ML19347D299

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Annual Financial Rept for FY80.Related Info Encl
ML19347D299
Person / Time
Site: San Onofre  Southern California Edison icon.png
Issue date: 06/30/1980
From:
ANAHEIM, CA
To:
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ML13302A498 List:
References
NUDOCS 8103110773
Download: ML19347D299 (175)
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ANNUAL b FINANCIAL REPORT JLNE 30,1980 810811O N

n. ) DED la CITY OF ANAHEIM, CALIFORNIA B ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30.198C4 0 i' m w l ~ ~ [ i 77 LE-% j f- -l 1 3* ;i *, s. ,j' .~

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r_E. g '. C. <3 ~ Prepared Dy Department of Finance George P Ferrone Director of Finance

CITY OF ANAHEIM ANNUAL FINANCIAL REPORT r TABLE OF CONTENTS JUNE 30,1980 INTRODUCTORY SECTION Page ,1 'l j LGtter of Transmittal i-iv MFOA Certificate of Conformance v CSMFO Certificate of Award for Meritorious Financial Reporting vi Organi:ation Chart vii Administrative Personnel viii R; port on Significant Accomplishments 1979-80 ix-xii FINANCIAL SECTION Rcport of Independent Accountants 1 ] GENERAL PURPOSE FINANCIAL STATEMENTS Combined Balance Sheet-All Fund Types and Account Groups 4 Combined Statement of Revenue, Expenditures and Changes in Fund Balances-6 All Govemmental Fund Types Statement of Revenue. Expenditures and Changes in Fund Balances (Deficit)- 8 l Budget and Actual-General and Special Revenue Fund Types Combined Statement of Revenue, Expenses and Changes in Retained Eamings 10 (Deficit)/ Fund Balance-All Proprietary Fund Types and Similar Trust Fund 1 Combined Statement of Changes in Financial Position-All Proprietary Fund Types 12 and Similar Trust Fund Combining Balance Sheet-All Enterprise Funds 16 Combining Statement of Revenue, Expenses and Changes in Retained Earnings 18 (Deficits)-All Enterprise Funds Combining Statement of Changes in Financial Position-All Enterprise Funds 20 Notes to the Financial Statements 23 SUPPLEMENTARY INFORMATION Balance Sheet-General Fund 33 Statement of Revenue, Expenditures and Changes in Fund Balance-General Fund 34 Combining Balance Shect-All Special Revenue Funds 35 Combining Statement of Revenue, Expenditures and Changes in Fund Balances 36 (Deficit)-All Special Revenue Funds (Continued)

a CITY OF ANAHEIM ANNUAL FINANCIAL REPORT TABLE OF CONTENTS JUNE 30,1980 (continued) Statement of Revenue. Expenditures and Changes in Fund Balances (Deficits)- 37 Budget and Actual-Major Special Revenue Funds Balance Sheet-Debt Service Fund 39 Statement of Revenue. Expenditures and Changes in Fund Balance-Debt 40 Service Fund Combining Balance Sheet-All Capital Projects Funds 41 Combining Statement of Revenue. Expenditures and Change in Fund Balances 42 (Deficits)-All Capital Projects Funds Combining Balance Deet-All intemal Service Funds 43 [ Combining Statement of Revenue. Expenses and Changes in Retained Eamings 44 (Deficits)-All Intemal Service Funds Combining Statement of Changes in Financial Position-All Intemal Service Funds 45 Combining Balance Sheet-All Trust and Agency Funds 47 i Combining Statement of Changes in Assets and Liabihties-All Agency Funds 48 Statement of General Fixed Assets 49 Statement of Changes in General Fixed Assets 50 Statement of General Long-term Debt 51 Statement of Changes in General Long-term Debt 52 Combined Schedule of Investments-All Funds 53 STATISTICAL SECTION Schedule of Insurance in Force 56 ' General Govemmental Expenditures by Function Last Ten Fiscal Years 58 General Revenues by Source Last Ten Fiscal Years 58 Assessed and Estimated Actual Values of All City Property Last Ten Fiscal Years 59 Current Tax Levies and Tax Collections Last Ten Fiscal Years 59 Schedule of Direct and Overlapping Banded Debt 60 Schedule of Net Debt Ra30s 61 Statement of Legal Debt Margin 61 Prope:ty Tax Rates-All Overlapping Govemments Last Ten Fiscal Years 62 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General 62 Expenditures Last Ten Fiscal Years Schedule of Revenue Bond Coverage-Water Utility Fund 63 Schedule of Reven'se Bond Coverage-Electric Utihty Fund 63 j~ Demographic Statistics 64 Construction Activity Last Ten Fiscal Years 65 Principal Taxpayers 65 Miscellaneous StatisticalInformation 66

vi m O V ( O= ~ b { CITYOF ANAHEIM, CALIFORNIA OfD Finance Department .-U November 4,1980 Honorable Mayor and City Council City of Anaheim Anaheim, California In accordance with the Charter of the City of Anaheim,I am submitting the Annual Financial Report for the year ended June 30,1980. This report format is similar to last year's. For the first time, an additional " Report on Significant Accomplishmeats 1979-80"is also included discussing some of the major activities and accomplishments of various City departments and programs. This supplemental report begins on page ix. The organization of the Financial Report follows the guidelines set forth by the Municipal Finance Officers Association of the United States and Canada and California Society of Municipal Finance Officers. It is divided into three sections:

1. Introductory section -letter of transmittal; prior year awards; City organization chart; Report on Significant

[ Accomplishments 1979-80, prepared by the City Manager's Office.

2. Financial section - combined financial statements followed by supplementary statements by individual fund and fund types.
3. Statistical section - pertinent financial and non-financial data that presents historical trends and other informa-tion about the City.

This Annual Financial Report is the fifth in a row with an unqualified opinion from the City's independent certified public accountants. On May 23,1980, the June 30,1979 report was awarded the highly coveted Certificate of Conformance in Financial Reporting, awarded by the Municipal Finance Officers Association. The 1979 report was also awarded, on February 8,1980, the Certificate of Award for Meritorious Finant.ai Reporting by the California Society of Municipal Finance Oflicers. The 1980 report will be submitted to both award programs again this year. FINANCIAL HIGHl.IGHTS OF 1979-80 The year 1979-80 saw many changes in the City, changes that strengthened its already sound financial foundation. The new Anaheim Civic Center opened its doors on June 2,1980, a major milestone in the downtown redevelopment effort. The Civic Center will be the focal point for additional development and neighborhood preservation in the surrounding area and will result in significant economic revitalization. In addition, consolidation of City departments in one new Civic Center structure has allowed the City to economize on the cost of general government and improve productivity. It should clso be noted that the structure is fully paid for, at a cost of approximately $12 million, as it was constructed primarily from Redevelopment and Federal Revenue Sharing funds. Finally, as part of the relocation effort, the City acquired (through a lease-purchase arrangement), its own private telephone system at a significant annual savings over previous phone service costs. The $6.2 million Anaheim Town Center, a regional shopping center adjacent to the new Civic Center, took shape in I 197940. The first stores in this commercial complex opened in October 1980, bringing to downtown Anaheim new retail facilities to serve the surrounding residential and commercial areas. Fiscal year 1979-80 also saw Anaheim Stadium expanded from 43,500 seats to approximately 70,000 to accommodate the los Angeles Rams, who opened their season, on schedule, in the Stadium August 11,1980. The arrival of the Rams to Orange County not only has already resulted in a net financial benefit to the City in the area of $1.5 million per year for + the first 10 years ias a result of football-related revenues), but also sets in motion the future commercial development of the acreage surrounding the Stadium facility. This development will bring significant added revenues to the City. The project, to be developed by Anaheim Stadium Associates, a general partnership, has recently been called "the most significant" economic development project in the State. Also worth noting is the City's spectacular success in providing a new scoreboard for the Stadium facility. Through a ten-year lease-purchase agreement with the Bank of America, the City obtained the $2.7 million financing to construct the fully-computerized board. At the same time, the City has obtained 10-year advertising agreements with eight major corporations which will more than twice pay the annual operating and financing costs of the board. [ Civic Center,200 S. Anaheim Blvd. - P. O. Box 3222, Anaheim, CA. 92803

Significant events impacting City finances also occurred at and around the Anaheim Convention Center this past year. Plans for the second expansion of the Center were finalized Anaheim's new 750-room Marriott Hotel located across the street from the Convention Center, took shape in FY 1979-80. with completten scheduled in March 1981. On May 6,1980, the City also entered mto an exclusive negotiation agreement with Hilton Hotels Corporation 'Wrather Corporation for the construction of a 1.000-room hotel adjacent to the Center at an estimated cost of $115 milhon. All these events will have a very favorable impact on sales tax and room tax revenues for the City. In the area of financing, the City went to the bond market in February 1980. issuing $7.350.000 in Water Revenue Bonds for the purpose of financing the acquisition and construction of certain additions to and improvements of the City's water j system. The fact that the City was able to sell the bonds at the relatively low efTective interest rate of 8 64019 at a time when other public agencies were unable to sell bonds or were payinghigher interest rates is indicative of the financial a strength of the City. The City's financial position was also boosted this past year from its active cash investment program, which netted l approximately $4 million greater than 1979-80 budget estimates as a result of the very high interest rates earned on 3 investments during the Sprirg of 1980. The City earned a record 13.6209 on its invested cash balances in the month of May,1980. Internally, the City implemented its new Accounts Payable and On-Line Budget systems during 1979-80, thus adding two major components to its family of modern integrated fiscal information systems. The City has one of the finest financial reporting systems available to municipalities. The system supports program budgeting, long range forecasting, cost accounting and management-by-objectives concepts which the City employs in all its operations. As a final note, the City experien ed, for the first time in 1979-80, virtually no increase over the prior year in its outstanding workers' compensation claims. This is due in large part to the City's effective Risk Management Program, especially in the area of worker safety. For further discussion of these events and others, please refer to the Report on Significant Accomplishments 1979-80 following this letter. s( FINANCIAL STATEMENT ANALYSIS y The following page illustrates, in tabular and graphic form, the City's financial performance for 1979-80. Proposition 13 again had a minimal impact on the City's overall operating financial position. As in 1978-79, the City's reliance on property tax revenues remained low. Property tax revenue was $5.5 million, only 89 of general governmental revenues. This is a decline from 99 in 1978-79. -a The performance of the governmental fund types (General Fund, Special Revenue funds. Debt Service Fund and Capital Projects funds) for 1979-80 can be described by: 1. A net decrease in fund balances of $0.6 million. (This is an improvement of $6.2 million over the prior year decrease of $6.8 million.) The General Fund had an increase of about $0.7 million in its fund balance. Special Revenue and Debt Service funds increased Sir fund balances by a total of $1 million. Capital Projects fund balances experienced a programmed decline of $2.3 million as a result of continued heavy Civic Center and other downtown redevelopment expenditures. 2. A strengthened revenue base. All categories of general governmental revenues showed increases over the prior year. Especially noteworthy was a 17Q increase in sales tax revenue and a 159 increase in charges for services revenue. The large increase in intergovernmental revenues went primarily toward capital improvements in the downtown area and throughout the City. l L 3. Cost control. General government and non-departmental expenditures in the governmental fund types declined 16% over the prior year, in the fare of double-digit inflation! A significant reason for this decline was a $1.5 million decrease in workers' compensation claims expenditures compared to the prior year. The major increases ki in spending over 1978-79 occurred in the area of public works (17% increase) as a result of our commitment to L expand and improve the capital facilities of the City. Public safety spending was also up 129. a Proprietary fund types (primarily Enterprise and Internal Service funds), again contributed significant financial resources to retained equity as in the previous year. In 1979-80, $7.9 million was the net contribution to retained equity vs. $8.0 million in 1978-79. l Enterprise funds (water and electric utilities, Anaheim Stadium, Anaheim Convention Center, and the two municipal golf courses) provided $8.5 million to retained equity. The electric utility contributed approximately $8.7 million to equity itself, due to retail rate action taken in June,1979 and to lower than expected energy costs charged by our major wholesale supplier of electric power. The lower than expected energy costs were caused by plentiful alternative fuel sources other than oil (gas, hydroelectric power) during the fiscal year. The water utility contributed $966.000 to equity, a 19G improvement over the prior year's $813,000. Other enterprise operations combined for a $4.4 million net income, but after transfers to other funds, resulted in a net $1.2 million reduction of retained equity. 11

CITY OF ANAHEI51 FINANCIAL SU3131 ARY June 30,1980 l Summary Balance Sheet-All Fund Types and Account Group-ein millions > Governmental Proprietary Fiduciary Total E Fund Fund Fund Account d Types Types Type Groups 1980 1979 Assets $27.7 $236.1 $7.6 $40.4 _$311.6, $25- -.7 6 k Liabilities $15.3 $121.9 $7.6 54.6 $149 4 $136 4 ,5 Equity 12.4 114.2 35.8 162.4 149.2 $27._7 $236.1 $7.6 $40.4 $311.8 $257. - - _6 Summary Operating Statement-Governmental and Proprietary Fund Types sin millions > e-l Governmental Proprietary 1980 1979 1980 1979 Revenue $ 68.5 5 58.6 $113.3 $ 91.0 Expenditures / Expense 77.7 71.7 102.9 54 6 Net (S.9 (13.li 10.4 6.4 Non-operating income 6.0 3.5 Transfers from iton other funds S.3 6.3 i8.5 '6.5' Net to equity before extraordinary item 80.6, i6.Si 7.9 3.7 Extraordinary item-gain on refunding of Stadium bonds 4.3 Net to equity <$ 0.6i 6S 5 7.9 $ S}0 TOTAL CITY REVENUE BY SOURCE

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Internal Service funds iData Processing Duplicating and Printing, and Equipment Supply) experienced a difricult year. Except for the Duplicating and Printing Fund which, in its first year of operation, had a $17,000 net income. Internal Service funds showed net losses for the year. On a combining basis, retained earnings are approximately $600.000 h than at June 30.1979. Increased charges to City departments should improve these funds' financial position in future years. The City's financial position at June 30,1980, as characterized by its balance sheet, can be summarized as very strong. Total assets have increased from $288 million to $312 million, primarily due to the expansion of capital facihties and increased restricted cash resulting from the issuance of 1980 Water Revenue bonds. Liabilities are up $11 milhon. [ primarily as a result of the same bond issue and retentions payable on the Civic Center and other construction contracts. E Fund equity is up $13 million over 1978 79. In comparison, there wasjust a $7.7 million increase in combined fund equity from 1977-78 to 1978-79. OUTLOOK FOR 1980-81 AND BEYOND As already discussed, major events occurred in Anaheim in 1979-80 which will have an impact on City finances for many years to come. The economic development picture remains very bright for the City. The Anaheim Financial Center, a $400 million commercial and office development in the downtown redevelopment area, will soon begin to take shape, as will Anaheim's new 2000-seat community theater, located adjacent to the Civic Center. Continuing development of the Santa Ana Canyon area of the City will bring new residents to the City along with accompanying commercial and retail growth. A major regional shopping center is currently in the planning stages for this area. For capital requirements associated with non-enterprise or private development, the City will be taking innovative steps to assure that these needs are met as g well. The coming years will also see Anaheim enter the electric power generation business. The City sold $84 million of Electric Revenue Bonds in October 1980 to acquire a 1.669 ownership interest in the San Onofre Nuclear Generating Station, Units 2 and 3. In June 1980, Anaheim voters overwhelmingly endorsed the City's contracting for a 109 share of the output of the coal-fuel Intermountain Power Project in central Utah. The City is also exploring other alternatives to continued purchase of electric energy generated with imported fuel oil. i,. In 1980-81, the City will make final payments on three of its six outstanding general obligation bond issues, issued in the early 1960's, and on its 1976 subordinated electric revenue bonds. Future issuance of general obligation debt remains precluded, as a result of the defeat of Proposition 4 on the November 4,1980 ballot. The Finance Director alone could not achieve the financial results presented herein. A fine staffof capable accountants led by Irwin Bornstein, Assistant Finance Director, made this financial presentation possible. Appreciation is also expressed to Mayor John Seymour; Mayor Pro Tem E. Llewellyn Overholt, Jr.; William O. Talley, City Manager and William T. Hopkins, Assistant City Manager, for their significant contributions as members of the Audit Committee. I wish to express special appreciation to the City Manager and the executive staff of the City for their strong support. Their l leadership has made possible the implementation of these important and innovative concepts in fiscal management by the r; l City of Anaheim. q Respectfully submitted, r l (dy George Pl Ferrone Director of Finance l u i l i i I l l lv l

Certi:!ica:e i o:! Con: ormance is in rinancia.

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Reaor:ing Presented to City of Ananeim, California 1 Forits Comprehensive Annual Financial Report for the Fiscal Year Ended June 30.1979 A Cert:ficate of Conformance in Financial Report ng is presented by the MunicipalFinance Officers Association of the United States and Canada to govemmental un:ts and pubbe employee retirement systems whose comprehensive annaal financial reports (CAFR's) are judged to substantially conform to program standards.

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J 0 "E h President ' a?ll% R sw $ u% ma h Execu rector The Municipal Finance Offcers Association of the United States and Canada (MFOA) awarded a Certificate of Conformance ? in Finarcal Reporting to the City of Anaheim for our Annual Financal Report for the fiscal year ended June 30,1979. In order to be awarded a Cert;ficate of Conformance, a govemmental unit must publish an easdy readable and efficientiy organized comprehensive Annual Financial Report, whose contents conform to industry standards. Such reports must sat:sfy both generally accepted accounting pnnopies and applicable legal requirements. A Certificate of Conformance is vahd for a penod of one year only. We beleve our current report continues to conform to Certifcate of Conformance Program requirements, and we are submrtting it to MFOA to determine its ehg:bdity for anotner certificate. V

I CALIFORNIA SOCIETY OF MUNICIPAL FINANCE OFFICERS DEDICATED TO THE PROFESSIONAL ADVANCEMENT OF MUNICIPAL FINANCE ADMINISTRATION l ,l I Certiftcate of Award l I FOR l MERITORIOUS FINANCIAL REPORTING l i PRESENTED TO Tile 4 ty ( SW) i This certificate is issued in recognition of meeting professional standards and criteria in reporting which reflect i a high level of quality in the annual financial statements and in the underlying accounting system from which the reports were prepared for the fiscal year 1976 /1979. CERTIFIED AND RECORDED: Wa& N d,i-:a w < ~ ~.......,,.... _ftGruaryD,14Bo feCr sagjB: 1900 ~. ca u .r

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i I . '] b n 'ti iLJ ADMINISTRATIVE PERSONNEL City Manager.............................................................. William O. Talley Assistant City Manager...................................................... William T. Hopkins Deputy City Manager (Parks. Recreation and Community Services Director)....... ..... James D. Ruth City Attomey............................. ......................... William P. Hopkins City Clerk.................................................................. Lind a D. R oberts City Treasurer.................................................................. Glenn E. Stewart Data Processing Director............................... .......... Philip M. Grammatica Finance Directc r............................................. ............ George P. Ferrone Fire C hie f................................................................... Bob D. Simpson Human P.ssources Director... ........................ Garry O. McRae Library Director............................................................. William G. G ri*fith 7-Planning Director............................................................ Ronald L. Thompson L Police C hie f.......................................................... ........ George P. Tielsch Public Works Executive Director................................................... Thomton E. Piersall Stadium, Convention Center and Golf Courses General Manager....................... Thomas F. Liegler Redevelopment Director............................................................ Norman J. Priest Utilities General Manager...................................................... Gordon W. Hoyt r vill

CITY OF ANAHEIM It has often been said that Anaheim is a " city of vision, a place where g dreams really do come true!" Founded by a group of 50 German l immigrante who wished to start a SIGNIFICANT community to grow grapes'and produce wine in 1857, Anaheim's HIGHLIGHTS history has reflected a series of AND dreams, visions and hopes...nearly all of which can be seen today in the ACCOMPL/SHMENTS 1 rgest city in orange County and the eighth most populated town m l cI 1979-80 California. i Anaheim is a Charter City which operates under the Council-Manager form of government. The five Coun-fx cil members, including one who t /. I$jl! l serves as Mayor, appoint a City

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( g Manager to carry out the policies set b h:yys by the Council and administer the n '.-QMZ:r operations of the City. Anaheim's [

q 'j current population is 211,700 resi-

-y d' dents. The City covers 42 square ~ miles. Another 15 million tourists ~ i i and convention delegates annually [ :: f;;: j h ~ l visit this Southern California com-mumty. 1,, I The City was recently characterized f by a local newspaper as "the Mouse x-f that Roared." While one of its most J famous residents, Mickey Mouse, l l i IA celebrated the 25th anniversary of l Disneyland this year, Anaheim has g3 truly been a city which is unafcaid of l ( J,. M A h -yj7t challenges and like a mighty mouse, .-.a.-_ has pressed forward with great The Anaheim Civic Center enthusiasm. IX

l Here are some of the high points of this past year's achievements in Anaheim which typify the City's progress. The City occupied a new Civic Center, the first in over 55 years; put finishing touches on a S29 million expansion improvement at Anaheim Stadium; broke ground for a fifth library branch; neared completion on $8 million in public improvements in the downtown redevelopment program and began construction of a 120.000 square foot community shopping center, an 86,000 square foot combined space for two office buildings, a new J savings and loan branch and considerable neighborhood preservation programs; insti-g tuted energy conservation programs, within government operations as well as through the City-owned electric and water utility; started negotiations for a 1,000-room four-star hotel on City owned land adjacent to the Anaheim Convention Center, and completed plans for a 150,000 square foot expansion of this busy facilrty; and completed seven Generai Plan { amendments to address land use and circulation, including comprehensive planning on a new one million square foot regional shopping center. t Anaheim is a well planned anc calanced community. It is home for more than 600 diversified industries producing goods for use by people throughout the world. Anaheim offers family and recreational entertainment from Disneyland, the Anaheim Convention Center and from Anaheim Stadium (home of the Califomia Angels, the California Surf and L the Los Angeles Rams). Its police can reach the scene of serious crimes or life-threatening emergencies within an average of threa minutes of the time of call. Emergency fire n. responses speed to first-alarm calls in all areas of the City within four minutes. Teams of [' fire fighter paramedics last year ansNered more than 8,000 calls for emergency medical care. The City's water system averaged a daily gross distribution of 51.6 million gallons from its total storage capacity of 993 million gallons. The municipal electric system b,.,, distributed power to 82,571 customers over 1,211 miles of circuit lines. Anaheim's Wi nationally acclaimed parks and its recreational programs catered to all ages with 493 acres of parkland, featuring 48 community parks and playgrounds and seven swimming pools. }' { i i A '. - ~,

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M ~g ? .Q lQ n.xy i 6i b ,.i t i.. wM}{$$ 7 k Q i Canyon Hills Library groundbreaking Anaheim's public library system with four branches, a bookmobile and a permanent collection of nearly a half million volumes were availat'e to patrons. In addition, there were regular programs for children, a local history rre. 2nd a depository for Watt Disney Productions materials. Two municipal 18-hole golf courses offered challenging recrea-tional activity for 159,844 golfers last year. Finally, a public works prograrn maintained 569 miles of city streets and the sanitation system which extended over 453 miles. x

I INNOVATION ABOUNDS Program highlights include the implementation this past year of an Accounts Payable System to cugment an existing Municipal Automated Financial Information System. This computerized recounting tool improves the City's ability to identify expenses on an ongoing basis and more i L realistically projects the needed information to management, on a more timely basis. The On-Line Budget System, also initiated last year, saves preparation time and supports the program budget concept which is used in Anaheim's annual Resource Allocation Plan. Two years ago, a comprehensive risk management program was started. Through the conclusion of the June 30,1980 period, savings have been calculated at $2,394,000. Other savings were seen in [ workers' compensation, industrial accident leave and in reduction of safety member disability E retirements. New safety programs were instituted with a dramatic city-wide reduction of 46 percent l in the number oflost man days from work, per million man-hours of exposure. The number ofinjury claims likewise dropped. A significant outreach of the Anaheim Redevelopment Agency has been the preparation for I neighborhood restoration and housing efforts. The program will extend over the next several years cnd will aid in preserving and restoring existing neighborhoods to the greatest degree possible. 1 Working with each individual owner and property neighbor, the primary concern is to retain local l character and have the preservation effort renect the desires of the residents as closely as possible. {' The housing function serves a current allocation of 1,538 Section 8 units for elderly and low income residents and administers assistance payments for 99 units in the recently completed senior citizen l Village Center Apartments. Anaheim has been awarded 114 moderate rehabilitation units, with coordination work underway with eligible landlords. Another 40 ' bonus' units in Section 8 were cwarded for new construction. C:ntinued demand for library services is apparent as 965,000 items were circulated this past year. An innovative computerind circulation control system became operational with such success that three neighboring cities have joined Anaheim in using the program. The system allows for instant identification of patrons as well as a status check on previous borrowing experience and unpaid fines. It also speeds placement of extremely popular books from reserved waiting lists. a One of the most exissive development projects in the State was firmed up with the signing of the Ground Lease Agreement at the Anaheim Stadium. Ninety-five acres surrounding the Stadium will be developed into a $200 million major commercial ofTice complex with Cabot, Cabot & Forbes in association with the Rosenbloom Family Fund. The total project is slated to be completed in 1993. i Training of fire fighters is a costly and difIicult task for most agencies. Anaheim used a joint powers agreement with two neighboring cities to construct a modern training tower and classroom facility. J Anaheim's fire suppression personnel received 28,000 hours of training this past year at the new facility. In addition, a multi-city communications center was included and emergency alarms are now dispatched for any city within 45 seconds from the time the call is received. h A RECOGNIZED PROGRAM AND MANAGEMENT TEAM Anaheim's Parks and Recreation Department was cited in June by the United States Department of Interior with the " Outdoor Achievement Award" for excellence in programming and management. i-It was one of several awards and honors bestowed on Anaheim during the year attesting to an outstanding management team. The Finance Department was given the " Meritorious Award" from the California Society of Municipal Finance Officers and the " Certificate of Conformance" from the Municipal Finance OfIicers Association, both for financial reporting excellence. The Automobile Club of Southern California issued a special citation to Anaheim for " Outstanding Pedestrain Safety Programs" and the Public Works Department was given a certificate for " Outstanding Service to Minority Enterprises" by the East Los Angeles Business Development Center. XI

l i The General h!anager of the City's Stadium-Convention Center and Golf Department was hailed as 1 the 1980 A1.mager of the Year by the Society for the Advancement of Alanagement. and the Executive Director of Public Works was selected as one of the " Top Ten Public Works Oflicials"in the United States by the American Public Works Associati< - I } Numerous other members of Anaheim's management team were appointed to ranking committees I and to leadership roles in various professional organizations and local service clubs. Future developments on the Anaheim h I horizon can be seen in extensive negotiations occurring in the redevel-i opment area, where a 12-acre disposi-E tion agreement is nearing completion k U for a major and complex development f ~pg., i d that will melude m excess of a milhon r-square feet of high-rise office and l commercial structures, plus 6,000 . 93 parking spaces in underground ga-mg y, rages, major restaurants and other / 1 ~ ;::G amenities fitting the city center of one // w? of California's important urban areas. 3 Energy conservation is another major s watch word today, with programs underway among City employees, -i energy audits being conducted for l business and industry, and testing of d[l innovative devices such as a vacuum gauge for City vehicles which assists the driver in fuel conservation; a more compact fuel-efficient vehicle fleet; _ ( reduced lighting at public facilities; l ; and more efficient street lighting in the community. Anaheim is also embarking on power generation proj-ects to assure electrical power for future generations. This is with the 3 strong endorsement of the citizens, e v l ..ho recently passed an advisory issue I by three to-one for the participation in a coal-fired plant being built in Utah. Restoring Anaheim for the future a Planning for an expanding community is important as well. With construction underway for a new branch library, fire de?artment officials have completed plans for the relocation of a station in the rapidly developing hill and canyon area of Anaheim, plus the design and site determination for a L' tenth fire station to be funded by a major shopping mall developer in the area. h' IDEALS, DREAMS AND HARD FACTS Yes, the City of Anaheim is a place where visions and dreams do come true...a city rich in its cultural heritage.and dedicated to meeting the needs ofits citizens and guests. I.I Anaheim shares in the dedication message of Disneyland, where creator and vision-extraordinaire l Walt Disney proclaimed, "To all who come to this happy place, welcome!...here age relives fond memories of the past and here youth may savor the challenge and promise of the future. Disneyland ~ is dedicated to the ideals, the dreams and the hard facts that have created America..with the hope that it will be a source ofjoy and inspiration to all the world." For the citizens and visitors to Anaheim, we too, accept the challenges of today while we strive for a better tomorrow! Xl1

I .Flee ..,~ - c,~, - - 8 fateraouse &' C, cs NEWPOAT GE ACM CALJCA% A 926t.0 i Ie E The Honorable City Council City of Anaheim, California In our opinion, the general purpose financial statements listed in the foregoing table of contents present fairly the financial position of the City of Anaheim, California at June 30,1980, and the results ofits operations and the changes in financial position ofits proprietary fund types for the year then ended, in conformity with generally accepted accounting principles which, except for the change, with which we concur, in the method of accounting for interest costs as described in Note 2 to the financial statements, have been applied on a basis consistent with that of the preceding year. Our q examination of these statements was made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. Our examination was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The supplementary information listed in the foregoing table of contents is presented for purposes of additional analysis and is not a required part of the general purpose financial statements of the City of Anaheim, California. The information has been subjected to the auditing procedures applied in the examination 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 s;atistical information lis'ted in the foregoing table of contents was not examined by us and, accordingly, we do not express an opinion thereon. V d 1 t

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CITY OF ANAHEIM COMBINED BALANCE SHEET-ALL FUND TYPES AND ACCOUNT GROUPS . LUNE 30,1980 (in thousands) Peoprietary Fiduciary Governmental Fund Types Fund Types Fund Type Accoun_t Groups Total Trust General General (Memorandum Special Debt Capital Internal and Fixed Long-Term only) General Revenue Service Projects Enterprise Service Agency Assets Debt 1980 1979 ASSETS Cash and investments $ 9,303 $3,0810 $545 $4,992 $ 16,073 $ 22 $7,553 $ 41,568 $ 40,786 Accounts receivable, nel 1,313 2,231 24 2,017 8,262 67 13,914 9,793 Accrued interest receivable 200 99 10 95 1,247 1,651 1,510 Due from other funds 628 242 870 933 inventories 1,557 125 1,682 1,327 Prepaid expenses and other assets 84 290 3/4 2 914 Deposits 676 29 4 709 1 244 Restricted cash and invest-ments (Notes 4,5 & 6) 2,065 355 29,451 31,871 48,101 Deferred charges (Note 12) 3.958 3,958 3,302 Property, plant and equip-ment, net (Notes 2 & 3) 170,165 4,598 $35,799 210,562 177,460 Amount available for retire-ment of general long-term debt $643 643 563 Amount to be provided for r:lirement of general long-term debt 4,002 4,002 4,678 $14,269 $5,794 $579 .$7,104 $231,245 $4,816 $7,553 $35,799 $4,645 $311,804 $237,611 (continued) 4 ( ( M I'.

CITY OF ANAHEIM COMBINED BALANCE SHEET-ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30,1980 (In thousands) (continued) Proprietary Fiduciary Governmental Fund Types Fund Types Fund Type Account Groups Total Trust Gcneral General (Memorandum Special Debt Capital internal and Fixed Long-Term only) General Revenue Service Projects Enterprise Service Agency Assets Debt 1980 1979 LIABILITIES AND FUND EQUITY Liabihties: Accounts payable $ 1,551 $ 427 $ 912 $ 14,952 $ 256 $18.098 $ 17,042 Accrued litbilities (Note 9) 5,159 208 2,554 E,308 717 10,946 7.252 Deposits 1,419 1,104 2.523 2.841 Due to other govemments 31 $7,510 7,541 8.526 Due to other funds 91 326 453 870 933 Deferred compensation payable 2,065 2,065 1.419 Deferred revenue 624 291 915 1.965 Advances for construction 1,443 1,443 90 Long-term debt (Notes 4,5 & 6) 100,346 $4,645 104.991 98,338 Total liabilities 10,316 1,259 3,757 120,479 1,426 7,510 4,645 149,392 138.406 Fund equity (Note 7): Contributed capital 51,586 3.829 55,415 51.959 Investment in general fixed assets $35,799 35,799 33.329 Fund balancestransferred 33,909 33.903 33.909 Retained earnings: Reserved 3,666 3,666 2.990 Unreserved 21,605 (439) 21,166 13.925 Fund balances: Reserved 3,953 610 22 4.585 4.994 Unreserved 3,925 $579 3.347 21 7.872 8.099 Total fund equity 3,953 4.535 579 3.347 110,766 3.390 43 35,799 162.412 149.205 $14,269 $5,794 $579 $7,104 $231.245 $4.816 $7.553 $35,799 $4.645 $31 ' 901 $287.611 See accompanying Notes to Financial Statements on pages 23 to 32. t,

CITY OF ANAHEIM COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30,1980 (In thousands) Total Special Debt Capital (Memorandum only) General Revenue Service Projects 1980 1979 Revenue: Property taxes $ 4.288 $1,256 $ 5,544 '87 Sales and use taxes 17,482 17.482 i5,001 Licenses, fees and permits 3,415 $ 419 3,834 3.178 Intergovemmental revenue 5,965 13,002 $ 9,123 28,090 23,943 Charges for services 7,850 7 7,857 6,836 Fines, forfeits and penalties 1,663 1,663 1,018 Interest and rentals 824 561 52 555 1,992 1,532 Other 1,478 590 221 2,289 1,892 42,965 14,579 1,308 9,899 68,751 58,587 Expenditures: General government 3,821 3,434 7 7,262 6.892 Nondepartmental 164 2,493 165 2,822 5,171 Public safety 23,661 187 101 23,949 21,476 Public works 17,371 3,651 14.173 35,195 30.126 Culture and recreation 5,753 1,338 179 7,270 6.860 Debt service: Prinpipal retirement 1,050 1,050 1,045 fnterest and fiscal charges 125 125 161 50,770 11,103 1,175 14,625 77,673 71,731 (continued) A ~ ~.. e. e ev e.

