City of San Buenaventura · The Bonds are being issued to provide funds: (i) to advance refund all...

NEW ISSUE—BOOK-ENTRY ONLY RATING: S&P: AA- (See the caption “RATING”)

In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however, to certain qualifications described herein, under existing law, the interest on the Series B Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, interest on the Bonds is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes. See the caption “TAX MATTERS.”

$2,560,000CITY Of SAN BUENAvENTURA

2012 TAxABLE WASTEWATER REvENUE REfUNdING BONdS, SERIES A


2012 WASTEWATER REvENUE REfUNdING BONdS, SERIES B

dated: date of delivery due: January 1, as shown below

The Bonds are being issued to provide funds: (i) to advance refund all of the outstanding City of San Buenaventura 2004 Wastewater Revenue Certificates of Participation; and (ii) to pay costs incurred in connection with the issuance of the Bonds.

The Bonds are being issued in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York. Individual purchases will be made in denominations of $5,000 and integral multiples thereof and will be in book‑entry form only. Purchasers of the Bonds will not receive certificates representing their beneficial ownership in the Bonds but will receive credit balances on the books of their respective nominees. Interest on the Bonds is payable on January 1 and July 1 of each year, commencing January 1, 2013. Payment of the principal of and interest on the Bonds is to be made to Cede & Co., which is to disburse such payments to the Beneficial Owners of the Bonds through their nominees.

The Series A Bonds are subject to extraordinary redemption and the Series B Bonds are subject to optional, extraordinary and mandatory sinking fund redemption, all as more fully described in this Official Statement.

The Bonds are being issued pursuant to the Indenture of Trust, dated as of November 1, 2012, between the City of San Buenaventura and The Bank of New York Mellon Trust Company, N.A., as trustee. The BONDS ARe SPeCIAl lIMITeD OBlIgATIONS Of The CITY PAYABle SOlelY fROM NeT ReveNueS, WhICh CONSIST Of gROSS ReveNueS Of The CITY WASTeWATeR SYSTeM MINuS The AMOuNT RequIReD TO PAY All OPeRATION AND MAINTeNANCe COSTS Of The CITY WASTeWATeR SYSTeM, AND fROM CeRTAIN OTheR fuNDS AND ACCOuNTS helD BY The TRuSTee PuRSuANT TO The INDeNTuRe. NeITheR The full fAITh AND CReDIT NOR ANY ReveNueS OR fuNDS Of The CITY OTheR ThAN The NeT ReveNueS ARe PleDgeD TO OR AvAIlABle fOR The PAYMeNT Of DeBT SeRvICe ON The BONDS. The OBlIgATION Of The CITY TO MAKe PAYMeNTS Of PRINCIPAl Of AND INTeReST ON The BONDS DOeS NOT CONSTITuTe AN OBlIgATION fOR WhICh The CITY IS OBlIgATeD TO levY OR PleDge ANY fORM Of TAXATION OR fOR WhICh The CITY hAS levIeD OR PleDgeD ANY fORM Of TAXATION.

Notwithstanding anything contained in the Indenture, the City is not required to advance any moneys derived from any source of income other than the Net Revenues for the payment of the principal of or interest on the Bonds, or any premiums upon the redemption thereof, or for the performance of any covenants contained in the Indenture (except to the extent that any such covenants are expressly payable under the Indenture from the gross Revenues).

The Bonds are revenue bonds, payable exclusively from the Net Revenues and other funds as provided in the Indenture. The general fund of the City is not liable, and the credit of the City is not pledged, for the payment of the interest on or principal of the Bonds. The Owners of the Bonds have no right to compel the forfeiture of any property of the City. The principal of and interest on the Bonds, and any premiums upon the redemption of any thereof, are not a debt of the City, or a legal or equitable pledge, charge, lien or encumbrance upon any property of the City or upon any of its income, receipts or revenues except the Net Revenues and other funds pledged to the payment thereof as provided in the Indenture.

MATURITY SCHEdULE(See inside front cover)

____________________________________

ThIS COveR PAge CONTAINS CeRTAIN INfORMATION fOR RefeReNCe ONlY. IT IS NOT A SuMMARY Of ThIS ISSue. INveSTORS MuST ReAD The eNTIRe OffICIAl STATeMeNT TO OBTAIN INfORMATION eSSeNTIAl TO MAKINg AN INfORMeD INveSTMeNT DeCISION.

The Bonds are offered when, as and if issued and received by the Underwriter, subject to approval as to the valid, legal and binding nature of the Bonds by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. Certain legal matters will be passed upon for the City by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, acting as Disclosure Counsel. In addition, certain legal matters will be passed upon for the City by the City Attorney and for the Trustee by its counsel. The Underwriter was represented by its counsel, Greenberg Traurig LLP, Phoenix, Arizona. It is anticipated that the Bonds, in book-entry form, will be available for delivery through the facilities of The Depository Trust Company on or about November 15, 2012.

firstSouthwestDated: November 2, 2012

MATURITY SCHEdULEBASE CUSIP®† 797053


2012 TAxABLE WASTEWATER REvENUE REfUNdING BONdS, SERIES A

Maturity (January 1) Principal Amount Interest Rate Yield CUSIP®†

2014 $ 870,000 0.970% 0.970% AA32015 885,000 1.170 1.170 AB12016 630,000 1.460 1.460 AC92017 175,000 1.660 1.660 AD7


2012 WASTEWATER REvENUE REfUNdING BONdS, SERIES B

Maturity (January 1) Principal Amount Interest Rate Yield CUSIP®†

2017 $ 465,000 4.000% 0.960% Ae52018 660,000 4.000 1.170 Af22019 685,000 4.000 1.410 Ag02020 710,000 4.000 1.700 Ah82021 740,000 4.000 1.940 AJ42022 775,000 4.000 2.180 AK12023 805,000 4.000 2.480* Al92024 835,000 4.000 2.660* AM72025 865,000 4.000 2.860* AN52029 985,000 3.000 3.230 Aq82030 1,015,000 5.000 2.970* AR62031 1,065,000 5.000 3.030* AS42032 1,120,000 5.000 3.090* AT2

$2,780,000 3.000% Term Series B Bonds Due January 1, 2028 – Price 97.614% CuSIP®† AP0$2,410,000 5.000% Term Series B Bonds Due January 1, 2034 – Price 113.807%* CuSIP®† Au9

† CuSIP® is a registered trademark of the American Bankers Association. Copyright© 1999‑2012 Standard & Poor’s Ratings Services, a Standard & Poor’s financial Services llC business. All rights reserved. CuSIP® data herein is provided by Standard & Poor’s CuSIP Service Bureau. This data is not intended to create a database and does not serve in any way as a substitute for the CuSIP Service Bureau. CuSIP® numbers are provided for convenience of reference only. Neither the City nor the underwriter takes any responsibility for the accuracy of such numbers.

* Yield or priced to first optional redemption date of January 1, 2022 at par.

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

This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts.

The Underwriter has provided the following sentence for inclusion in this Official Statement:

The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

The information and expression of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof.

Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements.” Such statements are generally identifiable by the terminology used, such as “plan,” “expect,” “estimate,” “project,” “budget” or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information under the captions “THE WASTEWATER SYSTEM” and “WASTEWATER SYSTEM FINANCIAL INFORMATION.”

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT, AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

The City maintains a website. However, the information presented on such website is not part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds.

CITY OF SAN BUENAVENTURA

CITY COUNCIL MEMBERS

Mike Tracy, Mayor Cheryl Heitmann, Deputy Mayor Neal Andrews, Council Member Brian Brennan, Council Member

James L. Monahan, Council Member Carl E. Morehouse, Council Member

Christy Weir, Council Member

CITY STAFF

Johnny Johnston, Interim City Manager Jay Panzica, Chief Financial Officer/Assistant City Manager

Ariel Calonne, Esq., City Attorney Cyndi Rodriguez, City Clerk

Shana Epstein, Ventura Water General Manager

BOND COUNSEL

Jones Hall, A Professional Law Corporation San Francisco, California

DISCLOSURE COUNSEL

Stradling Yocca Carlson & Rauth, a Professional Corporation Newport Beach, California

TRUSTEE AND ESCROW AGENT

The Bank of New York Mellon Trust Company, N.A. Los Angeles, California

VERIFICATION AGENT

Grant Thornton, LLP Minneapolis, Minnesota

TABLE OF CONTENTS Page

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INTRODUCTION ................................................................................................................................................ 1General ........................................................................................................................................................... 1Purpose of Issuance ........................................................................................................................................ 1Security .......................................................................................................................................................... 1Redemption .................................................................................................................................................... 2Miscellaneous ................................................................................................................................................ 2

REFUNDING PLAN ............................................................................................................................................ 3General ........................................................................................................................................................... 3Verification of Mathematical Computations .................................................................................................. 4

ESTIMATED SOURCES AND USES OF FUNDS ............................................................................................ 4

THE BONDS ........................................................................................................................................................ 4General Provisions ......................................................................................................................................... 4Book-Entry System ........................................................................................................................................ 5Transfers and Exchanges Upon Termination of Book-Entry System ............................................................ 5Redemption .................................................................................................................................................... 6Manner of Redemption .................................................................................................................................. 7Notice of Redemption .................................................................................................................................... 8Effect of Redemption ..................................................................................................................................... 8

DEBT SERVICE SCHEDULE ............................................................................................................................. 9

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS .................................................................. 10General ......................................................................................................................................................... 10No Reserve Fund .......................................................................................................................................... 12Rate Covenant .............................................................................................................................................. 12Additional Obligations ................................................................................................................................. 12Investment of Funds ..................................................................................................................................... 14Insurance ...................................................................................................................................................... 14

THE CITY .......................................................................................................................................................... 14

THE WASTEWATER SYSTEM ....................................................................................................................... 15General ......................................................................................................................................................... 15Administrative Personnel ............................................................................................................................. 16Environmental Compliance .......................................................................................................................... 16Service Area ................................................................................................................................................. 17Land Use ...................................................................................................................................................... 17Wastewater System Insurance ..................................................................................................................... 17Employee Relations ..................................................................................................................................... 17No Other Outstanding Indebtedness ............................................................................................................ 22Historic Wastewater System Connections ................................................................................................... 22Historic Wastewater System Daily Average Flow ....................................................................................... 22Historic Wastewater System Service Charge Revenues .............................................................................. 23Largest Wastewater Service Customers ....................................................................................................... 24Wastewater System Rates and Charges ....................................................................................................... 24Collection Procedures .................................................................................................................................. 27Future Wastewater System and Recycled Water System Improvements ..................................................... 27Projected Wastewater System Connections ................................................................................................. 28Projected Wastewater System Daily Average Flow .................................................................................... 28

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Projected Wastewater System Service Charge Revenues ............................................................................ 29The Reclaimed Water System ...................................................................................................................... 29Historic Reclaimed Water Connections ....................................................................................................... 29Historic Reclaimed Water Deliveries ........................................................................................................... 30Historic Reclaimed Water Service Charge Revenues .................................................................................. 30Largest Reclaimed Water Service Customers .............................................................................................. 31Reclaimed Water Rates and Charges ........................................................................................................... 31Projected Reclaimed Water Connections ..................................................................................................... 32Projected Reclaimed Water Deliveries ........................................................................................................ 33Projected Reclaimed Water Service Charge Revenues ................................................................................ 33

WASTEWATER SYSTEM FINANCIAL INFORMATION ............................................................................ 34Financial Statements .................................................................................................................................... 34Investment of City Funds ............................................................................................................................. 34Wastewater System Reserves ....................................................................................................................... 34Historic Wastewater System Operating Results and Debt Service Coverage .............................................. 35Projected Wastewater System Operating Results and Debt Service Coverage ............................................ 35

CERTAIN RISKS TO BONDHOLDERS .......................................................................................................... 36Limited Obligations ..................................................................................................................................... 36Accuracy of Assumptions ............................................................................................................................ 37Wastewater System Demand ....................................................................................................................... 37Wastewater System Expenses ...................................................................................................................... 37Limited Recourse on Default ....................................................................................................................... 37Rate-Setting Process under Proposition 218 ................................................................................................ 37Statutory and Regulatory Compliance ......................................................................................................... 38Natural Disasters .......................................................................................................................................... 38Limitations on Remedies ............................................................................................................................. 38Loss of Tax Exemption ................................................................................................................................ 39Secondary Market ........................................................................................................................................ 39Parity Obligations ........................................................................................................................................ 39

CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES ......................................... 40Article XIIIB ................................................................................................................................................ 40Proposition 218 ............................................................................................................................................ 40Future Initiatives .......................................................................................................................................... 42

TAX MATTERS................................................................................................................................................. 42Federal Tax Status of Series B Bonds .......................................................................................................... 42Federal Tax Status of Series A Bonds .......................................................................................................... 42California Tax Status ................................................................................................................................... 42Tax Treatment of Original Issue Discount and Premium............................................................................. 42Other Tax Considerations ............................................................................................................................ 43Circular 230 Disclaimer ............................................................................................................................... 43Form of Opinions ......................................................................................................................................... 43

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CERTAIN LEGAL MATTERS ......................................................................................................................... 43

LITIGATION ..................................................................................................................................................... 44

RATING ............................................................................................................................................................. 44

UNDERWRITING ............................................................................................................................................. 44

CONTINUING DISCLOSURE .......................................................................................................................... 44

ADDITIONAL INFORMATION ....................................................................................................................... 45 APPENDIX A AUDITED FINANCIAL STATEMENTS ............................................................................ A-1 APPENDIX B SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE ................................... B-1 APPENDIX C FORMS OF OPINIONS OF BOND COUNSEL .................................................................. C-1 APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE ................................................ D-1 APPENDIX E THE BOOK-ENTRY SYSTEM ............................................................................................ E-1

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$2,560,000 CITY OF SAN BUENAVENTURA

2012 TAXABLE WASTEWATER REVENUE REFUNDING BONDS, SERIES A

$15,915,000 CITY OF SAN BUENAVENTURA 2012 WASTEWATER REVENUE REFUNDING BONDS, SERIES B

INTRODUCTION

General

This Official Statement, which includes the cover page, table of contents and appendices hereto, is provided to furnish information in connection with the execution and delivery of the City of San Buenaventura 2012 Taxable Wastewater Revenue Bonds, Series A in the aggregate principal amount of $2,560,000 (the “Series A Bonds”) and the City of San Buenaventura 2012 Wastewater Revenue Refunding Bonds, Series B in the aggregate principal amount of $15,915,000 (the “Series B Bonds,” and together with the Series A Bonds, the “Bonds”). Descriptions and summaries of various documents described in this Official Statement do not purport to be comprehensive or definitive, and reference is made to each document for complete details of all terms and conditions. All statements herein are qualified in their entirety by reference to each document. Capitalized terms used and not otherwise defined herein have the meanings ascribed thereto in Appendix B hereto.

The Bonds are being issued in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Individual purchases will be made in denominations of $5,000 and integral multiples thereof and will be in book entry form only. Purchasers of the Bonds will not receive certificates representing their beneficial ownership in the Bonds but will receive credit balances on the books of their respective nominees. See Appendix E—“THE BOOK-ENTRY SYSTEM.” Interest on the Bonds is payable on January 1 and July 1 of each year, commencing January 1, 2013. Payment of the principal of and interest and premium (if any) on the Bonds is to be made to Cede & Co., which is to disburse such payments to the Beneficial Owners of the Bonds through their nominees.

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

Purpose of Issuance

The Bonds are being issued to provide funds: (i) to advance refund all of the outstanding City of San Buenaventura 2004 Wastewater Revenue Certificates of Participation (the “2004 Certificates”), as described under the caption “REFUNDING PLAN;” and (ii) to pay costs incurred in connection with the issuance of the Bonds. See the caption “ESTIMATED SOURCES AND USES OF FUNDS.”

Security

The Bonds are being issued pursuant to the Indenture of Trust, dated as of November 1, 2012 (the “Indenture”), between the City of San Buenaventura (the “City”) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). The Bonds are special limited obligations of the City payable solely from Net Revenues, which consist of Gross Revenues of the City Wastewater System minus the amount required to pay all Operation and Maintenance Costs of the City Wastewater System (as such terms are defined under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS”), and from certain other funds and accounts held by the Trustee pursuant to the Indenture.

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NEITHER THE FULL FAITH AND CREDIT NOR ANY REVENUES OR FUNDS OF THE CITY OTHER THAN THE NET REVENUES ARE PLEDGED TO OR AVAILABLE FOR THE PAYMENT OF DEBT SERVICE ON THE BONDS. THE OBLIGATION OF THE CITY TO MAKE PAYMENTS OF PRINCIPAL OF AND INTEREST ON THE BONDS DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.

Notwithstanding anything contained in the Indenture, the City is not required to advance any moneys derived from any source of income other than the Net Revenues for the payment of the principal of or interest on the Bonds, or any premiums upon the redemption thereof, or for the performance of any covenants contained in the Indenture (except to the extent that any such covenants are expressly payable under the Indenture from the Gross Revenues). The City may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose and may be used by the City for such purpose without incurring indebtedness.


The City has agreed in the Indenture to fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Wastewater System during each Fiscal Year which (together with existing unreserved, unrestricted working capital balances in the Wastewater Fund, and taking into account allowances for contingencies), are sufficient to yield estimated Net Revenues at least equal to 120% of the aggregate amount of principal of and interest on the outstanding Bonds and the Parity Debt coming due and payable during such Fiscal Year. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Rate Covenant.”

Redemption

The Series A Bonds are subject to extraordinary redemption and the Series B Bonds are subject to optional, extraordinary and mandatory sinking fund redemption. See the caption “THE BONDS—Redemption.”

Miscellaneous

Brief descriptions of certain provisions of the Indenture, the Bonds and certain other documents are included in this Official Statement. The descriptions and summaries of documents in this Official Statement do not purport to be comprehensive or definitive, and reference is made to each such document for the complete details of all of its respective terms and conditions. Copies of such documents are available for inspection at the City. All statements in this Official Statement with respect to certain rights and remedies are qualified by reference to laws and principles of equity relating to or affecting creditors’ rights generally. The information and expressions of opinion herein speak only as of the date of this Official Statement and are subject to change without notice. Neither delivery of this Official Statement, any sale made hereunder, nor any future use of this Official Statement will, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof.

Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made

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that any of the estimates will be realized. For definitions of certain terms used in this Official Statement and not defined, see Appendix B—“SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.”

Changes have been made to the Official Statement since the Preliminary Official Statement dated October 15, 2012: (i) under the caption “RATING” to reflect the rating of the Bonds by Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business; (ii) under the caption “THE BONDS—Redemption” to correct certain cross-references to other sections of the Official Statement; (iii) under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” and in Appendix B to reflect certain revisions to the Indenture; and (iv) under the captions “THE WASTEWATER SYSTEM—Administrative Personnel,” “THE WASTEWATER SYSTEM—Employee Relations—Pension Plan,” “WASTEWATER SYSTEM FINANCIAL INFORMATION—Investment of City Funds” and “CERTAIN RISKS TO BONDHOLDERS—Limited Recourse on Default” to make certain clarifying edits to the disclosures therein.

REFUNDING PLAN

General

The 2004 Certificates, which are currently outstanding in the aggregate principal amount of $20,300,000, were executed and delivered pursuant to a Trust Agreement, dated as of December 1, 2004 (the “2004 Trust Agreement”), among the City, the City of San Buenaventura Public Facilities Financing Authority (the “Authority”) and The Bank of New York Mellon Trust Company, N.A., formerly known as The Bank of New York Trust Company, N.A., as trustee (the “2004 Trustee”). The 2004 Certificates are payable from installment payments payable by the City to the Authority under the Installment Sale Agreement, dated as of December 1, 2004 (the “2004 Installment Sale Agreement”), between the City and the Authority. The City plans to apply a portion of the proceeds of the Bonds to effect the advance refunding of all of the outstanding 2004 Certificates.

Under an Escrow Deposit and Trust Agreement, dated the Closing Date (the “2004 Escrow Agreement”), among the City, the Authority and the 2004 Trustee, acting as escrow agent (the “Escrow Agent”), the City will deliver a portion of the proceeds of the Bonds to the Escrow Agent for deposit in the escrow fund established under the 2004 Escrow Agreement (the “2004 Escrow Fund”). Additionally, the City will transfer and cause the 2004 Trustee to transfer certain amounts from funds and accounts relating to the 2004 Certificates to the Escrow Agent for deposit in the 2004 Escrow Fund. The Escrow Agent will invest a portion of the amounts deposited in the 2004 Escrow Fund in Federal Securities as set forth in the 2004 Escrow Agreement. From the maturing principal of the Federal Securities and related investment income and other moneys on deposit in the 2004 Escrow Fund, the Escrow Agent will pay when due all regularly scheduled payments of principal and interest with respect to the 2004 Certificates from the date of issuance of the Bonds through March 1, 2014, and pay on March 1, 2014 the principal with respect to the 2004 Certificates maturing after March 1, 2014, plus interest with respect thereto accrued to such date, without premium.

Sufficiency of the deposits in the 2004 Escrow Fund for such purposes will be verified by Grant Thornton LLP, Minneapolis, Minnesota (the “Verification Agent”). Assuming the accuracy of such computations, as a result of the deposit and application of funds as provided in the 2004 Escrow Agreement, the obligations represented by the 2004 Certificates will be defeased pursuant to the provisions of the 2004 Trust Agreement and the 2004 Installment Sale Agreement, as of the date of issuance of the Bonds. See the caption “—Verification of Mathematical Computations.”

The amounts held and invested by the Escrow Agent in the 2004 Escrow Fund are pledged solely to the payment of the 2004 Certificates. Neither the funds deposited in the 2004 Escrow Fund nor the interest on the invested funds will be available for the payments of principal of and interest on the Bonds.

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Verification of Mathematical Computations

Upon the issuance of the Bonds, the Verification Agent, an independent firm of certified public accountants, will deliver to the City its report indicating that it has examined, in accordance with standards established by the American Institute of Certified Public Accountants, the information and assertions provided by the City and its representatives. Included in the scope of the Verification Agent’s examination will be: (i) a verification of the mathematical accuracy of the computations of the adequacy of the cash deposited with the Escrow Agent and the maturing principal of and interest on the Federal Securities to pay the interest, principal and prepayment price with respect to the 2004 Certificates, on and prior to their prepayment date; and (ii) the computations of yield of the Bonds and the Federal Securities which support Bond Counsel’s opinion that the interest on the Series B Bonds is excluded from gross income for federal income tax purposes.

ESTIMATED SOURCES AND USES OF FUNDS

The proceeds of the Bonds are expected to be applied as follows:

Sources of Funds(1) Series A Bonds Series B Bonds Total Principal Amount of Bonds $ 2,560,000 $ 15,915,000 $ 18,475,000 Plus Net Original Issue Premium - 1,598,031 1,598,031 Transfer from 2004 Certificates Funds and Accounts - 1,891,582 1,891,582 Total Sources $ 2,560,000 $ 19,404,613 $ 21,964,613 Uses of Funds(1) Deposit to 2004 Escrow Fund $ 2,518,287 $ 19,151,145 $ 21,669,432 Deposit to Costs of Issuance Fund(2) 41,713 253,468 295,181 Total Uses $ 2,560,000 $ 19,404,613 $ 21,964,613 (1) Amounts rounded to the nearest dollar. (2) Includes Underwriter’s discount, fees and expenses of Bond Counsel, Disclosure Counsel, Verification Agent, Escrow

Agent and Trustee, rating agency fees, printing costs, filing and reporting costs and other closing costs.

THE BONDS

General Provisions

The Series A Bonds will be issued in the aggregate principal amount of $2,560,000 and the Series B Bonds will be issued in the aggregate principal amount of $15,915,000. The Bonds will bear interest from and be dated the date of initial issuance, and will be payable upon maturity on the dates set forth on the inside front cover page hereof. Interest on the Bonds will be payable on January 1 and July 1 of each year, commencing January 1, 2013. Interest will be calculated at the rates set forth on the inside front cover page hereof on the basis of a year of 360 days comprised of twelve 30-day months.

The Bonds will be delivered only in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository for the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only in denominations of $5,000 or any integral multiple thereof. See the caption “—Book-Entry System” below and Appendix E attached hereto.

If either: (i) DTC determines not to continue to act as Depository for the Bonds; or (ii) the City determines to terminate DTC as such, then the City will thereupon discontinue the book-entry system with DTC. In such event, DTC will cooperate with the City and the Trustee in the issuance of replacement Bonds by providing the Trustee with a list showing the interests of the Depository System Participants in the Bonds, and by surrendering the Bonds, registered in the name of the Nominee, to the Trustee on or before the date such replacement Bonds are to be issued. DTC, by accepting delivery of the Bonds, has agreed to be bound by the foregoing provisions. If, prior to the termination of the Depository acting as such, the City fails to identify

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another Securities Depository to replace the Depository, then the Bonds will no longer be required to be registered in the Registration Books in the name of the Nominee, but will be registered in whatever name or names the Owners transferring or exchanging Bonds designate, in accordance with the provisions of the Indenture.

Book-Entry System

Each series of the Bonds will be initially delivered in the form of a separate single fully registered bond (which may be typewritten) for each maturity of such series of the Bonds. Upon initial delivery, the Trustee will register the ownership of each Bond on the Registration Books in the name of Cede & Co. as nominee of DTC (the “Nominee”). Except as provided in the Indenture, the ownership of all of the Outstanding Bonds will be registered in the name of the Nominee on the Registration Books. As long as the ownership of the Bonds is registered in the name of Cede & Co., the term “Owner” as used in this Official Statement will refer to Cede & Co. and not to the actual purchasers of the Bonds (the “Beneficial Owners”).

With respect to Bonds the ownership of which is registered in the name of the Nominee, the City and the Trustee have no responsibility or obligation to any Depository System Participant or to any person on behalf of which the Nominee holds an interest in the Bonds. Without limiting the generality of the immediately preceding sentence, the City and the Trustee have no responsibility or obligation with respect to: (i) the accuracy of the records of the Depository, the Nominee or any Depository System Participant with respect to any ownership interest in the Bonds; (ii) the delivery to any Depository System Participant or any other person, other than a Bond Owner as shown in the Registration Books, of any notice with respect to the Bonds, including any notice of redemption; (iii) the selection by the Depository of the beneficial interests in the Bonds to be redeemed if the City elects to redeem the Bonds in part; (iv) the payment to any Depository System Participant or any other person, other than a Bond Owner as shown in the Registration Books, of any amount with respect to principal or interest on the Bonds; or (v) any consent given or other action taken by the Depository as Owner of the Bonds.

The City and the Trustee may treat and consider the person in whose name each Bond is registered as the absolute owner of such Bond for the purpose of payment of principal of and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers of ownership of such Bond, and for all other purposes whatsoever. The Trustee will pay the principal of and the interest on the Bonds only to the respective Owners or their respective attorneys duly authorized in writing, and all such payments will be valid and effective to fully satisfy and discharge all obligations with respect to payment of principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than a Bond Owner will receive a Bond evidencing the obligation of the City to make payments of principal and interest under the Indenture. Upon delivery by the Depository to the City of written notice to the effect that the Depository has determined to substitute a new Nominee in its place, and subject to the provisions in the Indenture with respect to Record Dates, such new nominee will become the Nominee under the Indenture for all purposes; and upon receipt of such a notice the City will promptly deliver a copy of the same to the Trustee.

See Appendix E for additional information concerning DTC.

Transfers and Exchanges Upon Termination of Book-Entry System

In the event that the book-entry system described above is discontinued, the Bonds will be printed and delivered as provided in the Indenture. Thereafter, any Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of such Bond to the Trustee at its Office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. The Trustee will collect any tax or other governmental charge on the transfer of any Bonds under the Indenture.

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Whenever any Bond or Bonds are surrendered for transfer, the City will execute and the Trustee will authenticate and deliver to the transferee a new Bond or Bonds of like series, interest rate, maturity and aggregate principal amount. The City will pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any transfer of Bonds.

The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of other authorized denominations and of the same series, interest rate and maturity. The Trustee will collect any tax or other governmental charge on the exchange of any Bonds under the Indenture. The City will pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any exchange of Bonds.

The Trustee may refuse to transfer or exchange, under the provisions of the Indenture, any Bonds selected by the Trustee for redemption, or any Bonds during the period established by the Trustee for the selection of Bonds for redemption.

Redemption

Series A Bonds.

No Optional Redemption of Series A Bonds. The Series A Bonds are not subject to optional redemption prior to their respective stated maturities.

Special Mandatory Redemption From Insurance and Sale Proceeds. The Series A Bonds are subject to redemption as a whole or in part, on any Business Day, from and to the extent of the proceeds of disposition of Wastewater System properties or the proceeds of hazard insurance not used to repair or rebuild the Wastewater System, which proceeds are required to be used for such purpose under the applicable provisions of the Indenture (as set forth in Appendix B under the caption “COVENANTS OF THE CITY—Sale or Eminent Domain of Wastewater System” and under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Insurance”), at a redemption price equal to the principal amount of the Series A Bonds plus interest accrued thereon to the date fixed for redemption, without premium.

The City will give the Trustee written notice of the special mandatory redemption of Bonds from insurance, eminent domain and sale proceeds, and the manner of selecting such Bonds for redemption from among the maturities and series thereof, in sufficient time to enable the Trustee to give notice of such redemption in accordance with the Indenture.

Series B Bonds.

Optional Redemption of Series B Bonds. The Series B Bonds maturing on or before January 1, 2022, are not subject to redemption prior to their respective stated maturities. The Series B Bonds maturing on or after January 1, 2023, are subject to redemption in whole, or in part among maturities on such basis as set forth in a Certificate of the City filed with the Trustee, and in any event by lot within a maturity, at the option of the City, from any available source of funds, on any Business Day on or after January 1, 2022, at a redemption price equal to 100% of the principal amount thereof to be redeemed, together with accrued interest to the redemption date, without premium.

The City will give the Trustee written notice of its intention to optionally redeem Series B Bonds, and the manner of selecting such Series B Bonds for redemption from among the maturities thereof and the redemption price thereof, in sufficient time to enable the Trustee to give notice of such redemption in accordance with the Indenture.

Special Mandatory Redemption From Insurance, Eminent Domain and Sale Proceeds. The Series B Bonds are subject to redemption as a whole or in part, on any Business Day, from and to the extent of the proceeds of disposition of Wastewater System properties or the proceeds of hazard insurance not used to

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repair or rebuild the Wastewater System, or from the proceeds of insurance, which proceeds are required to be used for such purpose under the applicable provisions of the Indenture (as set forth in Appendix B under the caption “COVENANTS OF THE CITY—Sale or Eminent Domain of Wastewater System” and under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Insurance”), at a redemption price equal to the principal amount of the Series B Bonds plus interest accrued thereon to the date fixed for redemption, without premium.

The City will give the Trustee written notice of the special mandatory redemption of Bonds from insurance, eminent domain and sale proceeds, and the manner of selecting such Bonds for redemption from among the maturities and series thereof, in sufficient time to enable the Trustee to give notice of such redemption in accordance with the Indenture.

Mandatory Sinking Fund Redemption. The Series B Bonds maturing on January 1, 2028 and January 1, 2034 (the “Term Series B Bonds”) are subject to mandatory redemption in part by lot, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts and on January 1 in the respective years as set forth in the following tables; provided, however, that if some but not all of the Term Series B Bonds have been redeemed as set forth under captions “—Optional Redemption” or “—Special Mandatory Redemption From Insurance, Eminent Domain and Sale Proceeds,” the total amount of all future sinking fund payments shall be reduced by the aggregate principal amount of the Term Series B Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral multiples of $5,000 (as set forth in a schedule provided by the City to the Trustee).

Sinking Fund Redemption Date (January 1) Principal Amount to be Redeemed

2026 $900,000 2027 930,000 2028* 950,000

* Final Maturity.

Sinking Fund Redemption Date (January 1) Principal Amount to be Redeemed

2033 $1,175,000 2034* 1,235,000

* Final Maturity.

Partial Redemption of Bonds. If only a portion of any Bond is called for redemption, then upon surrender of such Bond the City will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the City, a new Bond or Bonds of the same series and maturity date, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed.

Manner of Redemption

Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, the Trustee will select the Bonds to be redeemed by lot in any manner which the Trustee in its sole discretion deems appropriate. For purposes of such selection, all Bonds will be deemed to be comprised of separate $5,000 denominations and such separate denominations will be treated as separate Bonds which may be separately redeemed.

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Notice of Redemption

The Trustee on behalf and at the expense of the City will mail (by first class mail) notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, to the Municipal Securities Rulemaking Board and to the Securities Depositories, at least 30 but not more than 60 days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice will state the date of the notice, the redemption date, the redemption place and the redemption price and will designate the CUSIP numbers, the Bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and will require that such Bonds be then surrendered at the Office of the Trustee identified in such notice for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date.

The City has the right to rescind any notice of the optional redemption of Series B Bonds under the Indenture by written notice to the Trustee on or prior to the dated fixed for redemption. Any notice of optional redemption will be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Series B Bonds then called for redemption, and such cancellation will not constitute an Event of Default. The City and the Trustee have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee will cause notice of such rescission to be mailed, first class mail, postage prepaid, to the respective Owners of any Bonds designated for redemption, at their addresses appearing on the Registration Books, and to the Municipal Securities Rulemaking Board and the Securities Depositories.

Effect of Redemption

From and after the date fixed for redemption, if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption have been duly provided, such Bonds so called will cease to be entitled to any benefit under the Indenture other than the right to receive payment of the redemption price, and no interest will accrue thereon from and after the redemption date specified in such notice. The Trustee will cancel and destroy all Bonds redeemed under the Indenture.

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DEBT SERVICE SCHEDULE

Set forth below is a schedule of payments of principal of and interest on the Bonds for each annual period ending on June 30 of the years indicated.

Series A Bonds Series B Bonds

Year Ending (June 30) Principal Interest Total Principal Interest Total

Total Bond Debt Service

2013 $ - $ 3,947.89 $ 3,947.89 $ - $ 83,700.83 $ 83,700.83 $ 87,648.72 2014 870,000.00 30,896.50 900,896.50 - 655,050.00 655,050.00 1,555,946.50 2015 885,000.00 22,457.50 907,457.50 - 655,050.00 655,050.00 1,562,507.50 2016 630,000.00 12,103.00 642,103.00 - 655,050.00 655,050.00 1,297,153.00 2017 175,000.00 2,905.00 177,905.00 465,000.00 655,050.00 1,120,050.00 1,297,955.00 2018 - - - 660,000.00 636,450.00 1,296,450.00 1,296,450.00 2019 - - - 685,000.00 610,050.00 1,295,050.00 1,295,050.00 2020 - - - 710,000.00 582,650.00 1,292,650.00 1,292,650.00 2021 - - - 740,000.00 554,250.00 1,294,250.00 1,294,250.00 2022 - - - 775,000.00 524,650.00 1,299,650.00 1,299,650.00 2023 - - - 805,000.00 493,650.00 1,298,650.00 1,298,650.00 2024 - - - 835,000.00 461,450.00 1,296,450.00 1,296,450.00 2025 - - - 865,000.00 428,050.00 1,293,050.00 1,293,050.00 2026 - - - 900,000.00 393,450.00 1,293,450.00 1,293,450.00 2027 - - - 930,000.00 366,450.00 1,296,450.00 1,296,450.00 2028 - - - 950,000.00 338,550.00 1,288,550.00 1,288,550.00 2029 - - - 985,000.00 310,050.00 1,295,050.00 1,295,050.00 2030 - - - 1,015,000.00 280,500.00 1,295,500.00 1,295,500.00 2031 - - - 1,065,000.00 229,750.00 1,294,750.00 1,294,750.00 2032 - - - 1,120,000.00 176,500.00 1,296,500.00 1,296,500.00 2033 - - - 1,175,000.00 120,500.00 1,295,500.00 1,295,500.00 2034 - - - 1,235,000.00 61,750.00 1,296,750.00 1,296,750.00

TOTAL $ 2,560,000.00 $ 72,309.89 $ 2,632,309.89 $ 15,915,000.00 $ 9,272,600.83 $ 25,187,600.83 $ 27,819,910.72

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SECURITY AND SOURCES OF PAYMENT FOR THE BONDS

General

Pledge of Net Revenues. The Bonds are secured by a first pledge of all of the Net Revenues, on a parity with the pledge which secures any Parity Debt issued in the future in accordance with the provisions described under the caption “—Additional Obligations.” In addition, the Bonds are secured by a pledge of all of the moneys in the Bond Service Fund, including all amounts derived from the investment of such moneys. The Bonds and all Parity Debt are equally secured by a pledge, charge and lien upon the Net Revenues and such moneys without priority for series, issue, number or date and the payment of the interest on and principal of the Bonds will be and is secured by an exclusive pledge, charge and lien upon the Net Revenues and such moneys. So long as any of the Bonds are Outstanding, the Net Revenues and such moneys may not be used for any other purpose; except that out of the Net Revenues there may be apportioned such sums, for such purposes, as are expressly permitted by the Indenture.

Certain definitions related to Net Revenues are set forth below.

“Gross Revenues” means all gross charges received for, and all other gross income and receipts derived by the City from, the ownership and operation of the Wastewater System or otherwise arising from the Wastewater System, including but not limited to investment earnings thereon; but excluding: (a) customer deposits; (b) the proceeds of any special assessments or special taxes levied upon real property within any improvement district for the purpose of paying special assessment bonds or special tax obligations of the City relating to the Wastewater System; and (c) connection charges, if any.

“Net Revenues” means, for any period, an amount equal to all of the Gross Revenues received during such period minus the amount required to pay all Operation and Maintenance Costs becoming payable during such period.

“Operation and Maintenance Costs” means the reasonable and necessary costs and expenses paid by the City for maintaining and operating the Wastewater System, including but not limited to: (a) the reasonable expenses of management and repair and other costs and expenses necessary to maintain and preserve the Wastewater System in good repair and working order; (b) the reasonable administrative costs of the City attributable to the operation and maintenance of the Wastewater System; and (c) transfers made to other funds of the City for the purpose of paying or reimbursing the payment of Operation and Maintenance Costs. Operation and Maintenance Costs do not include: (i) interest expense relating to obligations of the City with respect to the Wastewater System; (ii) depreciation, replacement and obsolescence charges or reserves therefor; and (iii) amortization of intangibles or other bookkeeping entries of a similar nature.

“Wastewater System” means the public utility owned, controlled and operated by the City for the collection, treatment and disposal of wastewater within the service area of the City, including, without limitation, the existing sewer systems, plans, works or undertakings together with any additions, improvements or extensions at any time constructed or acquired by the City for such purposes, and including facilities for the disposal of recycled wastewater.

