's Office - 90 - CITY OF TUSTIN TABLE6 PRINCIPAL TAXPAYERS June 30, 2000 Taxpayer 2000 Type of Business Valuation Percentage of Total Valuation The Irvine Company ReSidential & Commercial Prop. $ 290,441,902 7.190% Steelcase Inc. Manufacturing 82,530,480 2.043 % Catelus Development Corp. Industrial/Commercial 54,712,557 1.354% Sanyo Foods Recreation 39,634,523 0.981% Baycrest Associates Residential 32,180,700 0.797% Ricoh Development Manufacturing 31,319,871 0.775% Patrick F. Cadigan Trust Commercial 21,156,133 0.524% Stacy Lynn Bartlett Trust Commercial 20,945,075 0.519% Trinity Christian Center Nonprofit 20,020,888 0.496% AUD Corp. Manufacturing 19,431,588 0.481% Sanderson J. Ray Retail Sales 17,465,055 0.432% $ 629,838,772 15.592% Source: Orange County Assessor's Office -91 - CITY OF TUSTIN RATIO OF NET GENERAL BONDED DEBT TO ASSESSED VALUE AND NET BONED DEBT PER CAPITA LAST TEN FISCAL YEARS Fiscal Year Assessed Gross Debt Service Value Bonded Monies Population (in Thousands) Debt Available Net Bonded Debt 1991 49,409 $ 2,911,224 $ 400,000 $ 396,964 $ 3,036 1992 52,145 2,969,449 - 113,975 (113,975) 1993 54,739 3,280,888 1994 57,454 3,194,778 1995 62,497 3,245,111 1996 63,619 3,252,386 1997 65,287 3,282,083 1998 66,420 3,335,231 1999 66,834 3,670,215 2000 68,316 4,039,470 Source: City Finance Department - 92 - TABLE 7 Ratio of Net Bonded Debt to Assessed Value Net Bonded Debt Per Capita 0.00% 0.06% 0.00% 0.00% O.O0% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% - 93 - CITY OF TUSTIN TABLE 8 SPECIAL ASSESSMENT BILLINGS AND COLLECTIONS LAST SEVEN FISCAL YEARS Fiscal Year Special Assessments Levied Special Assessments Collected Percent of Total Collections to Special Assessment Levy 1994 $ 4,939,103 $ 4,746,853 96.11% 1995 5,377,883 4,794,379 89.15% 1996 5,354,889 5,305,471 99.08% 1997 4,028,446 4,009,020 99.52% 1998 3,597,691 3,580,452 99.52% 1999 4,038,813 4,014,672 99.40% 2000 4,548,241 4,521,690 99.42% Information prior to 1994 is not available. Source: County of Orange Tax Collector - 94 - CITY OF TUSTIN COMPUTATION OF LEGAL DEBT MARGIN June 30, 2000 TABLE9 Net Valuation Plus Exempt Property TOTAL VALUATION $ 4,039,469,929 123,479,953 $ 4,162,949,882 DEBT LIMIT 3.75% OF FULL VALUATION AMOUNT OF DEBT APPLICABLE TO DEBT LIMIT: Total Bonded Debt Less: Assets in Debt Service Funds Available for Payment of Principal $ 156,110,621 LEGAL DEBT MARGIN $ 156,110,621 Source: City Finance Department - 95 - CITY. OF TUSTIN TABLE 10 SCHEDULE OF DIRECT AND OVER.LAPPING BONDED DEBT 1999 - 2000 Assessed Valuation: Redevelopment Incremental Valuation: Adjusted Assessed Valuation: June 30, 2000 $ 4,517,021,032 417,317,243 $ 4,099,703,789 % Applicable OVERLAPPING TAX AND ASSESSMENT DEBT: Orange County Teeter Obligations Metropolitan Water District Irvine Unified School District Irvine Unified School District Community Facilities District No. 86 - 1 Santa Ana Unified School District Tustin Unified School District Community Facilities District No. 88 - 1 East Orange County Water District Irvine Ranch Water District Improvement Districts City of Tustin 1915 Act Bonds TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 2.177% 0.045% 0.263% 0.440% 0.002% 100.000% 26.626% 0.478 - 43.340% 100.000% Debt 6/30/00 $ 2,778,396 2,473,268 2,104 493,086 1,126 63,915,000 129,136 45,693,723 70,344,000 $ 185,829,839 DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT: Orange County General Fund Obligations Orange County Pension Obligations Orange County Transit Authority Orange County Water District Certificates of Participation Municipal Water District of Orange County Water Facilities Corporation South Orange County Community College District Certificates of Participation School District Certificates of Participation City of Tustin General Fund Obligations Irvine Ranch Water District Certificates of Participation Orange County Sanitation District No. 1 Certificates of Participation Orange County Sanitation District No. 7 Certificates of Participation Orange County Sanitation District No. 14 Certificates of Participation TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT Less: Orange County Transit Authority (80% self-supporting) Orange County Water District Certificates of Participation (100% self-supporting) MWDOC Water Facilities Corporation (100% self-supporting) City of Tustin Water Corporation (100% self-supporting) TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT 2.177% 2.177% 2.177% 3.260% 3.272% 5.567% Various 100.000% 9.714% 0.008% 12.530% 11.128% 23,150,087 3,099,231 267,662 7,406,557 2,103,896 2,597,006 19,307 3,720,347 5,439,840 3,608 3,094,381 185,392 51,087,314 (214,130) (7,406,557) (2,103,896) (1,8oo,ooo) $ 39,562,731 GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT $ 236,917,153 (1) $ 225,392,570 (1) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and nonbonded capital lease obligations. RATIO TO 1999 - 2000 ASSESSED VALUATION; Total Overlapping Tax and Assessment Debt .......................................... RATIOS TO ADJUSTED ASSESSED VALUATION: Gross Combined Direct Debt ($3,720,347) ............................................. Net Combined Direct Debt ($1,920,347) ................................................ Gross Combined Total Debt ............................................................... Net Combined Total Debt .................................................................. 4.11% 0.09% 0.05% 5.78% 5.50% STATE SCHOOL BUILDING AID REPAYABLE AS OF JUNE 30, 2000: Source: California Municipal Statistics, Inc. - 96 - $0 CITY OF TUSTIN TABLE 11 RATIO OF ANNUAL DEBT SER.VICE EXPENDITURES FOR. GENERAL BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES LAST TEN FISCAL YEARS Fiscal Year 1991 Principal Interest $ 50,000 $ 24,932 $ Total Total Debt General Service Expenditures 74,932 $ 44,039,165 Ratio of Debt Service to Total General Expenditures 0.2% 1992 1993 400,000 32,393 432,393 40,565,586 41,148,037 1.1% 0.0% 1994 37,307,496 0.0% 1995 39,347,743 0.0% 1996 34,995,788 0.0% 1997 37,615,587 0.0% 1998 38,548,185 0.0% 1999 47,035,589 0.0% 2000 40,175,456 0.0% Source: City Finance Department. - 97 - CITY OF TUSTIN REVENUE BOND COVERAGE - WATER BONDS LAST TEN FISCAL YEARS Fiscal Year Gross Revenues Operating Expenses Net Revenues Available for Debt Service 1991 $ 5,076,853 $ 4,278,813 $ 798,040 1992 4,867,984 3,754,707 I, 113,277 1993 5,791,050 4,722,290 1,068,760 1994 6,818,567 4,933,578 1,884,989 1995 7,867,169 5,134,257 2,732,912 1996 9,272,065 5,313,617 3,958,448 1997 10,092,653 5,285,301 4,807,352 1998 9,295,380 5,328,018 3,967,362 1999 9,923,454 5,493,255 4,430,199 2000 10,004,595 5,960,562 4,044,033 Source: City Finance Director -98 - TABLE 12 Principal Debt Service Requirement Interest Total Coverage $ 150,000 $ 357,500 $ 507,500 1.57 150,000 359,836 509,836 2.18 175,000 343,875 518,875 2.06 275,000 697,750 972,750 1.94 300,000 675,200 975,200 2.80 325,000 650,600 975,600 4.06 350,000 623,950 973,950 4.94 375,000 595,250 970,250 4.09 400,000 564,500 964,500 4.59 425,000 531,700 956,700 4.23 - 99 - CITY OF TUSTIN PROPERTY VALUE, CONSTRUCTION AND BANK DEPOSITS LAST TEN FISCAL YEARS Commercial Construction Fiscal Number of Percentage Number of Year Permits Value Change Permits Residential Construction Value Percentage Change 1991 318 $ 15,081,132 -80.00% 995 $ 130,224,929 45.00% 1992 225 13,928,654 -8.00% 876 115,683,934 ,11.00% 1993 261 17,535,061 26.00% 898 72,644,819 -37.00% 1994 267 23,046,827 31.00% 798 118,232,000 63.00% 1995 325 18,910,469 -18.00% 740 49,034,394 -59.00% 1996 231 14,837,239 -22.00% 781 57,014,707 16.oo% 1997 261 12,834,703 -13.00% 975 111,992,817 96.00% 1998 227 I8,824,651 47.00% 1,125 99,613,619 -11.00% 1999 253 21,122,115 12.00% 1,238 104,505,168 5.00% 2000 226 17,338,250 -17.91% 1,066 45,933,176 -56.05% Source: City of Tustin Community Development Department and the Findley Reports - 100 - TABLE 13 Bank Deposits (In Thousands) Property Value Commercial Residential $ 830,439 $ 785,735,672 $ 1,772,769,278 907,653 815,379,039 1,923,908,598 908,600 867,936,430 2,047,919,165 923,000 860,607,652 2,107,004,940 1,312,000 941,082,190 2,304,028,810 1,305,000 943,191,940 2,309,194,060 1,310,000 951,804,085 2,330,278,966 1,355,000 967,216,956 2,360,013,927 1,389,000 1,064,362,295 2,605,852,517 1,414,000 1,171,446,279 2,868,023,650 - 101 - CITY OF TUSTIN TABLE 14 DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS Year Population Percent Change in Population Per Capita Income Unemployment Rate (1) 1991 49,409 5.62% $ 19,371 5.20% 1992 52,145 5.54% 19,382 7.00% 1993 54,739 4.97% 19,300 7.00% 1994 57,454 4.96% 19,511 5.90% 1995 62,497 8.78% 20,101 5.10% 1996 63,619 1.80% 20,905 4.30% 1997 65,287 2.62% 30,280 4.00% 1998 66,420 1.74% 31,096 2.90% 1999 66,840 0.63% 31,934 2.70% 2000 68,316 2.21% 32,541 2.50% (1) Based on County-wide averages. Sources: State Department of Finance Orange County Chamber of Commerce - 102 - CITY OF TUSTIN MISCELLANEOUS STATISTICAL DATA June 30, 2000 TABLE 15 Date of Incorporation Form of Government Area Miles of Streets Number of Street-Lights Fire Protection Police Protection: Number of Stations Number of Sworn Personnel Education: Tustin Unified School District Attendance Centers Number of Teachers/Administrators Number of Students Municipal Water Department: Number of Metered Accounts Average Daily Consumption Miles of Water Mains Sewers: Sanitary Sewers Storm Sewers Building Permits Issued Recreation and Culture: Number of Parks/Acres Employees: Classified Service Exempt Total Employees 1927 Council/Manager 11.07 Square Miles 101.8 2,855 Contract with Orange County Fire Authority 1 93 23 766 16,000 13,500 12,500 (100 cubic feet) 173 47.9 miles 23.74 miles 1,292 12 parks, Total 81.5 acres 221 49 270 Source: City Finance Department. - 103 - CITY OF TUSTIN, CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2001 Prepared by: Ronald A. Nault Director of Finance CITY OF TUSTIN TABLE OF CONTENTS June 30, 2001 INTRODUCTORY SECTION: Table of Contents Elected and Administrative Officials Letter of Transmittal Organization Chart GFOA Certificate of Achievement for Excellence in Financial Reporting CSMFO Certificate of Award for Outstanding Financial Reporting FINANCIAL SECTION: Combined Statements - Overview Independent Auditors' Report Combined Balance Sheet - All Fund Types and Account Groups Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental and Fiduciary Fund Types Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General and Special Revenue Fund Types Comparative Statement of Revenues, Expenses and Changes in Retained Earnings - · Proprietary Fund Type - Water Enterprise Fund Comparative Statement of Cash Flows - Proprietary Fund Type - Water Enterprise Fund Notes to Financial Statements Supplementary Information- Combining Individual Fund and Account Group Financial Statements and Schedules' General Fund: Comparative Balance Sheets Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Special Revenue Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Page Number i iv V xix xxi 1 3 4-5 6-7 8-9 10 11 12-39 41 43 44 45 47 48 -49 50-51 -i- CITY OF TUSTIN TABLE OF CONTENTS (CONTINIYED) June 30, 2001 Supplementary Information - Combining Individual Fund and Account Group Financial Statements and Schedules (Continued): Special Revenue Funds (Continued): Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Gas Tax Fund Park Acquisition and Development Fund Asset Forfeiture Fund Air Quality Fund Marine Base Closure Fund Measure M Fund Supplemental Law Enforcement Debt Service Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Capital Projects Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Water Enterprise Fund: Comparative Balance Sheets Trust and Agency Funds: Combining Balance Sheet- All Trust and Agency Funds Statement of Revenues, Expenditures and Changes in Fund Balance - Deferred Compensation Expendable Trust Fund Combining Statement of Changes in Assets and Liabilities - All Agency Funds Account Groups: Comparative Schedule of General Fixed Assets by Source Schedule of General Fixed Assets by Function and Activity Schedule of Changes in General Fixed Assets by Function and Activity Comparative Schedule of General Long-Term Debt Page Number 52 53 54 55 56 57 58 59 60-61 62-63 65 66 - 67 68-69 71 72 73 74 75 76 77 78 79 80 81 - ii- CITY OF TUSTIN TABLE OF CONTENTS (CONTINUED) June 30, 2001 STATISTICAL SECTION: General Governmental Expenditures by Function- Last Ten Fiscal Years General Governmental Revenues by Source - Last Ten Fiscal Years Property Tax Levies and Collections - Last Ten Fiscal Years Assessed Value of Taxable Property - Last Ten Fiscal Years Property Tax Rates - Direct and Most Common Overlapping Governments - Last Ten Fiscal Years Principal Taxpayers Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita- Last Ten Fiscal Years Special Assessment Billings and Collections - Last Eight Fiscal Years Computation of Legal Debt Margin Schedule of Direct and Overlapping Bonded Debt Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures - Last Ten Fiscal Years Revenue Bond Coverage - Water Bonds - Last Ten Fiscal years Property Value, Construction, and Bank Deposits - Last Ten Fiscal Years Demographic Statistics - Last Ten Fiscal Years Miscellaneous Statistical Data Page Number 83 84 - 85 86- 87 88 - 89 91 92 93 94- 95 96 97 98 9 100- 101 102- 103 104 105 - iii - CITY OF TUSTIN Elected And Administrative Officials MAYOR Tracy Wills Worley CITY COUNCIL Jeffery M. Thomas, Mayor Pro Tem Lou Bone Mike Doyle Tony Kawashima AUDIT COMMITTEE Donnie L. Smith, Chairperson John R. Garner R. Lawrence Friend Richard G. Hilde Gregory C. Moore CITY MANAGER William A. Huston Lois E. Jeffrey City Attorney George W. Jeffries City Treasurer Elizabeth A. Binsack Director, Community Development Arlene Marks Director, Human Resources Patrick Sanchez Director, Parks and Recreation Services Pamela Stoker City Clerk Christine A. Shingleton Assistant City Manager Steve Foster Chief of Police Ronald A. Nault Director, Finance Tim D. Serlet Director, Public Works/ City Engineer - iV - Finance Department December 6, 2001 HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL City of Tustin Tustin, Califomia 92780 City of Tustin 300 Centennial Way Tustin, CA 92780 Director (714) 573-3061 Secretary (714) 573-3060 Water Billing (714) 573-3075 FAX (714) 832-0825 Submitted for your information and conSideration is the June 30, 2001 Comprehensive Annual Financial Report for the City of Tustin. Responsibility for both the accuracy of the data presented and the Completeness and fairness or,the presentation, including all disclosures, rests with the City. We believe the data as presented is accurate in all material aspects; that it is presented in a manner designed to fairly set forth the financial position and results of operations of the City, as measured by the financial activity of its various funds; and that all disclosures necessary to enable the reader to gain maximum understanding of the City's financial affairs have been included. The significant accounting policies of the City are described in the notes to the Financial Statements. These accounting policies have been reviewed by the City's independent certified public:accountants and are in conformance with the recommendations of the American Institute of Certified Public Accountants and the Governmental Accounting Standards Board. This report has been examined by independent auditors Diehl, Evans & Company, LLP. report is included on page three. Their Introduction The City of Tustin is located in the central part of Orange County, about 40 miles southeast of LoSAngeles and 80 miles north of San Diego, at the intersection of the 5 and 55.Freeways. Tustin covers over 11 square miles and adjoins the cities of Orange, Santa Aha and Irvine. The State of California Department of Finance has certified the City's January 1, 2001 population at 69,199, which represents a modest increase of 1.32 percent from 2000, and an increase of 47.3 percent for the ten years beginning in January, 1991. General History and Description Columbus Tustin, the City's founder and namesake, came to California by way of Oregon during the Gold Rush. After settling in Sonoma County for twenty years, he and his partner, Nelson Oscar Stafford, purchased 1,300 acres of Rancho Santiago de Santa Ana, an original Spanish Land Grant, in 1868. Tustin and Stafford divided their purchase and Tustin started "Tustin City" on his portion, which is the current Old Town section surrounding E1 Camino Real. To encourage settlers, Tustin offered a free lot to all who would settle on it and an entire block to families with several children. A rivalry grew up between Tustin City and nearby Santa Ana, which culminated in a struggle over the terminus of the Southern Pacific Railroad spur. The railroad demanded a considerable subsidy for the extension and only Santa Ana was able to raise the money, so the rails went no further than Santa Ana. The City was incorporated under the General Laws of the State of California in 1927 as the "City of Tustin". Government was by a five member elected City Council. The Council/Administrator form of City Government was adopted in 1965 and was modified to the Council/Manager form in 1981. Tustin is in the center of Orange County and, while surrounded by much of the County's main industrial employment, it is essentially a residential community. The Financial Reporting Entity As required by accounting principles generally accepted in the United States of America, these financial statements present the City of Tustin (the primary government) and its component units. The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationship with the City. These entities are legally separate from each other. However, the City of Tustin elected officials have a continuing full or partial accountability for fiscal matters of the other entities. The financial reporting entity consists of: (1) the City (2) organizations for which the City is financially accountable and (3) organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval by the primary government. In a blended presentation, a component unit's balances and transactions are reported in a manner similar to the balances and transactions of the City. Component units are presented on a blended basis when the component unit's governing body is substantially the same as the City's or the component unit provides services almost entirely to the City. - vi - Blended Component Units The Tustin Community Redevelopment Agency was established October 20, 1976 pursuant to the State of California Health and Safety Code, Section 33000, entitled "Community Redevelopment Law". Its purpose is to prepare and carry out plans for improvement, rehabilitation and redevelopment of blighted areas w/thin the territorial limits of the City of Tustin. The City provides management assistance to the Agency, and the members of the City Council also act as the governing body of the Agency. The separate financial statements of the Tustin Community Redevelopment Agency component unit may be obtained from the City Finance Department located in the Tustin Civic Center. The Tustin Public Financing Authority is a joint powers authority organized pursuant to the State of Califomia Government Code, Section 6500. The Authority exists under a Joint Exercise of Power Agreement dated May 1, 1995, by and between the City of Tustin and the Redevelopment Agency of the City of Tustin. The members of the City Council constitute the members of the Board of Directors of the Authority. The Authority is authorized to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations of, or for the purpose of making loans to the City and/or to refinance outstanding obligations of the City or Assessment Districts of the City. Separate component unit financial statements for the Tustin Public Financing Authority are not issued. The Reporting Entity and Its Services The City provides the following services: public safety (police), parks and recreation services, engineering services, planning services, public works, general administrative services, and capital improvements. The City contracts for frre protection from the Orange County Fire Authority. The Tustin Community Redevelopment Agency was established in 1976, pursuant to the State of California Health and Safety Code, Section 33000, entitled "Community Redevelopment Law". Its purpose is to eliminate blighted areas by encouraging the development of residential, commercial, industrial, recreational and public facilities. Financial Statement Format This report is organized into three main sections: Introductory, Financial and Statistical. The Introductory Section includes a Table of Contents, this Transmittal Letter, the City's Principal officers and its Table of Organization. The Financial Section includes: (1) a "liftable" General Purpose Financial Statement comprised of the Auditor's Report and five combined statements which provide an overview of the City's financial position and result of operations along with "notes" developed to insure full disclosure and fair presentation, and (2) Combining and Individual Fund and Account Group statements and schedules designed to present detailed information on individual funds to demonstrate compliance with finance-related legal and contractual requirements, and to assure adequate disclosure at the individual fund entity level. - VII - The Statistical Section provides financial data usually covering ten years and other non-accounting data. The tables reflect social and economic data, financial trends and fiscal capacity of the City government. Fund Descriptions The various fund types and account groups used by the City and included in this report are as follows: Fund & Account Group Category Fund Type Governmental Funds Proprietary Funds Fiduciary Funds Account Groups General Fund Special Revenue Funds Debt Service Funds Capital Projects Funds Enterprise Funds Agency Funds General Fixed Assets General Long-Term Debt A description of funds and account groups is included in the "Notes to the Financial Statements", while a listing and purpose of the individual funds established by the City is included on the divider pages preceding each section of Combining and Individual Statements by Fund Type. Internal Control~ Budgetary Control and Accounting Basis In developing and modifying the City's accounting system, consideration has been given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding the safeguarding of assets and the reliability of financial records and maintaining accountability of assets. The concept of reasonable assurance recognizes that: the cost of a control should not exceed its benefits. The evaluation of this cost benefit relationship rests with Management. All internal control evaluations occur within the bounds as described. We believe that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. The annual budget adopted by the City Council provides for the general operation of the City. It includes proposed expenditures and the means of financing them. The City Council approves total budgeted appropriations and any amendments to appropriations throughout the year. - viii - The "appropriated budget" covers substantially all City expenditures, with the exception of capital improvement projects carded forward from prior years, which expenditures constitute legally authorized "non-appropriated budget". ~re, w~.ii0 significant non-budgeted financial activities. Actual expenditures may not exceed budgeted appropriations at the functional or program level. The City has the following programs accounted for through its governmental funds - general government, public safety, public works, community services and capital expenditures. Budgets for the General and Special Revenue Funds are adopted on a basis substantially consistent with accounting principles generally accepted in the United States of America. Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant reconciling items. No budgetary comparisons are presented for the Capital Projects, Debt Service and Proprietary Funds, as the City does not adopt annual budgets for these types of funds or budgets adopted are long-tenn. Formal budgetary integration is employed as a management control device. Commitments for materials and services, such as purchase orders and contracts, are recorded during the year as encumbrances to assist in controlling expenditures. Encumbrances at year-end lapse, then are added to the following year's budgeted appropriations. Encumbrances are not carried forward at year-end. Governmental fund types and Agency funds use a modified accrual basis of accounting. The City has implemented GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Pools in fiscal year 98-99. Revenues are recognized when they are "susceptible to accrual", that is, measurable and available to finance expenditures of the current period. Accrued revenues include property taxes received within 60 days after year-end, Federal and State Grants and subventions, interest, and certain charges for current services. Revenues that are not considered susceptible to accrual include certain licenses, permits, fines, forfeitures and penalties. Expenditures, other than principal and interest on long-term debt and employee compensated absences (general leave), are recorded when the liability is incurred. Proprietary fund types are accounted for on the accrual basis. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when the liability is incurred. Governmental Funds Revenues for the governmental fund types totaled $50,993,343 for fiscal year 2000-01, which is an increase of $6,483,858 from fiscal year 1999-00. Sales taxes, property taxes, motor vehicle in-lieu fees and special assessments remain the largest sources of revenue for City governmental funds. The $31,744,296 total taxes collected during fiscal 2000-01 represents 62.3 percent of total governmental fund type revenues. The $2.8 million increase in taxes is a 9.6 percent increase from the prior fiscal year. The Orange County Assessor Office records show that the City of Tustin's total assessed valuation increased 5.7 percent to $4,745,868,740 while assessed valuation countywide increased approximately 9.0 percent. - ix - Intergovernmental Revenues may vary dramatically from year to year due to the nature of their source. Most intergovernmental revenues are received from County, State, and Federal agencies for funding or reimbursement of capital projects. In fiscal year 2000-01, intergovernmental revenues increased by 24.45 percent, or $1.9 million. Intergovernmental revenues for 1999-00, 1998-99, and 1997-98 were $7,624,889, $6,109,179 and $4,544,572 respectively. The amount of revenues from various sources and the change over last year are shown in the following tabulation. Please note that capital improvement revenues and expenditures may skew comparisons from one fiscal year to the next. Revenue Source Percent Changes Amount of Total From 6-30-00 Taxes License & Permits Fines & Forfeitures Use of Money & Property Intergovernmental Revenues Charges for Services Other Revenues $31,744,296 62.3% $2,790,513 1,016,213 2.0 365,695 715,589 1.4 27,227 4,293,395 8.4 682,085 9,487,369 18.1 1,862,480 1,303,800 2.5 <14,303> 2,432,681 5.3 770,161 TOTAL: $50,993,343 100.0% $6,483,858 In order to provide flexibility in dealing with economic uncertainty and to provide for the cash flow needs of the City, it is important to maintain adequate reserves and liquidity in the City's General Fund. The City's Non Consolidated General Fund Balance at June 30, 2001 is $15,449,357, up from $14,485,318 in the previous fiscal year. This audited Balance exceeds the City Council's policy of 15% General Fund Reserves. Expenditures for the governmental fund types totaled $42,673,908 for fiscal year 2000-01, an increase of 6.2% from the previous year. Changes in levels of expenditures for major general operating functions of the City over the preceding year are shown in the following tabulation: Percent Changes Functions Amount Of Total from 6-30-00 General Government Public Safety Public Works Recreation and Other Community Services Capital Outlay Debt Service: Principal Retirement Interest & Fiscal Charges Cost of Issuance Advance Refunding Escrow $7,811,395 18.3% $532,509 16,718,300 39.2 891,573 9,634,490 22.6 1,304,501 2,546,206 6.0 75,956 3,622,631 8.5 <321,646> 1,190,449 2.8 36,043 1,150,437 2.6 <20,484> -0- 0.0 -0- -0- 0.0 -0- TOTAL: $42,673,908 100.0% $2,498,452 -X- This $532,509 increase in general government and $891,573 increase in public safety expenditures is attributable to increasing salary and benefit expenses and our continuing technology investment program. Public Works expenses increased~$~t!3 .million, due to an increase in capital project activity as scheduled in the City's Seven Year CIP Plan. Recreation and Other Community Services increased by $75,956 as they once again are fully staffed. Debt Administration Debt Service expenditures were $2,340,886, an increase of $15,559 from fiscal year 1999-00, and included the following activity. Interest/ Fiscal Obligation Principal Charges Total Capitalized Leases Countywide Revenue Bonds Tax Allocation Bonds $151,329 -0- $151,329 344,908 -0- 344,908 1,835,442 9,207 1,844,649 TOTAL: $2,331,67,9, $9,207 $2,340,,886 Tax Allocation Bonds On July 1, 1998, the Tustin Community Redevelopment Agency issued $20,805,000 in Tax Allocation Refunding Bonds with interest rates ranging from 3.50 percent to 5.00 percent to refund the Agency's Town Center Area Redevelopmem Project Tax Allocation Refunding Bonds Series 1987, in aggregate principal amount of $5,145,000, and the Agency's Town Center Area Redevelopment Project Subordinate Tax Allocation Bonds Series 1991 in aggregate principal amount of $12,880,000. The 1987 bonds were fully redeemed and securities for 1991 bonds were deposited in an irrevocable trust with an escrow agent to provide for all future payments when Tax Allocation Bonds, Series 1991 are called for redemption, which will be in December of 2008. Outstanding principal of the 1998 Tax Allocation Bonds at 06-30-01 is $18,475,000. No new tax allocation bonds were issued in 2000-01 and we are not planning on issuing new debt during the 2001-02 fiscal year. - xi - Cash Management Cash temporarily idle during the year was invested in various securities as authorized in the City's adopted Investment Policy. The average yield on maturing investments during the fiscal year was 6.10 percent, a slight increase over last year's average of 5.84 per cent. Total interest received for all funds was $4,658,152, a modest increase of $88,020 from the previous year. Several global factors have caused a significant reduction in U.S. interest rates since the beginning of the year. While Tustin has managed to maintain a positive spread between the current market rates and what the City is yielding on its investments, we are well aware of the yields that can be expected when the present investments mature. We are not expecting any future growth in investment income to be significant. At June 30 each year the City prepares schedules in compliance with Government Accounting Standards Board (GASB) Statement No. 31, Accounting and Financial Reporting for Certain Investments and External Pools. This new statement requires public agencies to account for and record material market value changes in their investments at year-end. At June 30, 2001 total City investments and deposits were $96,477,729 and the fair market value was $96,804,034. The fair value exceeded the book value at that point in time by $326,305. Water Utility System For information purposes only, the following states the operating income and expenses of the Water Utility System. The City is continuing its feasibility analysis of water services to the City of Tustin. Year Ended Year Ended 6-30-01 6-30-00 Operating Revenues Operating Expenses Operating Income Non-Operating Revenue (Expenses) Operating Transfers 9,025,214 $ 9,045,773 6,027,207 5,960,562 2,998,007 3,085,211 <104,764> 169,429 <855,999> <736,313> NET INCOME: $ 2,037,244 $ 2,518,327 Changes in long-term debt of the Water Enterprise Fund consisted of the following: Balance July 1, 2000 Additions Payments 1993 Certificates of Participation $ 9,050,000 $ - 0 - $450,000 OCWD Note Payable 5,840,476 - 0 - 592,004 Compensated Absences 59,920 5,131 -0- TOTAL: $.!...4,950,396 $ 5,131- $1,042,004 Balance June 30, 2001 $ 8,600,000 5,248,472 65,051 $13,913,523 - xii- Capital Projects Fund The Capital Projects Funds of the City included...the Town Center and South Central Project Areas of the Tustin Community Redevelopment Agency, the Refunded Assessment District 95-1, the low-income housing funds, and other Capital Projects. Capital Improvement Projects initiated and/or completed during the Fiscal Year 2000-2001 totaled $7,159,716 from all funds. Significant capital improvement projects completed in FY2000-2001 include: Tustin Sports Park Ballfield Renovation; Irvine Boulevard Rehabilitation between SR-55 & Prospect Avenue; Newport Avenue Water Main Replacement Between Walnut Avenue and Edinger Avenue; and the Maintenance Yard Remodel. Capital projects completed totaled $6,794,403 in FY2000-2001 and $10,575,944 from implementation through completion. Capital improvement projects started or in progress during the fiscal year include: the Tustin Commuter Rail Station; Drainage Improvements - Irvine Blvd. between Holt & SR-55; Columbus Tustin Ballfield Renovation; Traffic Signal Modifications at: McFadden Avenue/Kitchey Street & McFadden Avenue/Williams Street; Jamboree Road reconstruction between 1350' and 2750' north of Tustin Ranch Road; John Lyttle Reservoir Repairs; and Old Town Streetscape and Pedestrian Enhancements. Tustin Community Redevelopment Agency There was significant activity in Tustin's Community Redevelopment Agency last year. Both the Town Center Redevelopment Project Area and the South Central Redevelopment Project Area experienced a great deal of positive activity. Town Center Project Area The Town Center Project Area, established in 1976, encompasses approximately 360 acres in the center of the city of Tustin which includes Old Town and the Civic Center complex and all the commercial properties within the central city. The project area has already seen a number of major development projects including new retail, office, residential and public improvement efforts. Old Town Diagonal Parking- To recreate the historic feel of the area, Tustin installed diagonal parking in Old Town on a temporary test basis. Working with the Old Town Association, parallel parking along E1 Camino Real was removed and replaced with diagonal parking. The test was successful, and the City Council authorized the solicitation of bids for the permanent installation of diagonal parking and other streetscape improvements, including enhanced landscaping, historic lighting and other signage and design improvements to the Old Town area. Utt Juice Factory Project- The Agency continued marketing outreach and initiated exclusive developer negotiations for a Disposition and Development Agreement (DDA) and ground lease for redevelopment of the Utt Juice property. The site is approximately one acre located in the heart of the Tustin Old Town District. The plan calls for approximately 25,000 square feet of commercial and retail uses at the property. Commercial Rehabilitation - The Agency continued to administer the City's Commercial Rehabilitation Program for downtown property owners and businesses. - xiii- South Central Project Area The South Central Project Area encompasses approximately 370 acres and is generally bounded by Edinger Avenue, Red Hill Avenue, Valencia Street, the Costa Mesa (SR-55) and Santa Ana (I-5) Freeways, and Newport Avenue. Portions of the area lack right-of-way improvements such as streetlights, sidewalks, adequate street capacity and circulation. The City in the early 1990's adopted the Pacific Center East Specific Plan (for the southerly most portion of the South Central Project Area) which identified the need for an extension of Newport Avenue and much needed improvements to the SR-55 Freeway off-ramp at Edinger Avenue. The Specific Plan provides for office, hotel and commercial uses. Housing Rehabilitation Program - The Tustin Community Redevelopment Agency continued to administer the City's Housing Rehabilitation Program. The Housing Rehabilitation Program provides financial assistance to property owners of single-family homes and small-scale multifamily rental apartments in target areas of the city. The program serves to stimulate rehabilitation of residential properties occupied by low to moderate-income households. Activity in the program continued to be strong and the housing in Tustin's Southwest neighborhood continued to be improved. Ambrose Lane Project - The Agency completed financial assistance and funding to Warmington Homes and eight income restricted home purchasers at the Ambrose Lane project, a new 38-unit single family small lot subdivision in the Old Town area. The project also provided financial assistance to renovate a small commercial retail shopping center on E1 Camino Real. Property Acquisition - The Agency completed the acquisition of two apartment properties along Newport Avenue as part of the Comprehensive Affordability Strategy and also to support the Agency's additional right-of-way needs for widening of Newport Avenue. Newport Avenue/State Route 55 Northbound Ramp Reconfiguration - The Agency will be funding an environmental study, right-of-way acquisition, engineering and construction, for relocation of existing ramps including construction of new ramps at the northbound SR-55 Freeway and Edinger Avenue. The ramps will provide for greater penetration and traffic circulation in the Pacific Center East Specific Plan Area and assist in redevelopment of the area. The project will also construct a new segment of Newport Avenue south of Edinger Avenue to Valencia, including realignment and reconstruction of Del Amo Avenue. Newport Avenue Extension, North of Edinger - The Agency will be funding environmental study, right-of-way acquisition, engineering and construction of this project. The project will extend Newport Avenue south from its existing terminus, under the railroad tracks and an Orange County Flood Control channel to Edinger Avenue. The Project also involves widening of Newport Avenue from Tustin Grove Drive to Myrtle Avenue, to include three lanes in each direction, raised medians and sidewalks. A large portion of the easterly right-of-way has already been obtained through the Shea Homes Development Agreement, and the Agency has obtained property for a large portion of the extension in the vicinity of Edinger Avenue through the purchase and demolition of the Case Swayne warehouse building. The project will be done after the Newport Avenue/SR-55 Freeway Northbound Ramp Reconfiguration project is completed. - xiv- Edinger Avenue Widening- Edinger Avenue will be widened between the SR-55 Freeway and a point 1400 feet east of Red Hill Avenue. Work will widen the street so that it will be configured to a major arterial "smart street'? standard.With dual left turn lanes and exclusive right turn lanes. There will be construction/reconstruction of inlets, curb and gutter, raised median, sidewalks, traffic signals, streetlights and striping. The purpose of the work is to reduce congestion and improve the level of service on the street. Future Projects MCAS - Tustin Project Area - The largest and most complex project on the horizon for the Tustin Community Redevelopment Agency is the redevelopment of the approximately 1,600- acre former Marine Corps Air Station, MCAS-Tustin. In late 1999 the City of Tustin was able to sublease a portion of the base to the Orange County Rescue Mission who will be providing emergency/transitional housing to specific segments of the community. The Agency has also been able to complete design of the Phase I backbone roadway and infrastructure system (the Valencia/Armstrong project) for the westerly portion of the base. The City of Tustin certified as complete the Joint Environmental Impact ReportfEnvironmental Impact Statement (EIR/EIS) for the Disposal and Reuse of MCAS-Tustin on January 16, 2001, with the Department of Navy issuing a Record of Decision on the document on March 2, 2001. A Preliminary Development Plan has been adopted and the final plan for the formation of a redevelopment project area is in preparation. Adoption of this project area will assist the City in redevelopment of the property by offsetting some of the expense associated With the substantial infrastructure improvements required for the site. To facilitate the rapid development of the base and job creation that will come as a result, the City of Tustin and the Tustin Community Redevelopment Agency are pursuing the acquisition of the developable portion of the base through an Economic Development Conveyance (EDC) with the Navy. Approval of the Citf s EDC application will ensure that private developers of proven quality and experience will receive and develop the base property consistent with the goals and objectives of the MCAS-Tustin Reuse Plan. Upon conveyance of the site to the City and Agency, the property will be offered through a request for proposal process to the private sector. Other major capital improvements identified in the City's most recent Capital Improvement Plan include the completion of the Columbus Tustin Ballfield Renovations, $545,000; construction of a skateboard facility at Frontier Park, $500,000; construction of a new park at Pioneer Road, $1,150,000; the rehabilitation of a portion of Walnut Avenue, $709,000; Old Town Streetscape and Pedestrian Enhancements, $661,000; rehabilitation of a portion of Jamboree Road, $1,115,000; widening on parts of Edinger Avenue, $5,161,000; intersection improvements at Irvine Blvd. and Newport Avenue, $5,172,000; widening a portion of Red Hill Avenue, $1,182,000; and freeway on ramp reconfiguration at Edinger Avenue, $10,893,600. Significant future Water Enterprise projects include reconstruction of the Simon Booster Station, $1,017,000; completion of the Main Street Reservoir, $6,260,000; construction of a new well along Pasadena Avenue, $1,580,000; and addition of a well at the Main Street location, $907,000. - XV - Prospects for the Future According to many economic analysts, the nation entered into a recession early in 2001. The events of September 11 and the subsequent military action have had a negative impact on the economy across the country. We have been apprised of a major increase in all lines of our municipal insurance premiums which is a direct result of the losses in New York City. We have also experienced our first significant quarterly sales tax decline in fifteen years. This is a result of declining auto sales in the third quarter of this year. Tustin is fairly well diversified in its sales tax sources but new and used auto sales and other auto related services account for 28% of total sales tax each year. If the economy continues to struggle we may see further declines in auto sales and leases. This may also impact our Motor Vehicle In-lieu revenue as older vehicles pay lower licensing fees on a sliding scale than new vehicles. There is also some concern that the State may decline to back fill the reduction in vehicle licensing fees they granted taxpayers in 1998 as they struggle with their own budget concems. We will continue to monitor the economic activity in our City, County and State in order to provide accurate revenue projections to the City Council as they are asked to make future budget decisions. The City's Consolidated General Funds ended the fiscal year with a fund balance of $15,449,357; of which $537,265 is reserved for prepaid items and long-term loan receivables. Unreserved but designated balances are for capital outlay, $5.6 million; self-insurance, $2.2 million; and contingencies, $7.0 million. Like other governmental entities in the State of California, we must contend with the tax limitation initiatives, now Article XIII A and B of the State Constitution. These limits are among the most slringent in the nation. Article XIII A (Prop I3) places an absolute limit on the level of the Property Tax rate and limits the rate of growth of property assessed value. Article XIII B (Prop 4) restricts appropriations from the proceeds of taxes by imposing a limit based upon the 1979 fiscal year adjusted for inflation and population growth. Prop 13 curtailed our ability to generate. revenues through the property tax rate structure for new programs, reserves and other needs, or to meet debt service on General Obligation Bonds. Prop 4 curtails growth of all tax revenues. The City of Tustin is not experiencing problems with its Proposition 4 limitation. Due to the growth in population as a result of the Tustin Ranch development keeping pace with increased revenues, we are maintaining a comfortable cushion between annual appropriations and our mandated appropriation limit. The City of Tustin 1999-00 appropriation limit was $38,112,465. Net appropriations subject to the limit were $29,434,084. At this time the City is $8,678,381 below its limit. Given that the popUlation growth in Tustin Ranch will continue to increase in pace with the revenue generated, it is projected that the appropriation limit for the City of Tustin should not be a problem for many years to come. - xvi- Self Insurance At June 30, 2001 the City was insured for.excess Workers' Compensation, Comprehensive General Liability and Workers' Compensation as a member of the Orange County Cities Risk Management Authority. The Authority is composed of twelve Cities and one other governmental entity in Orange County and is organized under a Joint Powers Agreement pursuant to the California Government Code. The purpose of the Authority is to arrange and administer programs of insurance for the pooling of self-insured losses and to purchase excess insurance coverage. The City's self insured portion of Workers' Compensation is the first $300,000, with excess amounts presently insured to the statutory requirements of the State of California. General and Auto Liability is self-insured for the first $250,000 per occurrence, with excess amounts presently insured to $5 million and a pooled liability program to a maximum of $20 million. Single Audit During fiscal 2001, the City has participated in an audit of all funds and account groups meeting the definition of GASB, and accordingly included the Tustin Community Redevelopment Agency in addition to the regular funds, grants and accounts of the City. These funds and account groups were further exposed to audit requirements of the Office of Management and Budget Circular A-128, Audits of State and Local Governments, which in addition to the requirements for an organization-wide examination of financial operations, requires tests of compliance with the major provisions of Federal law and regulations. There were no reportable items found during this audit; the results of this expanded audit activity are provided under separate cover. General Fixed Assets The general fixed assets of the City are those fixed assets used in the performance of general governmental functions and exclude the fixed assets of the Water Utility Fund. As of June 30, 2001, the general fixed assets of the City totaled $52,052,733. This amount represents the original cost of the assets, or estimated historical cost if actual historical cost is not available. Additions to fixed assets were $5,272,184 and deletions were $2,603,128 for a net increase of $2,669,056. Depreciation of general fixed assets is not recognized in the City's accounting system. Audit Committee The City of Tustin's Audit Committee is made up of five members chosen from residents and business members of the community. The Audit Committee is charged with oversight of the audit process. They are involved with the selection of the external auditors and they monitor the audit process. They have reviewed this document and any and all concerns that may have been addressed by the auditors. They will submit a report of their actions during the year to the City Council without comment regarding the numbers as they appear herewith. - xvii- Certificate of Achievement for Excellence in Financial Reporting The Govemment Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Tustin for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2000. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards. Such reports must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to the Certificate of Achievement Program requirements, and we are submitting it to GFOA. The City also received an award for "Outstanding Financial Reporting" for the same report from the California Society of Municipal Finance Officers and the Award of Excellence for the City's Investment Policy from the Municipal Treasurers Association of North America and Canada. Acknowledgments I wish to express my appreciation to the entire Finance Department staff for their contribution to the department during the year. Their efforts are reflected in this report and in other documents resulting from the annual audit process. Special thanks are due to Larry Schutz, Assistant Finance Director, and his staff. His efforts in preparing the final financial documents contribute significantly to the quality of this report. The Mayor and members of the City Council are to be commended for their interest and support in conducting the financial operations of the City in a responsible and progressive manner. Respectfully submitted, Finance Director - XVlll - 0 __ n , - xix - Certificate of Achievement for Excellence in Financial Reporting Presented to City of. Tustin,. California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2000 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. ant Director -- XX -- - xxi - FINANCIAL SECTION -1- THIS PAGE LEFT BLANK INTENTIONALLY DIEHL, EVANS &T COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS 2121 ALTON PARKWAY, SUITE 100 IRVINE, CALIFORNIA 92606-4906 (949) 399-0600 · FAX (949) 399-0610 www. diehlevans.com MICHAEL 1L LUDIN, CPA CRAIG W. SPRAKER, CPA NITIN P. PAT£L, CPA PHILIP H. HOLTIC4,MR CPA THOMAS M. PERLOWSKI, CPA HARVEY J. $CHROEDER, CPA A PROFESSIONAL CORPORATION September 21,2001 INDEPENDENT AUDITORS' REPORT The Honorable City Council of the City of Tustin Tustin, California We have audited the general purpose financial statements of the City of Tustin, California as of and for the year ended June 30, 2001 as listed in the accompanying table of contents. These general purpose financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these general purpose 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 general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Tustin, California, as of June 30, 2001 and the results of its operations and cash flows of its proprietary fund type for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated September 21, 2001 on our consideration of the City of Tustin's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The financial statements of the combining individual funds and account group Statements listed in the table of contents under supplementary information are presented for purposes of additional analysis and are not a required part of the general, purpose financial statements of the City of Tustin. The information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. The statistical information listed in the table of contents is not a required part of the basic general purpose financial statements, and we did not audit or apply limited procedures to such information and do not express any assurance on such information. OTHER OFFICES AT: 2965 ROOSEVELT STREET CARLSBAD, CALIFORNIA 92008-2389 (760) 729-2343 · FAX (760) 729-2234 613 W. VALLEY PARKWAY. SUITE 330 ESCONDIDO. CALIFORNIA 92025-2598 (760) 741-3141 · FAX (760) 741-9890 CITY OF TUSTIN COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS June 30, 2001 With comparative totals for June 30, 2000 ASSETS AND OTHER DEBITS Cash and investments (Note 2) Cash and investments with fiscal agents (Note 2) Taxes receivable Interest receivable Accounts receivable Due from other governments Due from other funds (Note 3) Deposits Prepaid items Loan receivable (Note 8) Deferred bond issue costs Land held for resale Property, plant and equipment, net of accumulated depreciation (Note 4) Amount available in debt service funds Amount to be provided for the retirement of general long - term debt TOTAL ASSETS AND OTHER DEBITS Governmental Fund Types Special Debt Capital General Revenue Service Projects $ 13,454,434 $ 11,425,909 261,032 - 3,755,468 - 537~090 - 1,362,973 - - 1,792,857 2,909,535 - 537,265 - LIABILITIES, FUND EQUITY AND OTHER CREDITS LIABILITIES: Accounts payable and accrued liabilities Interest payable Due to other funds (Note 3) Deposits Deferred revenue (Note 13) Due to bondholders Long - term debt (Note 9) TOTAL LIABILITIES $ 22,817,797 $ 13,218,766 $ 2,431,339 $ 431,822 - 1,372,686 4,661,574 - 275,527 165,207 FUND EQUITY AND OTHER CREDITS: Investment in general fixed assets Contributed capital (Note 15) Retained Earnings - Unreserved Fund Balances: Reserved (Note 12) Unreserved - Designated (Note 12) Unreserved - Undesignated TOTAL FUND EQUITY AND OTHER CREDITS $ 8,817,844 1,715,463 32,352 $ 10,565,659 TOTAL LIABILITIES, FUND EQUITY AND OTHER CREDITS $ 29,440,082 3,820,958 12,988 207,922 29,400 1,395,256 . 