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CITY OF ANAHEIM COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES lN FUND BALANCES ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30,1980 (in thousands) (continued) i Toul Special Debt Capital (Memorap'Jum only) General Revenue Service Projects 1980 1979 Excess of revenue over (under) expenditures ($7,805) $3,476 $133 ($4,726) i;8,922) ($13,144) Other financing sources ',usos): Operating transfors in 674 480 2,407 0,561 3.471 Operating transfors out (730) (3,081) (3,811) 43,726) (56) (2,601) 2,407 (250) (255) Excess of revenue and other sources over (undor) expenditures and other uses (7,861) 875 133 (2,319) (9,172) (13,399) Fund balances at beginning of year 3.276 3,660 446 5,666 13,048 19,852 Transfers from other funds (Note 11) 8,538 8,538 6,595 i Fund balances at end of year $ 3,953 $ 4,535 $579 $ 3,347 $12.414 $13,048 Sco accompanying Notes to financial Statements on pages 23 to 32. 1

CITY OF ANAHEIM STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICIT) BUDGET AND ACTUAL GENERAL AND SPECIAL REVENUE FUND TYPES YEAR ENDED JUNE 30,1980 (in thousands) Total General Fund Special Revenue Funds (Memorandum only) Variance-Variance-Variance-Favorable Favorable FavoratF Budget Actual (Unfavorable) Budget Actual (Unfavorable) Budget Actual (Unf avorau. _, Revenue: Property taxes $ 4,483 $ 4,288 ($ 195) $ 4,483 $ 4.288 ($ 195) Sales and use taxes 17,500 17,482 (18) 17,500 17,482 (18) Licenses, fees and permits 3,334 3,415 81 906 $ 419 ($ 487) 4.240 3.834 (406) Intergovernmental revenue 5,948 5,965 17 15,788 13.002 (2,786) 21,736 18.967 (2,769) Charges for services 8,109 7,850 (259) 7 7 8,109 7.857 (252) Fines, forfeits and penalties 1,515 1,663 148 1,515 1.663 148 Int:r:st and rentals 928 824 (104) 235 561 326 1,163 1.385 222 Other 1,802 1,478 (324) 491 590 99 2,293 2.068 (225) 43,619 42,965 (654) 17,420 14.579 (2,841) 61,039 57,544 (3.495) Expenditures: General government 4,488 3,821 667 3,564 3.434 130 8.052 7.255 797 Nondepartmental 1,314 164 1,150 2,688 2,493 195 4,002 2.657 1,345 Public safety 24,061 23,661 400 215 187 28 24.276 23.848 428 Public works 17.375 17.371 4 8.801 3.651 5,150 26,176 21.022 5.154 Culture and recreation 6,246 5,753 493 2,424 1,338 1,086 8,670 7.091 1.579 53,484 60,770 2,714 17,302 11,103 6,589 71,176 61.873 9.303 (continued) H 'T M FT

CITY OF ANAHEIM STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICIT) BUDGET AND ACTUAL GENERAL AND SPECIAL REVENUE FUND TYPES YEAR ENDED JUNE 30,1980 (In thousands) (continued) Total _ _ General Fund Special Revenue Funds (Memorandum only) Variance-Variance-Variance-Favorable Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) Budget Actual (Unfavorable) Excess of revenue over (under) expenditures ( $9,865) ($ 7,805) $2,060 ($ 272) $ 3,476 $3,748 ($10,137) ($ 4,329) 55,808 Other financing sources (uses): Operating transfers in 1,137 674 (463) 480 480 1,137 1.154 17 Operating transfers out (232) (730) (498) (3,537) (3,081) 456 (3,769) (3,811) (42) _ 56) (961) (3,537) (2,601) 936 (2,632) (2,657) (25) ( 905 Excess of revenue and other sources over (under) ex-penditures and other usos (8,960) (7,861) 1099 (3,809) 875 4,684 (12,769) (6,986) 5.783 Fund balances at beginning of year 3,276 3,276 3,660 3,660 6,936 6,936 Transfers from other funds (Note i t) 8,035 _ 8,538 503 8.035 8,538 503 Fund balances (deficit) at end of year $ 2,351 $ 3,953 $1,602 ($ 149) $ 4,535 $4,684 $ 2,202 $8,488 $6,286 See accompanying Notes to Financial Statements on pages 23 to 32. 9

CITY OF ANAHEIM COMBINED STATEMENT OF REVENUE, EXPENSES AND CHANGES IN RETAINED EARNINGS (DEFICIT)/ FUND BALANCE ALL PROPRIE"ARY FUND TYPES AND SIMILAR TRUST FUND YEAR ENDED JUNE 30,1980 (In thousands) Proprietary Fiduciary Fund Types Fund Type Total Internal Museum and (Memorandum only) Enterprise Service Library 1980 1979 Operating revenue: Charges for services $105,757 $5.690 $111,447 $89.303 Other 1,716 152 $5 1,873 1,710 107,473 5,842 5 113,320 91,013 Operating expenses: Cost of water / purchased power 76,024 76,024 62,492 Maintenance, operations and administration (Note 10) 16,751 5,466 14 22,231 18,222 Depreciation and amortization 3,394 1,213 4,607 3,824 Other 48 48 94 96,217 6,679 14 102,910 84,632 income (loss) from operations 11,256 (837) (9) 10,410 6,381 Nonoperating revenue (expenses): Interest revenuo 6,266 6 6,272 2,664 Transient occupancy tax (Note 13) 4,922 4,922 4,193 Interest expense gNote 2) (4,437) (109) (4,546) (2,509) Visitor and Convention Bureau expense (Note 13) (696) (696) (571) Other income 100 100 6,155 (109) 6 6,052 3.777 (continued) 10 t.38 W

1 CITY OF ANAHEIM COMBINED STATEMENT OF REVENUE, EXPENSES AND CHANGES IN RETAINED EARNINGS (DEFICIT)/ FUND BALANCE ALL PROPRIETARY FUND TYPES AND SIMILAR TRUST FUND YEAR ENDED JUNE 30,1980 (In thousands) (continued) Proprietary Fiduciary Fund Types Fund Type Total Internal Museum and .(Memorandum only) Enterprise Service Library 1980 1979 income (loss) before operating transfers and extraordinary item $17,411 ($ 946) ($3) $16,462 $10,158 Operating transfers in 250 250 254 Net income (loss) before extraordinary item 17,411 (696) (3) 16,712 10,412 Extraordinary gain on refunding of long-term debt (Note 1) 4,337 Not income (loss) 17,411 (6%) (3) 16,712 14,749 Retained eamings/ fund balance at beginning of year 16,752 163 46 16,961 8,9 @ Transfers (to) from other funds (8.892) 94 (8,798) (6,758) Retained eamings (deficit)/ fund balance at end of year $25,271 ($ 439) $43 $24,875 $16,960 See accompanying Notes to Financial Statements on pages 23 to 32. I1

CITY OF ANAHEIM COMBINED STATEMENT OF CHANGES IN FINANCIAL POSITION ALL PROPRIETARY FUND TYPES AND SIMILAR TRUST FUND YEAR ENDED JUNE 30,1980 (in thousands) Proprietary Fiduciary Fund Types p.Jnd Type Total Inters.as Museum and (Memorandum only) Enterprise Sc<vice Library 1980 1979 Financial resources were provided by: Operations-Net incomo (loss) beforo extraordinary item $17,411 ($ 696) ($ 3) $16,712 $10,412 Items not requiring (providing) working capital: Depreciation 3,073 1,213 4,286 3,522 Amortization of bond issuo costs 68 68 47 Amortization of deferred charges 321 321 302 Gain on salo of land and equipment (92) (92) Working capital provided (used) by operations exclusive of extraordinary item 20,873 425 (3) 21,295 14,283 Extraordinary item-bond refunding-Issuance of 1978 refunding bonds 11,785 Bond discount and issue costs (448) 1964 bonds refunded (17,200) Extraorf.u;; ;t. 4,337 Working capital used for bond refunding (1,526) Trrnsfer from other funds 144 144 Decrease in rostricted cash and investments 24.050 24.050 69 Decrease in deferred charges 122 Disposal of plant and equipment 95 142 237 Decrease in long-term portion of prepai<1 electric power 4.838 Increase in advances for construction 1,353 1,353 90 increase in long-term debt 9,190 9,190 43,000 Contributions in aid of construction 3,944 3,944 4,187 Other contributions 238 203 441 209 59,743 914 (3) 60,654 65,272 (contunned) 12 r

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. _9 CITY OF ANAHEIM COMBINED STATEMENT OF CHANGES IN FINANCIAL POSITION ALL PROPRIETARY FUND TYPES AND SIMILAR TRUST FUND YEAR ENDED JUNE 30,1b20 (In thousands) (continued) Proprietary Fiduciary Fund Types ~~ Fund Type Total internal Museum and (Memorandum only) Enterprise Service Library 1980 1979 Financial resources were used for: Increase in restricted cash and investments $ 7,148 $ 7,148 $35.284 increase in deferred charges 1,045 1,045 406 Additions to property, plant and equipment 39,124 $1,374 40,498 17,304 I?ecrease in long-term debt and contributions 4.387 206 4.593 5.776 Transfers to other funds 8,892 50 8.9 82 6,758 Other 288 288 92 60,884 1,630 62,514 65.620 Decrease in working capital ($ 1,141) ($ 716) ($ 3) ($ 1,860) ($ 348) Incrrase (decrease) in working capital by components: Cash and investments $ 4,474 ($ 282) ($ 3) $ 4,139 $ 4.584 Accour'Is receivable 1,504 60 1,564 549 Accrued interest receivable 214 214 938 Due from other funds 18 18 (313) Inventories 230 125 355 (594) Deposits (3) Prepaid expenses (2,525) (2.525) (1.337) Accounts payable (2,880) (5) (2,885) (2,840) Accesed liabilities 251 (689) (438) (267) Parrent portion of long-term debt 1,010 1,010 (606) Accrued interest payable (109) (109) (988) Due to other funds 79 75 154 (11) j Deposits 49 49 540 Contracts payable (3,456) (3.456) Decrease in working capital ($ 1,141) ($ 716) ($3) ($ 1,860) ($ 348) See accompanying Notes to Financial Statements on pages 23 to 32. 13

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CITY OF ANAHEIM COMBINING BALANCE SHEET ALL ENTERPRISE FUNDS JUNE 30,1980 (In thousands) Anaheim Anaheim Municipal Hills Water Electric Golf Golf Convention Total Utility Utility Course Course Stadium Center 1980 1979 ASSETS Current assets: C0sh and investments 669 $15.264 23 50 13 54 $ 16.073 $ 11,599 Accountr receivable, not of allowance for doubtful accounts of $270 in 1980 and $380 in 1979 1,904 4,679 42 18 1,259 360 8.262 6.758 Accrued interest receivable 223 416 415 193 1,247 ?.033 Due from other funds 41 70 74 57 242 224 inventories 439 1,118 1.557 1,327 Prepaid expenses 2 11 1 1 256 19 290 2.815 Total current assets 3,237 21,488 107 139 2.017 683 27.671 23,756 Restricted cash and investments (Not9s 4,5 & 6) 8,129 4,567 211 10,702 5.842 29.451 46.353 Deferred charges (Note 12) 528 2,626 688 116 3.958 3.302 Property, plant and equipment (Notes 2 & 3): Land 1,388 1,404 3,434 4.295 10.553 21.074 21.075 Duildings, structures and improvements 179 290 18.654 18.914 38.037 37.944 Utihty plant 57.856 54,751 112.607 104.081 Machinery and equipment 30 83 440 1,104 1.657 1.775 Construction work in progress 2,462 1,721 3 30.226 1,617 36.029 5.610 61,706 56,472 1,613 3.810 53,615 32,188 209.404 170.485 Less accumulated depreciation (12,445) (16.300) (301) (480) (4,730) (4.983) (39.239) (35.841) Net property, plant and equipment 49.261 40,172 1,312 3.330 48.885 27.205 170.165 134.644 $61.155 $68,853 51,419 $3,680 $62,292 $33.846 $231.245 $208.055 (continued) 1G E k LJn l. [?@ W M O' w

CITY OF ANAHElM COMBINING BALANCE SHEET ALL ENTERPRISE FUNDS JUNE 30,1960 (in thousands) (continued) Anaheim Anaheim Municipal Hills Water Electric Golf Golf Convention Total Utility Utility Course Course Stadium Center 1980 1979 LIABILITIES AND FUND EQUITY Current liabilities (payable from current assets): Accounts payable $ 1,172 $12,946 12 9 $ 644 169 $ 14,952 $ 12,072 Accrued liabihties 32 99 6 8 139 64 348 599 Current portion of long-term dcht 2,325 278 59 2.662 3.841 Due to other funds 211 41 74 326 405 Deposits 435 402 1 3 25 238 1,104 1,153 Total current liabihties (payable from current assets) 1,639 15,772 19 231 1.127 604 19,392 18.070 Current liabilities (payable from restricted assets): Accrued interest payable 320 221 36 766 617 1,960 1,851 Current portion of long-term debt 135 325 75 380 810 1,725 1.556 Contracts payable 3,456 3,456 Total current liabilities (payable from restricted assets) 455 546 111 4,602 1,427 7,141 3,407 Total current liabilities 2,094 16,318 19 342 5,729 2,031 26.533 21.477 Advances for construction 1,443 1,443 90 Long-term debt, less current portion (Notes 4,5 & 6) 8.370 11,450 1,055 45,427 26,201 92,503 87,700 Total liabilities 11,907 27,768 19 1,397 51,156 28.232 120,479 109.267 Fund equity (Noto 7): Contnbuted capital 33,663 2,833 438 4,324 9,306 1,022 51,586 48,127 Fund balances transferred 19,280 14,629 33,909 33,909 Retained earnings (deficits): Reserved 1,385 1,889 211 181 3.666 2,990 Unreserved (5,080) 21,734 962 (2,252) 1,830 4.411 21.605 13.762 Total retained earnings (deficits) (3,695) 23,623 962 (2,041) 1,830 4.592 25.271 16.752 Total fund equity 49,248 41,085 1,400 2,283 11.136 5.614 110.766 98.788 $61,155 $68,853 $1,419 $3,680 $62,292 $33.846 $231.245 $208.055 See accompanying Notes to Financial Statements on pages 23 to 32. si

CITY OF ANAHEIM COMBINING STATEMENT OF REVENUE, EXPENSES AND CHANGES IN RETAINED EARNINGS (DEFICITS) ALL ENTERPRISE FUNDS YEAR ENDED JUNE 30,1980 (in thousands) Anaheim Anaheim Municipal Hills Water Electric Golf Golf Convention Total Utility Utility Course Course Stadium Center 1980 1979 Operating revenue: Scies of water / light and power $8,187 $90,461 $98,648 $78.231 Facilities rental $1.835 $2.400 4,235 4.076 Green fees and cart rentals $651 $ 537 1,188 991 Concession fees 1,099 587 1,686 1.456 Other 115 327 38 ;5 276 905 1,716 1.642 8,302 90,788 689 UJ2 3,210 3,892 107,473 86.396 Operating expenses: Cost of water / purchased power 4,095 71,929 76.024 62.492 Maintenance, operations and administration (Note 10) 3,033 6,302 597 726 2,231 3,862 16,751 14,473 Depreciation 341 1,600 35 45 522 530 3.073 2.804 Amortization of deferred charges (Note 12) 321 321 302 Other 24 24 48 94 7,469 80,152 656 795 2,753 4,392 96.217 80.165 Income (loss) from operations 833 10,636 33 (203) 457 (500) 11.256 6.231 / (continued) ,e LW l 1 l'.. 1 "M 7 f' 6--

y N EEig B-47 "some CITY OF ANAHElM COMBINING STATEMENT OF REVENUE, EXPENSES AND CHANGES IN RETAINED EARNINGS (DEFICITS) ALL ENTERPfilSE FUNDS YEAR ENDED JUNE 30,1980 (In thousands) (continued) Anaheim Anaheim Municipal Hills Water Electric Golf Golf Convention Total Utility Utility Course Course Stadium Center 1980 1979 Nonoperating income (expenses): Interest income $ 583 $ 1,766 $2,887 $1,030 $ 6,266 $ 2.662 Transient occupancy tax (Note 13) 4,922 4,922 4,193 Int: rest expense (244) (661) ($ 71) (2,374) (1,087) (4,437) (2.459) Visitor and Convention Bureau expense (Note 13) (696) (696) (571) Other irc:ome 100 100 439 1,105 (71) 513 4,169 6.155 3.825 Operating transfer out (29) Net income (loss) before extraordinary item 1,272 11,741 $ 33 (274) 970 3.669 17.411 10.027 Extraordinary gain on refunding of long-term debt 4.337 Net income (loss) 1,272 11,741 33 (274) 970 3,669 17.411 14.364 Retained earnings (deficits) at beginning of year (4,661), 14,845 929 (1,767) 1,781 5.625 16.752 9.146 Trrnsfers to other funds (Note 11) (306) (2,963) (921) (4,702) (8.892) (6.758) Retained earnings (deficits) at end of year ( $3,695) $23,623 $962 ( $2,041) $1.830 $4,592 $25.271 $16.752 See accompanying Notes to Fonancial Statements on pages 23 to 32. l l 19

CITY OF ANAHEIM COMBINt1G STATEMENT OF CHANGES IN FINANCIAL POSITION ALL ENTERPRISE FUNDS YEAR ENDED JUNE 30,1980 (in thousands) Anaheim Anaheim Municipal Hills Water Electric Golf Golf Convention _ ___ Total Utility Utility Course Course Stadium Center 1980 1979 Financial resources were provided by: Operations-Net income (loss) before extraordinary item $1,272 $11,741 $ 33 ($274) 970 $ 3,669 $17,411 $10,027 Items not requiring working capital: Depreciation 341 1,600 35 45 522 530 3.073 2,804 Amortization of bond issue costs 10 11 43 4 68 47 Amortization of deferred charges 321 321 302 Working capital provided (used) by operations exclusive of extraordinary item 1.,623 13,673 68 (229) _ 1,535 __4,203 _20,873 13,180 Extraordinary item-bond refunding-Issuance of 1978 refunding bonds 11,785 Bond discount and issue costs (448) 1964 bonds refunded (17,200) Extraordinary gain 4.337 Working capital used for bond refunding (1,526) Decrease in restricted cash and investments 157 2 23,191 700 24.050 69 Decrease in deferred charges 122 Disposal of land and equipment 7 44 44 95 Decrease in long-term portion of prepaid electric power 4.838 increase in advances for construction 1,353 1,353 90 Increase in long-term debt 7,350 1,840 9,190 43,000 Contributions from other iunds 238 238 209 i Contributions in aid of construction 2,657 1,287 3,944 4,187 12,983 15.117 68 18 26.610 4,947 59,743 64,169 l (continued) 20 I 3 E

CITY OF ANAHEIM COMBINING STATEMENT OF CHANGES IN FINANCIAL POSITION ALL ENTERPRISE FUNDS YEAR ENDED JUNE 30,1980 (In thousands) (continued) Anaheim Anaheim Municipal Hills Water Electric Golf Golf Convention Total Utility Utility Course Course Stadium Center 1980 1979 Financial resources were used for: increase in restricted cash and investments $ 7,148 $7,148 $35,284 increase in deferred charges 538 474 33 1,045 406 Additions to property, plant and equipment 4,532 4,535 $ 41 $28,812 1,154 39,124 16,440 Decrease in long-term debt 135 2,650 $ 75 658 869 4,387 5.576 Transfers to other funds 306 2,963 921 4,702 8,892 6.758 Other 151 137 288 92 _12,81_0 10,809 41 75 30,391 6,758 60,884 64,556 Inctrise (decrease) in working capital $ _173 $ 4.308 $ 27 ($ 57) ($,3,781) ($_1,811) ($ 1,141) ($_ 387) Incr:Ise (decrease) in working capital by components: Cish and investments ($ 1,093) $ 7,370 $ 21 ($ 36) ($ 151) ($ 1,637) $ 4,474 $ 4,632 Accounts receivable 749 254 25 8 376 92 1,504 542 Accrued interest receivable 223 230 (285) 46 214 938 Due from other funds (18) (24) 29 31 18 (313) Inventories (18) 248 230 (594) Prepaid expenses (1) (2,446) (2) (51) (25) (2,525) (1,337) Accounts payable 88 (2,662) 3 (216) (93) (2,880) (2,911) Accrued liabilities 377 (53) (2) (3) (56) (12) 251 (269) Current portion of long-term debt (5) 1,350 (4) (298) (33) 1,010 (606) Accrued interest payable (289) 27 199 (46) (109) (988) Due to other funds 153 (74) 79 (21) Deposits 142 (10) 1 1 (25) (60) 49 540 Contracts payable (3,456) (3,456) Incr ase (decrease) in working capital 173 $ 4,308 $ 27 ($ 57) ($ 3,781) ($ 1,811) ($ 1,141) ($ ga7) See accompanying Notes to Financial Statements on pages 23 to 32. 2l

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CITY OF ANAHEIM NOTES TO FINANCIAL STATEMENTS NOTE 1-DESCRIPTION OF FUNDS AND

SUMMARY

OF organizations and other governmental units. These include non-SIGNIFICANT ACCOUNTING POLICIES: expendable trust funds and agency funds. Account groups DESCRIPTION OF FUNDS General Fixed Assets-The General Fixed Assets account group is Governmental fund types used to maintain control and cost information on capital assets owned by the City, other than those of the proprietary funds. General Fund-The General Fund is used to account for all financial r: sources except those required to be accounted for in another fund. General Long-Term Debt-The General Long-Term Debt account group is used to account for unmatured general long-term indebtedness of Special Revenue funds-Special Revenue fund,s are used to account the City. for the proceeds of specific revenue sources that are restricted by law or administrative action to expenditure for specified purposes.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES Debt Service Fund-The Debt Service Fund is used to account for the Reporting entity accumulation of resources for, and the payment of, interest and principal on generallong-term debt. Financialinformation for entities related to the City-Anaheim Housing Authority, Anaheim Redevelopment Agency, C iy of Anaheim (Califomia) Capital Projects funds-The Capital Projects funds are used to account Stadium, Inc. and Community Center Authority- -are accounted for in the for financial resources to be used for the acquisition or construction of City financial statements as detailed below. major capital facilities. City Council members, in separate session, serve as the goveming Proprietary fund types board members of the Housing Authority and Redevelopment Agency. The goveming boards of the other two entities do not include City Council Enterprise funds-Enterprise funds are used to account for operations members. The City provides accounting services to all four entities and where it is the stated intent that costs of providing that service to the serves as a fiscal agent for the Housing Authority and Redevelopment gen:ral public on a continuing basis be financed or recovered primarily Agency. through user charges and space rentals. The Anaheim Housing Authority and Anaheim Redevelopment Agency Internal Service funds-Internal Service funds are used to account for are shown as agency funds in these financial statements to reflect the financing of goods and services provided by one department to other cash held for these entities by the City Treasurer. The manner in which departments of the City and to other governmental units, on a cost-City of Anaheim Stadium, Inc. and the Community Center Authority are rtimbursement basis. reported in the City financial statements is described in Note 5. Separate audited financial statements are issued for each entity. Fiduciary fund types Bases of accounting Trust and Agency funds-Trust and Agency funds are used to account for assets held by the City as a trustee or agent for individuals, private The accrual basis of accounting is followed for budgeting and account-23

Bases of Accounting (cont.) The Genertl Fixed Assets account group does not include infrastructure fixed assets-roads, bridges, curbs and gutters, straels and sidewalks, ing purposes for all funds except the governmental fund types which use drainage systems, etc. No depreciation is provided on general fixed the modified accrual basis for budgetary and accounting purposes. Modifi-cations in such metnod from the accrual basis are as follows: assets. Because detailed records were not maintained for property, plant and equipment prior to July 1,1977, the sources of the funds used to se h gemal M assds am M avadah A. Revenue is recorded in cash, except for revenue susceptible to accrual, revenue of a material amount that is not received at its normal time of receipt and revenue received prior to its period of benefit. Revenue considered susceptible to accrual includes: pre Depreciation on property, plant and equipment in the Enterprise and erty taxes, sales taxes, cigarette taxes and motor vehicle license Internal Service funds is provided on the straight-line method over the fees. following estimated usefullives: B. Interest on general long-term indebtedness is not accrued but is recorded as an expenditure on its due date. Buildings and structures to to 85 years C. Disbursements for the purchase of capital assets providing future Improvements other than buildings 10 to 99 years benefits are considered expenditures and are accounted for in the Transmission and distribution plant 20 to 75 years General Fixed Assets account group; bond proceeds are consid-ered revenue and are accounted for in the General Long-Term Debt Machinery and equipment 3 to 50 years account group. Depreciation on assets acquired from contributions in aid of construc-The Utility funds follow the uniform system of accounts prescribed by tion, $723,000, ic not reflected in net income of the Utility funds but rather the Federal Energy Regulatory Commission (Electric Utility) and the is charged to the. elated contributions account. California Public Utilities Commission (Water Utility). Revenue recognition for Utility funds Cash and investments Revenue is recorded as billed to customers en a cycle basis. Residen-tial customers are billed bi-monthly and commercial customers monthly. The City pools idle cash from all funds for the purpose of increasing income through investment activities. Investments are carried at cost, Pension plan which approximates market value. Interest income on investments is allocated on the basis of average daily cash and investment balances to all All full time City employees are members of the Stato of California funds except the Anaheim Hills Golf Course Fund because the General Public Employees' Retirement System. The City's policy is to fund all Fund has contributed funds for its operations and capital. pension costs accrued; such costs to be funded are determined annually as of July 1 by the System's actuary. Inventories Vacation and sick leave Inventories, as determined by perpetual records, are stated at average cost. Physical counts of inventory are taken on a cyclical basis. Vacation and sick pay for all City employees is paid by the General Fund. The General Fund is reimbursed through payroll charges to all other Property, plant and equipment funds based on estimates of benefits to be eamed and used during the ensuing year. It is the policy of the City to pay all accumulated vacation pay Property, plant and equipment are recorded at cost, or in the case of when an employeo retires or terminates and one-fourth of the accumu-donations, at fair value at the date of the donation, except that assets lated sick leave when an employee retires. At June 30,1980, accumulated acquired prior to July 1,1977, are recorded at appraised historical cost. unused vacation and sick leave totals $4.626.000. 24 T" 9 i". L

Budgetary principles been made to the 1979 financi:1 statements to conform to the 1980 The City is required by its charter to adopt an annual budget on or before June 30 for the ensuing fiscal year. From the effective date of the NOTE 2-ACCOUNTING CHANGE: budget, the amounts stated therein as proposed expenditures become appropriations to the various City departments. The City Council may Effective July 1,1979, the City adopted Statement of Financial Account-amend the budget by motion during the fiscal year. The City Manager may ing Standards No. 34, issued by the Financial Accounting Standards transfer funds from one object or purpose to another within the same Board in October 1979, relating to the capitalization of interest cost. In department. accordance with the provisions of this statement, interest costs for out-standing bonds have been capitalized in the Stadium and Convention The City utilizes an encumbrance system as a management control Center funds in an amount proportionate to the average amount of technique to assist in controlling expenditures. Under this procedure, accumulated construction expenditures for the Stadium and Convention encumbrances of the General and Special Revenue funds-representing Center expansion projects. The total amount of bond interest expense purchase orders, contracts and other commitments-are reported as incurred in 1979-80 was $2,326,000 and $714,000 for the Stadium and reservations of fund balances at year-end. All appropriations lapse at the Convention Center, respectively, of which $758,000 and $416,000 per-end of the fiscal year to the extent that they have not been expended or tained to construction expenditures and have been reflected in construc-encumbered, except for capital projects which are carried forward until tion work in process in the Stadium and Convention Center funds financial such time as the project is completed or terminated. statements. The effect of this change is to decrease 1980 Stadium and Convention Center net income by $1,568,000 and $298,000, respectively. Budget information is presented for the General and Special Revenue fund types. Budgeted revenue amounts represent the original budget NOTE 3-PROPERTY, PLANT AND EQUIPMENT: modified by Council-authorized adjustments during the year which were contingent upon new or additional revenue sources. Budgeted expendi-Utility funds tura amounts represent original appropriations adjusted for supplemental appropriations during the year. Utility plant assets at June 30,1980 consist of the following: Water Electric " Total (Memorandum only)" information Utility Utility Fund Fund Columns on the accompanying combined financial statements cap-Source of water cupply $ 3,808,000 tioned " Total (Memorandum only)" do not present consolidated financial Pumping plant 1,474,000 information. They are not necessary for a fair presentation of the financial Transmission and distribution plant 52,054,000 $53.293.000 stat:ments, but are presented as additional analytical data. General 520.000 1,458.000 Restatement and reclassifications Internal Service funds Stadium Fund financial statements for the fiscal year ended June 30, 1979 have been restated to correct an error in the calculation of the Net fixed assets of Intemal Service funds at June 30,1980 consist of the extraordinary gain on refunding the 1964 City of Anaheim (Califomia) Stadium, Inc. bonds. The effect of the restatement was to decrease I UON"92 r:stricted cash and investments, extraordinary gain and net incomo each Equipment $ 7.263.000 by $720,000. Less accumulated depreciation (2.665.000) Certain reclassifications which have no effect on fund balance have $ 4.598.000 25

NOTE 3 - PROPERTY, PLANT AND EQUIPMENT: (cont.) Convention Center Fund-Revenues fron c ground lease ars pledged for the two remaining annual principal paymants of $85,000 plus intercst at General Haed assets 4%% per annum through fiscal year 1982. The City is required to reserve cash and investments equal to the next two annual principal and interest General fixed assets at June 30,1980 consist of the following: payments. Land $11,654,000 Golf Course Fu,d-The land purchase centract is secured by a first lien Buildings 7,493,000 on all income of both the Anaheim Municipal and Anaheim Hills Golf Improvements other than buildings 12,535,000 Courses and imposes certain requirements including establishment of a Equipment 4,117,000 reserve account equal to one year's prircipal and interest payment. $35,799,000 Furthermore, the courses must be mainta..:ed on a par with other local municipal golf courses and no cash can te transferred out of the golf Activity in the General Fixed Assets account group for the year ended course furds until debt service and operating expense payments have June 30,1980 is as follows: been made. The contract provides for semiannual payments on July 1 and January 1 of $105,349, including interest at $% through January 1,1991. Balance at July 1,1979 $33,329,000 In fiscal year 1976,70 acres of the land weve transferred to the General Additions 3,278,000 Fixed Assets account group to be used as a r arksite. The debt transferred. Deletions (808,000) $682,525, was equivalent to the land cost. The semiannual debt service requ rement of $34,463 for the principal and interest on this portion of the Balance at June 30,1980 ,$35,799,000 land purchase contract is being prooded by appropriations in the General Fund. The remaining semiannual debt service requirement of $70,886 is Capitalized leases being provided from golf course revenues in the Anaheim Hills Golf Course Fund where the debt service reserve account is also maintained. Machinery and equipment in the Convention Center and Data Process-ing funds and the General Fixed Assets account group totaling $416,000, NOTE 5-CAPITALIZED LEASE OBLIGATIONS: $1,226,000 and $137,000, respectively, represents capitalized equipment leases. The amounts included in property, plant and equipment for the Capitalized facility leases payable Stadium and Convention Center funds include $45,027,000 and $17,957,000, respectively, representing capitalized facility leases (see The City has entered into noncancelable long-term leases with a Note 5); these amounts include construction work in progress of nonprofit corporation (City of Anaheim lCalitomial Stadium, Inc.) and a $28,317,000 and $1,616,000, respectively, joint powers authority (Community Center Authority) for financing the acquisition of Anaheim Stadium and the Anaheim Convention Center, respectively. These leases provide for semiaqnual payments in amounts NOTE 4-LAND PURCHASE CONTRACTS PAYABLE: sufficient to meet the annual debt service requirements on the revenue bonds issued by the nonprofit corporation and the joint powers authority. The City has entered into three land purchase contracts which provide Since the leases are financing arrangements which transfer the ownership for the pledge of revenues from specific sources to service the debt as of the facilities to the City at the end of the tespective lease terms, and follows: since the solo activity of the nonprofit corporation and the joint powert. authority is providing financing for the City, the City has recorded the Parksites and Playground Fund-Revenues from certain parksite fees facility lease obligations and the related assets in the appropriate funds in am restricted for the payment of two contracts through September 15. amounts equivalent to the related revenue bo7ds payable and the cost of 1980. The debt is included in the General Long-Term Debt account group. the facilities (see Note 3). Further, any assets held by the fiscal agents for The remaining debt service requirement includes principal of $60,143 plus the nonprofit corporation and the joint powers authority remaining after the interest at 6% revenue bonds have been repaid will be conveyed to the City. Accordingly. 2G N. M II -~ ~

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6.-': bJ E ~ ~ amounts held by the fiscal agents arg included in the financial statements Generil Convention of the respective funds as bang available for the payment of the long-term Long-Term Center debt. Fiscal year Debt Fund 1981 280,000 64,000 Future minimum lease payments under these capital leases are as 1982 267,000 53,000 follows: 1983 31,000 1984 31,000 Convention 609,000 117,000 Stadium Center Less amount representing interest, Fiscal year Fund Fund 6.5-6.75% and 5% 63,000 7,000 1981 $ 2,664,000 $ 1,650,000 Present value of futuro minimum 1982 3,429,000 1,698,000 lease payments 546,000 110,000 1983 3,427,000 2,496,000 ~ ~ ~ ~ ~ ~~ 1984 3,413,000 2,496,000 1985 3,379,000 2,496.000 Thereafter 95,351,000 39,744,000 111,663,000 50,580,000 Less amount representing intorest,7.125% and 5.75% 67,418,000 23,790,000 Present value of future Other lease-purchase agreements minimum lease payments $44,245,000 $26,790,000 During fiscal year 1980, the City entered into two ten-year lease-Cash and investments in the Stadium and Convention Center funds purchase agreements for the acquisition of a new scoreboard for Anaheim held by fiscal agents at June 30, 1980 amount to $10,702,204 and Stadium in the total amount of $2,708,000. The agreements bear interest $5,660.509, respectively. The fiscal agents are required by the respective at 6.25% ($2.143,000 agreement) and 8.5% ($565,000 agreement) and bond resolutions to reservo cash and investments in the amount of one require ten payments, including interest, totaling $358,000 annually be-annual payment of principal and interest so long as any of the bonds are ginning in fiscal year 1981. As of June 30,1980, $1,840,000 has been outstanding. borrowed against these agreements for progress payments to the equip-mont supplier. This amount is recorded as a liability in the Stadium Fund. Also during 1980, the City entered into 10-year advertising agreements with eight companies for use of the new scoroboard, with rental fees Capitalized equipment leases payable totaling $785,000 annually beginning in fiscal year 1981. The City has entered into noncancolable long-term leases as losseo for The City entered into a fivo-year lease-purchase agrooment during financing the purchase of certain equipment utilized in the Data Process-fiscal year 1980 for the purchase of a telephone system for the Anaheim ing Fund, Convention Conter Fund and the General Fixed Assets account Civic Center. This agreement totals $1,002,000, bears interest at 6.25% group. Such leases quah.:y as capital leases for accounting purposes and and requires fivo annual payments, including interest, of $225,000 begin-therefore have been recorded at the present value of the future minimum I aso payments at the dato of inception of the lease (seo Noto 3). The ning in fiscal year 1981. As of June 30,1980, $644,000 has been Fund is reflected borrowed against this agreement for progress payments to the equipment liability for the equipment carried in the Data Processing'so it represents a supplier. This amount is recorded in the Long-Term Debt account group. in the General Long-Term Debt account Group becau general obligation of the City; however, the lease obligation is being satisfied by the Data Processing Fund. Futuro minimum lease payments The lease terms on thoso agreements will commence in fiscal year under these capitalleases are as follows: 1981. 21

NOTE 6-BONDS PAYABLE: Revenue bonds-Water Utility Fund General obligation bonds At June 30,1980, the Water Utility Fund is indebted under two revenue bond issues as follows: At June 30,1980 these bonds consist of the following: Bond Bond principal principal outstandng outstanding Water Revenue Series 1971 Bonds, 4.9861%, 1960 Municipal Improvements Series A, 3.6%, dated July 1,1971 in the amount of $2,000,000 issued in 1960 in the amount of $6,600,000, maturing serially to 1987 in annual principal maturing serially to fiscal year 1981 in annual installments of $135,000 to $195,000, total debt principal installments of $330,000, total debt ser-service of $1,369,924 to maturity $ 1,155,000 vice of $335,940 to maturity 330,000 ator Revanue Sess 1980 Bonds, BMW., 1960 Municipal improvements Series B,1% and dated January 1,1980, issued February 26, 3.6%, issued in 1960 in the amount of 1980, in the amount of $7,350,000, of which $1.785,000, maturing serially to fiscal year 1981 $4,165,000 rnatums senaHy to hscal year 2000 in in annual principal installments of $90,000, total annual principal installments ranging from debt service of $90,900 to maturity 90,000 $100,000 to $400,000, and $3,185,000 are term 1960 Mur.icipal improvements Series C,3.25% ".ds subject to mandatory call and redemption in fiscal years 2001 to 2006 in annual principal cnd 3.3%, issued in 1961 in the amount of mstaHments ranging imm $45,000 to $W,M $1,400,000, maturing serially to fiscal year 1982 total debt service of $17,339,755 to maturity $ 7,350,000 in annual principal installments of $115,000, total debt service of $241,385 to maturity 230,000 8 505,000 Less current portion 135,000 1961 Park Acquisition and improvement,1% to 3.6%, issued in 1962 in the amount of - ~~$ 8,370.000 $2.215,000, maturing serially to fiscal year 1981 in annual principal installments of $70,000, total in accordance with the revenue bond resolutions, a renewal and re-debt service of $70,700 to maturity 70,000 placement reserve account equal to a maximum of 1% of the nel book value of the utility plant is to be accumulated and maintained. 1963 Municipal improvements Series A, 3.3%, 1% and 3.2%, issued in 1963 in the amount of The two bond issues require the establishment of a bond service fund to $6,600,000, maturing serially to fiscal year 1984 account for the monthly accumulation of one-sixth of the interest payable in annual principal installments of $330,000, total within the next six months and one-twelfth of the principal payable within debt service of $1,424,610 to maturity 1,320,000 the next twelve months. 1963 Municipal improvements Series B,3.75% Restricted cash and investments include reserved amounts, as well as cnd 3.9%, issued in 1963 in the amount of undisbursed bond proceeds, as follows: $2.300,000, maturing serially to fiscal year 1987 in annual principal installments of $115,000, total Held by fiscal agent: debt service of $930,408 to maturity 805,000 Bond reserve fund $ 891,000 $ 2,845,000 Bond service fund 471.000 28 Q C_.. 1" TP C =

Held by City Tr:asurer: The three bond issues requirs the establishment of bond service Renewal and replacement reserve account 494,000 accounts for the monthly accumulation of one-sixth of the interest payable Restricted bond proceeds 6,273,000 within the next six months and one-twelfth of the principal payable within the next twelve months (six months for the $12,500,000 issue). .$.8M_9,000 Restricted cash and investments include reserved amounts as well as Revenue bonds-Electric Utility Fund undisbursed bond proceeds as follows: At June 30, 1980, the Electric Utility Fund is indebted under three Held by fiscal agent: . revenue bond issues as fc' lows: Bond reserve account $ 1,086,000 0 Bond service account 522,000 principal outstanding Held by City Treasurer: El:ctric Revenue Bonds, Issue of 1972, 4.9263%, issued March 28,1972 in the amount of Bond service account 454,000 $8,000,000, maturing serially to July 1,1992 in Renewal and replacement reserve account 803.000 annual principal installments of $325,000 to Restricted bond proceeds 1,702,000 $675,000, total debt service of $8.295,000 to S 4.567,000 miturity $ 6,225,000 Electric Revenue Bonds, issue of 1976, 6.07 %, issued April 27,1976 in the amount of $6,000,000, maturing serially to May 1,2006 in annual principal installments of $100,000 to $400,000, total debt service of $11,490,000 to maturity 5,650,000 NOTE 7-FUND EQUITY: Electric Revenue Bonds, Second Issue (Subordi-Am unts reservoo at June 30,1960 are as follows: n t:d) of 1976,4.8259%, issued June 8,1976 in the amount of $12,500,000, maturing seria!!y to General Fund: D:cember 1, 1980, total debt service of 2,225,000 Reserved for encumbrances 5 221,000 $2,279,513 to maturity 14,100,000 Reserved for petty cash, deposits, and Less current portion 2,650,000 tr ffic signalimprovements 580.000 Reserved for self-insurance claims 495.000 $11,450,000 Reserved for employee benefits 2,657,000 $ 3.953.000 Special Revenue funds: Reserved for encumbrancos $ 424.000 Reserved for land purchase contract 64.000 in accordance with the bond resolutions, bond reserve accounts for ' development 000 maximum annual debt service have been established and a renewal and her miscella res replacement reserve account is being accumulated to a maximum of 2% of $ 610.000 the book value of the utility plant. 79

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C3 giuB L L ..~ t..a C m B' No allocations of expenses wera made to the other funds of the City Visitor and Convention Bureau cxpense although General Fund departments provided certain generri and ad-In July 1969 the City entered into an agreement with the Anaheim Area ministrative services to them. Visitor and Convention Bureau (a nonprofit corporation) whereby the City conenSon gomobon aMes in N g i e au NOTE 11-TRANSFERS FROM ENTERPRISE FUNDS TO GENERAL City. The amount paid by the City each year is limited to the amount FUND: appropriated by the City Council. Transfers from Enterprise funds to the General Fund during fiscal year NOTE 14-DUPLICATING AND PRINTING FUND: 1980 consisted of the following: On July 1,1979, the City established the Duplicating and Printing Fund Water Utility Fund $ 306,000 as an intemal service fund to account for duplicating and printing services pr vided to all City departments. In prior years, this activity was accounted Electric Utility Fund 2.881,000 for in the General Fund. Stadium Fund 921,000 Convention Center Fund 4,402,000 Duplication and printing equipment, previously reflected in the General Fixed Assets account group, was transferred to the Duplicating and These amounts repmsent non-routine transfers of retained eamings in Printing Fund as a contribution from the General Fund at net depreciated excess of anticipater' requirements in these funds. Transfers from the book value. The expenses of the Duplicating and Printing Fund are Utility funds are lirr.'ted by the City Charter to 4% cf Utility adjusted gross charged to the various user funds in proportion to services rendered. revenues of the prior year. NOTE 15-COMMITMENTS AND CONTINGENCIES: n I n n a ar ag ermnt w@ h NOTE 12-Df!FERRED CHARGES-ELECTRIC UTILITY FUND: Los Angeles Rams Football Company for the purpose of exhibiting Na-tional Football League games at the Stadium beginning in fiscal year 1981. The City plans to participate in various power generats.en projects with The agreement provides for annual rental payments, consisting of a other agencies. Deferred charges include $1,588,000 of unamortized percentage of gate receipts, parking, concession and box suite revenues. project costs which represent advance payments to participating agencies The tenant has agreed to reimburse the City for game-day costs and a for ongoing preliminary engineering and environmental impact studies for portion of maintenance expenses. the related projects. Certain projects to which the City had advanced $1.734.000 were terminated without benefits accruing to the City. The The City has also entered into a 50-year ground lease with Anaheim $1.734.000 is being amortized to expense over five years, of which Stadium Associates, a general partnership, for the tease of 95 acres of $922,000 remains unamortized at June 30,1980-City owned property surrounding Anaheim Stadium. Anaheim Stadium Associates has announced plans to construct commercial office and retail buildings on the property, with construction commencing during fiscal year NOTE 13-CONVENTION CENTER FUND: 1982, while maintaining the existing parking capacity for the Stadium. The agreement calls for ground rental payments of approximately $8.000 per Tcx revenues assigned acre per year. The City receives a 6% transient occupancy tax from each licensee The General Fund is contingently liable for rental payments relating to operating in the City, which has been assigned to the Convention Center the Stadium and Convention Center facility teases, which range from l Fund to ensure sufficient funds to make debt service payrnents. This $4.314.000 to $5.923,000 during the next five years. These leases are revenue is recorded d9ectly in the Convemtion Center Fund although it recorded as liabilities in the Stadium and Convention Center funds (see represents a general revenue of the City. Notes 3 and 5). l 31 l

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e-~ g tj m+ g g CITY OF ANAHEIM BALANCE SHEET GENERAL FUND JUNE 30,1980 (in thousands) ASSETS 1980 1979 Cash and investments $ 9,303 $ 8,095 Accounts receivable, net of allowance for doubtful accounts of $72 in 1980 and $103 in 1979 1,313 1,460 Accrued interest receivable 200 189 Due from other funds 628 709 Other assets 84 99 Deposits 676 1,023 Restricted cash and investments 2,065 1,419 $14,269 $12.994 LIABILITIES AND FUND BALANCE Accounts payable $ 1,551 $ 1,890 Accrued liabilities 5,159 4,625 Deposits 1,419 1,688 Due to other governments 31 33 Due to other funds 91 Deferred compensation payable 2,065 1,419 Deferred revenue 63 Total liabilities 10,316 9,718 Fund balance: Reserved 3,953 3,276 314,269 $12.994 l [ l l l 33 l

CITY OF ANAHEIM STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND YEAR ENDED JUNE 30,1980 (in thousands) 1980 1979 Revenue: Property taxes $ 4.288 $ 3,734 Sales and use taxes 17,482 15,001 Licenses, fees and permits 3,415 2.634 Fines, forfeits and penalties 1,663 1,018 Cigarette taxes 801 903 State subventions 4,314 4,484 County subventions 370 401 Federal subventions 377 444 Other government agencies 103 142 Interest 824 843 Charges for services 7,850 6.802 Other 1,478 1,547 42,965 37,953 Expenditures: General govemment 3,821 3,842 Nondepartmental 164 3,576 Public safety 23,661 21,028 Public works 17.371 14,007 Parks and recreation 3,796 3.511 Library 1,957 1,667 50,770 47,631 Excess of expenditures over revenue (7,805) (9.678) Other financing sources (uses): Operating transfers in 674 1,140 Operating transfers out (730) (354) (56) 786 Excess of expenstves and other uses over revenue and other sources (7,861) (8.892) Fund balance at beginning of year 3,276 5.573 Transfers from other funds 8,538 6.595 Fund balance at end of year $ 3.953 $ 3.276 31 P T., '" S + E

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CITY OF ANAHEIM COMBINING BALANCE SHEET ALL SPECIAL REVENUE FUNDS JUNE 30,1980 (In thousands) Compre-hensive Community Sewer Employment Develop-Federal Parksites Construction Miscel-Gas and Training ment Revenue and and laneous Total Tax Act Block Grant Sharing Playground Maintenance Grants 1980 1979 ASSETS Crsh and investments $ 701 $ 32 $ 551 $ 11 $1,462 $323 $3,080 $3.148 Accounts receivable 859 757 545 23 47 2,231 1.556 Accrued interest receivable 29 30 33 7 99 43 Deposits 29 29 217 Restricted cash and investments $291 64 355 329 $1,589 $818 $291 $1,126 $ 98 $1,495 $377 $5,794 $5,293 LIAllLITIES AND FUND BALANCES Accounts payable 93 $173 $105 $ 54 $ 2 $ 427 $ 920 Accrued liabilities 20 70 100 4 9 2 208 145 Def rred revenue 575 49 624 568 Total liabilities 116 818 205 107 9 4 1.2c a 1,633 Fund balances (deficit): R served 306 76 173 55 610 1.696 Unreserved 1,167 10 $1,126 (182) 1,431 373 3,925 1,964 l Totalfund balances (deficit) 1,473 86 1,126 (9) 1,486 373 4.535 3,660 $1,589 $818 $291 $1,126 $ 98 $1,495 $377 $5,794 $5,293 35

CITY OF ANAHEIM COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICIT) ALL SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30,1980 (In thousands) Comprehensive Employment Parksites Sewer and-Commur,,ity Federal and Construction Miscel-Gas Training Development Revenue Play-and laneous Total Tax Act Block Grant Sharing ground Maintenance Grants 1980 1979 Revenue: Intergovernmental revenue $3,004 $4,229 $3,04 $2,226 $ 341 $157 $13,002 $12,054 Developers fees 247 $ 171 1 419 544 Charges for services 7 7 34 Interest and rentals 135 23 177 184 42 561 410 Other 166 10 6 363 45 590 345 3,312 4,229 3,078 2,409 951 400 200 14,579 13,387 Expenditures: General government 3,431 3 3,434 3,050 Nondepartmental 196 2,263 9 25 2,493 1,595 Public safety 113 36 38 187 448 Public works 2,341 225 650 170 15 201 49 3,651 5,192 Culture and recreation 264 81 953 40 1,338 1,682 2,341 4,229 3,033 179 968 201 152 11,103 11,967 Exc:ss of revenue over (under) expenditures 971 45 2,230 (17) 199 48 3,476 1.420 Other financing sources (uses); Operating transfers in (out), not (374) (2,407) 180 (2,601) (3,372) Exc:ss of revenue and other l sources over (under) expendi-tur:s and other uses 597 45 (177) 163 199 48 875 (1,952) Fund talances (defiet) at beginnug of year 876 41 1,303 (172) 1,287 325 3,660 5.612 Fund balances (def cit) i at end of year $1,473 86 $1,126 ($ 9) $1,486 $373 $ 4,535 5 3.660 36 C I'~' I (.P, T M E

CITY OF ANAHEIM STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFIC!TS) BUDGET AND ACTUAL MAJOR SPECIAL REVENL 2 FUNDS YEAR ENDED JUNE ',0,1980 (In thousands) Comprehensive Employment Community Development _ _ _. _ _ Gas Tax and Training Act Block Grant Variance-Variance-Variance-Favorable Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) Budget Actual (Unfavorable) Revenue: Intergovernmental revenue $5,116 $3,004 ($2,112) $5,595 $4,229 ( $1,366) $1,889 $3,045 $1.156 Charges for services 7 7 Int: rest and rentals 215 135 (80) 23 23 Other _ 166 166 10 10 5,331 3,312 (2,019) 5.595 4,229 (1,366) 1,889 3,078 1,189 Expenditures: General government 3,551 3,43. 120 12 3 9 Nondepartmental 423 196 227 2,236 2,263 (27) Public safety 156 113 43 36 (36) Public works 6,050 2,341 3,709 461 225 236 928 650 278 Culture and recreation 552 264 288 100 81 19 6,050 2,341 3,709 5,143 4,229 914 3,276 3,033 243 Exo:ss of revenue over (under) expenditures (719) 971 1,690 452 (452) (1,387) 45 1.432 Other financing sources (uses): Operating transfers in (out) (674) (374) 300 (408) 488 Excess of revenue and other sources over (under) expen-diturns and other uses (1,393) 597 1,990 (36) 36 (1,387) 45 1,432 Fund balances at beginning of year 876 876 41 41 Fund balances (deficits) at end of year ($ 517) $1,473 $1,990 ($ 36) $ 36 ( $1,346) 86 $1,432 37

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CITY OF ANAHEIM STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE DEBT SERVICE FUND YEAR ENDED JUNE 30,1980 (in thousands) 1980 1979 Revenuo: General property taxes $1,256 $1,453 Interest 52 1,308 1,453 Expenditures: Rodemption of serial bonds 1,050 1,045 Intorost on bonds I?3 159 Administrativo chargos 2 2 1,175 1,206 Excess of revenue over expondituros 133 247 Fund balanco at beginning of year 446 199 Fund balanco at and of year S 579 $ 446 dn [._ 66I F N EL.