NEITHER THE FULL FAITH AND CREDIT NOR ANY REVENUES OR FUNDS OF THE CITY OTHER THAN THE NET REVENUES ARE PLEDGED TO OR AVAILABLE FOR THE PAYMENT OF DEBT SERVICE ON THE BONDS. THE OBLIGATION OF THE CITY TO MAKE PAYMENTS OF PRINCIPAL OF AND INTEREST ON THE BONDS DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.

Notwithstanding anything contained in the Indenture, the City is not required to advance any moneys derived from any source of income other than the Net Revenues for the payment of the principal of or interest

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on the Bonds, or any premiums upon the redemption thereof, or for the performance of any covenants contained in the Indenture (except to the extent that any such covenants are expressly payable under the Indenture from the Gross Revenues). The City may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose and may be used by the City for such purpose without incurring indebtedness.


Receipt, Deposit and Application of Net Revenues. The City has previously established the Wastewater Fund, which it will continue to hold and maintain for the purposes and uses set forth in the Indenture. The City will deposit all Gross Revenues in the Wastewater Fund promptly upon the receipt thereof, and will apply amounts in the Wastewater Fund solely for the uses and purposes set forth in the Indenture and purposes set forth in the Parity Debt Documents. In addition to withdrawals of Net Revenues required to pay principal of and interest on the Parity Debt in accordance with the Parity Debt Documents, the City will withdraw Net Revenues on deposit in the Wastewater Fund and apply such Net Revenues at the times and for the purposes, and in the priority, as follows:

(a) Bond Service Fund. On or before the third Business Day of the month preceding each Interest Payment Date, so long as any Bonds remain Outstanding under the Indenture, the City will withdraw from the Wastewater Fund and pay to the Trustee for deposit into the Bond Service Fund (which the Trustee will establish and hold in trust under the Indenture) an amount of Net Revenues which, together with other available amounts then on deposit in the Bond Service Fund, is at least equal to the aggregate amount of principal of and interest coming due and payable on the Bonds on such Interest Payment Date, including the amount of Term Series B Bonds which are subject to mandatory sinking fund redemption as described under the caption “THE BONDS—Redemption—Series B Bonds—Mandatory Sinking Fund Redemption.”

The Trustee will apply amounts in the Bond Service Fund solely for the purpose of: (i) paying the interest on the Outstanding Bonds when due and payable (including accrued interest on any Bonds purchased or redeemed under the Indenture); and (ii) paying the principal of the Bonds at the maturity thereof. Upon the payment in full of all Outstanding Bonds and Parity Debt, the Trustee will transfer any moneys remaining in the Bond Service Fund to the City for deposit into the Wastewater Fund.

(b) Redemption Fund. If the City elects to effect an optional redemption of Outstanding Series B Bonds as described above under the caption “THE BONDS—Redemption—Series B Bonds—Optional Redemption of Series B Bonds,” the City will transfer to the Trustee for deposit into the Redemption Fund (which the Trustee will thereupon establish and hold in trust under the Indenture) an amount at least equal to the redemption price of the Series B Bonds, excluding accrued interest, which is payable from the Bond Service Fund. In addition, the City will transfer or cause to be transferred to the Trustee for deposit into the Redemption Fund all amounts required to redeem any Bonds which are subject to redemption under the special mandatory redemption provisions described above under the caption “THE BONDS—Redemption,” when and as such amounts become available. Amounts in the Redemption Fund will be applied by the Trustee solely for the purpose of paying the redemption price of Bonds to be redeemed under the Indenture. Following any such redemption of the Bonds, any moneys remaining in the Redemption Fund will be transferred by the Trustee to the City for deposit into the Wastewater Fund.

The City will manage, conserve and apply moneys in the Wastewater Fund in such a manner that all deposits required to be made under the Indenture and under the Parity Debt Documents will be made at the

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times and in the amounts so required. Subject to the foregoing sentence, and with respect to the transfers set forth in paragraphs (ii), (iii) and (iv) below, so long as no Event of Default has occurred and is continuing, the City may at any time use and apply moneys in the Wastewater Fund for any one or more of the following purposes: (i) the payment of the Operation and Maintenance Costs of the Wastewater System; (ii) the acquisition and construction of extensions and betterments to the Wastewater System; (iii) the redemption of any of the Bonds or Parity Debt which are then subject to redemption or the purchase thereof from time to time in the open market, at prices and in such manner, either at public or private sale, or otherwise, as the City in its discretion may determine; or (iv) any other lawful purpose of the City relating to the Wastewater System.

No Reserve Fund

No reserve fund has been established under the Indenture in connection with the payment of the Bonds.

Rate Covenant

Covenant Regarding Gross Revenues. The City has covenanted in the Indenture to fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Wastewater System during each Fiscal Year which are at least sufficient, after making allowances for contingencies and error in the estimates, to pay the following amounts in the following order:

(i) all Operation and Maintenance Costs estimated by the City to become due and payable in the Fiscal Year;

(ii) The principal of and interest on all outstanding Bonds and Parity Debt as they become due and payable during the Fiscal Year, without preference or priority;

(iii) all payments coming due and payable during the Fiscal Year and required for compliance with the Parity Debt Documents; and

(iv) all payments required to meet any other obligations of the City which are charges, liens, encumbrances upon or payable from the Gross Revenues during the Fiscal Year.

Covenant Regarding Net Revenues. In addition to the covenant set forth above under the caption “—Covenant Regarding Gross Revenues,” the City has covenanted in the Indenture to fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Wastewater System during each Fiscal Year which (together with existing unreserved, unrestricted working capital balances in the Wastewater Fund, and taking into account allowances for contingencies), are sufficient to yield estimated Net Revenues at least equal to 120% of the aggregate amount of principal of and interest on the outstanding Bonds and the Parity Debt coming due and payable during such Fiscal Year; provided, however, that in the event that the actual collection of Net Revenues based on such rates, fees and charges is insufficient to yield Net Revenues which meet such requirement in any Fiscal Year, such event will not constitute an Event of Default if the City meets the foregoing requirements in the following Fiscal Year.

Additional Obligations

No Senior Obligations. The City has covenanted in the Indenture not to issue or incur any additional bonds or other obligations having any priority in payment of principal or interest out of the Gross Revenues or the Net Revenues over the Bonds.

Issuance of Parity Debt. The City may issue additional Parity Debt from time to time under the Indenture in such principal amount as it determines, subject to the following conditions precedent:

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(a) No Event of Default has occurred and is continuing.

(b) The amount of Net Revenues as shown by the books of the City for the most recent completed Fiscal Year for which audited financial statements of the City are available or for any more recent consecutive 12-month period selected by the City, in either case verified by an Independent Accountant or a Financial Consultant or shown in the audited financial statements of the City, are at least equal to 120% of the amount of Debt Service for such Fiscal Year or more recent 12-month period.

(c) The amount of Net Revenues as shown by the books of the City for the most recent completed Fiscal Year for which audited financial statements of the City are available or for any more recent consecutive 12-month period selected by the City, in either case verified by an Independent Accountant or a Financial Consultant or shown in the audited financial statements of the City, plus at the option of the City any Additional Revenues, are at least equal to 120% of the amount of Debt Service which would have accrued for such Fiscal Year or more recent 12-month period had the proposed issue of Parity Debt been outstanding during the whole of such Fiscal Year or more recent 12-month period.

(d) The amount of Net Revenues which the City estimates it will receive during each of the three Fiscal Years immediately following the issuance of such Parity Debt are at least equal to 120% of the amount of Debt Service coming due and payable on the Installment Payments and all Parity Debt which would be outstanding during each of such Fiscal Years, as evidenced by a Certificate of the City filed with the Trustee and verified by an Independent Accountant or a Financial Consultant.

(e) The trustee or fiscal agent (if any) for such Parity Debt is the same entity performing the functions of Trustee under the Indenture.

(f) The City delivers to the Trustee a written certificate of a City Representative certifying that the conditions precedent to the issuance of such Parity Debt set forth above have been satisfied.

Certain definitions relating to the issuance of Parity Debt are set forth below.

“Additional Revenues” means, with respect to the issuance of any Parity Debt, any or all of the following amounts: (a) an allowance for Net Revenues arising from any increase in the charges made for service from the Wastewater System which has become effective prior to the incurring of such Parity Debt, in an amount equal to the total amount by which the Net Revenues would have been increased if such increase in charges had been in effect during the whole of the most recent completed Fiscal Year or during any more recent 12-month period selected by the City under the Indenture, all as shown by the certificate or opinion of an Independent Accountant or Financial Consultant employed by the City; or (b) an allowance for Net Revenues arising from any increase in the charges made for service from the Wastewater System which has become effective prior to the incurring of such Parity Debt but which, during all or any part of such Fiscal Year or such other 12-month period selected by the City under the Indenture, was not in effect, in an amount equal to the total 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 such other 12-month period, all as shown by the certificate or opinion of an Independent Accountant or Financial Consultant employed by the City.

“Debt Service” means, as of any Fiscal Year or other 12-month period selected under the Indenture, the sum obtained for such Fiscal Year or other 12-month period by totaling the following amounts: (a) the aggregate amount of principal of and interest on the Bonds coming due and payable in such Fiscal Year or other 12-month period; and (b) the aggregate amount of principal and interest coming due on all outstanding Parity Debt, if any, in such Fiscal Year or other 12-month period, including the principal of Parity Debt coming due and payable by operation of mandatory sinking fund redemption. Notwithstanding the foregoing, if any issue of Parity Debt has more than 25% of the aggregate principal amount thereof coming due in any Fiscal Year, the amount of Debt Service on such Parity Debt will be calculated on the assumption that the amount of principal of and interest on such Parity Debt were payable over a 25-year term on a level debt

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service basis. Furthermore, with regard to any issue of Parity Debt bearing interest at a variable rate, such interest will be calculated at an assumed rate equal to the most recently published Bond Buyer “Revenue Bond Index” (or comparable index if no longer published) plus 50 basis points.

“Parity Debt” means, collectively all bonds, notes, loan agreements, installment sale agreements, leases or other obligations of the City payable from and secured by a pledge of and lien upon any of the Net Revenues issued or incurred on a parity with the Bonds under the Indenture.

Junior and Subordinate Debt. Nothing in the Indenture limits or affects the ability of the City to issue or incur obligations which are either unsecured or which are secured by an interest in the Net Revenues which is junior and subordinate to the pledge of and lien upon the Net Revenues established under the Indenture.

Investment of Funds

The Indenture sets forth certain conditions on the investment of Wastewater System funds and funds and accounts created under the Indenture. See Appendix B under the caption “—Investment of Funds.”

Insurance

The City will at all times maintain with responsible insurers all such insurance on the Wastewater System as is customarily maintained with respect to works and properties of like character against accident to, loss of or damage to the Wastewater System. If any useful part of the Wastewater System is damaged or destroyed, such part will be restored to usable condition. All amounts collected from insurance against accident to or destruction of any portion of the Wastewater System will be used to repair or rebuild such damaged or destroyed portion of the Wastewater System, and to the extent not so applied, will be applied to redeem the Bonds or any Parity Debt in accordance with the Indenture and the Parity Debt Documents, respectively. The City will also maintain, with responsible insurers, worker’s compensation insurance and insurance against public liability and property damage to the extent reasonably necessary to protect the City, the Trustee and the Owners of the Bonds. The Trustee has no liability to determine whether the City is in compliance with the foregoing provisions.

The Indenture does not require the City to maintain earthquake insurance with respect to the Wastewater System facilities. See the caption “THE WASTEWATER SYSTEM—Wastewater System Insurance.”

THE CITY

The City is located approximately 65 miles northwest of Los Angeles in southern Ventura County. The City encompasses an area of approximately 32 square miles and its 2012 population is estimated to be approximately 109,000. The City was incorporated as a town on March 10, 1866, was recognized as a city in the State of California (the “State”) by election on December 4, 1905 and was certified on January 5, 1906. The City Charter was initially adopted on January 7, 1932 and was revised most recently on November 7, 1995. The City operates under an elected Council and appointed City Manager form of government and provides the following services as authorized by its charter: public safety (police and fire), public works (maintenance services and engineering), community services, general administrative services and water and wastewater utilities (through the City’s Ventura Water Department (“Ventura Water”)). The City’s Fiscal Year 2011 comprehensive annual financial report is set forth in Appendix A.

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THE WASTEWATER SYSTEM

General

The City treats wastewater for a service area of approximately 22 square miles that includes approximately 98% of the geographic area of the City and certain unincorporated areas of the County adjacent to City boundaries. The City is the sole provider of sanitary sewer collection service within its service area and maintains approximately 290 miles of gravity collection pipelines ranging in size from 6 to 36 inches, 10 miles of force mains, 11 pumping stations and one wastewater treatment facility, the Ventura Water Reclamation Facility (the “WRF”), a standard activated sludge treatment plant located near the Ventura Harbor. Treatment consists of physical, biological, and chemical methods, which include screening, sedimentation, chemical precipitation, and biological processes. The WRF’s rated capacity is 12 million gallons per day (“MGD”). The City’s average daily flow was approximately 8.49 MGD in Fiscal Year 2012. Peak wet weather records indicate that the maximum daily throughput was 14.83 MGD.

Wastewater is treated in several stages. In the pre-treatment stage, raw wastewater is routed through a screening process, which removes large inorganic material, and a grit removal process, which removes small inorganic material. Such material is washed, disinfected and disposed of in landfills. After pre-treatment, the influent enters the primary clarifiers where gravity is used to settle solids to produce primary effluent. The solids are pumped to the primary digesters where they are broken down by anaerobic organisms. The primary effluent then enters the secondary treatment stage. The secondary system consists of conventional activated sludge aeration and clarification. Primary effluent is oxidized and consumed by a cultivated aerobic bio-mass and forms “mixed liquor.” The mixed liquor (liquid in the aeration tanks) flows into the secondary clarifiers where gravity is used to separate the water (secondary effluent) from the biosolids. Secondary effluent is then pumped through the outfall described in the following paragraph for ultimate disposal. Excess secondary biosolids are pumped to the digesters, where they are mixed with primary sludge and treated for a minimum of 15 days. The volatile (organic content) mass of the combined biosolids are reduced to a stable state and transferred to the centrifuges for dewatering. The concentrated biosolids are disposed of via land application offsite and the water is returned to the WRF. A portion of secondary effluent is sent to the tertiary treatment process where filters further remove remaining particles. Flow is then disinfected with chlorine application or ultraviolet light to produce reclaimed water that meets the standards set forth in Chapter 3 of Division 4 of Title 22 of the California Code of Regulations. The City’s revenues from the sale of reclaimed water constitute Gross Revenues pledged to payment of the Bonds. See the caption “—The Reclaimed Water System.”

The WRF’s effluent is discharged to the mouth of the Santa Clara River, where it meets the Pacific Ocean (the “Estuary”) after flowing through a series of ponds for approximately four days. In late 2011, the City entered into a settlement agreement (the “Settlement Agreement”) with environmental groups and State and federal agencies with respect to the City’s discharge of treated effluent to the Estuary. The Settlement Agreement resolved several years of litigation and administrative appeals relating to the impact of such discharges on the Estuary. The Settlement Agreement establishes a goal of reducing the amount of water entering the Estuary by at least 50% by 2025 by diverting it to other uses, including reclaimed water, and calls for the City to undertake studies to determine how to accomplish this goal. However, because effluent discharges create habitat for certain plant and animal species, the Settlement Agreement requires the City to reduce discharges to the Estuary only in an amount approved and permitted by State and federal regulatory agencies with jurisdiction over discharges, the Estuary and the species and habitats therein.

The Settlement Agreement caps the City’s infrastructure expenses at $55,000,000, subject to adjustment for inflation, and caps required wastewater service rate increases to fund the costs of complying with the Settlement Agreement at 3% in any single year. In connection with the Settlement Agreement, the State of California Regional Water Quality Control Board, Los Angeles Region (the “Regional Board”) renewed the City’s wastewater discharge permit. See the caption “—Environmental Compliance.” As discussed under the caption “—Wastewater System Rates and Charges,” the City will levy a charge equal to

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2% and 4% of customers’ wastewater bill in Fiscal Years 2013 and 2014, respectively, to fund the costs of complying with the Settlement Agreement in such years.

Administrative Personnel

The Wastewater System is operated under the control of the City Council of the City with day to day management provided under the supervision of Johnny Johnston, Interim City Manager, Shana Epstein, General Manager of Ventura Water, the City division that administers the Wastewater System, and Dan Pfeifer, Wastewater Utility Manager.

Johnny Johnston was appointed Interim City Manager in September 2012 by the City Council. Mr. Johnston has over 40 years of executive management experience in both the public and private sectors. Prior to coming to the City, he served as Chief Executive Officer of the County of Ventura for seven years and previously served as chief of the County of Ventura’s General Services Agency. Mr. Johnston also previously served as Deputy Executive Officer for the Superior Court of California, County of Los Angeles, responsible for court operations, human resources and public information, and as City Manager for the cities of Artesia, California and Ojai, California. Mr. Johnston earned a Bachelor’s degree in Political Science and a Master Degree in Public Administration from the University of Southern California. As Interim City Manager, Mr. Johnston will maintain continuity and strategic leadership for the City’s management team while assisting in the selection process for a permanent City Manager.

Shana Epstein joined Ventura Water as its first General Manager in May 2011 and is responsible for the management and strategic direction of the City’s water and wastewater utilities. Ms. Epstein has over 15 years’ experience in the public sector. Prior to coming to the City, Ms. Epstein worked for the City of Anaheim Public Utilities Department and the City of Beverly Hills. Ms. Epstein earned a Bachelor’s degree from the University of California, San Diego and a Masters in Public Administration from George Washington University. Ms. Epstein currently serves as a member of the Association of California Water Agencies Management Committee.

Daniel Pfeifer, State of California Water Resources Control Board Grade V Wastewater Treatment Plant Operator, is the City of Ventura’s Wastewater Utility Manager. Mr. Pfeifer joined the City in 1999 and manages the Wastewater Division of Ventura Water, which includes the WRF, a sewer collection system and a State-certified water quality laboratory. Additionally, Mr. Pfeifer serves as Program Coordinator for the Wastewater Capital Improvement Program with responsibility for over $60,000,000 in infrastructure repair and improvement projects. Prior to joining the City, Mr. Pfeifer worked for over 13 years with the Big Bear Area Regional Wastewater Agency, reaching the position of Senior Operator and overseeing the operation and maintenance of its regional wastewater treatment plant. Mr. Pfeifer earned his Associate’s degree in Business Administration from Ventura College in 2006.

Environmental Compliance

The present discharge requirements for the WRF are established by the Regional Board, which administers and enforces all federal and State discharge requirements pursuant to regulations promulgated under the National Pollutant Discharge Elimination System (“NPDES”) by the United States Environmental Protection Agency and Division 7 of the California Water Code and regulations adopted thereunder. The City’s present discharge permit (NPDES Permit No. 00053561, Waste Discharge Order No. R4-2008-0011 was adopted by the Regional Board on March 6, 2008 and is effective for 5 years. The City is operating in compliance with the terms of its permit. See the caption “—General” for a discussion of the Regional Board’s recent renewal of the City’s discharge permit subject to certain conditions.

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Service Area

The City provides wastewater treatment services to 98% of the area within the City and small unincorporated County areas of development west and south of the City. Wastewater System customers are currently separated into five principal service classes: residential, commercial, industrial, schools and churches. The commercial class has been subdivided into six groups, with each group consisting of customers with similar wastewater uses. As of July 1, 2012, the Wastewater System had a total of 25,254 customers, comprised of 20,735 single family residential accounts, 2,574 multi-family residential accounts, 1,815 commercial accounts, 4 industrial accounts, 40 school accounts, 48 church accounts and 38 other accounts. The total population of the Wastewater System service area is estimated to be approximately 109,000. The service area has elevations varying from sea level to 1,035 feet.

Land Use

The Wastewater System service area is mostly built out and includes single family residences, multifamily residential units, industrial and commercial properties. Approximately 10% of the land within the Wastewater System service area is undeveloped. The City currently expects the Wastewater System service area to be fully built out in 2035 with an estimated population of 140,000.

Wastewater System Insurance

The City is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets, errors and omissions, injuries to employees and natural disasters. The City is self-insured up to $1,000,000 for each workers’ compensation claim, up to $1,000,000 for each general liability claim, up to $25,000 for each non-automobile-related property damage claim and up to $15,000 for each automobile-related property damage claim. Excess insurance purchased from commercial carriers supplies additional coverage for each worker’s compensation claim up to statutory limits, for each general liability claim up to $15,000,000 and for each property damage claim up to $1,000,000,000. The WRF is covered under the City’s property insurance coverage. However, Wastewater System pipelines that run underground in utility rights of way are not covered under the City’s property insurance coverage. The City does not maintain earthquake insurance for the Wastewater System. Settled claims have not exceeded commercial coverage amounts in any of the past three Fiscal Years. Pursuant to the Indenture, the City is obligated to maintain certain types of insurance with respect to the Wastewater System. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Insurance.”

Employee Relations

General. A total of 102 Ventura Water full-time equivalent employees (“FTEs”) operate and maintain the Wastewater System and the City’s water system. Generally, these employees are represented in collective bargaining as part of the maintenance unit or general employees unit, each of which are operating pursuant to collective bargaining agreements with the Service Employees International Union which extend through June 30, 2013. Certain management, supervisory and professional employees are represented in management groups for which no memorandum of understanding or collective bargaining agreement exists. For such employees, compensation adjustments generally occur each July. Ventura Water has never experienced a strike, slowdown or work stoppage.

Pension Plan. The City and the employees of Ventura Water contribute to the California Public Employees’ Retirement System (“PERS”), an agent multiple-employer public employee defined benefit plan that acts as a common investment and administrative agent for participating public entities in the State. The City’s contributions to PERS for Ventura Water employees constitute Operation and Maintenance Costs of the Wastewater System. PERS provides retirement, disability and death benefits to plan members and their beneficiaries. Ventura Water employees who have worked over 1,000 hours in a Fiscal Year are eligible to participate in the City’s Miscellaneous Plan, with benefits vesting after 5 years of service.

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PERS issues a publicly available financial report that includes the applicable financial statements and required supplementary information for PERS. The report may be obtained by writing to PERS at 400 Q Street, Sacramento, California 95814.

Required employer and employee contributions are determined from rates established by PERS based upon various actuarial assumptions which are revised annually. Miscellaneous Plan participants are required by State statute to contribute 7% of their annual salary. Employees contributed 3.5% of their annual salary in Fiscal Year 2012 and will contribute 4.5% of their annual salary in Fiscal Year 2013, with the City paying the remaining required employee contributions for all Miscellaneous Plan participants, including Ventura Water employees, on their behalf and for their account.

Effective July 23, 2011, the City implemented a 2-tier retirement plan. Employees beginning service with the City on or after July 23, 2011 are covered by the Tier 2 formula.

Under the Tier 1 retirement formula, participants who are age 50 with at least 5 years of credited PERS service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to a benefit factor multiplied by their final compensation. The Miscellaneous Plan members’ retirement formula is 2% at 55, and the benefit factor is an amount equal to between 1.426% and 2.418% multiplied by the number of years of credited employment. The benefit factor is based upon the age of the employee at retirement, increasing from age 50 to age 63. Final compensation is the average monthly pay rate for the last consecutive 12 months (or any 12-month period in which pay was higher) of employment.

Under the Tier 2 retirement formula, participants who are age 50 with at least 5 years of credited PERS service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to a benefit factor multiplied by their final compensation. The Miscellaneous Plan members’ retirement formula is 2% at 60, and the benefit factor is an amount equal to between 1.092% and 2.418% multiplied by the number of years of credited employment. The benefit factor is based upon the age of the employee at retirement, increasing from age 50 to age 63. Final compensation is the average three highest years of employment.

In addition to the City’s contribution on behalf of employees, the City currently funds the normal pension costs, which are determined by PERS using the Entry Age Normal Actuarial Cost Method, as well as an amortization of the City’s unfunded actuarial liability. For Fiscal Year 2012, the City’s PERS employer contribution for the Miscellaneous Plan was approximately $9,900,000, which was equal to the annual required contribution (the “ARC”) described below. The contribution rate for Fiscal Year 2013 has been established at 13.113% of annual covered payroll.

The City had an unfunded accrued liability of $21,327,225 for its Miscellaneous Plan as of June 30, 2010, based on an actuarial value of assets of $171,259,629, as set forth in the most recent actuarial report prepared by PERS in October 2011. PERS does not prepare separate actuarial reports for Ventura Water’s share of the unfunded liability. However, if the unfunded liability were spread based on the ratio of FTEs of Ventura Water (including the City’s water system) to the FTEs of the City as a whole, approximately 6.5% of the estimated Fiscal Year 2010 unfunded liability would be attributable to Ventura Water (including the City’s water system).

In Fiscal Years 2008 through 2012, the Sewer Fund’s contributions to PERS constituted an average of approximately 2.7% of total Wastewater System Operation and Maintenance Costs. For Fiscal Years 2013 through 2017, the City estimates that its contributions to PERS will constitute an average of approximately 2.8% of total Wastewater System Operation and Maintenance Costs, assuming annual increases in such contributions of approximately 5%. There can be no assurance that City contributions to PERS will not increase significantly in excess of such projected amounts in the future.

Under Government Accounting Standards Board Statement No. 27, an employer reports an annual pension cost equal to the ARC plus an adjustment for the cumulative difference between the annual pension

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cost and the employer’s actual plan contributions for the year. The cumulative difference is called the net pension obligation and may be positive or negative. The ARC for Fiscal Year 2012 was determined by an actuarial valuation of the City’s Miscellaneous Plan as of June 30, 2009 and the ARC for Fiscal Year 2013 has been determined by an actuarial valuation of the City’s Miscellaneous Plan as of June 30, 2010.

The staff actuaries at PERS annually prepare an actuarial valuation which covers a Fiscal Year ending approximately 15 months before the actuarial valuation is delivered (thus, the actuarial valuation delivered to the City in October 2011 covered the City’s Fiscal Year ended June 30, 2010). The actuarial valuations express the City’s required contribution rates in percentages of covered payroll, which percentages the City must contribute in the Fiscal Year immediately following the Fiscal Year in which the actuarial valuation is prepared (thus, the City’s contribution rate derived from the actuarial valuation as of June 30, 2010, which was delivered in October 2011, affects the City’s Fiscal Year 2013 required contribution rate). PERS rules require the City to implement the actuary’s recommended rates.

In calculating the annual actuarially recommended contribution rates, the PERS actuary calculates on the basis of certain assumptions the actuarial present value of benefits that PERS will fund under the PERS plans, which includes two components, the normal cost and the unfunded actuarial accrued liability (the “UAAL”). The normal cost represents the actuarial present value of benefits that PERS will fund under the PERS plans that are attributed to the current year, and the actuarial accrued liability represents the actuarial present value of benefits that PERS will fund that are attributed to past years. The UAAL represents an estimate of the actuarial shortfall between actuarial value of assets on deposit at PERS and the present value of the benefits that PERS will pay under the PERS plans to retirees and active employees upon their retirement. The UAAL is based on several assumptions such as, among others, the rate of investment return, average life expectancy, average age of retirement, inflation, salary increases and occurrences of disabilities. In addition, the UAAL includes certain actuarial adjustments such as, among others, the actuarial practice of smoothing losses and gains over multiple years (which is described in more detail below). As a result, the UAAL may be considered an estimate of the unfunded actuarial present value of the benefits that PERS will fund under the PERS plans to retirees and active employees upon their retirement and not as a fixed expression of the liability that the City owes to PERS under its PERS plans.

In each actuarial valuation, the PERS actuary estimates the actuarial value of the assets (the “Actuarial Value”) of the PERS plans at the end of the Fiscal Year (which assumes, among other things, that the rate of return during that Fiscal Year equaled the assumed rate of return, currently 7.5%). The PERS actuary uses a smoothing technique to determine Actuarial Value that is calculated based on certain policies. As described below, these policies changed significantly in 2012 and 2005, affecting the Actuarial Value calculation beginning in Fiscal Year 2007.

On March 14, 2012, the PERS Board approved a change in the inflation assumption used in the actuarial valuations used to determine employer contribution rates. The inflation assumption was changed from 3% to 2.75% effective July 1, 2012. The change impacted the inflation component of the annual investment return assumption and the long term payroll growth assumption as follows:

The annual assumed investment return decreased from 7.75% to 7.5%.

The long term payroll growth assumption decreased from 3.25% to 3%.

The inflation component of individual salary scales decreased from 3.25% to 3%.

Although the full impact of the above changes is not yet clear, PERS has estimated that they could result in net increases in future contribution levels of approximately 1% to 2%.

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In April 2005, the PERS Board adopted new policies aimed at stabilizing rising employer costs. These policies were used to set employer contribution rates for the City beginning in Fiscal Year 2007. These policies include:

Spreading PERS market value asset gains and losses over 15 years rather than three years.

Widening the “corridor” limits for establishing the actuarial value of assets from 90% to 110% of market value to 80% to 120% of market value (except for the 3-year phase-in of investment losses from Fiscal Year 2009, as described below).

Establishing a rolling 30-year amortization on all remaining net unamortized gains or losses, instead of amortizing 10% of the net unamortized gain or loss each year pursuant to prior policy. Such an amortization schedule results in approximately 6% of unamortized gains and losses each year. Due to the excess of accrued liability over actuarial value of plan assets, the amortization payment of the total unfunded liability may be higher than the payment calculated over a 30-year amortization period.

Requiring a minimum employer contribution rate equal to the employer normal costs minus a 30-year amortization of surplus (but not less than 0%).

Pursuant to the April 2005 policy change, multiple amortization bases (including those for benefit improvement or changes in actuarial methods or assumptions, which are typically less than 30 years) were combined into a single base (the gain and loss bases) and amortized over a rolling 30-year period to effect a “fresh start” as of June 30, 2004. The April 2005 policy did not affect other existing amortization bases for benefit improvements, assumptions changes and method changes.

Due to significant market investment losses of approximately 24% in the PERS trust fund for Fiscal Year 2009, PERS implemented a 3-year phase-in of the Fiscal Year 2009 investment loss. This phased in approach will be achieved by temporarily relaxing the constraints on the smoothed value of assets around the actual market value. The corridor will be widened and then contracted as follows:

Increase the corridor limits from 80% to 120% of market value to 60% to 140% of market value to determine the actuarial value of assets for the June 30, 2009 valuation, which impacted the Fiscal Year 2012 contribution rate.

Reduce the corridor limits from 60% to 140% of market value to 70% to 130% of market value to determine the actuarial value of assets for the June 30, 2010 valuation, which impacts the Fiscal Year 2013 contribution rate.

Return to the 80% to 120% of market value corridor limits for the actuarial value of assets on June 30, 2011 and thereafter, which impacts contribution rates for Fiscal Year 2014 and beyond.

Asset losses outside of the 80% to 120% corridor described above will be amortized pursuant to a fixed 30-year amortization schedule.

In addition, in February 2010, the PERS Board adopted a resolution requiring additional contributions for any plan or pool if the cash flows hamper adequate funding progress by preventing the expected funded status on a market value of assets basis of the plan to either:

Increase by at least 15% by June 30, 2043; or Reach a level of 75% funded by June 30, 2043.

Such contributions have been factored into the City’s contribution rates set by PERS.

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The following table summarizes the City’s annual required contributions for its Miscellaneous Plan as a whole (including Ventura Water employees) for Fiscal Years 2007 through 2011:

Fiscal Year

Employer Contribution

City-Funded Employee

Contribution Employee

Contribution

Annual Pension

Cost

Percentage of Annual Pension Cost Contributed

2007 $7,387,406 $3,399,837 $ - $7,387,406 100% 2008 8,211,264 3,737,496 - 8,211,264 100 2009 9,162,430 3,967,564 - 9,162,430 100 2010 9,128,521 3,863,621 - 9,128,521 100 2011 8,769,471 2,795,151 957,015 9,157,566 96

The following table sets forth the schedule of funding for the City’s Miscellaneous Plan as a whole,

including Ventura Water, as of June 30, 2010. The employer contribution rate for Fiscal Year 2013 is 13.113%.

Valuation Date

(June 30)

Entry Age Actuarial

Accrued Liability Actuarial Value

of Assets UAAL Market Value

of Assets Funded Ratio(1)

Annual Covered Payroll

2006 $140,835,180 $135,278,920 $ 5,556,260 $142,969,267 101.5% $25,720,303 2007 152,172,649 146,995,928 5,176,721 169,683,466 111.5 28,321,428 2008 167,837,616 157,529,148 10,308,468 160,114,307 95.4 30,850,606 2009 184,806,501 165,040,339 19,766,162 120,293,729 65.1 28,935,608 2010 192,586,854 171,259,629 21,327,225 133,507,592 69.3 27,786,031

(1) Based on the market value of assets. Source: PERS Actuarial Report Dated October 2011.

For additional information relating to the City’s Miscellaneous Plan, see Note 13 to the City’s Financial Statements set forth in Appendix A.

PERS reported significant investment losses in 2009, which accounts for a portion of the increase in the City’s unfunded actuarial liability from June 30, 2008 to June 30, 2009. In addition, the increase in the City’s unfunded actuarial liability is attributable to PERS studies performed in Fiscal Year 2009 and the adjustment of assumptions made by PERS valuations for age at retirement, years of service, mortality rates, and certain other assumptions. PERS earnings reports for Fiscal Years 2010 and 2011 report an investment gain in excess of 13.0 and 21.7%, respectively. Future earnings performance may increase or decrease future contribution rates for plan participants, including the City.

The City’s projections of Operation and Maintenance Costs set forth under the caption “WASTEWATER SYSTEM FINANCIAL INFORMATION—Projected Wastewater System Operating Results and Debt Service Coverage” assume increases in PERS contributions of approximately 5% per annum. However, no assurance can be provided that such expenses will not increase at a significantly higher rate in the future.

No Other Post-Employment Benefits. The City does not have a contractual obligation to fund post-retirement health benefits for any of its employees. The City agreed to pay a portion of the retirees’ health care premiums through December 31, 2008, after which the City has no further post-employment benefit obligations.

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No Other Outstanding Indebtedness

Upon the refunding of the outstanding 2004 Certificates as described under the caption “REFUNDING PLAN,” the City will have no other outstanding indebtedness subject to pledge of Net Revenues.

Historic Wastewater System Connections

The following table shows the number of connections to the Wastewater System for Fiscal Years 2008 through 2012.

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Historic Wastewater System Connections

Fiscal Year

Residential Commercial Industrial/Other Total

Increase/ (Decrease)

2008 23,204 1,791 136 25,131 (0.10)% 2009 23,233 1,798 133 25,164 0.13 2010 23,239 1,805 135 25,179 0.06 2011 23,265 1,802 130 25,197 0.08 2012 23,309 1,815 130 25,254 0.23

Source: City.

Historic Wastewater System Daily Average Flow

The following table shows the Wastewater System daily average flow for Fiscal Years 2008 through 2012. The decrease in daily average flow in Fiscal Years 2008 and 2009 reflects the effects of conservation as well as the economic recession.

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Historic Wastewater System Daily Average Flow

Fiscal Year Daily Average Flow (MGD) Increase/(Decrease)

2008 8.73 (2.78)% 2009 8.56 (1.95) 2010 8.80 2.80 2011 8.81 0.11

2012(1) 8.49 (3.63) (1) Decrease in Fiscal Year 2012 reflects hydrological conditions and reduced discharges from certain customers. Source: City.


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Historic Wastewater System Service Charge Revenues

The following table shows annual Wastewater System service charge revenues for Fiscal Years 2008 through 2012. The decrease in revenues in Fiscal Year 2011 reflects the City’s prior rate structure, pursuant to which rates for residential customers were based on lowest usage for prior winter billing periods rather than actual usage. The City’s rate structure was substantially revised in 2012. See the caption “—Wastewater System Rates and Charges.”

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Historic Wastewater System Service Charge Revenues

Fiscal Year

Residential Commercial Industrial/Other Total(1)


2008 $11,540,489 $3,049,862 $908,921 $15,499,272 N/A% 2009 11,823,540 3,152,144 787,265 15,762,949 1.70 2010 12,628,070 3,395,521 647,394 16,670,985 5.76 2011 12,102,465 3,306,985 646,134 16,055,584 (3.69)

2012(2) 12,323,086 3,419,006 751,874 16,493,966 2.73 (1) Historic annual Service Charges and Sale Revenues shown under the caption “WASTEWATER SYSTEM FINANCIAL

INFORMATION—Historic Wastewater System Operating Results and Debt Service Coverage” reflect the total revenues in this column plus the reclaimed water service charge revenues shown under the caption “—Historic Reclaimed Water Service Charge Revenues.”

(2) Reflects actual unaudited Fiscal Year 2012 results. Source: City.

Wastewater System service charge revenues are affected by a number of factors, including the number of connections and rates and charges. See the captions “—Historic Wastewater System Connections” and “—Wastewater System Rates and Charges.”


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Largest Wastewater Service Customers

The following table sets forth the ten largest wastewater service customers of the Wastewater System as of June 30, 2012, as determined by annual payments.

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Top Ten Wastewater Service Customers

Type of Business Total Payments

Percent of Total Wastewater System

Service Charge Revenues

Hospital $182,677 1.11% Multifamily Apartments 120,300 0.73 Multifamily Apartments 119,217 0.72

Commercial 110,638 0.67 Government 107,463 0.65

Multifamily Apartments 97,730 0.59 Hospital 95,376 0.58

Multifamily Apartments 94,245 0.57 Educational 85,557 0.52

Multifamily Apartments 80,402 0.49 Total $1,093,605 6.63%

Source: City.

These ten largest customers accounted for approximately 6.63% of total wastewater service charge revenues (excluding reclaimed water service charge revenues and other Gross Revenues) in Fiscal Year 2012.

Wastewater System Rates and Charges

General. City rates and charges for wastewater service are set by the City Council and are not subject to the jurisdiction of, or regulation by, the California Public Utilities Commission or any other regulatory body. The City is, however, required to comply with the notice, hearing and majority protest provisions of Article XIIID of the State Constitution, which is popularly known as Proposition 218. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218” for further information with respect to Proposition 218.

Ventura Water staff annually determines the adequacy of the charge structure for wastewater service in the service area after full consideration of expected operations, maintenance, capital costs and capital repayment obligations of the Wastewater System. The City Council currently sets wastewater charges at a level that it determines is sufficient to pay all Operation and Maintenance Costs of the Wastewater System and to maintain appropriate reserves for the Wastewater System. Current charges include a bimonthly fixed service charge based on meter size and a flow charge based on usage. See the caption “—Collection Procedures” for further information with respect to the collection of Wastewater System rates and charges.