150,618 2,905,000 $ 37,962,224 $ 945 $ 715,994 142,105 2,790,000 . 7,368,440 1,969,715 143,050 3,505,994 537,265 - 14,912,092 - 11,249,051 10,564,714 (142,105) 8,877,274 25,973,699 (394,743) See independent auditors' report and notes to financial statements. -4- 15,449,357 11,249,051 10,422,609 34;456,230 $ 22,817,797 $ 13,218,766 $ 10,565,659 $ 37,962,224 Proprietary Fiduciary Fund Type Fund Types Accoum Groups Trust General and Fixed Enterprise Agency Assets 15,414,122 $ 3,468,789 $ General Long - Term Debt Totals (Memorandum Only) 2001 2000 - $ 82,021,180 $ 68,973,768 1,052,091 7,933,310 - 14,782,854 16,915,784 - 51,960 - 3,852,768 3,051,420 - - 745,012 696,957 1,473,834 - - 2,866,207 3,679,715 - - 1,792,857 292,687 781,398 - 5,086,189 5,052,224 17,284 - - 17,284 30,000 24,612 - - 561,877 596,428 - - 150,618 200,971 160,127 - - 160,127 173,755 - - 2,905,000 2,905,000 29,390,017 - 52,052,733 - 81,442,750 78,814,992 - 10,422,609 10,422,609 8,145,673 - 11,939,738 11,939,738 15,286,367 $ 47,532,087 $ 12,235,457 $ 52,052,733 $ 22,362,347 $ 218,747,070 $ 204,815,741 $ 1,398,647 $ 14,552 $ $ - $ 4,993,299 $ 4,060,595 114,988 - - 114,988 124,212 - 781,398 - 5,086,189 5,052,224 82,273 406,173 - 5,150,020 4,091,380 - - - 440,734 590,403 - 10,815,327 - 10,815,327 10,525,582 13,913,523 - 22,362,347 36,275,870 38,382,436 15,509,431 12,017,450 22,362,347 62,876,427 62,826,832 - - 52,052,733 - 52,052,733 49,383,677 2,185,039 - - 2,185,039 2,185,039 29,837,617 - - 29,837,617 27,800,373 - 21g,007 - 20,197,260 17,308,609 - - - 40,885,791 35,739,027 - - - 10,712,203 9,572,184 32,022,656 218,007 52,052,733 - 155,870,643 141,988,909 $ 47,532,087 $ 12,235,457 $ 52,052,733 $ 22,362,347 $ 218,747,070 $ 204,815,741 -5- CITY OF TUSTIN COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL AND FIDUCIARY FUND TYPES For the year ended June 30, 2001 With comparative totals for the year ended June 30, 2000 Governmental Fund Special Debt General Revenue Service REVENUES: Taxes $ 26,754,868 $ - Licenses and permits 1,016,213 - Fines and forfeitures 715,589 - Use of money and property 641,648 860,861 Intergovernmental revenue 4,896,721 3,487,132 Charges for services 1,303,800 - Other revenues 2,092,594 50,452 TOTAL REVENUES 37,421,433 4,398,445 EXPENDITURES: Current: General government 6,719,800 Public safety 16,718,300 Public works 6,433,772 Community services 2,546,206 Capital outlay 1,046,551 Debt service: Principal retirement 145,449 Interest and fiscal charges 5,880 TOTAL EXPENDITURES 33,615,958 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 3,805,475 OTHER FINANCING SOURCES (USES): Proceeds from long-term debt Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES AT BEGINNING OF YEAR, AS RESTATED (NOTE 19) FUND BALANCES AT END OF YEAR See independent auditors' report and notes to financial statements. 2,006,564 (4,848,000) (2,841,436) 964,039 14,485,318 $ 15,449,357 -6- 168,683 3,200,718 . 183,588 3,552,989 845,456 1,548,000 (724,308) 823,692 1,669,148 9,579,903 $ 11,249,051 $ 3,991,543 . 597,147 . . . 4,588,690 40,848 . . . - 795,000 1,049,649 1,885,497 2,703,193 (426,257) (426,257) 2,276,936 8,145,673 $ 10,422,609 Types Capital Projects $ 997,885 2,178,402 1,103,516 289,635 4,569,438 Fiduciary Fund Type Expendable Trust 15,337 . . . Totals (Memorandum Only) 2001 2000 31,744,296 $ 28,953,783 1,016,213 650,518 715,589 688,362 4,293,395 3,611,310 9,487,369 7,624,889 1,303,800 1,318,103 2,432,681 1,662,520 15,337 50,993,343 44,509,485 848,222 2,392,492 250,000 94,908 33,842 7,811,395 7,278,886 - 16,718,300 15,826,727 - 9,634,490 8,329,989 - 2,546,206 2,470,250 - 3,622,631 3,944,277 1,190,449 1,154,406 1,150,437 1,170,921 3,585,622 33,842 42,673,908 40,175,456 983,816 (18,505) 8,319,435 4,334,029 3,300,000 3,300,000 - 45,298 6,854,564 6,587,431 (5,998,565) (5,841,721) 855,999 791,008 4,283,816 (18,505) 9,175,434 5,125,037 30,172,414 236,512 62,619,820 57,494,783 34,456,230 $ 218,007 $ 71,795,254 $ 62,619,820 -7- CITY OF TUSTIN COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL AND SPECIAL REVENUE FUND TYPES For the year ended June 30, 2001 REVENUES: Taxes (Note 5) Licenses and permits Fines and forfeitures Use of money and property Intergovernmental revenue Charges for services Other revenues TOTAL REVENUES EXPENDITURES: Current: General government Public safety Public works Community services Capital outlay Debt service: Principal retirement Interest and fiscal charges TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES AT BEGINNING OF YEAR, AS RESTATED FUND BALANCES AT END OF YEAR Budget $ 24,886,200 913,202 583,500 370,500 5,136,802 961,560 1,390,595 34,242,359 7,310,009 16,812,638 7,188,454 2,568,141 2,392,858 193,680 36,465,780 (2,223,421) 3,096,360 (4,648,000) (1,551,640) (3,775,061) 14,485,318 $ 10,710,257 General Fund Actual $ 26,754,868 1,016,213 715,589 641,648 4,896,721 1,303,800 2,092,594 37,421,433 6,719,800 16,718,300 6,433,772 2,546,206 1,046,551 145,449 5,880 33,615,958 3,805,475 2,006,564 (4,848,000) (2,841,436) 964,039 14,485,318 $ 15,449,357 Variance Favorable (Unfavorable) $ 1,868,668 103,011 I32,089 271,148 (240,081) 342,240 701,999 3,179,074 590,209 94,338 754,682 21,935 1,346,307 48,231 (5,880) 2,849,822 6,028,896 (1,089,796) (2o0,ooo) (1,289,796) 4,739,100 $ 4,739,100 See independent auditors' report and notes to financial statements. Special Revenue Funds Budget Actual Variance Favorable (Unfavorable) 544,000 860,861 316,861 9,424,696 3,487,132 (5,937,564) 11,000 50,452 39,452 9,979,696 4,398,445 (5,581,251) Totals (Memorandum Only) Budget Actual Variance Favorable (Unfavorable) $ 24,886,200 $ 26,754,868 $ 1,868,668 913,202 1,016,213 103,011 583,500 715,589 132,089 914,500 1,502,509 588,009 14,561,498 8,383,853 (6,177,645) 961,560 1,303,800 342,240 1,401,595 2,143,046 741,451 44,222,055 41,819,878 (2,402,177) - 168,683 (168,683) 5,559,869 - 5,559,869 9,134,997 3,200,718 5,934,279 - 813,094 183,588 629,506 15,507,960 (5,528,264) 3,552,989 11,954,971 7,310,009 6,888,483 421,526 22,372,507 16,718,300 5,654,207 16,323,451 9,634,490 6,688,961 2,568,141 2,546,206 21,935 3,205,952 1,23 O, 139 1,975,813 193,680 145,449 48,231 - 5,880 (5,880) 51,973,740 37,168,947 14,804,793 845,456 6,373,720 (7,751,685) 4,650,931 12,402,616 1,548,000 1,548,000 - (971,360) (724,308) 247,052 576,640 823,692 247,052 4,644,360 3,554,564 (1,089,796) (5,619,360) (5,572,308) 47,052 (975,000) (2,017,744) (1,042,744) (4,951,624) 1,669,148 6,620,772 (8,726,685) 2,633,187 11,359,872 9,579,903 9,579,903 $ 4,628,279 $ 11,249,051 $ 6,620,772 24,065,221 24,065,221 $ 15,338,536 $ 26,698,408 $ 11,359,872 -9- CITY OF TUSTrN COMPARATIVE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS - PROPRIETARY FUND TYPE WATER ENTERPRISE FUND For the year ended June 30, 2001 With comparative totals for the year ended June 30, 2000 OPERATING REVENUES: Charges for services OPERATING EXPENSES: Personal services Purchased water and power Maintenance and operations Depreciation and amortization TOTAL OPERATING EXPENSES OPERATING INCOME NONOPERATING INCOME (EXPENSES): Interest income Interest expense Loss from disposition of assets TOTAL NONOPERATING INCOME (EXPENSES) NET INCOME BEFORE OPERATING TRANSFERS OPERATING TRANSFERS: Operating transfers out NET INCREASE IN RETAINED EARNINGS RETAINED EARNINGS AT BEGINNING OF YEAR RETAINED EARNINGS AT END OF YEAR 2001 $ 9,025,214 1,159,959 781,037 3,141,123 945,088 6,027,207 2,998,007 1,171,820 (728,630) (547,954) (104,764) 2,893,243 (855,999) 2,037,244 27,800,373 $ 29,837,617 2000 $ 9,045,773 1,799,483 794,375 2,300,347 1,066,357 5,960,562 3,085,211 958,822 (786,914) (2,479) 169,429 3,254,640 (736,313) 2,518,327 25,282,046 $ 27,800,373 See independent auditors' report and notes to financial statements. CITY OF TUSTIN CoMpARATIVE STATEMENT OF CASH FLOWS PROPRIETARY FUND TYPE - WATER ENTERPRISE FUND For the year ended June 30, 2001 With comparative totals for the year ended June 30, 2000 CASH FLOWS FROM OPERATING ACTIVITIES: Operating income Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in prepaids (Increase) decrease in deposits Increase (decrease) in accounts payable and accrued liabilities Increase (decrease) in due to other funds Increase (decrease) in deposits payable Increase (decrease) in compensated absences TOTAL ADJUSTMENTS 2001 2000 $ 2,998,007 $ 3,085,211 945,088 1,066,357 (121,963) 138,044 (24,612) - (17,284) 78,396 110,807 (41,761) 41,761 (8,273) 3,016 5,131 (15,193) 814,722 1,344,792 NET CASH PROVIDED BY OPERATING ACTIVITIES 3,812,729 4,430,003 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Operating transfers out (855,999) (736,313) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of property, plant and equipment Principal paid on bonds payable Principal paid on notes payable Interest paid NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (1,438,116) (2,734,641) (450,000) (425,000) (592,004) (569,082) (737,854) (795,627) (3,217,974) (4,524,350) CASH FLOWS FROM INVESTING ACTIVITIES: Interest received 1,171,820 958,822 NET INCREASE IN CASH AND CASH EQUIVALENTS 910,576 128,162 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 15,555,637 15,427,475 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 16,466,213 $ 15,555,637 RECONCILIATION OF CASH AND CASH EQUIVALENTS ON STATEMENT OF CASH FLOWS TO THE BALANCE SHEET: Cash and investments Cash and investments with fiscal agents Cash and Cash Equivalents on Statement of Cash Flows $ 15,414,122 $ 14,485,960 1,052,091 1,069,677 $ 16,466,213 $ 15,555,637 See independent auditors' report and notes to financial statements. -11- CITY OF TUST1N NOTES TO FiNANCIAL STATEMENTS June 30, 2001 1. SUMMARY OF SIGNIFICANT ACCOUNTiNG POLICIES: The Financial Reporting Entity: The City of Tustin was incorporated in 1927 as a "General Law" City governed by an elected five- member city council. As required by accounting principles generally accepted in the United States of America, these financial statements present the City of Tustin (the primary government) and its component units. The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationship with the City. These entities are legally separate from each other. However, the City of Tustin elected officials have a continuing full or partial accountability for fiscal matters of the other entities. The financial reporting entity consists of: (1) the City (2)organizations for which the City is financially accountable and (3) organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. An organization is fiscally dependent on the primary government if it is unable to adopt its budget, levy taxes or set rates or charges, or issue bonded debt without approval by the primary government. In a blended presentation, a component unit's balances and transactions are reported in a manner similar to the balances and transactions of the City. Component units are presented on a blended basis when the component unit's governing body is substantially the same as the City's or the component unit provides services almost entirely to the City. Blended Component Units: The Tustin Community Redevelopment Agency was established October 20, 1976 pursuant to the State of California Health and Safety Code, Section 33000, entitled "Community Redevelopment Law". Its purpose is to prepare and carry out plans for improvement, rehabilitation and redevelopment of blighted areas within the territorial limits of the City of Tustin. The City provides management assistance to the Agency, and the members of the City Council also act as the governing body of the Agency. The Agency's financial data and transactions are included with the debt service fund type, capital projects fund type, general fixed assets account group, and general long-term debt account group. The separate financial statements of the Tustin Community Redevelopment Agency component unit may be obtained from the City of Tustin Finance Department located in the Tustin Civic Center. See independent auditors' report. -12- CITY OF TUST1N NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): Blended Component Units (Continued): The Tustin Public Financing Authority. is a joint powers authority organized pursuant to the State of California Government Code, Section 6500. The Authority exists under a Joint Exercise of Power Agreement dated May 1, 1995, by and between the City of Tustin and the Redevelopment Agency of the City of Tustin. The members of the City Council constitute the members of the Board of Directors of the Authority. The Authority is authorized to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations of, or for the purpose of making loans to the City and/or to refinance outstanding obligations of the City or Assessment Districts of the City. Currently the Authority has only issued debt to purchase the limited obligation bonds of Reassessment Districts 95-1 and 95-2. (See Note 10). Separate component unit financial statements for the Tustin Public Financing Authority are not issued. Description of Funds and Account Groups: The accounts of the City are organized on the basis of funds or account groups, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts which comprise its assets, liabilities, equity, revenues and expenditures. The various funds and account groups are defined as follows: Governmental Fund Types: The General Fund is used to account for all financial resources except those required to be accounted for in another fund. Special Revenue Funds are used to account for the proceeds of specific revenue sources that are restricted by law or administrative action for specified purposes. Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related fiscal agent costs. Capital Proiects Funds are used to account for the financial resources to be used for the acquisition or construction of major capital facilities, and for the improvement, rehabilitation and redevelopment of the Community Redevelopment Agency project areas. See independent auditors' report. -13- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): Proprietary_ Fund Type: The Enterprise Fund is used to account for operations that are financed and operated in a manner similar to private business enterprises. The intent of the governing body is that the costs of providing services to the general public on a continuing basis be financed or recovered through user charges. Fiduciary Fund Types: Expendable Trust Fund is used to account for deferred compensation assets for which the City has retained fiduciary responsibility. Agency Funds are used to account for assets held by the City as an agent for individuals, other governments and other entities. Account Groups: The General Fixed Assets Account Group is used to account for capital assets of the City which are long-term in nature, and used in the operation of the City, other than those which are capitalized in the proprietary fund. The General Long Term Debt Account Group is used to account for the City's outstanding long-term obligations, other than those of the proprietary fund. Basis of Accounting: The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds and the expendable trust fund are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. The proprietary fund is accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operation of this fund are included on the balance sheet. See independent auditors' report. -14- CITY OF TUSTIN NOTES TO FINANC~ STATEMENTS (CONTINUED) June 30, 2001 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT1NLIED): Basis of Accounting (Continued): Fund equity (net total assets) is segregated into contributed capital and retained earnings components. The proprietary fund-type operating statement presents increases (revenues) and decreases (expenses) in net total assets. The modified accrual basis of accounting is followed for the governmental and fiduciary fund types (General, Special Revenue, Debt Service, Capital Projects, Expendable Trust and Agency Funds). Under the modified accrual basis of accounting, revenues are recognized when they become susceptible to accrual; i.e., when they become measurable and available to finance expenditures of the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers property taxes as available if they are remitted within 60 days after the year end. Other revenues considered susceptible to accrual include sales tax, gas tax, motor vehicle license fees, franchise fees, interest income and charges for services. Licenses and permits, fines and forfeitures and other taxes are not susceptible to accrual became they are not measurable until received in cash. Grant revenues have been recorded according to the provisions of GASB Code Section G60, whereby grant funds earned but not received are recorded as a receivable, and grants received before the related revenue recognition criteria have been met are reported as deferred revenues. Expenditures are recorded when the related fund liability is incurred, except that principal and interest on general long-term debt is recognized when due. The long-term liability to be paid from governmental funds' resources for accumulated unpaid vacation and compensatory leave time is recorded in the General Long-Term Debt Account Group as it is expected to be paid from future resources. The accrual method of accounting is followed by the City's proprietary fund type (Enterprise Fund). Proprietary fund types are accounted for on an "income determination" or "cost of service" measurement focus. Accordingly, all assets and liabilities are included in their respective balance sheets, and the reported fund equity (total reported assets, less total reported liabilities) provides an indication of the economic net worth of the fund. Operating statements for proprietary fund types (on an income determination measurement focus) report increases (revenues) and decreases (expenses) in determining total economic net worth. Under this determination, unbilled service receivables are recorded at year-end. In accordance with Government Accounting Standards Board (GASB) Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the City applies all GASB pronouncements currently in effect as well as Financial Accounting Standard Board Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins of the Committee on Accounting Procedure issued on or before November 30, 1989. See independent auditors' report. -15- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): Budgetary Data: The City follows these procedures in establishing the budgetary data reflected in the financial statements. a, The annual budget is adopted by the City Council after the holding of a hearing and provides for the general operation of the City. The operating budget includes proposed expenditures and the means of financing them. b, The City Council approves total budgeted appropriations and any amendments to appropriations throughout the year. This "appropriated budget" (as defined by GASB Code Section 2400.109) covers City expenditures in all governmental funds, except for debt service and capital improvement projects carried forward from prior years. The City Manager is authorized to transfer budgeted amounts between departments.' Actual expenditures may not exceed budgeted appropriations at the fund level. Budget figures used in the accompanying financial statements are the final adjusted amounts. Supplemental appropriations authorized during the fiscal year ended June 30, 2001 were $4,266,879. C, Formal budgetary integration is employed as a management control device during the year. Commitments for materials and services, such as purchase orders and contracts, are recorded as encumbrances to assist in controlling expenditures. Capital projects appropriations are an automatic supplemental appropriation for the next year. All others lapse unless they are encumbered at year end or re-appropriated through the formal budget process. There were no outstanding encumbrances at year end. at Annual budgets are adopted for the General and Special Revenue Funds on a basis substantially consistent with accounting principles generally accepted in the United States of America. Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant reconciling items. Revisions to the originally adopted budget were made during the year and have been incorporated into budgetary amounts presented within these financial statements. No budgetary comparisons are presented for the City's Debt Service, Capital Projects, Expendable Trust and Proprietary Funds as the City is not legally required to adopt budgets for these fund types. Budgetary comparisons of the Redevelopment Agency are primarily "long-term" budgets which emphasize capital outlay plans extending over one year. Because of the long-term nature of redevelopment projects, "annual" budget comparisons are not considered meaningful and accordingly, no budgetary information is provided. See independent auditors' report. -16- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30,2001 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): Investments: Investments are stated at fair value (the value at which a financial instrument would be exchanged in a current transaction between willing parties other than a forced or liquidation sale), except for certain investments which have a remaining life of less than one year when purchased, which are stated at amortized cost. Those investments are short-term, highly liquid debt insmanents including commercial paper, bankers' acceptances, and U.S. Treasury and agency obligations. General Fixed Assets: General fixed assets including assets acquired under lease purchase contracts are recorded as expenditures in the various governmental funds at the time of purchase. Such assets include land, buildings, building improvements, furniture, fixtures, and equipment and are capitalized at cost in the General Fixed Assets Account Group. Donated fixed assets are recorded at their fair market value on the date donated. The cost of roads and streets, bridges, curbs and gutters, and lighting systems are not capitalized. No depreciation is provided on general fixed assets. Proprietary_ Fund Fixed Assets: Fixed assets purchased by the enterprise fund are capitalized at cost, while contributed assets are recorded at fair market value at the date of receipt. Depreciation has been provided on a straight-line basis over the following useful lives: Type of Asset Life In Years Plant 5 - 40 Equipment 4 - 10 Land Held for Resale: Land held for resale is carried at the lower of cost or estimated realizable value. Fund balances are reserved in amounts equal to the carrying value of land held for resale because such assets are not available to finance the City's current operations. Property_ Taxes: Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters. The property taxes go into a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City of Tustin accrues only those taxes which are received within 60 days after year end. See independent auditors' report. -17- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): Property Tax Calendar: Property taxes are assessed and collected each fiscal year according to the following property tax calendar: Lien date Levy date Due date Collection date January 1 July 1 to June 30 November 1 - 1st installment February 1 - 2nd installment December 10 - 1st installment April 10- 2nd installment Compensated Absences: All vested vacation and compensatory leave time is recognized as an expense and as a liability in the proprietary type fund at the time the liability vests. Governmental fund types recognize the vested vacation and compensatory time as an expenditure in the current year to the extent it is paid during the year. Accrued vacation and compensatory time relating to governmental funds is included as a liability in the General Long-Term Debt Account Group as those amounts are payable from future resources (See Note 9), and within the balance sheet for amounts relating to the proprietary fund type. Cash and Cash Equivalents: All cash and investments of the proprietary fund are pooled with the City's pooled cash and investments and is therefore considered cash equivalents for purposes of the statement of cash flows. Comparative Data: Comparative total data for the prior year have been presented in the accompanying financial statements in order to provide an understanding of changes in the City's financial position and operations. However, comparative data by fund type have not been presented, in each of the statements since their inclusion would make the statements unduly complex and difficult to read. Certain prior year balances have been reclassified in order to conform with the current year' s presentation. Total Column on Combined Statements: The total column on the Combined Financial Statements in captioned "Memorandum Only" to indicate that it is presented only to facilitate financial analysis and such data is not comparable to a consolidation. Data in this column does not present financial position, results of operations, or cash flows in conformity with accounting principles generally accepted in the United States of America. Interfund eliminations have not been made in the aggregation of this data. See independent auditors' report. -18- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 2. CASH AND INVEST~NTS: Authorized Investments: Under provision of the City's investment policy, and in accordance with Section 53601 of the California Government Code, the City may invest in the following types of investments: · Certificates of Deposit (or Time Deposits) placed with commercial banks and/or savings and loan associations · Bankers' Acceptances Medium-Term Corporate Notes · Commercial Paper · Local Agency Investment Fund (LAIF) · U.S. Treasury securities with a maturity of five years or less · State of California and local agency bonds · Federal agency short-term bonds or notes with a maturity of five years or less · Money market mutual funds The City has monies held by trustees or fiscal agents pledged to the payment or security of Certain bonds. The California Government Code provides that these monies, in the absence of specific stamt0ry provisions governing the issuance of bonds, may be invested in accordance with the ordinance, resolutions or indentures specifying the types of investments its trustees or fiscal agents may make. Pooled Deposits/Credit Risk: The California Government Code requires Califomia banks and savings and loan associations to secure a City's deposits by pledging government securities as collateral. The market value of pledged securities must equal at least 110% of a City's deposits. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City's total deposits. The City may waive collateral requirements for deposits which are fully insured up to $100,000 by federal depository insurance. See independent auditors' report. -19- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 2. CASH AND INVESTMENTS (CONTINUED): Pooled Deposits/Credit Risk (Continued): In accordance with GASB Statement No. 3, deposits are classified as to credit risk by three categories as follows: Category 1 - Insured or collateralized with securities held by the City or by its agent in the City's name. Category 2- Collateralized with securities held by the pledging financial institution's trust department or agent in the City's name. Category 3 - Uncollateralized Investments that are represented by specific identifiable investment securities are classified as to credit risk by three categories as follows: Category 1 - Category 2 - Insured or registered, or securities held by the City or its agent in the City's name. Uninsured and unregistered with securities held by.the counterparty's trust department or agent in the City's name. Category 3 - Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the City's name. Deposits were categorized as follows at June 30, 2001: Not Required Category to be Bank Carrying 1 2 3 Categorized Balances Amount Demand accounts $ 200,000 $ 2,646,966 $ - $ - $ 2,846,966 $ 1,748,635 The difference between the bank balances and carrying amount of the deposits is due to outstanding checks in the amount of $1,117,274 and deposits in transit of $18,943. See independent auditors' report. -20- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 2. CASH AND INVESTMENTS (CONTINUED): Investments at June 30, 2001 are categorized as follows: State of California Local Agency Investment Fund State of California Bonds Federal Agency Investments: Federal Home Loan Mortgage Corporation Notes Freddie Mac Notes U.S. Treasury Notes Repurchase Agreement Held by fiscal agent: Money Market Mutual Funds Investment Agreements Category_ 1 2 3 $ -$ -$ 2,514,025 - 1,469,544 14,845,249 26,374,080 Total Investments $ 45,202,898 $ - $ Not Required to be Fair Categorized Value. - $ 30,064,497 $30,064,497 - - 2,514,025 5,000,000 1,469,544 14,845,249 26,374,080 5,000,000 5,ooo,oo0 $ 5,234,735 5,234,735 9,548,119 9,548,119 44,847,351.. $95,050,249 Cash and investments at June 30, 2001 consisted of the following: Demand accounts $ 1,748,635 Petty cash 5,150 Investmems 95,050,249 Total Cash and Investments $ 96,804,034 The City follows the practice of pooling cash and investments of all funds except for funds required to be held by outside fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated monthly to the various funds based on the month-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund. See independent auditors' report. -21 - CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 2. CASH AND INVESTMENTS (CONTINUED): Investments Not Subiect to Categorization: Investments in the California Local Agency Investment Fund (LAIF) are not categorized, as GASB 3 does not require categorization of investment pools managed by another government. Local Agency Investment Fund (LAIF): The LAIF is a voluntary program created by statute in 1977 as an investment altemative through which local governments may pool investments. The LAIF has oversight by the Local Agency Investment Advisory Board, which consists of five members as designated by state statute. Each city may invest up to $30,000,000 each in the Fund for the city and redevelopment agency and may also invest without limitation in special bond proceeds accounts. Investments in LAIF are highly liquid, as deposits can be converted to cash within twenty-four hours without loss of interest. The City's proportionate share of the fair value of its investment in LAIF amounted to $30,064,497. Included in LAIF's investment portfolio are certain derivative securities or similar products such as structured notes totaling $1,517,548,000 and asset-backed securities totaling $937,966,000. LAIF's, and the City's, exposure to credit, market or legal risk is not available. Structured Notes: Included in the City's investment portfolio are $3,465,844 of Federal Agency callable issued, which are defined as structured notes. These notes are callable on the quarter (within five to ten business days notice) throughout the life of the notes. 3. DUE TO/DUE FROM OTHER FUNDS/INTERFUND TRANSFERS: General Fund Special Revenue Fund: Measure M Debt Service Funds: Marine Base Project Area Capital Projects Funds: Other Capital Projects South Central Project Area Town Center Project Area Marine Base Project Area Fiduciary Funds: Assessment District 95-1 Assessment District 95-2 Due From Due To $ 2,909,535 $ - 1,372,686 142,105 1,372,686 - - 2,050,000 22,570 - - 740,000 - 781,398 781,398 - $ 5,086,189 $ 5,086,189 See independent auditors' report. - 22- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 3. DUE TO/DUE FROM OTHER FUNDS/INTERFUND TRANSFERS (CONTINUED): Interfund transfers were as follows: General Fund Operating Transfers In $ 2,006,564 Operating Transfers Out $ 4,848,000 Special Revenue Funds: Gas Tax Park Acquisition and Development Measure M Supplemental Law Enforcement 1,548,000 562,719 13,400 148,189 Debt Service Funds: South Central Project Area Town Center Project Area Marine Base Project Area 79,906 307,908 38,443 Capital Projects Funds: Other Capital Projects 3,300,000 Emerprise Fund - 855,999 $ 6,854,564 $ 6,854,564 4. PROPERTY, PLANT AND EQUIPMENT: Changes in the components of the General Fixed Assets Account Group for the year ended June 30, 2001 were as follows: Balance at Balance at June 30, 2000 Additions Deletions June 30, 2001 Land Buildings and improvements Machinery and equipment $ 14,778,746 $ 3,300,603 $ - $ 18,079,349 23,648,918 749,928 174,164 24,224,682 10,956,013 1,221,653 2,428,964 9,748,702 $ 49;383,677 $ 5,272,184 $ 2,603.128 $ 52,052,733 See independent auditors' report. -23- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 4. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Components of the property, plant, and equipment of the Water Enterprise Fund as of June 30, 2001 are as follows: Land Machinery and equipment Construction in progress 846,662 32,081,209 4,704,916 Total Less: accumulated depreciation 37,632,787 (8,242,770) Net $ 29,390,017 5. RETIREMENT PLAN: Plan Description: The City of Tustin 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 the State of 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: 400 P Street, Sacramento, CA 95814. Funding Policy: Participants are required to contribute 7% (9% for safety employees) of their annual covered salary. The City makes the contributions required of City employees on their behalf and for their account. The City is required to contribute the remaining amount necessary to fund the benefits for its members, using the actuarial losses recommended by the PERS actuaries and actuarial consultants and adopted by the Board of Administration. See independent auditors' report. -24- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 5. RETIREMENT PLAN (CONTINUED): Annual Pension Cost: For 2001, the City's annual pension cost of $1,428,775 for PERS was equal to the City's required and actual contributions. The required contribution was determined as part of the June 30, 1998 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 8.25% investment rate of remm (net of administrative expenses), (b) projected annual salary increases that vary by duration of service, and (c) 3.75% per year cost-of-living adjustments. Both (a) and (b) included an inflation component of 3.5%. 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 four-year period (smoothed market value). PERS unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. The remaining amortization period as of the actuarial valuation date was 24 years for the miscellaneous employee plan and 16 years for the public safety plan. Three-Year Trend Information For PERS Fiscal Annual Pension Percentage of Net Pension Year Cost (APC) APC Contributed Obligation 6/30/1999 $ 2,111,964 100% 6/30/2000 1,543,645 100% 6/30/2001 1,428,755 100% See independent auditors' report. -25 - CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 5. RETIREMENT PLAN (CONTINUED): Annual Pension Cost (Continued): Schedule of Funding Progress For PERS Actuarial Accrued Actuarial Actuarial Liability Unfunded Valuation Value of (AAL) AAL Funded Date Assets Entry. Age (UAAL) Ratio (A) (B) (B-A) (A/B) Covered Payroll (C) UAAL as a % of Covered Payroll 6/30/98: Misc. $ 28,914,224 $ 21,382,925 $ (7,531,299) 135.2 % $ 7,267,512 (103.630) Safety 28,288,600 24,422~613 (3,865,987) 115.8 % 5,207,724 (74.236) Total $ 57,202,824 _$ 45,805,538 $__(11,397,286) 124.9% $12,475,236 (91.380) % 6/30/99 Misc. $ 32,579,611 $ 23,115,637 $ (9,463,974) 140.9% $ 7,909,182 (119.658) Safety 32,919,777 27,636,663 (5,283,114) 119.1% 5,661,307 (93.320) Total $.65,499,388 $ 50,752,300 .$ (14,747,088) 129.1 $ !.3,570~489 (108.670)% 6/30/00: Misc. $ 35,958,693 $ 25,539,871 $ (10,418,822) 140.8 % $ 7,870,671 (132.375) Safety 36,910,893 30,037,332 (6,873,561) 122.9 % 5,850,251 (117.492) Total $ 72,869,586_ $ 55,577,203 $ (17,.292,383) 131.1% ,$13,720,922 (126.029) Post-Employment Health Care Benefits: In addition to the pension benefits described above, the City provides certain health insurance benefits. In accordance with the plan, which was approved by the City Council, these benefits are available to all employees who are eligible for normal PERS retirement and who retire after January 1, 1990. The City pays the full amount of the insurance premiums or a"not-to-exceed" amount, whichever is less, based on the current Memorandum of Understanding. These premiums are recorded as current expenditures in the General Fund. The cost for 39 retirees was $8,050 in fiscal year 2000-2001. See independent auditors' report. -26- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 6. DEFERRED COMPENSATION: The City offers its employees deferred compensation plans created in accordance with Internal Revenue Code Section 457. The City has two plans; one is available to all City employees and the other for certain named employees that permitted them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. In fiscal year 1998-99, the plans were amended so that the assets of the plans are now held in trust for the exclusive benefit of the participants and their beneficiaries and no longer subject to the claims of the City's general creditors. The plan assets that are administered by an outside party in accordance with Governmental Accounting Standards Board Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, have been removed from the financial statements of the City. The assets for the plan for which the City performs the investment function and administration are recorded in the Expendable Trust Fund in the amount of $218,007. 7. SELF-INSURANCE PROGRAMYRISK POOL: The City maintains self-insurance programs for workers' compensation, general public liability, and auto liability. Claims are processed by an outside insurance s~rvice which administers the programs. The general and auto liability and workers' compensation program provides for self-insurance up to a maximum of $250,000 and $300,000, per incident, respectively. General liability claims which exceed the limit are insured through Orange County Cities Risk Management Authority (OCCRMA) up to a maximum per incident of $10,000,000 and $20,000,000 annual aggregate (See below). Workers' compensation claims which exceed the limit are insured by OCCRMA up to the California statutory limits for workers' compensation. Estimates for all general liabilities, up to the self-insured levels, have been recorded in the General Long-Term Debt Account Group. At June 30, 2001, total estimated general claims payable, including a provision for incurred but not reported claims, were $355,826 (See Note 9). Workers' Compensation claims of $465,994 (including IBNR's) are recorded in the General Fund. See independent auditors' report. - 27 - CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 7. SELF-INSURANCE PROGRAM/R/SK POOL (CONTINUED): Changes in the balances of claims liabilities for the years ended June 30, 2001 and 2000 including a provision for incurred but not reported claims were as follows: Claims Claims and Claims Year Ended Payable Changes in Claims Payable June 30, July 1 Estimates Payments June 30 2000 $ 701,754 $ 425,186 $ (332,358) $ 794,582 2001 794,582 386,447 (359,209) 821,820 There have been no significant changes in insurance coverage as compared to last year and the City has not experienced settlements in excess of insurance coverage during the past three fiscal years. Orange County Cities Risk Management Authority: The City of Tustin is a member of the Orange County Cities Risk Management Authority (OCCRMA). OCCRMA, a consortium of 13 cities in Orange County, California, was established to pool resources, share risks, purchase excess insurance, and to share costs for professional risk management and claims administration. Member cities may be assessed the difference between funds available and the $20,000,000 annual aggregate in proportion to their annual premium. The financial statements of the Authority are available at the Administrative Offices located at 240 Newport Center Drive, Suite 210, Newport Beach, California. 8. LOAN RECEIVABLE: The Tustin Community Redevelopment Agency has provided a commercial loan program to small businesses for making improvements. These loans are non-interest bearing. The outstanding loan balance at June 30, 2001 is $150,618. Due to the long-term nature of the loans, the Agency has reserved fund balance. See independent auditors' report. -28- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 9. CHANGES IN LONG-TERM DEBT: The following is a summary of the changes in the General Long-Term Debt Account Group for the year ended June 30, 2001: Balance at Balance at July 1, 2000 Additions Retirements June 30, 2001 Tax allocation bonds Countrywide revenue bonds Claims and judgments (Note 7) Compensated absences Capitalized leases $ 19,270,000 $ - $ 795,000$ 18,475,000 2,010,000 - 250,000 1,760,000 305,239 242,776 192,189 355,826 1,678,389 70,169 - 1,748,558 168,412 - 145,449 22,963 Total $ 23,432,040 $ 312,945 $ 1,382,638 $ 22,362,347 Tax Allocation Bonds: On July 1, 1998, the Tustin Community Redevelopment Agency issued $20,805,000 Tax Allocation Refunding Bonds to refund the Agency's Town Center Area Redevelopment Project Tax Allocation Refunding Bonds, Series 1987 in aggregate principal amount of $5,145,000 and the Agency's Town Center Area Redevelopment Project Subordinate Tax Allocation Bonds, Series 1991 in aggregate principal amount of $12,880,000. The net proceeds of $20,192,172 (after payment of $552,424 in underwriting fees, insurance, and other issuance costs) plus an additional $805,500 of 1987 Series sinking fund monies were used to purchase U.S. government securities. Securities for 1987 and 1991 bonds were deposited in an irrevocable trust with an escrow agent to provide for all future payments when Tax Allocation Bonds, Series 1987 and 1991 are called for redemption. As a result, the 1987 Tax Allocation Bonds have been removed from the general long-term debt account group. As of June 30, 2001, the 1987 bonds have been fully redeemed and $12,715,000 of the defeased 1991 bonds are outstanding. Serial bonds are payable in annual installments ranging from $775,000 commencing on December 1, 1998. Interest is payable semiannually on June 1 and December 1, with rates ranging from 3.5% to 5.0% per annum. The bonds maturing on or after December 1, 2009, are subject to redemption prior to maturity as a whole or in part, at the option of the Agency, on any date on or after December 1, 2008 at prices ranging from 100% to 101% of principal. $18,475,000 See independent auditors' report. -29- CITY OF TUST1N NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 9. CHANGES IN LONG-TERM DEBT (CONTINUED): Tax Allocation Bonds (Continued): The annual requirements to amortize the tax allocation refunding bonds are as follows: Year Ending June 30, Principal Interest Total 2002 $ 825,000 $ 833,537 $ 2003 850,000 800,450 2004 890,000 765,205 2005 920,000 727,640 2006 960,000 687,680 Therea~er 14,030,000 4,031,449 1,658,537 1,650,450 1,655,205 1,647,640 1,647,680 18,06.1,449 Total $ 18,475,000 $ 7,845,961 $ 2.6,320,961 Count _rywide Revenue Bonds: In June 1996, the City, joining with eight other cities created a Countrywide Joint Powers Authority (CJPA) for the purpose of financing the cost of an 800 MHz Radio System used among all County public safety agencies and public works, and other municipal capital improvement. In July 1996, CJPA issued a lease revenue bond in the amount of $27.725 million, at interest rates ranging from 4.1% to 5.75%. Under a lease and lease-back agreement, the City received a prepaid rent in the amount of $2.7 million to upgrade the radio system and to finance construction of a new park. Principal is payable in annual installments ranging from $220,000 to $330,000 commencing on August 1, 1997. Interest is payable semiannually on February 1 and August 1 with rates ranging from 4.1% to 5.3%. The bonds maturing on or after August 1, 2007 are subject to redemption prior to maturity as a whole or in part on any date on or after August 1, 2006 at prices ranging from 100% to 102% or principal. $ 1,760,000 See independent auditors' report. -30- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 9. CHANGES IN LONG-TERM DEBT (CONTINUED): Countrywide Revenue Bonds (Continued): The annual requirements to amortize the bonds are as follows: Year Ending June 30, Principal Interest Total 2002 $ 260,000 2003 270,000 2004 285,000 2005 300,000 2006 315,000 Therea~er 330,000 $ 82,983 $ 342,983 70,193 340,193 56,453 341,453 41,678 341,678 25,759 340,759 8,742 338,742 Total $ 1,760,000 $ 285,808 $ 2,045,808 Capitalized Leases: The City has entered into lease agreements for copiers and computer equipmem which qualify as capital leases. Furore minimum payments relating to the leases are as follows: Year Ending June 30, Amount 2002 $ 12,891 2003 9,324 2004 951 Total minimum lease payments Lease amount representing interest 23,166 (203.) Present value of minimum lease payments $ 22,963 The original cost of the equipment, aggregating $517,557 has been capitalized in the General Fixed Assets Account Group. See independent auditors' report. -31 - CITY OF TUST1N NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 9. CHANGES IN LONG-TERM DEBT (CONTINUED): The following is a summary of the changes in long-term debt of the Water Enterprise Fund for the year ended June 30, 2001: Balance at July 1, 2000 Additions Retirements Balance at June 30, 2001 Certificates of participation Notes payable Compensated absences $ 9,050,000 $ - $ 450,000$ 8,600,000 5,840,476 - 592,004 5,248,472 59,920 ....... 5,131 - 65,051 Total $ 14,950,396 $ 5,131 $ 1,042,004 $ 13,913,523 Certificates of Participation: On April 21, 1993, the Tustin Water Corporation issued $11,500,000 1993 Certificates of Participation in order to pay for the design and construction cost of water system improvements and also to advance refund the remaining $3,650,000 of the 1983 Water Revenue Bonds. During the year ended June 30, 1997, the Corporation was dissolved and the debt was transferred to the City. The 1983 bonds have been fully retired. Serial bonds are payable in annual installments ranging from $275,000 to $825,000 commencing April 1, 1994. Term bonds of $2,800,000 are due on April 1, 2013. Interest on all bonds is payable semiannually on October 1 and April 1 with rates ranging from 8.20% to 5.20% per annum. The bonds maturing on or after April 1, 2004 are subject to redemption prior to maturity as a whole or in part on any date on or after April 1, 2003 at prices ranging from 100% to 102% of principal. $ 8,600,000 The annual requirements to amortize the certificates of participation are as follows: Year Ending June 30, Principal Interest Total 2002 $ 500,000 2003 525,000 2004 550,000 2005 600,000 2006 625,000 Thereafter 5,800,000 $ 459,950 $ 421,200 393,900 365,300 334,100 1,283,100 959,950 946,200 943,900 965,300 959,100 7,083,100 Total $ 8,600,000 $ 3,257,550 $ 11,857,550 See independent auditors' report. -32- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30;2001 9. CHANGES IN LONG-TERM DEBT (CONTINUED): Notes Payable: In September 1996, the City of Tustin entered into an agreement with the Orange County Water District for the acquisition, construction, installation and operation of well facilities to improve water supply facilities and executed a note payable of $750,000. Interest on the note is 3.50% per annum with annual payments of $52,771 due through September 30, 2015 commencing September 30, 1996. The annual requirements to amortize the note payable are as follows: Year Ending June 30, Principal Interest 2002 $ 31,498$ 21,273 2003 32,601 20,170 2004 33,742 19,029 2005 34,923 17,848 2006 36,145 16,626 Therea~er , 438,873 88,837 Total $ 607,782 $ 183,783 In February 1992, the City of Tustin entered into an agreement with the Orange County Water District for the design, construction and operation of a desalination treatment facility for the purpose of removing nitrates and total dissolved solids (TDS) from ground water. In 1997-98 the City executed the note payable of $6,759,562. Interest on the note is 7% per annum with annual payments of $780,238 due through June 30, 2008 commencing June 30, 1998. $ 607,782 Total 52,771 52,771. 