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CITY OF ANAHEIM COMBINING BALANCE SHEET ALL CAPITAL PROJECTS FUNDS JUNE 30,1980 (In thousands) Neighborhood Civic Center Redevelopment Other Capital Total Center Construction Area Projects improvements 1980 1979 ASSETS Cash and investments $2.714 $2,278 $4,992 $8,668 Accounts receivable, not $2,017 2,017 Accrued interest receivable 62 33 95 245 $2,776 $2,017 $2,311, $7,104 $8,913 LIA!!LITIES AND FUND BALANCES Accounts payable 19 75 $ 797 21 $ 912 $1,909 Accrued liabilities 20 1,211 1,319 4 2,554 4 Deferred revenues 291 291 1,334 Total liabilities 39 1,286 2,407 25 3,757 3,247 Fund balances (deficits) (39) 1,490 (390) 2.286 3,347 5,666 $2,776 $2,017 $2,311 $7,104 $8,913 4I

CITY OF ANA! 5!M COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS) ALL CAPITAL PROJECTS FUNDS JUNE 30,1980 (In thousands) Neighborhood Civic Center Redevelopment Other Capital Total Center Construction Area Projects improvements 1980 1979 Revenue: Int;tgovernmentai revenue $ 530 $7,523 $1,070 $9,123 $5.515 Intsrest $ 341 214 555 279 Other 5 6 210 221 530 346 7,529 1,49^ 9,899 5.794 Expenditures: General government 7 7 Non-departmental 165 165 Public safety 101 101 Public works 569 5,547 7,792 265 14,173 10,927 Culture and recreation 179 179 b69 5,547 7,792 717 14,625 10.927 Excess of revenue over (under) expenditures (39) (5,201) (263) 777 (4,726) (5,133) Other financing sources: Operating transfers in 2,407 2,407 2.331 Excess of revenue and other sources over (under) expenditutes (39) (2.794) (263) 777 (2,319) (2.802) Fund balances (deficit) at beginning of year 4,284 (127) 1.509 5.666 8,468 Fund balances (deficits) at end of yere ($ 39) $1,490 ($ 390) $2,286 $3.347 $5,666 42 N A M

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F e tw 7 M C' CITY OF ANAHEIM COMBINING BALANCE SHEET ALL INTERNAL SERVICE FUNDS JUNE 30,1980 (In thousands) Duplicating Data Equipment Total and Printing Processing Supply 1980 1979 ASSETS Current assets: Casil and investments 20 2 $ 22 $ 304 Accounts recervable 67 67 7 loventory $ 125 125 Deposits 4 4 4 Total current assets 20 73 125 218 315 Equipment 54 1,351 5,858 7,263 6,568 Less accumulated depreciation (5) (527) (2,133) (2,665) (2.081) Net equipment 49 824 3,725 4.598 4,487 $ 69 $ 897 $3,850 $4,816 $4,802 LIABILITIES AND FUND EQUITY Current liabilities: Accounts payable 28 45 $ 183 $ 25G $ 251 Accrued liabilities 3 21 693 717 28 Due to other funds 453 453 528 Jrrent liabilities 31 66 1,329 1,426 807 Fund equity: Contributions from other funds 71 530 3,228 3,829 3.832 Retained earnings (deficits) (33) 301 (707) (439) 163 Total fund equity 38 831 2,521 3,390 3,995 69 $ 897 $3,850 $4,816 $4.802 A3

CITY OF ANAHEIM COMBINING STATEMENT OF REVENUE, EXPENSES AND CHANGES IN RETAINED EARNINGS (DEFICITS) ALL INTERNAL SERVICE FUNDS JUNE 30,1980 (In thousands) Duplicating Data Equipment Total and Printing Processing Supply 1980 1979 Operating revenue: Billings to City departments $ 387 $1,149 $3,507 $5,043 $3,956 Billings to other governments G47 647 593 Other 2 2 148 152 56 389 1,798 3,655 5,842 4,605 Operating expenses. Salaries and wages 116 1.114 1,095 2,325 1,863 Maintenance and operations 245 906 1,990 3,141 1,880 Depreciation 5 147 1,061 1,213 718 Interest 6 64 39 109 50 372 2,231 4,185 6,788 4,511 Operating income (losa) 17 (433) (530) (946) 94 Operating transfers in 250 260 283 Net income (loss) 17 (183) (530) (696) 377 Retained earnings (deficit) at beginning of year 340 (177) 163 (214) Transfers (to) from other funds (50) 144 94 Retained eamings (deficits) at end of year ($ 33) $ 301 ($ 707) ($ 439) $ 163 44 f E 1

9Q 8550 M M . M C .5 m E CITY OF ANAHEIM COMBINING STATEMENT OF CHANGES IN FINANCIAL 903l TION ALL INTERNAL SERV!CE FUNDS JUNE 30,1980 (In thousands) Duplicating Data Equipment ._.._ _ Total. _ _ and Printing Processing Supply 1980 1979 Financial resources were provided by: Operations-Net income (loss) 17 ($ 183) ($ 530) ($ 696) $ 377 Items not requiring (providing) working capital: Depreciation 5 147 1,061 1,213 718 Gain on sale of equipment (92) (92) Working capitalprovided (used)by operations 22 (36) 439 425 1,095 Disposal of equipment 142 142 Contributions from other funds 71 132 203 Transfers from other funds 144 144 93 108 713 914 1,095 Financial resources were used for: Additions to equipment 54 1,320 1,374 864 Dec" 'se in contributions 206 206 200 Transfers to other funds 50 50 104 206 1,320 1,630 1,064 increase (decrease) in working capital ($ 11) ($ 98) ($ 607) ($ 716) 31 increase (decrease) in working capital by components: Cash and investments 20 ($ 194) ($ 108) ($ 282) ($ 56) Accounts receivable 60 60 7 Inventories 125 125 Deposits (3) Accounts payable (28) 43 (20) (5) 71 Accrued liabilities (3) (7) (679) (689) 2 Due to other funds 75 75 10 Increase (decrease) in working capital ($ 11) ($ 98) ($ 607) ($ 716) 31 45

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passj sw - -7 m gg; CITY OF ANAHEIM COMBINING BALANCE SHEET ALL TRUST AND AGENCY FUNDS JUNE 30,1980 (In thousands) Non-Expendable ._ Agency Funds Total _ _ Trust Fund Anaheim Anaheim Museum Housing Redevelopment and Authority Agency Library 1980 1979 ASSETS Cash and investments $209 $7,301 $43 $7,553 $8,538 LIABILITIES AND FUND BALANCES Due to other governments $209 $7,301 $7,510 $8,493 Fund balances: Reserved $22 22 22 Unreserved 21 21 23 Total fund balances 43 43 45 $209 $7,301 $43 $7.553 $8,538 at

CITY OF ANAHEIM COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS YEAR ENDED JUNE 30,1980 (In thousands) Balance Balance July 1, June 30, 1979 Additions Deductions 1980 Anaheim Housing Authority ASSETS Cash and investments $ 279 $ 1,127 $ 1,197 $ 209 LIABILITIES Due to other govemments $ 279 $ 1,127 $ 1,197 $ 209 Anaheim Redevelopment Agency ASSETS Cash and investments $8,214 $12,794 $13,707 $7,30 t LIABILITIES Due to other govemments $8,214 $12,794 $13,707 $7,301 Total-All Agency Funds ASSETS Cash and investments $8,493 $13,921 $14,904 $7.510 LIABILITIES Due to other govemments $8,493 $13,921 $14,904 $7,510 4fl J7 F .., f m, p p, e

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_q 3 I i CITY OF ANAHEIM l STATEMENT OF GENERAL FIXED ASSETS JUNE 30,1980 i (in thousands) 1980 1979 General fixed assets: Land $11,654 $10,565 Buildings 7,493 7,439 Improvements other than buildings 12,535 11,871 Equipment 4.117 3,454 5 $3,5,799 $33,329 investment in general fixed assets $35,7,99 {33,329 i I I I l i 49 1

CITY OF ANAHEIM STATEMENT OF CHANGES IN GENERAL FIXED ASSETS YEAR ENDED JUNE 30,1980 (in thousands) Improvements Other Than Land Buildings Buildings Equipment Total Balance at July 1,1979 $10,565 $7.439 $11,871 $3.454 $33,329 Additions: Acquisitions 1,411 185 820 862 3,278 Deletions: Retirements 322 131 156 38 647 Transfers to internal Service funds 161 161 Total deletions 322 131 156 199 808 Balance at June 30,1980 $11,654 $7,493 $12,535 $4,117 $35,799 50 'M M i YW

~ ~. CITY OF ANAHEIM STATEMENT OF GENERAL LONG-TERM DEBT JUNE 30,1980 ~ (in thousands) 1980 1979 AMOUNTS AVAILABLE AND TO BE PROVIDED FOR THE PAYMENT OF GENERAL LONG-TERM DEBT General obligation bonds: Amount available in Debt Service Fund $ 579 $ 446 Amount to be provided 2,266 3,449 Total general obligation bonds 2,845 3,895 Other general obligation debt: Amount available in Parksites and Playground Fund 64 117 Amount to be provided 1,736 1,229 Total other general obligation debt 1,800 1,346 $4,645 $5,241 GENERAL LONG-TERM DEBT PAYABLE General obligation bonds payable $2,845 $3,895 Other general obligation debt payable: Capitalized equipment leases payable 546 646 Land purchase contracts payable: Parksites and playground land 60 117 Golf course and parksite land 550 583 Other lease-purchase agreements 644 Total other general obligation debt payable 1,800 1,346 $4,645 $5,241 51

CITY OF ANAHEIM STATEMENT OF CHANGES IN GENERAL LONG-TERM DEBT YEAR ENDED JUNE 30,1980 (In thousands) Balance Debt Balance At Service At July 1, Issuance Debt Fund June 30, 1979 of Debt Retirement Operations 1980 AMOUNTS AVAILABLE AND TO BE PROVIDED FOR THE PAYMENT OF GENERAL LONG-TERM DEST General obligation bonds: Amount available in Debt Service Fund $ 446 $133 $ 579 Amount to be provided 3,449 ($1,050) (133) 2,266 Total general obligation bonds 3,895 (1,050) 2,845 Other general obligation debt: Amount available in Parksites and Playground Fund 117 (53) 64 Amount to be provided 1,229 $ 781 (274) 1.736 Total other general obligation debt 1,346 781 (327) 1.800 $5,241 $781 ($1,377) $4.645 GENERAL LONG-TERM DEBT PAYABLE General obligation bonds payable $3,895 ($1,050) $2.845 Other general obligation debt payable: Capitalized equipment leases payable 646 $137 (237) 546 Land purchase contracts payable: Parksites and playground land 117 (57) 60 Golf course and parksite land 583 (33) 550 Other lease-purchase agreements 644 644 4 1,346 781 (327) 1.800 Total other general obligation debt payable $5.241 $ 781 ($ 1,377) $4.645 52 L" W

O \\J L>_ .N M CITY OF ANAHEIM COMBINED SCHEDULE OF INVESTMENTS -ALL FUNDS JUNE 30,1980 Description Interest Flates Amount Time Certificates of Deposit 8.00% to 17.50% $9,925,000 Bankers Acceptance Notes, Foreign 8.40% to 18.10% 9,534,615 Negotiable Certificates of Deposit 9.70% to 12.00% 6.010,578 U.S. Treasury Notes 8.875% to 15.00% 5,477,516 Federal Farm Credit Bank Notes 9.10% to 15.35% 5,000,000 Federal National Mortgage Association 8.40% to 11.70% 3,981,521 Government National Mortgage Association 8.75% to 9.50% 3,909,701 Federal Home Loan Banks 9.55% to 10.45% 2,986,753 Reverse Repurchase Agreements 16.45 % (2,890,333) U.S. Treasury Bills 6.88% to 14.08% 2,800,718 Bankers Acceptance Notes, Domestic 8.20% to 9.15% 1,982,340 Federal Home Loan Bank Discount Notes 14.125 % 897,986 Federal Land Bank Bonds 8.85 % 499,955 Passbook Savings Account 5.25 % 412 Total investments 50,116,762 Cash invested by fiscal agents and in banks, less warrants outstanding 23,322,238 Total cash and investments $,73.439,000 53

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CITY OF ANAHEIM SCHEDULE OF INSURANCE IN FORCE JUNE 30,1980 Policy Nome of Company Number Expiration Date Type of Coverage Liability Limits Property Mission insurance Co. MS 014109 January 1.1981 AN Hask. 6ncluding ear *iquake $15M arvi rental on Stadium and Deductitde - Conver4 eon Center 10% Earttwpake $100.000 att other American Protection Insurance OZF 003353 January 1.1983 Fire and Extended Coverage $137J81.990 excess through Kemper Group $15M American Protection insurance OZF 003355 January 1.1983 Hental and Earthquake on Stadium $10M part of $15M ttwoogh Kemper Group arvi Convention Center excess $15M Deductilsie - 10% Earitwtuahe $100 all other ANian2 Insurance Co. IMS 011060 January 1,1983 Rectal and Earthquake on Startun: $5M part r4 01SM excess armi Convention Center $15M Appalachian Insurance Company C4603 February 14.1981 Au nsk on personat property data $2.250.000 on equgwnent processang hardware, software arul $340.000 estea cupense entra expense Deduce)le-$100.000 Bonds Firemen's insurance Co. of Newark. New Jersey 2104206 Novemixer 22,1981 Putdic Otticial Dormi (Ducctor $100.000 of Finance) Firemen's insurance Co of Newark, New Jersey 2104207 November 22,1981 Putdic Ottacial Borwi $100.000 (Cety Treasurer) Continental Insurance Co. 2104301 December 20.1980 Employee's Blanket Bond $2.500 Honesty; covers sharmg agreement with County of Orarwyr Continental insurance Co. 2104?O3 Nuvember 22.1981 Employees' DiarAet Bond Honesty $100.000 femthtui and Faithful Performance $100.000 honesty Continental insurance Co. 2104209 November 22,1981 Employees' Blanket Dorw1 Honesty ordy $900.000 Worker's Compensation Argonaut insurance Co. CC 20375100272 Octotier 1.1980 CETA Employees Only StOtory Employers Hemsurance C 21991 Novemter 1,1980 CITY Employees $2M emess $500 000 CtH Deductitde - $'M 000 Liebility Admual Insurance Co. 9CM0835 Septomter 1,1982 Excess Datulity (Put>he hatxhty. $500.000 en ess auto arw1 E & 0) except dams arw1 ancraft $500.000 SlH Deductitdc - $500 000 Transcontinentat HDX 1773021 Septemter 1.1980 Excess t tatmhty (Pubhc batxhty, auto $4M e= cess $1M arul E & 0) except dams arws ancraft Transcontinental HDX 1773022 Septemtjer 1.1980 Encess teatmhty (Putdic hatnhty, auto $5M citess $su new1 E & 0) except dams armi ancraft Associated international AEL 05:027 September 1.1980 Excess L6atxhty (Putd*C hatwhty, auto $8M urt of $10M t arx1 E & 0) mclurbrua dams, enchmbrw; e= cess $10M ancraft (continued) bG b 'T M

CITY OF ANAHEIM SCHEDULE OF INSURANCE IN FORCE JUNE 30,1980 (continued) Policy Name of Company Number Empirettori Date Type of Coverage Liability Limits Alhanz AU5003089 September 1,1980 Excess Liabekty (Pub 6c liatzhty, auto and $2M part of $10M E & O) including darns, excludinq aarcraft excess $10M Forum insurance Co. PO 22091 September 1,1980 Pubhc Offoals E & O $1M excess $10.000 Deductit8e - $10,000 Great Attantic insurance Co. PL 0027 July 1,1981 Law Enforcement Officers $500.000 CSL Comprehensrve liabahty Cahfomia Union ZCG 003183 September 1,1980 Dams and Reservoirs $500.000 part of SIM eacess $25.000 Deductible - $25.000 INSCO Limited MLB 1112 September 1.1980 Dams and Reservoirs $200,000 part of $1M excess $25.000 Amanz AD 5004501 September 1,1980 Dams and Reservoirs $300.000 part of $1M excess $25.000 Cahfornia Union ZCX 003799 September 1,1980 Dams and Reservoirs $3.850.000 part of $9M excess SIM Amanz AD 5004502 September 1,1980 Dams and Reservoirs $3.200.000 part of $9M excess SIM Pinetop MLP 102554 September 1,1980 Dams and Reservoirs $750.000 part of $9M excess $1M Insurance of North America XPL 43462 September 1,1980 Dams and Reservoers $496.650 part of $9M excess $1M Amencan Universal AXTPL 6901 September 1,1980 Dams and Reservoers $234.450 part of $9M excess SIM National Urwon 1224757 September 1,1980 Dams and Reservoirs $468.90J part of $9M excess $1M National Union through Southeastem AV 979 0336 June 15,1981 Awo.O t Muhty $10M Aviation National Union through Southeastern AP 634 6307 June 15.1981 Pohce Hehport $10M Aviation The Insurance Co. of the State of AX 635 0308 June 15,1981 Excess Ancraft and $10M Pennsylvarna - through Southestem Hehport Liabihty Aviation Source: City Manager's Office 57

CITY OF ANAHEIM GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION LAST TEN FISCAL YEARS (In thousands) Fiscal General Non-Public Public Culture and Debt Year Government departmental Safety Works Recreation Service Total 1970-71 $2.265 $1,985 $ 6,354 $ 5,635 $2.491 $1,769 $20,499 1971-72 2,466 4,413 6,822 6,290 3,062 1,728 24,781 1972-73 2,957 1,853 9,517 7,627 3,312 1,688 26,954 1973-74 3,261 2,045 10,840 8,261 3,899 1,598 M 904 1974-75 3,777 2,341 13,258 8,894 4,868 1.565 34 703 1975-76 4,157 1,748 14,940 9,718 6,215 1,354 38,132 1976-77 5,322 6,331 16,419 11,897 7,052 1,318 48,339 1977-78 5,671 6,357 19,609 16,201 7,810 1,241 56,889 1978-79 6,892 5,171 21,476 30.126 6,860 1,206 71,731 1979-80 7,262 2,822 23,949 35,195 7,270 1,175 77,673 NOTE: Includes all govemmen*,e; fund types. Source: City Finance Department. GENERAL REVENUE BY SOURCE LAST TEN FISCAL YEARS (in thousands) Licenses Fines Inter-Fiscal Fees and Forfeits and governmental Charges for Miscellaneous Year Taxes Permits Penalties Revenue Service Revenue Total 1970-71 $10,866 $ 142 $ 364 $ 4,020 $1,853 $1,094 $18,639 1971-72 11,817 512 350 4.848 1,097 879 19,503 1972 73 13,009 573 397 5,937 2.336 886 23.138 1973-74 14,014 772 474 6,817 2,786 1,542 26,405 1974-75 15,404 601 578 8,311 2.737 1,773 29,404 1975-76 16,892 919 671 11,538 3.037 1,528 34.585 1976-77 18,154 3,657 669 14,594 3,970 688 41,732 1977-78 21,047 3,938 867 26,286 4,542 2,804 59.484 1978-79 20,188 3,178 1,018 23,943 6,836 3,424 58.587 l 1979-80 23.026 3,834 1,663 28.090 7,857 4.281 68,751 l NOTE: Includes all govemmental fund types. Source: City Finance Department. l ,8 C 7 [ C2 C C O U U E

CITY OF ANAHEIM ASSESSED AND ESTIMATED ACTUAL VALUES OF ALL CITY PROPERTY LAST TEN FISCAL YEARS Total Estimated Fiscal Common Public Unsecured Assessed Full Market Percent Year Property Utility Valuation Valuation Valuation increase 1970-71 $ 427,533,669 $27,975,480 $ 66,350,962 $ 521,860,111 $2,065,782,000 17% 1971-72 445,324,117 27,386,010 72,664,041 545.374,168 2,166,388,000 5 1972-73 493,884,693 30,041,990 84.172,349 608,099,032 2,423,495,000 12 1973-74 540,798,280 30,994,500 93,682,570 665,475,350 2,M1,901,000 10 1974-75 598,245,020 31,998,970 99,637,010 729,881,000 2,019,524,000 10 1975-76 642,440,520 30,092,076 120,583,198 793,115,794 3,172,463,000 9 1976-77 749,555,690 32,405,796 115,598,274 897,559,760 3,590,239,000 13 1977-78 879,301,410 35,510,596 127,462,798 1,042,274,804 4,169,099,000 16 1978-79 903,685,050 37,739,336 146,627,303 1,088,051,689 4,352,207,000 4 1979-80 1,031,446,820 36,319,646 163,125,078 1,230,891,544 4,923,566,000 13 Source: Orange County Assessor's Office. CURRENT TAX LEVIES AND TAX COLLECTIONS LAST TEN FISCAL YEARS Total Total Fiscal Current Current Percent of Year Levy Collection Levy Collected 1970-71 5,180,064 4,992,935 96.4 % 1971-72 5,418.580 5,336.373 98.5 1972-73 6,049,488 5,900,915 97.5 1973-74 6,115,299 5,879,795 96.1 1974-75 6,642,416 6,359,885 95.7 1975-76 7,378,264 6,934,601 94.0 1976-77 7,751,993 7,482,151 96.5 1977-78 8,384,523 8,232,390 98.2 1978-79 5,359,430 4,952,832 92.4 1979-80 5,799,946 5,439,736 93.8 Source: City Finance Department. 59

CITY OF ANAHElM SCHEDULE OF DIRECT AND OVERLAPPING BONDED DEBT June 30,1980 Government % Applicable Bonded Debt Orange County 10.525% 362.060t Orange County Building Authonties 10.525 2.166.202 Orange County Flood Control 10.525 1.843.980 Metropohtan Water District 2.000 10.137.260 County Sanitation District No. 2 (Various issues) 34.251-34.270 1.097.821 County Sanitation District No. 3 9.309 454.651 North Orange County Community CoIIege District 50.537 1.440.304 Fullerton Community College & Union High School Districts 0.263 12.187 Anaheim Union High School District (Various issues) 62.847-62.869 16.407.486 Orange Unified School District (Various issues) 17.699-18.373 3.385.286 Placentia Unified School District (Various issues) 29.066-30.160 5.554.101 Anaheim School Oestrict (Various issues) 99.493-99.498 1.810.862 Centralia School District (Various issues) 14.419-14 606 184,107 Magnolia School District 65.675 19.702 Savanna School District 46.583 271.578 Other School Districts Various 62.864 City of Anaheim

100, 2.845.000 City of Anaheim Building Authorities 100.

71.035.000* Municipal Water District of Orange County Water Facihties Corp. 11.876 9.429.544 Other Special Districts Various 36.597 TOTAL GROSS DIRECT AND OVERLAPPING BONDED DEBT $128.556.5928 Less: City of Anaheim water and electric bonds (100% self-supporting) 1.684.915 Water Facilities Corp. (paid from water charges) 9.429.544 Convention Center Bonds (Series A. B 8 C 100% self supporting) 26.790.000 Stadium, Inc. (100% self-supporting) 44.245.000 TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT 46.407.133 iExcludes share of Orange County lease-purchase obligahons.

  • Excludes $25.655.000 Anaheim Commuruly Center Authority Bonds sold October 21,1980.

1 Excludes revenue and tax allocation bonds. SHARE OF AUTHORIZED AND UNSOLD BONDS: Metropohtan Water District. .$7.300.000 Placentia Unified School District .55.525.447 Centralia School Distrist. .$ 249.449 STATE SCHOOL BUILDING AlD REPAYABLE AS OF JUNE 30,1980: $31.356.346 Source: Cahfomia Municipal Statistics. Inc. 60 "V T* r-J} k

M ~3 E CITY OF ANAHEIM SCHEDULE OF NET DEBT RATIOS Flatio to Net Bonded Debt Fiscal Net General Assessed Per Year Bonded Debt Valuation Net Bonded Debt Capita 1977-78 $2,031,772 0.19% $69,228,375 $338.03 1978-79 1,597,774 0.15 52,487,662 251.74 1979-80 1,160,085 0.09 46,407,133 219.21 Note: Information prior to 1977-78 is not available. Source: City Finance Department and California Municipal Statistics, Inc. STATEMENT OF LEGAL DEBT MARGIN JUNE 30,1980 Assessed Valuation $1,230,891,544 Charter Debt Umit 15% of Assessed Valuation $ 184,633,732 Amount of Debt Applicable to Limit 2,845,000 Legal Debt Margin $_1_81,788,732 Percent of Charter Debt Limit Authorized 1.54 % Source: City Finance Department. l l G1 l

CITY OF ANAHEIM PROPERTY TAX RATES - ALL OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS Basic

County, City.

County County Metropolitan County County Fiscal School Orange School Sanitation Flood Water Cemetery Harbor Water Year Levy City County Distilcts District Control District District District District Total 1970-71 1.0500 1.7160 6.5633 .4256 .2505 .1700 .0082 .0483 .0800 10.3119 1971-72 1.0500 2.0688 6.5185 4255 .2481 .1700 .0025 .1247 .0800 10.6881 1972-73 1.0500 2 1950 6.6102 .4254 .2395 .1500 .0042 .0083 .0800 10.7626 1973-74 1.0500 1.7344 6.3384 .4206 .2332 .1400 .0042 .2000 .0700 10.1908 1974-75 1.0500 1.6582 6.1420 .3825 .2222 .1400 .0042 .1843 .0700 9.8534 1975-70 1.0500 1.6875 6.1294 .3793 .2169 .1300 .0074 .1091 .0700 9.7796 1976-77 .9500 1.4854 5.7992 .3467 .1872 .1200 .0048 .1979 .0800 9.1712 1977-78 .8800 1.3761 5.8589 .2988 .1888 .2000 .0059 .1659 .0800 9.0544 1978-79 4.0000 .1470 .0032 .5312 .0215 .0171 .1000 4.8200 1979-80 4.0000 .0950 .0028 .4640 .0240- .0146 .1000 4.7004 Sourca-Orange County Auditor / Controller's Office. RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT TO TOTAL GENERAL EXPENDITURES

  • LAST TEN FISCAL YEARS Total Ratio of Debt Fiscal Total Debt General Service to General Year Principal Interest Service Expenditures
  • Expenditures (%)

1970-71 $1,310,000 $459,033 $1,769,033 $20,499,000 8.6% 1971-72 1,310,000 418,448 1,728,448 24,781,000 7.0 1972-73 1.310,000 377,863 1,687,863 26,954,000 6.3 1973-74 1,260,000 337,840 1,597,840 29,904,000 5.3 1974-75 1,260,000 301,880 1,561,880 34,703.000 4.5 1975-76 1,085,000 265,920 1,350,920 38,132,000 3.5 1976-77 1,085,000 230,398 1,315,398 48,339,000 2.7 1977-78 1,045,000 194,435 1,239,435 56,889,000 2.2 1978-79 1,045,000 159.007 1,204,007 71,731,000 1.7 1979-80 1,050,000 123,580 1,173,580 77,673,000 1.5 ' Note: Includes all governmental fund types. Source. City Finance Department. 62 r s CBE C"u ~

g-- ame g psaq - g y CITY OF ANAHEIM SCHEDULE OF REVENUE BOND COVERAGE WATER UTIUTY FUND Net Revenue Available Gross for _ Debt Service Requirements Reverst Expenses Debt Service Principal Interest Total Coverage 1971-72 $4,883,uuo $1,881,000 $3,002.000 $ 51,671 $ 51,671 58.1 1972-73 4,994,000 2,816,000 2,178,000 $ 85,000 100,973 185,973 11.7 1973-74 5,926,000 3,330,000 2,596.000 90,000 95.723 185.723 14.0 1974-75 5,903,000 4,092,000 1,811,000 95,000 90.173 185,173 9.8 1975-76 6,914,000 4,961,000 1,953,000 100,000 84,323 184,323 10.6 1976-77 7,691,000 5,317,000 2,374,000 110,000 78,023 188,023 12.6 1977-78 6,113,000 5,282,000 831,000 115,000 71.272 186.272 4.5 1978-79 7,714,000 6,162,000 1,552,000 120,000 65,183 185,183 S.4 1979-80 8,985,000 7,128,000 1,857,000 130,000 59,623 189,623 9.8 Source: City Utilities Department. SCHEDULE OF REVENUE BOND COVERAGE ELECTRIC UTILITY FUND Net Revenue Debt Service Requirements Gross Available (excluding Subordinated Bonds) Revenue Expenses for Debt Service Principal interest Total Coverage 1972-73 $20,495,000 $12,327,000 $ 8,168,000 $ 324,488 $ 324,488 25.2 1973-74 30,732,000 19,797,000 10,935,000 $ 200,000 425,650 625,650 17.5 1974-75 43,999,000 35,871,000 8,128,000 225,000 410.775 635,775 12.8 1975-76 49,293,000 43,215,000 6,078,000 250,000 394,150 644,150 9.4 1976-77 54,666,000 50,305,000 4.361,000 325,000 746,625 1,071,625 4.1 1977-78 65,299,000 56,405,000 8,894,000 350,000 722,250 1,072,250 8.3 1978-79 72.042,000 64,891,000 7.151,000 375,000 697,000 1,072,000 6.7 1979-80 92,554.000 78,231,000 14.323,000 400,000 668,875 1,068,875 13 4 Source: City Utilities Department. 63

CITY OF ANAHEIM DEMOGRAPHIC STATISTICS Average Annual City City of Anaheim Population Orange Population Rank in Size Square Percent County Percent of California Year Miles Population Change Population of County Cities 1900 3.70 1,456 19,696 7.4 % 51 1910 3.70 2,628 8.1% 34,436 7.6 66 1920 3.70 5,526 11.0 61,375 9.0 42 1930 3.70 10,995 9.9 118,674 9.3 44 1940 3.70 11,031 130,760 8'.4 Not Available 1950 4.40 14.556 3.2 216,224 6.7 68 1960 27.34 104,184 61.6 703,925 14.8 12 1970 33.10 166,701 6.0 1,420,386 11.7 8 1973 37.98 186,200 3.9 1,584,259 11.8 8 1974 38.62 187,400 0.6 1,646,314 11.4 8 1975 38.84 191,800 2.3 1,684,462 11.4 8 1976 38.97 196,400 2.4 1,722.100 11.4 8 1977 39.40 200,100 1.9 1,768,000 11.3 8 1978 39.95 204,800 2.3 1,808,200 11.3 8 1379 42.04 208,500 1.8 1,851,000 11.3 8 1980 42.05 211,700 1.5 1,896,200 11.2 8 Source: U.S. Bureau of the Census, California Department of Finance, City Planning Department. 64 Y VI M K s

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CITY OF ANAHEIM CONSTRUCTION ACTIVITY LAST TEN FISCAL YEARS Number of Fiscal Building Percent Estimated Percent Year Permits issued Change Valuation Change 1970-71 4,079 $141,078,552 1971-72 4,804 18 % 87,959,670 (38'b) 1972-73 5,533 15 74,556,557 (15) 1973-74 4,787 (13) 113.462,272 52 1974-75 4.593 (4) 78,436,011 (31) 1975-76 6,002 31 148,692,887 90 1976-77 6,279 5 224,385,885 51 1977-78 7.268 16 216,367,949 (4) 1978-79 4,227 (42) 112,161,104 (48) 1979-80 4,270 1 187,893,618 68 Source: Building Inspection Division of City Public Works Department. PRINCIPAL TAXPAYERS 1979-80 Assessed Percent of Valuations 1979-80 Total for Revenue Assessed Taxpayer Product Employees Purposes Valuation Disneyland Amusement Park Entertainment 6,0('9 $34,768,680 2.83% Rockwell Intemational Corp. Autonetics 8,00n 32,964,640 2.68 Disneyland Hotel Hotel 1.400 15.061,040 1.22 General Motors Corp. (Delco-Remy Division) Batteries 475 8,486,370 0.69 Northrop Corporation Aerospace Electronics 1,800 6,928,555 0.56 Kwikset Division of Emhart industries Locksets 1,800 6,674,685 0.54 Califomia Computer Products, Inc. Computer Peripherals 800 6,109.270 0.50 interstate Electronics Corp. Division of A-T-O, Inc. Electronics 1,700 3,560,260 0.29 Monsanto Plastic and Plastic Containers, Resins Co. Film and Sheeting 350 3.213,520 0 26 $117,767,020 9.57"b Source: Orange County Assessor's Office and " Orange County Business." February / March,1980. 65

CITY OF ANAHEIM MISCELLANEOUS STATISTICAL INFORMATION Founded - October 5,1857 Charter Cih - January 14,1965 Government - Council-Manager Form Municipal Water Plant - 51,600,000 Gallons Daily Average Distributed Production 78,200,000 Gallons Maximum Daily Distribution 5,748 Hydrants 93,461 Gallons per Minute; Plant Capacity 624 Miles of Mains 49,083 Customers Municipal Electric Plant - 82,571 Customers 1211 Males of Circuit Line 734,000 KVA Distribution Transformer Capacity Installed Police Protection 1 Station 424 Regular Employees 34 Part-time Employees 62 Crossing Guards and Traffic Controllers Fire Protection - 9 Stations 223 Regular Employees 9 Part-time Employees Source: City Finance and Utilities Departments. 66 '7 7" N" L.,

(-/ A City of Riverside's Answers to San Onofre Nuclear Generating Station, Unit Nos. 2 and 3 Docket Nos. STN 50-361 and STN 50-362 Request for Additional Financial Information Question No. 6: Describe the nature, amount, ratings and success of each municipal applicant's most recent revenue and general obligation bond sales. Indicate the current total out-standing indebtedness in each cat (gory for each entity. Answer No. 6: Riverside's most recent issue of Electric Revenue Bonds was its Electric Revenue Bonds, Issue of 1980, in the principal amount of $80 million and its Electric Refunding Revenue Bonds, Issue of 1980, in the amount c? $9,070,000. Both bond issues are dated as of October 1, 1980. The purposes of these bond issues were, respectively, to provide funds to acquire Riverside's ownership interest in San Onofre Nuclear Generating Station Units 2 and 3 from Southern California Edison Company, to provide funds to pay for certain costs of construction after acquisition of the ownership interest in the generating station and to refund certain previous Electric Revenue Bonds. The total principal amount of Electric Revenue Bonds outstanding as of June 30, 1980 was $9,410,000. As indicated above, all of the Electric Revenue Bonds previously issued i by the City before October 1, 1980 were refunded by the Electric Refunding Revenue Bonds, Issue of 1980. At the present time the total principal amount of outstanding Electric Revenue Bonds and Electric Re-funding Revenue Bonds is $89,070,000. The Electric Revenue Bonds, Issue of 1980, were rated Aa by Moody's Investor Service and A+ by Standard & Poor's. The net interest rate payable by the~ City on these bonds was 9.47%. The principal amount outstanding as of June 30, 1980 of General Obligation Bonds was $3,665,000. The-last issue of General Obligation Bonds by Rivernide-was issued in 1968. i

Question No. 7,: Provide copies of the official statement for the most recent bond issue. Provide copies of the preliminary statement for any pending security issue. Answer No. 7: Attached hereto is a copy of the Official Statement pertaining to the Electric Revenue Bonds, Issue of 1980, of $80 million which is the most recent issue of Electric Revenue Bonds sold by the City of Riverside. There are no pending security issues. e

F Question No. 8: Provide copies of the most recent annual financial report and the most recent interim financial statements for each municipal applicant. Answer No. 8: Attached hereto is a copy of the Annual Financial Report for the period ending June 30, 1980. There are no interim financial reports which have been prepared by the City of Riverside for the period after June 30, 1980. l e

o 1 i l Question No. 9: Is each participant's percentage ownership 1 share in the facility equal to its percentage entitlement in the electrical capacity and output of the plant? If not, explain the difference (s) and any resultant effect on any participant's obligation to provide its share of operating cost. -Answer No. 9: Riverside's percentage ownership interest in San Onofre Nuclear Generating Station Units 2 and 3 is 1.79%. Its entitlement to electrical capacity and output of those two units is equal to its percentage ownership j interest. Units 2 and 3 will, however, share certain facilities (co==on facilities) with Unit 1 at San Onofre Nuclear Gene _ating Station, in which Riverside will have no ownership interest. The parties have -dealt with this problem by reducing Riverside's ownership interest in co==on facilities. The fact that Riverside owns a different percentage of the con =on facilities than it owns of Units 2 and 3 of San Onofre liuclear Generating Station should have no effect upon Riverside's obligation to provide its share of operating costs. + t r l t 5 .[ i 4 F 1 x .m. . I. .m l. m. '2 m m --m .. m . m

Question No. 10: Describe the rate-setting authority of each municipal applicant and how that authority may be used to insure the satisfaction of financial obligations related to both capital and operating costs of the facility. Describe any restrictions on such rate-setting authority and how this may affect the applicant's ability to satisfy its obligations to the project. Describe the nature and amount of each municipal applicant's most recent rate relief action and the anticipated effects on revenues. Indicate the nature and amount of any pending rate relief action (s). Answer No. 10: Section 1302(e) of the Charter of the City of Riverside provides that the Board of Public Utilities of the City of Riverside has the power to establish rates for the electric utility owned and operated by the City subject to approval of the City Council. Section 1304 of the Charter of the City of Riverside provides that the revenues of the electric utility shall be kept separate and apart from all other monies of the city in the appropriate revenue fund and shall be used for the pur-poses of paying operating and maintenance expenses of the utility, for the payment of principal and interest on revenue bonds issued by the City of Riverside to finance additions to its electric utility and for capital expenditures of the electric utility. The Public Utilities Board, thus, is empowered to set electric rates to recover capital and operating costs in its electric rates sufficient to pay its obligations incurred by reason of its ownership interest in San Onofre Nuclear Generating Station Units 2 and 3. Riverside is not aware of any restriction on its ability to satisfy its obligations for its ownership interest in San Onofre Nuclear Generating Station Units 2 and 2. On January 23, 19 8.., the Board of Public Utilities established an electric rate increase and on February 3, 1981 the City Council approved the rate increase to be effective on February 3, 1981 on all bills issued on or after March 5, 1981. The

r Answer No. 10: increase was imposed contingent on a (Continued) wholesale rate increase by Southern California i Edison. Southern California Edison has - requested a wholesale rate increase to become effective on February 14, 1981. The Federal Energy Regulatory Ccmmission suspended the Edison rate increase for five months to be effective July 16, 1981. l The City's rate increase is rescinded and the Board and Council will consider a r rate increase at a future date. The rate increase was designed to increase the electric utilities revenues by approxi-nately S6.6 million annually. 4 1 1 1 G 9 u E -f t w-wr -4,< t-4w ny y w s--, .r.- y- ,,*w-y- y ,+- ry -y-- , *v n w .-".w-- t e y--#--+w-

~~ r Question No. 11: If a membership organization is participating in a joint ownership, explain the contractual arrangement among the members that assures that funds will be available to meet the parties' obligations to the project. Provide copies of the power sales contract. Answer No. 11: This question is not applicable because Riverside is financing its own share of the cost of ownership in San Onofre Nuclear Generating Station Units 2 and 3.