The City has agreed in the Indenture to fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Wastewater System during each Fiscal Year which (together with existing unreserved, unrestricted working capital balances in the Sewer Fund, and taking into account allowances for contingencies), are sufficient to yield estimated Net Revenues at least equal to 120% of the aggregate amount of principal of and interest on the outstanding Bonds and the Parity Debt coming due and payable during such Fiscal Year. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Rate Covenant.”

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Service Charges. On June 4, 2012, the City Council adopted revised wastewater service charges for Fiscal Years 2013 and 2014, respectively, in accordance with Proposition 218. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218.” The revised charges include a bimonthly fixed charge (which represents an increase for certain residential customers and a decrease for other customers) as well as increases in flow rates designed to encourage conservation. Flow rates are capped at 30 and 24 hundred cubic feet (“HCF”), respectively, for single family and multi-family residential customers. The charges are based on the average winter water usage for one full billing cycle for bills received in February through May and are set for one full year. Commercial customers are placed within six flow strength groups and pay a fixed charge and a flow rate with no cap. Schools pay a fixed charge which varies based on average daily attendance per 100 students. Churches pay a fixed charge and a flow rate. Industrial customers are billed monthly based on flow, chemical oxygen demand and total suspended solids.

In addition, the City will levy a charge equal to 2% and 4% of customers’ wastewater bill in Fiscal Years 2013 and 2014, respectively, to fund the costs of complying with the Settlement Agreement in such years, as described under the caption “—General.” For single family residential and multi-family residential customers, such charges are capped at a bimonthly rate of $1.96 and $1.54, respectively, for Fiscal Year 2013, and $4.07 and $3.21, respectively, for Fiscal Year 2014. There is no cap for non-residential customers.

The projected water revenues for Fiscal Years 2013 and 2014 set forth under the caption “WASTEWATER SYSTEM FINANCIAL INFORMATION—Projected Wastewater System Operating Results and Debt Service Coverage” reflect such wastewater service charge increases. There can be no assurance that the City Council will not repeal or modify such rate increases in the future or that the City’s ratepayers will not approve an initiative to repeal or modify any increase in potable water service rates and charges approved by the City Council.

The projected wastewater service revenues for Fiscal Years 2015 and thereafter set forth under the caption “WASTEWATER SYSTEM FINANCIAL INFORMATION—Projected Wastewater System Operating Results and Debt Service Coverage” assume future wastewater service charge increases that have not yet been authorized. Such rate increases are subject to the notice, public hearing and protest provisions of Proposition 218. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218.” There can be no assurance that the City Council will adopt such rate increases as currently projected.

Selected wastewater service rates and charges are set forth below.


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CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Wastewater Service Rates

Customer Type Fiscal Year 2013 Fiscal Year 2014

Single Family Residential Fixed Rate $17.65 $18.35

Flow Charge per HCF(1) 2.67 2.78

Multi-Family Residential Fixed Rate $13.06 $13.58


Churches Fixed Rate $17.65 $18.35

Flow Charge per HCF 2.33 2.43

Schools Rate Per 100 average daily attendance $128.17 $133.25

Industrial

Flow Charge per million gallons $3,689.47 $3,835.63 Chemical Oxygen Demand per 1000 pounds 153.01 159.08

Suspended Solids per 1000 pounds 283.68 294.92

Commercial

Group 1(3) Fixed Rate $17.65 $18.35


Group 2 (Hotels/Commercial Laundries) Fixed Rate $17.65 $18.35


Group 3 (Hotels with Dining Facilities) Fixed Rate $17.65 $18.35






Group 6 (Plant Nurseries) Fixed Rate $17.65 $18.35


Settlement Agreement Estuary Protection Charge 2% of bill 4% of bill Single Family Residential Capped at 30 HCF ($1.96) Capped at 30 HCF ($4.07) Multi-Family Residential Capped at 24 HCF ($1.54) Capped at 24 HCF ($3.21)

Non-Residential No Cap No Cap (1) Capped at 30 HCF. Cap determined for each customer based on winter usage for two full billing cycles. (2) Capped at 24 HCF. Cap determined for each customer based on winter usage for two full billing cycles. (3) Includes laundromats, car washes, professional office buildings, convalescent homes, retail establishments, public buildings, beauty salons,

gas stations, theaters, gymnasiums, hospitals and grocery stores without garbage grinders. (4) Uncapped. (5) Includes mortuaries and grocery stores with garbage grinders. (6) Includes restaurants, bakeries and multi-use shopping centers. Source: City.

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Rate Comparison. The table below sets forth a comparison of the Wastewater System’s typical bimonthly water bill for a single family residential user with usage of 20 HCF to those of certain nearby water purveyors as of July 1, 2012:

Community Bimonthly Charge(1)

City of Fillmore $168.92 City of Santa Paula 166.02 City of Ojai 104.14 Casitas Municipal Water District 100.42 City of Santa Barbara 78.42 City of San Buenaventura Wastewater System 72.47 City of Camarillo 67.84 City of Oxnard 57.64 Camrosa Water District 54.70 City of Simi Valley 52.16 City of Thousand Oaks 50.90 City of Moorpark 48.00

(1) Reflects single family residential usage of 20 HCF. Source: City.

Collection Procedures

The City is on a bimonthly billing cycle for wastewater, reclaimed water and potable water service. A consolidated bill is sent out every other month to Wastewater System customers. Payment is due by the 19th day after the billing date and is considered delinquent if not paid by that date. If payment is not received, a delinquency message appears on a reminder bill, with a 10% penalty assessment. The delinquency message also informs customers that service will be discontinued if the bill is not paid in full within 15 days. Forty-five days after the date billed, a notice of shutoff of service will be posted at the premises address of the customer. A processing charge of $52.00 will be assessed on such notice and the date of discontinuance of service will again be noted. If service is discontinued, an additional processing fee of $62.00 will be assessed. Accounts that have been shut off may be reconnected upon payment in full of all outstanding balances and processing fees. As of July 1, 2012, less than 0.2% of accounts were more than 65 days delinquent. Such delinquencies are in the total amount (including amounts due for potable water services) of approximately $9,221.

Future Wastewater System and Recycled Water System Improvements

The City projects total capital improvements to the Wastewater System and the recycled water system of approximately $52,000,000 over the next 5 years, including WRF equipment replacements, pipeline replacements, upgrades to metering systems and upgrades to WRF treatment facilities. Such capital improvements are expected to be financed by: (i) a combination of surplus Gross Revenues, grants and Wastewater System reserves; and (ii) the proceeds of additional Parity Debt issued in Fiscal Year 2016 (the “2016 Bonds”) in the estimated aggregate principal amount of $8,000,000. See the caption “WASTEWATER SYSTEM FINANCIAL INFORMATION—Projected Wastewater System Operating Results and Debt Service Coverage.”


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Projected Wastewater System Connections

The following table shows the projected number of connections to the Wastewater System for the current and next four Fiscal Years.

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Projected Wastewater System Connections

Fiscal Year

Residential Commercial Industrial/Other Total


2013 23,309 1,815 130 25,254 0.00% 2014 23,309 1,815 130 25,254 0.00 2015 23,326 1,815 130 25,271 0.07 2016 23,343 1,815 130 25,288 0.07 2017 23,360 1,815 130 25,305 0.07

Source: City.

Projected Wastewater System Daily Average Flow

The following table shows the projected Wastewater System daily average flow for the current and next four Fiscal Years.

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Projected Wastewater System Daily Average Flow

Fiscal Year Daily Average Flow (MGD) Increase/(Decrease)

2013 8.55 0.71% 2014 8.60 0.58 2015 8.65 0.58 2016 8.70 0.58 2017 8.75 0.57

Source: City.


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Projected Wastewater System Service Charge Revenues

The following table shows annual Wastewater System service charge revenues for the current and next four Fiscal Years.

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Projected Wastewater System Service Charge Revenues

Fiscal Year

Residential Commercial Industrial/Other Total(1)


2013 $12,722,750 $3,506,938 $619,112 $16,848,800 4.10% 2014 13,508,197 3,806,139 590,726 17,905,062 6.27 2015 14,340,749 4,033,930 626,169 19,000,848 6.12 2016 15,212,732 4,273,091 663,678 20,149,501 5.70 2017 16,137,999 4,532,488 703,469 21,373,956 6.08

(1) Projected annual Service Charges and Sale Revenues shown under the caption “WASTEWATER SYSTEM FINANCIAL

INFORMATION—Projected Wastewater System Operating Results and Debt Service Coverage” reflect the total projected revenues in this column plus the projected reclaimed water service charge revenues shown under the caption “—Projected Reclaimed Water Service Charge Revenues.”

Source: City.

Projected Wastewater System sales revenues reflect daily average flows described under the caption “—Projected Wastewater System Daily Average Flow” as well as rates and charges described under the caption “—Wastewater System Rates and Charges.” The projected wastewater service revenues reflect approved rate increases through Fiscal Year 2014. See the caption “—Water System Rates and Charges.” There can be no assurance that the City Council will not repeal or modify such rate increases in the future or that the City’s ratepayers will not approve an initiative to repeal or modify any increase in water service rates and charges approved by the City Council.

The projected sales water revenues for Fiscal Years 2015 and thereafter set forth above assume future rate increases that have not yet been authorized. Such rate increases are subject to the notice, public hearing and protest provisions of Proposition 218. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218.” There can be no assurance that the City Council will adopt such rate increases as currently projected.

The Reclaimed Water System

The City has provided reclaimed water to customers since 1980. The City’s reclaimed water facilities consist of the WRF, approximately 4.5 miles of pipelines, 2 service zones and 2 pump stations. The City provides reclaimed water for irrigation purposes to approximately 13 accounts, including the Ventura Marina area, golf courses, homeowners’ associations and landscape management districts. In Fiscal Year 2012, the City delivered an average of approximately 478,240 million gallons of reclaimed water, or an annual total of approximately 536 acre feet, to such customers.

The reclaimed water produced at the WRF undergoes tertiary treatment and meets health standards for irrigation use pursuant to Chapter 3 of Division 4 of Title 22 of the California Code of Regulations. The City estimates that the delivery of reclaimed water will reduce demand for potable water by approximately 3.2% by 2015.

Historic Reclaimed Water Connections

The City has had 13 reclaimed water connections for each of the past five Fiscal Years.

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Historic Reclaimed Water Deliveries

The following table shows historic reclaimed water deliveries for the last five Fiscal Years. Decreases in reclaimed water deliveries between Fiscal Years 2009 and 2011 reflect a wet hydrological year in Fiscal Year 2010, year-round use of wetting agents and penetrants resulting in reduced irrigation runoff by certain golf course customers and the partial closure of a golf course by one customer.

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Historic Reclaimed Water Deliveries in Acre Feet Per Year

Fiscal Year Deliveries Increase/(Decrease)

2008 625 N/A% 2009 648 3.68 2010 532 (17.90) 2011 476 (10.53) 2012 536 12.61

Source: City.

Historic Reclaimed Water Service Charge Revenues

The following table shows historic reclaimed water service charge revenues for the last five Fiscal Years. Decreases in reclaimed water service charge revenues between Fiscal Years 2009 and 2011 reflect a wet hydrological year in Fiscal Year 2010, year-round use of wetting agents and penetrants resulting in reduced irrigation runoff by certain golf course customers and the partial closure of a golf course by one customer.

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Historic Reclaimed Water Service Charge Revenues

Fiscal Year Reclaimed Water Service

Charge Revenues(1) Increase/(Decrease)

2008 $146,542 N/A% 2009 152,563 4.11 2010 133,816 (12.29) 2011 117,253 (12.38) 2012(2) 128,673 9.74

(1) Historic annual Service Charges and Sale Revenues shown under the caption “WASTEWATER SYSTEM FINANCIAL

INFORMATION—Historic Wastewater System Operating Results and Debt Service Coverage” reflect the reclaimed water service charge revenues in this column plus the total Wastewater System service charge revenues shown under the caption “—Historic Wastewater System Service Charge Revenues.”

(2) Reflects actual unaudited Fiscal Year 2012 results. Source: City.


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Largest Reclaimed Water Service Customers

The following table sets forth the five largest recycled water service customers as of June 30, 2012, as determined by annual payments.

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Top Five Reclaimed Water Service Customers

Type of Business Total Payments

Percent of Total Recycled Water Service

Revenues

Golf Course $ 70,992 55.17% Golf Course 40,402 31.40

Park 4,805 3.73 Hotel 3,502 2.72

Commercial 1,734 1.35 $121,435 94.37%

Source: City.

These five largest customers accounted for approximately 94.37% of total recycled water service charge revenues in Fiscal Year 2012.

Reclaimed Water Rates and Charges

General. City rates and charges for reclaimed water service are set by the City Council and are not subject to the jurisdiction of, or regulation by, the California Public Utilities Commission or any other regulatory body. The City is, however, required to comply with the notice, hearing and majority protest provisions of Article XIIID of the State Constitution, which is popularly known as Proposition 218. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218” for further information with respect to Proposition 218.

Ventura Water staff annually determines the adequacy of the charge structure for reclaimed water service in the service area after full consideration of expected operations, maintenance, capital costs and capital repayment obligations of the reclaimed water system. The City Council currently sets reclaimed water charges at a level that it determines is sufficient to pay all Operation and Maintenance Costs of the reclaimed water system, to pay debt service payments and to maintain appropriate reserves. Current charges include a bimonthly fixed service charge based on meter size and a monthly commodity charge based on usage. See the caption “—Collection Procedures” for further information with respect to the collection of reclaimed water rates and charges.

Reclaimed water revenues comprise a portion of Gross Revenues of the Wastewater System.

Service Charges. On June 4, 2012, the City Council adopted reclaimed water rate adjustments for Fiscal Years 2013 and 2014, respectively, in accordance with Proposition 218. The projected water revenues for Fiscal Years 2013 and 2014 set forth under the caption “WASTEWATER SYSTEM FINANCIAL INFORMATION— Projected Wastewater System Operating Results and Debt Service Coverage” reflect such reclaimed water rate increases. There can be no assurance that the City Council will not repeal or modify such rate increases in the future or that the City’s ratepayers will not approve an initiative to repeal or modify any increase in reclaimed water service rates and charges approved by the City Council.

The projected reclaimed water revenues for Fiscal Years 2015 and thereafter set forth under the caption “WASTEWATER SYSTEM FINANCIAL INFORMATION—Projected Wastewater System

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Operating Results and Debt Service Coverage” assume future reclaimed water rate increases that have not yet been authorized. Such rate increases are subject to the notice, public hearing and protest provisions of Proposition 218. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218.” There can be no assurance that the City Council will adopt such rate increases as currently projected.

The Fiscal Year 2013 reclaimed water commodity rate is $0.64 per unit (equivalent to 100 cubic feet of water, or approximately 748 gallons), rising to $0.68 per unit in Fiscal Year 2014. Reclaimed water bimonthly service charges are as follows:

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM RECLAIMED WATER BIMONTHLY SERVICE CHARGES

Meter Size Fiscal Year 2013 Charges Fiscal Year 2014 Charges

3/4” $ 23.14 $ 25.11 1” 35.34 38.35

1/1/2” 65.86 71.46 2” 102.48 111.20 3” 218.43 237.00 4” 389.31 422.41 6” 798.20 866.05 8” 1,469.52 1,594.43

10” 2,323.92 2,521.46 12” 3,056.26 3,316.05

Source: City.

Rate Comparison. The table below sets forth a comparison of a typical monthly water bill for reclaimed water customers with usage of 2,000 HCF to those of certain nearby water purveyors as of July 1, 2012:

Community Monthly Charge(1)

City of Camarillo $7,060.46 City of Oxnard 5,877.12 City of Moorpark 4,731.42 City of Santa Barbara 4,024.02 Camrosa Water District 1,491.74 City of San Buenaventura Wastewater System 1,382.48

(1) Reflects usage of 2,000 HCF. Source: City.

Projected Reclaimed Water Connections

The City projects that reclaimed water connections will rise to 14 in Fiscal Year 2015 and 15 in Fiscal Year 2017.


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Projected Reclaimed Water Deliveries

The following table shows projected reclaimed water deliveries for the current and next four Fiscal Years.

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Projected Reclaimed Water Deliveries in Acre Feet Per Year

Fiscal Year Deliveries Increase/(Decrease)

2013 476 11.03% 2014 476 0.00 2015 476 0.00 2016 476 0.00 2017 476 0.00

Source: City.

Projected Reclaimed Water Service Charge Revenues

The following table shows projected reclaimed water service charge revenues for the current and next four Fiscal Years.

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Projected Reclaimed Water Service Charge Revenues

Fiscal Year Reclaimed Water Service

Charge Revenues(1) Increase/(Decrease)

2013 $158,481 23.17% 2014 168,978 6.62 2015 177,440 5.01 2016 186,234 4.96 2017 195,028 4.72

(1) Projected annual Service Charges and Sale Revenues shown under the caption “WASTEWATER SYSTEM FINANCIAL

INFORMATION—Projected Wastewater System Operating Results and Debt Service Coverage” reflect the projected reclaimed water service charge revenues in this column plus the projected total Wastewater System service charge revenues shown under the caption “—Projected Wastewater System Service Charge Revenues.”

Source: City.

Projected reclaimed water service charge revenues reflect reclaimed water deliveries described under the caption “—Projected Reclaimed Water Deliveries” as well as rates and charges described under the caption “—Reclaimed Water Rates and Charges.” The projected reclaimed water service charge revenues reflect approved rate increases through Fiscal Year 2014. See the caption “—Reclaimed Water Rates and Charges.” There can be no assurance that the City Council will not repeal or modify such rate increases in the future or that the City’s ratepayers will not approve an initiative to repeal or modify any increase in reclaimed water service rates and charges approved by the City Council.

The projected reclaimed water service charge revenues for Fiscal Years 2015 and thereafter set forth above assume future rate increases that have not yet been authorized. Such rate increases are subject to the notice, public hearing and protest provisions of Proposition 218. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218.” There can be no assurance that the City Council will adopt such rate increases as currently projected.

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WASTEWATER SYSTEM FINANCIAL INFORMATION

Financial Statements

A copy of the most recent audited financial statements of the City (the “Financial Statements”) for the Fiscal Year ending June 30, 2011, prepared by White Nelson Diehl Evans, LLP, Irvine, California (the “Auditor”), are included as Appendix A. The Auditor’s letter dated December 9, 2011 is set forth on Page 1 of the Financial Section thereof. The Financial Statements are public documents and are included within this Official Statement without the prior approval of the Auditor. Accordingly, the Auditor has not performed any post-audit analysis of the financial condition of the City, nor has the Auditor reviewed or audited this Official Statement. The Financial Statements have been prepared on a combined basis and include the Water Fund and the Sewer Fund. The obligation of the City to make payments of principal of and interest on the Bonds is limited to Net Revenues of the Wastewater System and the City is not obligated to apply any other revenues to make such payments.

The summary operating results contained under the caption “—Historic Wastewater System Operating Results and Debt Service Coverage” are derived in part from the Financial Statements and the City’s audited financial statements for prior years (excluding certain non-cash items and after certain other adjustments) and are qualified in their entirety by reference to such statements, including the notes thereto. The Auditor has not reviewed or audited the summary operating results or any other portion of this Official Statement.

Investment of City Funds

The City invests its funds, including the Sewer Fund, in accordance with the City’s Investment Policy (the “Investment Policy”), which was most recently amended on June 18, 2012. In accordance with Section 53600 et seq. of the State Government Code, idle cash management and investment transactions are the responsibility of the City Treasurer. The Investment Policy sets forth the policies and procedures applicable to the investment of City funds and designates eligible investments. The Investment Policy sets forth a stated objective, among others, of insuring the safety of invested funds by limiting credit and interest rate risks. Eligible investments are limited to the Local Agency Investment Fund which is operated by the State Treasurer, United States Treasury obligations with maturities not greater than 5 years, United States government agency securities with maturities not greater than 5 years, FDIC-insured or negotiable certificates of deposit with maturities not greater than 5 years, medium term notes with maturities not greater than 5 years, repurchase agreements, banker’s acceptances and commercial paper rated A1/P1/F1, as applicable, or better, and money market mutual funds. Funds are invested in the following order of priority:

Safety of Principal Liquidity Return of Investment

The City Treasurer is required to provide a quarterly report to the City Manager and the City Council showing the type of investment, date of maturity, amount invested, current market value, rate of interest, and other such information as may be required by the City Council. See Note 2 to the Financial Statements set forth in Appendix A for further information with respect to the City’s investment policies with respect to the Sewer Fund and permitted investments of moneys held under the Indenture.

Wastewater System Reserves

The City maintains a reserve policy for the Wastewater System (the “Reserve Policy”). The Reserve Policy includes an Operating Reserves target of 3 months (or 25%) of Wastewater System operating expenses and a Capital Reserves target of 50% of average annual replacement of Wastewater System assets, gradually increasing to 100% by Fiscal Year 2017. Operating Reserves are intended to provide working capital, allow for unanticipated changes to budgeted expenses and provide adequate cash flow during disasters or other

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emergencies. Capital Reserves are intended to assist in building financial stability to support the Wastewater System’s capital replacement program. The Reserve Policy was adopted by the City Council on February 27, 2012 and is subject to change at any time in the discretion of the City Council. The Indenture does not require the City to maintain Wastewater System reserves.

Prior to the adoption of the Reserve Policy, in Fiscal Years 2007 through 2011, the Wastewater System maintained a Fiscal Year-end average of $ 22,552,898 in cash on hand. As of June 30, 2012, the Wastewater System had approximately $23,099,497 in cash on hand, which is equivalent to approximately 555 days’ Operation and Maintenance Costs of the Wastewater System. See Note 2 to the Financial Statements set forth in Appendix A for further information with respect to the City’s reserves.

Historic Wastewater System Operating Results and Debt Service Coverage

The following table is a summary of operating results of the Wastewater System of the City for the last five Fiscal Years.

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Historic Operating Results (Fiscal Year Ended June 30)

2008 2009 2010 2011 2012(1)

GROSS REVENUES Service Charges and Sale Revenues(2) $ 15,645,814 $ 15,915,512 $ 16,804,801 $ 16,172,837 $ 16,622,639 Transfers In(3) - 109,519 18,690 - - Other Revenues - - 324 4,864 207,662 Investment Income 1,734,356 1,771,660 1,104,443 225,582 262,670 TOTAL GROSS REVENUES $ 17,380,170 $ 17,796,691 $ 17,928,258 $ 16,403,283 $ 17,092,971 OPERATION AND MAINTENANCE COSTS $ 12,488,663 $ 11,775,857 $11,988,224 $ 14,140,212(4) $ 15,863,167(4) NET REVENUES $ 4,891,507 $ 6,020,834 $ 5,940,034 $ 2,263,071 $ 1,229,804 DEBT SERVICE 2004 Certificates $ 1,736,500 $ 1,740,000 $ 1,734,599 $ 1,738,750 $ 1,738,550 TOTAL DEBT SERVICE $ 1,736,500 $ 1,740,000 $ 1,734,599 $ 1,738,750 $ 1,738,550 DEBT SERVICE COVERAGE 2.82 3.46 3.42 1.30 0.71 NET REVENUES AVAILABLE FOR OTHER PURPOSES $ 3,155,007 $ 4,280,834 $ 4,205,435 $ 524,321 $ (508,746)(5)

(1) Reflects unaudited Fiscal Year 2012 results. (2) Reflects wastewater service charges set forth under the caption “THE WASTEWATER SYSTEM—Historic Wastewater System Service

Charge Revenues.” (3) Reflects transfers received from other City funds for services provided by Wastewater System. (4) Increase in Operation and Maintenance Costs in Fiscal Years 2011 and 2012 reflects costs associated with litigation relating to the discharge

of effluent from the WRF to the Estuary. Such litigation was settled through the Settlement Agreement. See the caption “THE WASTEWATER SYSTEM—General.” On June 4, 2012, the City significantly revised its Wastewater System rate structure to ensure sufficient Net Revenues to pay debt service. See the caption “THE WASTEWATER SYSTEM—Wastewater System Rates and Charges.”

(5) Paid from Wastewater System reserves. Source: City.

Projected Wastewater System Operating Results and Debt Service Coverage

The City’s projected operating results for the Wastewater System for the current and next four Fiscal Years are set forth below, reflecting certain significant assumptions concerning future events and circumstances. The financial forecast represents the City’s estimate of projected financial results based upon its judgment of the most probable occurrence of certain important future events and a variety of assumptions, including the assumptions set forth in the footnotes to the chart set forth below. All of such assumptions are

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material in the development of the City’s financial projections, and variations in the assumptions may produce substantially different financial results. Actual operating results achieved during the projection period may vary from those presented in the forecast and such variations may be material.

CITY OF SAN BUENAVENTURA WASTEWATER SYSTEM Projected Operating Results (Fiscal Year Ending June 30)

2013(1) 2014 2015 2016 2017GROSS REVENUES Service Charges and Sale Revenues(2) $17,007,281 $ 18,074,040 $ 19,178,288 $ 20,335,735 $ 21,568,984 Transfers In(3) - - - - - Other Revenues 258,680 258,680 258,680 258,680 258,680 Investment Income(4) 218,199 348,233 358,096 432,396 493,638 TOTAL GROSS REVENUES $ 17,484,160 $ 18,680,953 $ 19,795,064 $ 21,026,811 $ 22,321,302 OPERATION AND MAINTENANCE COSTS(5) $ 16,505,505 $ 15,797,465 $ 16,231,311 $ 16,668,915 $ 17,121,507 NET REVENUES $ 978,655 $ 2,883,488 $ 3,563,753 $ 4,357,896 $ 5,199,795 DEBT SERVICE 2004 Certificates(6) $ 482,806 $ - $ - $ - $ - 2012 Bonds 87,649 1,555,947 1,562,508 1,297,153 1,297,955 2016 Bonds(7) - - - 359,833 538,000 TOTAL DEBT SERVICE $ 570,455 $ 1,555,947 $ 1,562,508 $ 1,656,986 $ 1,835,955 DEBT SERVICE COVERAGE 1.72 1.85 2.28 2.63 2.83 NET REVENUES AVAILABLE FOR OTHER PURPOSES $ 408,200 $ 1,327,541 $ 2,001,245 $ 2,700,910 $ 3,363,840

(1) Reflects budgeted Fiscal Year 2013 amounts with certain adjustments. (2) Reflects projected wastewater service revenues set forth under the caption “THE WASTEWATER SYSTEM—Projected Wastewater

System Service Charge Revenues” as well as rates and charges set forth under the caption “THE WASTEWATER SYSTEM—Wastewater System Rates and Charges.” Assumes implementation of additional rate increases in Fiscal Year 2015 and thereafter that have not yet been authorized. Such rate increases are subject to the notice, public hearing and protest provisions of Proposition 218. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218.” There can be no assurance that the City Council will adopt such rate increases as currently projected.

(3) Reflects transfers received from other City funds for services provided by Wastewater System. (4) Based on City projections of income on Wastewater System reserves and other available Wastewater System moneys. (5) Projected to decrease approximately 4% from Fiscal Year 2013 budgeted amount in Fiscal Year 2014 and to increase approximately 2.7%

per annum thereafter. (6) Reflects refunding of all outstanding 2004 Certificates from proceeds of the 2012 Bonds. See the caption “REFUNDING PLAN.” (7) Reflects payments on 2016 Bonds in projected principal amount of $8,000,000 and at projected all-in true interest cost of 5.00% per annum.

See the caption “THE WASTEWATER SYSTEM—Future Wastewater System and Recycled Water System Improvements.” Source: City.

CERTAIN RISKS TO BONDHOLDERS

The following information should be considered by prospective investors in evaluating the Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations may be relevant to making an investment decision with respect to the Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks.

Limited Obligations

The obligation of the City to pay the Bonds is a limited obligation of the City and is not secured by a legal or equitable pledge or charge or lien upon any property of the City or any of its income or receipts, except the Net Revenues of the Wastewater System. The obligation of the City to pay the Bonds does not

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constitute an obligation of the City to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation.

Accuracy of Assumptions

To estimate the revenues available to pay debt service on the Bonds, the City has made certain assumptions with regard to the rates and charges to be imposed in future years, the expenses associated with operating the Wastewater System and the interest rate at which funds will be invested. The City believes these assumptions to be reasonable, but to the extent that any of these assumptions fail to materialize, the Net Revenues available to pay debt service on the Bonds will, in all likelihood, be less than those projected herein. See the caption “WASTEWATER SYSTEM FINANCIAL INFORMATION—Projected Wastewater System Operating Results and Debt Service Coverage.” The City may choose, however, to maintain compliance with the rate covenant set forth in the Indenture in part by means of contributions from available reserves or resources. In such event, Net Revenues may generate amounts which are less than 1.20 times the principal of and interest on the outstanding Bonds and the Parity Debt in any given Fiscal Year. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Rate Covenant.”

Wastewater System Demand

There can be no assurance that the demand for wastewater services and recycled water will occur as described in this Official Statement. Reduction in levels of demand could require an increase in rates or charges in order to comply with the rate covenant. Demand for wastewater services could be reduced as a result of reduced levels of development in the Wastewater System service area or other factors and demand for recycled water could be reduced as a result of wet hydrological years, technical improvements relating to water retention on golf courses and other irrigated areas or the suspension of business by recycled water customers.

Wastewater System Expenses

There can be no assurance that the City’s expenses will be consistent with the descriptions in this Official Statement. Wastewater System Operation and Maintenance Costs may vary with labor costs (including costs related to pension liabilities), treatment costs, regulatory compliance costs and other factors. Increases in expenses could require an increase in rates or charges in order to comply with the rate covenant and generate sufficient Net Revenues to pay debt service on the Bonds.

Limited Recourse on Default

If the City defaults on its obligation to pay principal of and interest on the Bonds, the Trustee has the right to declare the total unpaid principal, together with the accrued interest thereon, to be immediately due and payable. Parity Debt owners may have similar rights. However, in the event of a default and such acceleration there can be no assurance that the City will have sufficient funds to pay the accelerated amounts due on the Bonds and any Parity Debt from Net Revenues.

Rate-Setting Process under Proposition 218

Proposition 218, which added Articles XIIIC and XIIID to the State Constitution, affects the City’s ability to maintain existing rates and impose rate increases, and no assurance can be given that future rate increases will not encounter majority protest opposition or be challenged by initiative action authorized under Proposition 218. In the event that future proposed rate increases cannot be imposed as a result of majority protest or initiative, the City might thereafter be unable to generate Net Revenues in the amounts required by the Indenture to pay the Bonds. The City believes that the current wastewater rates approved by the City Council were effected under the public hearing and majority protest provisions of Proposition 218. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES.”

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Statutory and Regulatory Compliance

Laws and regulations governing treatment and disposal of wastewater are enacted and promulgated by federal, State and local government agencies. Compliance with these laws and regulations is and will continue to be costly, and, as more stringent standards are developed, such costs will likely increase.

Claims against the Wastewater System for failure to comply with applicable laws and regulations could be significant. Such claims may be payable from assets of the Wastewater System comprising Operation and Maintenance Costs or from other legally available sources. In addition to claims by private parties, changes in the scope and standards for public agency wastewater systems such as that operated by the City may also lead to administrative orders issued by federal or State regulators. Future compliance with such orders can also impose substantial additional costs on the City. No assurance can be given that the cost of compliance with such laws, regulations and orders would not adversely affect the ability of the City to generate Net Revenues sufficient to pay the Bonds.

Natural Disasters

The occurrence of any natural disaster in the City, including, without limitation, fire, earthquake or flood, could result in substantial damage to and interference with the operations of the Wastewater System and have an adverse material impact on the economy within the City, its Sewer Fund and the revenues available for the payment of the Bonds. Portions of the Wastewater System may be subject to unpredictable seismic activity. Four known active or potentially active faults (the Ventura, Oak Ridge, Red Mountain and Country Club faults) are located within the City. To date, only the Ventura fault has been designated active by the State Department of Mining and Geology within City limits. The Indenture does not require the City to maintain earthquake insurance.

The City maintains liability insurance for the Wastewater System and property casualty insurance (for losses other than from seismic events) for certain portions of the Wastewater System, including the WRF. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Insurance.” However, there can be no assurance that specific losses will be covered by insurance or, if covered, that claims will be paid in full by the applicable insurers. Furthermore, as described under the caption “THE WASTEWATER SYSTEM—Wastewater System Insurance,” significant portions of the Wastewater System, including wastewater and recycled water pipelines, are not covered by property casualty insurance. Damage to such portions of the Wastewater System as a result of natural disasters would result in uninsured losses to the City.

Limitations on Remedies

The ability of the City to comply with its covenants under the Indenture and to generate Net Revenues sufficient to pay principal of and interest with respect to the Bonds may be adversely affected by actions and events outside of the control of the City and may be adversely affected by actions taken (or not taken) by voters, property owners, taxpayers or persons obligated to pay assessments, fees and charges. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218.” Furthermore, the remedies available to the owners of the Bonds upon the occurrence of an event of default under the Indenture are in many respects dependent upon judicial actions which are often subject to discretion and delay and could prove both expensive and time consuming to obtain.

In addition, usual equity principles may limit the specific enforcement under State law of certain remedies, as may the exercise by the United States of America of the powers delegated to it by the federal Constitution, and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or State government, if initiated, could subject the owners of the Bonds to judicial discretion and interpretation of their

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rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitations, or modification of their rights. Remedies may be limited because the Wastewater System serves an essential public purpose.

In addition to the limitations on remedies contained in the Indenture, the rights and obligations under the Indenture may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against cities in the State. The opinion to be delivered by Bond Counsel concurrently with the execution and delivery of the Bonds will be subject to such limitations and the various other legal opinions to be delivered concurrently with the issuance of the Bonds will be similarly qualified. See Appendix C—“FORMS OF OPINIONS OF BOND COUNSEL.” In the event that the City fails to comply with its covenants under the Indenture or fails to pay principal of and interest with respect to the Bonds, there can be no assurance of the availability of remedies adequate to protect the interest of the holders of the Bonds.

Loss of Tax Exemption

In order to maintain the exclusion from gross income for federal income tax purposes of interest on the Series B Bonds, the City has covenanted in the Installment Purchase Agreement to comply with the applicable requirements of the Internal Revenue Code of 1986, as amended, and not to take any action or fail to take any action if such action or failure to take such action would adversely affect the exclusion from gross income of interest on the Series B Bonds thereunder. Interest on the Series B Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of issuance of such Series B Bonds as a result of acts or omissions of the City in violation of this or other covenants in the Indenture applicable to the Series B Bonds. The Series B Bonds are not subject to redemption or any increase in interest rates should an event of taxability occur and will remain outstanding until maturity or prior redemption in accordance with the provisions contained in the Indenture. See the caption “TAX MATTERS.”

The Internal Revenue Service (the “IRS”) has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Series B Bonds will be selected for audit by the IRS. It is also possible that the market value of the Series B Bonds might be affected as a result of such an audit of the Series B Bonds (or by an audit of similar obligations).

Secondary Market

There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that the Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price.

Parity Obligations

The Indenture permits the City to enter into additional Parity Debt payable from Net Revenues of the Wastewater System on a parity with the Bonds, subject to the terms and conditions set forth therein. The entry into of additional Parity Debt could result in reduced Net Revenues available to pay the principal of and interest on the Bonds. The City has covenanted to maintain coverage of 120% on the Bonds and all Parity Debt, as further described under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Additional Obligations—Issuance of Parity Debt.”

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CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES

Article XIIIB

Article XIIIB of the State Constitution limits the annual appropriations of the State and of any district, county, school district, corporation or other political subdivision of the State to the level of appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living and population. The “base year” for establishing such appropriation limit is the 1978-1979 State fiscal year and the limit is to be adjusted annually to reflect changes in population and consumer prices. Adjustments in the appropriations limit of an entity may also be made if: (a) the financial responsibility for a service is transferred to another public entity or to a private entity; (b) the financial source for the provision of services is transferred from taxes to other revenues; or (c) the voters of the entity approve a change in the limit for a period of time not to exceed four years.

Appropriations subject to Article XIIIB generally include the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions and refunds of taxes. “Proceeds of taxes” include, but are not limited to, all tax revenues and the proceeds to an entity of government from: (i) regulatory licenses, user charges, and user fees (but only to the extent that such proceeds exceed the cost of providing the service or regulation); and (ii) the investment of tax revenues. Article XIIIB includes a requirement that if an entity’s revenues in any year exceed the amounts permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years.

Certain expenditures are excluded from the appropriations limit, including payments of indebtedness existing or legally authorized as of January 1, 1979, or of bonded indebtedness thereafter approved by the voters and payments required to comply with court or federal mandates which without discretion require an expenditure for additional services or which unavoidably make the provision of existing services more costly.

The City is of the opinion that its charges for wastewater service do not exceed the costs it reasonably bears in providing such service and therefore are not subject to the limits of Article XIIIB. The City has covenanted in the Indenture to fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Wastewater System during each Fiscal Year which (together with existing unreserved, unrestricted working capital balances in the Wastewater Fund, and taking into account allowances for contingencies), are sufficient to yield estimated Net Revenues at least equal to 120% of the aggregate amount of principal of and interest on the outstanding Bonds and the Parity Debt coming due and payable during such Fiscal Year. See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Rate Covenant.”

Proposition 218

General. An initiative measure entitled the “Right to Vote on Taxes Act” (the “Initiative”) was approved by the voters of the State at the November 5, 1996 general election. The Initiative added Article XIIIC and Article XIIID to the State Constitution. According to the “Title and Summary” of the Initiative prepared by the State Attorney General, the Initiative limits “the authority of local governments to impose taxes and property-related assessments, fees and charges.”

Article XIIID. Article XIIID defines the terms “fee” and “charge” to mean “any levy other than an ad valorem tax, a special tax or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including user fees or charges for a property-related service.” A “property-related service” is defined as “a public service having a direct relationship to property ownership.” Article XIIID further provides that reliance by an agency on any parcel map (including an assessor’s parcel map) may be considered a significant factor in determining whether a fee or charge is imposed as an incident of property ownership.

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Article XIIID requires that any agency imposing or increasing any property-related fee or charge must provide written notice thereof to the record owner of each identified parcel upon which such fee or charge is to be imposed and must conduct a public hearing with respect thereto. The proposed fee or charge may not be imposed or increased if a majority of owners of the identified parcels file written protests against it. As a result, if and to the extent that a fee or charge imposed by a local government for water or wastewater service is ultimately determined to be a “fee” or “charge” as defined in Article XIIID, the local government’s ability to increase such fee or charge may be limited by a majority protest.