52,771 52,771 52,771 527,710 791,565 $ 4,640,690. See independent auditors' report. -33- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 9. CHANGES IN LONG-TERM DEBT (CONTINUED): Notes Payable (Continued): The annual requirements to amortize the note payable are as follows: Year Ending June 30, Principal Interest Total 2002 $ 584,519 $ 195,719 $ 780,238 2003 608,583 171,655 780,238 2004 633,826 146,412 780,238 2005 660,315 119,923 780,238 2006 688,123 92,115 780,238 Therea~er 1,465,32~ 95,152 1,560,476 Total $ 4,640,690 $ 820,976 $ 5,461,666 10. SPECIAL ASSESSMENT DISTRICTS BONDS' Special assessment districts exist in various parts of the City to provide improvements to properties located in those districts. Properties are assessed for the cost of improvements; these assessments are payable over the term of the debt issued to finance the improvements and must be sufficient to repay this debt. The bonds listed below were issued pursuant to the Refunding Act of 1984 for the 1915 Improvement Act Bonds and the Improvement Bond Act of 1915 and are the liabilities of the property owners and are secured by liens against the assessed property. The City Treasurer acts as an agent for collection of principal and interest payments by the property owners and remittance of such monies to bondholders. Neither the faith and credit nor the general taxing power of the City of Tustin have been pledged to the payment of the bonds. Therefore, none of the following special assessment bonds have been included in the accompanying financial statements. Amount Outstanding District Bonds of Issue June 30, 2001 Reassessment District 95-1 Reassessment District 95-2, 1996 Reassessment District 95-2, 1997 Reassessment District 95-2, 1998 Reassessment District 95-2, 1999 $ 35,705,000 $ 28,175,000 41,500,000 30,366,000 3,300,000 2,770,000 4,185,000 3,710,000 4,995,000 4,680,000 Total $_ 89,685,000 $ 69,701,000 See independent auditors' report. - 34- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 10. SPECIAL ASSESSMENT DISTRICTS BONDS (CONTINUED): Tustin Public Financing Authority: In February 1996, the Tustin Public Financing Authority (PFA) issued $35,705,000 of Revenue Bonds, Series A, to facilitate the issuance of the $35,705,000 of Assessment District Bonds for Reassessment District 95-1. The proceeds of the PFA bonds were used to purchase certain limited obligation bonds of Reassessment District 95-1. At June 30, 2001, the amount of the PFA Revenue Bonds, Series A outstanding was $28,175,000. In October 1997, the PFA issued $3,300,000 of Revenue Bonds, Series B, to facilitate the issuance of the $3,300,000 of Assessment District bonds for Reassessment District 95-2. The proceeds were used to purchase the entire issue of limited obligation bonds of the Reassessment District 95-2. The 95-2 Assessment bonds (issued October, 1997 and concurrently sold to the PFA) were issued for the purpose of refunding a portion of the 1996 Assessment Bonds 95-2. At June 30, 2001, the amount of the PFA Revenue Bonds, Series B outstanding was $2,770,000. In December 1998, the PFA issued $4,185,000 of Revenue Bonds, Series C to facilitate the issuance of thcS4,185,000 of Assessment District bonds for reassessment District 95-2. The proceeds were used to purchase the entire issue of limited obligation bonds of the Reassessment District 95-2. The 95-2 Assessment bonds (issued December, 1998 and concurrently sold to the PFA) were issued for the purpose of refunding a portion of the 1996 Assessment Bonds 95-2. The net proceeds of $4,135,943 were used to refund $3,648,000 of Assessment District 95-2 bonds. As a result, a portion of the Assessment District 95-2 Bonds are considered to be defeased. At June 30, 2001, the amount of the PFA Revenue Bonds, Series C outstanding was $3,710,000. In November 1999, the PFA issued $4,995,000 of Revenue Bonds, Series D to facilitate the issuance of the $4,995,000 of Assessment District bonds for reassessment District 95-2. The proceeds were used to purchase the entire issue of limited obligation bonds of the Reassessment District 95-2. The 95-2 Assessment bonds (issued November, 1999 and concurrently sold to the PFA) were issued for the purpose of refunding a portion of the 1996 Assessment Bonds 95-2. The net proceeds of $4,937,880 were used to refund $4,323,000 of Assessment District 95-2 bonds. As a result, a portion of the Assessment District 95-2 Bonds are considered to be defeased. At June 30, 2001, the amount of the PFA Revenue Bonds, Series D outstanding was $4,680,000. Neither the general taxing power of the City nor the faith or credit of the PFA or the City have been pledged to the payment of the bonds. Therefore, the bonds have not been included in the accompanying financial statements. See independent auditors' report. -35- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 11. JOINT VENTURES: Orange County_ Fire AuthoriW: In January 1995, the City of Tustin entered into a joint powers agreement with the Cities of Buena Park, Cypress, Dana Point, Irvine, Laguna Hills, Laguna Niguel, Lake Forest, La Palma, Los Alamitos, Mission Viejo, Placentia, San Clemente, San Juan Capistrano, Seal Beach, Stanton, Villa Park and Yorba Linda and the County of Orange to create the Orange County Fire Authority. The purpose of the Authority is to provide for mutual fire protection, prevention and suppression services and related and incidental services including, but not limited to, emergency medical and transport services, as well as providing facilities and personnel for such services. The effective date of formation was March 1, 1995. The Authority's governing board consists of one representative from each City and two from the County. The operations of the Authority are funded with structural fire fees collected by the County through the property tax roll for the unincorporated area and on behalf of all member Cities except for the Cities of Stanton, Tustin, San Clemente, Buena Park, Placentia and Seal Beach. The County pays all structural fees it collects to the Authority. The Cities of Stanton, Tustin, San Clemente, Buena Park, Placentia and Seal Beach are considered "cash contract Cities" and accordingly make cash contributions based on the Authority's annual budget. The financial statements of the Orange County Fire Authority are available at 180 S. Water Street, Orange, California. Countywide Joint Powers Authority: In June 1996, the City, joining with eight other cities created a Countywide Joint Powers Authority (CJPA) for the purpose of financing the cost of an 800 MHz Radio System used among all County public safety agencies and public works, and other municipal capital improvements. In July 1996, CJPA issued a lease revenue bond in the amount of $27.725 million, at interest rates ranging from 4.1% to 5.75%. Under a lease and lease-back agreement, the City received a prepaid rent in the amount of $2.7 million to upgrade the radio system and to finance construction of a new park. Separate financial statements of the Countywide Joint Powers Authority are not available. See independent auditors' report. -36- CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 12.KESERVED AND DESIGNATED FUND EQUITIES: Fund balances at June 30, 2001 are reserved as follows: General Fund: Prepaid items Debt Service Funds: Retirement of general long-term debt Capital Projects Funds: Long-term loans receivable Low income housing Land held for resale Trust and Agency Funds: Reserved for retiree benefits Total Governmental Funds Unreserved fund balances at June 30, 2001 are designated as follows: General Fund: Capital outlay Self-insurance Contingencies Capital Projects Funds: Specific projects and programs Total Governmental Funds $ 537,265 10,564,714 150,618 5,821,656 2,905,000 8,877,274 218,007 $ 20,197,260 $ 5,654,218 2,229,181 7,028,693 14,912,092 25,973,699 $ 40,885,791 See independent auditors' report. -37- CITY OF TUST1N NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 13. DEFERRED REVENUE: Deferred revenue consisting of revenues received in advance of related expenditures at June 30, 2001 consists of the following: General Fund: Street development Special Revenue Fund: Marine base closure (Federal Grants) 275,527 165,207 $ 440,734 14. SEGMENT INFORMATION: Net working capital of the Water Enterprise Fund at June 30, 2001 was as follows: Current assets Current liabilities payable from current assets $16,887,956 (2,711,924) Net working capital $14,176,032 15. CONTRIBUTED CAPITAL: Changes in Enterprise Fund contributed capital during 2000-2001 were as follows: Beginning balance, July 1, 2000 Change during the year $ 2,185,039 -- Ending balance, June 30, 2001 $ 2,185,039 16. OTHER REQUIRED INDIVIDUAL FUND DISCLOSURES: The Measure M Special Revenue Fund, Marine Base Project Area Debt Service Fund and Marine Base Project Area Capital Projects Fund had deficit fund balances of $94,318, $142,105 and $394,743, respectively. These deficits are expected to be relieved from future revenues or transfers from other funds. Expenditures exceeded appropriations as follows: Assets Forfeiture Special Revenue Fund Marine Base Closure Special Revenue Fund Supplemental Law Enforcement Special Revenue Fund See independent auditors' report. -38- Budget Actual Variance $ - $ 31,869 $ 31,869 - 168,683 168,683 102,940 102,940 CITY OF TUSTIN NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2001 17. COMMITMENTS AND CONTINGENCIES: There are certain legal actions pending against the City which have arisen in the normal course of operations. In the opinion of management and the City Attorney, the ultimate resolution of such actions is not expected to have a significant impact, if any, on the financial statements or operations ofthe City. AB265 requires redevelopment agencies to set aside 20 percent of their tax increment from project areas established before 1976 for low and moderate income housing. Between fiscal years 1985-86 and 1991-92, the Tustin Community Redevelopment Agency deferred a total of $2,776,042 from its low and moderate housing obligation. On February 1, 1993, the Agency adopted a plan to eliminate the d~ficit in subsequent years. 18. PROPOSITION 218: Proposition 218, which was approved by the voters in November 1996, will regulate the City's ability to impose, increase and extend taxes, assessments and fees. Certain language in the initiative is unclear as to the scope and impact of the proposition. Future court rulings or state legislation may clarify these issues. At this time it is uncertain as to the effect that Proposition 218 will have on the City's ability to maintain or increase the revenue it receives from taxes, assessments, property-related fees and charges. Any new, increased, or extended taxes, assessments, certain property-related fees and charges subject to the provisions of Proposition 218, require voter or property owner approval before they can be implemented. Additionally, Proposition 218 provides that these taxes, assessments, and fees are subject to the voter initiative process and may be rescinded in the future by the voters. Also, unclear is the extent to which a 1995 California Supreme Court ruling (the Guardino case) upholding the voter approval requirements of a previously enacted state initiative (Proposition 62) are applicable to prior periods. 19. RESTATEMENT OF PRIOR YEAR BALANCES: The following schedule reflects the restatement of beginning fund balance in the General Fund. Beginning fund balance, as previously reported Increase in accounts receivable $ 14,237,179 248,139 Beginning fund balance, as restated $ 14,485,318 See independent auditors' report. -39- THIS PAGE LEFT BLANK INTENTIONALLY SUPPLEMENTARY INFORMATION - COMBINGING INDIVIDUAL FUND AND ACCOUNT GROUP FINANCIAL STATEMENTS -41 - THIS PAGE LEFT BLANK INTENTIONALLY -42 - GENERAL FUND The General Fund is used to account for all revenues and expenditures of the City which are not required to be accounted for in other special purpose funds. -43 - CITY OF TUSTIN COMPARATIVE BALANCE SHEETS GENERAL FUND June 30, 2001 and 2000 ASSETS Cash and investments Cash and investments with fiscal agent Taxes receivable Interest receivable Accounts receivable Due from other funds Prepaid items Loans receivable TOTAL ASSETS LIABILITIES AND FUND BALANCE LIABILITIES: Accounts payable and accrued liabilities Due to other funds Deposits Deferred revenue TOTAL LIABILITIES FUND BALANCE: Reserved for: Prepaid items Long-term loans receivable Unreserved - Designated for: Capital outlay Self-insurance Contingencies TOTAL FUND BALANCE TOTAL LIABILITIES AND FUND BALANCE 2001 $ 13,454,434 261,032 3,755,468 537,090 1,362,973 2,909,535 537,265 $ 22,817,797 $ 2,431,339 . 4,661,574 275,527 7,368,440 537,265 . 5,654,218 2,229,181 7,028,693 15,449,357 $ 22,817,797 2000 $ 9,769,011 1,717,470 2,910,758 448,943 2,327,543 3,565,956 596,428 12,020 $ 21,348,129 $ 2,069,806 924,159 3,594,000 274,846 6,862,811 596,428 12,020 5,328,066 1,974,444 6,574,360 14,485,318 $ 21,348,129 See independent auditor's report. - 44 - CITY OF TUSTIN ST.ATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND For the year ended June 30, 2001 With comparative actual amounts for the year ended June 30, 2000 KEVENUES: Taxes Licenses and permits Fines and forfeitures Use of money and property Intergovernmental revenue Charges for services Other revenue TOTAL KEVENUES EXPENDITURES: Current: General government Public safety Public works Community services Capital outlay Debt service: Principal retirement Interest and fiscal charges TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from long-term debt Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCE AT BEGINNING OF YEAR, AS RESTATED FUND BALANCE AT END OF YEAR See independent auditors' report. 2001 Budget Actual $ 24,886,200 $ 26,754,868 913,202 1,016,213 583,500 715,589 370,500 641,648 5,136,802 4,896,721 961,560 1,303,800 1,390,595 2,092,594 34,242,359 37,421,433 Variance Favorable (Unfavorable) $ 1,868,668 103,011 132,089 271,148 (240,081) 342,240 701,999 3,179,074 2OO0 Actual $ 24,471,986 650,518 688,362 739,893 4,651,535 1,318,103 1,372,167 33,892,564 7,310,009 6,719,800 590,209 5,553,758 16,812,638 16,718,300 94,338 15,826,727 7,188,454 6,433,772 754,682 6,805,789 2,568,141 2,546,206 21,935 2,470,250 2,392,858 1,046,551 1,346,307 '694,666 193,680 145,449 48,231 154,406 - 5,880 (5,880) 15,204 36,465,780 33,615,958 2,849,822 31,520,800 (2,223,421) 3,805,475 6,028,896 2,371,764 - - 45,298 3,096,360 2,006,564 (1,089,796) 2,864,031 (4,648,000) (4,848,000) (200,000) (4,243,611) (1,551,640) (2,841,436) (1,289,796) (1,334,282) (3,775,061) 964,039 4,739,100 1,037,482 $ 4,739,100 14,485,318 14,485,318 $ 10,710,257 $ 15,449,357 - 45 - 13,447,836 $ 14,485,318 THIS PAGE LEFT BLANK INTENTIONALLY SPECIAL REVENUE FUNDS Gas Tax - This fund accounts for revenues and expenditures apportioned under the Street and Highways Code of the State of California. Expenditures may be made for any street-related purpose allowable under the Code. Park Acquisition and Development - This fund is used to accounts for fees received from developers to develop the City's park system. Asset Forfeiture, This fund is used to account for monies received from the Federal government that are used for special law enforcement purchases. Air Quality - This fund used to account for funds received from South Coast Air Quality Management District to be used for reducing pollution. Marine Base Closure - This fund is used for account for federal funds received for studying the reuse of the Marine Base after closure. Measure M - This fund is used to account for monies received from the County for street projects. Supplemental Law Enforcement - This law was established under Government Code Section 30061 enacted by A.B. 3229, Chapter 134, of the 1996 Statues and is appropriation from the State Budget for the "Citizens Option for Public Safety Program". These funds can only be used for police front line municipal activities that provide police services to the City in prevention of drug abuse, crime prevention and community awareness programs. -47- CITY OF TUSTIN COMBINING BALANCE SHEET ALL SPECIAL REVENUE FUNDS June 30, 2001 With comparative totals for June 30, 2000 ASSETS Cash and investments Due from other governments TOTAL ASSETS Gas Tax $ 4,643,467 120,862 $ 4,764,329 Park Acquisition and Development $ 5,907,869 $ 5,907,869 Asset Forfeiture $ 7,574 188 $ 7,762 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Due from other funds Deferred revenue TOTAL LIABILITIES FUND BALANCES (DEFICIT): Unreserved: Undesignated TOTAL LIABILITIES AND FUND BALANCES $ 19,591 19,591 4,744,738 $ 4,764,329 $ 36,497 . 36,497 5,871,372 $ 5,907,869 $ 2,280 2,280 5,482 $ 7,762 See independent auditors' report. -48 - Air Quality $ 692,928 19,985 $ 712,913 Marine Base Closure $ 165,207 $ 165,207 Measure M $ - 1,651,822 $ 1,651,822 Supplemental Law Enforcement $ 8,864 $ 8,864 Totals 2001 2000 $ 11,425,909 $ 9,757,615 1,792,857 292,687 $ 13,218,766 $ 10,050,302 165,207 165,207 $ 373,454 1,372,686 1,746,140 $ 431,822 $ 154,842 1,372,686 165,207 315,557 1,969,715 470,399 712,913 712,913 $ 165,207 (94,318) $ 1,651,822 8,864 11,249,051 9,579,903 $ 8,864 $ 13,218,766 $ 10,050,302 - 49 - CITY OF TUSTIN COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL SPECIAL REVENUE FUNDS For the year ended June 30, 2001 With comparative totals for the year ended June 30, 2000 REVENUES: Use of money and property Intergovernmental revenue Other revenue TOTAL REVENUES EXPENDITURES: Current: General government Public works Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES AT BEGINNING OF YEAR FUND BALANCES (DEFICIT) AT END OF YEAR Gas Tax Park Acquisition and Development 304,716 $ 334,011 1,746,357 - - 50,452 2,051,073 152,162 152,162 1,898,911 (562,719) (562,719) 1,336,192 3,408,546 $ 4,744,738 384,463 48,097 48,097 336,366 1,548,000 1,548,000 1,884,366 3,987,006 $ 5,871,372 Asset Forfeiture $ 476 11,845 12,321 31,869 31,869 (19,548) (19,548) 25,030 $ 5,482 See independent auditors' report. - 50 - Air Quality Marine Base Closure 46,458 $ 18,333 75,983 150,350 122,441 168,683 Measure M Supplemental Law Enforcement 151,068 $ 5,799 1,248,403 254,194 1,399,471 259,993 Totals 2001 2000 860,861 3,487,132 50,452 600,647 2,429,598 204,882 4,398,445 3,235,127 682 682 168,683 168,683 3,048,556 3,048,556 102,940 102,940 168,683 3,200,718 183,588 3,552,989 95,727 1,524,200 572,576 2,192,503 121,759 (1,649,085) 157,053 845,456 1,042,624 (13,400) (148,189) 1,548,000 (724,308) 992,811 (1,050,096) (13,400) (148,189) 823,692 (57,285) 121,759 591,154 712,913 (1,662,485) 1,568,167 $ (94,318) 8,864 $ 8,864 1,669,148 9,579,903 $ 11,249,051 985,339 8,594,564 $ 9,579,903 -51 - CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GAS TAX SPECIAL REVENUE FUND For the year ended June 30, 2001 With comparative actual amounts for the year ended June 30, 2000 REVENUES: Use of money and property Intergovernmental revenue TOTAL REVENUES EXPENDITURES: Current: Public works EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Operating transfers out EXCESS OF REVENUES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE AT END OF YEAR 2001 Budget Actual Variance Favorable (Unfavorable) $ 150,000 $ 304,716 $ 154,716 2,637,480 1,746,357 (891,123) 2000 Actual 203,304 1,227,566 2,787,480 2,051,073 (736,407) 1,430,870 5,559,869 152,162 5,407,707 113,131 (2,772,389) 1,898,911 4,671,300 1,317,739 (545,360) (562,719) (17,359) (569,000) (3,317,749) 1,336,192 4,653,941 748,739 3,408,546 3,408,546 $ 90,797 $ 4,744,738 $ 4,653,941 2,659,807 3,408,546 See independent auditors' report. -52- CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PARK ACQUISITION AND DEVELOPMENT SPECIAL REVENUE FUND For the year ended June 30, 2001 With comparative actual amoums for the year ended June 30, 2000 REVENUES: Use of money and property Other revenue TOTAL REVENUES EXPENDITURES: Capital outlay EXCESS OF REVENLrES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES: Operating transfers in EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE AT END OF YEAR 2001 Budget Actual Variance Favorable (Unfavorable) $ 240,000 $ 334,011 $ 94,011 11,000 50,452 39,452 2000 Actual $ 246,087 204,882 251,000 384,463 133,463 450,969 475,282 48,097 427,185 250,566 (224,282) 336,366 560,648 200,403 1,548,000 1,548,000 992,811 1,323,718 1,884,366 560,648 1,193,214 3,987,006 3,987,006 $ 5,310,724 $ 5,871,372 $ 560,648 2,793,792 $ 3,987,006 See independent auditors' report. CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ASSET FORFEITURE SPECIAL REVENUE FUND For the year ended June 30, 2001. With comparative actual amounts for the year ended June 30, 2000 REVENUES: Use of money and property Intergovernmental revenue TOTAL REVENUES EXPENDITURES: Capital outlay EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Operating transfers out EXCESS OF REVENUES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE AT END OF YEAR 2001 Budget Actual $ 15,000 $ 476 11,845 Variance Favorable (Unfavorable) $ (14,524) 11,845 2000 Actual 1,534 50,180 15,000 12,321 (2,679) 51,714 (31,869) 31,869 319,496 15,000 (19,548) (34,548) (267,782) (221,000) 221,000 (321,765) (206,000) (19,548) 186,452 (589,547) 25,030 25,030 $ 186,452 614,577 $ (180,970) $ 5,482 $ 25,030 See independent auditors' report. - 54 - CITY OF TUSTIN STATEMENT OF KEVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL AIR QUALITY SPECIAL REVENUE FUND For the year ended June 30, 2001 With comparative actual amounts for the year ended June 30, 2000 REVENUES: Use of money and property Intergovernmental revenue TOTAL REVENUES EXPENDITURES: Current: General government Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE AT END OF YEAR 2001 Budget Actual Variance Favorable (Unfavorable) $ 25,000 $ 46,458 $ 21,458 - 75,983 75,983 2000 Actual $ 35,119 73,693 25,000 122,441 97,441 108,812 - - 1,062 337,812 682 337,130 1,894 337,812 682 337,130 2,956 (312,812) 121,759 434,571 105,856 591,154 591,154 $ 278,342 $ 712,913 $ 434,571 485,298 $ 591,154 See independent auditors' report. - 55 - CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL MARINE BASE CLOSURE SPECIAL REVENUE FUND For the year ended June 30, 2001 With comparative actual amounts for the year ended June 30, 2000 REVENUES: Use of money and property Intergovernmental revenue TOTAL REVENUES EXPENDITURES: Current: General govemment Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE AT END OF YEAR 2001 Budget Actual $ - $ 18,333 - 150,350 168,683 Variance Favorable (Unfavorable) $ 18,333' 150,350 168,683 168,683 168,683 (168,683) 068,683) 2000 Actual $ 19,370 75,915 95,285 94,665 620 95,285 $ - $ - $ - $ - See independent auditors' report. - 56 - CITY OF TUSTrN STATEMENT OF REVENUES, EXPENDITUR.ES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL MEASURE M SPECIAL REVENUE FUND For the year ended June 30, 2001 With comparative actual amounts for the year ended June 30, 2000 REVENUES: Use of money and property Intergovernmental revenue TOTAL REVENUES EXPENDITURES: Current: Public works EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Operating transfers out EXCESS OF REVENUES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE (DEFICIT) AT END OF YEAR 2001 Budget Actual Variance Favorable (Unfavorable) $ 108,000 $ 151,068 $ 43,068 6,638,216 1,248,403 (5,389,813) 2000 Actual $ 95,233 853,652 6,746,216 1,399,471 (5,346,745) 948,885 9,134,997 3,048,556 6,086,441 1,411,069 (2,388,781 ) ( 1,649,085) 739,696 (462,184) (50,000) (13,400) 36,600 (10,739) (2,438,781) (1,662,485) 776,296 (472,923) 1,568,167 1,568,167 $ (870,614) $ (94,318) $ 776,296 2,041,090 $ 1,568,167 See independent auditors' report. - 57 - CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL SUPPLEMENTAL LAW ENFORCEMENT SPECIAL REVENUE FUND For the year ended June 30, 2001 With comparative actual amounts for the year ended June 30, 2000 REVENUES: Use of money and property Intergovernmental revenue TOTAL REVENUES EXPENDITURES: Capital outlay EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES: Operating transfers out EXCESS OF REVENUES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE AT END OF YEAR 2001 Budget Actual $ 6,000 $ 5,799 149,000 254,194 Variance Favorable (Unfavorable) (2Ol) 105,194 2000 Actual 148,592 155,000 259,993 104,993 148,592 (102,940) 102,940 155,000 157,053 2,053 148,592 6,811 (155,000) '(148,189) (148,592) 8,864 8,864 $ 8,864 $ 8,864 See independent auditors' report. -58- DEBT SERVICE FUNDS South Central Proiect Area - This fund records the accumulation and disbursement of monies to meet the debt service requirements of the South Central Redevelopment Project Town Center Project Area - This fund records the accumulation and disbursement of monies to meet the debt service requirements of the Town Center Redevelopment Project Area. Marine Base Proiect Area - This fund records the accumulation and disbursement of monies to meet the debt service requirements of the Marine Base Redevelopment Project Area. -59- CITY OF TUSTIN coMBINING BALANCE SHEET ALL DEBT SERVICE FUNDS June 30, 2001 With comparative totals for June 30, 2000 ASSETS Cash and investments Cash and investments with fiscal agents Taxes receivable Due from other funds TOTAL ASSETS South Central Project Area $ 6,029,190 12,401 $ 6,041,591 Town Center Project Area $ 2,788,654 1,715,463 19,951 $ 4,524,068 Marine Base Project Area LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Due to other funds TOTAL LIABILITIES FUND BALANCES (DEFICIT): Reserved for debt service Unreserved and undesignated TOTAL FLrND BALANCES (DEFICIT) TOTAL LIABILITIES AND FUND BALANCES $ - $ 945 6,041,59I 6,041,591 $ 6,041,591 945 4,523,123 4,523,123 $ 4,524,068 142,105 142,105 (142,105) (142,105) $ - See independent auditors' report. - 60 - Totals 2001 2000 $ 8,817,844 $ 6,305,544 1,715,463 1,685,304 32,352 55,525 - 320,562 $ 10,565,659 $ 8,366,935 $ 945 $ 1,362 142,105 219,900 143,050 221,262 10,564,714 8,199,353 (142,105) (53,680) 10,422,609 8,145,673 $ 10,565,659 $ 8,366,935 -61 - CITY OF TUSTIN COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL DEBT SERVICE FUNDS For the year ended June 30, 2001 With comparative totals for the year ended June 30, 2000 REVENUES: Taxes Use of money and property South Central Project Area $ 1,798,135 $ 341,824 Town Center Project Area 2,193,408 255,323 Marine Base Project Area TOTAL REVENUES 2,139,959 2,448,731 EXPENDITURES: Current: General government Debt service: Principal retirement Interest and fiscal charges 17,969 128,844 22,879 795,000 870,823 49,982 TOTAL EXPENDITURES 146,813 1,688,702 49,982 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Operating transfers out 1,993,146 (79,906) 760,029 (307,908) (49,982) (38,443) TOTAL OTHER FINANCING SOURCES (USES) (79,906) (307,908) (38,443) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES 1,913,240 452,121 (88,425) FUND BALANCES (DEFICIT) AT BEGINNING OF YEAR FUND BALANCES (DEFICIT) AT END OF YEAR 4,128,351 $ 6,041,591 $ 4,071,002 4,523,123 (53,680) $ (142,105) See independent auditors' report. - 62 - Totals 2001 2OOO $ 3,991,543 $ 3,585,025 597,147 445,997 4,588,690 4,031,022 40,848 24,122 795,000 760,000 1,049,649 1,049,899 1,885,497 1,834,021 2,703,193 2,197,001 (426,257) (458,014) (426,257) (458,014) 2,276,936 1,738,987 8,145,673 6,406,686 $ 10,422,609 $ 8,145,673 - 63 - TI-HS PAGE LEFT BLANK INTENTIONALLY CAPITAL PROJECTS FUNDS Other Capital Proiects - This fund accounts for all capital projects which are not funded by a specific source. Construction 95-1 - This fund accounts for infrastructure improvements to the Tustin 95-1 Area. South Central Pro}ect Area - This fund accounts for acquisition and construction activity in the South Central Redevelopment Project Area. Town Center Proiect Area - This fund accounts for acquisition and construction activity in the Town Center Redevelopment Project Area. Marine Base Proiect Area- This fund accounts for acquisition and construction activity in the Marine Base Redevelopment Project Area. Low Income Housing - This fund accounts for acquisition and construction activity for low income housing. As prescribed by the California Heath and Safety Code, 20% of Redevelopment Agency tax increment revenue is set aside in this fund for the purpose of low income housing development. -65 - CITY OF TUSTIN COMBINING BALANCE SHEET ALL CAPITAL PROJECTS FUNDS June 30, 2001 With comparative totals for June 30, 2000 Other Capital Projects Construction 95 - 1 South Central Project Area ASSETS Cash and investments $ 11,414,138 $ 545,429 $ 10,187,203 Cash and investments with fiscal agents 278,149 3,542,809 - Taxes receivable - - - Interest receivable - - - Accounts receivable 29,400 - - Due from other funds 1,372,686 - - Deposits - - - Loans receivable - - - Land held for resale - - 1,345,000 TOTAL ASSETS $ 4,088,238 $ 13,094,373 $ 11,532,203 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Due to other funds TOTAL LIABILITIES FUND BALANCES (DEFICIT): Reserved: Long-t. erm loans receivable Low income housing Land held for resale Deposits Unreserved: Designated for capital projects Undesignated TOTAL FUND BALANCES (DEFICIT) TOTAL LIABILITIES AND FUND BALANCES $ 687,968 687,968 12,406,405 12,406,405 $ 13,094,373 4,088,238 4,088,238 $ 4,088,238 $ 15,549 2,050,000 2,065,549 1,345,000 8,121,654 . 