= Question No. 12: Describe the applicant's plan for financing its share of the cost of eventual shutdown of the facility and maintenance in a safe shutdown condition. Answer No. 12: The City is currently attempting to determine which of several methods it should adopt to finance its share of the cost of eventual shutdown of San Onofre Nuclear Generating Station Units 2 and 3. A principal factor in this determination will be that those electric customers who benefit from use of the Generating Station facilities should also pay the cost of shutdown of the Generating Station. It is also the intention of the City to comply with the regulatory requirements of all governmental authorities having jurisdiction to regulate decommissioning cost recovery. 1 4 4 I ~ t l k J. s a,,

~~ NEW ISSUE Interest on the Bonds is exempt, in the opmion of Bond Counsel, from uncome lates of the limicJ 5 tate, o r America under present federal mcome tax laws, and is also crempt from personal uncome taxes of the state et Cahfornia u tJer present state income tax laws. CITY OF RIVERSIDE, CALIFORNIA $80,000,000 ELECTRIC REVENUE BONDS, ISSUE OF 1980 $9,070,000 ELECTRIC REFUNDING REVENUE BONDS, ISSUE OF 1980 Dated: October 1,1980 Due. October 1, as shown below Interest is payable *.emi-annually on April 1 and October 1 in e.ich sear, commencing Arn! 1.1441. The Bonds are issuable as cc,upon bonds in the denomination of $5,000 registrable as to pnncipal and interest. Principal, premium, if any, and interest on the Bonds are payable at the oft:ce of the City Treasurer of the City of Riverside, or, at the option of the holder, at any Paying Agent of the City in Los Angeles, San Francisco, Chicago or New York. The Bonds are subject to redemption prior to maturity, at the option of the City, on or af ter October 1. 1991,in whole, or in part by complete maturity or matuntws as selected by the City Council of the City at its discretion, on any interest payment date at an initial redemption pnce of 1045, p*us accrued interest The Bonds due October 1,2013 are also subject to redemption, by lot, in part on October 1,2004 and on each October I thereafter from Mandatory Sinking Account payments at a pnce of 100'; plus accrued interest. The Bonds are being issued to finance the acquisition of a 1.797 ownership interest in the San Onofre fy. Nuclear Generating Station, Units 2 and 3, from the Southern California Edison Company, to fund certain f.- reserves, to pay interest on a portion of the Bonds and to refund certain outstanding electnc revenue bonds of the City. The Bonds are payable solely from the Net Operating Revenues of the Electric Su~ tem of the Caty and Jo nct constitute an obligation or endence mdebtedness of the City. MATURITIES, AMOUNTS, RATES AND YIELDS OR PRICES (Accrued interest to be added) '"*Dm***' e Pnanp.i Amou.0 f lectr c Pri.cip.I 4mou.t Trif.," d'.",n*,', . ;',. s"",4. .""'"..a. 4,5,"

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..".".704. n.f..O"C.. =.. 1981.. $450,000 104 6 20's 1993.. 5470,000 $ 1,250,000 8'.5 1007 1982.. 450,000 10 6.40 1994. 470,000 1,375.000 R.40 100 1983.. 450,000 10 6.60 1945.. 470.000 1.500.000 R': A 55 4j 1984-455,000 $ 525,000 10 6.80 1996.. 470,000 1,650.000 8.70 100 1985-455,000 575,000 10 7.00 1997 300,000 1.800.000 8 80 8 85 1986.. 455,000 650,000 10 7.20 1998. 300,000 1,950.000 4 100 1987.. 425,000 700,000 10 7.40 1999.. 300,000 2,125,000 0.10 100 1988.. 465,000 775,000 10 7.60 2000.. 300.000 2,325.000 9.10 9.15 1989.. 470,000 850,000 10 7.80 2001. 220,000 2.525.000 9.20 100 1990.. 470.000 925.000 10 8.00 2002.. 130,000 2.750,000 9'. 100 1991.. 470,000 1,025,000 10 8.10 2003.. 125,000 3,000.000 4'. 9 30 1992... 470,000 1,125,000 8.10 100 550,600,000 9.704 Term Bonds Due October 1, 2013 at 1009 The Bonds are offered when. as, and if :ssued and received by the Underwriters, and subject to the approval of legality by O'Melveny & Myers, Los Angeles, California. It is expected that the Bonds in definitive form will be ready for delivery in Los Angeles, California on October 30.1980. October 21,1980

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CITY OF RIVERSIDE, CALIFORNIA CITY COUNCIL Albert C. Brown, Afayor Robert A. Buster Terry Frinel Robert E. Bowers Ronald O. Loveridge j / Sam Digati Jean Mansfield f Edwin Shepard i i BOARD OF PUBLIC UTILITIES Edward J. Campbell, Chairinan Lester G. Heustis Glenn W. Pratt Tony M. Esquibel-Joseph L. Renck CITY OFFICIALS Douglas G. Weiford, City Af anager Alice Hare, City ClerA Everett C. Ross, PuNic Utihtics Director Harold E. Brewer, Tinance Director John Woodhead, Caty Attorncu and City Treasurer BOND COUNSEL O'hielveny & Afyers f SPECIAL COUNSEL - Alan R. Watts CONSULTING ENGINEER R. W.' Beck and Associates FINANCIAL ADVISOR James J. Lowrey & Co. Incorporated . ~

No dealer, broker, salesman or other person has been authorized by the City of diverside or the Public Utilities Department or by the underwriters to give any information or to make any representations, other than as contained in this Ofticial Statement, and if given or made such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offet to sell or the sc 'ation of an offer to buy, nor shall there be any sale of the Bonds by any person in any N -ction in which it is unlawful for such persons to make such offer, solicitation or sale. The information set forth herein has been furnished by the City of Riverside, the 'ublic Utilities Department and other sources which are believed to be reliable, but is not guarantee <. as to accuracy or completeness, and is not to be construed as a representation by the hnancial advisor or by any underwrtter. The information and expressions of opinion contained herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City of Riverside or the City's Electric System since the date hereof. TABLE OF CONTENTS Page Page I n trod uction......_................. 2 Future Plans of the Electnc Surem 25 I Nuclear Regulatorv Commnuon 24 The City's Pubhc Utahties Department _.. General Descn ption...........,....... 2 Other Protects of the Flectric Sntem 25 Management of the Pubhc Utihties intermountain Power Protect 2; Department...... ..... ~.. 2 White Pine Proiect ~ 2e $ccunty for and Sources of Payment for the Cahfornia Coal Protect..... Bo n ds.............. _... -..... ~ 3 North Brawley Geothermal Prorect 27 - Pledge Under the Resolutions..-.-....... 3 Other Possible Rewurces 27 Revenues and Flow of Funds Under the Southern Cahfornia Pubhc Power Authonts 27 Resol unons..._........-................. _...... 3 Desenpt!en af the Bonds.. 27 Reserve Account and Refunding Bond Reserve General 27 Rate Covenant...... _. 4 Optional Rederg. tion.. 27 Accoun t.. _... 5 Sinking Acccont Redemption Proviuons. 24 Additional Debt.. 5 Notice of Redemption 24 Other Covena nts.......- _.....-... Apphcahon of Bond Proceeds 6 City of Riverside - Economic Background. 2S 7 Genera!........... 24 Refunding Plan 7 Municipal Government.. 29 Estimated Sources and Uses of Funds to Effect Population. 29 the I:efunding Plan._....... 9 Building Activity 29 City of Riverside - The Electnc System.............. 9 Employ ment - 30 i Lstimated Financial Informahon for hscal 1%0 9 income....~ 32 l Existing Facihties...... _. 9 Retail Sales.. 33 Power Supply...... 10 Education............. 33 Cons va.ers............ _. 11 City of Riverude - Financial Information. 34 Electnc kates and Charges....... -.... 12 Certain Financial Information. 34 Operating Expenses of the Electric System.. 15 Budgetary Precess...................... 35 Transfers to the General Fund of the City.. 15 Assessed Valuations and Tax Collections. 36 Debt Service Requirements... Ccnstituhonal Limitation on Governmental..... 16 Direct and Overlapping Debt. 37 Spending _..._........ 39 Retirement System.. Coverage of Debt Service.. I7 Litigation.... '...................... _...... 40 Summary Projection of Operating Results of the... _................ -... 17 Relating to the City and the Bonds.. 40 Other Litigation. 40 Electne System. 17 Legal Opinion. 41 The Project 19 Tax Exemption. 41 General.'. 14 Closing Documents.....-........ 41 Desenption of the Protect.. 14 Appendn A - Consulting Engineer's Report. A.1 j Estimated Financing Requirements for the Appenda B - Summarv of the San Onofre - l Protect-...... -.............. 20 Umts 2 and 3 Participatmn Agreeme it... B-1 ' Status and Schedule of Construction....._..... 21 Appendn C - Summary of the Fdner-Rnerude i Nucicar Fuel. 21 San Onofre Transn ission Service Agreement.. C-! Permits and Approvals... City's Future Power Supply Requirements and...... 22 Appendix D - Summary of the Intergrated Estimated Cost of Power to the City from the....... 22. Appenda E - Summary of the Supplemental.... D-1 Operations Agreement _ -....._... -. Future Power Supply Resources......- Agreement for the integrahon of Rivernde's Prorect ' Considerations and Assumptions of the............ 23 Entitlements in San Onofre Units 2 and 3...... E.1 Appenda F - City of Rwerude Electric f und Consulting Engineer..... 23 Audited Financial Statemenu for the icar Conclusions of the Consulting Engineer _.. 24 ~ Statements for the Year Ended lune 30.1%0. F-1 Ended June 30.-1979 and Unaudited Financial Certain Factors Affecting the Electnc Utihty Industry and Ef1ects of the Three Mile Appenda G - Proposed Form of Legal Island Accident, 24 Opinions..._. G-1 - Regulatory Matters.._.. 24

Official Statement of the CITY OF RIVERSIDE, CALIFORNIA Relating to its $80,000,000 Electric Revenue Bonds, Issue of 1980 $9,070,000 Electric Refunding Revenue Bonds, Issue of 1980 INTRODUCTION The Official Statement, including the Appendices hereto. is provided to furnish information in connection with the public sale by the City of Riverside, California (the " City") of 540.000 000 aggregate principal amount of Electric Revenue Bonds, Issue of 1950 (the "1940 Bonds"i and $9,070,000 aggregate principal amount of Electric Refunding Revenue Bonds l> sue of 19so (the " Refunding Bonds")(herein collectively referred to as the " Bonds"). The Bonds were authorized by two resolutions of the City Council (herein collectively referred to as the " Resolutions") adopted on July 29,19S0 and thereafter amended, all in accordance with the provo. tons of the City Charter. The 1980 Bonds are being issued to acquire a 1.797, ownership interest in the San Onof re Nuclear Generating Station, Units 2 and 3 (the " Project"), from the Southern Cahfornia Edison Company (" Edison"), and the Refunding Bonds are being issued to refund the City's SR4no.000 outstanding principal amount of Electric Revenue Bonds, Issues of 1966.1969,1471 and 1473 (the "Esisting Bonds"). Of the two resolutions passed by the City Council, one resolution provides for the issuance of the 1980 Bonds to acquire the ownership interest in the Project and the other resolution provides for the issuance of the Refunding Bonds to refund the Existing Ibnds AllBonds are equally secured as described in this Official Statement. The Project is currently owned by Edison and San Diego Gas and Electric Company CSan Diego"), Edison has been designated as project manager and operator. The City proposes to purchase its share of the Project from Edison. Edison has signed, and the City, upon delivery of the Bonds, will sign, the Participation Agreement, which provides, among other things. for the City to own its share of the Project and certain common facilities, for the City to pay Idison for the 1 799 ownership share and for Edison to construct, operate and maintain the Project on its behalf and on behalf of the other owners of the Project. The City has signed an Integrated Operations Agreement and, upon delivery of the 1980 Bonds, will sign a Supplemental Agreement with Edison, which agreements provide, among other things, integration of Project power and future City generating resources with those of Edison for operation, including the scheduling and dispatching of power from the City's ownership share of the Project with the scheduling and dispatching of output from Edison's other generating resources. Under the agreements, Edison will continue to supply the City's power and energy requirements over and above the capability of the City's own generating resources and will credit the City on its monthly billing statements for the pow er and energy generated by the City's own generating resources that are integrated with the operation of the Edison resources. Summaries of the Participation Agreement, the Transmission Service Agreement. the Integrated Operations Agreement and the Supplemental Agreement (all terms hereinaf ter dehned) are attached hereto as Exhibits B, C, D and E, respectively. It is estimated that proceeds of the 1980 Bonds will be allocated as follows: (i) 534.833.000 to the Construction Fund which, together with investment income thereon, will be used to pay the City's proportionate share of the cost of the Project; (ii) $16,455,000 to the Bond Service Account to par interest on 100% of the 1980 Bonds until June 1,1982 and on 509 of the 1980 Bonds uniil August I, 1983;(iii) $8,212,000, the maximum amount of annual debt service on the 1980 Bonds, to the Reserve 1

4, = = Account and (iv) 5500,000 to allow for certain co.ts of issuance. and that the proceeds of the Refunding Bonds will be allocated as follows (i) 59.561,000 to the Escrow Fund te prmide for the payment of the pnncipal, interest and redemption premium on the Eustmg Bonds tu s WMO to allow for certain co+ts of issuance and (in) 5159,000 to the Construction Fund bec 'Apphcatmn of Bond Proceeds ") The BonJs ace rayaHe w!, - trom the Net Orcrating Revenuc~ c* the cie t'n r:,F :, ut ' t a ecm

  • tb Ciru <the " Electric % tem"> and other ava:!aNe *unds r!eJged unle' the Rew;uw ~

Ihe lic =:J~ Jo va ce ~!nute an &!;gatten nor crtience a general di:gatwn indebtcJnen et the City and ne:ther the *u.'i wth avi s rcJz! wr the tat:ng power of the Citv is pledged to thnr ra. ment. Bnef descnptions of the Bonds, the secunty therefor and the Electnc System, and summanes of the Resolutions are included elsewhere in this Ofhcial Statement Such descnprions and summanes do not purport to be comprehensive or dehnitive. All references herein to the Bonds the Resolu-tions and any other documents are qualihed in their entirety by reference thereto Terms not denned herein shall have the meanings as set forth in the respective documents THE CITYS PUBLIC UTILITIES DEPARTA1ENT General Description Under the provisions of the California Constitution, Article XIll of the Charter of the City, the City owns and operates both electncal and water public utihty service + for its citizen s The Department of Pubhc Utihties (the " Department") esercises junsdiction over the electne and water utibtles owned. controlled, and operated by the .ty. The Department is under the mangement and control of the City Afanager, sub;ect to the powers and duties vested in the Board of Pubhc Utihties. and is supervised by the Public Utilities Direcor who is responsible for design. conctructwn maintenance and operation of the electnc and water utilities Atanagement of the Public Utilities Depar: ment Es tRETT C. Ross - Appointed Director of the Department in 1955 following two years' service as Assistant Afanager of the Department. Received a Bachelor of Science in Electncal Engineenng in 1047 from Stanford University. Registered electrical engmeer in the State of Cahfornia Senior member of the Institute of Electrical and E'ectronic Engineers. hfember of the Amencan Water Works Association. Past Chairman of California Regional Water Quality Control Board. Santa Ana Region. hiember of the Board of Governors and Past President, California Afumcipal Utihties Association. The Electric System's othces are located at Riverside City Hall, 3000 Niain Street, Riverside. Cahfornia 92522. For additional information contact Afr. John K. Eide. Utthries Administrative Ofhcer, at (714) 757-7504. The Board of Public Utilities (the " Board"). created by Article Xill, Section 1301 of the City Charter, consists of five members appointed by the City Council. As set forth in said Article X111, the Board, among other things. has the power and obligation to:(1) consider the annual budget for the Department during the process of its preparation and make recommendations with respect thereto to the City Council and the City Afanager, (2) within the limits of the budget of the Department, authorize and purchase of equipment. materials or supplies exceeding the sum of 52.000, and authonze the acquisition, construction, improvement, estension, enlargement, diminution, or curtailment of all or any part of any public utility system, and no such purchase, acquisition. construction, improvement, extension, enlargement, diminution or curtailment shall be made without such authorization,(3) within the limits of the budget of the Department, make appropria-tions from the contingency reserve fund for capital expenditures directly related to the apprornate utility function,(4) require of the City hianager monthly reports of receipts and expenditures of the Department, segregated as to each separate utility, and monthly statements of the general condition of the Department and its facilities, (5) establish rates for water and electric revenue producing 2

s utilities owned, controlled, or operated by the City, but subject to the approval of the City Council, (6) approve or disapprove the appointment of the Director, who shall be the department head. (7) designate its own secretary, (8) make such reports and recommendations to the City Council regarding the Department as it shall deem advisable, (9) recommend to the City Council, which i. shall approve or disapprove such recommendatmn, that the City issue revenue bonds and (10) exercise such other powers and perform such other duties as may be presenbed by ordmance not inconsistent with any of the provisions of the City Charter. The present members of the Board and their term of appointment are: EDWARD 3. CAMPHi t t -- Chairman of the Board, term expires October 31.1991. Appointed as a Board member in March 1972. Businessman. Owner of Preston and Simons Mortuary. LtsTtR G. littsTis - Appointed as a Board member in 1968, term expires October 31, 1980 Registered Mechanical Engineer in the State of California. Retired Chief Engineer, Alcan Western Products, Division of Alcan Aluminum Corporation, in Riverside. Tosy M. Esociati.- Appointed as a Board member in July 1972, term expires October 31,1980. j Owner and Chairman of Board of Bonita Enterprises, Inc., builder. Past commissioner, Riverside r County Flood Control & Water Conservation District, Zone 1. Gt ENN W. PR ATT - Appointed as a Board member in November 1978, term expires October 31, 1982. President of inland Pipe and Supply Company, Josten L RENCK - Appointed as a Board member in March 1980, term expires October 31, 1983. Retired owner of Renck Electric. Also former member of Parks Commission and former City Councilman. SECURITY FOR AND SOURCES OF PAYMENT FOR TIIE BONDS Pledge Under the Resolutions Pursuant to the City Charter and the Resolutions, the Bonds are secured by a pledge, charge and lien upon the Net Operating Revenues of the Electric System. Net Operating Revenues are dehned 7 in the Resolutions as Gross Operating Revenues less Operating and Maintenance Evenses. Gross

j Operating Revenues consist of all revenues from rates, fees and charges for providing electric

{ service to persons and real property and all other fees, rents and charges and other income derived j by the City from the ownership, operation, use or service of the Electric System. Operating and Maintenance Expenses are the reasonable and necessary current expenses of maintaining and operating the Electric System, including any necessary contribution to the retirement of the Electric System employees. The General Fund of the City is not liable for the payment of the Bonds or interest thereon, nor is the credit or taxing power of the City pledged for the payment of the Bonds or interest thereon. The holder of the Bonds or coupons may not compel the exercise of the taxing power by the City or the forfeiture of any of its property. The principal of and interest on the Bonds and premiums, if ' any, upon the redemption of any thereof are not a debt of the City nor a legal or equitable pledge, charge, tien, or encumbrance upon any of its property, or upon any of its income, receipts, or revenues, except the Net Operating Revenues of the Electric System which are, under the terms of the Resolutions, pledged to the payment of the Bonds. Revenues and Flow of Funds Under the Resolutions -Pursuant to the Resolutions, all Gross Operating Revenues are deposited with the City Treasurer (the " Treasurer") to the credit of the Electric Revenue Fund. The Treasurer shall allocate or transfer from the Electric Revenue Fund on the first day of each calendar month the following . amounts in the order of priority set forth below: 3

s First, to the hiaintenance and Operation Account, amounts suttcient for the payment of t Operating and Maintenance Expenses of the Electric System for the current month Second, (a) so long as any of the 1980 Bonds are outstanding for deposit in the Hond Se Account, an amount which, when added to the provision for capitalized interest and an amounts paid into said Account during the preceding month, will equal the total of (i) one-sisth of the interest which will become due and payable on the outstandmg 1980 Bonds within th ensuing six months and (ii) one-twelfth of the principal amount which will mature and be e next Refunding Bonds are outstanding, for deposit in the Refundi which, when added to any other amounts paid into said Account during the preceding me equal the total of(ij one-sixth of the interest which will become due and payable on th Refunding Bonds within the next ensuing six months and (ii) one-twelfth of the principal twelve months; provided, however, that on July 1.1984 the merge with and into the Bond Service Account and, thereafter, all payments required to be mad into the Refunding Bond Service Account will be made into the Bond Service Acc ount. Third, for deposit in the hiandatory Sinking Account, an amount equal to one-twelfth of the minimum principal amount of Term 1980 Bonds to be redeemed within the next ensuing months. Fourth, (a) for deposit in the Reserve Account, in the event of an insufhciency thereof amount equal to one-sixtieth (1/60) of the hiaximum Amount of Annual Debt Service (as hereina defined) on all the Bonds until the Reserve Account equals the hiaximum Amount of Annua Service on the 1980 Bonds, and (b) for deposit in the Refunding Bond Reserve Account twelve months following the delivery of the Bonds, an amount equal to one-twelfth of th by which the hiaximum Amount of Annual Debt Service on the Refunding Bonds exceeds e amount amount placed in said Account upon delivery of the Bonds, and, thereafter, in the event of an insufficiency thereof, an amount equal to one-sixtieth (1/60) of the hiaximum Amount of An Debt Service on the Refunding Bonds; provided, however, that on July 1,1984 the Re Reserve Account will merge with and into the Reserve Account and, thereafter, there will maintained in said Reserve Account an amount equal to the hiaximum Amount of Annual Deb Service on all the Bonds (see " Reserve Account and Refunding Bond Reserve Account") Fifth, to be applied for the following purposes in the priority indicated: (i) to pay the of and interest on the City's outstanding Electric Revenue Bonds, Issue of 1977 (Subordin " Subordinated Bonds") (none of which are outstanding), (ii) to restore if necessary th amount in the Reserve Account or the Refunding Bond Reserve Account, (iii) to make cap e u red expenditures for the Electric System, and (iv) to make one-twelfth of an annual payment to the City's General Fund not to exceed 11.5% of Gross Operating Revenues (exclusive revenue) for the last fiscal year (see " Transfer to the General Fund of the City"). Sixth, to the Surplus Account, any money rermining in the Electric Revenue Fund after the above transfers and uses have been made and all other covenants of the City contained in Resolutions have been performed. Such money may be:(i) invested in any authorized inv (ii) used for the redemption of Bonds which are subject to redemption or for purcha market of any Bonds at prices not exceeding the current redemption price or not exc en i initial redemption price if the Bonds are not then redeemable; or (iii) used in any lawful man er Reserve Account and Refunding Bond Reserve Account The Resolutions require that, upon delivery of the 1980 Bonds, there be deposited into the Reserve Account, from the proceeds of the 1980 Bonds, an amount equal to the hiaximum Annual Debt Service on the 1980 Bonds. Maximum Amount of Annual De Resolutions as an amount equal to the maximum amount required to be paid in any fis 4

account of interest and principal (or sinking fund payments) coming due on the subject Bonds. Upon delivery of the Refunding Bonds, approximately 5895,000 currently on deposit in the Reserve Account for the Existing Bonds and approximately $255,000 currently on deposit in the Bond Service Account for the Existing Bonds will be transferred to the Refunding Bond Reserve Account and will remain in such account and be pledged to the holders of the Bonds. The approumate 5109,000 necessary to fund the Refunding Bond Reserve Account to an amount equal to the Maximum Amount of Annual Debt Service on the Refunding Bonds will be deposited in the Refunding Bond Reserve Account, within one year from the delivery of the Bonds, from Gross Operating Revenues. Moneys in the Reserve Account and Refunding Bond Reserve Account may be used for the purpose of paying the interest or principal on any Bonds of the City payable out of the Electric Revenue Fund in the event that moneys in the Bond Service Account or Refunding B(.'d Service Account are insufficient therefor. Whenever moneys are withdrawn from either the Reserve Ac-count or the Refunding Bond Reserve Account, the amount in said account or accounts shall be restored as described above (see "Rever ues and Flow of Funds Under the Resolutions"). Any interest earned from investmert of moneys in the Reserve Account during the period of construction and for six months therefter shall be deposited in the Construction Fund Thereafter, any interest so earned shall be deemed to be part of the Gross Operating Revenues and shall be placed in the Electric Revenue Fund. Rate Covenant j The City has agreed under the Resolutions to prescribe, revise and collect such charges for the i services, facilities and electricity of the Electric System which, after making allowances for contin-gencies and error in the estimates, shall be at least sufficient to pay the followmg amounts in the order set forth;(i) Operating and Maintenance Expenses (ii) the interest on and principal (including any Mandatory Sinking Account payments) of all outstanding Bonds as they become due and payable, (iii) all payments required for compliance with the Resolutions, including payments required to be made into the Reserve Account and the Refunding Bond Reserve Account, (iv) all [ payments required for compliance with the resolution authorizing the Subordinated Bonds and (v) i all payments required to meet any other obligations of the City which are charges, liens, encum-brances upon or payable from revenues of the Electric System. Charges shall be so fixed that Net - Operating Revenues shall be at least equal to the sum of 1.25 times the amounts payable under (ii) and I times the amounts payable under (iv). Additional Debt Under the Resolutions, the City covenants that no additional indebtedness shall be incurred having any priority over the Bonds in payment of principal or interest from the Gross Operating Revenues of the Electric System. Parity bonds may be issued to finance or refinance any repairs, improvements, enlargements or extensions of the Electric System and to refund any Bonds then outstanding, provided that, except for bonds issued to refund Bonds, no additional indebtedness evidenced by revenue bonds, revenue notes or any other evidences of indebtedness payable out of the revenues of the Electric System and g ranking on a parity with the Bonds shall be created or incurred unless:(i) the City is not in default under the terms of the Resolutions and (ii) the Net Operating; Revenues of the Electric System, l calculated on sound accounting principles, as shown by the books of the City for the latest fiscal year or last completed 12 month period ended prior to the incurring of such additional indebtedness as shown by an audit certificate or opinion of an independent certified public accountant or hrm of certified public accountants employed by the City, plus, at the option of the City, either or all of the items designated under (a) and (b) below, shall have amounted to at least 1.25 times the Maximum Amount of Annual Debt Service in any fiscal year thereafter on all indebtedness to be outstanding immediately subsequent to the incurring of such additional indebtedness. 5

s i l The items which may be added to such Net Operating Revenues for the purpose of applying the above restriction are the following: (a) An allowance for any increase in Net Operating Revenues (including, without limita-tion, a reduction in Operating and Maintenance Expenses) which may arise from any additions to and extensions and improvements of the Electnc System to be made or acquired with the proceeds of such additional indebtedness or with the proceeds of bonds previously issued, and also for net revenues from any such additions, extensions or improvements which have been made or acquired with moneys from any source but which, during all or any part of such hscal year or last completed 12 month period, were not in service, all in an amount equal to the estimated additional average annual net revenues to be derived from such additions, extensions and improvements for the first 36 month period in which each addition, extension or improve-ment is respectively to be in operation, all as shown by the certificate or opinion of a qualihed independent engineer employed by the City, and (b) An allowance for earnings arising from any increase in the charges made for the use of the Electric System which has become effective prior to the incurring of such additional indebtedness but which, during all or any past of such hscal year or last completed 12 month period, was not in effect, in an amount equal to the amount by which the net revenues would have been increased if such increase in charges had been in effect during the whole of such fiscal year or 12 month period, as shown by the certificate or opinion of a qualihed independent engineer employed by the City. Other Covenants Other covenants of the City under the Resolutions are summarized below: I - (a) The City will punctually pay, or cause to be paid, the interest, principal and premium, if any, on the Bonds and will make all payments into the Bond Service Account, the Refunding Bond Service Account, the Mandatory Sinking Account, the Reserve Account and the Re-funding Bond Reserve Account in conformity with the terms of the Bonds and the Resolutions. (b) The City will commence the accomplishment of the purposes for which the 1980 Bonds are being issued and will complete such purposes with all practicable dispatch and in an economical manner. (c) The City will make appropriate direction to the Escrow Bank for the payment of moneys from the Escrow Fund in sufficient amounts and times to meet the refunding requirements for the Existing Bonds, and will take all action necessary to pay, retire and redeem the Existing Bonds including, without limitation, the execution of the Escrow Agreement. (d) The City will pay and discharge all lawful claims and any taxes, assessments or other governmental charges lawfully levied or assessed against the City upon or in n aspect of the Electric System or the Net Operating Revenues which,if unpaid, might impair th; security of the Bonds. (e) The City will operate the Electric System in an efficient and economical manner and will pteserve the Electric System in good repair and working order. (O The City will not mortgage, encumber, sell, lease, pledge, place a charge on or otherwise dispose of the Electric System or the revenues therefrom and will not enter into any agreement which' impairs the operation of the Electric System or otherwise impairs the rights of the Bondholders with respect to the revenue or operatien of the Electric System without making adequate provision to protect the rights of the Bondholders. (g) The City will maintain adequate insurance on the Electric System. (h) The City will keep proper books of records and accounts of the Electric System in which complete and correct entries will be made of all transactions relating to the Electric 6

h \\ _ ~. i l l System, will cause the books and accounts of the Electne System to be audited annually by an independent certified public accountant and will furnish a copy of the audit report, upon request, to any Bondholder. (i) The City will maintain and enforce valid rego!ations for the payment of bills for eiertnc service and will permit no free connections with, or use and services of, the Electnc System except to the extent that the City is required to do so under agreements and/or contracts existing on the effective date of the Resolutions. (j) The City will not issue additional bonds having any priority in payment of principal or interest out of the Electric Revenue Fund over the Bonds. (k) The City will not invest the proceeds of the Bonds in a manner which would result in l the Bonds constituting taxable arbitrage bonds" within the meaning of Section 103(c) of the F Internal Revenue Code of 1954, as amended, and the regulations issued thereunder. (1) The City will maintain paying agents in Los Angeles, Califorma, San Francisco, i California, Chicago, Illinois, and New York, New York. ~ APPLICATION OF BOND PROCEEDS The City anticipates that the proceeds of the Bonds (excluding accrued interest) will be applied approximately as follows: 1980 Bonds Refunding Bonds _41J Payment of the City's share of Project Construction Costs. 554.833.000(2) 5 159,000 Deposit to Escrow Fund to effect Refunding of the Existing Bonds.. 8,861.000(3) Deposit in the Reserve Account... 8,212,000 Payment of costs of issuance... 500,000 50,000 Deposit in the Bond Service Account (4).. 16,455,000 580,000.000 59.070.000 (1) See Refunding Plan - Estimated Sources and Uses of Funds to E"ect the Refunding Planf (2) Includes a_n estimated $9,649,000 to be paid to Edison for interest charges prior to November 1, 1980. Excludes $3,843,000 of estimated investment income on 1980 Bond proceeds deposited in the Construction Fund, the Bond Service Fund and the Reserve Fund which, together with this portion of the 1980 Bond proceeds, will equal the City's estimated total share of Project Construction Costs. (3) In addition, approximately $120,000 currently-on deposit in the Bond Service Account for payment of principal and interest on the Existing Bonds will be deposited in the Escrow Fund. ~ (4) To pay 100% of the interest on the 1980 Bonds until June 1,1982 and 50% of the interest on the 1980 Bonds until August 1,1983. REFUNDING PLAN The City will use approximately $8,861,000 of the proceeds of the Refunding Bonds together .Li with approximately $120,000 currently on deposit in' the Bond Service Account for payment of principal and interest on the Existing Bonds to refund the currently outstanding Existing Bonds. The refunding is being undertaken to release the City from certain provisions contained in the resolu-tions pursuant to which the Existing Bonds were issued. The Refunding Bonds are being issued to refund $8,960,000 of outstanding Existing Bond.. ' Pursuant to State law, the City must call and redeem the Existing Bonds at the earliest available call dates. Set forth in the following table are the designations of each series of the Existing Bonds, the. 7 . m

principal amount of each series which is presently outstanding, and the date and prem which each series will be paid under the City's refunding plan: REDEMPTION SCllEDULE Principal Principal Series of Refunded Bonds Amount Amount Dates to t>e Paid or issued Outstanding Redeemed Price Electric Revenue Bonds, Issue of 1966.. 54,700,000 5 2,600,000 April 1,1981 (*) Electric Revenue Bonds, Issue of 1969. 2,100,000 70,000 December 1,1950 100'I 1,330,000 June 1,1981 (*) Electric Revenue Bonds, Issue of 1971. 3,000,000 100,000 June 1,1951 100~ 2,000,000 June 1,1981 (*) Electric Revenue Bonds, Issue of 1973. 3,700,000 120,000 April I,1981 1001 3 2,500,000 April 1,19SI (*) 120,000 April 1,19S2 100'1 120,000 April 1,1983 100(i (') At 100%% plus a premium of % of 14 for each twelve month period or fraction thereof from ca date to stated maturity date, but not to exceed 104%. To effect the refunding of the Existing Bonds, the City will, at or prior to the delivery of the Bonds, enter into an Escrow Deposit Agreement (the " Escrow Agreement") with Security P National Bank, as escrow agent (the " Escrow Agent"). Pursuant to the terms of the Escro ment, the City will deposit a portion of the proceeds of the Refunding Bonds, and approxima $120,000 currently on deposit in the Bond Service Account, with the Escrow Agent. Su will be applied to the purchase of United States Treasury Obligations (such Treasury Obligat being herein collectively referred to as the " Treasury Securities"). The Treasurv bcurities will mature at such times and in such amounts so that the maturing principal, togethe.cith moneys held uninvested by the Escrow Agent, will be sufficient to pay, when due, all pnncipal of, pre as required, and interest on the Existing Bonds according to the above redemption schedule. The, maturing principal of and interest income earned on the Treasury Securities held by the Escrow Agent will be irrevocably pledged to the payment of the principal of, redemption premium, as required, and interest on the Existing Bonds. By the deposit of the Treasury Securities with the Escrow Agent pursuant to the Escrow Agreement, the City will have effected the full cash defeasance of the Existing Bonds in accordance with the bond resolutions under which the Existing Bonds were issued. As a result of such defeasance, the Existing Bonds will no longer be payable from or secured by the revenues of the Electric System or any of the other pledged funds, but will be payable solely from the princip and interest income earned on the moneys in the Escrow Fund, and the lien of the Existing Bond together with all other obligations of the City to the holders of the Existing Bonds under the resolutions pursuant to which the Exisiting Bonds were issued, will terminate. As a result, the Bonds issued under the Resolutions will be payable from the Net Operating Revenues of the Electric System and other available funds pledged thereunder. 8

s Estimated Sources And Uses of Funds to Effect the Refunding Plan Sources Proceeds of the Refunding lionds.. 58.861.000t 1 ) Other Available Moneys of the Electric System. 120.000(2) Investment Earnings on Treasury Secunties.. 535.604il l Total Sources...... 59.516.604 ' Uses Payment of Principal of Existing Bonds (3). 58.960,000 Payment of Interest on Existing Bonds (3)~ 341,216 Payment of Redemption Premium (3).. 215.385 59._516.604 (1) The Refunding Bond issue was sized based upon an assumed 7W yield on moneys held in the Escrow Fund.Since a higher yield was available st S time of sale, only 5S.41.000 will be used to effect the refunding plan. Under the R",olutions, excess Refunding Ikmd proceeds will be placed in the Construction Fund. (2) Approximate sum to be transferred from the Bond Service Account for the Eust:ng Bonds to the Escrow Fund. (3) See Redemption Schedule" on preceding page. CITY OF RIVERSIDE - TiiE ELECTRIC SYSTEM The City of Riverside was a pioneer in the long-distance transmission and distribution of electric power. The municipal electric system which was constructed in 1895. was among the Hrst eight such municipally wned systems in the State of California prior to the turn of the centurv. It bro been fundamentally a sub-transmission and distribution system, though the City did generate part of its own power from 1900 to 1924. Power has been purchased exclusively from Edisen from 1950 to May of 1976. At that time, Riverside began receiving non-firm energy purchased from the Nevada Power Company and delivered to the City by Edison. The Electnc System provide 3 service throughout the City to domestic, commercial, industrial, agricultural municipal and other customers Prior to mid-1W), the Electric System sold power to approximately 32S customers outside the City limits. The City sold these distribution facilities to Edison and the California Electric Power Company on June 30, 1950, in order to comply with the provisions of a wholesale-resale basic service agreement for the purchase of electric energy solely from Edison. The City commenced service on April 13,1966 to the Arlanza area annexed November 17,1961 and to' the La Sierra area annexed May 7,1963; prior to this, both areas had been served by Edison. Part of the proceeds of the electric revenue bonds sold March 1966, was used to hnance the - consolidation of these areas into the Electric System. Estimated Financial Information for Fiscal 1980 The Electric System, as well as the City,is currently undergoing its annual audit for the fiscal year ended June 30,1980. Therefore, the financial information and statistics reflecting the status of the Electric System for the period ended June 30,1980 have been estimated by the Department and - are preliminary and subject to audit adjustment change. Existing Facilities The Electric System is fundamentally a sub-transmission and distribution system providing service to virtually all electric customers winin the City limits. 9