In addition, Article XIIID contains a number of limitations applicable to existing fees and charges, including provisions to the effect that: (a) revenues derived from the fee or charge may not exceed the funds required to provide the property-related service; (b) such revenues may not be used for any purpose other than that for which the fee or charge was imposed; (c) the amount of a fee or charge imposed upon any parcel or person as an incident of property ownership may not exceed the proportional cost of the service attributable to the parcel; and (d) no such fee or charge may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question. Property-related fees or charges based on potential or future use of a service are not permitted.

Based upon the California Court of Appeal decision in Howard Jarvis Taxpayers Association v. City of Los Angeles, 85 Cal. App. 4th 79 (2000), which was denied review by the State Supreme Court, it was generally believed that Article XIIID did not apply to charges for water or wastewater services that are “primarily based on the amount consumed” (i.e., metered water rates), which had been held to be commodity charges related to consumption of the service, not property ownership. The State Supreme Court stated in Bighorn-Desert View Water Agency v. Verjil, 39 Cal. 4th 205 (2006) (the “Bighorn Case”), however, that fees for ongoing water service through an existing connection were property-related fees and charges. The State Supreme Court specifically disapproved the holding in Howard Jarvis Taxpayers Association v. City of Los Angeles that metered water rates are not subject to Proposition 218. The City has complied with the notice and public hearing requirements of Article XIIID in determining whether to change Wastewater System rates and charges since its first post-Bighorn Case rate increase in 2006.

Article XIIIC. Article XIIIC provides that the initiative power may not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge and that the power of initiative to affect local taxes, assessments, fees and charges is applicable to all local governments. Article XIIIC does not define the terms “local tax,” “assessment,” “fee” or “charge,” so it was unclear whether the definitions set forth in Article XIIID referred to above are applicable to Article XIIIC. Moreover, the provisions of Article XIIIC are not expressly limited to local taxes, assessments, fees and charges imposed after November 6, 1996. On July 24, 2006, the State Supreme Court held in the Bighorn Case that the provisions of Article XIIIC included rates and fees charged for domestic water use. In its ruling, the State Supreme Court noted that the decision did not address whether an initiative to reduce fees and charges could override statutory rate setting obligations. In any event, the City does not believe that Article XIIIC grants to the voters within the City the power to repeal or reduce rates and charges for the wastewater service provided by the Wastewater System in a manner which would be inconsistent with the contractual obligations of the City. However, there can be no assurance of the availability of particular remedies adequate to protect the Beneficial Owners of the Bonds. Remedies available to Beneficial Owners of the Bonds in the event of a default by the City are dependent upon judicial actions which are often subject to discretion and delay and could prove both expensive and time-consuming to obtain. So long as the Bonds are held in book-entry form, DTC (or its nominee) will be the sole registered owner of the Bonds and the rights and remedies of the Bond Owners will be exercised through the procedures of DTC.

In addition to the specific limitations on remedies contained in the applicable documents themselves, the rights and obligations with respect to the Bonds and the Indenture are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, and to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State. The various

42

opinions of counsel to be delivered with respect to such documents, including the opinions of Bond Counsel (the forms of which are attached as Appendix C), will be similarly qualified.

Future Initiatives

Articles XIIIB, XIIIC and XIIID were adopted as a measure that qualified for the ballot pursuant to the State’s initiative process. From time to time other initiatives could be proposed and adopted that affect the City’s revenues or ability to increase revenues.

TAX MATTERS

Federal Tax Status of Series B Bonds

In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Series B Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings.

The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Tax Code”) that must be satisfied subsequent to the issuance of the Series B Bonds. The City has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the Series B Bonds.

Federal Tax Status of Series A Bonds

The City has determined that interest on the Series A Bonds is not excluded from gross income for federal income tax purposes under the Tax Code.

California Tax Status

In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes.

Tax Treatment of Original Issue Discount and Premium

If the initial offering price to the public (excluding bond houses and brokers) at which a Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public (excluding bond houses and brokers) at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “original issue premium” for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium is disregarded.

Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond.

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The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Bonds under federal individual and corporate alternative minimum taxes.

Under the Tax Code, original issue premium is amortized on an annual basis over the term of the Bond (said term being the shorter of the Bond’s maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Bonds.

Other Tax Considerations

Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Bonds other than as expressly described above.

Circular 230 Disclaimer

To ensure compliance with requirements imposed by the Internal Revenue Service, Bond Counsel informs owners of the Bonds that any U.S. federal tax advice contained in this Official Statement (including any attachments) (a) was not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer and (b) was written to support the promotion or marketing of the Bonds. Each taxpayer should seek advice based on that taxpayer’s particular circumstances from an independent tax advisor.

Form of Opinions

A copy of the proposed opinions of Bond Counsel relating to each series of the Bonds are attached hereto as Appendix C.

CERTAIN LEGAL MATTERS

The Bonds are offered when, as and if issued and received by the Underwriter, subject to approval as to the valid, legal and binding nature of the Bonds by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. Certain legal matters will be passed upon for the City by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, acting as Disclosure Counsel. In addition, certain legal matters will be passed upon for the City by the City Attorney and for the Trustee by its counsel. The Underwriter was represented by its counsel, Greenberg Traurig LLP, Phoenix, Arizona (“Underwriter’s Counsel”). Payment of the fees and expenses of Bond Counsel, Disclosure Counsel and Underwriter’s Counsel is contingent upon the issuance of the Bonds.

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LITIGATION

At the time of delivery of and payment for the Bonds, the City will certify that there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, pending or, to the knowledge of the City, threatened against the City affecting the existence of the City or the titles of its directors or officers to their respective offices or seeking to restrain or to enjoin the sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture, or in any way contesting or affecting the validity or enforceability of the Bonds, the Indenture or any action of the City contemplated by any of said documents, or in any way contesting the completeness or accuracy of this Official Statement or any amendment or supplement thereto, or contesting the powers of the City or its authority with respect to the Bonds or any action of the City contemplated by any of said documents, nor to the knowledge of the City, is there any basis therefor.

RATING

The City expects that Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business (“S&P”), will assign the Bonds the rating of “AA-”. There is no assurance that any credit rating given to the Bonds will be maintained for any period of time or that the rating may not be lowered or withdrawn entirely by S&P if, in the judgment of S&P, circumstances so warrant. Any downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds. Such rating reflects only the views of S&P and an explanation of the significance of such rating may be obtained from S&P.

UNDERWRITING

The Bonds will be purchased by First Southwest Company (the “Underwriter”) pursuant to a Bond Purchase Agreement, dated November 2, 2012 (the “Purchase Agreement”), by and between the City and the Underwriter, pursuant to which the Underwriter has agreed to purchase all, but not less than all, of the $18,475,000 aggregate principal amount of the Bonds at a purchase price of $19,943,705.90 (being the aggregate principal amount thereof plus a net original issue premium of $1,598,030.90 and less an Underwriter’s discount of $129,325.00). The obligation to make such purchase is subject to certain terms and conditions set forth in the Purchase Agreement, the approval of certain legal matters by counsel, and certain other conditions.

The initial public offering prices stated on the inside front cover of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into investment trusts), dealer banks, banks acting as agents and others at prices lower than said public offering prices.

CONTINUING DISCLOSURE

The City has covenanted in a Continuing Disclosure Certificate for the benefit of the holders and Beneficial Owners of the Bonds to provide certain financial information and operating data relating to the City by 270 days following the end of the City’s Fiscal Year (currently its Fiscal Year ends on June 30) (the “Annual Report”), commencing with the report for Fiscal Year ending June 30, 2012, and to provide notices of the occurrence of certain enumerated events. The Annual Report and the notices of enumerated events will be filed by the City with EMMA. The specific nature of the information to be contained in the Annual Report and the notice of material events is set forth in Appendix D—“FORM OF CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made in order to assist the Underwriter in complying with Rule 15c2 12(b)(5) promulgated under the Securities Exchange Act of 1934. The City filed its audited financial statements for Fiscal Year 2009 after the time by which filing was required to be made pursuant to previous continuing disclosure undertakings of the City. Other than as set forth in the previous sentence, the City has not previously failed to comply with any previous continuing disclosure undertaking in any material respect in the last five years.

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ADDITIONAL INFORMATION

The summaries or references to the Indenture and other documents, agreements and statutes referred to herein, and the description of the Bonds included in this Official Statement, do not purport to be comprehensive or definitive, and such summaries, references and descriptions are qualified in their entireties by reference to each such document or statute.

Insofar as any statements made in this Official Statement involve matters of opinion or of estimates, whether or not expressly stated, they are set forth as such and not as representations of fact. No representation is made that any of the statements will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the owners of the Bonds.

During the initial offering period for the Bonds, copies of the Indenture may be obtained, upon written request, from the City.

The execution and delivery of this Official Statement have been duly authorized by the City Council of the City.


By: /s/ Johnny Johnston Interim City Manager

APPENDIX A

AUDITED FINANCIAL STATEMENTS

Year Ended June 30

C O M P R E H E N S I V E A N N U A L

F i n a n c i a l R e p o r t

C A L I F O R N I A

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2011

A.J. GEBHART

Year Ended June 30


F i n a n c i a l R e p o r t

C A L I F O R N I A

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2011

A.J. GEBHART

Jay Panzica, Chief Financial Officer


Year Ended June 30

Financial Report 2011

Introductory Section

City of San Buenaventura Comprehensive Annual Financial Report For the year ended June 30, 2011 Table of Contents

INTRODUCTORY SECTION Page Title Page Table of Contents .................................................................................................................................................... i Letter of Transmittal ............................................................................................................................................. v GFOA Certificate of Achievement for Excellence in Financial Reporting.................................................... ix Directory of City Officials .................................................................................................................................... x Organizational Structure ..................................................................................................................................... xi FINANCIAL SECTION Independent Auditor’s Report ........................................................................................................................... 1 Management’s Discussion and Analysis (unaudited) ................................................................................... 3 Basic Financial Statements: Government-Wide Financial Statements:

Statement of Net Assets ........................................................................................................................ 17 Statement of Activities .......................................................................................................................... 18 Fund Financial Statements: Governmental Fund Financial Statements:

Balance Sheet ................................................................................................................................... 20

Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets .............................................................. 22

Statement of Revenues, Expenditures and Changes in Fund Balances .................................. 23

Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities ................ 25

Proprietary Fund Financial Statements: Statement of Net Assets ................................................................................................................. 26 Statement of Revenues, Expenses and Changes in Net Assets ................................................ 27 Statement of Cash Flows ................................................................................................................ 28

Fiduciary Fund Financial Statements: Statement of Fiduciary Assets and Liabilities ............................................................................. 29

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FINANCIAL SECTION, Continued Page Basic Financial Statements, Continued:

Index to the Notes to the Basic Financial Statements ............................................................................. 30 Notes to the Basic Financial Statements ................................................................................................... 32

Required Supplementary Information (unaudited): Budgetary Information ................................................................................................................................ 79

General Fund .......................................................................................................................................... 80 Gas Tax Special Revenue Fund ........................................................................................................... 81 Park and Recreation Special Revenue Fund ...................................................................................... 82

Schedule of Funding Progress - Defined Benefit Pension Plan ............................................................. 83

Supplementary Information:

Major Governmental Funds: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: Certificates of Participation Debt Obligation Debt Service Fund ................................................... 84

Non-Major Governmental Funds: Combining Balance Sheet ..................................................................................................................... 85 Combining Statement of Revenues, Expenditures and Changes in Fund Balances .................... 87

Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual:

Supplemental Law Enforcement Services Special Revenue Fund ........................................... 89 Law Enforcement Special Revenue Fund .................................................................................... 90 Public Art Special Revenue Fund ................................................................................................. 91 Downtown Parking Special Revenue Fund ................................................................................ 92 Maintenance Assessment District Special Revenue Fund ........................................................ 93 Street Lighting Special Revenue Fund ......................................................................................... 94 Municipal Improvement Revenue Bonds Debt Service Fund .................................................. 95 Redevelopment Agency Debt Service Fund ............................................................................... 96 Internal Service Funds: Combining Statement of Net Assets ................................................................................................... 97 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets ....................... 99 Combining Statement of Cash Flows ................................................................................................. 101

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City of San Buenaventura Comprehensive Annual Financial Report For the year ended June 30, 2010 Table of Contents, Continued

FINANCIAL SECTION, Continued Page Basic Financial Statements, Continued:

Fiduciary Funds: Combining Statement of Fiduciary Assets and Liabilities .............................................................. 103 Combining Statement of Changes in Assets and Liabilities............................................................ 104

STATISTICAL SECTION (unaudited)

Index to the Statistical Section .................................................................................................................... 105

Statistical Section:

Financial Trends

A. Net Assets by Component – Last Nine Fiscal Years ................................................................... 107 B. Changes in Net Assets – Last Nine Fiscal Years ......................................................................... 109 C. Fund Balances of Governmental Funds – Last Nine Fiscal Years ........................................... 113 D. Changes in Fund Balances of Governmental Funds – Last Nine Fiscal Years ...................... 115

Revenue Capacity

A. Assessed Value and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years . 117 B. Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years ....................................... 118 C. Principal Property Taxpayers – Current Year and Ten Years Ago ........................................... 120 D. Property Tax Levies and Collections – Last Ten Fiscal Years ................................................... 121

Debt Capacity

A. Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ................................................... 122 B. Direct and Overlapping Debt – June 30, 2011 .............................................................................. 124 C. Legal Debt Margin Information – Last Ten Fiscal Years ............................................................ 125 D. Pledged Wastewater and Tax Allocation Revenue Coverage – Last Ten Fiscal Years .......... 126 E. Pledged Water Revenue Coverage – Last Ten Fiscal Years ....................................................... 127

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STATISTICAL SECTION (unaudited) Page Statistical Section, Continued:

Demographic and Economic Information

A. Demographic and Economic Statistics – Last Ten Calendar Years .......................................... 128 B. Full-Time City Employees by Function – Last Ten Fiscal Years ............................................... 129 C. Principal Employers – Current Year and Ten Years Ago .......................................................... 130 D. Investment Portfolio Statistics – Last Ten Fiscal Years .............................................................. 131

Operating Information

A. Operating Indicators by Function – Last Ten Fiscal Years ........................................................ 132 B. Capital Assets Statistics by Function – Last Ten Fiscal Years .................................................... 133 C. Wastewater Service Rates – Last Ten Fiscal Years ...................................................................... 134 D. Wastewater Customers – Current Year and Eight Years Ago .................................................. 135 E. Water Sold by Type of Customer – Last Ten Fiscal Years .......................................................... 136 F. Water Rates – Last Ten Fiscal Years .............................................................................................. 137 G. Water Customers – Current Year and Eight Years Ago ............................................................ 138

ANNUAL CONTINUING DISCLOSURE REQUIREMENTS SECTION (unaudited):

A. Public Facilities Financing Authority – Summary of Certificates of Participation ................ 139 B. 2002 COP, Series D – Buenaventura and Olivas Links Historic Operating Results .............. 140 C. 2004 COP, Wastewater Revenue – Historic Operating Results ............................................... 142 D. 2004 COP, Wastewater Revenue – Historic Usage, Connections, and Flow Charges .......... 143 E. 2004 COP, Wastewater Revenue – Top Ten Customers ............................................................ 144 F. 2004 COP, Water Revenue – Historic Operating Results .......................................................... 145 G. 2004 COP, Water Revenue – Historic and Projected Water Supply. ........................................ 146 H. 2004 COP, Water Revenue – Historic Service Charges and Sales Revenues .......................... 147 I. 2004 COP, Water Revenue – Top Ten Customers ...................................................................... 148 J. 2004 COPs, Water and Wastewater – Utility Rates .................................................................... 149

K. Employee Relations and Collective Bargaining…………………………………………..……150

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501 Poli Street • P. O. Box 99 • Ventura, California 93002-0099 • 805.654.7800 • cityofventura.netPrinted on 100% post consumer waste

December 12, 2011 Honorable Mayor and City Councilmembers, and the Citizens of the City of San Buenaventura: City policy requires the annual publication of a complete set of audited financial statements. This Comprehensive Annual Financial Report (CAFR) is published to fulfill that requirement for the fiscal year ended June 30, 2011. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal controls that it has established for this purpose. Because the cost of internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements by reviewing each of the following categories:

Achievement of business objectives and goals Effectiveness and efficiency of operations Reliability of financial reporting Compliance with applicable laws and regulations Safeguarding of assets

White Nelson Diehl Evans LLP has issued an unqualified (“clean”) opinion on the City’s financial statements for the year ended June 30, 2011. The independent auditor’s report is located at the front of the financial section of this report. The Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. Profile of the Government The City of San Buenaventura, generally referred to as the City of Ventura, is located on the southern California coastline, approximately 62 miles northwest of the City of Los Angeles and 364 miles south of the City of San Francisco. The city limits cover approximately 33 square miles. The City was incorporated in 1866 and has been the County seat since 1873. The City is a charter city with a council-manager form of government. A seven-member City Council is elected at large for four-year alternating terms at elections held every two years. The Mayor of the City is the presiding officer of the City Council and is selected by the City Council from its members to serve a two-year term. The City Manager, appointed by the City Council for an indeterminate term, acts as chief executive officer in carrying out the policies of the City Council. The City’s first charter was adopted in 1932. The present charter was adopted by election on November 6, 1973, and approved by the California legislature in January 1974 and was amended on November 7, 1995. With 595 full time employee positions authorized in the FY 2010-11 citywide budget, the City provides a full range of services, including public safety (law enforcement and fire protection), public works, community development, community recreational services, and general government (finance, technology, purchasing, legal, licensing and code enforcement). In addition, enterprise funds account for the operations of two municipal golf courses and water/wastewater services. The Council is required to adopt a final budget by no later than the close of the fiscal year. The annual budget serves as the foundation for the City’s financial planning and control. The annual

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budget is prepared and organized by fund, department, and project. City department heads may make transfers within their department; however, all transfers over $50,000 are reported to City Council. All transfers between departments require approval of the City Council. Local Economy The City’s ongoing commitment to an economic development strategy continues to achieve results with an emphasis on generating both private and public sector value, both of which build community stability and wealth. The City’s revenue base is a blend of business and commercial, light and heavy industrial and residential uses. The City’s economy revolves chiefly around the County government facilities, financial services, retail operations, and a well-developed food processing industry. Government services employ over 12 thousand workers, providing relative stability to the City's employment base. In July 2011, the Los Angeles Economic Development Corporation (LAEDC) issued its 2011-2012 Mid-Year Economic Forecast & Industry Outlook, with a section devoted to Ventura County. In summary, the LAEDC noted that “a stable economic plateau and visible underlying improvement in many sectors is now here.” It went on to say that Ventura County is expanding at a rate similar to other counties surrounding Los Angeles such as San Diego and Orange Counties. On the plus side, a significant portion of Ventura County’s revenue is related to agriculture, and fortunately this industry continues to record good growth. In addition, the leisure & hospitality and professional & business services industries in Ventura have been supplying 2/3 of the job growth this year. Government employment in Ventura County has been stable, and the City of Ventura, as the hub of Ventura government has benefited from this stability in employment and the related flow of income. As a result of these observations, the decline in sales tax revenue for the City of Ventura has stopped and actually turned around. Recent forecasts reflect an improvement in sales tax revenue and the FY 2011-12 City of Ventura budget reflects this expected improvement. On the minus side, new home building and used home sales have fallen to very low levels. The LAEDC has attributed this decline to high employment and tighter lending standards, which have combined to drive home prices downward, and has “sidelined many buyers.” Recent information from the Ventura County tax records confirms the drop in home values and has resulted in a decrease in property tax revenue to the City. The City of Ventura FY 2011-12 budget reflects this expected decrease. A review of Ventura County Economic Indicators shows that 1) The forecast unemployment rate for FY 2011 of 10.2% is expected to drop to 9.6% in FY 2012, 2) The forecast total personal Income for FY 2011 of $39.4 billion is expected to grow to $41.4 bill, and 3) The forecast taxable retail sales of $8.2 billion is expected to grow to $8.8 billion. Based on forecasts such as those just mentioned, the City is expecting no significant change in its overall revenue levels and corresponding service levels as it moves into the FY 2011-12 fiscal year. The level of taxes, fees, and charges for services (including development-related mitigation fees) will have a bearing on the City's competitive ability to encourage retail, office, residential, and industrial development to locate within the jurisdiction. The City places significant emphasis on encouraging economic development with higher paying jobs. In addition to community-related economics, i.e., business, employment, and real estate indices, the City’s finances and operations are directly impacted by national and regional economic trends. In October 2011, Bloomberg provided a U.S. Economic Forecast that surveyed 80 Economists

vi

nationwide. The result shows that the fed funds rate projection remains as reported in recent quarters, i.e.: that rates will remain constant at 0.25% with no projected increase through the 2nd quarter of 2013. This means the market anticipates the Federal Reserve will continue to keep its overnight fed funds rate low with the intent of stimulating the economy. This has two impacts on the City of Ventura: The first is that interest earnings on the City’s portfolio for the balance of 2011 through 2012 are expected to be historically low. This continuing multi-year decrease in market rate returns for allowable investments has resulted in the city’s effective rate of return on its investment portfolio being 1.61 percent for the fiscal year ended June 30, 2011. This represents, a decrease from the prior year’s return of 2.09 percent. The second is that any new financing the city may pursue could also be at historically low rates. Although not currently planned for the General Fund, outside funding may be sought by the City’s Enterprise Funds in the next few years. Long-Term Financial Planning The City will continue with the projects identified in the six-year Capital Improvement Projects Plan. Major projects include the following:

Enterprise Funds Wastewater Planet Electrical Switchgear Replacement $3.5 M Saticoy Well #3 $3.2 M Waterline Replacement – Harbor Blvd. $2.8 M Waterline Replacement – Fairview Neighborhood $2.9 M

Public Works

Annual Street Maintenance $9.8 M Callens Rd Replacement $2.1 M Highway 126/Harmon Barranca Bike Path Connection $1.9 M Beach Water Quality Improvement $0.8 M

Relevant Financial Policies The general fund maintains $12 million committed for contingencies per the City’s financial policies. In addition, it is the City’s policy to ensure that adequate sustainable long-term revenues are available to support any new debt issues. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its CAFR for the fiscal year ended June 30, 2010. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a governmental unit must have published an easily readable and efficiently organized CAFR, whose contents conform to program standards. The Comprehensive Annual Financial Report must satisfy both generally accepted accounting principles and applicable legal requirements.

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The Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to program requirements and will be submitted to the GFOA. I would like to thank the management and staff of the Finance and Technology Department for their contributions to the preparation of this year’s CAFR. In addition, I would like to thank the staff of White Nelson Diehl Evans LLP, the City’s independent auditors, for their proactive assistance and advice during their first year of service providing the City’s audit needs. In addition, the City Manager is to be commended for his interest in the Finance and Technology Department’s progress in building the City’s financial systems to support daily operations and allow for new opportunities. The CAFR is available in the City Council’s reading file as well as on the City’s website. Respectfully submitted,

Jay Panzica Chief Financial Officer

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Year Ended June 30


DIRECTORY OF

CITY OFFICIALS

Bill Fulton Mayor

Mike Tracy James L. Monahan Deputy Mayor Councilmember

Neal Andrews Carl E. Morehouse Councilmember Councilmember

Brian Brennan Christy Weir Councilmember Councilmember

Rick Cole City Manager

Mabi Plisky Interim Deputy City Manager

Elaine Preston Jay Panzica Kevin Rennie Jeffrey Lambert Interim City Clerk Chief Financial Officer Fire Chief Community Development Director

Ken Corney Elena Brokaw Rick Raives Jenny Roney Police Chief Parks, Recreation & Public Works Human Resources Community Partnerships Director Director Director

Ariel Calonne Shana Epstein City Attorney Ventura Water General Manager


Year Ended June 30


x

ORGANIZATIONAL STRUCTURE

City Council

City Attorney

City Manager

Community DevelopmentDepartment

Parks, Recreation & Community Partnerships

FireDepartment

HumanResourcesDepartment

Finance & TechnologyDepartment

PoliceDepartment

Public Works

Department

Agency & Committees

F inancial Report 2011

Ventura Water

xi


Year Ended June 30


Financial Section

2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893

Offices located in Orange and San Diego Counties

INDEPENDENT AUDITORS’ REPORT City Council Members City of San Buenaventura San Buenaventura, California We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of San Buenaventura, as of and for the year ended June 30, 2011, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of San Buenaventura’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of San Buenaventura, as of June 30, 2011, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As explained further in Note 21, the California State Legislature has enacted legislation that is intended to provide for the dissolution of redevelopment agencies in the State of California. The effects of this legislation are uncertain pending the result of certain lawsuits that have been initiated to challenge the constitutionality of this legislation. In accordance with Government Auditing Standards, we have also issued our report dated December 9, 2011 on our consideration of the City of San Buenaventura’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

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The management’s discussion and analysis, the schedules of funding progress and budgetary comparison schedules, as listed in the table of contents as required supplementary information, are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. This information is an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the management’s discussion and analysis and the schedules of funding progress in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during the audit of the basic financial statements. We do not express an opinion or provide any assurance on the management’s discussion and analysis and the schedules of funding progress because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The budgetary comparison schedules and related note have been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements of the City of San Buenaventura or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of San Buenaventura’s basic financial statements as a whole. The introductory section, supplementary information and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion or provide any assurance on them. December 9, 2011 Irvine, California

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Year Ended June 30


Managem

ent’s Discussion & Analysis

CITY OF SAN BUENAVENTURA MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED JUNE 30, 2011

As management of the City of San Buenaventura (City), we offer readers of the City’s basic financial statements this narrative overview and analysis of the financial activities of the City for the year ended June 30, 2011. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our transmittal letter, which is found on pages v-vii of this report. All amounts, unless otherwise indicated, are expressed in thousands of dollars. FINANCIAL HIGHLIGHTS Net assets of the City totaled $352.9 million at June 30, 2011. Of this amount, $67.4 million is

unrestricted and may be used to meet the City’s ongoing obligations to citizens, utility customers, and creditors, subject to applicable laws and regulations

The City’s total net assets, including all activities, decreased by $6.8 million compared to last fiscal

year. The City’s total net long-term liabilities decreased by $3.0 million or 2.2% during fiscal year 2010-

11.

As of June 30, 2011, the City’s governmental funds reported combined ending fund balance of $72.1 million.

Fund balance in the General Fund decreased $1.4 million.

As of June 30, 2011, the total fund balance for the General Fund was $32 million, a decrease of

$1.4 million from the prior year. Funds balance is classified per GASB Statement No. 54 as Nonspendable ($6.6 million), Restricted ($5.3 million), Committed ($15.9 million), and Assigned ($4.3 million). Additional information on the City’s General Fund balances is located in note 11 on page 69 of this report.

As of June 30, 2011, the City’s other governmental funds, excluding the General Fund, reported

combined ending fund balances of $40 million. OVERVIEW OF THE FINANCIAL STATEMENTS The City’s basic financial statements are comprised of three components: 1) Government-wide Financial Statements, 2) Fund Financial Statements, and 3) Notes to the Basic Financial Statements. Each of these sections is discussed below. This report also contains other required and supplementary information in addition to the basic financial statements themselves. Government-Wide Financial Statements The Government-Wide Financial Statements are designed to present financial information about the City as a whole in a manner similar to the private sector, including the use of accrual-based accounting to recognize its revenues and expenses. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely primarily on user fees and charges to fund their operations. Governmental

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activities include those traditionally associated with local government, such as public safety (fire and police), community development, public works, parks and recreation, and general government (administrative) functions. Business-type activities include the City’s utility operations (water and wastewater) and golf course. The Statement of Net Assets presents information on all of the City’s assets, including capital assets, and al related current liabilities and long-term obligations. The difference between total assets and total liabilities is presented as net assets, which serves as a measure of the financial health of the City. Over time, an increase in net assets generally indicates that the financial health of the City is improving. The Statement of Activities presents information showing how the government’s net assets changed during the most recent fiscal year. Decreases in net assets are presented as “Expenses;” increases in net assets are presented as “Revenues.” Revenues directly attributable to a particular function within the City are presented as “Program Revenues.” Tax revenues, including those restricted to a particular program function, are reported as “General Revenues” unless specifically required to be reported as program revenues (i.e. gas and transportation taxes). All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (such as, revenues pertaining to uncollected taxes, or expenses pertaining to earned, but unused, vacation and sick leave). The government-wide financial statements include not only the City of San Buenaventura (known as the primary government), but also two legally separate component units: Public Facilities Financing Authority and a legally separate Redevelopment Agency. The governing board of each of these entities is comprised entirely of members of the City Council, and their financial activity has been included as an integral part of the primary government. The government-wide financial statements are located on pages 17-19 of this report. Fund Financial Statements The City, like other state and local governments, uses fund accounting for recording its financial activities. In general, fund accounting provides a mechanism to separately account for a variety of different funding sources and enables the City to demonstrate compliance with legal and/or contractual requirements that may be associated with these funds. Thus, the accompanying fund financial statements present individual funds organized into one of three categories: Governmental, Proprietary, and Fiduciary Funds. Note that the fund financial statements only present information on the most significant (i.e. “major”) funds on the face of the statements. Nonmajor funds are grouped and presented in total on the face of the statements. In addition, the fund financial statements include a schedule that reconciles the fund financial statements to the government-wide financial statements. This is designed to explain the differences created by the integrated approach to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds- Most of the City’s basic services are reported in governmental funds. Governmental funds include the General Fund, Special Revenue, Capital Projects, and Debt Service funds. In the fund financial statements, all governmental fund types are reported using the modified accrual basis of accounting, whereby revenues are generally measured when measurable and available to finance current operating costs, and expenditures are recognized when the related liability is incurred. In addition, the focus is on inflow (revenues) and outflow (expenditures) of the current

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period. As such, the balance sheets of governmental funds are intended to present only short-term assets and liabilities. The fund financial statements include separate columns, by fund type, for all “major” governmental funds of the City. All “Nonmajor” governmental funds are consolidated into a single column labeled “Other Governmental Funds.” The details of these funds are included in the Combining and Individual Fund Statements and schedules located in the supplementary information section of this report on pages 85-104. Since the focus of governmental funds is narrower than that of government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing this comparison, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances, provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City adopts an annual appropriated budget for its funds. A budgetary comparison is provided for the City’s General Fund, Gas Tax, and Park and Recreation Special Revenue Funds to demonstrate compliance with this budget. Proprietary funds – Proprietary funds are used to account for services provided to external customers or other City departments and funds that are primarily funded from user fees and charges. Proprietary funds use the accrual basis of accounting and measure the balance and change in total economic resources. Accordingly, balance sheets of proprietary funds include all assets and liabilities, including long-term receivables, capital assets, and long-term liabilities. The basis of accounting and measurement focus used to prepare proprietary fund statements is the same that is used to prepare the government-wide statements. Thus, proprietary fund statements provide the same, but more detailed, information about these funds, which are included in the “Business-Type Activity” column of the government-wide statements. The City maintains two different types of proprietary funds: Enterprise and Internal Service.

Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its Water, Wastewater, and Golf. Water and Wastewater are classified as major funds. The Golf is classified as a non-major fund.

Internal Service funds are used by the City to account for its intra-city services: information

technology services, fleet services, building maintenance, digital publishing, workers’ compensation, employee fringe benefits, and risk management.

Because internal service funds predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements. Individual fund data for the internal service funds is provided in the form of combining statements in the supplementary information section of this report on pages 97-102.

The proprietary fund financial statements are located on pages 26-28 of this report.

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Fiduciary funds are used to account for resources held by the City as trustee on behalf of other agencies or individuals. Fiduciary funds are not presented in the accompanying government-wide financial statements since the resources of those funds are not available to support the City’s programs. The basis of accounting used for the fiduciary funds is similar to what is used for the proprietary funds. The fiduciary funds financial statements are located in the basic financial statements section – page 29 of this report. Notes to the Basic Financial Statements The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements are located on pages 32-78 of this report. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s progress in funding the obligation to provide pension benefits to City employees and budgetary comparison schedules for the General Fund and each major special revenue fund. Required supplementary information is located on pages 79-83 of this report. The combining statements, referred to earlier in connection with non-major governmental funds, internal service funds, and fiduciary funds are presented following the required supplementary information on pensions. Combining statements are located on pages 85-88 and 97-104 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS Analysis of Net Assets As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets exceeded liabilities by $352.9 million at the close of the most recent fiscal year. The largest portion of the City’s net assets (62.1%) reflects its investment in capital assets (e.g., land, buildings, infrastructure, machinery, and equipment), less any related debt used to acquire those assets that are outstanding. The City uses these capital assets to provide services to citizens and consequently, these assets are not available for future spending. Although the City’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since capital assets alone may not be used to liquidate these liabilities.

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The unrestricted net assets in all City funds are $67.4 million and may be used to meet the government’s ongoing obligations to citizens and creditors.

At June 30, 2011, the City was able to report positive balances in all three categories of net assets, for the government as a whole and for business-type activities. The same situation held true for the prior fiscal year. The City’s net assets decreased $6.8 billion during the fiscal year concluded June 30, 2011. This decrease was due to operations in the governmental and business-type activities where revenues were $2.1 million below prior year. 1.7 million of the decreased revenue was from operating grants.

2011 2010 2011 2010 2011 2010Assets:

Current and Other Assets $ 127,027 $ 129,725 $ 57,080 $ 63,056 $ 184,107 $ 192,781 Capital Assets 141,246 142,211 198,952 198,897 340,198 341,108

Total Assets 268,273 271,936 256,032 261,953 524,305 533,889

Liabilities: Current Liabilities 32,720 31,290 5,539 6,797 38,259 38,087 Long-Term Liabilities 74,289 75,186 58,857 60,965 133,146 136,151

Total Liabilities 107,009 106,476 64,396 67,762 171,405 174,238

Net Assets:

Invested In Capital Assets, Net of related Debt 77,322 75,888 141,883 145,414 219,205 221,302 Restricted 34,753 35,393 31,502 26,350 66,255 61,743 Unrestricted 49,189 54,179 18,251 22,426 67,440 76,605

Total Net Assets $ 161,264 $ 165,460 $ 191,636 $ 194,190 $ 352,900 $ 359,650

CITY OF SAN BUENAVENTURA-Net Assets(In Thousands)

Governmental ActivitiesBusiness-Type

Activities Total

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2011 2010 2011 2010 2011 2010Revenues:

Program RevenuesCharges for Service 14,754$ 14,093$ 41,738$ 43,427$ 56,492$ 57,520$ Operating Grants 10,590 12,243 - 16 10,590 12,259 Capital Grants 1,475 1,713 - - 1,475 1,713

General RevenuesTaxes

Property 23,499 21,562 - - 23,499 21,562 Other 17,564 17,337 - - 17,564 17,337

Intergovernmental RevenuesSales Taxes 19,172 19,629 - - 19,172 19,629 Motor Vehicle License 8,342 8,195 - - 8,342 8,195

Investment Earnings/ (loss) 1,137 1,860 301 1,664 1,438 3,524 Other - - - - - -

Total Revenues 96,533 96,632 42,039 45,107 138,572 141,739

Expenses:General Government 2,939 4,057 - - 2,939 4,057 Human Resources 758 998 - - 758 998 Finance and Technology 8,974 7,212 - - 8,974 7,212 Community Development 9,784 7,957 - - 9,784 7,957 Community Services 12,858 7,663 - - 12,858 7,663 Public Safety - Police 29,709 30,974 - - 29,709 30,974 Public Safety - Fire 15,218 19,262 - - 15,218 19,262 Public Works 17,151 21,905 - - 17,151 21,905 Interest on Long Term Debt 5,058 3,909 - - 5,058 3,909 Wastewater - - 17,092 15,096 17,092 15,096 Water - - 20,941 21,664 20,941 21,664 Golf Operations - - 4,737 4,735 4,737 4,735

Total Expenses 102,449 103,937 42,770 41,495 145,219 145,432

Increase (Decrease) In Net Assets (5,916) (7,305) (731) 3,612 (6,647) (3,693)

Transfers 1,824 2,000 (1,824) (2,000) - - Change In Net Assets (4,092) (5,305) (2,555) 1,612 (6,647) (3,693)

Net Assets - Beginning as restated 165,355 170,765 194,190 192,578 359,545 363,343

Net Assets - Ending 161,263$ 165,460$ 191,635$ 194,190$ 352,898$ 359,650$

CITY OF SAN BUENAVENTURA-Change In Net Assets

Governmental Activities Business Activities Total

(In Thousands)

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Governmental Activities Public Safety/Police is the largest department at 29.0% of total governmental expense, followed by Public Works – 16.7%, Public Safety/Fire – 14.9%, Community Services – 12.6%, Community Development – 9.6%, Finance and Technology – 8.8%, Interest on Long Term Debt – 4.9%, General Government – 2.9%, and Human Resources – 0.7%. The governmental activities’ chart below illustrates operating revenues by source.

Revenues by Source - Governmental Activities($96.6 Million)

Motor Vehicle License9%

Investment Earnings1%Other Taxes

18%

Sales Tax20% Property Taxes

25%

Operating and Capital Grants

12%

Charges for Service15%

Sales, property, motor vehicle license, and other taxes are general revenues used to support overall government functions. These sources account for $68.6 million or 71% of total governmental revenue. Operating and capital grants make up 12.5% and charges for services amount to 15.1%. The City’s net assets for governmental activities reflected a decrease of approximately $4.1 million. Some key factors include the following:

Investment earnings decreased approximately $723,000 due to the significant reduction in rates of return in the treasuries market and the corresponding reduction in all allowable city investment options. Any investments that could be called, were, thus requiring the city to reinvest them at rates between 0.5% and 2.0%.

Remaining revenues decreased approximately $8.2 million from the previous year due to the

downturn in the economy.

Expenses decreased approximately $1.5 million from the previous year due to city-wide

reductions in all departments that were instituted to respond to the reductions in the revenue being experienced by the city.

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Business-Type Activities The business-type activities chart below shows revenues by source. The City’s Water Enterprise is the largest business-type operation, followed by Wastewater with fees for services mainly funding the two utilities. Business-type activities decreased the City’s overall net assets by $2.6 million. Key element is a decrease in investment earnings and operations in the Water and Wastewater Funds.

GOVERNMENT FUNDS FINANCIAL ANALYSIS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. At June 30, 2011, the City’s governmental funds reported a combined ending fund balance of $72 million, a decrease of $2.8 million in comparison with the prior year. The decrease was mainly due to capital projects and expenditure of proceeds from the new tax allocation bond issued last year. Of the total fund balance of $72 million, $14.4 million was nonspendable, $34.2 was restricted, $18.6 was committed, $13.0 was assigned, and -$8.0 million was unassigned. The following are the major funds the City considered important to financial statement users.