9,466,654 $ 11,532,203 See independent auditors' report. - 66 - Town Center Project Area 1,131,841 207,922 . 22,570 150,618 855,000 $ 2,367,951 Marine Base Project Area Low Income Housin§ 348,248 $ 5,813,223 - 12,988 - 705,000 $ 348,248 $ 6,531,211 Totals 2001 2OOO 29,440,082 $ 26,264,793 3,820,958 3,725,403 12,988 23,373 207,922 248,014 29,400 301 1,395,256 107,462 - 30,000 150,618 188,951 2,905,000 2,905,000 $ 37,962,224 $ 33,493,297 $ 4,931 . 4,931 $ 2,991 740,000 742,991 $ 4,555 $ 715,994 $ 512,723 2,790,000 2,808,160 4,555 3,505,994 3,320,883 150,618 855,000 1,357,402 2,363,020 $ 2,367,951 (394,743) (394,743) $ 348,248 5,821,656 705,000 6,526,656 $ 6,531,211 150,618 188,951 5,821,656 5,140,345 2,905,000 2,905,000 - 30,000 25,973,699 22,110,296 (394,743) (202,178) 34,456,230 30,172,414 $ 37,962,224 $ 33,493,297 - 67- CITY OF TUSTIN COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL CAPITAL PROJECTS FUNDS For the year ended June 30, 2001 With comparative totals for the year ended June 30, 2000 REVENUES: Taxes Use of money and property Intergovernmental revenue Other revenue TOTAL REVENUES EXPENDITURES: Current: General government Capital outlay Debt service: Principal retirement Interest and fiscal charges TOTAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Operating transfers in Operating transfers out TOTAL OTHER FINANCING SOURCES (USES) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER ('UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES (DEFICIT) AT BEGINNING OF YEAR FUND BALANCES (DEFICIT) AT END OF YEAR Other Capital Projects $ 785,001 1,103,516 1,888,517 2,081,254 250,000 94,908 2,426,162 (537,645) 3,300,000 3,300,000 2,762,355 9,644,O50 $' 12,406,405 Construction 95 - 1 137,471 . 137,471 I37,471 137,471 3,950,767 $ 4,088,238 South Central Project Area 703,334 703,334 168,345 236,380 404,725 298,609 298,609 9,168,045 $ 9,466,654 See independent auditors' report. - 68 - Town Center Marine Base Low Income Totals Project Area Project Area Housing 2001 2000 $ - $ - $ 997,885 $ 997,885 $ 896,772 138,262 - 414,334 2,178,402 1,810,255 - - - 1,103,516 543,756 - 102,199 187,436 289,635 85,471 138,262 102,199 1,599,655 4,569,438 3,336,254 141,769 294,764 243,344 848,222 1,567,628 74,858 - 2,392,492 2,677,035 250,000 240,000 94,908 105,818 216,627 294,764 243,344 3,585,622 4,590,481 (78,365) (192,565) 1,356,311 983,816 (1,254,227) 3,300,000 2,730,589 - (90,000) 3,300,000 2,640,589 (78,365) (192,565) 1,356,311 4,283,816 1,386,362 2,441,385 (202,178) 5,170,345 30,172,414 28,786,052 $ 2,363,020 $ (394,743) $ 6,526,656 $ 34,456,230 $ 30,172,414 - 69 - THIS PAGE LEFT BLANK INTENTIONALLY -70- ENTERPRISE FUNDS Water Enterprise - This fund accounts for the City's water service operations to residents and businesses. -71- CITY OF TUSTIN COMPARATIVE BALANCE SHEETS WATER ENTERPRISE FUND June 30, 2001 and 2000 ASSETS CURRENT ASSETS: Cash and investments Accounts receivable TOTAL C~NT ASSETS RESTRICTED ASSETS: Cash and investment with fiscal agents Deferred bond issuance costs Deposits Prepaid items TOTAL RESTRICTED ASSETS PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation TOTAL ASSETS LIABILITIES AND FUND EQUITY CURRENT LIABILITIES: Accounts payable and accrued liabilities Interest payable Due to other funds Deposits Current portion - notes payable Current portion - bonds payable TOTAL CURRENT LIABILITIES NONCURKENT LIABILITIES: Compensated absences Notes payable Bonds payable TOTAL NONCURRENT LIABILITIES TOTAL LIABILITIES FUND EQUITY: Contributed capital Retained earnings TOTAL FUND EQUITY TOTAL LIABILITIES AND FUND EQUITY 2001 $ 15,414,122 1,473,834 16,887,956 1,052,091 160,127 17,284 24,612 1,254,114 29,390,017 $ 47,532,087 $ 1,398,647 114,988 82,273 616,016 500,000 2,711,924 65,051 4,632,456 8,100,000 12,797,507 15,509,431 2,185,039 29,837,617 32,022,656 $ 47,532,087 2000 $ 14,485,960 1,351,871 15,837,831 1,069,677 173,755 . 1,243,432 29,431,315 $ 46,512,578 $ 1,320,251 124,212 41,761 90,546 582,024 450,000 2,608,794 59,920 5,258,452 8,600,000 13,918,372 16,527,166 2,185,039 27,800,373 29,985,412 $ 46,512,578 See independent auditors' report. - 72 - TRUST AND AGENCY FUNDS EXPENDABLE TRUST FUND Deferred Compensation - This fund accounts for the assets held for employees in accordance with the provisions of Internal Revenue Code Section 457 for which the City has retained fiduciary responsibility for the assets. AGENCY FUNDS Assessment District 95-1 - This fund records the deposit of monies held to pay the debt service requirements of the assessment district. Assessment District 95-2 - This fund records the deposit of monies held to pay the debt service requirements of the assessment district. -73- CITY OF TUST1N COMBINING BALANCE SHEET - ALL TRUST AND AGENCY FUNDS June 30, 2001 ASSETS Cash and investments Cash and investments with fiscal agents Taxes receivable Due ~om other funds TOTAL ASSETS Expendable Trust Deferred Compensation $ 218,007 $ $ 218,007 Agency Funds Assessment District 95 - 1 Assessment District 95 - 2 3,250,782 6,347,784 51,960 781,398 1,585,526 $ 10,431,924 $ 1,585,526 Totals 2001 $ 3,468,789 7,933,310 51,960 781,398 $ 12,235,457 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Due to other funds Deposits payable Due to bondholders TOTAL LIABILITIES FUND BALANCES Reserved for employee benefits TOTAL LIABILITIES AND FUND BALANCES 218,007 $ 218,007 $ 14,552 $ - 781,398 406',173 - 10,011,199 804,128 $ 14,552 781,398 406,173 10,815,327 10,431,924 1,585,526 12,017,450 $ 1,585,526 $ 10,431,924 218,007 $12,235,457 See independent auditors' report. - 74- CITY OF TUSTIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE DEFERRED COMPENSATION EXPENDABLE TRUST FUND For the Year Ended June 30, 2001 REVENUES: Use of money and property 15,337 EXPENDITURES: Distribution to the employee (33,842) FUND BALANCE AT BEGINNING OF YEAR 236,512 FUND BALANCE AT END OF YEAR $ 218,007 See independent auditors' report. - 75 - CITY OF TUSTIN COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS For the year ended June 30, 2001 ASSESSMENT DISTRICT 95 - 1 ASSETS: Cash and investments Cash and investments with fiscal agents Taxes receivable Due from other funds TOTAL ASSETS LIABILITIES: Accoums payable and accrued liabilities Deposits payable Due to bondholders TOTAL LIABILITIES ASSESSMENT DISTRICT 95 - 2 ASSETS: Cash and investments Cash and investments with fiscal agents TOTAL ASSETS LIABILITIES: Due to other funds Due to bondholders TOTAL LIABILITIES TOTAL - ALL AGENCY FUNDS ASSETS: Cash and investments Cash and investments with fiscal agents Taxes receivable Due from other funds TOTAL ASSETS LIABILITIES: Accounts payable and accrued liabilities Due to other funds Deposits payable Due to bondholders TOTAL LIABILITIES Balance July 1, 2000 Additions Deletions Balance June 30, 2001 $ 2,154,333 $ 6,584,599 $ 5,488,150 $ 3,250,782 6,069,428 19,158,551 18,880,195 6,347,784 61,764 51,960 61,764 51,960 1,058,244 - 276,846 781,398 $ 9,343,769"' $ 25,795,110 $ 24,706,955 $ 10,431,924 $ 1,611 $ 4,923,805 $ 4,910,864 $ 14,552 406,834 661 406,173 8,935,324 10,139,328 9,063,453 10,011,199 $ 9,343,769 $ 15,063,133 $ 13,974,978 $ 10,431,924 $ - $ - $ - 2,648,502 7,840,982 8,903,958 $ 2,648,502' $ 7,840,982"' $ 8,903,958 1,585,526 $ 1,585,526 $ '$ $ 1,058,244 $ $ 276,846 1,590,258 2,011,391 2,797,521 $ 2,648,502 $ 2,011,391 $ 3,074,367' 781,398 804,128 1,585,526 $ 2,154,333 $ 6,584,599 $ 5,488,150 $ 3,250,782 8,717,930 26,999,533 27,784,153 7,933,310 61,764 51,960 61,764 51,960 1,058,244 - 276,846 781,398 $ 11,992,271 ' $ 33,636,09:~"' $ 33,610,913 $ 12,017,450 $ 1,611 $ 4,923,805 $ 4,910,864 1,058,244 - 276,846 406,834 - 661 10,525,582 12,150,719 11,860,974 $ 11,992,271 $ 17,074,524 $ 17,049,345 $ 14,552 781,398 406,173 10,815,327 $ 12,017,450 See independent auditors' report. - 76 - ACCOUNT GROUPS General Fixed Assets - Used to account for the costs of fixed assets that are used in the performance of general government functions and that are not accounted for in the proprietary funds. The General Long-Term Debt - Used to account for matured long-term indebtedness of the City and Redevelopment Agency not accounted for in the proprietary funds. - 77- CITY OF TUSTIN COMPARATIVE SCHEDULE OF GENERAL FIXED ASSETS BY SOURCE GENERAL FIXED ASSETS ACCOUNT GROUP June 30, 2001 and 2000 GENEKAL FIXED ASSETS: Land Buildings and improvements Machinery and equipment Construction in progress TOTAL GENERAL FIXED ASSETS 2001 $ 18,079,349 24,224,682 9,748,702 $ 52,052,733 2000 $ 14,778,746 23,648,918 10,956,013 $ 49,383,677 INVESTMENT IN GENERAL FIXED ASSETS: General and special revenue funds Capitalized lease obligations Redevelopment Agency TOTAL INVESTMENT IN GENERAL FIXED ASSETS $ 40,066,980 517,557 11,468,196 $ 52,052,733 $ 37,229,273 517,557 11,636,847 $ 49,383,677 See independent auditors' report. - 78 - CITY OF TUSTIN SCHEDULE OF GENEKAL FIXED ASSETS BY FUNCTION AND ACTIVITY GENERAJ., FIXED ASSETS ACCOUNT GROUP June 30, 2001 Function General government: Legislative Data processing Administration Community development Nondepartmental Public safety Public works Community services Total Land 7,838,648 5,700,032 4,540,669 $ 18,079,349 Buildings Machinery Construction and and in Improvements Equipment Progress $ - $ 118,672 22,082 34,211 912,283 224,068 16,396,603 1,810,636 129,311 4,174,807 632,333 2,219,439 7,032,224 266,715 $ 24,224,682 $ 9,748,702 $ Total $ 118,672 22,082 946,494 224,068 26,045,887 4,304,118 8,551,804 11,839,608 - $ 52,052,733 See independent auditors' report. - 79 - CITY OF TUSTIN SCHEDULE OF CHANGES IN GENERAL FIXED ASSETS BY FUNCTION AND ACTIVITY GENERAL FIXED ASSETS ACCOUNT GROUP For the year ended June 30, 2001 General govemment: Legislative Data processing Administration Community development Nondepartmental Total General Government Public safety Public works Community services TOTALS Balance Balance July 1, 2000 Additions Deletions June 30, 2001 $ 53,493 $ 106,864 $ 41,685 732,556 - 710,474 932,981 13,513 - 392,719 69,905 238,556 23,293,844 4,364,456 1,612,413 $ 118,672 22,082 946,494 224,068 26,045,887 25,405,593 4,554,738 2,603,128 27,357,203 3,586,672 717,446 8,551,804 - 11,839,608 - $ 2,603,128 $ 49,383,677 $ 5,272,184 4,304,118 8,551,804 11,839,608 $ 52,052,733 See independent auditors' report. - 80- CITY OF TUSTIN COMPARATIVE scHEDULE OF GENERAL LONG-TERM DEBT GENERAL LONG-TERM DEBT ACCOUNT GROUP June 30, 2001 and 2000 AMOUNTS AVAILABLE AND TO BE PROVIDED FOR THE PAYMENT OF GENERAL LONG-TERM DEBT: Amount available in debt service funds Amount to be provided: Tax allocation and countrywide bonds Claims and judgments Compensated absences Capitalized leases TOTAL AMOUNT AVAILABLE AND TO BE PROVIDED FOR THE PAYMENT OF GENERAL LONG-TERM DEBT 2001 $ 10,422,609 9,812,391 355,826 1,748,558 22,963 $ 22,362,347 2000 $ 8,145,673 13,134,327 305,239 1,678,389 168,412 $ 23,432,040 GENERAL LONG-TERM DEBT PAYABLE: 1998 tax allocation refunding bonds 1996 countywide bonds Claims and judgments Compensated absences Capitalized leases TOTAL GENERAL LONG-TERM DEBT PAYABLE $ 18,475,000 1,760,000 355,826 1,748,558 22,963 $ 22,362,347 $ 19,270,000 2,010,000 305,239 1,678,389 168,412 $ 23,432,040 See independent auditors' report. -81 - TI-HS PAGE LEFT BLANK INTENTIONALLY STATISTICAL SECTION ~83 ~ CITY OF TUSTIN GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION LAST TEN FISCAL YEARS Fiscal Year General Public Public Government Safety Works Recreation and Other Community Services 1992 $ 3,886,347 $ 1!,982,825 $ 5,440,981 $ 1,112,690 1993 3,982,164 11,598,821 6,245,346 1,239,028 1994 4,015,043 12,124,822 6,028,954 1,212,653 1995 3,367,706 13,146,028 8,517,702 1,217,1 O0 1996 4,149,544 13,445,073 9,423,516 1,376,938 1997 5,619,688 14,120,461 8,630,457 2,210,231 1998 4,857,344 14,846,971 9,861,522 1,920,842 1999 5,536,998 15,403,356 14,097,600 2,512,655 2000 7,278,886 15,826,727 8,329,989 2,470,250 2001 7,811,395 16,718,300 9,634,490 2,546,206 Includes all governmental fund types. Source: City Finance Department - 84 - TABLE 1 Capital Expenditures Other Departmental Debt Service Totals $ 13,222,161 $ 1,296,116 $ 3,624,466 $ 40,565,586 10,597,372 773,718 6,714,588 41,151,037 7,282,697 986,162 5,657,165 37,307,496 7,494,430 250,738 5,354,039 39,347,743 4,216,235 2,384,482 34,995,788 4,623,976 2,410,774 37,615,587 4,864,589 6,151~954 2,196,917 3,333,036 38,548,185 47,035,599 3,944,277 2,325,327 40,175,456 3,622,631 2,340,886 42,673,908 -85- CITY OF TUSTIN GENERAL GOVERNMENTAL REVENUES BY SOURCE LAST TEN FISCAL YEARS Fiscal Year Taxes Licenses Fines Interest Intergovem- and and and mental Permits Forfeitures Rentals Revenues 1992 $ 19,857,860 $ 296,5.16 $ 420,302 $ 4,578,698 $ 5,455,300 1993 20,329,102 331,201 371,997 3,854,543 5,997,411 1994 22,664,574 390,596 . 435,460 2,650,048 4,653,858 1995 23,086,805 421,046 487,694 3,306,191 4,419,831 1996 23,003,112 511,318 441,044 3,403,069 5,288,806 1997 25,472,800 538,278 458,262 2,391,642 7,278,732 1998 30,681,614 433,606 429,926 2,761,166 4,544,572 1999 31,924,929 486,925 741,603 2,9'05,442 10,109,179 2000 28,953,783 650,518 688,362 3,611,310 7,624,889 2001 31,744,296 1,016,213 715,589 4,293,395 9,487,369 Includes all governmental fund types. Source: City Finance Department - 86 - TABLE 2 Charges for Services Sale of Property Developer Fees Other Totals $ 1,724,155 $ 56,665 $ 1,884,487 $ 1,713,185 $ 35,987,168 1,568,677 10,000 1,088,460 33,551,391 1,520,077 60,862 55,153 1,212,898 33,643,526 1,064,018 1,430,746 34,216,331 1,087,533 2,828,645 1,266,459 37,829,986 1,195,462 1,286,986 38,622,162 1,210,724 1,148,071 41,209,679 1,203,980 1,202,045 48,574,103. 1,318,103 1,662,520 44,509,485 1,303,800 2,432,681 50,993,343 - 87 - CITY OF TUSTIN PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Total Fiscal Tax Year Levy Current Percent Delinquent Tax of Levy Tax Collections Collected Collections Total Tax Collections 1992 $ 9,704,763 $ 9,500,394 97.89% $ 167,617 $ 9,668,011 1993 10,592,679 9,968,598 94.11% 293,422 10,262,020 1994 10,285,757 9,791,553 95.20% 291,365 10,082,918 1995 10,835,271 1 O, 116,251 93.36% 221,798 10,338,049 1996 11,022,917 10,556,309 95.77% 488,882 11,045,191 1997 13,727,024 13,010,051 94.78 % 420,618 13,430,669 1998 13,709,660 13,299,663 97.01% 261,410 13,561,073 1999 14,657,444 14,330,209 97.77% 205,914 14,536,123 2000 11,551,531 11,436,631 99.01% 141,957 11,578,588 2001 11,939,602 11,892,787 99.61% 8,542 11,901,329 Includes impounds not reflected in prior years. Includes Assessment for AD 95 - 2. Source: Orange County Auditor Controller's Office -88 - TABLE 3 Percent of Percent of Outstanding Delinquent Total Tax Delinquent Taxes/ Collections Taxes/ Impounds to Tax Levy Impounds to Tax Levy 99.62% $ 36,752 0.38% 96.88% 689,443 6.51% 98.03% 311,017 3.02% 95.41% 455,004 4.20% 100.20% 233,740 2.12% 97.84% 236,355 1.72% 98.92% 386,633 2.82% 99.17% 370,306 2.53% 100.23% 47,963 0.42% 99.68% 133,415 1.12% - 89- THIS PAGE LEFT BLANK INTENTIONALLY - 90- CITY OF TUsTIN TABLE 4 ASSESSED VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Real Property Personal Property Fiscal Assessed Assessed Assessed Year Value Value Value Total Percent Change From Previous Year 1992 $ 2,612,038,983 $ 357,410,126 $ 2,969,449,109 2.00% 1993 2,915,855,595 365,032,361 3,280,887,956 10.49% 1994 2,967,612,592 227,175,851 3,194,788,443 -2.62% 1995 2,923,543,175 321,567,540 3,245,110,715 1.58% 1996 2,927,828,605 324,557,015 3,252,385,620 0.22% 1997 2,939,121,396 342,961,655 3,282,083,051 0.91% 1998 3,017,259,205 317,971,678 3,335,230,883 1.62% 1999 3,246,774,384 423,440,428 3,670,214, 812 10.04% 2000 3,639,036,716 400,433,213 4,039,469,929 10.06% 2001 4,071,186,489 420,731,469 4,491,917,958 11.20% Source: County of Orange Assessor's Office -91 - CITY OF TUSTIN TABLE 5 PROPERTY TAX RATES - DIRECT AND MOST COMMON OVERLAPPING GOVERNMENTS (PER $100 OF DIRECT AND ASSESSED VALUE) LAST TEN FISCAL YEARS Debt County/ Countywide F is cai Service Other B as ic Year Funds Districts County Total 1992 0.01485 0.01060 1.00000 1.02545 1993 0.01316 0.00890 1.00000 1.02206 1994 0.00767 0.00890 1.00000 1.01657 1995 0.00387 0.00890 1.00000 1.01277 1996 0.00050 0.00890 1.00000 1.00940 1997 0.00012 0.00890 1.00000 1.00902 1998 - 0.00890 1.00000 1.00890 1999 - 0.00890 1.00000 1.00890 2000 - 0.00890 1.00000 1.00890 2001 - 0.00890 1.00000 1.00890 Source: Orange County Auditor Controller's Office - 92 - CITY OF TUST1N TABLE 6 PRINCIPAL TAXPAYERS June 30,2001 Taxpayer 2001 Type of Business Valuation Percentage of Total Valuation The Irvine Company Residential & Commercial Prop. $ 310,772,835 6.918% Steelcase Inc. Manufacturing 88,307,614 1.966% Catelus Development Corp. Industrial/Commercial 58,542,436 1.303% Sanyo Foods Recreation 42,408,940 0.944% Baycrest Associates Residential 34,433,349 0.767% Ricoh Development Manufacturing 33,512,262 0.746% Patrick F. Cadigan Trust Commercial 22,637,062 0.504% Stacy Lynn Bartlett Trust Commercial 22,411,230 0.499% Trinity Christian Center Nonprofit 21,422,350 0.477% AUD Corp. Manufacturing 20,791,799 0.463 % Sanderson J. Ray Retail Sales 18,687,609 0.416% $ 673,927,486 15.003% Source: Orange County Assessor's Office - 93 - CITY OF TUSTIN RATIO OF NET GENERAL BONDED DEBT TO ASSESSED VALUE AND NET BONED DEBT PER CAPITA LAST TEN FISCAL YEARS Fiscal Year Population Assessed Gross Debt Service Value Bonded Monies (in Thousands) Debt Available Net Bonded Debt 1992 52,145 $ 2,969,449 $ - $ 113,975 $ (113,975) 1993 54,739 3,280,888 1994 57,454 3,194,778 1995 62,497 3,245,111 1996 63,619 3,252,386 1997 65,287 3,282,083 1998 66,420 3,335,231 1999 66,834 3,670,215 2000 68,316 4,039,470 2001 69,199 4,491,918 Source: City Finance Department - 94 - TABLE ? Ratio of Net Bonded Debt to Assessed Value Net Bonded Debt Per Capita 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% - 95 - CITY OF TUSTIN SPECIAL ASSESSMENT BILLINGS AND COLLECTIONS TABLE 8 LAST EIGHT FISCAL YEARS Fiscal Year Special Assessments Levied Special Assessments Collected Percent of Total Collections to Special Assessment Levy 1994 $ 4,939,103 $ 4,746,853 96.11% 1995 5,377,883 4,794,379 89.15% 1996 5,354,889 5,305,471 99.08% 1997 4,028,446 4,009,020 99.52% 1998 3,597,691 3,580,452 99.52% 1999 4,038,813 4,014,672 99.40% 2000 4,548,241 4,521,690 99.42% 2001 4,451,177 4,422,225 99.35% Information prior to 1994 is not available. Source: County of Orange Tax Collector - 96 - CITY OF TUSTIN TABLE 9 COMPUTATION OF LEGAL DEBT MARGIN June 30, 2001 Net Valuation Plus Exempt Property TOTAL VALUATION $ 4,491,917,958 123,479,953 $ 4,615,397,911 DEBT LIMIT 3.75% OF FULL VALUATION $ 173,077,422 AMOUNT OF DEBT APPLICABLE TO DEBT LIMIT: Total Bonded Debt Less: Assets in Debt Service Funds Available for Payment of Principal LEGAL DEBT MARGIN $ 173,077,422 Source: City Finance Department - 97 - CITY OF TUSTIN TABLE 10 SCHEDULE OF DIRECT AND OVERLAPPING BONDED DEBT June30,2001 2000 - 2001 Assessed Valuation: Redevelopment Incremental Valuation: Adjusted Assessed Valuation: $ 5,015,I20,583 460,297,551 $ 4,554,823,032 OVERLAPPING TAX AND ASSESSMENT DEBT: Orange County Teeter Obligations Metropolitan Water District Irvine Unified School District Irvine Unified School District Community Facilities District No. 86 - 1 Santa Ana Unified School District Tustin Unified School District Community Facilities District No. 88 - 1 h'vine Ranch Water District Improvement Districts City of Tustin 1915 Act Bonds TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT % Applicable Debt 6/30/01 2.212% $ 2,769,977 0.464% 2,447,507 0.299% 1,495 0.439% 478,291 0.003% 1,690 100.000% 63,520,000 0.633 -41.335% 41,337,112 100.000% 70,100,000 '$ 180~656,072 DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT: Orange County General Fund Obligations Orange County Pension Obligations Orange County Transit Authority Orange County Water District Certificates of Participation Municipal Water District of Orange County Water Facilities Corporation South Orange County Community College District Certificates of Participation School District Certificates of Participation City of Tustin General Fund Obligations Irvine Ranch Water District Certificates of Participation Orange County Sanitation District No. 1 Certificates of Participation Orange County Sanitatio. n District No. 7 Certificates of Participation TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT Less: Orange County Transit Authority (80% self-supporting) Orange County Water District Certificates of Participation (100% self-supporting) MWDOC Water Facilities Corporation (100% self-supporting) City of Tustin Water Corporation (100% self-supporting) TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT 2.177% 2.177% 2.177% 3.260% 3.272% 5.567% Various 100.000% 9.714% 0.008% 12.530% $ 23,163,268 2,983,158 223,412 7,464,488 1,962,575 2,541,661 4,063,684 3,107,757 5,084,768 2,086 972,198 51,569,055 (178,730) (7,464,488) (1,962,575) (1,425,000) 40,538,262 GROSS COMBINED TOTAL DEBT $ 232,225,127 (1) NET COMBINED TOTAL DEBT $ 221,194,334 (1) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and nonbonded capital lease obligations. RATIO TO 20,00 - 2001 ASSESSI~D VALUATION: Total Overlapping Tax and Assessment Debt .......................................... 3.60% RATIOS TQ ADJUSTED ASSESSED VALUATION: Gross Combined Direct Debt ($3,107,757) .......................................... Net Combined Direct Debt (5;1,682,757) ............................................. Gross Combined Total Debt ............................................................... Net Combined Total Debt .................................................................. 0.07% 0.04% 5.10% 4.86% STATE SCHOOL BI. JILI)INQ AID REPAYABLE AS OF JUNE 30,2001:. $0 Source: California Municipal Statistics, Inc. - 98 - CITY OF TUSTIN TABLE 11 RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES LAST TEN FISCAL YEARS Fiscal Year Principal Interest Total Total Debt General Service Expenditures Ratio of Debt Service to Total General Expenditures 1992 $ 400,000 $ 32,393 $ 432,393 $ 40,565,586 1.1% 1993 41,148,037 0.0% 1994 37,307,496 0.0% 1995 39,347,743 0.0% 1996 34,995,788 0.0% 1997 37,615,587 0.0% 1998 38,548,185 0.0% 1999 47,035,589 0.0% 2000 40,175,456 0.0% 2001 42,673,908 0.0% Source: City Finance Department. - 99 - CITY OF TUSTIN REVENUE BOND COVERAGE - WATER BONDS LAST TEN FISCAL YEARS Fiscal Year Gross Revenues Operating Expenses Net Revenues Available for Debt Service 1992 $ 4,867,984 $ 3,754,707 $ 1,113,277 1993 5,791,050 4,722,290 1,068,760 1994 6,818,567 4,933,578 1,884,989 1995 7,867,169 5,134,257 2,732,912 1996 9,272,065 5,313,617 3,958,448 1997 10,092,653 5,285,301 4,807,352 1998 9,295,380 5,328,018 3,967,362 1999 9,923,454 5,493,255 4,430,199 2OOO 10,004,595 5,960,562 4,044,033 2001 9,253,484 5,761,243 3,492,241 Source: City Finance Director - 100 - TABLE 12 Debt Service Requirement Principal Interest Total Coverage $ 150,000 $ 359,836 $ 509,836 2.18 175,000 275,000 343,875 697,750 518,875 972,750 2.06 1.94 300,000 675,200 975,200 2.80 325,000 650,600 975,600 4.06 350,000 623,950 973,950 4.94 375,000 595,250 970,250 4.09 400,000 564,500 964,500 4.59 425,000 531,700 956,700 4.23 450,000 496,850 946,850 3.69 - 101 - CITY OF TUSTIN PROPERTY vALuE, CONSTRUCTION AND BANK DEPOSITS LAST TEN FISCAL YEARS Commercial Construction Fiscal Number of Percentage Number of Year Permits Value Change Permits Residential Construction Value Percentage Change 1992 225 $ 13,928,654 -8.00% 876 $ 115,683,934 -11.00% 1993 261 17,535,061 26.00% 898 72,644,819 -37.00% 1994 267 23,046,827 31.00% 798 118,232,000 63.00% 1995 325 18,910,469 -18.00% 740 49,034,394 -59.00% 1996 231 14,837,239 -22.00% 781 57,014,707 16.00% 1997 261 12,834,703 -13.00% 975 111,992,817 96.00% 1998 227 18,824,651 47.00% 1,125 99,613,619 -11.00% 1999 253 21,122,115 12.00% 1,238 104,505,168 5.00% 2000 226 17,338,250 -17.91% 1,066 45,933,176 -56.05% 2001 241 19,313,824 11.39% 747 41,910,590 -8.76% Source: City of Tustin Community Development Department and the Findley Reports - 102 - TABLE 13 Bank Deposits (In Thousands) Property Value Commercial Residential $ 907,653 $ 815,379,039 $ 1,923,908,598 908,600 867,936,430 2,047,919,165 923,000 860,607,652 2,107,004,940 1,312,000 941,082,190 2,304,028,810 1,305,000 943,191,940 2,309,194,060 1,310,000 951,804,085 2,330,278,966 1,355,000 967,216,956 2,360,013,927 1,389,000 1,064,362,295 2,605,852,517 1,414,000 1,I71,440,279 2,868,009,450 1,560,000 1,302,656,208 3,189,261,750 - 103 - CITY OF TUST1N TABLE 14 DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS Year' Population Percent Change in Population Per Capita Income Unemployment Rate (1) 1992 52,145 5.54% $ 19,382 7.00% 1993 54,73 9 4.97% 19,300 7.00% 1994 57,454 4.96% 19,511 5.90% 1995 62,497 8.78% 20,101 5.10% 1996 63,619 1.80% 20,905 4.30% 1997 65,287 2.62% 30,280 4.00% 1998 66,420 1.74% 31,096 2.90% 1999 66,840 0.63% 31,934 2.70% 2000 68,316 2.21% 32,541 2.50% 2001 69,199 1.29% 33,390 2.61% (1) Based on County-wide averages. Sources: State Department of Finance Orange County Chamber of Commerce - 104- CITY OF TUSTIN MISCELLANEOUS STATISTICAL DATA June 30, 2001 TABLE 15 Date of Incorporation Form of Govemment Area Miles of Streets Number of Street-Lights Fire Protection Police Protection: Number of Stations Number of Sworn Personnel Education: Tustin Unified School District Attendance Centers Number of Teachers/Administrators Number of Students Municipal Water Deparmaent: Number of Metered Accounts Average Daily ConsumPtion Miles of Water Mains Sewers: Sanitary Sewers Storm Sewers Building Permits Issued Recreation and Culture: Number of Parks/Acres Employees: Classified Service Exempt Total Employees 1927 Council/Manager 11.07 Square Miles 101.