I J Power is purchased wholesale from Edison at 66.000 volts and is supplied to the City limits through hve separate 66,000-volt transmission lines owned and operated by Edison These hnes are used for the sole purpose of delivenng electric energy from Edison's Vista Substa: ion to the northerly limits of the City of Riverside, as which points connections are made to the City-owned and operated 66,000. volt transmission system. Including street lights, the City had 1,278 circuit miles of sub-transmission and distnbution lines as of the fiscal year ended June 30,1950. The 637 circuit mdes of underground hnes are primarily in commercial and new residential areas. Newly constructed substations and recent additions to existing stations provide ample distnbution capacity for most any type of industr al or commercial load. There are now 18 substations, with a combined capacity of 434 htVA (million volt-amperes). The following table sets forth statistical information relating to the facilities of the Electnc System; 3 '4 Electric System Facilities Fiwal iear Ended lune 30 1990 19M 1978 1977 1976 (Unaudited) Net Utihty Plant (less accumulated provision for depreciation)..... -...... 536,008,807 535,05o,S51 533,572.733 532.555,134 532/'26.357 - Distribution - Overhead Circuit hiiles.. 637 625 623 602 625 Underground Circuit hiiles.. 641 612 574 4s5 416 Power Supply - At present, all of the electricity supplied to the City is purchased from Edison or from Nevada Power Company. In fiscal year ended June 30, 1950, the Electric System purchased a total of 1,086,624,000 kilowatt hours of electricity for delivery to customers throughout Riverside. About 97 percent, or 1,057,397,000 kilowatt hours were purchased from Edison. The remaining 3 percent or 29,227,000 kilowatt hours, was purchased from Nevada Power Company. The following table sets forth, in kilowatt hours of electricity, the total purchases of power and Electric System peak demand during the last five fiscal years. Total Power Purchased and Peak Demand Fixal Year Ended June 30 1980 1979 19*8 19"? 1976 From Edison (LWh).....,. 1,057,397,000 1,003,664,000 928,410.000 826.958,000 917,227,000 From Nevada Power Comp.ny (kWh).. 29,227,000 '64,136.000 69,126.000 106.450.000 21.461.000 System Total (kWh).. 1.086,624,000 1.072,800.000' 997,536.000 933.405.000 435.6SS.000 System peak demand. Kilowatts.... 2 %,640 . 289,800 253,440 ~ 249.120 245.040 The Electric System purchases power from Edison pursuant to the Integrated Operations Agreement whereby Edison agrees to furnish the capacity and energy necessary to meet the City's - Lload, to the extent not provided by City integrated resources. The term of such agreement is 50 - years. (See Appendis D for a summary of the Integrated Operations Agreement) .' 10 m- {YL

N, in addition, the Electric System purchases economy energy from Nevada Power Company pursuant to an agreement negotiated in 1976 which provided for purchase of economy energy for a minimum of four years. The proceeds of $2,500,000 Subordinated Bonds were used to fund such purchases. Nevada Power delivers the energy to Edison's Eldorado Substation in Southern Nevada and Edison transmits the energy to Riverside. The Nevada Power agreement ends in December 1980 In July 1980, a subsequent agreement was executed between the City and Nevada Power Company providing for economy energy exchanges and energy banking arrangements. (See "Futu s Plans of the City's Electric System".) The following table sets forth the annual purchased power costs during the last hve hscal years Annual Purchased Power Costs Fiscal Year Ended tune 30 19E[ 1980 1979 1978 19*7 tUnaudited) Annual Power Costs.. $44,723,275 $36,244,753 $31,668,783 $27.646,644 524.299,050 Power Costs (mills per kilowatt hour).. 41.2 33.8 31.7 29.6 25.9 Consumers The following table sets forth the average number of customers and total kilowatt hour usage during the last five years. Average Number of Customers Fiscal iear Ended June 30 1980 1979 1978 1977 1976 Domestic.. 62,331 60,151 56,549 54,307 52,239 Commercial. 4.943 4,704 4,519 4,392 4,304 Industrial. 176 168 158 147 143 Other..... 171 178 185 208 216 Total - all classes... .67,621 65,20_1 6_1,4_11 59f54 56.9_03 Total Kilowatt Hour Usage (000's omitted) Fiscal iear Ended June 30 1980 1979 1978 1977 1976 Domestic. 398,683 380,457 360,579 319,23b 318.376 Commercial.. 207,343 202.074 191,421 175,302 179,575 Industrial. -391,772 376,415 364,378 344,882 357,978 Other.. 40,515 38,574 38.089 40,793 39,213 Total Kilowatt Hour Usage.. 1,038,313 997,520 954,467 880,207 895,142 4 11

t The following table sets forth the ten major commercial and industnal customers of the Electnc System, their annual kilowatt hours purchased and their total billing dunng calendar year 1979 Major Electric Customers For Calendar Year 1979 Annual Total Customer khh Annual Product or Service Pu rc h ased Bilhng University of California, Riverside. State University 46.048,000 $1.544.64 6 Alumas Mill Products, Inc. Aluminum Mill Products. Sheet and Plate. 28.425.000 1.012.362 Rohr Indu4tries, Inc. Aerospace and Aircraft Components.. 25,437,000 93R,464 Hourns, Inc. Precision Electro-Mechanical Inst ru men ts.. I1,729,000 409,6R 4 Loma Linda University. Private College. 8,328,000 356.565 Riverside County Hospital. Hospital. 7,192,000 292.265 County of Riverside. Hall of Records. 6.720,000 290+07 Riverside Community Hospital. Hospital. 6,454.000 234.763 City of Riverside. City Hall.. 5.436.000 220.154 City of Riverside. Sewage Treatment Plant.. 5.411,000 219.145 Toeal. 151,180.000 55.83_S 663 z Percentage of System Total. 15.29 12 5'; Electric Rates and Charges The City is obligated by its Charter and by the Resolutions to establish rates and collect charges in an amount sufhcient to meet its expenses of operation and maintenance and service the Electric Sy em's indebtedness, with specified requirements as to priority and coverage. (See " Rate Cove-vant" under the section " Security for and Sources of Payment for the Bonds".) Electric rates are established by the Board and subject to approval by the City Council. Electnc rates are not subject to regulation by the California Public Utilities Commission or by any other state agency Although its rates are not subject to approval by any federal agenc' 'he City is subject to certain rate making provisions of the Public Utility Regulatory Policies Act of 1978 (the "Act"). The City is operating in compliance with the Act and with the standards promulgated by the President's Council on Wage and Price Stability. At present the Electric System has nine rate schedules in effect. The City provides no free electric service. The current electric rates were established by the Board, approved by the City Council and became effective on August 7,1979. In addition, the Department maintains a fuel adjustment se-d arge which reflects a monthly adjus; ment of fuel costs incurred by the Department in its purchue of energy from Edison. Such surcharge is not reflected in the general rate schedule The following table sets forth the general rate schedules for the residential, commercial and. industrial customers. 12

Rate Schedules for Residential, Commercial and Industrial Customers Per Meter Per Month Type and Description of Service Charge Domestic Service-Applicable where Service includes lighting, appliances. heating. cooking and power consuming appliances Customer Charge.. .. ~. 5 2.20 Energy Charge (to be added to Customer Charge): 3 29c First 500 kWh, per kWh. 4.02c All Excess kWh. per kWh... General Service - Flat Rate Applicable to service for all types of uses 5 3 60 Customer Charge.. Energy Charge (to be added to Customer Charge): 5.432c All kWh, per kWh General Service - Demand Basic Rate A Demand Charge First 20 KW. 5 72.00 All excess KW, per KW.... 5 3 60 Energy Charge (to be added to Demand Charge) First 150 kWh, per KW of billing demand, per kWh.. 2.869c Next 150 kWh, per KW of billing demand, per kWh. 2.589c Over 300 kWh, per KW of billing demand, per kWh.. 2 2 Soc General Services - Demand Basis Rate B Demand Charge First 200 KW. SS00.00 All excess KW. 3.50 , Energy Charge (to be added to Demand Charge) 2.394c First 150 kWh, per KW of billing demand, per kWh.. Next 150 kWh, per KW of billing demand, per kWh. 2.194 c Over 300 kWh, per KW of billing demand, per kWh.. 1.994c Industrial Service - Applicable to service for industrial and processing establishments Demand Charge All KW, per KW. 5 4.30 Energy Charge (to be added to Demand Charge) 1.730c First 150 kWh, per KW of billing demand, per kWh.. Next 150 kWh, per KW of billing demand, per kWh. 1.530c Over 300 kWh. per KW of billing demand, per kWh.. I.330c Electric System rates have been changed four times over the last five years. The following table sets forth the percentage changes in rates for the indicated customer classes. Such percentage changes do not reflect changes in the fuel adjustment surcharge. Percentage Increase in Electric Rates Overall Effective Date System Residential Commercial Industrial 16.3% 14.4% 19.29 8.17 July 1,1974. January 15, 1976.... 18.4 9.0 24.4 29.9 October 1,1977.. 4.8 5.0 3.3 4.2 August 7,1979._ 13-

3 The electne rates now in effect in the City compare favorably with those of other uties in the area, with Riverside being the lowest in most categones shown in the following table Of those nine cities, six are served directly as retail customers of Edison The latter sells power a holede to tmtb Riverside and Anaheim, while Los Angeles generates its own power Exact industrial comparisons are difficult because of the necessity of making assumptmns for such factors as peak diversity. However, Riverside's industrial rates are competitive and genera!h follow the same relationships to other cities as for domestic and commercial service Comparison of Monthly Electric Bills (As of June 1,1980) Domestic Com mercial 500 kWh 5.000 k h h 150 kWh ta ver-1,500 kWh 500 kW h 2,000 k h h hmall hmalli aget flarge) hmall t f aserages ywert Riverside (l). $10.60 530.18 5 93.45 542.30 5155 % 5390 % Anaheim (1).. 8.73 27 13 55 55 41 03 150 no 3e975 Corona (2). 9.28 34 89 116 59 47.11 174 44 43n no Los Angeles (l). 10.90 36 37 109 09 36.17 135e4 374 co Ontario (2). 9.28 34 89 116 SS 47.11 17494 430e0 Palm Springs (2).. 9.28 34.59 116.5S 47.11 174.94 430 60 Pomona(2)... 92S 34 89 116.59 47.I1 174 44 430oO San Bernardino(2). 9.28 34 89 116.58 47.11 174 44 430 on Santa Ana(2).. 9.28 34 S4 1le 59 47.11 174 04 430 60 (1) Served by Municipal Electric Fvstem. (2) Served by Edison at retail. Residential, commercial and industrial customers are billed monthly. Bills are due and payable on presentation and become delinquent fifteen days after mailing. After a bill is delmquent. following appropriate procedures, the Department may discontir'ue electric service Charge > for connection or reconnection of service, payments for deposits or to reinstate deposits, and the entire delinquent bill shall all be paid in full or other satisfactory arrangements made before serv ce shall be connected or reconnected. Gross revenues from the sale of electricity have increased from 533,095.422 in tscal year ended June 30,1976 to $56.246,036 in fiscal year ended June 30,1980, an increase of 707. The following table sets forth such gross electric sales during the five fiscal years. Gross Electric Sales Fhcal Year Ended lune 30 1980 1979 1978 1977_ _ _,1_9]e __ _ tUnauditedi Domestic.- $22,149,968 $18,749,458 517,074,243 513.70o.SO4 312N 5.ol o Commercial and Industrial. 32,477,023 26,528,741 24,335.511 20.743,573 19.021.370 Municipal. 1,619.044 1.569,772 1,541.364 1.33o.056 1,149.133 Total. $56,2 4_6,039 $4. 6,8_47,9_71 $42.95_1 118 535.836.413 533.045 422 I4

s The table below sets forth the average billing pnce per kilowatt hour of the varmu-tuo.rr er classes during the last hve years. Average Billing Price Per Kilowatt flour f ewal iear inded lune M seso te o see ic-i.. Domestic. ... _.. 5 .0556 5 .0493 $ 0474 5 0424 5 n404 Commercial and Industrial _ 0527 .0447 0427 ON M42 Municipal.... _.. .0o90 .0671 .O_n49 _.. _5 s4 ON 0 Average All Classes I Combined....._. 5 .0542 5 .0470 5 0450 5 0407 5 0370 Operating Expenses of the Electric System A staff of approximately 170 persons is employed by the City to operate and mamtam the Electric System. During hscal year 1950 the total operating espen>es of the Electric System w ere 549J29,3% escluding depreciation. The total Gross Operating Revenues of the Electnc Sy> tem were 556,553,634. Operating Expenses have increased from 523,404346 in n> cal year ended June 30. Fo to $49,729,396 in fiscal year ended June 30, 1950, an increase of approumately 751 Whde e. st t m growth and general inflation has had some impact on operatmg espenses the impact of mrtawd prices paid by Edison for imported low sulphur fuel oil and increawd demand charge-m FJm6 resale power rates have been the primary causes of increased operating expenws Purchased pew er expense increased from $24.299,050 for Escal year ended June 30.197e to 544 723.275 for h-ca! p ar ended June 30,1950, an increase of approximately 84% The following table sets forth-the Operating Espenses of the Elecinc 5ptem iewiudm.; depreciation) during the last five hscal years. Operating Expenses (Escluding Depreciation) Fiwal ) ear Ended June to 1990 19~9 19?8 1**? Ice Wnauditedi Purchased Power - 544J23,275 53o 249J53 - $31.e os.753 527+46.644 524 244 053 Transmission Espenses....._ - 91,885-52.409 78,197 74.004 70 % 5 Distribution Expenses.. 1,938,007 1,549J42 1,374.091 1.342 # 4 1.4%7 Customer Account Expenses 1,030,075 595,213 591.203 830. sos c 4.514 o Power Service Expenses 31,161 40,3S3 . 29.241 35.4o0 34302 Administration and General - Espenses 1,S %,570 1,629,469 1.555.502 1.575.407 1.o17.4o1 Clearing and Miscellaneous . Account Expenses.. 18,420 (534S) (34331) (33.4111 21.057 Total $49,729306 540,411,621 535.542.9fo 531.470.140 523.40414e Transfers to the General Fund of the City Effective December 1,1977, transfers to the General Fund of the City of surplus funds of the Electric System (after payment of Operating Expenses and debt service on the Bond 4 are limited bv the Charter of the City to twelve equal monthly installments dunng each hscal 3 car of an amount not to esceed ll.5're of the Cross Revenues, esclusive of fuel adjustment surcharges, for the last nwal year ended and reported by an independent public auditor. 15 ..n

1 Debt Service Requirements The following table indicates the debt service on the 13onds Estimated Debt Service Requirements (000) % ear of Maturity Principal _In terest Total 1981. 5 450 5 8.444(1) 5 8.898 1982. 450 8.403(1) 8,833 1983. 450 8,358(1) 8.808 1984. 980 8,313 4,291 1985. 1,030 8.215 9.245 1986. 1,105 8.112 4,217 1987. 1,155 8,001 9,156 1988. 1,240 7,886 9,126 1989. 1,320 7,762 9,082 1990. 1.395 7,630 9,025 1991. 1,495 7,490 8.955 1992. 1.595 7.341 8,936 1993. 1,720 7,211 8,931 1994. 1,845 7,069 8,414 1995. 1,970 6,914 S,884 1996. 2,120 6,747 b,867 1997 2,100 6,563 8,663 1998. 2,250 6,378 8,628 1999. 2,425 6,175 8,600 2000. 2,625 5,435 8,5S0 2001. 2,745 5,716 8.461 2002. 2,880 5,463 8,343 2003. 3,125 5,197 8,322 2004. 3,300 4.90s 8.20S 2005. 3,600 4,589 8,l S S 2006. 3,925 4,238 8,163 2007 4,300 3,858 8,158 2008. 4,675 3,441 8,116 2009 5,125 2,987 8,112 2010. 5,600 2.490 8,090 2011. 6,100 1,447 S,047 2012. 6,675 1,355 8,030 2013. 7,300 708 8,008 $89,070 5195,877(2) 5284,947(2) (1) 100% of the interest on the 1980 Bonds is capitalized until June 1,1982 and 509 of the interest on the 1980 Bonds is capitalized until August 1,1983. (2) Variation due to rounding. 16

s . s Constitutional Limitation on Governmental Spending Article XIllB of the California Constitution (adopted by a vote of the people in November,1979) limits the annual appropriations of State and local governmental entities to the amount of ap-propriations of the entity for the prior fiscal year, as adjusted fu changes in the cost of living, changes in population and changes in services rendered by the entity. Pending clarification of certain of its provisions by the courts, or by the Legislature, the full impact of Article XIIIB is not clear. However, to the extent moneys in the Electric Revenue Fund are used to pay the costs of maintaining and operating the Electric System and debt service on the Bonds (including the funding of the Reserve Fund, as required by the Resolutions), such moneys should not, under the terms of Article XIllB as supported by recent legislation and based upon the ofncial ballot argument supporting the measure at the November 1979 election be held to be subject to the appropriation limit. Coverage of Debt Service The following table shows the historical coverage of debt service on the outstanding Bonds as well as the Subordinated Bonds by the Net Operating Revenues of the Electric System for the last five years as calculated in accordance with the flow of funds in the Resolutions. Summary of Coverage of Debt Service Fiwal icar Ended June 30 1930 1979 1978 1977 ler6 (Unauditedi Operating Revenues: Total Electric Sales.- 556,246.039 $46,847,971 $42.951,118 535,836,433 533.0 % 422 j Other Operating Revenues.. 307,595 199.257 217.9o4 195.427 13.960 t Total Operating Revenues.. $56,553.634 547,047.228 543.169.082 536.034.860 533.235,352 Operating Expenses: Purchased Power.. $44,723,275 $36,249,753 $31,668,783 527,646,644 $24.299,050 Transmission Expenses. 91,885 52,409 78,197 79,008 70.965 ' Distribution Expenses - 1,938,007 1,549,742 1,374,091 1,342.664 1,396,467 Customer Account Expenses.. 1,030,078 895,213 891,203 830,S68 964.514 Power Service Expenses 31,161 40,383 29,241 35,460 34,302 Administration and General Expenses.. 1,896,570 1,629,469 1,585,502 1,578,407 1,617,461 Clearing and Miscellaneous Account Expenses., 18,420 (5,348) (34.331) (33,911) 21,087 Total Operating Expenses.... $49,729,396 $40.411,621 $35.592,956 531.47c 140 $28.404.346 Net Operating Revenues Available for Debt Service and Depreciation ~.. 6,824,238 6,635,607 7,576.096 4,555,720 4,831,036 Debt Service Requirements on Existing Bonds and Subordinated Bonds- $ 1,812,433 $ 1,825,074 5 1,465,342 5 994,985 5 963,717 Times Debt Service Covered 3.8 3.6 5.2 4.6 5,0 For further information concerning the Electric System's operations and financial position, see the financial statements attached hereto as Appendix F.

SUMMARY

PROJECTION OF OPERATING RESULTS OF THE ELECTRIC SYSTE.%1 Based on the ferecast of power costs by the Consulting Engineer and on certain data supplied by the City and certain considerations and assumptions (see " Considerations and Assumptions of the p Consulting Engineer"), the Consulting Engineer has prepared a summary projection of operating. I i 17 L

I s - i results of the City's Electric System for the hscal years ending 1981 through 1985 increases in revenue requiremener are projected beyond those generated by the City's existing rates The required revenues are tused on covering projected operating expenses, debt service on the lionds and on meeting the City's projected capitalimprovement program and other non.operatmg hnancial commitments. The additional revenues required are primarily to meet future capital improvements and escalating purchased power costs from Edison. Projected Operating Results (000) Final icar Ending lune 30, 1981 1982 1983 1984 1945 Gross Operating Revenues. Revenues from Sales of Electncity: At Existing Pates. 560.890 562.798 5 64,594 5 66,502 5 68,4nd Additional Revenues Required (l). 15.499 25.231 41,257 61,162 73.672 Subtotal.. 576,389 588,029 5105,851 5127.664 5142.138 Afiscellaneous Operating Revenues (2). 205 208 210 212 214 Other income (3). 400 429 4 9 1.06s 1.097 Total Estimated Gross Operating Revenues.. 576,994 588,666 5106,810 5128 944 5143.44 u Operating Expenses: Power Production-San Onofre Units 2 and 3.. 5 0 5 764 5 2,393 5 4..'.55 5 5.117 Purchased Power from Edison. 62,438 71,932 84,246 99,357 111.744 Other Operating and Afaintenance Expense (2).. 5,185 5,600 6.048 6.532 7.055 Total Estimated Operating Expenses Excluding Depreciation and Amortization $67.623 578,296 5 92,687 5110,144 5123371 Total Estimated Net Operating Revenues. 5 9,371 5i0,370 5 14,123 5 18.800 5 19,478 Debt Service on the Bonds: Subordinated Bonds.. 5 459 5 0 5 0 5 0 5 0 Proposed Bonds.(4) San Onofre Portion - 1980 Bonds. 0 319 3,828 7,731 8.180 Refunding Portion - Refunding Bonds 972 1,300 1,268 1.226 1,1S2 Total Debt Service on the Bonds.. $ 1,431 5 1.619 5 5,096 5 8,957 5 9,362 Balance for Other Purposes (5).. 5 7,940 $ 8,751 5 9,027 5 9,843 5 10.116 Debt Service Coverage on the Bonds (6).. 6.55 6.41 2.77 2.10 2.08 (1) Additional revenues required primarily to meet costs of future capital improvements and escalating purchased power costs from Edison. (2) Estimated by the City. (3) Estimated by the City. Includes interest earnings on the Reserve Account and the Refunding Bond Reserve Account at an assumed 8.5% interest rate and interest earnings on other funds and working capital at an assumed 79. interest rate. (4) Based on 100% ofinterest on th< '980 Bonds capitalized to June 1982;509 of interest on the 1980 Bonds capitalized to August 1%3 and full principal and interest payments on the 1980 Bonds at an assumed interest rate of approximately 9.60'~c and the amortization of principal over 30 years commencing August 1,1983. Principal and interest on the Refunding Bonds are based upon scheduled maturity and interest at an assumed rate of approximately 9.909. (5) Includes, among other things, funds for capital improvements and payments to the general fund of the City. (6) Ratio of Total Estimated Net Operating Revenues to Total Debt Service on the Bonds. 18 l

3 Tile PROJECT 2 General Pursuant to a Settlement Agreement dated August 4,1972 with Edison, the City was granted the right to acquire a 1.79% ownership interest in the Project with Edison providmg the necessary transmission services to the City to deliver the output of the Project to the Electric System Ednon has signed and the City, upon delivery of the Bonds, will sign the San Onofre Units 2 and 3 Participation Agreement (the " Participation Agreement") with Edison which sets forth the terms and conditions under which the City will participate in the ownership and output of the Project and the Transmission Service Agreement (the " Transmission Service Agreement") whereby Edison { agrees to provide transmission of the City's share of the output of the Project to the point of delivery. The City has also signed an Integrated Operations Agreement (the "IOA") and will sign upon delivery of the 1980 Bonds a Supplemental Agreement for the Integration of Riverside's entitlements in San Onofre Units 2 and 3 (the " Supplemental Agreement") wHh Edison which provides, among other things, for the operation of the Project by Edison for the beneht of the City. Under the IOA, Edison will continue to supply the City's power and energy requirements over and above the capability of the City's share of the Project and any future City owned resource and will credit the City on its monthly billing statements for the power and energy generated by such resources that are integrated with Edison resources. The City and Edison have agreed in the Supplemental Agreement that the Project will be included as an integrated resource pursuant to the IOA. (For a summary description of the Participation Agreement, the Transmission Service Agree-ment, the IOA and the Supplemental Agreement see Appendices B, C, D and E respectively, attached hereto.) Description of the Project The San Onofre Nuclear Generating Station consists of two 1,100 htWe nuclear generating units currently under construction and an existing nuclear generating unit, Unit No.1 (not a part of the Project) rated at 450 htWe. The station is located on an 84 acre site approximately three miles south 4 of San Clemente, California and within the U.S. hiarine Corps Base at Camp Pendleton. Except for certain common facilities shared with Unit 1, the Project consists of the two units under construc-tion. These units Units 2 and 3, are essentially identical in design and will share certain common facilities including the control room and certain other facilities. The nuclear steam supply systems for the Project, supplied by Combustion Engineering, Inc., are closed-cycle pressurized water reactor systems rated at 3,410 hiWe each. The turbine generators are tandem compound units supplied by GEC Turbine Generators, Ltd. (formerly English Electric). The main condensers are being supplied by Ingersoll Rand and will be cooled by circulating i seawater obtained through large intake lines extending out 5200 feet into the ocean. The main generators are rated at 1,312,950 kVA. The main transformers will step up the output voltage of each generator to 220 kV for interconnection into the facilities of Edison's network. The Project is being' designed and the construction is being managed by the Bechtel Power Company for Edison. Edison it..nanaging the start up program and will operate the two units upon receiving a commercial operating license. j .V 1 19 ~

it is currently planned that the Project will be owned as tenants-in-common by the following investor owned and publicly owned utilities Participan_ts Ow nership Interest Edison.. 76 55': San Diego.. 20 00 City of Riverside.. 1.79 City of Anaheim. . _1 6p Total. 100 00". j Estimated Financing Requirements for the Project The following table shows the estimated cost of constructing and 6nancing the Project i Total Project (H Cit.s's Share Land and Land Rights. 5 3,270,000 5 54.000 Structures and Improvements.. 680,928,000 12.189.000 Reactor Plant Equipment. 811,009,000 14,517.000 Tu rbogenerator. 460,008.000 8,234.000 Accessory Electrical Equipment. '5,485,000 3.449.000 Miscellaneous Power Plant Equipment., 58,500,000 1,047.000 Subtotal Direct Construction Costs. 52,209,200,000 539,545.000 Ad Valorem Taxes (2). 691,000 Nuclear Fuel (l). 5,174.000 City's Contingency (3). 3,500,000 Total Construction Costs.. 548,910,000 Interest payable to Edison (4). 9.649,000 Reserve Account (5). 8,196,000 Interest Funded During Constructien(6). 16,588,000 Financing Costs. 500.000 Gross Requirements.. 583,843.000 Less: Interest income (7). 3,843,000 Net Financing Requirements.. 580,000,00_0 (1) Estimated by Edison. (2) Estimated share of tax to be paid by City. (3) Additional contingency not included in Edison's estimated costs to allow funds for uncertainties in the licensing schedule and possible additional design changes in the future. (4) City's share of estimated interest costs paid by Edison through October 31, 1977 and City's interest costs at 9% per year on funds expended by Edison from November 1,1977 to October 31, 1980. (5) Maximum annual debt service based on estimated debt service payments on the 1980 Bonds. (6) Based on an assumed annualinterest rate of approximately 9.601 on the 1980 Bonds.1003 of the interest on the 1980 Bonds is capitalized until June 1,1982, and 50% of the interest on the 1480 Bonds is capitalized until August 1,1983. (7) From temporary investment at an assumed interest rate of 7% on the 1980 Bond proceeds deposited in the Construction Fund. Also included are 100% of interest income on the Reserve Account invested at an assumed interest rate of 8%% until June 1,1982 and 509 of such interest 20

s income until August 1,1983. The interest earnings on the Reserve Account are r-quired by the Resolutions to be deposited in the Construction Fund during the period of constructmn and for six months thereafter. The Three Mile Island Un. No. 2 ("TMI-2") accident analysis cf the Nuclear Regulatory Comraission (the "NRC") has resulted in additmnal design change requirements by the NRC These design changes are estimated by Ediwn to cost $30,000.000 plus overheaa and Edison has included funding to cover these costs in the Project estimate. There is the possibhty that additional design l changes may be required in the future. Status and Schedule of Construction Construction of Unit 2 began in March 1974 after receipt of a construction permit from the NRC l in October 1973, and the major construction of Unit 3 started in June 1975 Fuel loading for Unit 2 is scheduled for the second quarter of 1981 with commercial operation in December 1981 Fuel loadmg for Unit 3 is scheduled for the third quarter of 1982 with commercial operation scheduled for February 1983. An operating license must be issued for each unit before fuel loading may begin for that unit. As of June 1980, Edison has stated that the construction of Unit 2 was approumately 430 complete and Unit 3 was approximately 63% complete. Various locals of the international Brotherhood of Boilermakers have begun work stoppages at projects in certain western states, after the espiration on September 30, 1980 of their regional contract. Local 92 of the Boilermakers halted work on the Project on October 7,1980. and, with other trade unions honoring the stoppage, construction work on the Project has stopped. The City is unable to predict the duration of the stoppage or the impact of the stoppage on the construction schedule or cost of the Project. Nuclear Fuel The nuclear fuel cycle consists of four basic elements prior to insertion of the fuel assemblies in a nuclear reactor. These elements include acquisition of uranium concentrates, conversion of the uranium concentrates to uranium hexafluoride, enrichment of the uranium hexafluoride and fabrication of the enrici ed uranium into fuel assemblies. After the fuel has been used in the reactor, it is removed for reprocessing or disposal. The following table shows the amount of coverage of the necessary materials and services Edison has acquired for the Project; Unit No. 2 (* nit No. 3 { _ Full Coverage % Coverage f ull Coserage i Coserage Through Through 1990 Through Through 1990 1985 85 1985 52 Uranium..... Conversion... 1990 100 1990 100 l Enrichment._ 2009 100 2009 100 t Fabrication. 1984 25 1985 55 1991 100 1992 100 Storage.... At the present time, no operating facilities for the reprocessing of spent fuel are available and in April 1977 the President of the United States announced an indefinite deferral of reprocessing spent fuel and the use of plutonium. In October 1977, the United States Department of Energy (the " DOE") announced its intent to accept and take title to spent fuel from utilities upon payment of a one time storage fee. The details of this DOE program are currently being formulated. Edison is providing on-site spent fuel storage capacity for the Project estimated to be sufhcient to accommo-date storage of the discharges of all spent fuel from Unit 2 through 1991 and from Unit 3 through 1992. By then it is assumed that an appropriate program will have been implemented to accept spe fuel for placement in a suitable repository. 21

J Permits and Approvals Edison has informed the City that all major required permits, escept an operating license, have been granted. Edison's current schedule anticipates that the operating license will be received from the NRC in sufficient time to meet the projected fuel loading and startup schedules. However, petitions have been granted to certain adverse parties to intervene in the operating license proceed-ings. Tne City cannot predict what impact,if any, such intervention will have upon the timing of, issuance of, or the conditions included in, the operating license (See " Regulatory Matters"). City's Future Power Supply Requirements and Future Power Supply Resources Pending further development of other generating resources the City may enter into (see "Other Projects of the Electric System")it is assumed that the City's power requirements not produced by the Project will be met by purchases from Edison through the IOA. The following table shows the annual peak and energy requirements as estimated by the City and the estimated amounts of power and energy espected to be supplied from the Project and from Edison purchases. Peak tMW) Energy tMillions of kWh) Purchased Capacity Purchased Generated fiscal Year from froni the from by*he Ending June 30 Requirements Edison Project Requirements . Edison Project 1981.. 312.0 312.0 1,144 1,144 1982.. 315.0 315.0 -( * ) 1,180 1,145 35 1983... 325.0 309.5 15.5(') 1,214 1,105 109 1984.. 334.0 304.0 31.0 1,250 1,071 179 1985.. 344.0 314.0 31.0 1,287 1,073 214 1986.. 355.0 325.0 31.0 1,327 1,099 228 1987.. 365.0 335.0 31.0 1,367 1,129 238 1988.. 376.0 346.0 31.0 1,407 1,169 238 1989.. 388.0 358.0 31.0 1,450 1,212 238 1990... 399.0 369.0 31.0 1,494 1,256 238 (*) The City will receive certain capacity credits for the Project for the years ending June30,1982 and June 30,1983 from Edison, however, not all capacity from the City's share of the Project will be available to meet the City's forecast peak load for those years. 7 J 22

e Estimated Cost of Power to the City from the Project The following table shows the estimated annual costs of power from the Protect as it is delivered to the City's system for the years 1982 through 1990 based on Edison % estimate of energy generation by the Pro)ect. Estimated Annual Costs to the City of Power From the Project (000) fiwal % ear EndinJJune M 1982 1983 1984 1985 lesh 1947 Iki IOne 'I m Interest and Amortiza-tion (1).. 5 319 53.828 5 7.731 5 8,180 5 8.192 5 R.186 5 8.145 5 8144 5 m.176 land Easement (2).. I 2 3 3 4 4 4 4 4 i Operation and i Maintenance (2).. 264 539 998 1,442 1.5A6 1.739 1.4% 2.0% 22w I Administrative and General (2).. 154 322 405 448 4% 531 577 e2* 651 Nuclear Insurance (2). 52 124 169 188 204 222 242 263 246 Nuclear Fuel (3).....-.. 111 902 1,901 2,213 2.039 2.531 3.1 ; 5 264 2 791 Renewals and Replacements (4)... 115 291 444 480 518 554 e04 M2 704 T4 = es(5)...... 5 60 115 120 120 120 120 120 120 Transmission (6)... 62 153 220 223 226 230 233 217 240 y Subtotal.. 51,083 56,221 511.986 513.207 513.377 514.122 514.94e 514 M 515 2w4 t' - Lew Interest e? e9' Ea rni n gs(7).....-.. 29 349 66A 697 697 697 697 o i Total............ 51.054 55.872 511,318 512.600 512.690 513.425 514.2 9 514le 514. W Energy Delivered (Millions of kWh)(B).. 35 109 179 214 228 238 238 23k 235 Cost (Mills per kWh).. 30.1 53.9 63.2 58.9 55 6 56 4 60 0 59 5 61 3 (1) Based on 100% of interest on the 1980 Bonds capitalized until June 1,1982 and 507 of the interest on the 1980 Bonds capitalized until August 1,1983. Remaining interest to be paid from revenues. Debt service payments are based on an assumed interest rate of approsimately 9.609 and the amortization of principal on the 1980 Bonds over 30 years with the initial principal payment due October 1,1984. (2) Estimated by Edison. (3) Based on Edison nuclear fuel costs. (4) Estimated at 1.0% of capital costs a:.d escalated at 8.0% per year. (5) Based on the City's share of ad valorem taxes at the time of acquiring its ownership share (6) Based on the Transmission Serfice Agreement. (7) Earnings on moneys in the Reserve Account not deposited in the Construction Fund at an assumed interest rate of 8%%. (8) Computed at City's share of estimated total generation at the Project site less energy transmis-sion losses estimated at approximately 1.6%. Considerations and Assumptions of the Consulting Engineer The estimates and projections of R.. W. Beck and Associates (the " Consulting Engineer") are based upon, among other things,information from Edison, as manager of the Project and from the City. Such estimates and projections are also based upon the considerations and assumptions reflected in Appendix A - Consulting Engineer's Report. 23 nr

o i Conclusions of the Consulting Engineer The Consulting Engineer to the City, has prepared the Consulting Engineer's Report concern-ing the Project. Based upon the studies, investigations, analyses and assumptions set forth and the information supplied by the City and Edison with respect to the proposal by the City to acquire an ownership interest in the Project, the Consulting Engineer is of the opinion that

1. The acquisition of an ownership interest in the Protect by the City and the operation of the Project under the provisions of the IOA will provide the City with an economical long-range source of power that will result in lower power supply cost, than would result trom the continued purchase of all its power requirements from t'dison.
2. The forecast overall revenoe requirements from the sale of electricity by the City are reduced by the City acquiring an ownership share in the Proiect rather than continuing to purchase all of its power requirements from Edison
3. The estimated cost of power from the Project compares favorably with forecast purchase power rates from Edison and with available cost projections of other generating resources potentially available to the City in the 1980's.
4. The construction cost estimates provided by Edison for the Project are comparable with 7

the costs expected for similar projects being developed within the same time frame. e Certain Factors Affecting the Electric Utility Industry and Effects of the Three Mile Island Accident The electric utility industry is currently esperiencing problems in a number of areas including. among others, the effects of inflation upon the costs of operations and construction, availability and high cost of capital, availability and increased cost of fuel for the generation of electric mergy, long construction periods for new generating units, licensing and other delays affecting the construction of new facilities, and compliance with environmental regulations and Federal energy legislation, includirr, the National Energy Act of 1978. The City is unable to predict the extent to which the Electric system will be affected by such factors. In addition, following the accident at the TMI-2, the NRC has undergone a reorganization and an interruption of its licensing efforts. The licensing requirements for nuclear plants are continually being re-evaluated in light of the TMI-2 accident which has resulted in some uncertainty in the licensing schedules for all plants approaching completion of construction. The TMI-2 accident analysis of the NRC has resulted in additional design change requirements by the NRC. These design changes are estimated by Edison to cost $30,000,000 plus overhead, and Edison has included funding to cover these costs in the Project estimate. There is the possibility that additional design changes may be required in the future. REGULATORY MATTERS 1 The California Public Utilities Commission has issued an order authorizing Edison to transfer an ownership interest in the Project to the City. It is not necessary that either the Federal Energy Regulatory Commission ("FERC") or the California Energy Commission (the " CEC") approve the transfer of an ownership interest to the City. The City has complied with the California Environ-mental Quality Act insofar as it is applicable to the transfer of an ownership interest to the City. To the extent that additional permits or approvals (other than the NRC operating permit discussed below) may be required, the City believes that such will be obtained in due course. Nuclear Regulatory Commission The Atomic Energy Act (42 USC 2131; Title 10 CFR 50.10(a)) provides that it is unlawful for any person within the United States to transfer or receive in interstate commerce, manufacture, produce. transfer, acquire, possess, use any utilization of production facility equipment except under and in 24

l accordance with a license issued by the NRC. A Construction Permit was issued on October 1% 1973 I to Edison and San Diego. Therefore, while the City will not operate the facility, it has been concluded that it will be necessary for the Construction Permit to be amended by adding the City as an owner thereto. On July 19,1979 Edison, San Diego, Riverside ar.d Ar.aheim bled an Application with the NRC to amend the Construction Permit. On August 5,1950, the NRC approved the Application to amend the Construction Permit thereby addmg Riverside and Anaheim as owners of I the Project, Edison and San Diego have applied for an Operatmg Permit. Petitions to Intervene have been granted to several adverse parties. Primary issues raised relate to seismic and geologic conditions and to emergency planning. As part of the proceedings, the United States Geological Survey is preparing a report on seismic and geologic matters for submission to the NRC for its consideratmn Edison has advised the City that, based on studies conducted by and on behalf of Edison, it beheves that the Project is designed to be able to withstand maximum adverse seismic conditions it considers credible for the Project area. Discovery has commenced and is presently proceeding. Thereaf ter the Atomic Safety and Licensing Board (the " Licensing Board") will set dates for heanngs on this matter. The Licensing Board has indicated that when the City and the city of Anaheim acquire their ownership interest in the Project they will be consolidated with Edison and San Diego for the Operating Permit proceedings. An Operating Permit has not yet been granted for this facility. It will be necessary for the City to apply for, and be granted, an Operating Permit for Units 2 and 3 It is not anticipated that the City will have any different problems with obtaining an Operating Permit than will Edison and San Diego. FUTURE PLANS OF THE ELECTRIC SYSTEA1 The City currently purchases all of its hrm electrical power requirements from Edison at Edison's wholesale rates and purchases certain amounts of economy energy, pursuant to an Econo-my Energy Agreement dated hfay 25,1976 from Nevada Power Company. The Economy Energy - Agreement will terminate in December 1980. In July,1980 the City and Nevada Power Company executed an agreement which provides for economy energy eschanges and energy banking arrangements. The increased cost of fuel oil has resulted in higher wholesale power costs to the City. The cost of electricity purchased by the City increased by 197 for the fiscal year ended 1930. In order to lessen the impact of the continually rising power costs, the City is actively pursuing alternate sources of power including joint participation in coal and other electric generating projects OTHER PROJECTS OF THE ELECTRIC SYSTESt In addition to the Project, the City has an ongoing program to investigate other potential power supply resources which could be used to serve a portion of its electrical requirements which are I currently being purchased from Edison. Of these potential resources, the most dehnitive is the Intermountain Power Project ("lPP"), to be located in Southwest Utah. Intermountain Power Project in 1974 the City entered into a membership and study agreement with the California cities of Anaheim, Burbank, Glendale, Pasadena and the Department of Water & Power of the City of Los Angeles ("LADWP") and with the Intermountain Consumer Power Association, composed of a i group of Utah municipalities and rural electric cooperatives. The purpose of the agreement was to investigate the feasibility of constructing and operating the project. The proposed project is a 3,000-t megawatt coal-fired electric-generating plant consisting of four 750-megawatt generators, to be located in Southwest Utah. The presently projected commercial operation date of the first unit is July 1986 with other units following at one-year intervals. A feasibility study has been completed by i the LADWP pursuant to an agreement between IPP and the LADWP. l. 25