Revenues by Source - Business-Type Activities ($42 Million)

Water49%

Wastewater39%

Golf 11%

Interest Earnings & Operating Grants

1%

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General Fund The General Fund is the City’s chief operating fund. It showed a decrease of $1.4 million in fund balance for fiscal year 2010-11. At June 30, 2011, the total fund balance was $32 million. The decrease is mainly due to a 2.6 million net transfers in prior year of Capital project fund monies returned to the General Fund. Gas Tax Special Revenue The Gas Tax Special Revenue Fund showed a decrease of $155,000 in fund balance for fiscal year 2010-11. This decrease is mainly due to a 1.5 million capital construction expenditure increase and a reduction in grant revenue (no Proposition 1B 2010) and Transportation development Act (TDA). Park and Recreation Special Revenue Fund The Park and Recreation Special Revenue Fund experienced a decrease of $9,000 in fund balance for fiscal year 2010-11. This decrease is due to a decrease in revenues related to development activity. Certificates of Participation Debt Obligation Debt Service Fund This fund experienced an increase of $933,000 in fund balance for fiscal year 2010-11. This increase was mainly due to the proceeds from certificate of participation issue partially offset by refunded bond and principal payments. Capital Improvement Capital Projects Fund The Capital Improvement Capital Projects Fund showed a decrease of $419,000 in fund balance for fiscal year 2010-11. This decrease was due to the planned use of prior year resources to complete ERP implementation. Housing and Community Development Block Grant Fund The Housing and Community Development Block Grant Fund is a major fund this fiscal year. Fund balance decreased approximately $7,000 this year due to investment earnings. Since this fund accounts for the reimbursable capital and other projects, revenues generally equal expenditures unless there is a delay in receiving reimbursements for qualified expenditures. Redevelopment Agency Capital Projects The Redevelopment Agency Capital Projects Fund experienced a decrease of $95,000 in fund balance for fiscal year 2010-11. This decrease was due to decreased tax increment revenues, reduced expenses for Low-Mod projects offset by a $500,000 loan write off for the Ventura Theater. Proprietary Funds The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The net assets of the Water, Wastewater and Golf funds were $89.1 million, $88.7 million and $13.9 million, respectively. The total growth in assets for Water fund was $650,000 due to increases in

11

depreciation recordings, new principal and interest payments for the SWRF loan, offset by decreased capital expenditures. There was a decline in net assets for the Wastewater fund of $1.9 million due to decreased interest earnings by $887 thousand coupled by an increase in operating expenditures of $2.0 million. The increase in operating expenditures was mainly due to increase in legal, claims & judgments of $549 thousand and increase in operating permits of $602 thousand for State Water Resource Control Board payments. The Golf fund decreased $1.3 million in net assets due to decreased revenues and increased operational expenses. Internal Service Funds The internal service funds are used to finance and account for goods and services provided internally among City departments. The funds were in a positive position at the close of the fiscal year. Fiduciary Funds The City maintains fiduciary funds for the assets of the Portobello Assessment District Fund, the Property Based Improvement District Fund, and the newly formed Ventura Oxnard Camarillo Tourism Business Improvement District Fund. The assets for the Property Based Improvement District Fund were $33,000. The assets for the Ventura Oxnard Camarillo Tourism Business Improvement District Fund were $20,000. GENERAL FUND BUDGETARY HIGHLIGHTS During the year, there was a $9.3 million increase in appropriations between the original and final amended budget for services and supplies. Following are the main components: Expenditures

$6.9 million increase in transfers to other funds primarily for capital projects

$1.8 million increase in services and supplies essentially due to the rollover of prior year encumbrances

$400 thousand decrease in other contingencies due to the transfer of appropriation to other departments for Council approved projects

Revenue

$7.9 million increase in use of prior year resources primarily for capital projects and encumbrance rollovers

$400 thousand increase due to transfers from other funds

Significant budgetary variances between final amended budget and actual results were as follows:

Revenues for taxes were less than anticipated by $1.7 million; intergovernmental resources were $1.7 million less than anticipated, and charges for services were $800 thousand less than anticipated.

Expenditures for transfers to other funds were $5.8 million less due to a delay in capital project spending. Expenditures for Public Works were $2.5 million less due to a deferring construction projects and professional services. Expenditures for Parks, Recreation and Community Partnerships were $900 thousand less due to project delays and deferring outside professional services into next year.

12

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2011, amounts to $340.2 million (net of accumulated depreciation). This investment in capital assets includes land, water rights, buildings and related systems, improvements, machinery and equipment, park facilities, roads, highways, and bridges. Major capital asset events during the current fiscal year included the following capital expenditures:

$4.9 million for the Upgrade VTA Wastewater Facility $2.3 million for the Surfers Point Improvements

$977,000 for Waterline Replacement Lincoln

$685,000 for Laboratory remodel

Additional information on the City’s capital assets is located in Note 6 to the basic financial statements on pages 54-56 of this report. Long-Term Obligations At the end of the current fiscal year, the City had total net long-term outstanding obligations of $140 million. Of this amount, $61 million relates to revenue bonds and other obligations of the City’s business enterprises. The balance relates to revenue bonds, tax allocation bonds, notes payable, self-insurance, and employee benefit obligations for the City’s governmental activities.

2011 2010 2011 2010 2011 2010Land 19,102$ 19,102$ 497$ 497$ 19,599$ 19,599$ Water Rights - - 1,222 1,222 1,222 1,222 Buildings and improvements 64,898 64,913 70,147 70,179 135,045 135,092 Improvements other than buildings 19,458 19,460 62,139 62,139 81,597 81,599 Machinery and equipment 47,675 47,576 130,509 130,680 178,184 178,256 Infrastructure 101,878 101,878 1,615 1,615 103,493 103,493 Construction in progress 16,037 10,261 32,082 23,620 48,119 33,881

Total 269,048$ 263,190$ 298,211$ 289,952$ 567,259$ 553,142$

TotalGovernmental

ActivitiesBusiness-Type

Activities

CITY OF SAN BUENAVENTURA - Capital Assets (Gross)(In Thousands)

13

2011 2010 2011 2010 2011 2010

Governmental Long-Term Obligations $ 79,320 $ 80,865 $ - $ - $ 79,320 $ 80,865 Revenue Bonds, Net - - 43,922 45,126 43,922 45,126 Safe Drinking Water Loan, net - - 17,149 17,988 17,149 17,988

Total $ 79,320 $ 80,865 $ 61,071 $ 63,114 $ 140,391 $ 143,979

CITY OF SAN BUENAVENTURA-Outstanding Obligations(In Thousands)

GovernmentalActivities Activities Total

Business-Type

The table does not include the capital leases of $354,000. The City’s total debt decreased by $3.6 million (excluding capital leases of $354,000) during the current fiscal year due primarily to a principal payments of $24.5 million offset by a new Certificate of Participation – 2010 Series F of $20.6 million and an increase in claims and judgments payable of $98,000. Additional information on the City of San Buenaventura’s long-term obligations is located in Note 9 to the basic financial statements on pages 58-67 of this report. The City Charter states that the City shall not incur an indebtedness evidenced by general obligation bonds greater than 15% of the total assessed valuation of all real and personal property within the City. The level of debt is significantly below Charter requirements. ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES Economy and Budget Plan The lack of an improving national, statewide and local economy was the main issue affecting the development of the FY 2010-11 and FY 2011-12 budgets. To address the downturn in revenue due to the economy, the City Council directed staff to prepare a fiscal plan that would result in the City living within its means. In other words, instead of proceeding with a budget that relied on spending money the City did not have and utilizing borrowing or spending cash reserves, spending levels were reduced to match projected revenue levels. This resulted in a budget that continued to reflect a reduction of expenses. These reductions eliminated the projected gap between revenue and expenses. This was accomplished by using a long-range approach called “Budgeting for Outcomes”, in which all City-provided services were prioritized, with the highest priority going to public safety and rebuilding prosperity by promoting high-wage, high value jobs in the private sector. Lower-priority expenses and programs were reduced and/or eliminated. The information created in this process and used for developing the FY 2010-11 budget was readdressed and updated for FY 2011-12. The FY 2011-12 budget was designed to reflect a predicted flattening of the economic recovery for the local economy. As a result, the FY 2011-12 budget was conservatively built and did not predict any real growth in revenue. During FY 2010-11, considerable staff time was directed towards updating and understanding the revenue stream on an ongoing basis in an effort to create an early warning system in the event that revenue did not meet expectations. So far, sales tax revenue for FY 2011-12 is running better than expected, but property tax is expected to come in lower. The City continues to remain committed to providing the very best municipal services within its means.

14

Budget Challenges In delivering a balanced budget plan for the upcoming FY 2011-12, the City followed City Council direction to balance additional spending reductions with prudent use of one-time revenue sources. The goal is to ensure we live within our means without further eroding core services and our ability to deliver them.

For residents and local business, the bottom line is that the City will be “holding the line” on services. On the one hand, there are no more visible or damaging reductions in services if we meet our conservative revenue projections. On the other hand, we cannot afford to restore even the most hurtful cuts, such as reductions in our Police staffing and closure of Fire Station 4.

The City Council has ratified three-year union contracts for 90% of our workforce (with the remaining soon to follow.) All require employees to begin paying at least 4.5% of their pay toward rising pension costs. While this will not entirely offset the impact of covering investment losses by the State pension plan (CalPERS) during the Great Recession, it does set us on a more sustainable course for the future. All new hires will come under a reduced pension formula that will be less costly in the long run.

In addition to challenges in the General Fund, the City is facing critical challenges in its Capital and Water/Wastewater/Stormwater budgets. The City Council recently unanimously adopted the 2011-17 Capital Improvement Plan, called “Building Ventura’s Future.” Over the past fifteen years, Ventura has made impressive investments in rebuilding, replacing and upgrading its key infrastructure – all the myriad public facilities we too often take for granted: sewer pipes; water treatment plants; street pavement; emergency back-up generators; traffic signals; disabled access ramps; energy efficient lighting; stormwater retention basins; baseball diamonds; solar power panels; park paths and trails; and water wells.

The City is continuing to do so, but in too many areas, its investments are falling short of the needs. Confronted with the brutal reality of a closed library and fire station and reduced staffing for everyday needed services, it is unthinkable to carve out deeper cuts to fund investments with long-term pay-offs. However, Ventura would not be the livable community it is today if earlier generations had not made sacrifices to build and maintain facilities and assets that long outlasted them.

In the area of water, the City cannot afford complacency either. While the City is proposing no immediate water or wastewater increases despite rising costs, it must embark on a serious, long-term discussion of the costs and uses of the water needed for its homes and businesses. At the supermarket, water sold by the gallon costs about a dollar. The cost for that same gallon is one fifth of a penny delivered by Ventura Water. The community has an exemplary record of water conservation and cost-effective local self-sufficiency when it comes to water. Yet, in the years ahead, the City is going to have to use less and pay more because of real and direct threats to its current way of doing business. Whether it is protecting public health, keeping seawater from leeching into its groundwater or safeguarding its fragile local environment, the City is going to face difficult and costly changes. In the long run, however, the City will be in a much better position to continue to ensure both the safe delivery of clean water and its responsible and beneficial disposal.

All these challenges have a common thread: sustainability. Living within our means; safeguarding our future quality of life and standard of living; creating a healthier and “greener” economy; prudently investing in long-term facilities and assets; partnering with our community and its institutions to work together toward common goals; and making wise decisions despite political pressures to defer or deny them – all these are vital to working toward “sustainable prosperity” for Ventura.

The City faces great challenges ahead as it continues its path toward sustainable prosperity.

15

REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City of San Buenaventura’s finances for all those with an interest in the government’s finances. Questions concerning any of the information contained herein should be addressed to Jay Panzica, Chief Financial Officer, via E-mail at [email protected], or P.O. Box 99 - Room 101, Ventura, CA 93002-0099, (805) 654-7812.

16


Year Ended June 30


Government-W

ide Financial Statements

City of San BuenaventuraStatement of Net AssetsJune 30, 2011

Governmental Business-TypeActivities Activities Total

ASSETSCurrent assets:

Cash and investments 85,004,973$ 45,680,544$ 130,685,517$ Restricted cash and investments 6,006,374 5,105,697 11,112,071 Accounts receivable, net 313,769 5,530,435 5,844,204 Interest receivable 328,900 - 328,900 Due from others 3,525,356 618,586 4,143,942 Due from other governments 6,200,035 255,031 6,455,066 Internal balances 2,020,993 (2,020,993) - Inventory 19,140 - 19,140 Prepaid items 6,426 - 6,426 Deferred charges 492,589 - 492,589 Land and buildings held for resale 540,880 - 540,880

Total current assets 104,459,435 55,169,300 159,628,735 Noncurrent assets:Restricted cash and investments - 880,989 880,989 Loans and notes receivable, net 13,975,587 - 13,975,587

Deferred charges - 1,029,747 1,029,747 Equity interest in SCAT 8,591,606 - 8,591,606 Capital assets

Non-depreciable 35,138,954 33,801,499 68,940,453 Depreciable, net 106,106,656 165,150,795 271,257,451 Total capital assets 141,245,610 198,952,294 340,197,904 Total noncurrent assets 163,812,803 200,863,030 364,675,833 Total assets 268,272,238 256,032,330 524,304,568

LIABILITIESCurrent liabilities:

Accounts payable 4,124,263 2,124,940 6,249,203 Accrued payroll liabilities 1,603,872 - 1,603,872 Interest payable 1,592,213 603,947 2,196,160 Due to other governments 4,923,800 4,146 4,927,946 Deposits held for others 13,205,077 591,765 13,796,842 Unearned revenue 661,301 - 661,301 Capital leases payable 177,192 - 177,192 Claims and judgments payable 2,538,315 - 2,538,315 Compensated absences payable 533,183 - 533,183 Long-term debt - due within one year 3,360,922 2,214,060 5,574,982 Total current liabilities 32,720,138 5,538,858 38,258,996

Noncurrent liabilities:Capital leases payable 177,192 - 177,192 Claims and judgments payable 6,201,188 - 6,201,188 Compensated absences payable 4,575,844 - 4,575,844 Interest payable 157,500 - 157,500 Long-term debt - due in more than one year 63,176,893 58,857,466 122,034,359

Total noncurrent liabilities 74,288,617 58,857,466 133,146,083 Total liabilities 107,008,755 64,396,324 171,405,079

NET ASSETSInvested in capital assets, net of related debt 77,321,482 141,883,333 219,204,815 Restricted for:

Capital projects 25,301,353 30,121,497 55,422,850 Debt service 5,057,004 1,380,174 6,437,178 Community development 2,978,975 - 2,978,975 Special projects 1,415,817 - 1,415,817

Total restricted 34,753,149 31,501,671 66,254,820 Unrestricted 49,188,852 18,251,002 67,439,854

161,263,483$ 191,636,006$ 352,899,489$

See Independent Auditor's Report and accompanying notes to the basic financial statements.

Total net assets

17

City of San BuenaventuraStatement of ActivitiesFor the year ended June 30, 2011

Operating CapitalCharges for Grants and Grants and

Functions/Programs Expenses Services Contributions Contributions Total

Primary government: Governmental activities:

General government 2,938,785$ 952,233$ -$ -$ 952,233$ Human resources 757,721 132,793 - - 132,793 Finance and technology 8,974,168 1,725,803 61,591 1,787,394 Community development 9,784,289 1,048,606 751,973 1,800,579 Community services 12,857,684 2,693,611 143,334 2,836,945 Public safety - police 29,709,223 2,742,998 648,606 3,391,604 Public safety - fire 15,218,015 3,311,170 279,402 3,590,572 Public works 17,150,786 2,146,823 8,704,594 1,475,426 12,326,843 Interest on long-term debt 5,057,876 - - - -

Total governmental activities 102,448,547 14,754,037 10,589,500 1,475,426 26,818,963

Business-type activities:

Wastewater 17,091,823 16,326,078 - - 16,326,078 Water 20,940,661 20,946,374 - - 20,946,374 Golf 4,737,086 4,465,557 - - 4,465,557

Total business-type activities 42,769,570 41,738,009 - - 41,738,009

Total primary government 145,218,117$ 56,492,046$ 10,589,500$ 1,475,426$ 68,556,972$

General Revenues:Taxes:

Property taxesUtility users taxesTransient occupancy taxesFranchise taxesOther taxes

Total taxes Intergovernmental Revenues:

Sales taxes - intergovernmental unrestrictedMotor vehicle license - intergovernmental unrestricted

Total intergovernmental revenues

Investment earningsMiscellaneous

Transfers:

Total general revenues and transfers

Change in net assets

Net assets - beginning of year as restated

Net assets - end of year


Program Revenues

18

Governmental Business-TypeActivities Activities Total

(1,986,552)$ -$ (1,986,552)$ (624,928) - (624,928)

(7,186,774) - (7,186,774) (7,983,710) - (7,983,710)

(10,020,739) - (10,020,739) (26,317,619) - (26,317,619) (11,627,443) - (11,627,443) (4,823,943) - (4,823,943) (5,057,876) - (5,057,876)

(75,629,584) - (75,629,584)

- (765,745) (765,745) - 5,713 5,713 - (271,529) (271,529)

- (1,031,561) (1,031,561)

(75,629,584) (1,031,561) (76,661,145)

23,498,798 - 23,498,798 8,774,360 - 8,774,360 3,435,953 - 3,435,953 3,278,467 - 3,278,467 2,075,351 - 2,075,351

41,062,929 - 41,062,929

19,171,669 - 19,171,669 8,342,441 - 8,342,441

27,514,110 - 27,514,110

1,136,757 301,096 1,437,853 514 - 514

1,823,954 (1,823,954) -

71,538,264 (1,522,858) 70,015,406

(4,091,320) (2,554,419) (6,645,739)

165,354,803 194,190,425 359,545,228

161,263,483$ 191,636,006$ 352,899,489$

and Changes in Net AssetsNet (Expense) Revenue

19


Year Ended June 30



Year Ended June 30


Fund Financial Statements


Year Ended June 30


Governmental Fund

Financial Statements


Year Ended June 30


General Fund – The General Fund was established to account for sources and uses of financial resources traditionally associated with governments which are not required to be accounted for in another fund.

Gas Tax Special Revenue Fund – To account for revenue received from the State of California and other sources to be used for street maintenance and improvements only.

Park and Recreation Special Revenue Fund – To account for park and recreation facilities tax revenue to be used for planning, acquisition, improvements or expansion of public parks, playgrounds, or other recreational facilities.

Housing and Community Development Block Grant Fund – To account for the revenue and expenditures related to Federal community development block grants.*

Certificates of Participation (COP) Debt Obligation Debt Service Fund – To account for the accumulation of resources and payment of long-term debt principal and interest for COP issues by the Public Facilities Financing Authority.

Capital Improvement Capital Projects Fund – To account for financial resources to be used for purchase or construction of major capital improvements (other than those funded through proprietary or special revenue funds).

Redevelopment Agency Capital Projects Fund – To account for the economic revitalization and redevelopment of the City through acquisition and development of City property determined to be in a declining condition.

Other Governmental Funds – The aggregate of all the non-major governmental funds.

* This has been classified as a Major Fund for June 30, 2011

City of San BuenaventuraBalance SheetGovernmental FundsJune 30, 2011

Certificates ofGas Tax Park and Participation Capital

General Special Recreation Debt Obligation ImprovementFund Revenue Special Revenue Debt Service Capital Projects

ASSETSCash and investments 33,114,213$ 21,490,920$ 4,980,634$ -$ 1,778,397$ Restricted cash and investments - - - 2,577,099 - Investment in bonds 200,000 - - - - Accounts receivable, net 117,992 32,015 - - - Interest receivable 328,900 - - - - Due from other funds 2,837,161 1,169,935 - - 388,901 Due from others 3,391,478 - - - - Due from other governments 3,083,532 303,636 - - 1,807,921 Prepaid items 926 - - - - Inventory 19,140 - - - - Loans and notes receivable 1,070,114 - - - - Land and buildings held for resale - - - - - Advances to other funds 5,538,076 - - - -

Total assets 49,701,532$ 22,996,506$ 4,980,634$ 2,577,099$ 3,975,219$

LIABILITIES AND FUND BALANCESLiabilities:

Accounts payable 1,181,138$ 659,515$ 61$ -$ 749,141$ Due to other funds 1,996,413 - - 40,079 - Due to other governments 6,879 - 4 - 22 Deposits held for others 13,205,077 - - - - Advances from other funds - - - - - Deferred revenue 1,283,688 337,400 - - 1,489,643

Total liabilities 17,673,195 996,915 65 40,079 2,238,806

Fund balances (deficit):Nonspendable 6,630,047 - - - - Restricted 5,260,641 21,542,404 - 2,537,020 - Committed 15,873,858 - - - - Assigned 4,263,791 457,187 4,980,569 - 1,736,413 Unassigned - - - - -

Total fund balances (deficit) 32,028,337 21,999,591 4,980,569 2,537,020 1,736,413

Total liabilities and fund balances 49,701,532$ 22,996,506$ 4,980,634$ 2,577,099$ 3,975,219$


Major Funds

20

Housing andCommunity Development Redevelopment Other Total Block Grant Agency Governmental Governmental

Capital Projects Capital Projects Funds Funds

255,281$ 320,682$ 4,971,285$ 66,911,412$ - - 3,429,275 6,006,374 - - - 200,000 - - 31,475 181,482 - - - 328,900 - 283,758 - 4,679,755 - 126,569 592 3,518,639

418,549 13,209 48,471 5,675,318 - - - 926 - - - 19,140

6,016,154 5,737,974 - 12,824,242 - 540,880 - 540,880 - - 1,181,742 6,719,818

6,689,984$ 7,023,072$ 9,662,840$ 107,606,886$

109,577$ 29,367$ 145,335$ 2,874,134 283,758 816,168 1,541,792 4,678,210

4,916,491 5 8 4,923,409 - - - 13,205,077 - 6,719,818 - 6,719,818 - - - 3,110,731

5,309,826 7,565,358 1,687,135 35,511,379

816,398 5,737,974 1,181,742 14,366,161 466,472 540,880 3,821,507 34,168,924

97,288 - 2,661,612 18,632,758 - - 1,542,283 12,980,243 - (6,821,140) (1,231,439) (8,052,579)

1,380,158 (542,286) 7,975,705 72,095,507

6,689,984$ 7,023,072$ 9,662,840$ 107,606,886$

Major Funds

21

City of San BuenaventuraReconciliation of the Governmental Funds Balance Sheet

to the Government-Wide Statement of Net AssetsJune 30, 2011

Total Fund Balances - Total Governmental Funds 72,095,507$

Amounts reported for governmental activities in the Statement of Net Assets were different because:

Equity interest in SCAT is not a current financial resource and not reported in the Governmental Funds Balance Sheet. 8,591,606

Capital assets used in governmental activities are not current financial resources. Therefore, they are not reported in the Governmental Funds Balance Sheet. Except for the internal service funds reported below, the capital assets are adjusted as follow

Non-depreciable 35,127,863 Depreciable 214,583,207 Accumulated depreciation (116,032,401)

Total capital assets 133,678,669 Interest payable on long-term debt does not require current financial resources. Therefore, interest payable is not reported as a liability in Governmental Funds Balance Sheet. (1,749,713)

Deferred revenue is reported as revenue on the accrual basis in the Government-Wide Statement of Net Assets. 2,533,943

Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the

Information Technology Fund 1,282,348 Fleet Maintenance Fund 11,348,510 Facilities Maintenance Fund 1,830,474 Reproduction Services Fund 179,506 Workers' Compensation Fund (153,231) Employee Fringe Benefits Fund (3,731,944) Risk Management Fund 1,226,772

Total internal service funds 11,982,435

Long-term liabilities are not due and payable in the current period. Therefore, they are not reported in the Governmental Funds Balance Sheet. Long-term debt reported in the Internal Service Funds is included in the adjustment above.

Premium on issuance on long-term debt recorded as revenue on governmental, but is a liability on the Government-Wide Statement of Net Assets (1,066,553) Debt issuance cost recorded as an expenditure in govermental fund, but are recorded as deferred charges in the Government-Wide Statement of Net Assets 492,589 Long-term liabilities - due within one year (3,310,000) Long-term liabilities - due in more than one year (61,985,000)

Total long-term liabilities (65,868,964) Net Assets of Governmental Activities 161,263,483$


22


Year Ended June 30


City of San BuenaventuraStatement of Revenues, Expenditures and Changes in Fund BalancesGovernmental FundsFor the year ended June 30, 2011

Certificates ofGas Tax Park and Participation Capital

General Special Recreation Debt Obligation ImprovementFund Revenue Special Revenue Debt Service Capital Projects

REVENUES:

Taxes 56,877,384$ 770,890$ 328,053$ -$ 113,011$ Licenses and permits 2,103,379 - - - - Intergovernmental 9,176,456 3,843,665 - - 2,041,475 Charges for services 7,604,749 - - - 260,625 Fines and forfeitures 1,634,251 - - - - Use of money and property 1,486,905 181,379 87,789 32,575 163,535 Other revenue 2,769,381 259 2,722 - 298,500

Total revenues 81,652,505 4,796,193 418,564 32,575 2,877,146

EXPENDITURES:

Current:General government 2,677,327 - - - - Human resources 758,217 - - - - Finance and technology 7,305,876 - - - - Community development 7,014,408 - - - - Community services 11,217,429 - - - - Public safety - police 27,712,849 - - - - Public safety - fire 14,460,517 - - - - Public works 6,954,028 - - - - Capital outlays 400,263 4,875,498 6,186 13,184 5,592,576

Debt service:Principal retirement - - - 10,500,000 - Debt issuance cost - - - 492,589 - Interest and other charges - - - 2,370,224 -

Total expenditures 78,500,914 4,875,498 6,186 13,375,997 5,592,576

REVENUES OVER (UNDER) EXPENDITURES 3,151,591 (79,305) 412,378 (13,343,422) (2,715,430)

OTHER FINANCING SOURCES (USES):Issuance of certificates of participation - - - 20,615,000 - Premium on issuance of debt - - - 1,066,553 - Payment to refunded bond escrow agent - - - (11,728,764) - Transfers in 1,621,971 50,990 3,680 4,465,765 2,365,201 Transfers out (6,146,894) (127,180) (425,000) (141,710) (68,690)

Total other financing sources (uses) (4,524,923) (76,190) (421,320) 14,276,844 2,296,511

Net change in fund balances (1,373,332) (155,495) (8,942) 933,422 (418,919)

FUND BALANCES (DEFICIT):

Beginning of year 33,401,669 22,155,086 4,989,511 1,603,598 2,155,332

32,028,337$ 21,999,591$ 4,980,569$ 2,537,020$ 1,736,413$


End of year

Major Funds

23

Housing andCommunity Development Redevelopment Other Total Block Grant Agency Governmental Governmental

Capital Projects Capital Projects Funds Funds

-$ 3,408,602$ 114,157$ 61,612,097$ - - - 2,103,379

713,847 7,331 29,991 15,812,765 - - 1,978,788 9,844,162 - - - 1,634,251

7,289 128,170 224,026 2,311,668 - 3,475 535 3,074,872

721,136 3,547,578 2,347,497 96,393,194

- - - 2,677,327 - - - 758,217 - - - 7,305,876 - - - 7,014,408 - - - 11,217,429 - - 542,647 28,255,496 - - - 14,460,517 - - 2,725,448 9,679,476

713,847 2,080,062 92,384 13,774,000

- - 755,000 11,255,000 - - - 492,589 - 385,148 1,330,007 4,085,379

713,847 2,465,210 5,445,486 110,975,714

7,289 1,082,368 (3,097,989) (14,582,520)

- - - 20,615,000 - - - 1,066,553 - - - (11,728,764) - - 2,156,847 10,664,454 - (1,177,626) (780,160) (8,867,260)

- (1,177,626) 1,376,687 11,749,983

7,289 (95,258) (1,721,302) (2,832,537)

1,372,869 (447,028) 9,697,007 74,928,044

1,380,158$ (542,286)$ 7,975,705$ 72,095,507$

Major Funds

24

City of San BuenaventuraReconciliation of the Governmental Funds Statement of Revenues, Expenditures,

and Changes in Fund Balances to the Government-Wide Statement of Activities For the year ended June 30, 2011

Net Change in Fund Balances - Total Governmental Funds (2,832,537)$

Amounts reported for governmental activities in the Statement of Activities are different because:

Governmental funds report capital outlay as expenditures. However, in the Government-Wide Statement of Activities, the cost of these assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlay exceed depreciation in the current period.

Capital outlay $6,208,744 Depreciation expense (6,062,336) Net of deletions (5,852) 140,556

The net loss in the equity interest in SCAT is reported in the Government-Wide Statement of Activities, but not current financial uses. Therefore, the net gain is not reported as revenue in Governmental Funds. is not a current financial resource and not reported in the Governmental Funds Balance Sheet. (889,073)

Deferred revenue is reported as revenue on the accrual basis in the Government-Wide Statement of Activities. The following amount represents the change in accrued deferred revenue from the prior year. 131,436

Repayment of bond principal is an expenditure in governmental funds, but the repayment reduces long-term liabilities in the Government-Wide Statement of Net Assets. 22,983,764

Bond proceeds provided current financial resources to governmental funds, but issuing debt increased long-term liabilities in the Government-Wide Statement of Net Assets. (20,615,000)

Debt issuance cost are expenditures in the Governmental Statements, but the expenditures are capitalized and recorded as deferred asset in the Government-Wide Statement of Net Assets 492,589

Premium on issuance on long-term debt is recorded as revenue in Governmental Statements, but is a liability in the Government-Wide Statement of Net Assets (1,066,553)

Accrued interest expense on long-term debt is reported in the Government-Wide Statement of Activities, but does not require the use of current financial resources. Therefore, accrued interest expense is not reported as an expenditure in Governmental Funds. The following amount represents the change in accrued interest from the prior year. (972,498)

Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The net expense of the internal service funds is reported with governmental activities. (1,464,004)

Change in Net Assets of Governmental Activities (4,091,320)$


25


Year Ended June 30


Proprietary Fund Financial Statem

ents


Year Ended June 30


City of San BuenaventuraStatement of Net AssetsProprietary FundsJune 30, 2011

Non-Major GovernmentalEnterprise Fund Activities

InternalWastewater Water Golf Total Service Funds

ASSETSCurrent assets:

Cash and investments 23,678,824$ 22,001,720$ -$ 45,680,544$ 17,893,561$ Restricted cash and investments 4,031,445 1,074,252 - 5,105,697 - Accounts receivable, net 2,322,739 3,207,696 - 5,530,435 132,287 Due from other funds - - - - 2,019,448 Due from others - 2,405 616,181 618,586 6,717 Due from other governments - 255,031 - 255,031 524,717 Prepaid items - - - - 5,500 Notes receivable - - - - 1,151,345

Total current assets 30,033,008 26,541,104 616,181 57,190,293 21,733,575 Noncurrent assets:

Restricted cash and investments 880,989 - - 880,989 - Deferred charges 519,815 509,932 - 1,029,747 - Capital assets:

Non-depreciable 22,418,210 10,744,408 638,881 33,801,499 11,091 Depreciable, net 56,926,975 93,305,463 14,918,357 165,150,795 7,555,850

Total capital assets 79,345,185 104,049,871 15,557,238 198,952,294 7,566,941 Total noncurrent assets 80,745,989 104,559,803 15,557,238 200,863,030 7,566,941

Total assets 110,778,997 131,100,907 16,173,419 258,053,323 29,300,516

LIABILITIESCurrent liabilities:

Accounts payable 777,336$ 1,052,479$ 295,125$ 2,124,940$ 1,250,129$ Accrued payroll liabilities - - - - 1,603,872 Unearned revenue - - - - 84,513 Interest payable 331,184 272,763 - 603,947 - Due to other funds - - 2,020,993 2,020,993 - Due to other governments 3,922 224 - 4,146 391 Deposits held for others - 591,765 - 591,765 - Capital leases payable - - - - 177,192 Claims and judgments payable - - - - 2,538,315 Compensated absences payable - - - - 533,183 Long-term debt - due within one year 745,000 1,469,060 - 2,214,060 50,922

Total current liabilities 1,857,442 3,386,291 2,316,118 7,559,851 6,238,517

Noncurrent liabilities:Capital leases payable - - - - 177,192 Claims and judgments payable - - - - 6,201,188 Compensated absences payable - - - - 4,575,844 Long-term debt - due in more than one year 20,244,341 38,613,125 - 58,857,466 125,340

Total noncurrent liabilities 20,244,341 38,613,125 - 58,857,466 11,079,564

Total liabilities 22,101,783 41,999,416 2,316,118 66,417,317 17,318,081

NET ASSETS

Invested in capital assets, net of related debt 62,358,409 63,967,686 15,557,238 141,883,333 7,025,204 Restricted for:

Capital projects 10,665,000 19,456,497 - 30,121,497 - Debt service 578,685 801,489 - 1,380,174 -

Unrestricted net assets (deficit) 15,075,120 4,875,819 (1,699,937) 18,251,002 4,957,231

Total net assets 88,677,214$ 89,101,491$ 13,857,301$ 191,636,006$ 11,982,435$


Major Enterprise Funds

26

City of San BuenaventuraStatement of Revenues, Expenses and Changes in Net AssetsProprietary FundsFor the year ended June 30, 2011


InternalWastewater Water Golf Total Service Funds

OPERATING REVENUES:

Utility service charges 16,326,078$ 20,946,374$ -$ 37,272,452$ -$ Golf fee charges - - 4,465,557 4,465,557 - Internal service charges - - - - 18,663,186 Other operating revenues - - - - 235,844

Total operating revenues 16,326,078 20,946,374 4,465,557 41,738,009 18,899,030

OPERATING EXPENSES:

Salaries and benefits 4,108,193 4,825,528 173,382 9,107,103 3,731,187 Contractual services 2,005,401 66,895 3,284,732 5,357,028 2,284,548 Materials and supplies 2,241,872 1,358,012 22,893 3,622,777 2,097,642 General and administrative 4,473,707 8,853,316 342,445 13,669,468 2,208,430 Insurance premiums and settlements - - - - 8,581,080 Depreciation 3,252,299 4,317,268 913,634 8,483,201 1,495,550

Total operating expenses 16,081,472 19,421,019 4,737,086 40,239,577 20,398,437

OPERATING INCOME (LOSS) 244,606 1,525,355 (271,529) 1,498,432 (1,499,407)

NONOPERATING REVENUES (EXPENSES):

Investment income 225,582 75,514 - 301,096 116,605 Loss on disposal of assets - - - - (54,934) Loss on investments - - - - (43,000) Interest expense (1,010,351) (1,519,642) - (2,529,993) (10,028)

Total nonoperating revenues (expenses) (784,769) (1,444,128) - (2,228,897) 8,643 Income (loss) before transfers (540,163) 81,227 (271,529) (730,465) (1,490,764)

Transfers in - 1,007,343 5,610 1,012,953 94,911 Transfers out (1,311,039) (438,641) (1,087,227) (2,836,907) (68,151)

Change in net assets (1,851,202) 649,929 (1,353,146) (2,554,419) (1,464,004)

NET ASSETS:

Beginning of year 90,528,416 88,451,562 15,210,447 194,190,425 13,446,439

End of year 88,677,214$ 89,101,491$ 13,857,301$ 191,636,006$ 11,982,435$



27

City of San BuenaventuraStatement of Cash FlowsProprietary FundsFor the year ended June 30, 2011


InternalWastewater Water Golf Course Total Service Funds

CASH FLOWS FROM OPERATING ACTIVITIES:Cash received from customers/other funds 16,428,620$ 21,091,530$ 4,167,028$ 41,687,178$ 18,945,539$ Cash payments to suppliers for goods and services (7,730,977) (8,754,886) (2,692,321) (19,178,184) (867,782) Cash (payments) receipts for interfund services (1,773,092) (2,183,986) (252,258) (4,209,336) (5,558,722) Cash payments to employees for services (4,108,193) (4,825,528) (173,383) (9,107,104) (3,731,187) Insurance premiums and settlements - - - - (9,985,227) Other operating revenues - - - - 320,357

Net cash provided (used) by operating activities 2,816,358 5,327,130 1,049,066 9,192,554 (877,022)

CASH FLOWS FROM NONCAPITALFINANCING ACTIVITIES:

Employee housing loans made - - - - (16,729) Payment of employee housing loans - - - - 117,163 Transfers to other funds (1,311,039) (438,641) (1,087,227) (2,836,907) (68,151) Transfers from other funds - 1,007,343 5,610 1,012,953 94,911

Net cash provided (used) by noncapital (1,311,039) 568,702 (1,081,617) (1,823,954) 127,194 financing activities

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Purchase of capital assets (6,644,553) (1,926,151) - (8,570,704) (508,403) Payment of long-term debt - - - - (95,836) Proceeds (loss) from sale of assets - - 32,551 32,551 64,040 Repayment of capital leases - - - (177,192) Repayment of state water loan - (838,891) - (838,891) - Repayment of revenue bonds (720,000) (590,000) - (1,310,000) - Interest paid on revenue bonds and contracts (1,018,753) (1,524,304) - (2,543,057) -

Net cash provided (used) by capitaland related financing activities (8,383,306) (4,879,346) 32,551 (13,230,101) (717,391)

CASH FLOWS FROM INVESTING ACTIVITIES:Investment income (loss) 225,582 75,514 - 301,096 73,605

Net cash provided (used) by investing activities 225,582 75,514 - 301,096 73,605 Net increase (decrease) in cash and cash equivalents (6,652,405) 1,092,000 - (5,560,405) (1,393,614)

CASH AND INVESTMENTS:Beginning of year 34,362,674 21,983,972 - 56,346,646 19,244,175 End of year 27,710,269$ 23,075,972$ -$ 50,786,241$ 17,850,561$

RECONCILIATION OF OPERATING INCOME (LOSS) TO NETCASH PROVIDED (USED) BY OPERATING ACTIVITIES:

Operating income (loss) 244,606$ 1,525,355$ (271,529)$ 1,498,432$ (1,499,407)$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation 3,252,299 4,317,268 913,634 8,483,201 1,495,550 Changes in assets and liabilities:

Accounts receivable 102,542 393,651 - 496,193 24,506 Due from other funds - - - - 178,445 Due from other governments - (248,305) - (248,305) 80,952 Due from others - (191) (298,529) (298,720) (1,549) Prepaid items - - - - 6,600 Deferred charges 97,584 53,856 - 151,440 - Accounts payable (882,518) (452,407) 284,795 (1,050,130) 157,651 Accrued payroll liabilities - - - - (1,694,686) Deferred revenue - - - - 84,513 Due to other funds - - 420,695 420,695 - Due to other governments 1,845 92 - 1,937 (136) Deposits held for others - (262,189) - (262,189) - Claims and judgments payable - - - - 98,510 Compensated absences payable - - - - 192,029