$ 2,855 Contract with Orange County Fire Authority 1 93 23 766 16,000 13,500 12,500 (100 cubic feet) 173 47.90 miles 23.74 miles 988 12 parks, Total 81.5 acres 230 49 279 Source: City Finance Department. - 105 - CiTY OF TUSTIN PUBLIC WORKS DEPARTMENT! 300 CENTENNIAL WAY -- TUSTIN, CA 92780 FAX (714) 734-8991 Letter of Transmittal To: Christine Shingleton Date: September23, 2002 From: Dana R. Kasdan ~ Project No. CIP No. 7133 File No. Environmental Insurance Application Form for the Red Hill Avenue Re:' Widening Project at the I-5 Freeway WE ARE FORWARDING: ~ STREET IMPROVEMENT PLANS I~ ~ SIGNAL/STRIPING PLANS I~1 [~] SPECIFICATIONS ~ ~--~ RETURNED FOR CORRECTIONS ~ ~ FOR YOUR REVIEW & COMMENT [-~ FOR YOUR INFORMATION FOR YOUR FILES PER YOUR REQUEST FOR YOUR APPROVAL FOR PERMIT REMARKS: Attached are the completed environmental insurance application forms for the above referenced proiect. Richard Hyland, of Complete Insurance, Inc., has reviewed the forms and has approved them as attached. Mr. Hyland also commented that the "past five (5) years loss runs history" and the "past two (2) years audited financial statements" would not be required to be submitted at this time. Please review the attached forms, and note any suggested revisions. Mr. Hyland will personally pick-up the forms when signed. /--'~,~.~ ~ S:\ClP Projects - Active\7133 - Red Hill Widen ECR-Nisson~Aquisition\Environmental Insurance Forms.doc INSURANCE XL Environmental, Inc. 52.0 Eaglevlew Boulevard PO Box 636 Exton, PA 19341-0636 USA Tel: 800-327-1414 610-458-0570 Fax: 610-458-8667 www. xlenviron mental.corn 'INDUSTRIAL & COMMERCIAL I ENVIRONMENTAL FACILITIES APPLICATION This Application is For An "Occurrence" Or A "Claims-Made and Reported" General Liability Policy And/Or A "Claims-Made and Reported" Pollution and Remediation Legal Liability Policy Or A "Claims-Made and Reported" Pollution Legal Liability Policy-PLEASE READ IT CAREFULLY. . , APPLICANT: Address: Contact: Telephone: City of Tustin 300 Centennial Way Dana R. Kasdan 714.573.3150 Federal Employer Identification Number: FIRM IS: TRle: Engineering Services Manager Fax: 714.734.8991 95-6000804 EPA Identification Number: r-} Pa~nemhip 1-] Co~oration ['-I Joint Venture r'f] Other Public or Private: Public Does the applicant have any facilities in Mexico, the United Kingdom or Europe? If yes, does the applicant desire information on coverages available in those locations? [-! Yes [] No [--I Yes r'-I No 3. REVENUES: Estimated (Ensuing Year): 19 $ Does not applyPrevious Year: 19 $ Does not apply , PROPERTY DESCRIPTION: The widening of Red Hill Avenue between E1 Camino Real & the I-5 Freeway Total acreage: N/A Name: N/A Address: N/A , , WHAT STRUCTURES ARE CURRENTLY ON THIS PROPERTY (I.E. TYPE OF BUILDING, SQUARE FOOTAGE, AGE, ETC.)? None LIST THE CURRENT OCCUPANTS AND THE CURRENT OPERATIONS ON THIS PROPERTY: None ICEFIA (5/02) Page 2 SERIES 2000 7. HOW LONG HAS'PRESENT OWNER CONTROLLED OR OWNED THIS pROpERTY? City has owned property on the west Side of Red Hill Ave. for 3-1/2 months. on the east side has been owned by the Pankey Trust for over 5-years. .8. WHAT WERE THE PAST USES OF THIS PROPERTY? The property Gas Stations RECORD: a. Have you dudng the last five (5) years been cited and/or prosecuted for contravention or violation of any standard or law relating to the any release from the location(s) of any substance into sewers, rivers, seas, air or onto land? ["] Yes I-~ No If yes, give details: bo Please deScribe any pollution claims during the last five (5) years (if none, please so state): None At the time of signing this Application, are you aware of any circumstances which may reasonably be expected to give rise to a claim under the pollution liability or general liability policy? E] Yes g-I No If yes, give details: do Has any insurance carder canceled or nonrenewed pollution liability or general liability coverage? I-'1 Yes I-~ No If yes, give details: 10. COVERAGE REQUESTED: Policy Term: 1 year 2 years 3 years Limits of Liability: $ 5M Per Loss, Remediation Expense or Legal Defense Expense $ 5M Aggregate Prospective Additional Insured (if any): None 1t. PROPERTY SETTING: (Attach Plot Plan) Refer to attachments previously submitted a. Provide a descd~ion ofa~ace~land use(No~h, East, South and We~): Subject property is adjacent to two commercial businesses, Wendy's restaurant to the east and Starbuck's to the west. b. Identify nea~ysudace waterbodies(i.e. ~reams, lakes, wetlands): None c. Descdbe any prote~ed environmentsinthe area(pa~s, wildliferese~es, etc.)' None d. Identify any surface or groundwater uses in the area (drinking wells, etc.): None e. is public water and sewer used on site? i-'] Yes [~] No If no, identify what is used in its place: Subject site is a public street ICEF1A (5/02) Page 3 SERIES 2000 12. ON-SITE MATERIALS: a.- LIST: A: RAW MATERIALS USED AT LOCATION: None B: PROCESS MATERIALS USED AT LOCATION: (Plating agents, degreasers, cleaning solvents, etc.) None b. Describe any change in process during the last five (5) years that has altered (lessened or increased) the risk of environmental liability: None TANK STORAGE: Does this p. ropert~ 13ave an)/above~rouncl or un(]e~roun(~ szora'/e tanKs¥ ~ Yes I~J mo ..... . . , ~ ~ ': ~ ~: ~ ~..~ E~mple: Di~el Bare Steel 5,~ gal 5 ~ ~T 110% Volume - Poured 13. Explain any tank inventory control and/or testing methods used (Attach latest tank test results): 14. DOES THIS PROPERTY GENERATE, HANDLE, STORE OR DISPOSE OF ANY HAZARDOUS WASTE OR MATERIALS? D Yes E~ No a. Describe the on-site storage practices (i.e. describe storage areas, secondary containment, etc.): None If TSD Facility: Permitted Acreage Filled Acreage Closed Acreage b. Describe the dis methods used: None d. Identify any past storage or disposal practices at the site, including any inactive disposal areas: None Descdbe the waste treatment practices used: None ICEF1A (5/02) Page 4 SERIES 2000 e. Identify effluent discharge points for wastewater and stormwater (Attach discharge monitoring results): None f. Identify types of air emissions (i.e. toxic gases, vapors, dust, etc.) and volume per year: None g. Describe methods and equipment used for collection and treatment of polluting air emissions: None h. Describe any groundwater monitoring activities at the location(s) (Attach monitoring results for'the past year): None ARE THERE ANY STATUTES, STANDARDS, OR OTHER CITY, STATE AND/OR FEDERAL REGULATIONS RELATING TO THE PROTECTION OF THE ENVIRONMENT WHICH APPLY TO ANY LOCATION WITH WHICH YOU CANNOT AT PRESENT COMPLY? [-] Yes [~] No If yes, please explain: 16. HAVE ANY PRIOR ENVIRONMENTAL AUDITS OR STUDIES BEEN DONE FOR THIS PROPERTY? (Attach copies) [~] Yes [~] No Provide full details as to any recommendations made and the status of compliance: 17. DETAIL ANY FIRE DETECTION/SUPPRESSION SYSTEMS: None 18. DESCRIBE ANY OF YOUR PRODUCTS THAT REQUIRE SEGREGATED STORAGE: None 19. ARE YOUR EMPLOYEES TRAINED IN FIRE/SPILL RESPONSE AND THE USE OF PERSONAL PROTECTIVE EQUIPMENT? ["] Yes ~] No 20. Do you maintain an employee safety manual ? (Attach copies) r-] Yes [-'] No Does not apply 21. PLEASE PROVIDE THE APPROPRIATE ACORD APPLICATIONS FOR THE BELOW REFERENCED COVERAGE LINES: None ICEF1A (5/02) Page 5 SERIES 2000 22. DESCRIBE YOUR PRODUCTS AND/OR OPERATIONS: None 23. NAME ALL PRODUCTS WHICH YOU HAVE CEASED TO HANDLE DURING THE.PAST FIVE (5)YEARS: None 24. PRODUCTION / QUALITY CONTROL: a Do others manufacture, assemble, package or install products under your name/label? b Do you manufacture, assemble, package or install products under another's name/label? c. Do your employees perform any installation services? d. Are all products labeled in compliance with all regulations and with appropriate wamings? e. Have any of your products been subject to inquiry by a governmental agency? f. Have you been involved in a recall of any products you have sold? g. Do you maintain complete inventory records on shipments and deliveries? If yes, for how long? ['-I Yes I-'i Yes I"-] Yes [~ Yes r-1 Yes I-'1 Yes r-1 Yes [] No [~ No No [~] No [~] No [~ No [~ No Please detail any yes responses: 25. DO YOU HAVE THE FOLLOWING WRITTEN QUALITY CONTROL .PROCEDURES? (If yes, attach copies) Raw Materials ['"] Yes [] No Work in Process [~ Yes [] No Finished Product I-'1 Yes ~ N© ICEF1A (5/02) Page 6 SERIES 2000 FRAUD WARNINGS NOTICE TO ARKANSAS APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment for a loss or benef~ or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison. NOTICE TO CALIFORNIA APPLICANTS: Pursuant to California Insurance Law, Sec. 1623, this application for insurance is being submitted by an insurance broker who is acting on behalf of an insured. NOTICE TO COLORADO APPLICANTS: It is unlawful to knowingly provide false, incomplete, or misleading facts or information to an insurance company for the purpose of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines, denial of insurance, and civil damages. Any insurance company or agent of an insurance company who knowingly provides false, incomplete, or misleading facts or information to a policy holder or claimant for the purpose of defrauding or attempting to defraud the policy holder or claimant with regard to a settlement or award payable from insurance proceeds shall be reported to the Colorado Division of Insurance within the Department of Regulatory Agencies. NOTICE TO D.C. APPLICANTS: WARNING: It is a crime to provide false or misleading information to an insurer for the purpose of defrauding the insurer or any other person. Penalties include imprisonment and/or fines. In addition, an insurer may deny insurance benefits if false information materially related to a claim was provided by the applicant. NOTICE TO FLORIDA APPLICANTS: Any person who knowingly and with intent to injure, defraud, or deceive any insurance company files a statement of claim or an application containing any false, incomplete, or misleading information is guilty of a felony of the third degree. NOTICE TO HAWAII APPLICANTS: For your protection, Hawaii law requires you to be informed that presenting a fraudulent claim for payment of a loss or benefit is a crime punishable by fines or imprisonment or both. NOTICE TO KENTUCKY APPLICANTS: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime. NOTICE TO LOUISIANA APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in pdson. NOTICE TO MAINE APPLICANTS: It is a cdme to knowingly provide false, incomplete or misleading information to an insurance company for purposes of defrauding the company. Penalties may include imprisonment, fines or a denial of insurance benefits. NOTICE TO MARYLAND APPLICANTS: Any person who, with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement may be guilty of insurance fraud. NOTICE TO MINNESOTA APPLICANTS: A person who submits an application or files a claim with intent to-defraud or helps commit a fraud against an insurer is guilty of a crime. NOTICE TO NEW JERSEY APPLICANTS: Any person who includes any false or misleading information on an application for an insurance policy is subject to criminal and civil penalties. NOTICE TO NEW MEXICO APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false'information in an application for insurance is guilty of a crime and may be subject to civil fines and criminal penalties. NOTICE TO NEW YORK APPLICANTS: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact matedal thereto commits a fraudulent insurance act, which is a cdme, and shall be also subject to a civil penalty not to exceed five thousand dollars and the stated value of the claim for each such violation. ICEF1A (5/02) Page 7 SERIES 2000 NOTICE TO OHIO APPLICANTS: Any person who, with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement is guilty of insurance fraud. NOTICE TO OKLAHOMA APPLICANTS: WARNING: Any person who knowinglY, and with intent to injure, defraud or deceive any insurer, makes any claim for the proceeds of an insurance policy containing any false, incomplete or misleading information is guilty of a felony. NOTICE TO OREGON APPLICANTS: Any person who makes an intentional misstatement that is matedal to the dsk may be found guilty of insurance fraud by a court of law. NOTICE TO PENNSYLVANIA APPLICANTS: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact matedal thereto commits a fraudulent insurance act, which is a cdme and subjects such person to criminal and civil penalties. NOTICE TO TENNESSEE APPLICANTS: It is a cdme to knowingly provide false, incomplete or misleading information to an insurance company for the purpoSe of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits. NOTICE TO TEXAS APPLICANTS: Any person who makes an intentional misstatement that is material to the risk may be foUnd guilty of insurance fraud by a court of law. NOTICE TO VIRGINIA APPLICANTS: It is a cdme to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance beneffis. . . NOTICE TO ALL OTHER STATE APPLICANTS: Any person who knowingly includes any false or misleading information on an application for an insurance policy is subject to cdminal and civil penalties. THE APPLICANT REPRESENTS THAT THE ABOVE STATEMENTS AND FACTS ARE TRUE AND THAT NO MATERIAL FACTS HAVE BEEN SUPPRESSED OR MISSTATED. COMPLETION OF THIS FORM DOES NOT BIND COVERAGE. APPLICANT'S ACCEPTANCE OF THE COMPANY'S QUOTATION IS REQUIRED PRIOR TO BINDING COVERAGE AND POLICY ISSUANCE. ALL WRITI'EN STATEMENTS AND MATERIALS FURNISHED TO THE COMPANY IN CONJUNCTION wITH THIS APPLICATION ARE HEREBY INCORPORATED BY REFERENCE INTO THIS APPLICATION AND MADE A PART HEREOF. Applicant: Dana R, Kasdan T~le: Engineering Services Manager Applicant's Signature: Date: Agent/Broker Name: (Fraud Language Revised 12/01) ICEF1A (5/02) Page 8 SERIES 2000 iNSURANCE XL Environmental, inc. 520 Eagle¥iew Boulevard PO Box 636 Exton, PA 19341-0636 USA Tel: 800-327-1414 610-458-0570 Fax: 610-458-8667 www. xlenvironmental.oom INDUSTRIAL & COMMERCIAL FACILITIES QUESTIONNAIRE* POLLUTION & REMEDIATION LEGAL LIABILITY (PARLL) Name: City of Tustin Covered Location Address: I-5 Freeway Estimated Revenues/Rents for upcoming year: Age of Existing Buildings: N/A .Building Square Footage: What is the property currently used for?. Is the property: I~lOwned r']Leased The widening of Red Hill Avenue between E1 Camino Real and the Does not apply N/A Acreage: N/A NOTE: For multiple locations, attach property listing including: names, addresses, property use and size (i.e., acreage, square footage) What were the previous uses of this property? Gas Stations Does this property have any aboveground storage tanks? Does this property have any underground storage tanks? If yes, do the underground storage tanks meet the 1998 EPA Standards? Has this property had previous underground storage tanks? r-lYes [~--I No l-lYes r-]Yes I-]No ~Yes r'-INo Provide details of any known pollution conditions or claims: Refer to reports from the Orange County Health Care Agency previously submitted. Have any environmental audits or studies been completed in the past five years for this property? [~]Yes r--INo If yes, provide name of consultant, type of report and date of report: reports previously submitted. Orange County Health Care Agency *Please note that a completed Master Pollution Application will be required to bind coverage. ICFQUES (10/99) Page 1 SERIES 2000 FRAUD WARNINGS NOTICE TO ARKANSAS APPLICANTS: Any person who knowingly presents a false or-fraudulent claim for payment for a loss or benefit or knowingly presents false information in an application for insurance is guilty of a cdrne and may be subject to fines and confinement in pdson. NOTICE TO CALIFORNIA APPLICANTS: Pursuant to California Insurance Law, Sec. 1623, this application for insurance is being submitted by an insurance broker who is acting on behalf of an insured. NOTICE TO COLORADO APPLICANTS: It is unlawful to knowingly provide false, incomplete, or misleading facts or information to an insurance company for the purpose of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines, denial of insurance, and civil damages. Any insurance company or agent of an insurance company who knowingly provides false, incomplete, or misleading facts or information to a policy holder or claimant for the purpose of defrauding or attempting to defraud the policy holder or claimant with regard to a settlement or award payable from insurance proceeds shall be reported to the Colorado Division of Insurance within the Department of Regulatory Agencies. NOTICE TO D.C. APPLICANTS: WARNING: it is a crime to provide false or misleading information to an insurer for the' purpose of defrauding the insurer or any other person. Penalties include imprisonment and/or fines. In addition, an insurer may deny insurance beneffis if false information materially related to a claim was provided by the applicant. NOTICE TO FLORIDA APPLICANTS: Any person who knowingly and with intent to injure, defraud, or deceive any insurance company files a statement of claim or an application containing any false, incomplete, or misleading information is guilty of a felony of the third degree. NOTICE TO HAWAII APPLICANTS: For your protection, Hawaii law requires you to be informed that presenting a fraudulent claim for payment of a loss or benefit is a crime punishable by fines or imprisonment or both. NOTICE TO KENTUCKY APPLICANTS: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance containing any materially false information or conceals for the purpose of misleading, information conceming any fact matedal thereto commits a fraudulent insurance act, which is a cdme. NOTICE TO LOUISIANA APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benef'~ or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in pdson. NOTICE TO MAINE APPLICANTS: It is a'cdme to knowingly provide false, incomplete or misleading information to an insurance company for purposes of defrauding the company. Penalties may include imprisonment, fines or a denial' of insurance beneffis. NOTICE TO MARYLAND APPLICANTS: Any person who, with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement may be guilty of insurance fraud. NOTICE TO MINNESOTA APPLICANTS: A person who submits an application or files a claim with intent to defraud or helps commit a fraud against an insurer is guilty of a chine. NOTICE TO NEW JERSEY APPLICANTS: Any person who includes any false or misleading information on an application for~an insurance policy is subject to criminal and civil penalties. NOTICE TO NEW MEXICO APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment of a loss or beneffi or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to civil fines and cdminal penalties. NOTICE TO NEW YORK APPLICANTS: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact matedal thereto commits a fraudulent insurance act, which is a cdme, and shall be also subject to a civil penalty not to exceed five thousand dollars and the stated value of the claim for each such violation. ICFQUES (10/99) Page 2 SERIES 2000 NOTICE TO OHIO APPLICANTS: Any person who, with intent to defraud or knowing that he is facilitating a fraud against an insurer, sUbmits an application or files a claim containing a false, or deceptive statement is guilty of insurance fraud. · NOTICE TO OKLAHOMA APPLICANTS: WARNING: Any person who knowingly, and with intent to injure, defraud or deceive any insurer, makes any claim for the proceeds of an insurance policy containing any false, incomplete or misleading information is guilty of a felony. NOTICE TO OREGON APPLICANTS: Any person who makes an intentional misstatement that is matedal to the dsk may be found guilty of insurance fraud by a court of law. NOTICE TO PENNSYLVANIA APPLICANTS: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact matedal thereto commits a fraudulent insurance act, which is a cdme and subjects such person to cdminal and civil penalties. NOTICE TO TENNESSEE APPLICANTS: It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits. NOTICE TO TEXAS APPLICANTS: Any person who makes an intentional misstatement that is material to the dsk may be found guilty of insurance fraud by a court of law. NOTICE TO VIRGINIA APPLICANTS: It is a cdme to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance benef'~s. NOTICE TO ALL OTHER STATE APPLICANTS- Any person who knowingly includes any false or misleading information on an application for an insurance policy is subject to cdminal and civil penalties. THE APPLICANT REPRESENTS THAT THE ABOVE STATEMENTS AND FACTS ARE TRUE AND THAT NO MATERIAL FACTS HAVE BEEN SUPPRESSED OR MISSTATED. COMPLETION OF THIS FORM DOES NOT BIND COVERAGE. APPLICANT'S ACCEPTANCE OF THE COMPANY'S QUOTATION IS REQUIRED PRIOR TO BINDING COVERAGE AND POLICY ISSUANCE. ALL WRITTEN STATEMENTS AND MATERIALS FURNISHED TO THE COMPANY IN CONJUNCTION WITH THIS APPLICATION ARE HEREBY INCORPORATED BY REFERENCE INTO THIS APPLICATION AND MADE A PART HEREOF. Applicant: Dana R. Kasdan T~ie: Engineering Services Manager Applicant's Signature: Date: Agent/Broker Name: (Fraud Language Revised 12/01) ICFQUES (10/99) Page 3 SERIES 2000 CITY OF TUSTIN PUBLIC WORKS DEPARTMENT 300 CENTENNIAL WAY TUSTIN, CA 92780 FAX (714) 734-8991 Letter of Transmittal To: Rich Hyland Date: August 13, 2002 Complete Insurance From: Dana R. Kasdan Project No. CIP 7133 File No. Pankey Property Acquisition for the Red Hill Avenue Widening Re: Project at the I-5 Freeway. WE ARE FORWARDING: STREET IMPROVEMENT PLANS ~ SIGNAL/STRIPING PLANS ~ SPECIFICATIONS ~-~ RETURNED FOR CORRECTIONS ~-~ FOR YOUR REVIEW & COMMENT ~ FOR YOUR INFORMATION FOR YOUR FILES PER YOUR REQUEST FOR YOUR APPROVAL FOR PERMIT REMARKS: In response to your e-mail of 8-13-02 concerninq the Pankey property at 13922 Red Hill Avenue, the following are our responses: 1) The property owner will be executing a Purchase Aqreement and Grant Deed for the property required for the Red Hill Avenue widening proiect and we will acquire the property in fee. 2) Attached is a copy of the Legal Description of the property to be acquired. 3) We anticipate that the Purchase Agreement and Grant Deed will be signed within the next · four weeks. 4) We are not aware of any indemnification agreements that were in place at the time the present property owner acquired the property. Our property appraisal states that the present owner acquired the property over 5 years ago. c: Christine Shin.qleton S:\CeeCeeWlisc~etter of Transmittal.doc "EXHIBIT "A" LEGAL DESCRIPTION BEING A PORTION OF PARCEL MAP 99-197, IN THE CITY OF TUSTIN, COUNTY OF ORANGE, STATE OF CALIFORNIA. AS SHOWN ON A MAP FILED IN BOOK 315 PAGES 8-10 OF PARCEL MAPS, RECORDS OF SAID ORANGE COUNTY MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE CENTERLINE INTERSECTION OF RED HILL AVENUE AND EL CAMINO REAL AS SHOWN ON SAID PARCEL MAP; THENCE ALONG THE CENTERLINE OF SAID RED HILL AVENUE SOUTH 40041 '23" WEST, 21.342 METERS (70.02 FEET); THENCE LEAVING SAID CENTERLINE AT RIGHT ANGLES SOUTH 49018'37'' EAST, 16.572 METERS (54.37 FEET) TO A POINT ON THE NORTHWESTERLY BOUNDARY OF SAID PARCEL MAP 99-197 SAID POINT ALSO BEING A POINT ON THE SOUTHEASTERLY RIGHT-OF-WAY LINE OF RED HILL AVENUE AS ESTABLISHED BY DEED RECORDED FEBRUARY 19, 1992 AS INSTRUMENT NO. 92-097801 OF OFFICIAL RECORDS OF SAID COUNTY; SAID POINT ALSO BEING THE POINT OF BEGINNING; THENCE ALONG THE NORTHWESTERLY AND SOUTHWESTERLY BOUNDARY OF SAID PARCEL MAP THE FOLLOWING COURSES; SOUTH 37016'24'' WEST 25.881 METERS (84.91 FEET), SOUTH 19020'02'' EAST, 14.219 METERS (46.65 FEET). SOUTH 45038'27'' EAST, 5.752 METERS (18.87 FEET); THENCE LEAVING THE SOUTHWESTERLY BOUNDARY OF SAID PARCEL MAP NORTH 01 °58'12" WEST 21.891 METERS (71.82 FEET) TO A LINE PARALLEL WITH AND 21.336 METERS (70 FEET) SOUTHEASTERLY FROM THE CENTERLINE OF RED HILL AVENUE; THENCE ALONG SAID'PARALLEL LINE NORTH 40°41'23" EAST 17.209 METERS (56.46 FEET); THENCE LEAVING SAID PARALLEL LINE AT RIGHT ANGLES TO SAID CENTERLINE OF RED HILL AVENUE NORTH 49018'37'' WEST 4.764 METERS (15.63 FEET)TO THE POINT OF BEGINNING. TOGETHER WITH THE EXTINGUISHMENT OF ALL EASEMENTS OF VEHICULAR ACCESS APPURTENANT TO THE REMAINING LANDS IN AND TO RED HILL AVENUE OVER AND ACROSS THE SOUTHWESTERLY 15.240 METERS (50.00 FEET) OF THAT CERTAIN COURSE HEREINABOVE DESCRIBED AS HAVING A LENGTH OF 17.209 METERS (56.46 FEET). THE ABOVE DESCRIBED AREA CONTAINS AN AREA OF 197.1 SQUARE METERS (2,122 SQUARE FEET), MORE OR LESS. SUBJECT TO ANY AND ALL EASEMENTS OR AGREEMENTS, IF ANY, OF RECORD AND/OR FACT. ALL AS SHOWN ON "EXHIBIT "B", ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEREOF. EUGEN~SHAFFER, L.S. LICENSE EXPIRES DATE \\10.20.0.55\Projects\aslce~226.04\LEGALS\50002104_REV.DOC 07/16/02 N 45':'38'27"W 5.7:52m (1 AP NO. 500-021-04 N19'19'57"W 14.219m (46.65') PER 92-097801 O.R. '19m (58.79 2.168m (39.92') x z 21.336m (70') RIGHT OF WAY-- o ~ ~ I_ 12.192m o ' " ~ ~ ~ ~9 ~8 3~ W ~ ~ ,f~ 4.764m (15.6 ~ 2 I S49o18'57"E .~ ___ ~ / , ______' .... -- ~ ~ ,1 / ~ - ~ _ EL CAMINO RELINQUISHED TO THE CITY OF TUSTIN _1 o E P.O.C. _FIEAL~ PREPARED UNDER THE DIRECTION OF EtlCi~;~N~ A."