In May 1977, several Utah municipalities, which are members of the Intermountain Consumer Power Association, agreed to organize the Intermountain Power Agency O' IPA"), a political subdivi-sion of the State of Utah created pursuant to the provisions of the Interlocal Cooperation Act of the State of Utah, for the express purpose of undertaking and hnancing IPP It is currently contemplated that IPA will issue long-term bonds (estimated to aggregate approximately 58 bilhon) to hnance the construction of IPP with said bonds secured by "take-or-pay" power sales contracts between IPA and purchasers of power from IPP obligating those purchasers to pay whether or not power is produced. On August 6,1980, the City entered into such a power sales contract obli;;ating it to purchase a 6.82% share of IPP capacity and energy. Payments by the City of its share of IPP power costs (including debt service) are expected to commence in the hscal year ending 1997. Based upon preliminary estimates, R. W. Beck and Associates expects that participation in IPP will result in f lower costs of power to the City than purchasing the equivalent amount of power from Edison g Pursuant to the IOA, Edison has agreed to integrate IPP as a resource and to provide transmission services to the City's point of delivery. An environmental impact statement has been prepared by the United States Bureau of Land Management. On December 29,1979, the Secretary of the Interior announced his approval of the project following the completion of the environmental impact statement. IPA is entering into contracts to acquire approximately 39,500 acre feet of surface water annually from the Sevier River and 5,500 acre feet of ground water annually from wells located in the vicinity of the proposed plant site. IPA has commenced negotiations to acquire a coal supply but no contracts have been executed to obtain coal for the project. White Pine Project The City, together with other public and private utilities in California and Nevada have begun preliminary studies to explore the feasibility of constructing a coal-fired generating station near Ely. Nevada. This generating station would provide approximately 1,500 megawatts of electrical capaci-ty. It is contemplated that White Pine County would finance and construct this project. The bonds issued by White Pine County would be secured by power sales contracts executed with the various purchasers of power from the project.The City's entitlement percentage share for feasibility studies is currently expected to be approximately 2.652%. It is currently anticipated that the electric utilities referred to above will enter into a power supply development agreement with White Pine County in the fall of 1980 for the purpose of conducting further feasibility and environmental studies and obtaining permits and licenses for constructing and operating the project. It is anticipated that White Pine County will issue notes not exceeding $30,000,000 for such purposes. Such notes will be payable from the proceeds of long term bonds issued by the County or from payments by the pa-ticipants under such agreements on the basis of entitlement shares. The estimated commercial operation dates for each of three 500 megawatt generating units are 1989,1990 and 1991, respectively. California Coal Project The City has entered into a letter agreement with Edison and other utilities to endeavor to obtain all necessary regulatory approvals required to construct and operate the California Coal Project. The project is a proposed 1,500-megawatt plant consisting of three 500-megawatt generating units to be located in the eastern desert in Southern California. A Notice of Intent for cer+ification and approval of a plant site was filed with the CEC on December 28,1979. Proceedings are currently being held before the CEC with respect to the Notice of Intent. A decision by the CEC is expected by January 15,1981. The City's entitlement percentage share for the feasibility studies currently is 2.5%. The project is planned to be in operation in the early 1990's with Edison acting as the project manager. 26

6 i North Brawley Geothermal Project Union Oil Corapany (" Union") has entered into an agreement with Edison wherein Union agreed to construct a 10 megawatt demonstration plant and a separate agreement wherein Union agreed to sell geothermal energy to Edison to operate the 10 megawatt demonstration plant it has been proposed that the City, along with other public agencies in Southern California. agree to acquire a 501 ownership interest in the demonstration plant for the purpose of studying the technological developments and operating esperience obtained in the operation of the demonstra-tion plant, all for the purpose of constructing additional geothermal units It is proposed that the City enter into an agreement with LADWP, Hurbank, Glendale, Pasadena. Anaheim and the Imperial irrigation District to acquire ownership rights in the demonstration plant and the right to acquire options to purchase geothermal energy from Union Oil Company in the North Brawley Geothermal Field for approsimately 450 megawatts of geothermal energy. The Cityi s proposed entitlement percentage share would be approsimately 5't Other Possible Resources The City is also studying the feasibility of participating in the acquisition of some hydroelectric resources in the State of California. Along with the City of Anaheim the City has hied an application for a preliminary permit to study a proposed 140 megawatt hydroelectric project at Balsam Meadows, FERC Project No. 2858. The City has also filed, along with the cities of Arusa. Banning, Colton and Anaheim and the Northern California Power Agency, a competmg application with Pacihe Gas and Electric Company for a license to operate the esisting hydroelectric facilities at - Cresta and Rock Creek powerhouses on the Feather River FERC Project No.1%2 It is unknown whether either of these applications will be granted by FERC Southern California Public Power Authority The City and other public agencies in Southern California are considering the creation of a joint powers authority. as currently contemplated, such authority would provide for the nnancing and construction of electric generating and transmission projects for participation by so ne or all of its members. To the extent the City participates in any project developed by the Authority, it is anticipated that the City would be obligated for its share of cost on a "take-or-pay" basis whether or not power is generated or delivered. DESCRIPTION OF Tile BONDS General l The Bonds are being issued in the aggregate principal amount of SS9,070,000, are dated October 1,1980, bear interest at the rates per annum set forth on the cover page of this Of6cial Statement, payable semi-annually on April 1 and October 1 of each year, commencing April 1,1981, and mature on October 1 in the years and principal amounts set forth on the cover page of this Of6cial Statement. i The Bonds are issuable in coupon form in the denomination of $5.000 each, registrable as to principal and interest, with the privilege of discharge from registration. The principal of and premium,if any, and interest on the Bonds are payable at the othee of the City Treasurer of the City of Riverside, California, or, at the option of the holder, at any paying agent of the City in Los Angeles, San Francisco, Chicago or New York. Optional Redemption The Bonds maturing on or after October 1,1992 are subject to redemption, at the option of the City, on and after October 1,1991,in whole or in part by complete maturity or maturities as selected 27

by the City Council at its discretion, on any interest payment date, at the following redemption prices, plus accrued interest to the date of redemption: Redemption Price Redemption Period 1 percentage of (dates inclusivel principal amount) October 1,1991 - September 30,1995. 104': October 1,1995 - September 30,1997. 103 October 1,1997 - Septernber 30,1999. 102 October 1,1999 - September 30,2001. 101 October 1,2001 - maturity. 100 Sinking Account Redemption Provisions The 1980 Bonds maturing on October 1,2013, shall also be subject to redemption in part, by lot, prior to maturity on October 1,2004 and on each October I thereafter at 1001 of the principal amount thereof plus accrued interest to the date of redemption, from minimum Term Bond payments deposited in the Mandatory Sinking Account in the amounts set forth below: Minimum Afinimum Principal Principal Year Amount Year Amount 2004. $3,300,000 2009.. 55,125,000 2005. 3,600,000 2010.. 5.600,000 2006. 3,925,000 201I. 6,100,000 2007. 4,300,000 2012.. 6.675.000 2008. 4,675,000 2013.. 7,300.000 Notice of Redemption The Resolutions require the City to give notice of redemption of the Bonds by publication in a newspaper of general circulation in the City and in a nnancial newspaper or journal of national circulation published in the City of New York, New York, said publications to be at least 30 days but not more than 60 days prior to the redemption date. CITY OF RIVERSIDE-ECONOMIC BACKGROUND The Bonds will not be secured by any pledge of ad valorem tases or General Fund revenues but will be payable solely from the Net Operating Revenues of the City's Electric System. The nnancial . and economic position of the City set forth below and on the following pages is included in the Official Statement for information purposes only, in the interest of giving a more complete description of the City. General The City is the County seat of Riverside County and is located in the western portion of that County about 57 miles east of downtown Los Angeles and about 87 miles north of San Diego. Within - ten miles of Riverside are the seven cities of San Bernardino, Corona, Norco, Fontana, Rialto, Colton and Redlands, Those eight cities are located in the Counties of Riverside and San Bernardino, which .together are referred to as the Riverside-San Bernardino-Ontario Standard Metropolitan Statistical Area (SMSA). The eight cities, including Riverside, represent an important economic area of the State and of Southern California. They lie to the west and south respectively of the strategic San Gorgonio and Cajon Passes, from which transcontinental railroads and interstate highways converge to connect the Los Angeles area with other areas of the nation. The City is situated in close proximity to the metropolitan economic centers of Los Angeles and Orange counties. Riverside and San Bernardino counties cover 27,400 square miles, a land area larger than the State of Virginia. Riverside County alone is larger than the State of New Jersey. The City area, though small geographically in relation to the bi-county area, contains most of the population. 28

!i Rainfall in the Riverside area amounts to about 12 inches during the average year, and averaw-temperatures range from 51* in January to 75.5* in July. More extreme weather prevails in the arid interior of the counties. Municipal Government The City is a charter City and has a council-manager form of government with a seven member council being elected for four-year overlapping terms. The mayor is elected at large for a four-year term and is presiding othcer of the council, but does not have a vote except in case of a tie The position of City Manager is hiled by appointment of the council to serve as administrator of the staff at.d to carry out the policies of the council. Functions of the City government are carried out by approsimately 1.550 full-time and 140 part-time personnel. Water is supplied by the City system. The City operates and maintains a sewer i system. Electricity is provided by the City-owned electric utility Other City services include a diversihed recreation program and park department, museum and librarv. Population The growth of Riverside has steadily increased since 1950. The 1970 i ederal Census show ed the City's population to be 140,089, which represents an increase of 55,757 or 66T in the ten years since the 1960 census. During the twenty year period since the 1950 census, the population increased by 93,343. The State Department of Finance estimated population at 162,800 as of January 1,1974 The following table shows the growth in population since 1940. Population Statistics irar Population 1940.. 35,227 1950.. 46,746 1960... 84.332 1970.. 140.084 1979... 162,800 Building Activity . Paralleling population and commercial growth in the City, building activity has increased steadily. Close to $521 million of building permits have been issued by the City's Building Department since 1975. The inc: ease in 1977 is due principally to building permits being iwued for 4.138 single family dwellings with a total permit valuation of $168 million. In November 1977, the City placed a building moratorium on all residential construction except for individual single-family dwelling construction. The purpme of this moratorium was to allow the City sufficient time to complete various area planning studies and to develop a system for evaluating residential developments and their impact upon City services. The moratorium was terminated in March 1979. Upon termination of the moratorium a residential point system process was instituted. This process will somewhat limit building activity. In addition, some prime agricultural areas and hillside areas have been restricted as to potential future growth by the pas age of an initiative i measure restricting these areas to one house per two acres to one house per hve acres. However, the City anticipates new construction to proceed at rates comparable to the period prior to 1977. In addition, the City's sewage treatment plant is approaching capacity and additional capacity. does not appear to be possible for a three-to four-year period. As a result, the City has determined that the remaining capacity will be prorated over the next three years by limiting sewer connec-tions. The City is planning to add sewer capacity by cor.struction of additional treatment facilities after the three year period. 29 h.

j The following chart indicates the total valuation of all building permits tssued bv the Cityi Building Division during the period from 1975 to 19~9 Building Permit Valuations 1979 _, 19*M. 197* 14*h tw?; New residential 527,338,100 5 7,337,791 5209,401.10s 577.044.646 530.561.332 Com mercial/ industrial 46,027,102 27,649,356 18,950.143 9,319.69; 11.290.255 Alterations / additions 10,839,l_08 _12,50,797 _ 15,333.157 10.367.007 6.179.004 Total valuation.. 584.204,310 547,557,944 5243.6s4,40s 596.731.39s $4 N 3 To,591 Total new dwelling units.. 280 78 4,506 1.n66 87 Total permits 3,710 4,319 A,4 6 s 4.7;4 3.425 Source. City Planning Department-Building Division Employment While no annual information is regularly compiled on employment for the City, infermation for the Riverside-San Bernardino-Ontario ShfSA, the sixth largest of 17 in Califorma, indicates t h.i t resident employment increased from 415,500 in 1975 to about 533,100 in 1979 The rate et revdent uner ployment ranged from 10.19 to 6 69 in 1975 through 1979 The following tab!c indwatn the employment statistics during the penod from 1975 to 1979 Riverside-San Bernardino-Ontario ShlSA Employment, Unemployment and Labor Force (*) Averages: 1975-1979 (thousa nds) 1979 1978 197" le 6 1975 Employment 533.1 511.3 467.- 436 0 415.5 Unemployment 37.6 34 5 42.9 _44 0 4o 7 Civilian Labor Force. 570.7 519 s 510 6 440 9 462 2 Unemployment Rate 6 v; 7 0'; S 4'; 9.37 10 l' State Unemployment Rate 6.2'i 7.15 8 2n o.20 9m (*) By place of residence, including workers involved in labor disputes. Source: State Employment Development Department. 3 The most important wage and salary employment sectors are trade, services. and government. which combined made up almost two thirds of all such employment in 1979. Government consti-tuted about 24%. Being the county seats, Riverside's and San Bernardino's county government establishments, as well as two major U.S. Air Force bases, Afarch Air Force Base south of Riverside and Norton Air Force Base near San Bernardino, explain the importance of that sector. The City is an important industrial center for the manufacture of, among others, instruments. computer equipment, aluminum, recreational vehicl(s, mobile homes, and aerospace and aircraft components. The City bas over 3,800 acres ioned for industrial use. 30

The following two tables indicate the sccpe of employment in Rnerside in relairrig the wage and salarv employment by industry and the pnncipal employers Riverside-San Bernardino-Ontario SNISA Wage and Salary Employment by Industrp') Averages: 1975-79 (thousands) sator tre se s ie--

ire, ics Agriculture..

18.4 19 1 14 4 14 2 17 4 hiining.. 2.6 25 23 22 2.. Construction...... 29 3 26 0 17 7 14 5 12 5 Durable hianufacturing.. 50.0 46 9 41.3 39 1 37.1 Non-Durable hianufacturing 17.4 17.2 15 e 15 2 14 0 Transportation, Communications. Utilities 23 e 21 S 20 1 Ic 0 Io 0 Wholesale Trade. 14 4 14 0 14 3 13o 13 1 Retail Trade. 81.0 84 1 74 3 a1 e4 s Finance, insurance, Real Estate.. 18 6 17.0 14 5 13 5 12 o Services... 87 6 82.3 74 9 71 2 o5 I Government. 97.3 06 4 42.9 40 0 FG 2 Total. 440.2 427.3 399 1 3on e 350 4 (*) By place of work, escluding the self-employed. farmers unpaid f amily workers. deme-tu workers in households, and workers involved in labor disputes Source State Employment Development Department. 31

) Principal Employers Firm / Institution Number of Principal _ Products E mylo s ees Afanufacturing: Rohr Industries Inc. Aircraft and rockei motor assemblies 3.080 Bourns Inc. Electronic components and systems 1,800 Fleetwood Enterprises Afobile homes, recreational vehicles 1.000 Toro Co. Automatic irrigation systems 500 Owens-Illinois / Lily Div. Paper and plastic cups and containers 450 Aluman Inc. Aluminum mill products 375 m ATCO International Inc. Relocatable housing structures 325 Hunter Engineering Co. Rolling mill machinery / equipment 300 Riverside Cement Co. Cement 250 FhfC Corp., Citrus hiachinery Div. Citrus processing machinery, egg handling 200 systems Non-hfanufacturing: County of Riverside County government 6,500 Univ. of Calif. Riverside State university 2.885 Riverside Unihed School District Public school system 2.400 City of Riverside City government 2.000 Riverside Community Hospital Private hospital 1,060 Afarch AFB (non-military empl.) Afilitary installation 1,050 Pacific Telephone Co. Telephone utility 900 Alvord Unified School District Public school system S60 Press-Enterprise Co. Daily newspaper 750 Source: Riverside County Department of Development,1980. Income Total resident personal income in the Riverside-San Bernardino-Ontario ShfSA increased about 90% from 1971 through 1977 (the latest year published by the U.S. Department of Commerce) due both to increases in population as well as to increased per capita income. Per capita personal income in the ShfSA increased about 67.8% from 53,827 in 1971 to $6,423 in 1977. The latter amount trailed the 58,356 average in the four Southern California counties and the SS,015 average in California. The total personal income of residents of the ShfSA in 1977 represented about 109 of the four Southern California counties

  • personal income and about 4.8% of the State's personal income.

32

_ _ _. ~ _ - _. { .l l Retail Sales '} Retail merchandising is a primary factor in the City's economy. The City serves as a major commercial and marketing center for a large portion of Riverside and San Bernardino counties. The following table indicates the growth in tasable transactions from 1975 to 1979. Taxable Transactions I Outlets f anable Year July 1 Transactions 1975.. 2,903 5506,560,000 l 1976.. 3,034 588,267,000 1977... 3,161 722,846,000 1978.. 3,294 834,053.000 1979.. 3,433 954,303.000 Source: State Board of Equalization. Education Riverside provides instruction at all levels. The University of California at Riverside, with a 1978/79 enrollment of approximately 5,000 offers undergraduate and graduate degrees in many liberal arts fields in addition to a notable agricultural curriculum. The Riverside Unified School District operates 24 elementary schools. 5 junior high schools,4 high schools and 3 special schools. The Alvord Unified School District also provides public schools for a small percentage of City residents. Also located at Riverside is La Sierra College, a four-year Seventh-Day Adventist college 1 affiliated with Loma Linda University. Specialized schools include California School for the Deaf and the Sherman Institute. The Riverside City Community College District operates Riverside City College. The school is a community college offering two-year programs leading either to terminal degre+s in technical fields or to entrance to a four-year college at the third year level, plus adult education courses. Fall 1977 enrollment was approximately 16,000. L i A 33

CITY OF RIVERSIDE - FINANCIAL INFORMATION Certain Financial Information The following tables present the comparative Balance Sheets and the comparative Statements of Revenues and Expenditures for the General Fund of the City over the years 1974-1975 to 1475-1474 COMPARATIVE BALANCE SIIEETS Assets Fiscal 1 ear Ended June 30 1979 1978 19*7 1976 1973 Cash $6,279,811 $3,256,432 $5.370,679 52.304,195 51.144.255 Accounts Receivable - Net. 70e,982 587,66S 612,784 678,560 244.336 Interfund Loans Receivable. 489,381 426,136 Due From Other Governmental Agencies.. 851,177 883,135 711,070 198.443 205.441 Pre-paid Expenses.. 35,971 160,731 135.635 140.345 116.728 Amount to be provided for Contract !< Lease Purchase Obligations. 48,996 125,079 398,849 4S9,408 624.779 Total. $8,412,318 $5,439,181 57,229,022 53,810.051 52,375,534 Liabilities, Reserves and Fund Balance Accounts Payable. 52,144,251 51,669,334 $1,374,166 $1,029.826 $ S05 095 Interfund Loans Payable. 94,682 156,306 Deferred Revenues. 20,918 14,411 e.282 Contract and Lease Purchase Obligations.. 48,996 125,079 398,849 489,409 624.779 Total Liabilities. 2,193,247 1,889,095 1,950,239 1,533,645 1,436.146 Reserves. 5,934,555 1,353,645 1,043,8S3 550.053 434.850 Fund Balance. 284,516 2,196,441 4,234.900 1,727,253 504,543 Total.. $8,412,318 $5,439,181 $7,229,022 $3,810,051 52.375.539 34

Summary of Revenues and Expenditures . __... _ _ _ _..._.. f iwal i ear I.nded June 10, 1979 1978 1977 1976 197% REVI:NUES Property tases. 5 3.038,704 5 4,832.015 5 4.465,422 5 3,975.kl 5 4010;6 Sales and use taxes. 9,521,980 8,414,718 6,713.855 5,640,ws 4.832.203 Other non-property taxes 5.546,717 6,561,334 5,076.931 3,068,9;3 2.693,741 Licenses and permits.. 975.588 2.017,458 1,534,897 1,876.304 1.084,84s Fines and penalties.. 1.0'44.658 903,944 819,142 681,166 644.006 Use of money and property. 1,582.421 966,886 476,248 452,720 640.493 From ofher agencies.., 19,509,754 13,392.221 11.621.089 12,911.274 4,;0' 474 Current services.. 8,747,096 8,537,908 7,624,377 4.802,894 4,704 924 Other revenue-4,990,475 4.713,394 4,122.321 4,177,3 % 3.307.424 Total. 555.007.393 550,339,878 542,454,242 537.637.193 531,057,624 EXPENDITURES General government.... 5 7,068,281 5 7,692.314 5 5,190,295 4 3,605.212 5 2.800,626 Public safety. 15,718,952 14.393,066 12.692,188 11.491,824 10.252,432 Public works.. 12,187,920 11,353,256 9,159,340 8,700.639 8,350.101 llealt h.. .. ~.. -- 24,084 56.140 Library. 2,565,788 2,835,537 2,480,356 2,304,122 2.098.121 l Parks and recreation.. 4,498,347 4,838,170 3,782.253 3,316,951 2.476.007 Contributions to other governmental units.. 69,988 253,445 133,838 19,338 67,122 Capital outlays.. 10.106,148 4,115,766 5,041,604 5,661.477 4.232.265 Total. 552,215,424 545,481.554 538,479,874 535.123,647 530.863,314 Source: City Finance Department as reported to State Controller and published in State Controller's Annual Report entitled Trnancial Tran.sactions Cencernmg Citics of Cahternia. Excludes Airport. Electric System and Water Department enterprise funds. Budgetary Process The fiscal year of the City begins on the hrst day of July of each year and ends on the thirtieth day of june of the following year. At such date as the City Manager determines, each department head must furnish to the City Manager an estin ate of revenues and expenditures for such department, for the ensuing hscal year. l. detailed in such manner as may be prescribed by the City Manager. In preparing the proposed budget, the City Manager reviews the estimates, holds conferences thereon with the respective E . department heads, boards or commissions as necessary, and may revise the estimates as he or she ' deems advisable, j At least thirty.five days prior to the beginning of each fiscal year, the City Manager submits to l the City Council the proposed budget as prepared by him or her. After reviewing and making such > revisions as it deems advisable, the City Council determines the time for the holding of a public hearing thereon and causes to be published a notice thereof not less than ten days prior to the hearing date; Copies of the proposed budget are available for inspection by the public in the olhce of the City Clerk at least ten days prior to the hearing. At the conclusion of the public hearing, the City Council further considers the proposed budget and makes any revisions thereof that it deems advisable and on or before June 30 it adopts the budget with revisions,if any, by the affirmative vote of at least a majority of the total members of the Council. 35-

From the effective date of the budget, the several amounts stated as proposed expenditures become appropriated to the several departments, othces and agencies for the objects and purposes named, provided that the City Manager may transfer funds from one ob ect or purpose to another l within the same department, oHice or agency. All appropriations lapse at the end of the hscal year to the extent that they have not been expended or lawfully encumbered At any public meeting after the adoption of the budget, the City Council mav amend or supplement the budget by motion adopted by the athrmative vote of at least hve members of the City Council. Under the City charter, the City may not incur indebtedness avidenced by general obhgation ~ bonds which would in the aggregate exceed fifteen percent of the total assessed valuation. for purposes of City taxation, of all the real and personal property within the City, and no Funded indebtedness which shall constitute a general obligation of the City may be created unless authorized by the afhrmative votes of two-thirds of the electors votmg on such proposition at any election at which the question is submitted to the electors. At present the City has no authorized but unissued general obligation bonds, and future authorizations are precluded as a result of the passage of Article XIll of the California Constitution. The City Council employs, at the beginning of each hscal year, an independent certihed pubhc accountant who, at such time or times as specified by the City Council and at such other times as he or she shall determine, examines the books, records, inventories and reports of all orncers and employees who receive, control, handle or disburse public funds and of all such other othcers. employees or departments as the City Council may direct. As soon as practicable after the end of the hscal year, a report is submitted by such accountant to the City Council and a copy of the hnancial statements as of the close of the fiscal year is published. Assessed Valuations and Tax Collections Taxes are levied for each hscal year on taxable real and personal property which is situated in the City as of the preceding March I. For assessment and collection purposes. property is classihed either as " secured" or " unsecured" and is listed accordingly on separate parts of the assessment roll The " secured roll" is that part of the assessment roll containing State-assessed public utshties property and property the taxes on which are a lien on real property suthcient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the " unsecured roll ' Property taxes on the secured roll are due in two installments, on November I and February 1 of the fiscal year. If unpau, such taxes become delinquent on December 10 and April 10, respective-ly, and a 6% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June 30 of the hscal year. Such property may thereafter be rede med by payment of the delinquent taxes and the delinquent penalty, plus a redemption penalty of 1% per month to the time of redemption. If taxes are unpaid for a period of hve years or more, the property is deeded to the State and then is subject to sale by the County Tax Collector. Property taxes on the unsecured roll are due as of the March I lien date and become delinquent. if unpaid, on August 31 of the fiscal year. A 6% penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of 1% per month begins to accrue beginning November 1 of the 6 scal year. The taxing authority has four ways of collecting unsecured personal property taxes:(1) a civil action against the taxpayer;(2) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer. (3) filing a certi6cate of delinquency for record in the County Recorder's othee, in order to obtain a lien on certain property of the taxpayer;and (4) seizure and sale of personal property, improvements or possessory interest belonging or assessed to the assessee. 36

Direct and Overlapping Debt The following table indicates the direct and estimated overlapping borded debt of the City 29.1980 prepared by California Municipal Statistics, Inc. as of September STATEMENT OF DIRECT AND LSTIM ATED OVERLAPPING BONDED DEB ~l 1980-81 Assessed Valuation: 5788.405,799 (Before deducting redevelopment ta s alh tation increment) Percent Debt as of Direct and Overlapping Bonded Debt: Apptjcabic son tpo 18.9377 5 106.047 Riverside County. 18.937 4.7 %.636 Riverside County Building Authorities. 1.137 5,735.655 Metropolitan Water District. 74 346 15,110.825 Riverside County Flood Control Dist., Zone #1. 62.372 - 62 691 750.37A Riverside City Com. College Dist. (various issues).. 91.586 - 92.858 13,544.434 Riverside Unif. School Dist. (various issues).. 90.385 - 93.539 4,300.447 Alvord Unif. School Dist. (various issues).. Various 35.934 Other School and Unified School Districts.. 100. 3.545.000 City of Riverside.. 100. 27,743.000 City of Riverside Building Authorities.. 100. 5n3.000 City of Riverside Parking Dist. #1 100. 210.000 La Sierra Community Services Dist.. Various 164.172 Other Special Districts. 76.n i n.032 TOTAL GROSS DIRECT AND OVERLAPPING BONDED DEBT. 365 000 Less: Parking Dist. #1 (100% self. supporting). 576051.032 TOTAL NET DIRECT AND OVERLAPPING BONDED DEUT.. RATIOS TO ASSESSED VALUATION 3 47' Direct Debt (531,288,000). u.71 ' Total Gross Debt. 4 o4" Total Net Debt.. SilARE OF AUTilORIZED AND UNSOLD BONDS Metropolitan Water District. 54,219.400 5 655,507 Alvord Unified School District.. 5 4.751 Highgrove School District. 5 49 Moreno Valley Unified School District.. 5 551,100 Riverside Unified School District.. 5 253 Home Gardens Sanitary District.. 5 100.000 La Sierra Community Services District. 5 250.000 Riverside (Airport Revenue).. Western MWD, ID #3.. 5 339.515 State School Aid Repayable as of 6/30/80: 56,712,226 37

b Total assessed valuation of all taxable property in the City increased from 296,720.661 to 740,053,848 at an average annual rate of approsimately 10.379 from 1970-71 to 1979 R0. Such assessed valuations include secured and unsecured properties assessed by the Riverside County Assessor and secured utility properties assessed by the State Board of Equalization The valuations are before deduction of State-reimbursed homeowners' and business inventory exemptionsbut exclude veterans, religious, charitable, and other such nonrecoverable exemptions Excluded also are the incremental assessed valuations within redevelopment project areas the revenues from which were allocated to the Riverside Redevelopment Agency in the years beginning with 1974-76 In addition to a 10-year record of assessed valuations the table below shows the City tax levies. collections, and collection percentages for the last ten completed fiscal years. Assessed Valuations, Tax Collections, and Tax Rates Percent of Current i ca r's Taies Ratio Fiscal Auessed Total Receised of Total Secu.ed Roll Tai Rate tear Valuation Total Tan During Collections Oserlap-Ended All latable Tas Collec. Current to Total City of ping

fj June 30 Propertyt!'

Levy tionM2p iear Tas Levy Riserside A gencies Total 1970.. 5 279,265,432 $2,958,343 $2,955,321 95 91 99.4'i 5 1.1300 3 8 9250 510 0550 1971.. 296,740,661 3,113,037 3,105,231 96.7 99.8 1.1300 9.3000 10 4300 1972.. 322,768,084 3,109,436 3,381,375 95.4 99.2 1.1300 9.480 10.7080 ^ 1973.. 336,823,772 3,563,196 3,571,253 95 6 100.2 1.1300 9 6150 10.7450 1974.. 355,837,058 3,403,294 3,371,122 95.4 99.1 1.1300 9.3010 10.4310 1975.. 385,907,138 3,687,559 3,584,477 93.6 97.2 1.1300 8.4400 10.0700 1976.. 416,491.631(3) 3,974,909 3,926,906 94.2 98.8 1.1300 9.8760 11.0060 1977.. 453,417,402(3) 4,363,320 4,432,360 97.3 101.6 1.1300 10.1200 11.2590 1978.. 542,390,209(3) 4,855,572 4,805,534 N/A 100.1 10100 9.4370 10.4470 19,'9.. 614,459,041 N/A(4) 3,010,161 N/A N/A N/A N/A 4.942 1980.. 715,300,139 N/A(4) N/A N/A N/A .5S0 4.24 4.S20 (1) Cross assessed va;uation less all exemptions, plus the homeowners' and business inventory exe beginning in 1969-70, the taxes on which are paid by the State of California. (2) Includes prior years. (3) Excludes incremental assessed valuation in the redevelopment project area, the taxes on whic to the Redevelopment Agency. (4) Because the City, by law is no longer required to set a tax rate other than a debt service rate a only a percentage of the taxes collected by the County of Riverside, it can no longer compute the percentage of tax collected to amount levied after fiscal year ended June 30,1975. Source: City of Riverside Annual Financial Reports. 38

Summarized below is a 10-year history of property tas rates levied in a typical tas code area in Riverside by the City and overlapping taxing agencies Property Tau Rate Ifistory Typical Tax Code Area (Mills per $1.00 of Valuation) County School of City Districts Riverside Other Total Fiscal Year 1.130 5.338 2.3774 .6140 9.4594 1969.. 1.130 5.640 2.5450 .7400 10.0550 1970... 1.130 5.677 2.9590 .6640 10.4300 1971. 1972.. 1.I30 5.780 2.9250 .8730 10 7080 1.130 5.930 2.8250 .86 'e 10 7450 1973.. 1974. 1.130 5.758 2.6730 .870v 10.4310 1975.... 1.130 5.445 2.6350 .8600 10.0700 1.130 6.387 2.6330 .8560 11.0060 1976.... 1.130 6.384 2.9230 .8220 11.2590 1977. 1.010 6.077 2.5440 .8160 10.4470 1978.... 1979.. N/A N/A N/A N/A 4.942 ( 9 .680 2.494 1.182 .464 4.820 (*) 1980.. (*) Estimated Retirement System Employees of the City participate in a defined-beneht pension plan which is admin accordance with a contract between the City and the State of California Public Employees' Re ment System ("PERS"). 541.187 members, of The PERS system was established in 1931. As of June 30,1978, there were whom approximately 10% are classified as " safety" members (principally fire and the balance are classified as " miscellaneous" members (management, administrative, staff, tional and clerical employees). Approximately one-third of the members of PERS are state personnel and the public agency personnel. As of June 30,1979, the PERS provided retirement, dea benefits under 1,039 contracts for 2,136 public agency employers (cities, counties. school l special districts and other public bodies) with 358,537 members. PERS's fund employee contributions together with investment income. Contributions fluctuate on the number of members and their respective salary schedules. Total assets of the PERS at June 30,1979 were $11.4 billion, according to the most audit. Of this amount, net assets of $11.1 billion were available for benefits. The annual co 1978/79 fiscal year was $988 million. The annual contribution by employees by employers for the 1978/79 fiscal year was $354 million. for the The most recent actuarial valuation, performed by PERS, utilized census data as of Ju The total untunded obligation of the PERS was determined to be $6,868,665,000. Th was entry age normal cost, which is a projected benefit cost method wherein lev cost rates, considering present member contributions, are calculated at amounts suff benefits over the entire service life of members. Except for the pooling of certain public agency raiscellaneous members, actuar are performed for each participating employer, and the total accrued actuaria is the sum of the individual employer accounts. According to the PERS annual report, pu -39

J employer contril,ution rates set forth between each agency and PERS will meet all ongoi ig costs and fund the unfunded liability for each agency in - ardance with the terms of each agen ;y's contract State law provides that, when rendered necessary by changes in benents or by periadic actuarial review, PERS may modify the amounts of annual pension contnbutions by agencus contracting with it. At July 1,1978, an actuarial valuation by the state (the most recent) indicated the City had an unfunded liability for safety members of $18,899,494 and for miscellaneous members of M0.542.6% Contribution rates of 10.594% for safety members and 6 068% for miscellaneous membm were established by the state to amortize this liability by July 1,2006. The PERS's financial statements are prepared on an accrual basis of accounting. The PERS's auditor is Touche Ross & Co., San Francisco, California. Citicorp Investment Management, Inc, San Francisco, provides investment advisory services. The PERS's actuarial activities are conducted internally on a continuous basis. with an esperience analysis being required no less than every four years under the Retirement Law. Management Applied Programming. Inc.. Los Angeles, is review-ing the June 30,1977 actuarial valuation prepared by the PERS staff LITIGATION Relating to the City and the Bonds in the opinion of the City Attorney, there is no litigation pending or, to the knowledge of the City, threatened, questioning the corporate existence of the City, or the title of the ofheers of the City to their respective offices, or the validity of the Bonds or the power and authority of the City to issue the Bonds, or the validity of the IOA, Participation Agreement, Supplemental Agreement or Transmission Service Agreement, except as noted below. There is no litigation pending, or the knowledge of the City, threatened, questioning the authority of the City to fu, charge and collect rates for the sale of power and energy by the City as provided in the Resolution. Other Litigation Cuty of Anaheim, Et Al. v. 50. California Edison Company On March 2,1978, the cities of Riverside, Anaheim, Banning, Colton and Azusa filed an action in the Federal District Court for the Central District of California alleging that Edison was involved in a conspiracy to restrain and monopolize trade and price disenmination all in violation of the Sherman Antitrust Act and the Robinson-Patman Price Discrimination Act. On or about May 5,1978 Edison filed motions for a more definite statement, to dismiss the complaint for failure to state a claim, or in the alternative, to stay the action. The District Court denied Edison's Motion to Dismiss, but stayed the case pending the FERC's decision in Docket No. ER 76-205, E-796 and E-7777. The District Cnurt lifted the stay on September 10, 1979 to permit discovery on certain matters. On . February 10,1980 the District Court vacated the stay entirely. On November 29,1979 Edison filed its Answer and Counterclai.c requesting damage in an unspecified amount. A status conference is scheduled for February,1981. Counsel to the City believes, based upon the allegations contained in the Counterclaim, which allegations constitute the factual basis for such belief, that the Counter-claim of Edison is without merit. The City is a party plaintiff or intervenor in various rate cases and other proceedings affecting the Electric System. The City does not believe that any of these proceedings will have an adverse effect upon the financial condition of the Electric System. 40

LEGAL OPINIONS The City will furnish to the Underwriters the approving legal opinions of O'Melveny & Myers, of Los Angeles, California, Bond Counsel to the City. Said opinions in substantially the form attached as Appendix G will be printed on the Bonds. Bond 4.'ounsel's participation in the preparation of this Official Statement has been limited to reviewing the statements of law and legal conclusions set forth herein under the captior - " Security for and Sources of Payment for the Bonds" and " Description of the Bonds " The servues of Bond Counsei are limited to reviewing and rendering assista: ce in the preparation of the legal proceed-ings authorizing the Bonds, to the limited participation in the preparation of the Ofhcial Statement described above, to the issuance of the opinion described in the preceding paragraph, and to the issuance of the tax opinion described below. Such opinions will not consider or extend to any documents, agreements, representations, offering circulars or other material of any kind concerning the issue not stated in this paragraph to have been reviewed by Bond Counsel TAX EXEMPTION In the opinion of Bond Counsel, interest on the Bonds is exempt from income tases of the United States of America under present federal income tax laws, and is also exempt from personal income taxes of the State of California under present state income tax laws. CLOSING DOCUMENTS The City will furnish the Underwriters, without charge, concurrently with payment for the delivery of the Bonds, the following closing documents each dated the date of such delivery: (a) The opinions of Bond Counsel in the form included in this Otheial Statement as Appendix G; (b) A certificate of the Public Utilities Director to the effect that at the time of the sale of the Bonds and at all times subsequent thereto up to and including the time of said delivery the Official Statement did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (c) A certi6cate of an appropriate official of the City, acting solely in an official and not personal capacity, to the effect that the members of the City Council have reviewed the Othcial Statement and have determined that as of the date thereof the information contained therein is, to the h=t of their knowledge and belief, true and correct in all material respects and docs not contain.ny untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading, and that the signatory knows of no material adverse change in the condition of the City which would make it unreasonable for the purchasers of the Bonds to rely upon the Ofhcial Statement in connection with the resale of the Bonds. (d) The certificate of the City Attorney that there is no litigation pending crfecting the validity of the Bonds. CITY or Rivinsion, CurioRN14 /s/ ALBERT C. BROWN Mook /s/ DOUGLAS G. WElFORD CITY M AN AGIR /s/ EVERETT C. ROSS Pesue UTiutits DintcTon ' OCTOBER 21,1980 41