Total adjustments 2,571,752 3,801,775 1,320,595 7,694,122 622,385 Net cash provided (used) by operating activities 2,816,358$ 5,327,130$ 1,049,066$ 9,192,554$ (877,022)$

Noncash financing activities:Employee housing loans written off -$ -$ -$ -$ 43,000$



28


Year Ended June 30


Fiduciary FundFinancial Statem

ents

City of San BuenaventuraStatement of Fiduciary Assets and LiabilitiesFiduciary FundsJune 30, 2011

Agency FundsASSETS

Cash and investments 1,281$ Accounts receivable 113,054 Due from others 21,953

136,288$

LIABILITIES

Due to others 83,225$ Deposits held for others 53,063

136,288$


29


Year Ended June 30



Year Ended June 30


Notes to Basic Financial Statements


Year Ended June 30


City of San Buenaventura Index to the Notes to the Basic Financial Statements For the year ended June 30, 2011

Page Note 1 - Summary of Significant Accounting Policies ............................................................................. 32

A. Description of the Reporting Entity ........................................................................................... 32 B. Basis of Accounting and Measurement Focus ......................................................................... 33 C. Use of Restricted/Unrestricted Net Assets ............................................................................... 37 D. Cash, Cash Equivalents and Investments.................................................................................. 37 E. Restricted Cash and Investments ............................................................................................... 37 F. Inventory and Prepaid Items ....................................................................................................... 37 G. Assets Held for Resale .................................................................................................................. 37 H. Interfund Transactions ................................................................................................................. 37 I. Capital Assets ................................................................................................................................ 38 J. Compensated Absences ............................................................................................................... 38 K. Long-Term Debt ............................................................................................................................ 39 L. Interest Payable ............................................................................................................................. 40 M. Property Taxes ............................................................................................................................... 40 N. Net Assets ...................................................................................................................................... 40 O. Fund Balances ............................................................................................................................... 40 P. Use of Estimates ............................................................................................................................ 40

Note 2 – Cash and Investments ..................................................................................................................... 41

A. Cash and Investments ................................................................................................................. .41 B. Investments Authorized by the California Government Code and the City’s Investment Policy ......................................................................................................................... 41 C. Investments Authorized by Debt Agreements ......................................................................... 42 D. Disclosures Relating to Interest Rate Risk ................................................................................. 42 E. Disclosures Relating to Credit Risk ........................................................................................... 43 F. Concentration of Credit Risk ....................................................................................................... 43 G. Custodial Credit Risk ................................................................................................................... 44 H. Investment in State Investment Pool .......................................................................................... 44

Note 3 – Loans and Notes Receivable .......................................................................................................... 45

A. City Home ...................................................................................................................................... 45 B. Chapel Lane Senior Housing Project ......................................................................................... 45 C. Business Assistance Program ...................................................................................................... 46 D. City Officials .................................................................................................................................. 46 E. Redevelopment Agency ............................................................................................................... 47 F. Affordable Housing Development ............................................................................................. 48 G. Homebuyer Assistance Program (City) ..................................................................................... 49 H. Housing Preservation Program ................................................................................................. 49

Note 4 - Interfund Transactions .................................................................................................................... 49

30

City of San Buenaventura Index to the Notes to the Basic Financial Statements For the year ended June 30, 2011

Page

Note 5 – Land and Buildings Held for Resale ........................................................................................... 54 Note 6 – Capital Assets ................................................................................................................................... 54 Note 7 – Leases ................................................................................................................................................. 57 Note 8 – State Water Project .......................................................................................................................... 58 Note 9 – Long-Term Debt ............................................................................................................................... 58

A. Governmental Activities Long-Term Debt ................................................................................ 58 B. Long-Term Debt of Business-Type Activities and Proprietary Funds .................................. 65

Note 10 – Deferred Revenues ........................................................................................................................ 68 Note 11 – Fund Balances for Governmental Funds ................................................................................... 69 Note 12 – Self-Insurance Accrued Liabilities ............................................................................................. 72 Note 13 – Pension Plans ................................................................................................................................ 73 Note 14 – Joint Venture Transactions .......................................................................................................... 74 Note 15 – Commitments and Contingencies .............................................................................................. 74 Note 16 – Jobs Investment Fund ................................................................................................................. 75 Note 17 – Deferred Fees ................................................................................................................................ 75 Note 18 – Restatement of the Financial Statements ................................................................................ 76 Note 19 – Deficit Fund Balances and Net Assets ..................................................................................... 76 Note 20 – Related Organizations ................................................................................................................ 77 Note 21 – Recent Changes in Legislation Affecting California Redevelopment Agencies ............. 77

31

City of San Buenaventura Notes to the Basic Financial Statements For the year ended June 30, 2011

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the City of San Buenaventura (Ventura), California (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below. A. Description of the Reporting Entity The City, incorporated as a town on March 10, 1866, was recognized as a city in the State of California by election on December 4, 1905, and was certified on January 5, 1906. The initial City Charter was adopted January 7, 1932, and was revised most recently on November 7, 1995. The City operates under an elected Council and appointed City Manager form of government and provides the following services as authorized by its charter: public safety (police and fire), public works (maintenance services and utilities), community services, and general administrative services. As required by GAAP, these basic financial statements present the City and its component units (entities for which the City is considered to be financially accountable). Blended component units, although legally separate entities are, in substance, part of the City’s operations and data from these units are combined with data of the City. Each blended component unit has a June 30 year-end. The City had no discretely presented component units. The following entities are reported as blended component units:

The Redevelopment Agency of the City of Ventura (Agency) was created by the Ventura City Council (City Council) in August 1961. The Agency was formed for the purpose of preparing and carrying out plans for improvement, rehabilitation and redevelopment of blighted areas within the territorial limits of the City. The City Council acts as the Agency’s governing board and exerts significant influence over its operations. The funds of the Agency have been included in the governmental activities of the financial statements. Complete financial statements for the Redevelopment Agency may be obtained from the City of Ventura, P.O. Box 99, Ventura, California 93002-0099. Ventura Public Facilities Financing Authority (Authority) was established by ordinance, pursuant to the City Charter and Constitution of the State of California, as a public body, corporate and politic, acting to facilitate serving the public purposes of the City. The ordinance was adopted on May 28, 1985, and became effective July 1, 1985. The governing body of the Authority is comprised of the consenting members of the City Council. The Authority is empowered to construct, acquire, maintain and improve public facilities and improvements within the City and to sell, lease, exchange, transfer, encumber or otherwise dispose of any interest in property. The Authority's activities presently consist of providing financial assistance to the City through the issuance of certificates of participation and the leasing of assets to the City. At the end of the lease term, all assets revert to the City. The funds of the Authority have been included in the governmental activities of the financial statements.

32

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund balance, revenues, and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Government - Wide Financial Statements The City’s government-wide financial statements include a Statement of Net Assets and a Statement of Activities. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements. The basic financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets, as well as infrastructure assets and long-term liabilities, are included in the accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Grant revenues are recognized when all eligibility requirements have been met. Certain types of transactions are reported as program revenues for the City in three categories:

Charges for services Operating grants and contributions Capital grants and contributions

Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Assets have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated:

Due to/from other funds Advances to/from other funds Transfers in/out

The City applies all applicable GASB pronouncements (including all NCGA Statements and Interpretations currently in effect).

33

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued Governmental Fund Financial Statements Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in fund balances and change in fund balances as presented in these statements to the net assets and change in net assets presented in the government-wide financial statements. The City has presented all major funds that met the applicable criteria. In addition, the City has presented certain funds as major funds because the City believes the financial position and activities of these funds are significant to the City as a whole. The following is a list of these major funds:

General Fund - The general fund was established to account for sources and uses of financial resources traditionally associated with governments, which are not required to be accounted for in another fund. Gas Tax Special Revenue Fund - To account for revenue received from the State of California Gas Tax, and other sources to be used for street maintenance and improvements only. Park and Recreation Special Revenue Fund - To account for park and recreation facilities tax and intergovernmental revenue to be used only for planning, acquisition, improvements, or expansion of public parks, playgrounds, or other recreational facilities. Certificates of Participation (COP) Debt Obligation Debt Service Fund - To account for the accumulation of resources and payment of long-term debt principal and interest for COP issues by the Public Facilities Financing Authority. Capital Improvement Capital Projects Fund - To account for financial resources assigned for the purchase or construction of major capital improvements (other than those funded through proprietary or special revenue funds). Housing and Community Development Block Grant Fund - To account for the revenue and expenditures related to Federal community development block grants. Redevelopment Agency Capital Projects Fund - To account for tax resources restricted for the economic revitalization and redevelopment of the City through acquisition and development of City property determined to be in declining condition.

All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, sales tax, intergovernmental revenues and other taxes,

34

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued interest, and charges for services. Expenditures are recorded in the accounting period in which the related fund liability is incurred. Deferred revenues arise when potential revenues do not meet both the “measurable” and “available” criteria for recognition in the current period. Deferred revenues also arise when the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met or when the government has a legal claim to the resources, the deferred revenue is removed from the Balance Sheet and revenue is recognized. Proprietary Fund Financial Statements Proprietary fund financial statements include a Statement of Net Assets, a Statement of Revenues, Expenses and Changes in Net Assets, and a Statement of Cash Flows for each major proprietary fund. The following is a list of the proprietary funds:

Wastewater Fund – To account for all wastewater activities and treatment services provided to the City of Ventura, including, but not limited to administration, operations, maintenance, laboratory, and debt service. Water Fund – To account for all water activities and water treatment services provided to the City of Ventura and some residents of the County. Such activities include but are not limited to administration, maintenance, distribution, customer service, production, purification, and debt service. Golf Fund – To account for revenue and costs related to the operation of two municipal golf courses for use by the general public. Golf fund is a non-major fund. Internal Service Funds A separate column representing internal service funds is also presented in these statements; however, internal service balances and activities have been combined with the governmental activities in the government-wide financial statements. The following is a list of the internal service funds:

Information Technology Fund - To account for costs related to the replacement and maintenance of the City’s computer infrastructure. Costs are recovered through a monthly user fee charged to City departments. Fleet Maintenance Fund - To account for costs related to operations of the central fleet maintenance system which provides vehicles for all City departments. Costs are recovered through a monthly user fee charged to City departments. Facilities Maintenance Fund - To account for costs related to providing building maintenance services to all City departments. A monthly fee, based on square footage, is charged to City departments to recover these costs.

35

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued

Digital Publishing Fund - To account for costs related to printing and reproduction of materials by all City departments. Costs are recovered through a monthly fee charged to City departments using the service. Workers’ Compensation Fund - To account for costs and liabilities related to the Workers’ Compensation Program. Costs are recovered through a monthly fee based on employee-type charges to City departments. Employee Fringe Benefits Fund - To account for costs and liabilities related to health, life, dental and disability insurances, public employees’ retirement system, federal and state taxes, association dues, leave time benefits and miscellaneous deductions paid by the City on behalf of the employees. A bi-weekly employee benefit charge, based on a percentage of gross payroll, is charged to City departments to recover these costs. Risk Management Fund - To account for costs of providing public liability insurance coverage to operating funds. Costs are recovered from those funds that benefit from the insurance coverage.

Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or non-current) are included on the Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Net Assets presents increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses. Fiduciary Fund Financial Statements Fiduciary fund financial statements include a Statement of Fiduciary Assets and Liabilities. The City's fiduciary funds represent agency funds, which are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Agency funds are reported using the accrual basis of accounting. The City currently reports three fiduciary funds detailed below:

Portobello Assessment District Fund - To account for the funds held in trust by the City as collected from property assessments to be used for payment of debt service on special assessment bonds issued to fund improvements and maintenance of the Portobello Canal. Property Based Improvement District Fund - To account for the funds held in trust by the City as collected from property assessments to be used for the improvements and maintenance of the Downtown Property Based Improvement District. Ventura Oxnard Camarillo Tourism Business Improvement District Fund - To account for the funds held in trust by the City as collected from hotel assessments. VOCTBID is a benefit assessment district proposed to help fund marketing and sales promotional efforts of lodging businesses.

36

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

C. Use of Restricted/Unrestricted Net Assets When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, the City’s policy is to apply restricted net assets first. D. Cash, Cash Equivalents and Investments The City pools its available cash for investment purposes. The City’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. Cash and cash equivalents are combined with investments and displayed as Cash and Investments. In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. Guaranteed investment contracts are stated at cost. All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available. For purposes of reporting cash flows, the City considers each fund’s share in the cash and investments pool to be cash and cash equivalents. E. Restricted Cash and Investments Certain restricted cash and investments are held by fiscal agents for the redemption of bonded debt and for acquisition and construction of capital projects. Cash and investments are also restricted for deposits held for others within the enterprise funds. The restricted cash and investments are separated from unrestricted cash and investments and displayed as Restricted Cash and Investments. F. Inventory and Prepaid Items Inventory is valued at cost using first in, first out method. Inventory in the governmental funds consists of expendable supplies held for future consumption. The cost is recorded as expenditure as inventory items are consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. G. Assets Held for Resale Land and buildings held for resale are recorded at the lower of cost or estimated net realizable value, only determined upon the execution of a disposition and development agreement. Fund balances are restricted in amounts equal to the carrying value of land and buildings held for resale, because the proceeds from such assets are restricted to finance the City’s redevelopment activities. H. Interfund Transactions Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued H. Interfund Transactions, Continued

Advances to other funds, reported in the governmental fund financial statements, are offset by a fund balance nonspendable account in applicable governmental funds to indicate that they are not in spendable form and are not expendable available financial resources. I. Capital Assets

The City’s assets are capitalized at historical cost or estimated historical cost. City policy has set the capitalization threshold for reporting capital assets, including infrastructure assets, at $10,000. Gifts or contributions of capital assets are recorded at fair value when received. Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows:

Buildings and improvements 10 – 76 years Improvements other than buildings 10 – 75 years Machinery and equipment 2 – 75 years Infrastructure 5 – 50 years

In June 1999, the Governmental Accounting Standards Board (GASB) issued Statement No. 34, which requires the inclusion of infrastructure capital assets in local governments’ basic financial statements. In accordance with Statement No. 34, the City has included the value of all infrastructure in the basic financial statements.

The City defines infrastructure as the basic physical assets that allow the City to function. These assets include the streets, water purification and distribution system, sewer collection and treatment system, park and recreation lands and improvement system, storm water conveyance system, and buildings combined with site amenities such as parking and landscaped areas used by the City in the conduct of its business. Each major infrastructure system can be divided into subsystems. For example, the street system can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, traffic control devices (signs, signals and pavement markings), landscaping and land. These subsystems are not delineated in the basic financial statements. The appropriate operating department maintains information regarding the subsystems. Interest incurred during capital asset construction, if any, is capitalized net of any interest earned for the business-type activities and proprietary funds as part of the asset cost. There was no interest capitalized during the fiscal year. J. Compensated Absences The City accrues the cost of annual vacation leave as earned for all eligible employees. The City accrues the cost of sick leave for all employees following ten (10) years of continuous City service, when employees become eligible for a payout of the balance of unused sick leave upon separation (resignation or retirement). The amount of payout varies by employee group as follows:

Employees covered by SEIU Supervisory (S) and Professional (Q) Unit agreements shall, after ten years of continuous City service, be eligible to receive an amount equivalent to 25 percent of their accrued sick leave upon resignation, or retirement from employment or in the case of death to the employee's beneficiary. The maximum sick leave accrual is 480 hours.

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued J. Compensated Absences, Continued

Employees covered by the Ventura Fire Management Association (VFMA) agreement shall, after ten years of continuous City service, be eligible to receive an amount equivalent to 25 percent of their accrued sick leave upon resignation, or retirement from employment or in the case of death to the employee's beneficiary. After twenty years of continuous City service, they shall be eligible to receive an amount equivalent to 50 percent of their accrued sick leave upon resignation, or retirement from employment or in the case of death to the employee's beneficiary. The maximum sick leave accrual is 1,440 hours (2,016 hours when assigned to a 56-hour work week). Employees in the Executive (E), Management (M), Confidential (C) and Administrative Confidential (U) salary schedules shall, after ten years of continuous City service, be eligible to receive an amount equivalent to 25 percent of their accrued sick leave upon resignation, or retirement from employment or in the case of death to the employee's beneficiary. Notwithstanding the foregoing, employees in Salary Schedule "E" shall, after twenty years of continuous City service, be eligible to receive an amount equivalent to 50 percent of their accrued sick leave upon resignation, or retirement from employment or in the case of death to the employee's beneficiary. The maximum accrual is 480 hours.

All police shall, after ten years of continuous City service, be eligible to receive an amount equivalent to 2.5 percent of their accrued sick leave for each completed year of service and will be received upon resignation, or retirement from employment or in the case of death to the employee's beneficiary. After twenty years of continuous City service, they shall be eligible to receive an amount equivalent to 3 percent of their accrued sick leave for each completed year of service (not to exceed 75 percent). This benefit will be received upon resignation, or retirement from employment or in the case of death to the employee's beneficiary. The maximum accrual is 1,440 hours. All fire (excluding management) shall, after ten years of continuous City service, be eligible to receive an amount equivalent to 25 percent of their accrued sick leave upon resignation, or retirement from employment or in the case of death to the employee's beneficiary. After twenty years of continuous City service, they shall be eligible to receive an amount equivalent to 50 percent of their accrued sick leave upon resignation, or retirement from employment or in the case of death to the employee's beneficiary. The maximum accrual is 2,016 hours.

Vacation and sick leave benefits are accrued and recorded in the Employee Fringe Benefits Internal Service Fund. Compensated absences are generally liquidated in the Internal Service Fund.

K. Long-Term Debt In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental and business-type activities. Bond premiums, discounts, and deferred losses on refunding, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium, discount, and deferred loss on refunding. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the period in which bonds are issued. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued K. Long-Term Debt, Continued while discounts on debt issuance are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. L. Interest Payable In the government-wide financial statements, interest payable on long-term debt is recognized as the liability is incurred for governmental and business-type activities. In the fund financial statements, proprietary funds recognize the interest payable when the liability is incurred. M. Property Taxes Property taxes are levied based on a fiscal year (July 1 – June 30). The property tax assessments are formally due on November 1 and February 1, and become delinquent after December 10 and April 10, respectively. Taxes become a lien on the property effective January 1 of the preceding year. N. Net Assets In the government-wide financial statements, net assets are classified in the following categories:

Invested in Capital Assets, net of Related Debt – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt attributed to the acquisition, construction, or improvement of the assets. Restricted Net Assets – This amount is restricted by external creditors, grantors, contributors, laws or regulations of other governments, enabling legislation, or constitutional provisions. At fiscal year-end June 30, 2011, the restricted net assets balance was $34,282,425 for governmental activities, of which $5,817,106 was restricted by enabling legislation. Unrestricted Net Assets – This amount is all net assets that do not meet the definition of “invested in capital assets, net of related debt” or “restricted net assets.”

O. Fund Balances In the fund financial statements, governmental fund balances are classified based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. See Note 11 for further detail on fund balance reporting. P. Use of Estimates

The preparation of the basic financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In addition, estimates affect the reported amount of expenses. Actual results could differ from these estimates and assumptions.

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2. CASH AND INVESTMENTS A. Cash and Investments Cash and investments as of June 30, 2011, are classified in the accompanying financial statements as follows:

Fiduciary Fund Statement of Net Assets: Cash and Investments 1,281$ Government-Wide Statement of Net Assets: Cash and investments 130,685,517 Restricted cash and investments (held by bond trustee): Current amount 11,112,071 Noncurrent amount 880,989 Total cash and investments 142,679,858$

Cash and investments as of June 30, 2011, consist of the following:

Cash on hand 32,152$ Deposits with financial institutions 7,647,247 Investments 135,000,459 Total cash and investments 142,679,858$

B. Investments Authorized by the California Government Code and the City’s Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, and concentration of credit risk. This table does not address investment of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

Maximum Maximum Authorized Maximum Amt / Percent Investment

Investment Type Maturity of Portfolio* in One Issuer U.S. Treasury Obligations 5 years N/A N/A U.S. Agency Securities 5 years N/A N/A Banker’s Acceptances 180 days 20% 5% Commercial Paper 270 days 15% 5% Negotiable Certificates of Deposit 5 years 20% 5% Certificates of Deposit 5 years N/A $100K Certificates of Deposit Account Registry 5 years $5M $5M Repurchase Agreements 92 days 20% N/A Medium-Term Notes 5 years 20% $5M Money Market Mutual Funds N/A 20% 5% Local Agency Investment Fund (LAIF) N/A N/A $50 million**

* Excluding amounts held by bond trustee that are not subject to California Government Code restrictions. ** Maximum investment is per component unit.

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2. CASH AND INVESTMENTS, Continued C. Investments Authorized by Debt Agreements Investment of debt proceeds held by bond trustee is governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy. The table below identifies the investment types that are authorized for investments held by bond trustee and identifies certain provisions of these debt agreements that address interest rate risk and concentration of credit risk.

Maximum Maximum Authorized Maximum Percentage Investment

Investment Type Maturity Allowed in One Issuer U.S. Treasury Obligations 30 years N/A N/A Money Market Mutual Funds N/A N/A N/A Guaranteed Investment Contract 30 years N/A N/A Local Agency Investment Fund N/A N/A N/A

D. Disclosures Relating to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair market value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair market value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time, as necessary to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair market values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:

Remaining Maturity (in Months)

City Portfolio 12 Months 13 to 24 25-59 > 60Investment Type Totals or Less Months Months Months

Federal Agency Securities 64,632,219$ 266,540$ 5,005,650$ 49,403,929$ 9,956,100$ Local Agency Investment Fund 51,872,861 51,872,861 - - - Medium Term Notes In Default 1,285,000 - 1,285,000 - - Municipal Debt 200,000 200,000 - - - Rabobank Money Market 5,017,320 5,017,320 - - - Held by bond trustee: Federal Agency Securities 2,200,710 - - 2,200,710 - Money Market Funds 2,532,226 2,532,226 - - - Investment Contracts 880,987 - - 880,987 - Local Agency Investment Fund 6,379,137 6,379,137 - - -

Total 135,000,460$ 66,268,084$ 6,290,650$ 52,485,626$ 9,956,100$

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2. CASH AND INVESTMENTS, Continued E. Disclosures Relating to Credit Risk

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The following presentation is the minimum rating required (where applicable) by the California Government Code, the City’s investment policy, debt agreements, and the actual rating as of year-end for each investment type:

F. Concentration of Credit Risk The City’s investment policy contains limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. Investments in any one issuer that represent 5 percent or more of total City’s investments are as follows:

City Portfolio MinimumInvestment Type Totals Rating Aaa/AAA 1 Not Rated

Federal Agency Securities $ 64,632,219 N/A $ 64,632,219 -$ Municipal Debt 200,000 N/A - 200,000 Medium Term Notes: Medium Term Notes In Default2 1,285,000 N/A - 1,285,000 Local Agency Investment Fund 51,872,861 N/A - 51,872,861 Rabobank Money Market 5,017,320 N/A 5,017,320 - Held by bond trustee: Federal Agency Securities 2,200,710 N/A 2,200,710 - Money Market Funds 2,532,226 A 2,532,226 - Investment Contracts 880,987 N/A - 880,987 Local Agency Investment Fund 6,379,137 N/A - 6,379,137 Total $ 135,000,460 $ 74,382,475 $ 60,617,985

Ratings as of year-end

2: On September 14, 2008, Lehman Brothers Holdings Inc. (Lehman) filed a Chapter-11 bankruptcy proceeding to seek relief under the provisions of the United States Bankruptcy Code. The City holds a Lehman $5M Medium Term Corporate Note, classified as "senior unsecured debt". A policy decision was made to continue to hold the security in the City's third party safekeeping account until such time that the security is either sold or settlement occurs through bankruptcy proceedings or other lawsuits.

1. The ratings were with Moody's and S&P as of June 30, 2011. Subsequently, S&P reduced the rating of the Federal Agency Securities from AAA to AA+.

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2. CASH AND INVESTMENTS, Continued F. Concentration of Credit Risk, Continued

Issuer Investment Type Reported Amount

Federal Farm Credit Bank Federal Agency Securities $19,416,879 Federal National Mortgage Association Federal Agency Securities 34,972,400 Total $54,389,279

There are no limits on the above Federal Agency Securities. G. Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits. H. Investment in State Investment Pool The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair market value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.

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3. LOANS AND NOTES RECEIVABLE At June 30, 2011, loans and notes receivable consisted of the following:

Balance BalanceLoan Description Fund July 1, 2010 Additions Deletions June 30, 2011

City Home Fund 32 59,056$ -$ -$ 59,056$ Chapel Lane Senior Housing Project Fund 32 657,500 - - 657,500 Business Assistance Program: Micro Loan Fund 32 830,882 150,000 (87,109) 893,773 Code Compliance Assistance Fund 01 179,010 50,000 (47,057) 181,953 Commercial Rehabilitation Loan Fund 01 330,972 10,000 (96,420) 244,552 Economic Development Loan Fund 01 508,360 17,980 (52,940) 473,400 City Officials Fund 68 1,294,780 - (143,435) 1,151,345 Redevelopment Agency:

Disposition and Development Agreement - 1997 Fund 88 500,000 - (500,000) - Homebuyer Assistance Program (RDA) Fund 89 22,600 - - 22,600

Working Artists Community Fund 88 & 89 3,500,000 - (11,443) 3,488,557 CHFA HELP Program Loan Fund 89 16,171 - (2,304) 13,867 Affordable Housing Development: Soho Associates LP (City) Fund 32 350,000 50,000 - 400,000 Soho Associates LP (RDA) Fund 89 406,000 72,000 - 478,000 El Patio LP (City) Fund 32 408,000 - - 408,000 El Patio LP (RDA) Fund 89 306,400 28,550 - 334,950 Azahar Place Associates LP (CEDC) (City) Fund 32 900,000 200,000 - 1,100,000 Azahar Place Associates LP (CEDC) (RDA) Fund 89 1,100,000 300,000 - 1,400,000 Homebuyer Assistance Program (City) Fund 32 649,964 - - 649,964 Housing Preservation Program Fund 01 & 32 1,954,525 148,610 (85,065) 2,018,070

Total 13,974,220$ 1,027,140$ (1,025,773)$ 13,975,587$

A. City Home The general purpose of the City Home program is to promote neighborhood stabilization, stimulate private reinvestment, and broaden affordable housing opportunities. The Program is administered by the Housing Authority of Ventura and provides deferred loans, to low-income residents who are first-time homebuyers, for down-payment assistance. The maximum term of the loan is 45 years with interest being charged in the form of equity sharing equal to 50 percent of the value of the original loan. Provided that the participating owner occupies the property continuously for 45 years, all interest shall be forgiven. B. Chapel Lane Senior Housing Project The project includes 38 one and two-bedroom units for senior low and very low-income households. The project has commercial space dedicated to the City’s Housing Authority for office use. The maximum term of the loan is 45 years with interest being charged at 3 percent per annum.

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3. LOANS AND NOTES RECEIVABLE, Continued C. Business Assistance Program The interest rate will be fixed at the cost of City funds, plus two points. The borrower is responsible for repaying the entire loan, plus interest in a timely manner. The maximum term of the loan will not exceed 10 years. All loan programs must adhere to adopted Design Guidelines and Design Review Requirements where applicable. There are four components to the Business Assistance Program:

Micro Loan Program - The primary goal of this program is to create jobs and support the growth and success of small businesses in Ventura. This is a flexible program designed for existing and new small businesses. The minimum loan to any business is $10,000 with a maximum of $50,000.

Code Compliance Assistance Program - The Code Compliance Assistance Program is to support businesses with building code compliance requirements on existing commercial properties. This program is designed to encourage code compliance and public safety in conjunction with Inspection Services. Commercial Rehabilitation Loan Program - The Commercial Rehabilitation Loan Program is designed to encourage revitalization and renovation of older commercial districts while promoting physical enhancement of commercial property. The program goal is to foster business growth or retention through improving the physical appearance of qualified buildings. Qualified property owners and businesses may be eligible to receive below market rate loans for façade, construction, or building renovation. This program is targeted to the Downtown Redevelopment Area and the Westside Revitalization Area.

Economic Development Loan Program – The Economic Development Loan Program is designed to encourage and facilitate business growth in Ventura. This growth will increase sales tax revenues for the City and will fund the operations of the City and benefit the Ventura community.

D. City Officials The City Council established a mortgage assistance program as an important tool to enable key officials and other employees to live in the City. It was also intended to aid the City to recruit highly qualified employees and assist them in obtaining housing in the City. The City is not providing new mortgage assistance loans at this time. The City has seven loans outstanding for the purpose of mortgage assistance in the purchase of a home. The loans are secured by a deed of trust on the properties.

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3. LOANS AND NOTES RECEIVABLE, Continued D. City Officials, Continued The following table summarizes the loan activity:

* The City’s share of its equity interest in the Ventura Residences shall be due and payable in full: 1) immediately upon the sale of, or other transfer of title, to the Ventura Residence by Employee; 2) within 120 days of the Employee’s termination for any reason whatsoever; 3) within 120 days of the termination of Employee’s use of the Ventura Residence as a principal residence, or; 4) in some cases within 10 years of loan issue date. The interest rates vary from zero percent for equity sharing agreements to 7.7 percent. E. Redevelopment Agency Disposition and Development Agreement – 1997 - The Agency entered into a disposition and development agreement in October 1997 to loan $500,000 to a limited liability company to construct certain improvements on property within the Agency’s Downtown Redevelopment Project Area. The loan is secured by a deed of trust and bears no interest. The loan can be forgiven upon the occurrence of certain events. Required events have been met and the loan has been forgiven. The reconveyance was issued on September 7, 2011. The outstanding amount due to the Agency as of June 30, 2011 was zero. Homebuyer Assistance Program (RDA) - The Agency entered into an agreement annually for the Homebuyer Assistance Program. The maximum term of the loan is 45 years with interest being charged in the form of equity sharing equal to 50 percent of the value of the original loan. Provided that the participating owners occupy the property continuously for 45 years, all interest shall be forgiven. The outstanding amount due to the Agency as of June 30, 2011, was $22,600. Working Artists Community - In January 2008, the Agency loaned $1.5 million in proceeds from a CalHFA HELP loan to the Working Artists of Ventura (WAV) Apartments Partners at 3 percent simple interest for a term of 30 years (annual payments of $77,598 commencing May 1, 2010). On February 1, 2008, the Agency entered into a construction agreement with WAV Apartments Partners to acquire property and build affordable housing designed for artists. As part of this agreement, the Agency loaned additional $2,000,000 at 5percent simple interest to the WAV Apartments Partners for construction. This loan is to be repaid the earlier of December 1, 2016 or thirty days after the sale or transfer of the last unit per the most recent amendment. The total outstanding amount due to the Agency as of June 30, 2011, was $3,488,557.

OriginalDate Amount Term of Balance Balance

Issued of Loan Loan July 1, 2010 Additions Deletions June 30, 2011

2003 325,000$ * 325,000$ -$ -$ 325,000$ 2007 280,000 * 49,291 - - 49,291 2008 538,035 * 298,309 - (23,421) 274,888 2009 474,000 * 474,000 - (117,000) 357,000 2010 150,000 * 148,180 - (3,014) 145,166 Total 1,294,780$ -$ (143,435)$ 1,151,345$

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3. LOANS AND NOTES RECEIVABLE, Continued E. Redevelopment Agency, Continued CHFA HELP Loans - The primary goal of this program is for rental rehabilitation or seismic improvements of multifamily housing units in designated target areas. The City provided a 3 percent interest rate, fully amortizing loans for property rehabilitation to landlords for 15 to 30 years. Participating landlords agreed to fix maximum rents at fair market rates established for the HUD Section 8 Program during the term of the HELP Loan. Eligible developments must be occupied by a minimum of 51 percent low-income households as defined by HUD, at the initiation of negotiations between the Landlord and the City. The outstanding balance as of June 30, 2011, was $13,867. The program is no longer active and there is only one remaining loan. F. Affordable Housing Development Soho Associates LP - The Agency entered into an agreement on May 1, 2010 to loan $550,000 to a limited partnership to assist with the acquisition and development on an affordable housing project located outside the Downtown’s Redevelopment Project Area. The loan is to be disbursed over the course of three fiscal years (fiscal year 2009-10 $406,000; fiscal year 2010-11 $72,000; and fiscal year 2011-12 $72,000) from the Low and Moderate Housing Set-Aside Funds. The loan is secured by a deed of trust bearing simple interest at 3 percent commencing on the date of the initial disbursement. The term expires 55 years after the date of recordation of the affordability covenant against the property. Payments are due on May 1st of each year and with payment of the outstanding principal and accrued interest equal to the Agency’s pro-rata share of residual receipts. The project is funded in conjunction with a $450,000 City HOME funds loan that is being disbursed over three fiscal years (fiscal year 2009-10 $350,000; fiscal year 2010-11 $50,000 and fiscal year 2011-12 $50,000). El Patio LP - The Agency entered into an agreement on December 17, 2009 to loan $392,000 to a limited partnership to assist with the rehabilitation of property within the Agency’s Downtown Redevelopment Project Area. The loan is to be disbursed over the course of four fiscal years (fiscal year 2009-10 $306,400; fiscal year 2010-11 $28,550; fiscal year 2011-12 $28,550; and fiscal year 2012-13 $28,500) from the Low and Moderate Housing Set-Aside Funds. The loan is secured by a deed of trust bearing simple interest at 3 percent commencing on the date of the initial disbursement. The term expires 55 years after the date of recordation of the affordability covenant against the Property. Payments are due on September 30th of each year with payment of the outstanding principal and accrued interest equal to the Agency’s pro-rata share of residual receipts. Azahar Place Associates LP (CEDC) - The Agency entered into an Owner Participation Agreement on February 16, 2010 to loan $1,700,000 to a limited partnership to assist with the acquisition and development on an affordable housing project located outside the Downtown’s Redevelopment Project Area. The loan is to be disbursed over the course of three fiscal years (fiscal year 2009-10 $1,100,000; fiscal year 2010-11 $300,000; and fiscal year 2011-12 $300,000) from the Low and Moderate Housing Set-Aside Funds. Financial assistance is in the form of two loans: 1) Acquisition $1,100,000, and 2) Development $600,000 both secured by separate deeds of trust bearing simple interest at 3 percent commencing on the date of the initial disbursement. The term expires 55 years after the completion of construction. Payments are due on September 30th of each year with payment of the outstanding principal and accrued interest equal to the Agency’s pro-rata share of residual receipts.

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3. LOANS AND NOTES RECEIVABLE, Continued F. Affordable Housing Development, Continued The project is funded in conjunction with a $1,300,000 City HOME funds loan disbursed over three fiscal years (fiscal year 2009-10 $900,000; fiscal year 2010-11 $200,000 and fiscal year 2011-12 $200,000). G. Homebuyer Assistance Program (City) The City entered into a loan agreement on September 13, 1999. The maximum term of the loan is 45 years with interest being charged in the form of equity sharing equal to 50 percent of the value of the original loan. Provided that the participating owner occupies the property continuously for 45 years, all interest shall be forgiven. The outstanding amount due to the City as of June 30, 2011, was $649,964. H. Housing Preservation Program Under the Housing Preservation Program (HPP), low interest loans are available to qualifying low and moderate-income households to rehabilitate single-family owner-occupied properties. Special hardship grants are also available on an urgent need basis to address immediate threats to health and safety. The terms of these loans range from 15 to 45 years with interest being charged in either the form of equity sharing equal to 50 percent of the value of the original loan or based on the cost of funds to the City that shall not be less than 3 percent. The outstanding amount as of June 30, 2011, was $2,018,070. 4. INTERFUND TRANSACTIONS Fund Financial Statements Advances to/from Other Funds As of June 30, 2011, balances of advances to/from other funds were as follows:

OtherGeneral Governmental

Advances from other funds Fund Funds Total

Redevelopment Agency Capital Projects Fund 5,538,076$ 1,181,742$ 6,719,818$

The long-term advances consisted of the following:

Balance Balance7/1/2010 Additions Deletions 6/30/2011

Line of credit 5,771,750$ -$ (233,674)$ 5,538,076$ Public Art Fund Loan 1,125,469 56,273 - 1,181,742

6,897,219$ 56,273$ (233,674)$ 6,719,818$

Advances to other funds

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4. INTERFUND TRANSACTIONS, Continued The line of credit advances between the Agency and the City have been established through a cooperation agreement, first approved in 1980, describing the operation support provided to the Agency, and the terms and conditions for repayment of City loans or advances. In June 1992 and May 1997, a restated and amended cooperation agreement was adopted for the purpose of restructuring the financial aspects of the relationship. In 2004, an amended cooperation agreement was adopted to establish a predictable revenue stream into the General Fund and provide for accumulation of project funds for the Agency. In 2011, a second amended and restated cooperation agreement was adopted to update the status of the amounts paid to the City and the amount of existing indebtedness of the Agency owed to the City. The 2011 amended agreement calls for: 1) the Agency to reimburse the City with interest payments accruing at five percent on the total amount of principal owed by the Agency to the City beginning July 1, 2010; 2) the Agency to reimburse the City with principal installments of $562,364 from May 15, 2011 through May 15, 2015; and 3) in the event there is insufficient tax increment revenue to make a debt payment, the Agency may request to defer that portion that cannot be paid in the current year to an upcoming year. Any request shall be presented to City Council at a regular meeting, on or before June 30 of that year. The City may elect to reloan funds to the Agency, on an as-needed basis, through a line of credit as described in the agreement. Currently, the City supports the Agency by making advances for project costs and administrative expenses and classifies the payments as nonspendable advance to RDA in the City’s General Fund. The outstanding line of credit balance at June 30, 2011, was $5,538,076. The Agency’s liability with respect to the line of credit is also included in the Redevelopment Agency Capital Projects Fund in the basic fund financial statements. The City’s Public Art fund on January 26, 2008 loaned the Agency $1,000,000 at 5 percent compound interest for a term of 2 years for the WAV project. In 2011, a second amendment to the promissory note was adopted to modify and extend the terms for repayment of the loan. The loan was extended for a term that expires on the earlier of (a) December 1, 2016, or (b) thirty (30) days after the last unit in the project is sold. Further, the loan shall accrue simple interest at the rate of 3 percent per annum commencing on the date of disbursement with the exception of payment in default according to Section 7 of the original agreement. Due to/from Other Funds

As of June 30, 2011, balances of due to/from other funds were as follows:

Gas TaxSpecial

Due from other funds Revenue Total

General Fund -$ -$ -$ -$ -$ 1,996,413$ 1,996,413$ Certificates of Participation Debt Obligation Debt Service - - 17,044 - 23,035 - 40,079 Housing and Community Development Block Grant Capital Projects - - - 283,758 - - 283,758 Redevelopment Agency Capital Projects 816,168 - - - - 816,168

Other Governmental funds - 1,169,935 371,857 - - - 1,541,792

Golf course enterprise fund 2,020,993 - - - - - 2,020,993 Total 2,837,161$ 1,169,935$ 388,901$ 283,758$ 23,035$ 1,996,413$ 6,699,203$

Due to other funds

Redeve-lopment Agency

Captial Projects Internal Services

Facilities Mainten-

ance

Workers Compen-

sationGeneral

Fund

Capital Improve-

ment

50

4. INTERFUND TRANSACTIONS, Continued Due to/from Other Funds, Continued General Fund

The loan from the Workers’ Compensation Fund was used for capital improvement projects.