~-'SHAFFE ,~,~.S. 4644 DATE LICENSE EXPIRES ~ CITY OF TUSTIN RIGHT-OF-WAY "EXHIBIT B" APN # 500-021-04 DRAWN BY: MDM CHECKED BY: JRB SCALE 1:500 DATE: 9/01 CONTAINING · 197.1 m"2 (2,122 SF) J.N. 226.04 FILE - 50002104_REV.DWG 2002 - 2003 INSURANCE PROPOSAL FOR THE CITY OF TUSTIN Presented By Richard W. Hyland ~OMPLETE INSURANCE INC. California DOI # 0437762 1500 Quail Street, Suite 410 Newport Beach, California 92660 www. completeinsurance.com 949.263.0606 September 16, 2002 TABLE OF CONTENTS About Complete Insurance Inc. Section 1 Pollution and Remediation Legal Liability Premium Summary ~OMPLETE INSURANCE INCORPORATED THE CITY OF TUSTIN NAMED INSUREDS The City of Tustin ADDITIONAL INSUREDS If required by written contract q~VOMPLETE INSURANCE INCORPORATED PLEASE READ THIS THIS IS A DISCLAIMER The forms which follow are for illustration purposes only in order to assist clients in purchasing insurance. This proposal is intended to summarize the coverage, limits and deductibles offered by insurers. It is not intended to nor does it alter or amend the policies which are proposed. The policies are contracts which you as the purchaser must read. YOUR OPERATIONS/SERVICES The coverage outlined in the following proposal pages is based on and determined by the information provided in the application(s) of insurance and on the classifications/operations as shown in this proposal. In order to comply with policy conditions that could affect coverage under the policies being quoted it will be necessary for you to notify our office if the operations of your company change or you expand the services you provide. Failure to do so could result in an uncovered claim. ~VOMPLETE INSURANCE INCORPORATED WHAT THE INSURANCE BUSINESS RELATIONSHIP ENTAILS Role of Your Insurance Broker As your insurance broker, Complete Insurance Inc. (CII) will become your representative and advocate in the worldwide insurance marketplace. It is our responsibility to understand your operations, suggest insurance coverage, negotiate your insurance contracts and place your insurance with the proper carriers. Additionally, CII assists in problem solving and will help you in the event a claim arises. In placing coverage, it is important to remember that insurance companies are profit- making institutions and that their premiums are set to properly evaluate and underwrite risks. While it is CII's responsibility to obtain insurance protection for you on favorable terms and conditions, accurate information and realistic goals are essential to successfully placing proper coverage. Purpose of Insurance The most important element of insurance selection is understanding what risks are being insured. Thoroughly identifying exposures and selecting proper coverage enables companies to avoid catastrophic loses and meet their financial goals. It is equally important to understand what risks policies will not cover. CII recommends carefully reading policies and thoroughly reviewing coverage with your CII broker. In California, it is particularly important to protect individual and company assets from claims and actions by others. CI! strongly recommends that only quality insurers be used for liability policies. Based on our experience, we also frequently recommend excess or umbrella policies to provide additional l/mits over primary liability coverage, and special policies to protect corporate officers and directors. Role of Your Insurance Carrier Your insurance carrier enters into a contract with you to accept the risk of certain specified losses within the terms and conditions of the insurance policy issued. The following pages detail CII's insurance proposals for your business operations. Your CII broker developed this proposal using the specifications you requested. Please carefully review the proposal to confmn that the coverages are presented accurately. Because these specifications may differ from those provided by other brokers, we suggest analysis of coverages and not merely policy costs. Should you have any questions, please call your broker at 949.263.0606. ~OMPLETE INSURANCE INCORPORATED FOR YOUR COMPANY'S INSURANCE NEEDS: COMPLETE INSURANCE INCORPORATED The importance of commercial insurance continues to rise as the risks of doing business change and grow. Incorporated in 1972, CII is a highly professional brokerage firm with the talent and depth of experience needed to meet the evolving challenges of business risk management. The broad array of insurers and insurance products through which financial losses can be reduced or avoided is constantly changing. We understand the difficulty faced by business owners and managers trying to stay abreast of these developments. We know that the maze of coverage forms and legalese contained in nearly all insurance policies can be perplexing. That is why we provide step-by-step services to quantify risks, simplify insurance rhetoric, and place value-driven insurance programs designed especially for your business. CII recognizes that risk management and insurance selection are fundamental to the financial security and continued success of its clients. By providing professional risk management and insurance services, CII enables client management teams to focus on other factors essential to the growth and success of their businesses. CH is adept at working with companies that face unique exposures and difficult contractual issues. Our brokers and support staff play a important role in helping clients understand how insurance coverage applies and when insurers must respond. Every member of our staff is dedicated to maintaining the superior technical and market skills vital to success in the fast- changing world of commercial insurance. MEETING THE LIABILITY CHALLENGE The liabilities assumed by employers and businesses in today's business world are numerous and require thorough consideration. These liabilities involve claims arising from: bodily injury, property damage, employment practices, activities as a corporate director or officer, product performance, professional or contractual obligations, pollution, employee benefits and a host of other exposures. Business professionals must have confidence in the insurance decisions they make. Our recommendations and service involve professional judgments as well as a defining relationship that goes beyond the initial purchase and premium calculations. CII clients can be assured that their insurance broker and carrier(s) will respond promptly and appropriately to a myriad of issues throughout the policy year. We are always mindful that our clients depend upon us for professional work- not guesswork! The insurance relationship requires that we make good initial recommendations in the placement of coverage and continue to act on behalf of our clients and insurers. Our defining element is integrity ... our most valued asset is the trust our clients place in us. ~OMPLETE INSURANCE INCORPORATED CII has earned a reputation among clients and insurers for meticulous attention to detail and for providing accurate information to all parties involved. As professional brokers, we know that insurance policies are legal contracts, which place obligations on both the purchaser and the insurer. Insurance cannot be a guessing game when it is so crucial to the financial security of those who purchase it. Our standard is to furnish accurate, useful information and advice in every phase of our services. To assure precision and reliability, we approach insurance problems in a step-by-step manner that produces dependable results for our clients. GROWING COMPANIES NEED COMPLETE INSURANCE Growing companies need the insights and meticulous approach to insurance issues that CI! offers. Our brokers and staff- all characterized by keen attention to detail- are experienced insurance professionals who know risk management and the insurance industry. We never lose sight of the fact that the quality of our work can be crucial at the time of a loss. We act quickly and decisively when needed. The challenge of insurance problems and meeting the needs of our clients are not simply chores for which we draw paychecks. Finding solutions for our clients is our passion - it's what makes our business interesting and worthwhile! With more than 1,400 clients, CII is recognized in the insurance industry as one of the leading independent brokerage fro'ns on the West Coast. We are licensed in 16 states and routinely place insurance programs for clients with multiple state or worldwide operations. Many of our client companies deal with particularly complex risk management obstacles, difficult product exposures and large construction projects. The confidence these companies have in CII demonstrates our capacity to successfully take on the most difficult insurance and risk issues. Prior to quoting risks, CII welcomes the opportunity to discuss market capabilities and target premiums with you. In doing so, we request assignment of markets preceding the submission of insurance applications. ~OMPLETE INSURANCE INCORPORATED SPECIAL INSURANCE PROGRAMS Although CII is known for its Indl~'dually Cra£ted Insurance Programs, the company has special expertise in a number of business categories for which it offers special or group insurance programs. In several of these business categories, CII's brokers have hands-on experience actually working in the business or have developed expertise through special training and knowledge. These categories inclUde: · Construction (general and specialty) · Banking · Technology companies (including Intemet Companies) · Information and communication systems · Intellectual property risks · Architects, Engineers, and Surveyors · Private schools and institutions · Auto dealers, suppliers and repair · Restaurant and hotel facilities · Wholesale food distribution · Crude oil production · Oil products transportation and distribution · Pipeline construction · Environmental remediation activities · Heavy manufacturing · Furniture manufacturing and woodworking · Logistics/Warehousing · Extended Care facilities for the elderly · Ambulance services · Large property The brokers and staff at Complete Insurance start with the premise that they can meet the needs of clients better than other insurance brokerage fro-ns. We look forward to working with you and your company! ~VOMPLETE INSURANCE INCORPORATED CLIENT SERVICES As your Broker, Richard W. Hyland and CII represent The City of Tustin in the world insurance markets. In this role, we will present your interests and coordinate with insurance company underwriters, billing and accounting departments, claims departments and other insurance professionals. Sherrill Barton, Account Administrator, will assist in all day-to-day matters relating to the insurance coverage that has been placed. To assure dependable results, our professional team approaches insurance problems in a step-by-step system. For The City of Tustin, we will: o Carefully review the nature of the financial risks and suggest the correct insurance or other protections which may be required. Please be aware that even the best insurance programs do not eliminate all of the risks. . Market your insurance aggressively among the more than eighty insurers with which CII places insurance. 3. Provide formal written proposals which explain the alternatives proposed. These presentations confirm underwriting information and show the basis for premium determinations. CII prepares the most comprehensive proposals available among insurance brokerage frans. 4. Review insurance contracts to assist in determining whether the proposed insurance program meets the identifiable needs posed by the business risks. 5. Identify the CII staff members who will be servicing your policy needs. These staff members are charged with providing professional and timely responses once insurance is placed for our clients. 6. Schedule periodic stewardship visits with you in order to review changes and special service needs. 7. Keep you abreast of insurance issues through CII's highly informative newsletters, P~'sk Manager and FinandalAdvisor, and other special topical mailings. Your broker, account administrator, and the talented team at CII tailor their services to meet your specific needs. Many special services are offered, including: Insurance Summaries At your written request, CII will prepare summaries of your insurance policies highlighting the coverage provided by the insurers. These are reference and discussion documents only. It should be noted that the actual policies issued by insurers define the coverage and set forth the terms, conditions and exclusions. Another goal of our service plan is to assist clients by preparation of insurance information documents, such as computerized vehicle fleet schedules or special accident reporting forms. ~OMPLETE INSURANCE INCORPORATED Certificates of Insurance CII will prepare Certificates of Insurance on your behalf for all parties doing business with the entities we have insured. Original certificates are mailed to the requesting certificate holder within 24 hours unless special provisions are required. Copies are provided to you for reference. Lists of each clients certificate holders are available to them upon request. Contract Review As an on-going service, CII will examine leases, contracts, covenants, conditions and restrictions, reservations of easements, etc., as they relate to insurance events or liabilities for clients. In doing so, we are providing advice with respect to insurance only. We are unable to provide legal opinions or interpretations. ~VOMPLETE INSURANCE INCORPORATED GENERAL RESPONSE POLICIES: WHY WRITTEN CONFIRMATIONS ARE ESSENTIAL IN INSURANCE TRANSACTIONS PLACING COVERAGE AND AMENDING POLICIES To the extent possible, CII creates a written record of all communications regarding the placement of coverage and amendments to insurance policies it places. Please do not attempt to amend policies or provide policy change requests through the voice mail system. Only written tecotdsptotect our clients and protect the insurers with whom we place coverage. Therefore, CII will request written confirmation of insurance program changes from our clients. If you require additional copies of our reporting forms, please contact us. Claims Response and Service One of the most important services provided by an insurance broker is the response to claims. We submit claims forms to insurers and assist our clients in completing reports. Please be aware that certain claims must be submitted within reporting periods specified by the policy. Contact us immediately if you or your employees are involved in an accident or receive a claim by a third party. V/orker's compensation c/aims must be reported direct/y to the insurer by the employer. Once the initial report of a claim is received by the broker or account administrator, the ongoing steps to closing a claim are managed by ClI's Claims Department. If you require information about a claim, please contact your account administrator. Written summaries of the status of client claims are available through CII's computerized claims status system. WE'RE ALWAYS AVAILABLE TO SERVE YOU! Monday through Friday 8:30 a.m. to 5:00 p.m. (PST) Phone (949) 263-0606 Main Fax (949) 263-0906 See the Service Team Page for specific e-mail and fax information In case of emergency call the rapid response numbers provided by your broker It's quick, it's easy, and it will make you feel better right away. Now clients of Complete Insurance Inc. (CII) can receive prompt and reliable answers to a variety of legal questions simply by calling our Legal Assistance Helpline. The Helpline is staffed during business hours Monday through Friday by the friendly and competent attorneys at the law firm of Allie & Schuster. We at CII view this complimentary service as one more way to help you find the answers you need. The attorneys at Allie & Schuster are prepared to help you with: · Concerns related to lease issues · Indemnity and hold harmless agreements · Claims issues including the obligation to defend and indemnify · Workers' Compensation discrimination claims · Contract review · Construction defect claims/issues · General business law · Employment labor issues · Wrongful termination, discrimination and harassment CII's Legal Assistance Helpline will provide quick answers to your basic questions on a complimentary basis. More complex issues may require in-depth study, requiring that a fee be charged. Give our Helpline a try--and cure your legal headaches today. Helpline hours are 8:30 am to 4:30 pm (PST) Monday through Friday. Be prepared to identify yourself as our client and give your company name when you call. Use of this service is reserved exclusively for our clientele. _OMI' TE INSURANCE INC. Professiona' ~d ~ B'7oke"~s of Commercia~l ~nsuranc-'-'"~ _ Newport Beach, California · Phone 949.263.0606 ° www. CompleteInsurance.com DOI#0437762 Now our clients can receive immediate, personalized counseling on questions related to employment procedures and law just by calling our new Human Resources Management Helpline. The Helpline is staffed by a team of Human Resources experts (The Human Resources Management Network) and is complimentary to our clients. Counselors are prepared to help you with: · Pre-employment practices · Harassment · Compensation and benefits · Inspection of personnel files · Pregnancy leave · Regulation compliance · Discipline and discharge · Employee relations · I-9 Forms · Disability leave In addition, you'll receive access to forms, postings and legal analyses by mail or fax. You'll get professional advice on the implementation of HR programs, policies, procedures, legal trends and management practices. And to keep you updated, callers will receive a newsletter containing current technical and le al information g o Using the helpline is simple--so give it a try today! Human Resources Management Helpline 800.945.3812 Available to our clients only. Be prepared to identij) yourself as our client and give your company name when you call. Then ask your toughest question! 1500 Quail Street · Newport Beach, CA 92660 ° 949.263.0606 www. Completelnsurance.com ~OMPLETE INSURANCE INCORPORATED ACCOUNT SERVICE TEAM Broker Richard W. Hyland Account Manager Sherrill Barton Claims Department Ingrid Seiver Employee Benefits Department Suzanne Purnell Gerry Magnaghi Backup Assistance Kristen Kang Barbara Burns Emergency Access Richard Hyland Voice: (949) 263-0606, ext. 16 Fax: (949) 809-2334 Email: RHyland~completeinsurance.com Voice: (949) 263-0606, ext. 19 Fax: (949) 809-2342 Email: SBarron~completeinsurance.com Voice: (949) 263-0606, ext. 54 Fax: (949) 809-2325 Email: ISeiver~completeinsurance.com Voice: (949) 263-0606, ext. 52 Email: SPurnell~completeinsurance.com Voice: (949) 263-0606, ext. 58 Email: GMagnaghi~completeinsurance.com Voice: Email: Voice: Email: (949) 263-0606, ext. 21 KKang~completeinsurance.com (949) 263-0606, ext 33 BBurns~completeinsurance.com Home: (949) 551-1250 ~OMPLETE INSURANCE INCORPORATED THE CITY OF TUSTIN POLLUTION AND REMEDIATION LEGAL LIABILITY POLICY CLAIMS MADE INSURER: BEST RATING: POLICY TERM: INDIAN HARBOR INSURANCE COMPANY A+XV To BE DETERMINED COVERAGE A - POLLUTION LEGAL LIABILITY (PLL) - THIRD PARTY LEGAL LIABILITY CLAIMS INCLUDING ON - SITE AND OFF-SITE BODILY INJURY AND PROPERTY DAMAGE. COVERAGE B - REMEDIATION LEGAL LIABILITY - REMEDIATION EXPENSE FROM POLLUTION CONDITIONS ON~ AT~ UNDER OR EMANATING FROM THE COVERED LOCATIONS. COVERAGE C - LEGAL DEFENSE EXPENSE - LEGAL DEFENSE EXPENSE ARISING FROM ON-SITE AND OFF-SITE LOSS OR IN CONNECTION WITH REMEDIATION EXPENSE. COVERAGE D - CONTINGENT TRANSPORTATION - PAYS FOR LOSS OR REMEDIATION EXPENSE AS A RESULT OF A CLAIM FROM POLLUTION CONDITIONS ARISING FROM THE INSURED~S PRODUCT/WASTE DURING THE COURSE OF TRANSPORTATION. THE POLICY RESPONDS TO LOSS~ REMEDIATION EXPENSE OR LEGAL DEFENSE EXPENSE IN EXCESS OF THE RETENTION AMOUNT. SB This insurance proposal and/or coverage summary does not alter, extend or amend the policy or policies as issued. The insurance is subject to actual policy conditions and exclusions. ~OMPLETE INSURANCE INCORPORATED POLICY FORM: COVERED LOCATIONS: POLLUTION AND REMEDIATION LEGAL LIABILITY 1) PORTION OF PARCEL #13951 (MAKENA PROPERTY, WHERE CONSTRUCTION IS CURRENTLY UNDERWAY FOR A STARBUCKS COFFEE SHOP) AND 2) PORTION OF PARCEL #13922 (PANKEY PROPERTY, WHERETHERE IS CURRENTLY A WENDYtS RESTAURANT) LIMITS OF LIABILITY: OPTION A) $5,000,000 PER OCCURRENCE AND $5,000,000 IN THE AGGREGATE. OPTION B) $ $10,000,000 PER OCCURRENCE AND $10,000,000 IN THE AGGREGATE SELF INSURED RETENTION: $100,000 PER OCCURRENCE POLICY TERM OPTION- FIVE ($) YEARS OPTION - TEN (10) YEARS 1. 2. Limit of Liability - Each Loss, $5,000,000 $10,000,000 Remediafion Expense or Legal Defense Expense Limit of Liability - total All Losses Remediafion Expenses or Legal Defense Expenses Retention $100,000/Occ $100,000/Occ Policy Premium - 5 Years $81,400' $114,136' Policy Premium - 10 Years $146,692' $205,686* * Plus Applicable Taxes and Fees ~ 3.25% PREMIUMS This insurance proposal and/or coverage summary does not alter, extend or amend the policy or policies as issued. The insurance is subject to actual policy conditions and exclusions. ~OMPLETE INsuRANcE INCORPORATED Premium Indication Notes: · This indication is intended to be preliminary, subject to receipt of review of further engineering data. · This premium indication is based on the Pankey and Makena parcels being sold "as is". · The property will not be acquired by the City of Tustin through "eminent domain" fight. · An Easement agreement does not exist as respects the acquisition of these Covered Locations. · This coverage is based on the Wendy's Restaurant and Starbucks Coffee Shop not being additional insureds. · It is XL Environmental's understanding that there is no indemnification agreements between current owners of Wendy's Restaurant and the Starbucks Coffee Shop and the prior gasoline station retailers on these same sites, separate from the parcels noted above. Nor, is there, or will there, be any indemnification between the Wendy's Restaurant and the Starbucks Coffee Shop and the City of Tustin for purchase of these parcels of land for the Redhill Avenue Road Widening Project. · Coverage is intended to apply only to pollution conditions including on-site and off-site remediation expense, third party on-site and off-site bodily injury and property damage. · Coverage is not intended for known pollution conditions or remediation of fuel constituents at the covered locations. · CoVerage is not intended for pre-existing pollution conditions from the Wendy's Restaurant, the Starbucks Coffee Shop, or its prior owners. · Coverage does not include ongoing operations performed either by the Wendy's Restaurant, the Starbucks Coffee Shop. · Coverage is not intended to cover any pollution conditions arising from the operations performed by the Contractors during the Construction Project, which shall include the actual Redhill Avenue road widening. · A retroactive date of policy inception will apply for this project. · The final quotation will be valid for thirty (30) days at which time XL Environmental has the right to re-evaluate the proposed program and premiums. · A completed PARLL application would be needed prior to binding. To develop a more formal quotations XL Environmental would need the following information: · Signed Final Copy of the Purchase Agreement and Grant Deed executed by the Property Owners(s) and the City of Tustin, or as feasible the Draft Purchase Agreement. · Written documentation that there are no prior indemnification agreements between the owners of the Wendy's Restaurant and the Starbucks Coffee Shop and the prior respective retail gasoline station owners. · Legal descriptions of Parcels comprising the Covered Locations. · Final Indemnification Agreements related to the "southern parcels". · Written documentation that the City of Tustin has not waived any of its subrogation fights against any third parties. · Documentation that the City of Tustin has waived its rights of subrogation against the owner of the Wendy's and Starbucks. · Confirmation of the timeframe of the Construction Project. This insurance proposal md/or coverage summary does not alter, extend or amend the policy or policies as issued. The insurance is subject to actual policy conditions md exclusions. ~OMPLETE INSURANCE INCORPORATED THE CITY OF TUSTIN PREMIUM SUMMARY Pollution and Remediation Legal Liability Policy (Five Years) $5,000,000 per occurrence and $5,000,000 in the Aggregate Additional Options Detailed in Proposal $81,400 Subtotals: Taxes and Fees: Total Premium: $81,400 $ 2,646 $84,046 ~OMPLETE INSURANCE INCORPORATED BESTtS RATING CII attempts to avoid placing insurance with any insurance company of questionable financial or managerial integrity. We use information obtained by the A.M. Best Company and other sources to monitor the character of the various companies. The A.M. Best Company evaluates insurance companies on the basis of general management and assigns one of nine ratings: A+ + and A+ - Superior C and C- = A and A- - Excellent D - B++ and B+ - Very Good E - B and B- = Fair F = C++ and C+ - Marginal S = Weak Poor Under Regulatory Supervision In Liquidation Rating Suspended Also considered by A.M. Best Company is the financial size of insurance companies to which 15 categories are assigned: (In Thousands of Dollars) Class I Up to $1,000. Class II 1,000. to 2,000. Class III 2,000. to 5,000. Class IV 5,000. to 10,000. Class V 10,000. to 25,000. Class VI 25,000. to 50,000. Class VII 50,000. to 100,000. Class VIII 100,000. to 250,000. Class IX 250,000. to 500,000. Class X 500,000. to 750,000. Class XI 750,000. to 1,000,000. Class XII 1,000,000. to 1,250,000. Class XIII 1,250,000. to 1,500,000. Class XIV 1,500,000. to 2,000,000. Class XV 2,000,000. and above The size category is based on reported policyholders surplus plus conditional or technical reserve funds such as mandatory securities valuation reserve, other investment and operating contingency funds and miscellaneous voluntary reserves reported as liabilities. To make a clear distinction between a company's Best's Rating and its Financial Size Category (FCS), the FCS is represented by Roman numerals ranging from Class I (the smallest) to Class XV (the largest). This insurance proposal and/or coverage summary does not alter, extend or amend the policy or policies as issued. The insurance is subject to actual policy conditions and exclusions.