APPENDIX A R. W. BECK AND ASSOCIATES ENGINFIRS AND CONSULTANTS O NIN4Lut6KI rL ANNING DISK;N tongggggtetNG

  • if ArTL E. n AMl!NGTUN 2**U
  • A RoNMINY AL sI ArTLL % A5HINGToN **101 Et ONoMICs 20H22 Hwe M AN AGIMrNT October 21.1990 1

City of Riverside City llall 3900 Main Street Riverside, California Gentlemen:

Subject:

Consulting Engineer's Report Riverside Electric System Presented herewith is a summary of our analyses, investigations and studies with respect to the proposal by the City of Riverside, California (the " City") to issue 5S0,000.000 of Electric Revenue Bonds, Issue of 1980 (the "1980 Bonds") for the purpose of paying the cost of acquiring a 1Jo1 ownership interest in the San Onofre Nuclear Generating Station. Units 2 and 3 (together referred to herein as the " Project") and $9,070.000 of Electric Revenue Refunding Bonds Issue of 1950 (the " Refunding Bonds") for the purpose of refunding previous bonds. The Project is being constructed by the Southern California Edison Company (" Edison") and the San Diego Gas and Electric Company. Edison has been designated manager and operator of the Project. The City proposes to acquire its ownership share of the Project from Edison. Based on estimated costs of the Project, the City expects that the 1980 Bonds wil! be sufficient to acquire a 1599 ownership interest in the Project. However, the City's present financing program provides that additional bonds could be issued at later dates if necessary to pay any remaining cost of acquiring its ownership interest in the Project. The City entered into a Settlement Agreement dated August 4,1972 with Edison which provided, among other things, that the City may acquire a 179% ownership interest in the Project and that Edison will provide the necessary transmission services to the City to deliver the output of the Project to the City's system. The City has signed an Integrated Operations Agreement ("!OA") and the Supplemental Agreement for the Integration of Riverside's Entitlement in San Onofre Units 2 and 3 (" Supplemental Agreement") with Edison which provide, among other things. for the operation of the Project by Edison for the benefit of the City. Under the IOA, Edison will continue to supply the City's power and energy requirements over and above the capability of the City's share of the Project and any future City owned resource and credit the City on its monthly billing statements for the power and energy generated by such resources that are integrated with Edison resources. The Supplemental Agreement provides that the Project will be included as an integrated resource pursuant to the IOA. Further, Edison has signed and the City, upon delivery of the Bonds, will sign the San Onofre Units 2 and 3 Participation Agreement which sets forth the terms and conditions under which the City will participate in the ownership and output of the Project and the Transmission Service Agreement in which Edison agrees to provide transmission of the City's share of the output of the Project to the City's point of delivery. For a summary of the San Onofre Units 2 and 3 Participation Agreement the Transmission Service Agreement, the IOA and the Supplemental A-1

Agreement see Appendices II, C, D, and E respectively to the Othcial Statement to w is attached (" Official Statement"). Currently, all of the City's power and energy is purchased at wholesale rates f rom for interruptible energy which the City may purchase from other public and private electra ut and governmental agencies when it is available at an economically attractive prne The C its espects to use its share of the output of the Project to replace a portion of the power and energy curr nti being purchased from Edison, with resulting long-term economic benefits to the Litt e v Tile PROJECT San Onofre Nuclear Generating Station The San Onofre Nuclear Generating Station consists of two 1,100 MWe nuclear generati currently under construction and an existing nuclear generating unit, Umt No I (not part of the Project), rated at 450 AfWe. The station is located on an 84-acre site approumately three mdes I of San Clemente, California and within the U.S. Marine Corps Base at Camp Pendleton I A certain common facilities shared with the existing unit, the Project consists of the two units under construction. These units, Units 2 and 3, are essentially identical in design and will share certain common facilities including the control room and certain other facihties The nuclear steam supply systems for the Project, supplied by Combustion Engmeermg. are closed cycle pressurized water reactor systems rated at 3,410 MWt each The turbme generat are tandem compound units supplied by GEC Turbine Generators, Ltd. (formerly English Electra The main condensers are being supplied by Ingersoll Rand and wdl be cooled by circula seawater obtained through large intake lines extending out 5200 feet into the ocean. The main generators are rated at 1,312,950 voltage of each generator to 220 kV for interconnection into the facilities of E network. The Project is being designed and the construction is being managed by the Ilechtel Pow er Company for Edison. Edison is managing the startup program and will operate the two units u,o receiving a commercial operating license. It is currently planned that the Project will be owned as tenants-in-common by the follow utilities: Ownership (l Edison. In teres t_ 76 55'1 San Diego Cas & Electric Company. 20.00 City of Riverside.. 1.79 City of Anaheim.. 1.66 Total.. 100.00'i Status and Schedule Construction of Unit 2 began in March 1974 after receipt of a construction permit from the Nuclear Regulatory Commission ("NRC") in October 1973, and the major construction of Unit 3 started in June 1975. Fuel loading for Unit 2 is scheduled for the second quarter of 1981 with commercial operation in December 1981. Fuelloading for Unit 3 is scheduled for the third quarter of 1982 with commercial operation scheduled for February 1983. As of June 27,1980, construction of Unit 2 was approximately 93% complete and Unit 3 was approximately 63'i complete. Edison's current schedule anticipates that the opera:ing license will be received from the NRC in suthcient time to meet the projected fuel loading and startup schedules. For a discussion of the status of the operating license, see the caption " Regulatory Matters - Nuclear Regulatory Commission" in the Official Statement. A-2

Construction work on the Pro;ect is currently halted due to a strike as part of a western regional work stoppage by the International Brotherhood of Boilermakers The City is unable to predict the duration of the stoppage, or its impact on the construction schedule or cost of the Project. For a further discussion. see the caption "The Pro;ect - Status and Schedule of Construction" in the Othcial Statement. Estimated Financing Requirements for the Project i The following table shows the estimated cost of constructing and hnancing the Protect-Total Projecetti City's Wre leem Land & Rights. 5 3.270.000 5 59.000 Structures & impsovements. 68'),92S.000 12,159.000 Reactor Plant Equipment.. 811.009.000 14.517.000 460,009,000 8 234.000 Turbogenerator.. Accessory Electrical Equipment.. 145.485.000 3.400.000 Miscellaneous Power Plant Equipment. 39 500.000 1.047.000 52.209.200.000 539.545.000 i Subtotal Direct Construction Costs... 601.000 Ad Valorem Tases(2).. 5.174.000 Nuclear Fuel (1).. 3.500.000 City's Contingency (3).. Total Construction Costs.. 544.910.000 Interest Payable to Edison (4)... 9.649.000 S.196.000 Reserve Account (5L.... 16.5SS.000 ' Interest Funded During Construction (6).. 500.000 Financing Costs (6).- $s3.843.000 Gre's Requirements.. Less: Interest Income (7).. 3.843.000 Net Financing Requirements.. 540.000.000 L (1) Estimated by Edison. (2) Estimated share of tas to be paid by City. (3) Additional contingency not included in Edison's estimated costs to allow funds for uncertainties i-in the construction, licensing and startup schedules and possible additional design changes. l (4) City's share of estimated interest costs paid by Edison through October 1,1977 and City's interest costs at 9% per year on funds expended by Edison from November 1,1977 to October 31,1980. (5) Masimum annual debt service based on estimated debt service payments on the 1980 Bonds. (6) Based on an assumed annualinterest rate of approximately 4.60% on the 1950 Bonds.1009 of the I interest on the 1980 Bonds is capitalized until June 1,1982, and 5'A of the interest on the 1950 Bonds is capitalized until August 1,1983. (7) From temporary investment at an assumed interest rate of 7% on the 1980 Bonds proceeds deposited in the Construction Fund. Also included are 100% of interest income on the Reserve Account, invested at an assumed interest rate of 8.5% until June 1,1982 and 50% of such interest income until August 1,1983. The interest earnings on the Reserve Account are required by the ~ Resolution authorizing the 1980 Bonds to be deposited in the Construction Fund during the ~ period of construction and for six months thereafter. A-3 i t.._.

i o Effects of the Three Mile Island Accident Following the accident at the Three Mile Island Unit No 2. ("TMI-2"), the NR a reorganization and an interruption of its licensing efforts. The hcensing requirements plants are continually beitig reevaluated in light of the TMI 2 accident which has r uncertainty in the licensing schedules for all plants near the completion of construction by the NRC. These design changes are estimated by E additional design changes may be required in the future. Edison has Nuclear Fuel The nuclear fuel cycle consists of four basic elements prior to insertion of the f ue a nuclear reactor. These elements include acquisition of uranium concentrates, convel fabrication of the enriched uranium into fuel assemblies. it is removed for reprocessing or disposal. The following table shows the amount of coverage of the necessary materials and serv Edison has acquired for the Project: ( Unit 2 Unjt 3_, Iull 'l iull Cover-Coverage Cover. Cot erage age Throua,,h age Through Through 1990 Th rough, t**0 Uranium. 1985 85 1985 52 l Conversion. 1990 100 1990 100 Enrichment.. Fabrication......... 2009 100 2009 100 1984 25 1985 55 Storage... 1991 100 1992 100 At the present time, no operating facilities for the reprocessing of spent fuel are availa in April 1977 the President of the United States announced an indennite deferra spent fuel and the use of plutonium. In October 1977, the United States Departme (" DOE") announced its intent to accept and take title to spent fuel from utilities upon one-time storage fee. The details of this DOE program are currently being formulated Edison of a providing on-site spent fuel storage capaciN for the Project estimated to be sufficient to ac date storage of the discharges of all spent fuel from Unit No. 2 through 1991 and from through 1992. By then it is assumed that an appropriate program will have been imple

accept spent fuel for placement in a suitable repository 8

A-4

Estimated Cost to the City of Power from the Project The following table shows the estimated annual costs to the City of power from the Project as it is deliv4 red to the City's system for the years ending June 30,1982 through 1990 based on Edison's estimate of energy generation by the PrMect. ESTIMATED ANNUA). COSTS TO TIIE CITY OF POWER FROM Tile PROJECT (000) h*'88 i'ar Endy_ lune 30. 1942 1943 1944 1949 1946 1947 1944 1994 1**0 Interest and Amortirationtil. 5 319 53.824 5 7.731 5 R lR0 $ N.192 5 a.1kh 5 6. I *

  • 5 m.l=4 5 k 178 land Eawment(2).....

I 2 3 3 4 4 4 4 5 Operatmn and Maintenance (2). 264 5.39 994 1.442 1.546 1.739 1.908 2.0" 2.2k9 Administrative and General (2L 154 322 405 44% 4A4 531 577 62k at Nuclear insurance (2). 52 124 169 19A 204 222 242 261 2Ee Nuclear Fuel (3).. til 902 1.901 2.213 2.019 2.431 3 115 2.6A 9 2191 Renewals and Replacements (4). 115 291 444 440 514 459 604 e52 704 Taie4 5).... _.. -.. ~.. S 60 115 120 120 120 120 120 120 Transmiumn(6). 62 153 220 223 226 210 233 237 240 Subtotal. 51.083 56.221 511.986 513.297 513.377 514.122 514.946 514.ke 515.294 ten Interest Earningg7).. 29 349 66A 697 e97 697

  • 07 o97 697 Tota!..

11.054 55.R72 511.318 512.600 512.640 513.42; 5i4,249 514 le 514 597 Energy Delisered tMillmns of kWhM8). 35 104 179 214 22A 23% 214 234 23* Cost tMills per kWh).. 30 1 53 9 63 2 5A 9 55 6 %4 60 0 54 5 el 3 (1) Based on 100% of interest capitalised on the 1980 Bonds until June 1,1982 and 509 of the interest on the 1980 Bonds capitalized on the 1980 Bonds until August 1,1983. Remaining interest to be paid from revenues. Debt service payments are based on an assumed interest rate of approximately 9.60% and the amortization of principal on the 1980 Bonds over 30 years with the ini:ial principal payment due October 1,1984. (2) Estimated by Edison. (3) Based on Edison nuclear fuel costs. (4) Estimated at 1.0% of capital costs and escalated at 8.09 per year. (5) Based on the City's share of ad valorem taxes at the time of acquiring its ownership share. (6) Based on the Transmission Service Agreement. (7) Earnings on monies in the Reserve Account not deposited in the Construction Fund at an assumed interest rate of 8.';%. (8) Computed as the City's share of estimated total generation at the Project site, less energy transmission losses estimated at approximately 1.6"- . ENERGY AND CAPACITY REQUIREMENTS During the last five fiscal years, the City's electric customers have increased by 18.S9 from 56,902 customers in 1976 to 67,621 customers in 1980. During the same period of time, the City's electric energy requirements have increased from 938,688,000 kilowatt-hours in 1976 to 1,086,624,000 kilowatt-hours in 1980,a 15.89 total increase and a 3.7% increase per year. peak demand increased from 248,000 kilowatts in 1976 to 296.600 kilowatts in 1980. A5

Ilistorical Number of Customers and Load Requirements Aserage

inerg, Peak fiscal ) ear Numtwer of

't increase Requirements i Increase Demand increa c {nding June 10 Custome rs _ID nt h h p (D dthe to 1976 56,902 1.4 938,688 29 24s o n5 1977 59,054 38 933,408 (0 h) 2491 04 1978 61,411 40 997,536 69 294 1-1979 65,201 62 1.072,800 75 2w

  • 14 4 1980 67,621 37 1.056.o24 13 296 r, 2;

(1) Over previous year. The City's forecast of load requirements, shown on the folhiwing table. are based en prelimo nary results of a forecast the City is preparing to submit to the Cahfornia Inergy Commi smn (" CEC"). The City does not expect its hnal submission of a forecast to the CEC to matenalty ditter from that shown herein. The forecast shows a slightly lower rate of growth than that espenenced in the previous hve-year period. The load forecast, as developed by the Cits. was prepared considerme among other things. economics of the region. pnce elasticity and the Citvi on.gomg conserutmn programs. Forecast Peak and Energy Requirements Peak Eneras fiscal iear Demand % Increase Requirements Increase Inding June 30 MfWND (2) _ _ t yt h h p 126 1981 312(3) 1.144.000 1982 315 1.0 1,180.000 31 1983 325 32 1,214.000 29 1984 334 2.8 1.250.000 10 1985 344 30 1.287.000 30 1986 355 32 1.327.000 31 1987 365 2.8 1.367.000 30 1988 376 3.0 1.407,000 29 1989 388 3.2 1.450,000 31 j 1990 399 2.8 1,494.000 30 (I) Estimated by the City. (2) Over the previous year. (3) Actual in July 1980. POWER SUPPLY PLANNING Currently, all of the City's electricity is purchased at wholesale rates from fdoon escept for interruptible energy which the City may purchase from other public and pnvate electric utthties and governmental agencies when it is available at an economically attractive price. For a discussion of the contractual arrangements between the City and Edison and the City and the Nevada Power Company which has provided certain economy energy to the City, see the caption " Future Plans of the Electric System"in the Official Statement. The capacity and energy espected to be received from the Project will be used to displace a portion of the power currently purchased from Edison. A-6 1

Future Power Supply Resources The City has an ongoing program to investigate potential power supply resources, in addition to the Project, which could be used to offset purchases of power from Edison as well as to meet all or some portion of forecast load growth. The City has contracted to purchase power from the intermountain Power Project ("lPP") and is involved in the feasibility studies of other protects. The City plans on evaluating each of these potential future resources on the basis of providing an economic reliable suppl-of electric power to its customers. The status of IPP and other projects under construction are described herein. Intermountain Power Project in 1974 the City entered into a membership and study agreement with the California cities of Anaheim, Burbank, Glendale, Pasadena and the Department of Water & Power of the City of Los Angeles ("LADWP") and with the Intermountain Consumer Power Association, composed of a group of Utah municipalities and rural electric cooperatives. The purpose of the Membership and Study Agreement was to investigate the feasibility of constructing and operating IPP. The proposed IPP is a 3,000-megawatt coal fired electric generating plant consisting of four 750-megawatt gener-ators, to be located in Millard County in central Utah. The IPP plan includes construction of two iS00-kV direct-current transmission lines from the plant site to the Leon Substation in the vicinity of Victorville, California where the lines will be connected to the LADWP transmission grid. The City will receive its power over these transmission lines. A feasibility study has been completed by LADWP pursuant to an agreement between IPP and the LADWP. As currently contemplated, LADWP will act as project manager. In May,1977, several Utah municipalities, which are members of the Intermountain Consumer Power Association, organized the Intermountain Power Agency ("lPA"), a political subdivision of the State of Utah, for the express purpose of financing and constructing IPP. It is proposed that IPA issue long-term bonds (estimated to aggregate approximately $8 billion) to finance construction of the IPP with said bonds secured by "take or pay" power sales contracts between IPA and purchasers of power from the IPP obligating the purchasers to pay whether or not power is produced. The City has entered into such a contract to purchase a 6.82% share of IPP capacity and energy. Payments by the City of its s m M IPP costs (including debt service) are expected to commence in the year 5 ending June 30,1987. Based on preliminary estimates, it is expected that participation in IPP will result in lower costs of power to the City than purchasing the equivalent amount of power from Edison. Pursuant to the IOA, Edison has agreed to integrate IPP as a resource and to provide transmission services to the City's point of delivery. An environmental impact statement has been prepared by the United States Bureau of Land Management. On December 19,1979, the Secretary of the Interior announced his approval of the project following the completion of the environmental impact statement. IPA is entering into contracts to acquire approximately 39,500 acre feet of surface water annually from the Sevier River and 5,500 acre feet of ground water annually from wells located in the vicinity of the proposed plant site. IPA has commenced negotiations to acquire a coal supply but no contracts have been executed to obtain coal for the-project. White Pine Project The City, Anaheim, Burbank, Glendale, Pasadena and LADWP have begun preliminary studies to explore the feasibility of constructing a coal-fired generating station near Ely, Nevada. This generating station would provide approximately 1,500 megawatts of electrical capacity. It is contem-plated that White Pine County would finance and construct this project. The bonds issued by White Pine County would be secured by power sales contracts executed with the various purchasers of power from the project. The City's percentage share for feasibihty studies is currently expected to be approximately 2.65%. It is currently anticipated that the electric utilities referred to above will enter ' into a power supply development agreement with White Pine County in the fall of 1980 for the A-7

j The estimated commercial operation dates for each of thr 1990 and 1991, respectively. California Coal Project The City has entered into a letter agreement with Edison and other utilities to endea obtain all necessary regulatory approvals required to construct and operate the Cal Project. The project is a proposed I,500-megawatt plant consisting of three 500-m units to be located in the eastern desert in Southern California. A Notic g and approval of a plant site was filed with the CEC on December 28,1979. Pro being held before that commission with respect to the Notice of intent. A decision by expected by January 15, 1981. The City's entitlement percentage share for the feasibility studies currently is 2.401 The project is planned to be in operation in the early 1990's with the project manager. North Brawley Geothermal Project Union Oil Company (" Union") has entered into an agreement with Edison wherein Unio agreed to construct a 10-megawatt demonstration plant and a separate agreement wherein been proposed that the' City, along with other public agencies acquire a 50% ownership interest in the demonstration plant for the purpose of study , agree to technological developments and operating experience obtained in the operation of the dem tion plant. ra-It is proposed that the City enter into an agreement with LADWP, Burbank, Glendale Pa Anaheim and the Imperial Irrigation District to acquire ownership rights in the demo and the right to acquire options to purchase geothermal energy from Union North Brawley Geothermal Field for approximately 450 megawatts of geothermal e proposed entitlement percentage share would be approximately 2.5% Other Possible Resources The City is also studying the feasibility of participating in the acquisition of some hydr resources in the State of California. Along with the City of Anaheim, the City has filed an application for a preliminary permit to study a proposed 140-megawatt hydroelectric p Balsam Meadows, Federal Energy Regulatory Commission ("FERC") Project No. 2 also filed, along with the Cities of Azusa, Banning, Colton and Anaheim and the Northern California Power Agency, a competing application with Pacific Gas and Electric Comp license to operate hydroelectric facilities at Cresta and Rock Creek powerhouses on the Fe River, FERC Project No.1962. It is unknown whether either of these applications will be granted by FERC. Southern California Public Power Authority The City and other public agencies in Southern California are considering the creatio powers authority. As currently contemplated, such authority would provide for the financing construction of electric generating and frusmission facilities. To the extent the City participate any project developed by the authority, it is anticipated that the City would be obligated for its sha of costs on a "take or pay" basis whether or not power is generated or delivered PROJECTED RESOURCES AND POWER COSTS City's Power Supply Pending further development of IPP or other generating resources the City may enter into w have assumed herein that the City's power requirements exceeding that provided by the A-8

be met by purchases from Edison through the IOA. The following table shows the annual peak and energy requirements as estimated by the City and the estimated amounts of peak and energy expected to be supplied from the Project and from Edison purchases. Peak (MW) Energy (Million. of kWhl Purchased Capacity Purchased Generated Fiscal Year from from the from by the Ending June 30 Requirements Edison Project Requirements Edison Project 1981 312.0 312.0 1,144 1,144 1982 315.0 315.0 - (*) 1,180 1,145 35 1983 325.0 309.5 15.5( *) 1,214 1,105 109 1984 334.0 303.0 31.0 1,250 1,071 179 1985 344.0 313.0 31.0 1,287 1,073 214 1986 355.0 324 0 31.0 1,327 1,099 228 1987 365.0 334.0 31.0 1,367 1,129 238 1988 376.0 345.0 31.0 1,407 1,169 238 1989 388.0 357.0 31.0 1,450 1,212 238 1990 399.0 368.0 31.0 1,494 1,256 238 (*) The City will receive certain capacity credits for the Project for the years ending June 30,1982 and June 30,1983 from Edison; however, not all capacity from the City's share of the Project will be available to meet the City's forecast peak load for those years. Under the provisions of the IOA, the City will receive credit for the amount of capacity of its integrated resources less transmission losses and less the City's share of Edison system reserves. For purposes of our analyses, we have assumed the transmission losses would be approximately 1.6% and that Edison system ccpacity reserves wuld be 20% for each year of the study. Cost of Power to the City We have projected the costs of power to the City for the period 1982 through 1990 on the basis that the City would purchase from Edison all power requirements not supplied from the Project. In accordance with the IOA, the City will purchase power from Edison at Edison's partial requirements rates. In addition, when a City Capacity Resource, such as the Project, is not available, the City shall purchase Contract Energy, which is the amount of energy capability associated with the capacity credit less energy received from City Integrated Resources. During the study period Contract Energy is estirnated to average less than 59 of all energy purchased from Edison by the City The Contract Energy cost is determined by multiplying Edison's cost of fuel for conventional oil-fired combustion turbine and combined-cycle generating resources measured in dollars per Btu by the weighted heat rate of these generating resources measured in Btu's per kilowatt-hour. This rate plus a charge for certain other costs associated with fuel is then adjusted for transmission losses to the City's point of delivery. Should extended outages occur at the City Integrated Resource, the City will be required to provide or purchase from Edison Replacement Capacity. In accordance with the IOA, the amount of Replacement Capacity that the City must purchase is the greater of (i) the maximum kilowatt difference (rated generating capability of the City's Integrated Resource for a given day less the capacity available from the resource that day) which has existed for 70 or more consecutive days immediately preceding that day, or (ii) the maximum kilowatt difference which exists for that day and has existed for 100 or more non-consecutive days durin5 the 180 consecutive-day period immediately preceding that day. The City will not be required to purchase Replacement Capacity until a generating unit has been out or partially out of operation for more than 70 consecutive days or. more than 100 days out of 180 consecutive days and the City has exhausted its maintenance reserve for each unit for that year. The maintenance reserve is an amount cf megawatt-days A-9

1 established for each of the City's Integrated Resources each year from which the City may wit megawatt-days to be credited against City's Replacement Capacity obligation for each unit. The cost of Replacement Capacity, measured in dollars per kilowatt-day,is based on the costs electric generating facilities installed during the hve years just prior to the current year. Iloweve the City expects to be required to pay the cost of Replacement Capacity only under unusual circumstances arising from extended outages of its Integrated Resources Therefore, we have not considered the effe. :s of Replacement Capacity costs on the City's power supply costs. Based upon the foregoing assumptions, forecast wholesale power rates from I'dison and forecast Project costs, the following table shows the estimated power supply costs for the City for the from 1982 through 1990, with and without Project ownership. The savings to the City resultin Project ownership as shown in that table increase from $535,000 in the hscal year ending June 30, 1982 to $10,389.000 in the fiscal year ending June 30,1990. differ from actual savings to the extent that actual conditions differ from those assume 1 ESTIMATED POWER SUPPLY COSTS AND SAVINGS TO TiiE CITY Fiscal Year Ending June 30 (000) 1982 1983 1984 1985 1986 1987 1988 1989 1990 ANNUAL POWER COSTS WITil TiiE PROJECT San Onofre Prmect Costs - 5 1,054 5 5,872 $ 11,318 $ 12,600 $ 12.680 $ 13.425 5 14.289 5 14 164 5 14.59' Purchased Power Costst i)...... 71.932 84.246 99.357 _.111.799 122.741 135.310 _150.277 163.224 17o.109 Total Annual Power Costs.. $72.986 $90,118 $110.675 $124399 $135,421 5144,735 5164.56o $177392 $ 100.706 Total Energy Requirements (GWh).... 1,180 1,214 1,250 I.287 1327 1,367 1.407 1.450 1.494 Unit Power Ccsts (Mills / kWh)....,_.. 61.9 74.2 88.5 %7 102I IOR 8 117 0 122 3 127 o ANNUAL POWER COSTS WITifoUT TiiE PROJFCT Purchased Power Costs.. $73,521 $90379 $l11.560 $128,494 $142,096 5157,091 $173.500 $187.375 5201.095 Unit Power Costs (Mills /kWh)... 623 74 4 89.2 99.8 107.1 114.9 123 3 129 2 134 6 Savings to the City (2). $ $35 $ 261 $ 885 5 4,095 $ 6.675 $ 8.356 5 8,934 $ 9,986 5 10349 (1) Based on projected Edison energy and capacity r&s and projected Edison contract energy c (2) Estimated savings to City are calculated from estunates of Project costs and Edison wholesale power rates which are based on the assumptions set out in this report. The savings to the City resulting from Project ownership shown above will differ from actual savings to the extent that actual conditions differ from those assumed. PROJECTED OPERATING RESULTS Based on the foregoing forecast of power costs and on certain data supplied by the City, we have prepared a projection of operating results of the City's electric system for the fiscal perio ending June 30,1981 through 1985. In these projections, we show increases in revenue require beyond those generated by the City's existing rates. Required revenues are based on cove projected operating exp-nses, debt service on the Bonds and previous bonds issued by the City, on meeting the City's projected capital improvement program and other non-operating financial A-10

commitments. The additional revenues required are primarily to meet future capital improvements and escalating power costs, including any further fuel adjustments, from Edison PROJECTED OPERATING RESULTS (000) Fiscal iear Lading 1981 1962 19 0 1984 1985 Gross Operating Revenues: Revenu-s from Sales of Electricity: At Existing Rates.. 560,890 562,798 5 64,594 5 66,502 5 6S,4o6 Additional Revenues Required (1).- 15,499 25,231 41,257 61,162 73.672 Subtotal.. 576,389 588,029 5105,851 5127.664 5142.138 Miscellaneous Operating Revenues (2). 205 208 210 212 214 Other Income (3). 400 429 749 1,068 1,097 Total Estimated Gross Operating Revenues.. 576,994 588,666 5106,810 5128.944 5143.449 Operating Expenses: . Power Production - San Onofre Units 2 and 3.. 5 0 5 764 5 2,393 5 4,255 5 5,117 Purchased Power - Edison.. 62,438 71,932 84,246 99,357 111,799 Other Operation and Maintenance Expense (2).... 5,185 5,600 6.048 6.532 7,055 Total Estimated Operating Expenses Excluding Depreciation and Amortization 567,623 578,296 5 92.687 5110,144 5123,971 Total Estimated Net Operating Revenues.. 5 9,371 510,370 5 14,123 $ 18,800 5 19,478 Debt Service on the Bonds: Subordinated Bonds.. 5 459 5 0 5 0 5 0 5 0 Proposed Bonds:(4) San Onofre Portion - 1980 Bonds. 0 319 3,828 7,731 8,150 Refunding Portion - Refunding Bonds 972 1,300 1,268 1,226 1,182 Total Debt Service on the Bonds.. 5 1,431 5 1,619 5 5,096 5 8,957 5 9,362 Balance for Other Purposes (5).. 5 7,940 5 8,751 5 9,027 5 9,843 5 10,116 - Debt Service Coverage on the Bonds (6).. 6.55 6.41 2.77 2.10 2.09 (1) Additional revenues required primarily to meet costs of future capital improvements and escalating purchased power costs from Edison. (2) Estimated by the City. (3) Estimated by the City. Includes interest earnings on the Reserve Account at an assumed 8.59 interest rate and interest earnings on other funds and working capital at an assumed 7% interest rate. (4) Based on 100% of interest capitalized on the 1980 Bonds to June 1982: 50% of interest capitalized on the 1980 Bonds to August 1983 and full principal and interest payments on the 1980 Bonds at an assumed interest rate of approximately 9.60% and the amortization of principal over 30 years commencing August 1,1983. Principal and interest on the Refunding Bonds are based upon scheduled maturity and interest at an assumed rate of approximately 9.909. '(5) Includes, among other things, funds for capital improvements and payments to the general fund of the City, (6) Ratio of Total Estimated Net Operating Revenues to Total Debt Service on the Bonds. A-11

i CONSIDERATIONS AND ASSUMPTIONS The estimates and projections, contained herein, of the operations of the electnc system of the City are based upon, among other things, information made available to us by Edison, as manager of the Project, and from the City. These estimates and projections are also based upon the following pnncipal considerations and assumptions which in light of inflation rates and other conditions presently prevailing in the economy appear to be reasonable:

1. The forecast power and energy requirements were estimated by the City.
2. The capital expenditures and operation and maintenance expenses of the City's electric system will follow historical trends and have been estimated by the City
3. Commercial operation for Units 2 and 3 of the Project, respectively, will be December 1981 and February 1983 as estimated by Edison 1

i

4. Based on Edison's estimate of Total Direct Construction Costs of the Project, the City's share of such costs will be $39,545,000.
5. Nuclear fuel costs, ad valorem taxes and all other operating costs of the Project were estimated by Edison.
6. Each unit of the Project will have a plant factor of 35% during the first year of operation, 60% in the secord and third years of operation, and 70% thereafter as estimated by Edison
7. Power and energy requirements of the City beyond that provided by the Project will be purchased from Edison in accordance with the principles of the Integrated Operations Agree-ment. The City's participation in the Intermountain Power Project or other potential resources available during the forecast period have not been included in forecast power costs to the City.
8. The 1980 Bonds will be amortized over 30 years at an annual interest rate of approxi-mately 9.60%. Reinvestment rate for the Reserve Account is 8.59. Reinvestment rate in all other funds is 7%.100% of the interest on the 1980 Bonds is capitalized until June 1,19S2 and 50% of the interest on the 1980 Bonds is capitalized until August 1,1983.100% reinvestment earnings on the Reserve Fund will be deposited in the Construction Fund until June 1.1982, and 50'; of reinvestment earnings on the Reserve Fund will be deposited in the Construction Fund until August 1,1983.
9. During the study period, the City will finance the estimated costs of the electric system capital improvement program from current revenues.
10. Transmission for Project power will be provided by Edison at a rate of 55.29 per kilowatt in 1980 escalated at 1.5% per year with losses from the Project to the City at 1.61% per year.

I1. Renewals and replacements are assumed to be 1% of direct construction costs escalated at 8.0% per year.

12. Projected wholesale power and energy rates for Edison are based on recent rate blings, electric system plans and forecasts and their generation resource program. Annual escalation factors for coal and nuclear fuel were 8.0% per year. Fuel oil and natural gas were escalated at 25% from 1980 to 1981, 20% per year from 1981 to 1983,16% from 1983 to 1984, and 10%

thereafter, utilizing a base rate for fuel oil of $28.00 per barrel in 1980. Operation and maintenance expenses were escalatad at approximately 10.0% per year. The resulting averige wholesale power rate during our study increased at an average annual rate of 9.3%. CONCLUSIONS Based upon our studies, investigation and analyses, the assumptions set forth in this letter and the information supplied by the City and Edison with respect to the proposal by the City to acquire an ownership interest in the Project, we are of the opinion that: A-12

1. The acquisition of an ownership interest in the Pro}ect by the City and the operatmn of the Project under the principles of the IOA should provide the City with an economical long-range source of power that will result in lower power supply costs than if the City continued to purchase all of its power requirements from Edison.
2. The forecast overall revenue requirements from the sale of electncity by the City are reduced by the City acquiring an ownership share in the Project rather than continuing to purchase all of its power requirements from Edison.
3. The estimated cost of power from the Project compares favorably with forecast purcnase power rates from Edison and with available cost projections of other generating resources potentially available to the City in the 1980's.
4. The construction cost estimates provided by Edison for the Project are comparable with the costs espected for similar projects being developed within the same time frame.

Respectfully submitted. /s/ R. W. BECK AND ASSOCIATES A-13

APPEND X B

SUMMARY

OF TiiE SAN ONOFRE UNITS 2 AND 3 PARTICIPATION AGREEMENT The following is a general summary of certain provisions of the Participation Agreement Such summary does not purport to be complete and accordingly is qualihed by reference to the full te, t of the Participation Agreement, copies of which may be obtained from the C.ty, upon wntren reque. Purpose Edison and the Cities of Riverside, Anaheim and Banning entered into a Settlement Agreement. dated August 4,1972, under which offered to said Cities participation in the ownership and output of Units 2 and 3 at San Onofre. Anaheim and Riverside have indicated their intent to participate in Units 2 and 3, The purpose of the Participation Agreement is to provide for the terms and conditions under which the Parties will participate in the ownership and output of Units 2 and 3. Parties The parties to the Participation Agreement are Edison, San Diego. Riverside and Anaheim Edison and San Diego have signed the Participation Agreement and the City will sign upon deliverv of the 1980 Bonds. Ownership Upon uecution of the Participation Agreement Edison. San Diego. Riverside and Anaheim shall own facilities as tenants-in-common as follows: Edison San Diego Ris ersh Anaheun Units 2 and 3. 76.559 20.001 1.79n 1.669 Common Facilities.. 77.12 20.00 1.49 1.39 Project Easements Unit 1. 80.00 20.00 0 0 Units 2 and 3.. 76.55 20.00 1.79 1.66 Switchyard Area. 80.00 20.00 0 0 Construction Agreement Edison assigns to Riverside and Anaheim, respectively, an undivided 1.799 and 1.664 interest in the Construction Agreement as it pertains to Units 2 and. 3. Riverside and Anaheim acquira all rights and assume all duties and obligations of a " company" under the Construction Agreement. which shall be amended to provide for payment by Riverside and Anaheim of their porportionate shares of expenses. Operating Agreement The parties shall execute an ( ing Agreement, covering the operation and maintenance of Units 2 and 3, which shall be a. Thed in substantially the same manner and terms and conditions as the Unit 1 Operating. 'ent provides for Unit 1. Edison will be operating agent for Units 2 and 3 and shall act as bo. .. Agent and Principal on behalf of the other parties. Each of the parties shall be entitled to their proportioned share of the benefits and bear their proportioned share of the burden; incurred by Edison and San Diego in the performance of their duties under the agreements entered into by them for the construction, operation and maintenance of Units 2 and 3 and the common facilities. Billing and Payment Riverside and Anaheim will reimburse Edison within fifteen (15) days after receipt of invoice for construction costs incurred prior to execution of the Participation Agreement. Construction costs B-1

j incurred after date of execution shall be paid in the manner prescnbed in the Cons Agreement. Until such time as direct payment arrangements are made, Edison will b and Anaheim for their proportionate share of costs of all project easements, plant sit e the costs of Units 2 and 3 Off-Shore Land Easement lease. Riverside and Anaheim will reimburse Edison for production costs of the common fa paid by Edison and for the acquisition, rental and developmental e=penses incurre within ten (10) days after execution of this Agreement. Riverside and Anaheim will reimburse Edison for costs incurred to effect their pa Units 2 and 3 each month within fifteen (15) days after receipt of invoice. Payments no before the due date will be payable, with interest accrued at a rate of 10% per annum maximum rate of interest, whichever is less. I Administration Anaheim and Riverside shall designate representatives in accordanu with Section 7 of the Construction Agreement within ten (10) days after execution of the Participation A and obligations set forth in Section 7 will become effective when Riverside and Ana paying funds pursuant to the billing and payment procedures set out above. Liability and Insurance tion Agreement except as fol!ows:The provisions of Section 8 and 9 of the Constr The term company" shall include Edison. San Diego, Riverside, and Anaheim. T . Edison - 76.55E San Diego - 2E00% Riverside - 1.79% and A o Riverside and Anaheim will be added as named insureds on those policies of insurance presently in effect. Each. will make application to Nuclear Mutual Limited, to become membe insureds under the policies of insurance presently in effect for San Onofre Units 2 and 3 f risk builders' risk insurance covering loss or damage to project work under course of constru and (b) nuclear property damage insurance. If application for such insurance is accepted R and Anaheim shall maintain the policies through the term of this Agreement. If the applic not accepted, Riverside and Anaheim will each secure and maintain insurance coverage from Nuclear Energy Liability-Property Insurance Association and the Mutual Atomic Ene surance Pool, or their equivalent. . resulting from damage to, or loss of use of, Units 2. and 3, operation or maintenance of Unit I, the Edison Switchyard, the San Diego Switchyard, the Interc - nection Facilities, or any additional generating units. Edison and San Diego release Riverside a Anaheim from any and all liability resulting from damage to or loss of use of Unit 1, which is th result of the construction, operation or maintenance of Units 2 or 3, or any additional . units. Nuclear Fuel The Pmject Director, Edison, will make arrangements for the supply of nuclear fue so, it will negotiate, execute, administer, perform and enforce nuclear fuel agreements as it dee necessary or appropriate. The proposed Nuclear Fuel Agreements will be submitted to the coor-dinating representatives for information and approval prior to execution. However, any Nu Fuel Agreement may-be executed by the Project Director without its being submitted to the coordinating representatives as long as obligations of the parties are consistent with the Nucle Fuel Budget. B-2

~ Costs incurred by the Project Director shall be shared by each party in proportion to its generation entitlement share. Each party will own an undivided interest in all nuclear fuel equal to its generation entitlement share and may determine its own method of hnancing. With certain limitations, any party may elect to provide directly all or a portion of its share of natural uranium 308 concentrates if the election is communicated to the Project Director suthciently in advante One year prior to each date in which natural uranium 308 concentrates are scheduled to t e delivered, the Project Director will notify all parties of the quantity and specibcatmns of uramum concentrates required. Within one month of such notification each party will provide the Project Director with evidence that the party has a firm commitment for providing the required uranium If such evidence is not satisfactory the Project Director may proceed to arrange for dehvery of the deficient party's uranium concentrates and the cost shall be billed to the deficient party as incurred if the Project Director is unable to arrange for the uranium to cover a deficient party's commitment, then party shall be subjected to an appropriate reduction in its entitlement to the Net Energy Generation during the cycle. Each party shall pay its proportionate share of the total amount due in advance of the date of which payments therefore by the Project Director become due. Taxes All taxes or assessments levied against each party's ownership or benencial interest m San Onofre shall be that party's sole responsibility. Riverside and Anaheim shall reimburse Edison or San Diego for all taxes which are levied against Edison or San Diego as a result of their transfer to Riverside and Anaheim of a portion of Edison's ownership interest in Units 2, 3 or the common facilities. These taxes shall not include any tax on capital gains which may result from such transfer. Termination . Riverside andre i Anaheim may terminate this Agreement if unable to attain any required approval from regulatory or other authorities. If construction of Units 2 and 3 is not continued by the remaining parties, the accumulated construction costs incurred by the terminating party shall be borne by such terminating party. If construction is continued the other parties shall acquire the terminating parties interest in San Onofre and shall reimburse such terminating party for its incurred construction costs. Additional Generating Units The parties reserve any right to participate in any additional generating unit, provided, that - Riverside and Anaheim shall neither be granted nor denied participation rights by reason of any provision of the Participation Agreement. If additional generating units are constructed, interests in the project easements shall be reallocated among the participants. Uncontrollable Forces No party will be considered in breach of any obligation herein other than the obligation to pay money, to the extent failure of performance is due to an uncontrollable force as defined in the Participation Agreement. Any party unable to fulfill obligations by reason of an uncontrollable force shall exercise. diligence to remove the inability with all reasonable dispatch. Miscellaneous Provisions Edison shall, within twelve (12) months after receipt of payments, procure releases of the interest transferred from the lien of Edison's trust indenture and deliver to Riverside and Anaheim a bill of sale covering their respective ownership interests. Each party will be responsible for making arrangements necessary to transmit its entitlement of San Onofre power from San Onofre to its electric system. Except as provided in the Participation - Agreement, Riverside and Anaheim will each be responsible for obtaining from all regulatory authorities such authorizations and approvals as are necessary for its participation and construction and operation of San Onofre and its performance of the provisions of the Participation Agreement. B-3