Certificates of Participation Debt Obligation Debt Service

Capital improvement construction expenditures incurred this year will be reimbursed next year with debt financing funds.

Redevelopment Agency Capital Projects

The Redevelopment Agency SERAF payments in the prior fiscal year required cash from the general fund. This will be repaid when funds are available.

Other Governmental Funds Advances from the Gas Tax Traffic Mitigation Fund were used to fund the startup of the Downtown Parking District fund. Capital improvement construction expenditures to be reimbursed next year with debt financing funds. Redevelopment Agency revenues were used to fund the Home Match Program.

Golf Enterprise Fund

The Golf Enterprise Fund was in a negative cash position at year-end. This covers that negative cash positions.

Transfers

Transfers for the year ended June 30, 2011, were as follows:

Debt Service

Capital Project Funds

General Fund

Gas TaxSpecial

Revenue

Park and Recreat-

ion Special

Revenue

Certificates of Participa-

tion Debt Obligation

Capital Improve-

ment

Other Govern-mental Funds Water Golf

Internal Service Funds Total

Transfers OutGeneral Fund $ - $ - $ 3,680 $ 3,593,538 $ 1,560,333 $ 943,733 $ - $ 5,610 $ 40,000 6,146,894$ Special Revenue Funds:

Gas Tax 127,180 - - - - - - - 127,180 Parks and Recreation 425,000 - - - - - - - - 425,000

Debt Service Fund:

Certificates of Participation-Debt Obligation - - - - 106,950 - - - 34,760 141,710

Capital Projects Funds:CIP General 42,000 - - - - 26,690 - - - 68,690 Redevelopment Agency - - - - - 1,177,626 - - - 1,177,626

Other Governmental Funds: 122,242 - - - 657,918 - - - - 780,160 Enterprise Funds:

Wastewater 277,436 23,400 - - 2,860 1,007,343 - - 1,311,039 Water 405,113 27,590 - - 5,938 - - - 438,641 Golf Course 215,000 - 872,227 - - - - 1,087,227

Internal Service Funds: 8,000 - - 40,000 - 20,151 68,151 Total $ 1,621,971 $ 50,990 $ 3,680 $ 4,465,765 $ 2,365,201 $ 2,156,847 $ 1,007,343 $ 5,610 $ 94,911 $ 11,772,318

Major Funds

Enterprise

Transfers In

51

4. INTERFUND TRANSACTIONS, Continued Transfers, Continued The transfers were for the following purposes:

General Fund transfers to:Parks and Recreation 3,680$ For reimbursement of funding provided for improvement projects

financed through prior debt financing for Parks and Receation improvements.

Certificates of Participation Debt Obligation 3,593,538 For payment of the annual debt service requirements.

Capital Improvement 1,560,333 For reimbursement of funding provided for improvement projects financed through prior debt financing for Police Fire Emergency Generator, Surfers Point, and City Hall Energy Efficiency Chillers improvement projects.

Enterprise Funds 5,610 For reimbursement of funding provided for improvement projects financed through prior debt financing for Golf improvements.

Internal Service Funds 40,000 For information technology extra help services.

Other Governmental Funds 943,733 To cover Law Enforcement (Fund 14) project revenue shortfall.6,146,894$

Gas Tax transfers to:

General Fund 127,180$ For reimbursement of Gas Tax eligible expenditures-Traffic Safety.127,180$

Park and Recreation transfers to:General Fund 425,000$ To provide for Westside Revitalization and for reimbursement of

funding provided for improvement projects financed through prior debt financing.

425,000$

Certificate of Participation Debt Obligation transfers to:Capital Improvement 106,950$ For reimbursement of funding provided for improvement projects

financed through prior debt financing for City Hall capital improvements.

Internal Service Funds 34,760 For reimbursement of funding provided for improvement projects financed through prior debt financing for City Hall capital improvements.

141,710$

CIP General transfers to:General Fund 42,000$ To reimburse General fund for software SYMPRO purchases.Other Governmental Funds 26,690 For funding of future public art projects.

68,690$

Redevelopment Agency transfers to:Other Governmental Funds 1,177,626$ To provide for RDA project for Debt issued.

1,177,626$

52

4. INTERFUND TRANSACTIONS, Continued Transfers, Continued Other Governmental Funds transfers to:

General Fund 122,242$ To provide for City overhead expenses.

Capital Improvement 657,918 For reimbursement of funding for improvement projects financed through prior debt financing for park capital improvements.

780,160$

Wastewater transfers to:General Fund 277,436$ Annual Ventura Water right-of-way payment.Gas Tax 23,400 To provide for Contruction In Progress street resurfacing-manhole

improvements.Water 1,007,343 For reimbursement of the Ventura Water administration and billing

expenses shared by Wastewater.Other Governmental Funds 2,860 For funding of future public art projects.

1,311,039$

Water transfers to:General Fund 405,113$ For annual Ventura Water right-of-way payment, web services,

and storm drain impacts.Gas Tax 27,590 To provide for Contruction In Progress street resurfacing-water

valve improvements.Other Governmental Funds 5,938 For funding of future public art projects.

438,641$

Golf Course transfers to:General Fund 215,000$ For annual land lease payment.Certificates of Participation Debt Obligation 872,227 For payment of the annual debt service requirements.

1,087,227$

Internal Service Funds transfers to:

General Fund 8,000$ For payment of annual physical exams.Capital Improvement 40,000 For information technology extra help services.Internal Service Funds 20,151 For annual payment of shared warehouse services.

68,151$

53

5. LAND AND BUILDINGS HELD FOR RESALE Land and buildings held for resale are recorded at the lower of cost or estimated net realizable value, only determined upon the execution of a disposition and development agreement. The available fund balance is restricted in an amount equal to the carrying value of land and buildings held for resale because such assets are restricted for specific purpose stipulated by redevelopment law. The amount recorded as assets held for resale and the corresponding restricted fund balance as of June 30, 2011, was $540,880. 6. CAPITAL ASSETS Government-Wide Financial Statements At June 30, 2011, the City’s capital assets consisted of the following:

Government Business-TypeActivities Activities Total

Non-depreciable assets:Land 19,102,058$ 497,497$ 19,599,555$ Water rights - 1,221,838 1,221,838 Construction in progress 16,036,896 32,082,164 48,119,060

Total non-depreciable assets 35,138,954 33,801,499 68,940,453

Depreciable assets:Buildings and improvements 64,897,710 70,147,462 135,045,172 Improvements other than buildings 19,458,089 62,138,897 81,596,986 Machinery and equipment 47,675,210 130,509,356 178,184,566 Infrastructure 101,878,155 1,614,700 103,492,855

Total depreciable assets 233,909,164 264,410,415 498,319,579

Less accumulated depreciation for:Buildings and improvements (27,292,666) (23,599,491) (50,892,157) Improvements other than buildings (6,845,054) (32,433,427) (39,278,481) Machinery and equipment (24,973,216) (42,916,241) (67,889,457) Infrastructure (68,691,572) (310,461) (69,002,033)

Total accumulated depreciation (127,802,508) (99,259,620) (227,062,128)

Total depreciable assets, net 106,106,656 165,150,795 271,257,451

Total capital assets 141,245,610$ 198,952,294$ 340,197,904$

54

6. CAPITAL ASSETS, Continued The following is a summary of changes in capital assets for governmental activities:

Depreciation expense in governmental activities for capital assets for the year ended June 30, 2011, is composed of the following:

General Government 758,146$ Finance and Technology 331,352 Community Development 29,354 Parks, Recreation and Community Partnerships 1,658,356 Public Safety 553,445 Public Works 2,731,683 Internal Service Fund depreciation charged to functions 1,495,550

7,557,886$

Balance BalanceJuly 1, 2010 Additions Deletions June 30, 2011

Governmental Activities:Capital assets, not being depreciated:

Land 19,102,058$ -$ -$ 19,102,058$ Construction in progress 10,260,434 5,776,462 - 16,036,896

Total capital assets,not being depreciated 29,362,492 5,776,462 - 35,138,954

Capital assets, being depreciated:Buildings and improvements 64,912,901 - (15,191) 64,897,710 Improvements other than buildings 19,460,023 - (1,934) 19,458,089 Machinery and equipment 47,576,368 940,686 (841,844) 47,675,210 Infrastructure 101,878,155 - - 101,878,155

Total capital assets,being depreciated 233,827,447 940,686 (858,969) 233,909,164

Less accumulated depreciation for:Buildings and improvements (25,911,197) (1,396,660) 15,191 (27,292,666) Improvements other than buildings (6,163,741) (683,247) 1,934 (6,845,054) Machinery and equipment (22,169,209) (3,521,024) 717,017 (24,973,216) Infrastructure (66,734,617) (1,956,955) - (68,691,572)

Total accumulated depreciation (120,978,764) (7,557,886) 734,142 (127,802,508)

Total capital assets,being depreciated, net 112,848,683 (6,617,200) (124,827) 106,106,656

Total governmental activities 142,211,175$ (840,738)$ (124,827)$ 141,245,610$

55

6. CAPITAL ASSETS, Continued The following is a summary of changes in capital assets for business-type activities:

Depreciation expense in business-type activities for capital assets for the year ended June 30, 2011, is composed of the following:

Wastewater 3,252,299$ Water 4,317,268 Golf Course 913,634

Total depreciation expense 8,483,201$

Balance BalanceJuly 1, 2010 Additions Deletions June 30, 2011

Business-Type Activities:

Capital assets, not being depreciated:Land 497,497$ -$ -$ 497,497$ Water rights 1,221,838 - - 1,221,838 Construction in progress 23,619,816 8,462,348 - 32,082,164

Total capital assets,not being depreciated 25,339,151 8,462,348 - 33,801,499

Capital assets, being depreciated:Buildings and improvements 70,179,257 - (31,795) 70,147,462 Improvements other than buildings 62,138,897 - - 62,138,897 Machinery and equipment 130,680,113 108,358 (279,115) 130,509,356 Infrastructure 1,614,700 - - 1,614,700

Total capital assets,being depreciated 264,612,967 108,358 (310,910) 264,410,415

Less accumulated depreciation for:Buildings and improvements (22,135,710) (1,495,576) 31,795 (23,599,491) Improvements other than buildings (31,068,247) (1,365,180) - (32,433,427) Machinery and equipment (37,619,513) (5,543,292) 246,564 (42,916,241) Infrastructure (231,308) (79,153) - (310,461)

Total accumulated depreciation (91,054,778) (8,483,201) 278,359 (99,259,620)

Total capital assets,being depreciated, net 173,558,189 (8,374,843) (32,551) 165,150,795

Total business-type activities 198,897,340$ 87,505$ (32,551)$ 198,952,294$

56

7. LEASES

Capital Leases The City entered into a lease agreement in December 2007 to finance the acquisition of Computer Aided Dispatch and Mobile System upgrade to the existing system. There are five annual payments due starting on January 1, 2009 and ending on January 1, 2013. This lease agreement is considered a capital lease for accounting purposes and, therefore, has been recorded at the present value of the future minimum lease payments as of the inception date. The asset acquired through this capital lease is as follows:

Decreases to Capital Leases Payable were as follows:

The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2011, are as follows:

Amounts AmountsBalance Balance Due Within Due in More

July 1, 2010 Additions Deletions June 30, 2011 One Year than One Year

Governmental Activities:2009 Lease Agreement 531,577$ -$ (177,193)$ 354,384$ 177,192$ 177,192$

Classification

Governmental Activities

Asset:Machinery and equipment $ 885,961Less: Accumulated depreciation (265,788)

Total $ 620,173

Year Ending June 30Governmental

Activities

2012 177,192$ 2013 177,192

Total minimum payments 354,384$

57

8. STATE WATER PROJECT On July 6, 1971, the City executed a contract with the Casitas Municipal Water District (CMWD) for the allocation of fifty (50) percent of CMWD’s annual entitlement of available water from the State of California Water Project. In turn, the City assumed the burden of costs, both past and future, in the same proportion. The City’s share of existing costs as of the inception of the contract was covered by a contract payable over a twenty (20) year period at four (4) percent interest, and was paid as of June 30, 1990. The current agreement runs through June 30, 2035, with the right to extend the agreement for continued service. Under this agreement, the City’s share of current project costs is paid on an annual basis. This agreement allows the City the option to maintain its right to beneficial use of water from the State Water Line Project. The costs for this project are adjusted semiannually by the State and have been increasing annually. Since most of the costs are associated with operation and maintenance, the City elected to expense these costs. The total cost for the year ended June 30, 2011 was $1,392,498. 9. LONG-TERM DEBT A. Governmental Activities Long-Term Debt The Summary of Changes in Long-Term Debt for Governmental Activities for the year ended June 30, 2011, is as follows:


July 1, 2010 Additions Deletions June 30, 2011 One Year than One Year

Governmental Activities:CalHFA HELP Loan - 2008 1,500,000$ -$ -$ 1,500,000$ -$ 1,500,000$ Certificates of Participation - 2001 Series A 1,580,000 - (1,580,000) - - - Certificates of Participation - 2001 Series C 13,740,000 - (7,155,000) 6,585,000 410,000 6,175,000 Certificates of Participation - 2002 Series B 11,345,000 - (9,890,000) 1,455,000 1,455,000 - Certificates of Participation - 2002 Series D 13,670,000 - (2,985,000) 10,685,000 240,000 10,445,000 Certificates of Participation - 2007 Series E 10,165,000 - (450,000) 9,715,000 470,000 9,245,000 Certificates of Participation - 2010 Series F - 20,615,000 - 20,615,000 400,000 20,215,000 Tax Allocation Bonds - 2003 6,545,000 - (270,000) 6,275,000 275,000 6,000,000 Tax Allocation Bonds - 2008 8,500,000 (35,000) 8,465,000 60,000 8,405,000 California Energy Commission 2004 Loan 150,999 - (12,586) 138,413 13,073 125,340 California Energy Commission 2007 Loan 111,070 - (73,221) 37,849 37,849 -

Subtotal governmental activities 67,307,069 20,615,000 (22,450,807) 65,471,262 3,360,922 62,110,340

Claims and judgments payable (Note 12) 8,640,993 2,820,236 (2,721,726) 8,739,503 2,538,315 6,201,188 Compensated absences payable (Note 1J ) 4,916,998 2,393,436 (2,201,407) 5,109,027 533,183 4,575,844

Total governmental activities 80,865,060$ 25,828,672$ (27,373,940)$ 79,319,792$ 6,432,420$ 72,887,372$

Classification

58

9. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued CalHFA HELP Loan - 2008 The City entered into a loan agreement on December 21, 2007 with the California Housing Finance Agency (CALHFA) to borrow $1.5 million at a 3.5 percent interest rate for a term of 10 years for the WAV project. Payment of principal and all simple interest is due on the tenth anniversary of the agreement. Certificates of Participation – 2001 Series A Certificates of Participation in the amount of $2,925,000 were issued on December 1, 2001. The Certificates were issued to provide for: (1) the defeasance of $2,960,000 of the City of Ventura 1987 Refunding Certificates of Participation (Capital Improvement Project); (2) to acquire debt service reserve surety bond for the Series A Certificates; and (3) to pay costs in connection with the execution and delivery of the Series A Certificates. The Certificates were defeased in January 2011 from the proceeds of the Certificates of Participation, Series F, which were issued in July 2010. Series F proceeds were used to advance-refund $1,380,000 of the Series A certificates, with a $13,800 premium on redemption. The City’s non-defeased portion of the COPs was repaid during the year and there was no outstanding balance at year-end. At June 30, 2011, the total outstanding defeased Certificates totaled $1,380,000. The Certificates will be repaid from the funds placed in escrow with a third party trustee. Certificates of Participation – 2001 Series C Certificates of Participation in the amount of $16,345,000 were issued on December 1, 2001. The Certificates were issued to provide for: (1) improvements to the Ventura Community Park, the City Hall Terra Cotta Restoration Project, heating and ventilation improvements to City Hall and city-wide street median improvement programs; (2) to acquire a debt service reserve surety bond for the Certificates; and (3) to pay costs in connection with the execution and delivery of the Series C Certificates. The Certificates were partially defeased from the proceeds of the Certificates of Participation, Series F, which were issued in July 2010. Series F proceeds were used to advance-refund $6,760,000 of the Series C certificates, with a $67,600 premium on redemption. The remaining Certificates are due in annual principal installments ranging between $0 and $1,025,000 through 2031. Interest rates range from 3.00 percent to 4.725 percent and interest is payable semi-annually on February 1 and August 1. The funding source for the repayment is lease payments made by the City to the Authority. The total amount outstanding as of June 30, 2011, was $6,585,000. At June 30, 2011 the total outstanding defeased Certificates totaled $6,760,000. The Certificates will be repaid from the funds placed in escrow with a third party trustee.

59

9. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued Certificates of Participation – 2001 Series C, Continued The annual debt service requirements for the 2001 Series C Certificates of Participation outstanding at June 30, 2011, were as follows:

Certificates of Participation – 2002 Series B Certificates of Participation in the amount of $19,765,000 were issued on October 3, 2002. The Certificates were issued to provide funds for: 1) the defeasance of 1993 Refunding Certificates of Participation and related City lease payment obligations; 2) to acquire a debt service reserve surety bond for the Series B Certificates; and 3) to pay certain costs incurred in connection with the execution and delivery of the Series B Certificates. The Certificates were partially defeased from the proceeds of the Certificates of Participation, Series F, which were issued in July 2010. Series F proceeds were used to advance-refund $8,505,000 of the Series B certificates, with an $85,050 premium on redemption. There is one remaining principal installment due January 1, 2012. The interest rate on the non-defeased debt is 2.5 percent to be paid on July 1, 2011 and January 1, 2012. The funding source for the repayment is lease payments made by the City to the Authority. The total amount outstanding as of June 30, 2011, was $1,455,000. At June 30, 2011 the total outstanding defeased Certificates totaled $8,505,000. The Certificates will be repaid from the funds placed in escrow with a third party trustee. The annual debt service requirements for the 2002 Series B Certificates of Participation outstanding at June 30, 2011, were as follows:

Year EndingJune 30 Principal Interest Total

2011-12 1,455,000$ 36,375$ 1,491,375$

Total 1,455,000$ 36,373$ 1,491,373$

Y ear E nding

June 30 Principal Interest Total

2012 410,000$ 342,638$ 752,638$ 2013 - 324,187 324,187 2014 - 324,188 324,188 2015 - 324,187 324,187 2016 - 324,188 324,188

2017-2021 - 1 ,620,937 1 ,620,937 2022-2026 1,545,000 1 ,581,300 3 ,126,300 2027-2031 4,630,000 754,162 5 ,384,162

Total 6 ,585,000$ 5 ,595,788$ 12,180,788$

60

9. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued Certificates of Participation – 2002 Series D Certificates of Participation in the amount of $15,930,000 were issued on December 1, 2002. The Certificates were issued to provide funds for: 1) improvements to the Buenaventura Golf Course and the Olivas Park Golf Course; 2) to acquire debt service reserve surety bond for the Certificates; 3) to fund capitalized interest; and 4) to pay certain costs incurred in connection with the execution and delivery of the Certificates. The Certificates were partially defeased from the proceeds of the Certificates of Participation, Series F, which were issued in July 2010. Series F proceeds were used to advance-refund $2,755,000 of the Series D certificates, with no premium on redemption. The remaining Certificates are due in annual principal installments of $0 to $980,000 through 2032. Interest rates range from 1.65 percent to 5.00 percent and is payable semi-annually on February 1 and August 1. The funding source for the repayment is lease payments made by the City to the Authority. The total amount outstanding as of June 30, 2011, was $10,685,000. At June 30, 2011 the total outstanding defeased Certificates totaled $2,605,000. The Certificates will be repaid from the funds placed in escrow with a third party trustee. The annual debt service requirements for the 2002 Series D Certificates of Participation outstanding at June 30, 2011, were as follows:

Certificates of Participation – 2007 Series E On December 1, 2007, the City issued $11,420,000 in Certificates of Participation (Series E) with an average interest rate ranging from 3.0 percent to 4.5 percent to: 1) provide for the advance refunding of the $7,090,000 City of Ventura Public Facilities Financing Authority 1995 Refunding Lease Revenue Bonds with an interest rate ranging from 4.55 percent to 5.75 percent and a principal balance of $3,455,000, 2) finance the acquisition of unencumbered fee title to a public parking structure, 3) finance certain public park improvements, 4) fund the Reserve Fund, and 5) pay certain costs incurred in connection with the execution and delivery of the Certificates. The Certificates were executed and delivered by and among the Bank of New York Trust Company, N.A. as Trustee. As a result, the 1995 Refunding Lease Revenue Bonds discussed in (1) above are considered to be defeased, and the liability for those bonds has been removed from the financial statements. The total amount outstanding as of June 30, 2011, was $9,715,000.


2012 240,000$ 523,375$ 763,375$ 2013 255,000 514,075 769,075 2014 - 503,875 503,875 2015 - 503,875 503,875 2016 - 503,875 503,875

2017-2021 1,650,000 2,443,375 4,093,375 2022-2026 3,320,000 1,817,750 5,137,750 2027-2031 4,240,000 902,250 5,142,250

2032 980,000 49,000 1,029,000 Total 10,685,000$ 7,761,450$ 18,446,450$

61

9. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued Certificates of Participation – 2007 Series E, Continued The annual debt service requirements for the 2007 Series E Certificates of Participation outstanding at June 30, 2011, were as follows:

Certificates of Participation – 2010 Series F On July 28, 2010, the City issued $20,615,000 in Certificates of Participation, Series F with interest rates ranging from 2 percent to 4.75 percent to: 1) provide for the advance refunding and defeasance of a portion of the $2,925,000 2001 Refunding Certificates of Participation, Series A; a portion of the $19,765,000 2002 Refunding Certificates of Participation, Series B; a portion of the $16,345,000 Certificates of Participation, Series C; and a portion of the $15,930,000 2002 Certificates of Participation, Series D; 2) finance certain public golf course improvements; 3) acquire a reserve fund surety policy; and 4) pay certain costs incurred in connection with the execution and delivery of the Certificates. The Certificates were executed and delivered by and among the Bank of New York Trust Company, N.A. as Trustee. The refunding resulted in a reduction in total debt service payments by approximately $1.2 million and an economic gain (difference between the present value of the old and new debt service payments) of $807,175. The total amount outstanding as of June 30, 2011, was $20,615,000. The annual debt service requirements for the Certificates of Participation, 2010 Series F outstanding at June 30, 2011:


2012 470,000$ 434,031$ 904,031$ 2013 485,000 415,231 900,231 2014 510,000 395,831 905,831 2015 215,000 375,432 590,432 2016 225,000 366,831 591,831

2017-2021 1,270,000 1,690,825 2,960,825 2022-2026 1,560,000 1,398,781 2,958,781 2027-2031 1,955,000 1,006,050 2,961,050 2032-2036 2,460,000 495,663 2,955,663

2037 565,000 26,838 591,838

Total 9,715,000$ 6,605,513$ 16,320,513$


2012 400,000$ 730,938$ 1,130,938$ 2013 2,320,000 692,137 3,012,137 2014 2,925,000 613,388 3,538,388 2015 3,005,000 520,625 3,525,625 2016 3,125,000 409,312 3,534,312

2017-2021 6,190,000 922,688 7,112,688 2022-2026 2,015,000 273,912 2,288,912 2027-2031 - 150,812 150,812 2031-2033 635,000 45,244 680,244

Total $ 20,615,000 $ 4,359,056 $ 24,974,05662

9. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued Tax Allocation Bonds – 2003 Tax Allocation Bonds (TABs) in the amount of $8,000,000 were issued by the Agency on June 1, 2003. The bonds were issued to provide funds to: 1) repay certain advances made by the City to the Agency; 2) fund a reserve account for the bonds; and 3) pay costs of issuance of the bonds. The bonds are due in annual principal installments of $205,000 to $495,000 through 2028. Interest rates range from 2.00 percent to 4.25 percent and interest is payable semi-annually on February 1 and August 1. The funding source for the repayment is tax increment revenue. The total amount outstanding as of June 30, 2011, was $6,275,000. The 2003 TABs are special obligations of the Agency, which are secured by an irrevocable pledge of tax increment revenues payable to the Agency. The principal and interest remaining on the bonds is $8,674,473, payable through August 2028. For the current year, principal and interest payments totaled $516,464. The annual debt service requirements for the 2003 Tax Allocation Bonds outstanding at June 30, 2011, were as follows: Tax Allocation Bonds – 2008 Tax Allocation Bonds in the amount of $8,785,000 were issued by the Agency on December 18, 2008. The bonds were issued to provide funds to 1) repay certain advances made by the City to the Agency; 2) fund a reserve account for the bonds; and 3) pay costs of issuance of the bonds. The bonds are due in annual principal installments of $35,000 to $695,000 through 2039. Interest rates range from 3.00 percent to 8.00 percent and is payable semi-annually on February 1 and August 1. The funding source for the repayment is tax increment revenue. The total amount outstanding as of June 30, 2011, was $8,465,000. The 2008 TABs are special obligations of the Agency, which are secured by an irrevocable pledge of tax revenues payable to the Agency. The principal and interest remaining on the bonds is $18,512,991, payable through August 2039. For the current year, principal and interest payments totaled $653,513.


2012 275,000$ 238,457$ 513,457$ 2013 285,000 230,058 515,058 2014 290,000 221,070 511,070 2015 300,000 211,295 511,295 2016 310,000 200,807 510,807

2017-2021 1,735,000 821,126 2,556,126 2022-2026 2,110,000 435,009 2,545,009 2027-2028 970,000 41,650 1,011,650

Total 6,275,000$ 2,399,473$ 8,674,473$

63

9. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued Tax Allocation Bonds – 2008, Continued The annual debt service requirements for the 2008 Tax Allocation Bonds outstanding at June 30, 2011, are as follows:

Total tax increment revenue for all tax allocation bonds for the year ended June 30, 2011 was $3,408,602. California Energy Commission – 2004 Loan On August 5, 2005, a low-interest loan was received from the California Energy Commission to install solar panels at the City’s Sanjon Yard facility to reduce energy use. The loan has an interest rate of 3.95 percent and a fifteen-year repayment schedule with 30 equal semi-annual payments of $9,214. The annual debt service requirements for this loan at June 30, 2011, are as follows:

Y ea r E n d in gJu n e 3 0 P rin cip a l In te rest T o ta l

20 1 2 6 0 ,00 0$ 6 1 6 ,4 1 9$ 6 76 ,4 19$ 20 1 3 9 0 ,00 0 6 1 2 ,9 3 1 7 02 ,9 31 20 1 4 16 5 ,00 0 6 0 6 ,6 6 9 7 71 ,6 69 20 1 5 22 5 ,00 0 5 9 6 ,6 3 7 8 21 ,6 37 20 1 6 26 5 ,00 0 5 8 3 ,2 7 8 8 48 ,2 78

2 01 7 -20 21 1 ,73 0 ,00 0 2 ,5 9 7 ,7 9 7 4 ,3 27 ,7 97 2 02 2 -20 26 1 ,45 0 ,00 0 2 ,0 4 2 ,4 7 8 3 ,4 92 ,4 78 2 02 7 -20 31 1 ,73 5 ,00 0 1 ,4 2 6 ,3 8 1 3 ,1 61 ,3 81 2 03 2 -20 36 1 ,51 5 ,00 0 8 1 3 ,0 0 0 2 ,3 28 ,0 00 2 03 7 -20 41 1 ,23 0 ,00 0 1 5 2 ,4 0 0 1 ,3 82 ,4 00

T o tal 8 ,46 5 ,00 0$ 1 0 ,0 4 7 ,9 9 1$ 18 ,5 12 ,9 91$

Year Ending June 30 Principal Interest Total

2012 13,073$ 5,354$ 18,427$ 2013 13,609 4,818 18,427 2014 14,152 4,275 18,428 2015 14,717 3,711 18,428 2016 15,296 3,132 18,428

2017-2019 67,566 6,145 73,711 Total 138,413$ 27,436$ 165,849

64

9. LONG-TERM DEBT, Continued A. Governmental Activities Long-Term Debt, Continued California Energy Commission – 2007 Loan On October 13, 2006, a low-interest loan was received from the California Energy Commission to install energy efficient lights at various City facilities and energy efficient pumps and motors on the heating and cooling systems at City Hall and Police/Fire Headquarters. The loan has an interest rate of 4.5 percent and a six-year repayment schedule with 11 equal semi-annual payments of $38,703. The annual debt service requirements for the October 13, 2006, California Energy Commission loan outstanding at June 30, 2011, are as follows:

B. Long-Term Debt of Business-Type Activities and Proprietary Funds The summary of changes in long-term debt of business-type activities for the year ended June 30, 2011, is as follows:


July 1, 2010 Additions Deletions June 30, 2011 One Year than One YearBusiness-Type Activities:

Wastewater Revenue Refunding COPs $ 21,765,000 -$ $ (720,000) $ 21,045,000 $ 745,000 $ 20,300,000Less unamortized :

Bond premium 203,146 - (8,464) 194,682 - 194,682 Deferral on refunding (333,787) - 83,447 (250,340) - (250,340)

Wastewater Revenue Refunding COPs, net $ 21,634,359 - (645,017) 20,989,342 745,000 20,244,342

Water Revenue Refunding COPs 23,840,000 - (590,000) 23,250,000 610,000 22,640,000 Less unamortized :

Bond premium 371,917 - (33,811) 338,106 - 338,106 Deferral on refunding (720,460) - 65,496 (654,964) - (654,964)

Water Revenue Refunding COPs, net 23,491,457 - (558,315) 22,933,142 610,000 22,323,142

Safe Drinking Water Loan 17,987,933 - (838,891) 17,149,042 859,060 16,289,982

Total business-type activities $ 63,113,749 -$ $ (2,042,223) $ 61,071,526 $ 2,214,060 $ 58,857,466

Classification

Year Ending June 30 Principal Interest Total

2012 37,849$ 854$ 38,703$

Total 37,849$ 854$ 38,703$

65

9. LONG-TERM DEBT, Continued B. Long-Term Debt of Business-Type Activities and Proprietary Funds, Continued Wastewater Revenue Refunding 2004 Certificates of Participation Certificates of Participation in the amount of $25,075,000 were issued on December 16, 2004. The Certificates were issued to provide for: 1) the defeasance of $7,125,000 million of the City of Ventura 1996 Wastewater Revenue Refunding Bonds; 2) finance improvements to the City’s water reclamation facility upgrade; 3) fund a reserve fund for the Certificates; and 4) pay costs in connection with the execution and delivery of the Certificates. The Certificates are due in annual principal installments of $625,000 to $1,405,000 through 2034. Interest rates range from 2.50 percent to 5.00 percent and is payable semi-annually on September 1 and March 1. The funding source for the repayment is lease payments made by the City to the Authority. The total amount outstanding as of June 30, 2011, was $21,045,000. The Wastewater Revenue Refunding Certificates of Participation is secured by an irrevocable pledge of wastewater revenue. The principal and interest remaining on the certificates of participation is $34,993,675, payable through fiscal year 2034. For the current year, principal and interest payment and pledged revenue were $1,738,750 and $244,606, respectively. Total Wastewater Revenue Refunding Certificates of Participation outstanding as of June 30, 2011, net of unamortized bond premium were as follows:

The annual debt service requirements for the 2004 Wastewater Revenue Refunding Certificates of Participation outstanding at June 30, 2011, were as follows:

Principal outstanding at June 30, 2011 $ 21,045,000Add unamortized bond premium 194,682 Less unamortized deferral on refunding (250,340)

Net Bonds outstanding at June 30, 2011 $ 20,989,342


2012 745,000$ 993,550$ 1,738,550$ 2013 775,000 965,612 1,740,612 2014 800,000 936,550 1,736,550 2015 835,000 904,550 1,739,550 2016 605,000 871,150 1,476,150

2016-2020 3,420,000 3,955,763 7,375,763 2021-2025 4,330,000 3,053,750 7,383,750 2026-2030 5,515,000 1,859,250 7,374,250 2031-2034 4,020,000 408,500 4,428,500

Total 21,045,000$ 13,948,675$ 34,993,675$

66

9. LONG-TERM DEBT, Continued B. Long-Term Debt of Business-Type Activities and Proprietary Funds, Continued Water Revenue Refunding Certificates of Participation Certificates of Participation in the amount of $27,410,000 were issued on March 1, 2004. The Certificates were issued to provide for: (1) the defeasance of $12,615,000 of the City of Ventura 1993 Water Revenue Refunding Bonds; (2) finance improvements to the City’s water system; (3) fund a reserve fund for the Certificates; and (4) pay costs in connection with the execution and delivery of the Certificates. The Certificates are due in annual principal installments of $505,000 to $1,610,000 through 2034. Interest rates range from 3.00 percent to 5.00 percent and is payable semi-annually on October 1 and April 1. The funding source for the repayment is revenues from the Water Fund that provide cash for the lease payments to the Authority. The total amount outstanding as of June 30, 2011, totaled $23,250,000. The Water Revenue Refunding Certificates of Participation is secured by an irrevocable pledge of water revenue. The principal and interest remaining on the certificates of participation is $38,514,275, payable through fiscal year 2034. For the current year, principal and interest payment and pledged revenue were $1,689,375 and $1,525,355, respectively. Total Water Revenue Refunding Certificates of Participation outstanding as of June 30, 2011, net of unamortized bond premium and deferral on refunding were as follows:

The annual debt service requirements for the Water Revenue Refunding Certificates of Participation outstanding at June 30, 2011, were as follows:

Principal outstanding at June 30, 2011 $ 23,250,000Add unamortized bond premium 338,106 Less unamortized deferral on refunding (654,964)

Net Bonds outstanding at June 30, 2011 $ 22,933,142


2012 610,000$ 1,078,375$ 1,688,375$ 2013 630,000 1,055,888 1,685,888 2014 655,000 1,030,975 1,685,975 2015 680,000 1,004,275 1,684,275 2016 705,000 976,575 1,681,575

2017-2021 3,995,000 4,397,862 8,392,862 2022-2026 4,975,000 3,387,325 8,362,325 2027-2031 6,395,000 1,980,125 8,375,125 2032-2034 4,605,000 352,875 4,957,875

Total 23,250,000$ 15,264,275$ 38,514,275$

67

9. LONG-TERM DEBT, Continued B. Long-Term Debt of Business-Type Activities and Proprietary Funds, Continued Safe Drinking Water Loan The City has entered into a funding agreement with the State of California Department of Water Resources for a construction loan under the Safe Drinking Water State Revolving Fund Law of 1997. The loan has an interest rate of 2.39 percent and a 20-year repayment schedule with 40 equal payments of $631,910. 10. DEFERRED REVENUES

Deferred revenues at June 30, 2011, consist of:


2012 859,060$ 404,760$ 1,263,820$ 2013 879,714 384,106 1,263,820 2014 900,865 362,955 1,263,820 2015 922,524 341,295 1,263,819 2016 944,705 319,115 1,263,820

2017-2021 5,075,343 1,243,756 6,319,099 2022-2026 5,715,523 603,576 6,319,099 2027-2028 1,851,308 44,421 1,895,729

Total 17,149,042$ 3,703,983$ 20,853,026$

General Fund:Recreational activities 606,788$ Grants 676,900

Total General Fund 1,283,688

Special Revenue Funds: Gas Tax: Department of Transportation 337,400 Total Special Revenue Funds 337,400

Capital Projects Funds:Capital Improvement:

CEC loan 164,499 Olivas Adobe 175,751 Surfer's Point 1,149,393

Total Capital Projects Funds 1,489,643

Total Deferred Revenues 3,110,731$

68

11. FUND BALANCES FOR GOVERNMENTAL FUNDS Fund Balances The City has adopted the provisions of GASB 54. The objective of the statement is to enhance the usefulness of fund balance information by providing fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. The City has evaluated the use of the Special Revenue, Debt Service and Capital Projects Funds under the criteria set forth in GASB 54 and has determined there is no change needed. As prescribed by GASB 54, governmental funds report fund balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. As of June 30, 2011, fund balance for governmental funds consist of the following: Nonspendable Fund Balance – includes amounts that are (a) not in spendable form, or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example: inventories, prepaid amounts, and long-term notes receivable. Restricted Fund Balance – includes amounts that are restricted for specific purposes stipulated by external resources providers, constitutionally or through enabling legislation. Restrictions may effectively be changed or lifted only with the consent of resource providers. Committed Fund Balance – includes amounts that can only be used for the specific purposes determined by a formal action of the City’s highest level of decision-making authority, the City Council. Commitments may be changed or lifted only by the City Council taking the same formal action that imposed the constraint originally (for example: resolution and ordinance). Assigned Fund Balance – includes amounts intended to be used by the City for specific purposes that are neither restricted nor committed. Intent is expressed by 1) City Council, or 2) a body (a budget, finance committee, or management (City Executive Leadership Team, which consists of City Manager and Executive Department Heads) to which the assigned amounts are to be used for specific purposes. Assigned amounts also include all residual amounts in governmental funds (except negative amounts) other than the General Fund, that are not classified as nonspendable, restricted, or committed. Unassigned Fund Balance – the residual classification for the General Fund and includes all amounts not contained in the other classifications. Governmental funds report residual negative balances as unassigned fund balance. In circumstances where an expenditure is made for a purpose for which amounts are available in multiple fund balance classifications, fund balance is depleted in the order of restricted, committed, assigned, and unassigned. In all cases, encumbrance amounts have been assigned for specific purposes for which resources already have been allocated. Fund balances at June 30, 2011, for the governmental funds are nonspendable, restricted, committed, assigned, or unassigned for the following purposes:

69

11. FUND BALANCES FOR GOVERNMENTAL FUNDS, Continued

Housing and

Certificates of Community

Gas Tax Park and Participation Capital Development Redevelopment Major

General Special Recreation Debt Obligation Improvement Block Grant Agency Governmental