Each party waives the right to seek partition of San Onofre and the Project Easements Each further agrees that it will not resort to any action at law or inequity to partition the same. Before any party may assign to any entity, other than another party, any or all its interests in Units 2 or 3. the other parties each shall have the right of hrst refusal. Riverside and Anaheim have the right to audit the books and records of Edison directly pertaining to Units 2 and 3 in the common facilities and the plant site. If any errors are revealed by such inspection, appropriate adjustments will be made.

s I

t B-4

Appendix C

SUMMARY

OF Tile EDISON-RIVERSIDE SAN ONOFRE TRANSMISSION SERVICE AGREEMENT The following is a general summary of certain provisions of the Edison-Riverside San Onofre Transmission Service Agreement (the " Agreement"). Such summary does not purport to be cem-plete and accordingly is qualihed by reference to the full text of the Agreement, copies of which may be obtained from the City, upon written request. Purpose The purpose of the Agreement is to provide transmission of Riverside's share of the energy from the Edison Switchyard at San Onofre Nuclear Generating Station to Riverside's point of delivery. Term The Agreement shall become effective on the date following execution by the parties when accepted for filing by the Federal Energy Regulatory Commission. The Agreement shall remain in effect for 50 years unless terminated sooner by (i) written agreement of the Parties;(ii) termination of the Integrated Operations Agreement; or (iii) termination of the Units 2 and 3 ownership or operating agreements. If notice of termination of the Integrated Operations Agreement is given by either party the parties shall take action to develop a new arrangement for furnishing the services referred to in the Settlement Agreement. Edison has signed the Agreement and the City will sign upon delivery of the 1980 Bonds. Transmission Service Except as modified in the Agreement, transmission service shall be provided in accordance with the Contract Rate TN. Service shall ccmmence on the Date Of Firm Operation for Unit 2, at which time Contract. Capacity shall be 19.69 megawatts, the City's share of the expected maximum rated capacity for Unit 2. On the Date of Firm Operation for Unit 3, Contract Capacity shall be increased by 19.69 megawatts, the City's share of the expected maximum rated capacity for Unit 3, and Contract Capacity.shall, for each unit, be 19.69 megawatts. Edison will accept delivery of Riverside's Units 2 and 3 energy at Edison's 220-kV buses at rates of delivery not exceeding Contract Capacity, and will simultaneously deliver a like amount of energy to Riverside at the Point Of Delivery. The Point Of Delivery is the City Limits of Riverside. During times when Riverside may be required to provide its share of auxiliary power requirement at San Onofre, Edison will accept deliveries from Riverside at the Point Of Delivery and simultaneous-ly deliver the like amount to Edison's 220-kV busses to enable Riverside to meet its requirements. Edison reserves the right to temporarily interrupt or curtail services upon reasonable advance . notice to Riverside to make repairs or modifications or to perform maintenance werk. Charges and Transmission Losses Charges will be made in accordance with the rates set forth in Contract Rate TN. Circuit mileage - is agreed to be 69.9 miles subject to change. No additional charge shall be made for auxiliary power requirements. Transmission losses will be determined in accordance with the rates set forth in Contract Rate TN, and using the circuit mileage agreed to above. Edison reserves the right, in furnishing transmission x. ice, to file with the federal Energy L Regulatory Commission for changes in rates, charges, classification, or services, or any rule, regula-tion or contract as provided in the Integrated Operations Agreement. C-1

i 1 Billing and Payment Prior to the 15th day of December of each year. Ed on will render a bdl to Riversid to be provided during the following year Riverside on the 15th day of each month. Payments which are not m accrue interest at 101 per annum on the unpaid balance Integration Agreement Provisions Provisions of the Integrated Operations Agreement covering habihty, arbitration. reg authority, uncontrollable Agreement. forces, governing law, notices, and other matters. apply also to ths o I l r i l i e C-2

APPENDIX D

SUMMARY

OF Tile INTEGRATED OPERATIONS AGREEMENT The following is a general summary of certain provisions of the Integrated Operations Agree-ment (the " Agreement"). Such summary does not purport to be complete and accordmgly is qualihed by reference to the full text of the Agreement, copies of which may be obtained from the City, upon written request. Purpose The City has executed the Agreement with Edison pursuant to which the Project will be integrated and operated for the benefit of the City. In order to more efhciently meet the power requirements and obtain operational economies on their respective systems, the City and Edison agreed to integrate their present and future Resources. The Agreement is intended to provide for Edison to furnish the capacity and energy necessary to meet the City's load, to the extent not provided by City integrated resources. Term The Agreement was signed by Edisc,n on November 1,1977 and became effective on the date it was accepted for filing by the Federal Energy Regulatory Commission and shall remain m eftect for hity (50) years, unless terminated (i) by written agreement of the parties, (ii) upon 30 days advance written notice by the City, to Edison,if no City Capacity Resource has been accepted for integration. (iii) upon not less than ten (10) years advance written notice from one party to the other. or (iv) upon five (5) years advance written notice from City to Edison if Edison tenders for filing a change in rates which effects Integrated Operations, and which creates a substantial detriment to the City. If Notice of Termination is given by either party the parties shall commence nego+iations to negotiato in good faith a new arrangement to become effective upon termination of the Agreement. Integration of Resources City may construct or acquire and integrate a Resource as a City Capacity Resource to meet all or part of its Firm Load, and Edison shall use its best efforts to integrate such proposed City Capacity Resource in accordance with the qualincations contained in the Agreement. Scheduling and Dispatching Edison, acting as City's agent, shall provide scheduling and dispatching services for City - Resources and City Transmission Facilities. Reserve Obligations City's contribution to Reserves is deemed to be a percentage of the sum of the kilowatt capability of City Capacity Resources. The percentage for any year shall be equal to the arithmetic average of the five annual reserve margins planned by Edison for its resources for the next five consecu ive years. Partial Requirements Service Edison shall make available and deliver capacity and energy to City under the Partial Require-ments Rate then in effect with the Federal Energy Regulatory Commission. City is billed under the Partial Requirements Rate for its maximum peak demand during the billing period,less the Capacity Credit in effect at the time such maximum peak demand occurs. The Capacity Credit is equal to the rated capabilities of the City Capacity Resources minus the City contnbution to installed re>erves. The amount of the partial requirements energy to be purchased in any billing period shall equal the total energy requirement of the City's load, minus the greater of the amount of energy scheduled and dispatched from City Resources, or the amount of energy associated with the effective Capacity Credit. ' Replacement Capacity and Contract Energy if a City Capacity Resource is unavailable for 70 or more consecutive days. or for 100 or more non-consecutive days during a 180 consecutive day period, the City must provide replacement D-1

capacity by first withdrawing a number of kilowatt-days from the Scheduled Mamtenance Account for that City Capacity Resource. After the scheduled maintenance account Resource is exhausted, the City may obtain replacement capacity by purchas for a C ity Lapacity e from one or more third parties outside the Edison Control Area. or Edison. or both. When a City Capaaty Resource is not available, the City shall purchase from Edison, Contract Energy, which is the amount of energy capability associated with the capacity credit, less the amount of energy Integrated Resources. The cost of Contract Energy is derived by utilinng Edison'sreceived from City fuel cost for conventional oil-bred, combustion turbine and combined-cycle generation plus the operatmg and maintenance costs associated with the production of such energy Surplus Capacity and Excess Energy from City Capacity Resources Edison shall purchase from the City surplus capacity aN assoaated energy from ant Citv Capacity Resource when the City, upon twelve (12) inonths advance wntten notice to Edison. shall declare such capacity and energy to be surplus to the City's estimated load dunng the pened of sale Edison shall pay the City for such capacity and associated energy at a pnce which shall tully compensate City for its costs associated with such City Capacity Resources When energy is dispatched from one or more City Capacity Resources which esceeds the requirements of City's load in any hour, such excess energy shall be purcha-ed by Ednon le charge for such energy shall be City's incremental costs of that City Capaaty Resource. plus it of 4 such costs. To the estent a City Capacity Resource is available, but not dispatched by Edison. City mar sel! energy associated with such City Capacity Resource to third parties outside the Edison tontro: Area Transmission Service Edison shall provide, upon City's request, hrm transmission service for capaaty or energy. or both, associated with City Capacity Resources. Transmission Service shall be provided either on Edison's 220 kV network or on a point-to-point basis where transmission service is to be provided outside the 220 kV network but within Edison's Certincated Service Area Edison shall use it efforts to provide transmission service where a City requests transmission service outside of Edson's Certificated Service Area. Transmission service shall be provided in accordance with rates on hie and approved by the Federal Energy Regulatory Commission. Change of Rates In general, with respect to the rates charged by Edison for Partial Requirement-Service. Replacement Capacity and Contract Energy, and Transmission Service, Edi>on resers e3 the nght to file with the Federal Energy Regulatory Commission for a change in rates, charges and conditions of service provided that no change shall be made which is inconsistent with the Integrated Operations Agreement or any Integration Agreement. Edison's right to file for a change in rates with re<pect to Partial Requirements Service is subject to certain limit tions when the Partial Requirements Rate 3 becomes different than the All Requirements Rate. Thereafter, changes in the rate design of the Partial Requirements Rate are also subject to certain limitations. Edison has the nght to char.ge the rates, charges and conditions relating to Replacement Capacity and Contract Energy, provided that no change shall be inconsistent with the Agreement or any Integration Agreement. Edison may also change the wording contained in the Agreement which describes how Replacement Capacity and Contract Energy charges are calculated, but such changes may not become effective for three years after the filing or a Final Order of the Commission, whichever occurs hrst. Edison reserves the right to change the rates, charges and conditions of service with re>pect to the furnishing of Transmission service, provided that no change shall be inconsistent with the Agreement or any Integration Agreement. Moreover, any change as to wording in any Transmission Service Agreement may not become effective for two years after the filing or a Final Order of the Commission, whichever occurs first. D-2

o a APPENDIX E

SUMMARY

OF THE SUPPLEMENTAL AGREEMENT FOR Tile INTEGRATION OF RIVERSIDE'S ENTITLEMENTS IN SAN ONOFRE UNITS 2 AND 3 The following is a general summary of certain provisions of the Supplemental Agreement for the Integration of Riverside's Entitlements in San Onofre Units 2 and 3 (the Supplemental Agreement"). Such summary does not purport to be complete and accordingly is qualihed by reference to the full test of the Supplemental Agreement, copies of which may be obtained from the City, upon written request. The Supplemental Agreement between the City and Edison is supplemental to the Integrated Operations Agreement and does not amend or supersede it except to the extent that terms therein are inconsistent. The Supplemental Agreement provides that the City's entitlements in the San Onofre Nuclear Generating Station, Units 2 and 3 will be integrated. Integration Riverside's entitlements in Units 2 and 3 shall be integrated and Riverside shall receive capacity credit in accordance with the Integrated Operations Agreement. Riverside's Unit 2 entitlement shall become a source of Rated Capability on October 1,1980, or the Date Of Firm Operation for Unit 2, whichever is later and, Unit 3 entitlement shall become a source of Rated Capability on Januarv 1. 1982, or the Date of Firm Operation for Unit 3, whichever is later. Determination of Riverside's Rated Capability Rated Capability of Riverside's entitlements shall be equal to 1.79% of the Rated Capabilities rating of Units 2 and 3 respectively. The Rated Capability shall be equal to the effective operatmg capacity of each unit and is planned for 1,100 megawatts for each Unit. Riverside's Election to Pay for Energy When Units are Available but Not Dispatched To the extent that Units 2 and 3 are available, but not dispatched by Edison, the City may elect to pay for the amount of energy associated with its capacity credit at the cost of Contract Energy or the incremental cost of Unit 2 and 3 energy. Riverside has elected to pay for energy associated with its entitlement in Units 2 and 3 at City incremental Cost. Riverside may change its election to pay at Contract Energy Cost or City Incremental Cosi upon either three years notice to Edison or when a change in a Contract Energy Cost formula has become effective. The City incremental Cost is derived by adding the cost of fuel to other production costs and subtracting transmission losses. Effective Date, Term and Termination The Supplemental Agreement is effective on the date following the execution by both parties when accepted for filing by the Commission, or at such time when the Commission determines that the Supplemental Agreement is just and reasonable without new conditions unacceptable to either party. The Supplemental Agreement is to remain effective for fifty (50) years, except upon, (1) written agreement of the parties to terminate the Agreement, or (2) termination of the Integrated Operations Agreement, or (3) termination of the Units 2 and 3 ownership or operating agreements. If Notice of Termination of the Integrated Operations Agreement is given by either party, the party shall take actions to develop a new arrangement for furnishing the services referred to Supplemental Settlement Agreement. E-1

APPENDIX F TilOM AS, BYRNE & SMITII Certified Public Accountant November 27,1979 4T02 Orange A reet t lbnald L. Thomas. C.P.A R.verude. Cahfornia 92504 D Richard Byrne, C P.A M246f V. C. Smith. Jr. C P A. The City Council City of Riverside 3900 Main Street Riverside, California 92522 Gentlemen: We have examined the balance sheet of the Electric Enterprise Funds of the City of Riverside as of June 30,1979, and the related statements of revenue and expense, changes in retained earnings, and changes in financial position for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances escept that we did not verify historical costs of all property and equipment. In our opinion, except for the values shown for property and equipment, the accompanying . financial statements present fairly the financial position of the Electric Enterprise Funds of the City of Riverside at June 30, 1979, and with the exception of depreciation which was computed on property and equipment whose historical cost was not verified by us, the accompanying statements reflect fairly the results of operations and changes in financial position of the Electric Enterprise Funds for the year then ended in conformity with that of the preceding year-Respectfully submitted. THOMAS. BYRNE & SMITH Certified Public Accountant - F-1 o. '{-

CITY OF RIVERSIDE BALANCE SIIEET ELECTRIC FUND June 30,1979 and 1980 1979 1980 ( Audited) IUnaudited) ASSETS Cash. 5 9,270,320 $ 9.05-*,673 Cash with Fiscal Agent.. 482.298 505,494 Accounts Receivable.. 3,917.426 4,900,453 Allowance for Estimated Uncollectibles. Interest Receivable. (42,782) (75,179) 171,173 166.212 Inter Fund Loans Receivable.. 505,063 505,063 Due From Other Governments. 1,180 1,328 Prepaid Expenses. Land.. 203,797 119,426 827,155 830,621 Buildings and Improvements.. 1,482,507 1,503.351 Accumulated Depreciation. (440,934) (469,923) Improvements Other Than Buildings.. 49,219,450 51,549,282 Accumulated Depreciation. (16,332.567) (17,941.286) Machinerv and Equipment.. 1,317,639 1,553.S33 Accumulated Depreciation. (1,016,399) (1,016,071) Construction in Progress.. 3,451,176 3,314,903 Total Assets.. 533,016,502 $54,504.180 LIABILITIES AND FUND EQUITY 1979 1980 ( A udited) (Unaudited6 Accounts Payable. S 6,678,627 5 7,995,557 Contracts Payable.. 25,135 Accrued Liabilities., 81,321 109,224 Revenue Bonds Payable.. 10,710,000 9,410,000 Total Liabilities. 17,495,083 17,514,781 Fund Equity: Contributed Capital and Grants.. 5,556,894 5,789,467 Retained Earnings: Reserve for Revenue Bond Retirement.. 1,572,045 1,550.904 Unreserved. 28,392,480 29,649,024 Total Retained Earnings., 29,9o4,525 31,199.932 Total Fund Equity.. 35,521,419 36,989.399 Total Liabilities and Fund Equity.. $53,016,502 $54.504.180 The accompanying notes are an integral part of this statement F-2

e CITY OF RIVERSIDE STATEMENT OF CHANGES IN FINANCIAL POSITION ELECTRIC FUND Year Ended June 30,1979 and 1980 19N 1%0 ( Audit _ed) (1.*naudited) Sources of Financial Resources: Operations: Net increase (decrease) in retained earnings or fund balance during the year (exhibit 4).. .. ~.. 5 1,236.223 5 1.235,407 Expenses not requiring current outlay of financial resources: 1,775,481 1.S92.729 Depreciation. Total financial resources from operations. 3.011,704 3,128,136 Contributed capital 658,804 232.573 Total sources of financial sources.. 3.670,508 _ 3.360,709 Uses of Financial Resources: Acquisition of_ fixed assets.. 3,381,372 2.708.412 Retirement of revenue bonds payable.. 1.250.000 1.300.000 Total uses of financial resources 4.631372 4.008.412 Net increase (decrease) in working capital.. 5 (960.864) 5 t o47,703) Component elements of net increase (decrease) in working capital: ' Cash; 5 4,204,370 5 (212.647) Cash with fiscal agent.. 5,124 23,196 Accounts receivable (net). (270,569) 950,778 Prepaid expenses.. (1,116,102) (84,371) Interest receivable.... 23,623 (4,961) Accounts payable.. (3,823,379) (1,316,930) . Contracts payable. 21,232 25,135 (5,163) (27.903) Accrued liabilities = Net increase (decrease) in working capital. 5 (960.864) 5 (647,703) The accompanying notes are an integral part of this statement F._

CITY Of RIVERSIDE STATEMENT OF REVENUES, EXPENSES AND CilANGES IN RETAINED EARNINGS ELECTRIC FUND Year Ended June 30,1979 and 1980 sc9 19%o t Auditedl (Unauditeds Operating revenues. Charges for service. 547.047.228 556.553+34 Total operating revenues. 47.047.228 56.553.o34 Operating expenses: Personal services. Contractual services.. 3.481,461 3.763.463 338,374 5s1.330 Alaintenance and operations.. General of6ce expenses.. 36,232,543 4;.115 404 83.098 81.773 h!aterials and supplies. Insurance. 4.640 4.554 Rent payments.. 116,305 27.642 Depreciation. 155.200 155,200 _1.7[5.4 S 1 _ l.592.729 Total operating expenses.. T' ' 42,187.102 51.o22.125 l Operating income. _ 4,860.126 4.931.509 p.; Non-operating revenues (expenses) Interest revenue. Sundry. 675,812 792.209 184.119 173.579 Interest expenses and Escal charges.. General fund contributions.. (575.074) (524.701) (3.908,760) (4.137.278) Total non-operating revenu(s (expenses). (3,623,903) (3.696 102) Net income. 1.236,223 1.235.407 Retained earnings / fund balance July 1. 23.728.302 24,9o4.525 Retained earnings / fund balance June 30.. 529,96_4.525 531.199.432 ( The accompanying notes are an integral part of this statement F-4

City of Riverside NOTES TO FINANCIAL STATEMENTS Fiscal Year Ended June 30,1979 A. Summary of financial report presentation: funancial report presentation The City's 1978-79 Financial Report a presented to conform with Statement 1," Governmental Accounting and Financial Reporting Principles," released March.1979 by the National Council on Governmental Accaunting. Comphance with American Inststute of Certsfied PuNic Accountants Statement of P+ution 77~2. Septem I,1977. The City has reflected the utility contributions to the General Fund on the statements of revenue, expense and changes to retained earnings in accordance with the Statement of Position. The contributions were formerly reflected in a separate comparative analysis of changes in retained earnings statement. Accounting records of the City of Riverside are organized on the basis of the eight genenc fund types and the two account groups generally used by governmental units. Desenptions are on divide pages in the statement section of this report. Afemorandum totals. This report uses memorandum totals on combined statements. The total columns on such statements are not comparable to a consolidation; it does not fairly present financial position in conformity with generally accepted accounting pnntiples, even if interfund elimination were made. It is not customary to make such eliminations in the combined statements of governmental units. Memorandum totals are used for overview purposes ontv Basis of accounting. The General,Special Revenue and Debt Service Funds are maintained on the modified accrual basis of accounting, wherein:

1. Revenues are recorded as received in cash except:
a. Revenues which are both measurable and available as a resource to hnance opera.

tions of the current year are accrued. b, Revenues of a material amount not received at the normal time of receipt are accrued or deferred as appropriate.

c. Examples of revenues accrued:
1. Property taxes collected by the County of Riverside but not received by the City at June 30,1979.
2. Interest earned on investments.
3. Governmental grants.
4. Known revenues collected by other governmental agencies but not received by the City at June 30,1979.
5. Charges for current services which are billable.

. (Note: The City of Riverside accrues all revenues as recommended by the California League of Cities.) - 2. Expenditures are recorded on an ascrual basis except:

a. Disbursements for inventory type items are considered expenditures at the time of purchase.
b. Interest on long-term debt is recorded as an expenditure on its due date.

All other funds are maintained on the accrual basis of accounting. Int'estments are stated at cost. Cash accounts of all funds are pooled for investment purposes in order to maximize interest earnings. All such interest earnings become revenue to the General Fund F-5

unless prohibited by bond covenants, or legal requirements relating to specinc funds or grant provisions. Inventories are priced at cost using the average cost method. Tued Assds are carried at cost in the enterprise funds and internal service tund Depreciatmn of these assets is computed by use of straight-line method over the estimated useful hves of the assets. General fued assels are recorded as expenditures in the General, Special Revenue, and Project Funds at time of purchase. These assets, excluding streets and storm drain related facihties which are not capitalized, are capitalized at cost in the general hsed assets account group Gif recorded in general fixed assets at fair market value at the time received No depreciation is provided on general fixed assets. Taed assets disposed of are removed from the accounts on the bass of their historical or estimated acquisition costs, as appropriate. Uncollectible accounts relative to utility accounts receivable (electric, water, sewer and refuse service charges, street light excise taxes and utility users tas), is determined by the percentage sales method. Uncollectible account expense, relative to miscellaneous accounts receivable, is determined by the direct write-off method on those accounts considered uncollectible and b reserving those accounts which are doubtful. The City has loaned the Redevelopment Agency of the City of Riverside, a separate public entity, p-5500,315. Current changes in Cahfornia Property Tas C.T Laws makes the anticipated repayment of the loan doubtful, inasmuch as it was based on tas increments available to the Redevelopment Agency on this project. The City has reflected this note as being a 1001 doubtful account; when payments are received they will be recorded as current revenues. Encumbrances. The City records obligations in the form of purchase orders, contracts on other commitments. They cease to be encumbrances when the actual liability is incurred and the related expenditure is recorded. Budgetary Process. The annual budget, which includes estimated revenue and appropriations. i adopted by the City Council and presented in the financial statements as fo!!ows.

1. Estimated revenue is the original estimate with modifications for new programs which are anticipated to be received during the fiscal year.
2. Original appropriations are modified by supplemental appropriations and tranfers among budget categories.
3. Available appropriations from certain completed projects and programs are closed out to a budget clearing account and during the fiscal period additional appropriations are made from this clearing account.
4. Str ct budget controlis maintained over all accounts and expenditures are not allowed to exceed appropriations except in those specific projects and programs approved in advance by the City Council.
5. The City Council approves all significant changes.

Property Taxes. Property tax rates for general obligations bond debt services are determined b the City with collections and allocations made by the County of Riverside. The City also receives from the County of Riverside a percentage of the basic $4 maximum tax rate allowed on assessments collected and allocated by the County. Cash with Fiscal Agent. The City tranfers to its bond fiscal agent all debt service requirements fifteen days prior to the date due. Unpaid redemptions are shown on the City's records as a payab Investments tcith Fiscal Agent. The City has deposited with its fiscal agent funds which will earn interest to cover all debt service requirements for Parking District No. I Revenue Ikmds. F-6

Confr buted Capital and Grants. The following transactions are recorded as contributions in the enterprise and intragovernmental service funds:

1. Receipts of federal and state grants for acquisition of fned asssets,
2. Fixed assets contributed from other funds or the general fned assets account group
3. Contributions from customers for the acquisitmn of fixed assets.

B. Composition of Cash. Tre'asurers cash and investments at June 30,1979. Demand deposits and checking accounts. 5 1,679,057 Time certificate of deposit and other investments. 28,324,716 Banker's acceptance.. 13,4'1,282 Cash on hand, June 30,1979. 33,799 Total treasurers cash and investments. 543,528,854 Included in the above amount is restricted cash reserved for bond construction and debt service requirements, in the enterprise funds. Bond Detit Service Construction Requirements Elect ric.. 5 $1,572.045 Water.. 7,028,221 2,803,973 Sewer. 486,851 57,028,221 54,862,869 C. Retirement Plan. Substantially all city employees are members of the Public Employees' Retirement System, administered by the State of California, to which contributions are made by both the City and employee. At July 1,1978, the plan administrator indicated the City had an unfunded liability of $20,542,688 for the miscellaneous members and 518,899,494 for the safety members. The excess of the actuarially computed value of vested benefits over the amounts available in the pension fund was not determined at June 30, 1979. Contribution rates have been established to amortite the unfunded liabilities by the year 2000. Most city employees (except Police and Fire) are also cove ad under OASDI, administrated by the Public Employees' Retirement System of the State of California fully funded equally by the City and the employee. The total pension expense recognized by the City for the fiscal year ended June 30,1979, was approximately 54,314,000 for PERS and 5862.000 f or

OASDI, D. Vacation'and Sick Pay.

The accompanying financial statements do not include any accrual for vacation and sick pay benefits due employees at June 30,1979. These amounts are recorded as realized and appropriated accordingly in the annual budget. Vacation. City employees receive from ten to twenty days vacation each year depending upon the length of service. Vacation can be accumulated as of January I to a maumum not to exceed . accumulation of two years continuous service. Unused vacation pay may be redeemed in cash upon termination of employment. At June 30,1979 employees vacation leave balance totaled approximate-ly 25,800 days, representing a potential cost of approximately 51,600,000. Sick Leave. City employees receive one working day of sick leave for each month of employment .or major portion thereof with unlimited accumulation for uaused sick leave. Upon retirement disability or. death, unused sick leave can be redeemed in cash at the rate of 25i after five years employment and 50% after ten years employment. At June 30,1979 employee sick leave balance F-7

totaled approximately 89,800 days. This represents a cost of approumately $5,567,600, because of the City's sick leave policy there is no way to calculate the liability to the City. The past three years experience is as shown below: Sick leave Used Sick leave Pagoff 1976-77. 5548,000 5211,000 1977-78.. 598,000 199,000 1978-79. 682,000 129,000 E. Changes in General Long Term Debt and Capitalized Leases. General Debt L ewors Obligatio e Service Resenues Balance Bonds funds Principal Halance lu,1y 1,197B Retired Operations Reduc tion June 30.1_974 Amount available in debt service funds,. 133,473 5 5 380,250 5 5 513,723 Amount to be provided for retirement: Long term debt.. 4,676,527 570,000 (380,250) 3,726,277 4 Long term lease obligation. 27.120,000 495,000 26.625,000 k Total available and to be 3 provided.. 531,930,000 5 570,000 $ 5 495,000 530,865,000 General obligation debt payable: General b;nds.. 5 4,810,000 5 570,000 5 5 5 4.240.000 Long term lease obligations.. _ 27,120,000 495,000 26.625.000 Total general obligation debt payable and long term lease obligations. 531,930,000 $ _570,000 5 495,000 530,865,000 General debt service requirements to maturity: Princid interest Total 54,240,000 5 982.522 $5,222,522 Capitalized Leases. The City has entered into lease agreements with the Riverside Civic Center Authority and Parking Authority of the City of Riverside, separate public entities, which have issued revenue lease bonds to construct facilities for the City. These bonds are collateranzed by leases of the facilities to the City with the facilities becoming the City's property upon the retirement of the bonds. The lease payments approximately equal the total debt service requirements of the bonds. Because of the nature of the leases and related bond transactions, these transactions are being accounted for as though the City owned and financed the facilities directlyJ Accordingly the lease obligations have been recorded in the City's long-term debt account.The total of the related bond debt,and the amount expended to date for construction of the facilities have been reflected in the general fixed assets group of accounts. The following tabulation reflects pertinent information reflecting the sale of bonds and annual lease payments. 4 F-8

a Parking Authority of the City of Riverside Civic Center Authority Ris e rm'* Community Center Parking Garage 1 _ City Italt laolity f acility (Amoun's en thousando Date of issue. 12-1-72 7-15-74 h-1 ;-74 Amount issued.. $15,000 511,000 53,450 Interest rate.. 4.25% to 6.25's 74 7t; Years of redemption... 1975-02 1975-04 1977-03 Redemption range.. $220 to $1,065 5155 to 5795 540 to 5270 Lease expires.. 2002 2003 2003 Annual lease payment. $1,008.6 5925 5285.7 Current long term obligation. $13,065 510,417.5 53,142.5 On August 16,1977, a Refunding Lease Revenue Bond was issued for 59.000.000 by Riverside Civic Center Authority to refund Community Center Facility Bonds. The bonds bear mterest at rates which vary from 5.1% to 6.6% and mature serially in progressive annual amounts from 5360,000 in ,1988 to $845,000 in 2003 with final year payment of $405,000 in 2004. The 1977 Ref un ing Lease d Revenue Bonds were sold to redeem callable bonds of the 1974 issue totaling 58.665,000 and pay a call premium of $225,900 on July 15,1987. F. Revenue Bond Debt Services and Capitalized Lease. Outstanding revenue bond debt service at June 30,1979 is, Principal _ Interest Tota: Electric.. $10,710,000 5 5,230,308 515,940,308 32,790,000 28,206,617 60,996,617 Water.. Sewer........ 3,045,000 1,708,890' 4,753,R90 Total., $_46,545,000 $35,145,815 581.690,815 On July 5,1978 the City authorized the issuance of $43,000,000 in Electric Revenue Bonds for acquisition of ownership in the San Onofre Nuclear Generating Station, Units No. 2 and No. 3 from the Southern California Edison Company. Subsequent to June 30,1979, the City sold $900,000 Sewer Revenue Bonds to hnance the City's share of the cost of primary / secondary treatment modifications to the existing city owned and operated treatment plant. The City-has entered into a lease agreement with the Riverside Airport lease Company, a separate public entity, which has issued revenue lease bonds to construct facilities for the City. These bonds are collateralized by a lease of the facilities to the City with the facilities becoming the City's property upon the retirement of the bonds. The lease payments approximately equal the total debt service requirements of the bonds. Because of the nature of the lease and related bond ~ transactions, these transactions are being accounted for as though the City owned and hnanced the facilities directly. Accordingly the lease obligation has been recorded in the City's Airport Fund statement. The total o_f the related bond debt; and the amount expended to date for construction of - the. facilities have been reflected in the City's Airport Fund statements. The following tabulation reflects pertinent information reflecting the sale of bonds and annual lease payment.' F-9 t

Riverside Airport lease Company Airport Terminal tAmounts in thouundu Date of issue.. 12168 Amount of issued. 5530 Interest rate 4.5'4 Years of redemption. 1967-92 Redemption range.. 512 to $36 Lease expires. 1992 Annual lease payment.. 536.5 Current long term obligation.. 5347 G. Changes in General Fixed Assets. Balance Retire-Bala nce July 1,1978 Additions ment June 30.1979 ' Cost: General government.. 514,072,581 5 453,994 5 443,513 514.0A3 An2 Public safety. 5,966,046 340.887 (97,520) 6,404.453 Highways and streets.. 8,539,359 205.233 53,582 8,e>91.010 Culture and recreation.. 22.116.063 416.261 (26.079) 22,558.403 Total cost. 550.6_94,049 51,416,375 5 373d96 551.736.928 Investments for general fixed assets from: l Lease agreements.. 527,371.245 Gifts.. Operating revenues.. 425,854 17.207,302 General obligation bonds.., 3,394 494 County contracts and grants. 332.605 State grants.. 1,951,095 liousing and community development.. 244.216 Revenue sharing.. 3F 1.109 Other federal grants. 424.008 Total investments in general fixed assets.. 551,736,928 H. City of Riverside Deferred Compensation Plan. During the fiscal year 1976-77 the City of Riverside established an employee deferred compen-sation plan. Glendale Federal Savings and Loan Association was appointed to accept funds for investment and accounts for such funds on a regular basis. The City has the same rights and obligations in connection with any such invested funds as any other investor having the same type of savings account with Glendale Federal. The plan was approved by the Internal Revenue Service on December 9,1976. Each participant's account is insured up to 540,000 and the City up to 5100.000 by the Federal Savings and Loan Insurance Corporation. At June 30,1979 Glendale Federal had on deposit in the name of the City of Riverside, assigned to participants the sum ~of $539,272. The aforementioned amount is not included in the accompanying financial statements. I.' Contingencies. As of June 30,1979, the City was invylved in a number of damage suits, in which claims range from minor to substantial amounts, are being asserted against the City, in the opinion of the City administration, these actions should not have a significant effect on the financial position of the funds of the City. F-10

J. Special Assessment District Improvement Bonds. The City has special assessment bonds issued under the 1911 and 1913 Special Improvement Act and the 1943 Vehicle Parking Improvement Act. The City has no liabihty to the bond boiders until assessments represented by that particular bond has been collected K. Transportation Development Act Funds. The Transportation Development Act Funds have been accounted for as an enterprise fund as required. mpen-3ds for itsand ne type Service 3100.000 i had on 272 The .ms range i the City

on of the F-11 1

APPLNDi\\ G PROPOSED FORM OF LEGAL OPINION-1980 BONDS October 3'),1980 City of Riverside Electric Revenue Bonds, Issue of 1980 (Managing Underwriters) and Associates Gentlemen: We have examined certified copies of proceedings taken for the issuance and sale to you of $80,000,000 City of Riverside, California, Electric Revenue Bonds, Issue of 1980. Said bonds are issued under and pursuant to Section 1306 of the Charter of said City and Resolution No.14134 of the City Council of said City, as amended by Resolution No.14147 and Resolution No.14167 of said City Council, each adopted pursuant to said Section 1306 (Resolution No 14134, as so amended, herein referred to as the Resolution"), and consist of 16000 bonds, numbered I to 16000, of the denomination of $5,000 each, dated October 1,1980, bear interest payable semiannually, and mature in consecutive numerical order on October 1 in the amounts and at the rates for each of the several years as follows: Interest Interest ) ear Amount Rate tear Amount Rate 1984... $ 525,000 10.00% 1995.. 1,500.000 8.50'i 1985.. 575,000 10.00',1 1996.. 1.f 50,000 8.70'i 1986... 650,000 10.00% 1997. 1,800.000 8.801 1987... 700,000 10.00% 1998.. 1.950.000 9 007 1988.... 775,000 10.00T 1999.. 2.125,000 9.10G 4 1989.. 850,000 10.60% 2000.. 2,325.000 9.10'1 1990.. 925,000 10.00% 2001. 2,525,000 9.20'i 1991. 1,025,000 10.00% 2002.. 2.750.000 4.259 1992.. 1,125,000 8.10% 2003.. 3.000,000 9.25'1 1993.. 1,250,000 8.25% 2013.. 50,600.000 9.70'i 1994... 1,375,000 8.40% The bonds maturing - efter October 1,1992, are subject to call and redemption prior to maturity on the dates, e es, upon the notice and in the manner set forth in the Resolution. From this examina:... we are of the opinion that the proceedings have been taken in ac-cordance with the laws and Constitution of the State of California and the Charter of said City, and that said bonds, having been issued in duly authorized form and executed by the proper officials and delivered to and paid for by you, constitute the legal and binding obligations of said City, payable only out of the Electric Revenue Fund as set forth in the Resolution. We are further of the opinion that' (1) the City has power and is obligated to levy and collect charges for electric service at least sufficient to pay the operating and maintenance expenses of the Electric System, the interest on and principal of the bonds as the same become due and payable, and all payments required for l compliance with the Resolution, including payments into the Reserve Account;(2) no additional l' revenue 1.onds of the City payable out of said Electric Revenue Fund will have any priority over the i bonds of this issue with respect to payment of principal or interest out of said Electric Revenue Fund;(3) the agreements and covenants contained in the Resolution are authorized by the Charter of said City and the laws of the State of California and are legal and binding in accordance with L their terms, except as the same may te limited by bankruptcy, insolvency, or other laws affecting the enforcement of creditors' rights; and (4) interest on said bonds is exempt from income taxes of the . United States of America under present federal income tax laws and such interest is also exempt from personal income taxes of the State of California under present state income tax laws. Respectfully submitted, G-1

PROPOSED FORM OF LEGAL OPINION-REFUNDING llONDS October 30,1980 City of Riverside Electric Refunding Revenue Bonds, Issue of 1980 (Managing Underwriters) and Associates Gentlemen: ) We have examined certified copies of proceedings taken for the issuance and sale to you of $9,070,000 City of Riverside, California, Electric Refunding Revenue Bonds, Issue of 1980. Said bonds are issued under and pursuant to Section 1306 of the Charter of said City and Resolution No. 14135 of the City Couned of said City, as amended by Resolution No.14168 of said City Council, each adopted pursuant to said Section 1306 (Resolution No.14135, as so amended, herein referred to as the " Resolution"), and consist of 1814 bonds, numbered I to 1814, of the denomir tion of $5,000 each, dated October 1,1980, bear interest payable semiannually, and mature in consecutive numeri-cal order on October 1 in the amounts and at the rates for each of the several years as follows; interest Interest iear Amount Rate icar Amount Rate 1981. . 5 450,000 10.00% 1993.. 5 470,000 8.259 1982.. 450,000 10.00% '. 994.. 470,000 8.401 1983.. 450,000 10.00% 1995.. 470,000 8.504 1984.. 455,000 10.00% 1996.. 470,000 8.703 1985.. 455,000 10.009 1997.. 300,000 8.80% 1986.. 455,000 10.00% 1998.. 300,000 9.001 1987.. 455,000 10.00% 1999... 300,000 9.109 1988.. 465,000 10.00% 2000.. 300,000 9.10% 1989.. 470,000 10.00% 2001.. 220,000 9.20% 1990.. 470,000 10.00% 2002... 130,000 9.254 1991.. 470,000 10.00% 2003.. 125,000 9.254 1992.. 470,000 8.10% .The bonds maturing on or after October 1,1992 are subject to call and redemption prior to maturity on the dates, at the prices, upon the notice and in the manner set forth in the Resolution. From this examination we are of the opinion that the proceedings have been taken in ac-cordance with the laws and Constitution of the State of California and the Charter of said City, and that said bonds, having been issued in duly authorized form and executed by the proper officials and delivered to and paid for by you, constitute the le;gt and binding obligations of said City, payable only out of the Electric Revenue Fund as set forth a the Resolution. We are further of the opinion that: (1) the City has power and is obligated to levy and collect charges for electric service at least sufficient to pay the operating and maintenance expenses of the Electric System, the interest on and principal of the bonds as the same become due and payable and all payments required for compliance with the Resolution, including p.:yments into the Refunding Bond Reserve Account:(2) no additional revenue bonds of the City payable out of said Electric Revenue Fund will have any priority over the bonds of this issue with respect to pcyment of principal or interest out of said Electric Revenue Fund;(3) the agreements and covenants contained in the Resolution are authorized by the Charter of said City and the laws of the State of California and are legal and binding in accordance with their terms, except as the same may be limited by bankruptcy, insolvency, or other laws affecting the enforcement of creditors' rights; and (4) interest on said bonds is exempt from income taxes of the United States of America under present federal income tax laws and such interest is also exempt from personal income taxes of the State of California under present state income tax laws. . Respectfully submitted, G-2}}

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