Fund Revenue Special Revenue Debt Service Capital Projects Capital Projects Capital Projects Funds

Fund Balances:

Nonspendable:

Loans and Notes Receivable 1,070,114$ -$ -$ -$ -$ 816,398$ 5,737,974$ 7,624,486$

Advance to RDA 5,559,007 - - - - - - 5,559,007

Prepaids 926 - - - - - - 926

Subtotal 6,630,047 - - - - 816,398 5,737,974 13,184,419

Restricted for:

Assets Held for Resale - - - - - - 540,880 540,880

Capital Projects 5,260,641 8,199,850 - - - - - 13,460,491

Debt Service - - - 2,537,020 - - - 2,537,020

Housing & Community Development - - - - - 466,472 - 466,472

Public Protection - - - - - - - -

Transportation & Highways - 13,342,554 - - - - - 13,342,554

Subtotal 5,260,641 21,542,404 - 2,537,020 - 466,472 540,880 30,347,417

Committed to:

Building & Safety 85,839 - - - - - - 85,839

Capital Projects - - - - - - - -

Contingencies 12,000,000 - - - - - - 12,000,000

Jobs Investment 3,256,226 - - - - - - 3,256,226

Other Miscellaneous 19,140 - - - - - - 19,140

Public Art - - - - - - - -

Revenue Enhancement 512,653 - - - - - - 512,653

Subtotal 15,873,858 - - - - - - 15,873,858

Assigned to:

Capital Projects - - 807,000 - 1,736,413 - - 2,543,413

Code Compliance Loans 74,219 - - - - - - 74,219

Downtown Commercial Rehabilitation 493,566 - - - - - - 493,566

Encumbrances 2,327,245 457,187 - - - 97,288 - 2,881,720

Housing Preservation 441,837 - - - - - - 441,837

Investment Portobello 164,933 - - - - - - 164,933

Other Miscellaneous 10,531 - - - - - - 10,531

Park and Recreation - 4,173,569 - - - - 4,173,569

Public Protection 751,459 - - - - - - 751,459

Portobello Assessment - - - - - - - -

Subtotal 4,263,791 457,187 4,980,569 - 1,736,413 97,288 - 11,535,248

Unassigned: - - - - - - (6,821,140) (6,821,140)

Total fund balances 32,028,337$ 21,999,591$ 4,980,569$ 2,537,020$ 1,736,413$ 1,380,158$ (542,286)$ 64,119,802$

Major Funds

Restricted to Future Capital Projects Street resurfacing-Main st-Mills to Telephone Rd. 2,003,780$ Street resurfacing-N. Catalina neighborhood 1,567,044

Cemetery Memorial park improvement 263,867$ ASM - Fairview neighborhood 708,976 Police/Fire emergency generator 96,825 HWY 126 Harmon barranca bike path connection 706,569 HVAC City Hall West 1,096,429 Green street demonstration - S. Catalina 674,588 Marina Park boating docks renovation 295,299 Street resurfacing - 2011 slurry/cape seal 580,791 Marina Park restroom repl & park improvement 339,549 Olivas park drive extension 534,674 City Hall photovoltaic power system 250,000 Traffice signal infrastructure modernization 503,693 Fire station energy efficiency improvements 200,000 Telegraph road - Claremont street traffic signal 329,799 Energy efficiency light replacements 249,994 Left turn lane 5 Points intersection 255,844 City Hall East first floor refurbishment 1,018,462 Access ramps 2009 186,886 Surfers Point improvements 444,186 Bus center & shelters 111,928 Comm park energy savings improvements 1,006,029 California street bridge upgrade 34,979

General Fund CIP Total 5,260,640$ Gas Tax CIP Total 8,199,550$

Community Park Softball Field lights 310,000$ CMP & Drainage infrastructure replacement 100,000$ Transfer to General Fund (Debt Repayment) 150,000 Harbor area public safety facility 380,000 Westside Community Pool 148,000 Beach Water Quality improvements 713,229 Ocean Park/Thompson Connection 199,000 Promenade repair and improvements 543,184

Park and Recreation CIP Total 807,000$ Capital Improvement Capital Projects Total 1,736,413$

Assigned to Future Capital Projects

70

11. FUND BALANCES FOR GOVERNMENTAL FUNDS, Continued

Capital Projects

Supplemental Total

Law Downtown Maintenance Street Municipal Other Total

Enforcement Law Public Parking Assessment Lighting Improvement Redevelopment Portobello Governmental Governmental

Services Enforcement Art District District District Revenue Bonds Agency Dredging Funds Funds

-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 7,624,486$

- - 1,181,742 - - - - - - 1,181,742 6,740,749

- - - - - - - - - - 926

- - 1,181,742 - - - - - - 1,181,742 14,366,161

- - - - - - - - - - 540,880

- - - - - - - - - - 13,460,491

- - - - - - 2,417,685 1,382,961 - 3,800,646 6,337,666

- - - - - - - - - - 466,472

20,861 - - - - - - - - 20,861 20,861

- - - - - - - - - - 13,342,554

20,861 - - - - - 2,417,685 1,382,961 - 3,821,507 34,168,924

- - - - - - - - - - 85,839

- - 1,069,866 - - - - - - 1,069,866 1,069,866

- - - - - - - - - - 12,000,000

- - - - - - - - - - 3,256,226

- - - - 223,115 - - - - 223,115 242,255

- - 718,604 - 664,027 - - - - 1,382,631 1,382,631

- - - - - - - - - - 512,653

- - 1,788,470 - 887,142 - - - - 2,675,612 18,549,470

- - - - - - - - - - 2,543,413

- - - - - - - - - - 74,219

- - - - - - - - - - 493,566

- - - - - - - - - - 2,881,720

- - - - - - - - - - 441,837

- - - - - - - - - - 164,933

- 4,351 - - - - - - - 4,351 14,882

- - - - - - - - - - 4,173,569

- 114,790 - - - - - - - 114,790 866,249

- - - - - - - - 1,409,142 1,409,142 1,409,142

- 119,141 - - - - - - 1,409,142 1,528,283 13,063,531

- - - (1,180,834) - (50,605) - - - (1,231,439) (8,052,579)

20,861$ 119,141$ 2,970,212$ (1,180,834)$ 887,142$ (50,605)$ 2,417,685$ 1,382,961$ 1,409,142$ 7,975,705$ 72,095,507$

Special Revenue Debt Service

Committed to Future Capital Projects

Public Art - California street bridge 124,000$ Public Art - Mission Park gateway 87,000 Public Art - Promenade/Surfer's point 17,000 Public Art - Harbor wastewater wetlands phase I 244,000 Public Art - Conservation 20,000 Public Art - Harbor Wastewater wetlands phase II 400,000 Public Art - Wells neighborhood park 60,000 Public Art - Streetscape murals bus shelters phase II 25,000 Public Art - Administration 41,398 Public Art - Municipal art acquisition 28,727 Public Art - Place community arts projects 17,741 Public Art - Community response 5,000

Public Art CIP Total 1,069,866$

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12. SELF-INSURANCE ACCRUED LIABILITIES The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City is self-insured for the first $500,000 in loss for each workers’ compensation claim and the first $1,000,000 for each general liability claim and up to $25,000 for property damage claims. The City accounts for and finances its self-insured risks of loss in the Workers’ Compensation Fund and Public Liability Fund. Excess insurance is purchased from commercial carriers for each workers’ compensation and general liability claim losses in excess of the self-insured retention levels. The outstanding claim liabilities in each of the self-insurance internal service funds are based on independent claims evaluation and also the results of separate actuarial studies and include amounts for claims incurred but not reported. Claims liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. The estimate of the claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether allocated to specific claims. General and workers’ compensation liabilities are carried at an actuarially determined rate. It is the City’s practice to obtain full actuarial studies biannually for general liability and workers’ compensation coverage. Premiums are charged by the internal service self-insurance funds using various allocation methods that include actual costs, trends in claims experience, claim severity and claims frequency. Revenues of the internal service self-insurance funds are expended to provide adequate resources to allay program administrative costs, preventative measures and to meet liabilities as they become due. Claims and judgments are generally liquidated by the internal service funds. During the past three fiscal (claims) years, none of the above programs of protection have had settlements or judgments that exceeded pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage in the prior year. The aggregate change in the balance of claims liabilities for the internal service self-insurance funds were as follows:

2011 2010

Unpaid claims, beginning of year $ 8,640,993 $ 7,219,595Incurred claims and changes in estimates 2,820,236 3,641,402 Claim payments (2,721,726) (2,220,004)

Unpaid claims, end of year $ 8,739,503 $ 8,640,993

Current portion $ 2,538,315 $ 2,282,412Noncurrent portion 6,201,188 6,358,581

Total claims and judgements payable $ 8,739,503 $ 8,640,993

June 30

At June 30, 2011, total estimated claims payable were as follows:

General Liability 1,787,214$ Workers' Compensation 6,952,289

Total 8,739,503$

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13. PENSION PLANS California Public Employees’ Retirement Plan (PERS) Plan Description - The City contributes to the California Public Employees’ Retirement System (PERS), an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and City ordinance. Copies of PERS’ annual financial report may be obtained from their Executive Office located at 400 P Street, Sacramento, California 95814. Funding Policy - Active members are required by State statute to contribute 7 percent of their annual salary if a Miscellaneous member, and 9 percent if a Safety member. The employees contribute 2percent of their required contribution and the City pays the remaining required employee contributions for all Miscellaneous employees and Safety employees in the Fire, Police, Police Management and for the Fire Chief and Police Chief (Fire Management Unit employees pay their own 9 percent). The City’s employer required contributions rate for Safety employees was 31.295 percent and Miscellaneous was 10.309 percent for the fiscal year. Annual Pension Cost - Required contributions were determined as part of the June 30, 2008, actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included: (a) 7.75 percent investment rate of return (net of administrative expenses), (b) projected salary increases range from 3.55 percent to 14.45 percent for miscellaneous employees and 3.55 percent to 13.15 percent for safety employees depending on age, service, and type of employment, and (c) 2 percent per year cost-of-living adjustments. Both (a) and (b) included an inflation component of 3.0 percent. The actuarial value of PERS assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a three-year period. PERS unfunded actuarial accrued liability (or surplus) is being amortized as a level percentage of projected payrolls on a closed basis. These assumptions are the same that were used in computing the schedule of funding progress below in 2010. The amortization period at June 30, 2010, was 21 years for miscellaneous employees. The amortization period at June 30, 2010, was 29 years for safety employees.

THREE-YEAR TREND INFORMATION FOR PERS

Fiscal Year

Miscellaneous Pension Cost

(APC)

Safety Pension Cost

(APC)

Total Pension Cost

(APC) APC

Contributed Net Pension Obligation

6/30/2009 $2,843,559 $6,318,871 $9,162,430 100% -

6/30/2010 2,771,846 6,356,675 9,128,521 97% $388,095

6/30/2011 2,857,655 6,299,911 9,157,566 100% -

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13. PENSION PLANS, Continued A schedule of funding progress is presented below: Underfunded (Overfunded) Underfunded Actuarial Entry Age (Overfunded) Liability as Actuarial Actuarial Actuarial Actuarial Percentage of Valuation Asset Accrued Accrued Funded Covered Covered Date Value Liability Liability Ratio Payroll Payroll Miscellaneous Employees Group 06/30/10 $171,259,629 $192,586,854 $21,327,225 88.9% $27,786,031 76.8% Safety

Employees Group 06/30/10 190,490,790 258,876,170 68,385,380 73.6% 20,216,386 338.3% The required schedule of funding progress immediately following the Notes to the basic financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. 14. JOINT VENTURE TRANSACTIONS South Coast Area Transit The City is a participant in a joint venture agreement with the cities of Port Hueneme, Ojai, Oxnard, and the County of Ventura for investment in a public bus transportation system, South Coast Area Transit (SCAT). As of June 30, 2011, the City held a 31.93 percent interest in SCAT based upon the number of service miles in the City. The City’s net equity in SCAT, accounted for under the equity method, was $8,591,606 or 38.18 percent at June 30, 2011. The City’s share of SCAT’s net operating loss was $975,378 for the fiscal year ended June 30, 2011, and the City’s share of SCAT’s capital grants was $86,305 resulting in a net $889,073 decrease in equity in fiscal year 2011. Complete separate financial statements are available from the SCAT office at 301 East Third Street, Oxnard, CA 93030. 15. COMMITMENTS AND CONTINGENCIES The City is presently involved in certain matters of litigation that have arisen in the normal course of conducting City business. City management believes, based upon consultation with the City Attorney, that the case listed below is the only case that could result in a material adverse financial impact on the City. Not withstanding the case below, City management believes that the City’s insurance programs are sufficient to cover any potential losses if an unfavorable outcome materializes from any of the other cases. The City was a named defendant in Wishtoyo Foundation/Ventura Coastkeeper vs. City of Ventura, U.S. District Court Case No.: CV10-02072- K(PJWx). This action seeks declaratory and injunctive relief and civil penalties against the City for alleged unlawful discharge of treated sewage effluent and raw sewage into waters of the United States in violation of the Clean Water Act and Ventura’s NPDES permit. Among the relief requested was an order declaring that Ventura has violated and is in continued violation of the Clean Water Act; enjoining Ventura from discharging raw sewage to waters of the United States; and ordering Ventura to pay civil penalties of up to $32,500 per day per violation for all Clean Water Act

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15. COMMITMENTS AND CONTINGENCIES, Continued violations occurring between January 5, 2005 and January 12, 2009, and up to $37,500 per day per violation for all Clean Water Act violations occurring since January 12, 2009. In August 2011, the City agreed to resolve this case. Analysis is currently underway of the potential remediation costs. However, the City expects that any costs associated with the settlement will be borne by the City’s Wastewater Fund and not the General Fund. The City does not expect that the case will have a material adverse effect on the General Fund or obligations payable from the General Fund, including lease payments. 16. JOBS INVESTMENT FUND During fiscal year 2007-08, the City entered into an agreement with DFJ Frontier Fund as a limited liability partner to invest a total of $3 million in high-tech, start-up companies throughout the state of California, excluding Silicon Valley. The purpose of this venture capital arrangement is to promote economic growth within the State. When these start-up companies sell after maturing, investors will receive a percentage of the equity based upon their investment. Between fiscal year 2008 and 2011, the City expended $1,650,000 of the $3 million set-aside for this purpose. The City has treated this as an expenditure rather than an investment. In addition, the City set aside $1.6 million for the Ventura Jobs Coinvestment Account with DFJ Frontier Fund to invest in high-tech, start-up companies within the City of Ventura. DFJ Frontier has agreed to match the City’s contributions in funding these companies. The City has expended $180,000 of the $1.6 million set aside for this purpose. The City has treated this as an expenditure rather than an investment. There were no expenditures in fiscal year 2010-11 Finally, $682,000 has been expended to establish and provide start-up funding for the Ventura Technology Center incubator. The City displays the money set-aside for the Jobs Investment Fund as committed fund balance within the General Fund (see Note 11). 17. DEFERRED FEES Due to the slowing California economy, the City entered into an agreement, during fiscal year 2007-08, with Working Artists of Ventura (WAV) Apartments Partners (69 units of rental housing restricted to low and very low income households) to defer $1,483,914 in planning and permitting fees. The deferred fees are scheduled to be repaid over 55 years beginning in 2010. Because of the long-term repayment schedule with WAV, no receivable has been recorded for these deferred fees.

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18. RESTATEMENT OF THE FINANCIAL STATEMENTS The accompanying financial statements contain a restatement of net assets and fund balance. The beginning net assets at July 1, 2010 were restated to report a change in interest payable for the CALHFA HELP loan 2008. The beginning net assets reported in the financial statements at July 1, 2010 were restated as follows:

Net AssetsGovernmental

Activities

Ending net assets, June 30, 2010, as previously reported (15,639,504)$ Accrued interest payable adjustment (105,000) Beginning net assets, July 1, 2010, as restated (15,744,504)$

19. DEFICIT FUND BALANCES AND NET ASSETS Below are plans to eliminate deficit fund balances and net assets: Downtown Parking District The deficit of $1,180,834 includes substantial initial start up costs and capital expenditures, and these costs will be covered by future anticipated revenues. Street Lighting District The deficit of $50,605 will be covered by transfers from the General fund. Employee Fringe Benefits The rate of collections for this fund is reviewed and adjusted annually during the budget development. This process will be used to increase rates in future years in order to cover the deficit of $3,734,203 in this fund. Workers’ Compensation The rate of collections for this fund is reviewed and adjusted annually during the budget development. This process will be used to increase rates in order to cover the deficit of $153,231 in this fund. Redevelopment Agency Capital Projects The deficit of $542,286 will be covered by future tax increment revenue.

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20. RELATED ORGANIZATIONS The Housing Authority of the City of Ventura’s (Housing Authority) Board of Commissioners is appointed by the Mayor, while the Ventura Port District’s Board of Commissioners is appointed by the City Council. However, these entities do not qualify as component units of the City pursuant to GASB Statements No. 14 and 39 because the City cannot impose its will on these entities and there is no potential for these entities to provide specific financial benefits to, or impose specific financial burdens on, the City. As a result, the Housing Authority and the Ventura Port District are considered as related organizations of the City. 21. RECENT CHANGES IN LEGISLATION AFFECTING CALIFORNIA REDEVELOPMENT

AGENCIES On June 29, 2011, the Governor of the State of California signed Assembly Bills 1X 26 and 27 as part of the State’s budget package. Assembly Bill 1X 26 requires each California redevelopment agency to suspend (effective July 1, 2011) nearly all activities except to implement existing contracts, meet already-incurred obligations, preserve its assets and prepare for the impending dissolution of the agency. Assembly Bill 1X 27 provides a means for redevelopment agencies to continue to exist and operate by means of a Voluntary Alternative Redevelopment Program. Under this program, each city would adopt an ordinance agreeing to make certain “community remittance” payments to the County Auditor Controller in fiscal year 2011-12 and annual payments each fiscal year thereafter. Assembly Bill 1X 26 indicates that the city “may use any available funds not otherwise obligated for other uses” to make this community remittance payment. The City of Ventura (“City”) intends to use tax increment allocable to its redevelopment agency for this purpose per Resolution #2011-050 and #RA2011-008. The amounts to be paid after fiscal year 2011-12 have yet to be confirmed by the State Legislature. The League of California Cities and the California Redevelopment Association (CRA) filed a lawsuit on July 18, 2011 on behalf of cities, counties and redevelopment agencies petitioning the California Supreme Court to overturn Assembly Bills 1X 26 and 27 on the grounds that they violate the California Constitution. On August 11, 2011, the California Supreme Court issued a stay of all of Assembly Bill 1X 27 and most of Assembly Bill 1X 26. The California Supreme Court stated in its order that “the briefing schedule is designed to facilitate oral argument as early as possible in 2011, and a decision before January 15, 2012.” A second order issued by the California Supreme Court on August 17, 2011 indicated that certain provisions of Assembly Bills 1X 26 and 27 were still in effect and not affected by its previous stay, including requirements to file an appeal of the determination of the community remittance payment by August 15, the requirement to adopt an Enforceable Obligations Payment Schedule (“EOPS”) by August 29, 2011, and the requirement to prepare a preliminary draft of the initial Recognized Obligation Payment Schedule (“ROPS”) by September 30, 2011. Because the stay provided by Assembly Bill 1X 26 only affects enforcement, each agency must adopt an EOPS prior to September 30, as required by the statute. Enforceable obligations include bonds, loans and payments required by the federal or State government; legally enforceable payments required in connection with agency employees such as pension payments and unemployment payments, judgments or settlements; legally binding and enforceable agreements or contracts; and contracts or agreements necessary for the continued administration or operation of the agency that are permitted for purposes set forth in AB1X 26. The Agency adopted the EOPS on August 22, 2011. Assembly Bill 1X 26 directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the

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20. RECENT CHANGES IN LEGISLATION AFFECTING CALIFORNIA REDEVELOPMENT AGENCIES, Continued

expenditure or encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as the successor agency by Assembly Bill 1X 26. In the event that Assembly Bill 1X 26 is upheld, the receivable recognized by funds of the City that had previously loaned or advanced funds to the redevelopment agency may become uncollectible with a loss recognized by the advancing funds. Funds of the City may also be impacted by the elimination of reimbursements previously paid to the City by the redevelopment agency for shared administrative services. On August 1, 2011, City Ordinance No. 2011-011 was adopted, indicating that the City will comply with the Voluntary Alternative Redevelopment Program in order to permit the continued existence and operation of the agency, in the event Assembly Bills 1X 26 and/or 27 are upheld as constitutional. The initial payment by the City is estimated to be $1,191,458 with one half due on January 15, 2012 and the other half due May 15, 2012. Thereafter, an estimated $300,920 will be due annually. The amounts to be paid after fiscal year 2011-12 have yet to be confirmed by the state legislature. The semi-annual payments will be due on January 15 and May 15 of each year and would increase or decrease with changes in tax increment. Additionally, an increased amount would be due to schools if any new debt were incurred. Assembly Bill 1X 27 allows a one-year reprieve on the agency’s obligation to contribute 20 percent of tax increment to the low-and-moderate-income housing fund so as to permit the Agency to assemble sufficient funds to make its initial payments. On September 26, 2011, the City and Agency issued resolutions approving and authorizing a conditional agreement for the community remittance payments, and the Agency approved a resolution (#RA2011-009) conditionally reducing its Low and Moderate Income Housing Fund for FY 2011-2012 to accommodate the community remittance payment. Management believes that the Agency will have sufficient funds to pay its obligations as they become due during the fiscal year ending June 30, 2012. The nature and extent of the operation of redevelopment agencies in the State of California beyond that fiscal year are dependent upon the outcome of litigation surrounding the actions of the state. In the event that Assembly Bills 1X 26 and/or 27 are specifically found by the courts to be unconstitutional, there is a possibility that future acts of the California State legislature may create new challenges to the existence and funding of redevelopment agencies. This is based on the California State legislature’s declared intent to eliminate redevelopment agencies and to reduce their funding.

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Year Ended June 30


Required Supplementary Inform

ation

City of San Buenaventura Required Supplementary Information For the year ended June 30, 2011 1. BUDGETARY INFORMATION Through the budget, the City Council sets the direction of the City, allocates its resources and establishes its priorities. The Annual Budget assures the efficient and effective use of the City's economic resources, as well as establishing that the highest priority objectives are accomplished. The Annual Budget serves the fiscal period July 1 to June 30 and is a vehicle that accurately and openly communicates these priorities to the community, businesses, vendors, employees, and other public agencies. Additionally, it establishes the foundation of effective financial planning by providing resource planning and controls that permit the evaluation and adjustment of the City's performance. The City prepares a one-year budget. The annual budgets are adopted on a basis consistent with generally accepted accounting principles for the General, special revenue, and debt service funds. All annual appropriations expire at the end of the year. Capital projects funds adopt project-length plans. The Finance and Technology Department, working with all operating departments and the City Manager, develops a preliminary budget. On or before May 1 each year, the City Manager transmits the proposed budget to the City Council. The proposed budget includes both the sources and types of funds for the proposed expenditures. The City Council conducts public hearings on the proposed budget prior to June 30. On or before July 1, the budget is adopted and enacted by the City Council. The appropriated budget is prepared by fund, department and division. City department heads may make transfers of appropriations within their department. All transfers between departments require approval of the City Council. The legal level of budgetary control is at the department level for the General Fund and at the fund level for all other governmental funds. Appropriation revisions made during the year ended June 30, 2011, were not significant. Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase orders, contracts) outstanding at year-end are reported as reservations of fund balances and do not constitute expenditures or liabilities. The commitments will be re-appropriated and honored in the subsequent year.

79

City of San Buenaventura Required Supplementary Information For the year ended June 30, 2011 1. BUDGETARY INFORMATION, Continued Following are the budget comparison schedules for the General Fund and all major special revenue funds. Budget Comparison Schedule, General Fund

Variance withFinal Budget

Actual PositiveOriginal Final Amounts (Negative)

Fund balance, July 1 33,401,669$ 33,401,669$ 33,401,669$ -$

Resources (inflows):Taxes 58,589,958 58,589,958 56,877,384 (1,712,574) Licenses and permits 1,069,489 1,069,489 2,103,379 1,033,890 Intergovernmental 8,470,796 10,857,806 9,176,456 (1,681,350) Charges for services 8,334,404 8,297,112 7,604,749 (692,363) Fines and forfeitures 1,968,801 1,968,801 1,634,251 (334,550) Use of money and property 1,843,387 1,801,909 1,486,905 (315,004) Other revenue 2,581,457 2,799,510 2,769,381 (30,129) Transfers from other funds 2,236,743 2,810,866 2,037,691 (773,175) Amount available for appropriations 85,095,035 88,195,451 83,690,196 (4,505,255)

Charges to appropriations (outflows):General government 3,055,601 3,281,812 2,677,327 604,485 Human resources 1,006,014 955,780 758,217 197,563 Finance and technology 7,817,371 7,670,168 7,305,876 364,292 Community development 6,238,083 7,192,698 7,014,408 178,290 Community services 11,923,071 12,113,518 11,217,429 896,089 Public safety - police 27,187,398 27,777,527 27,712,849 64,678 Public safety - fire 14,388,133 14,787,295 14,460,517 326,778 Public works 8,408,802 9,467,756 6,954,028 2,513,728 Capital outlays 248,000 711,003 400,263 310,740 Transfers to other funds 5,139,195 12,411,232 6,562,614 5,848,618

T Total charges to appropriations 85,411,668 96,368,789 85,063,528 11,305,261

Excess of resources over (under)charges for appropriations (316,633) (8,173,338) (1,373,332) 6,800,006

Fund balance, June 30 33,085,036$ 25,228,331$ 32,028,337$ 6,800,006$

Budgeted Amounts

80

City of San Buenaventura Required Supplementary Information For the year ended June 30, 2011 1. BUDGETARY INFORMATION, Continued Budget Comparison Schedule, Gas Tax Special Revenue Fund




Resources (inflows):Taxes - - 770,890 770,890 Intergovernmental 7,470,063 7,116,669 3,843,665 (3,273,004) Use of money and property 65,731 65,731 181,379 115,648

Other revenue - - 259 259

Transfers from other funds 339,344 398,734 133,306 (265,428) Amount available for appropriations 7,875,138 7,581,134 4,929,499 (2,651,635)

Charges to appropriations (outflows):Capital outlays 11,713,835 18,977,109 4,875,498 14,101,611 Transfers to other funds 961,185 671,969 209,496 462,473

Total charges to appropriations 12,675,020 19,649,078 5,084,994 14,564,084

Excess of resources over (under)charges for appropriations (4,799,882) (12,067,944) (155,495) 11,912,449


Budgeted Amounts

81

City of San Buenaventura Required Supplementary Information For the year ended June 30, 2011 1. BUDGETARY INFORMATION, Continued Budget Comparison Schedule, Park and Recreation Special Revenue Fund




Resources (inflows):Taxes - - 328,053 328,053 Intergovernmental - - - - Use of money and property - - 87,789 87,789

Other revenue 218,965 218,965 2,722 (216,243)

Transfers from other funds - 1,009,709 3,680 (1,006,029) Amount available for appropriations 218,965 1,228,674 422,244 (806,430)

Charges to appropriations (outflows):Current:

Capital outlays 1,308,932 1,486,797 6,186 1,480,611 Transfers to other funds 150,000 425,000 425,000 -

Total charges to appropriations 1,458,932 1,911,797 431,186 1,480,611

Excess of resources over (under)charges for appropriations (1,239,967) (683,123) (8,942) 674,181

Fund balance, June 30 3,749,544$ 4,306,388$ 4,980,569$ 674,181$

Budgeted Amounts

82

City of San Buenaventura Required Supplementary Information For the year ended June 30, 2011 2. SCHEDULE OF FUNDING PROGRESS - DEFINED BENEFIT PENSION PLAN A schedule of funding progress for the most recent years available, four actuarial valuations are presented below.

Underfunded(Overfunded)

Underfunded ActuarialEntry Age (Overfunded) Liability as

Actuarial Actuarial Actuarial Actuarial Percentage ofValuation Asset Accrued Accrued Funded Covered Covered

Date Value Liability Liability Ratio Payroll Payroll

Miscellaneous 06/30/08 157,529,148$ 167,837,616$ 10,308,468$ 93.9% 30,850,606$ 33.4% Employees Group 06/30/09 165,040,339 184,806,501 19,766,162 89.3% 28,935,608 68.3%

06/30/10 171,259,625 192,586,854 21,327,225 88.9% 27,786,031 76.8%

Safety 06/30/08 177,314,177 223,938,241 46,624,064 79.2% 19,855,299 234.8% Employees Group 06/30/09 184,660,390 248,929,746 64,269,356 74.2% 21,898,681 293.5%

06/30/10 190,490,790 258,876,170 68,385,380 73.6% 20,216,386 338.3%

83


Year Ended June 30



Year Ended June 30


Supplementary Inform

ation


Year Ended June 30


Major Governm

ental Funds

City of San BuenaventuraSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualCertificates of Participation Debt Obligation Debt Service FundFor the year ended June 30, 2011




Resources (inflows):Use of money and property 89,064 89,064 32,575 (56,489)

Other revenue - - 1,066,553 1,066,553 Issuance of certificates of participation - - 20,615,000 20,615,000

Transfers from other funds 4,375,068 4,375,068 4,465,765 90,697

Amount available for appropriation 4,464,132 4,464,132 26,179,893 21,715,761

Charges to appropriations (outflows):Capital outlays 10,000 508,882 505,773 3,109 Principal retirement 2,360,000 10,500,000 10,500,000 - Interest and fiscal charges 2,005,068 2,370,236 2,370,224 12

Payment to refunded bond escrow agent - - 11,728,764 (11,728,764) Transfers to other funds 845,398 1,889,213 141,710 1,747,503

Total charges to appropriations 5,220,466 15,268,331 25,246,471 (9,978,140)

Excess of resources over (under) charges to appropriations (756,334) (10,804,199) 933,422 11,737,621

Fund balance, June 30 847,264$ (9,200,601)$ 2,537,020$ 11,737,621$

Budgeted Amounts

84


Year Ended June 30



Year Ended June 30


Non-Major

Governmental Funds


Year Ended June 30


Supplemental Law Enforcement Services Fund – To account for the enactment of Assembly Bill 3229 in the California State Budget to be used for front-line municipal police services.

Law Enforcement Fund – To account for revenue and costs related to special narcotics investigations and for providing police services on a contractual basis to other entities.

Public Art Fund – To account for revenue and expenditures related to the City’s Public Art Program.

Downtown Parking District Fund – To account for revenue and expenditures related to the City’s Downtown Parking Management Program.

Maintenance Assessment District Fund – To account for funds held in trust by the City as collected from property assessments to be used for maintenance for improvements such as landscape and lighting.

Street Lighting Fund – To account for street lighting revenue and expenditures for the City.

Municipal Improvement Revenue Bonds Fund – To account for the accumulation of resources and payment of long-term debt principal and interest for the parking structure leaseback and Revenue Refunding Bonds.

Redevelopment Agency Fund – To account for the accumulation of resources and payment of general long-term debt principal and interest by the Redevelopment Agency.

Housing and Community Development Block Grant Fund – To account for the revenue and expenditures related to Federal community development block grants.*

Portobello Dredging Fund – To account for improvements and dredging of the Portobello Canal.

* This has been classified as a Major Fund for June 30, 2011.

City of San BuenaventuraCombining Balance SheetNon-Major Governmental Funds June 30, 2011

SupplementalLaw Downtown Maintenance

Enforcement Law Public Parking AssessmentServices Enforcement Art District District

ASSETS

Assets:Cash and investments -$ 120,989$ 1,790,708$ 3,254$ 891,903$ Restricted cash and investments - - - - - Accounts receivable, net - 408 - 1,833 5,872 Due from others - - - 592 - Due from other governments 20,861 - - - 11,283 Advances to other funds - - 1,181,742 - -

Total assets 20,861$ 121,397$ 2,972,450$ 5,679$ 909,058$

LIABILITIES AND FUND BALANCES

Liabilities:Accounts payable -$ 2,256$ 2,238$ 16,570$ 21,916$ Due to other funds - - - 1,169,935 - Due to other governments - - - 8 -

Total liabilities - 2,256 2,238 1,186,513 21,916

Fund Balances:Nonspendable - - 1,181,742 - - Restricted 20,861 - - - - Committed - - 1,774,470 - 887,142 Assigned - 119,141 14,000 - - Unassigned - - - (1,180,834) -

Total fund balances (deficit) 20,861 119,141 2,970,212 (1,180,834) 887,142

Total liabilities and fund balances 20,861$ 121,397$ 2,972,450$ 5,679$ 909,058$


Special Revenue

85

Special Revenue Capital ProjectsTotal

Street Municipal OtherLighting Improvement Redevelopment Portobello GovernmentalDistrict Revenue Bonds Agency Dredging Funds

12,151$ 743,138$ -$ 1,409,142$ 4,971,285$ - 2,046,370 1,382,905 - 3,429,275

23,272 34 56 - 31,475 - - - - 592

16,327 - - - 48,471 - - - - 1,181,742

51,750$ 2,789,542$ 1,382,961$ 1,409,142$ 9,662,840$

102,355$ -$ -$ -$ 145,335$ - 371,857 - - 1,541,792 - - - - 8

102,355 371,857 - - 1,687,135

- - - - 1,181,742 - 2,417,685 1,382,961 - 3,821,507 - - - - 2,661,612 - - - 1,409,142 1,542,283

(50,605) - - - (1,231,439)

(50,605) 2,417,685 1,382,961 1,409,142 7,975,705

51,750$ 2,789,542$ 1,382,961$ 1,409,142$ 9,662,840$

Debt Service

86

City of San BuenaventuraCombining Statement of Revenues, Expenditures and Changes in Fund BalancesNon-Major Governmental FundsFor the year ended June 30, 2011

SupplementalLaw Downtown Maintenance

Enforcement Law Public Parking AssessmentServices Enforcement Art District District

REVENUES:

Taxes 107,814$ -$ -$ -$ 3,067$ Intergovernmental - 29,991 - - - Charges for services - - - 434,849 675,383 Use of money and property - 1,504 70,300 57,244 11,770 Other revenue - - - - 535

Total revenues 107,814 31,495 70,300 492,093 690,755

EXPENDITURES:

Current:Public works - - - 1,114,728 345,399 Public safety - police 366,452 176,195 - - -

Capital outlays - - 91,788 - - Debt service:

Principal retirement - - - - - Interest and other charges - - - - -

Total expenditures 366,452 176,195 91,788 1,114,728 345,399

REVENUES OVER (UNDER) EXPENDITURES (258,638) (144,700) (21,488) (622,635) 345,356

OTHER FINANCING SOURCES (USES):Transfers in 257,865 131,551 35,488 - - Transfers out - - - - (122,241)

Total other financing sources (uses) 257,865 131,551 35,488 - (122,241)

Net change in fund balances (773) (13,149) 14,000 (622,635) 223,115

FUND BALANCES:

Beginning of year 21,634 132,290 2,956,212 (558,199) 664,027

End of year 20,861$ 119,141$ 2,970,212$ (1,180,834)$ 887,142$

See Independent Auditor's Report and Accompanying Notes to Basic Financial Statements.

Special Revenue

87

Special Revenue Capital ProjectsTotal

Street Municipal OtherLighting Improvement Redevelopment Portobello GovernmentalDistrict Revenue Bonds Agency Dredging Funds

3,276$ -$ -$ -$ 114,157$ - - - - 29,991

868,556 - - - 1,978,788 2,413 28,986 13,559 38,250 224,026

- - - - 535

874,245 28,986 13,559 38,250 2,347,497

1,265,321 - - - 2,725,448 - - - - 542,647 - - - 596 92,384

- 450,000 305,000 - 755,000 - 456,031 873,976 - 1,330,007

1,265,321 906,031 1,178,976 596 5,445,486

(391,076) (877,045) (1,165,417) 37,654 (3,097,989)

404,317 150,000 1,177,626 - 2,156,847 - (657,919) - - (780,160)

404,317 (507,919) 1,177,626 - 1,376,687

13,241 (1,384,964) 12,209 37,654 (1,721,302)

(63,846) 3,802,649 1,370,752 1,371,488 9,697,007

(50,605)$ 2,417,685$ 1,382,961$ 1,409,142$ 7,975,705$

Debt Service

88

City of San BuenaventuraSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualSupplemental Law Enforcement Services Special Revenue FundFor the year ended June 30, 2011



Fund balance, July 1 21,634$ 21,634$ 21,634$ -$

Resources (inflows):Taxes 200,000 200,000 107,814 (92,186) Use of money and property 1,682 1,682 - (1,682) Transfer from other funds 252,412 252,412 257,865 5,453

Amount available for appropriation 454,094 454,094 365,679 (88,415)

Charges to appropriations (outflows):Public safety - police 454,094 454,094 366,452 87,642

Total charges to appropriations 454,094 454,094 366,452 87,642

Excess of resources over (under) charges to appropriations - - (773) (773)

Fund balance, June 30 21,634$ 21,634$ 20,861$ (773)$

Budgeted Amounts

89

City of San BuenaventuraSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualLaw Enforcement Special Revenue FundFor the year ended June 30, 2011




Resources (inflows):Intergovernmental 50,000 50,000 29,991 (20,009) Use of money and property 26 26 1,504 1,478 Transfers from other funds 100,138 100,138 131,551 31,413

Amount available for appropriation 150,164 150,164 163,046 12,882

Charges to appropriations (outflows):Public safety - police 150,164 210,164 176,195 33,969


Excess of resources over (under) charges to appropriations - (60,000) (13,149) 46,851

Fund balance, June 30 132,290$ 72,290$ 119,141$ 46,851$

Budgeted Amounts

90

City of San BuenaventuraSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualPublic Art Special Revenue FundFor the year ended June 30, 2011




Resources (inflows):Use of money and property - - 70,300 70,300 Transfers from other funds - 35,488 35,488 -

Amount available for appropriation - 35,488 105,788 70,300

Charges to appropriations (outflows):Capital outlays 631,339 1,097,659 91,788 1,005,871

Total charges to appropriations 631,339 1,097,659 91,788 1,005,871

Excess of resources over (under) charges to appropriations (631,339) (1,062,171) 14,000 1,076,171


Budgeted Amounts

91

City of San BuenaventuraSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualDowntown Parking Special Revenue FundFor the year ended June 30, 2011



Fund balance, July 1 (558,199)$ (558,199)$ (558,199)$ -$

Resources (inflows):Charges for services 901,230 939,088 434,849 (504,239) Use of money and property - 41,478 57,244 15,766


Charges to appropriations (outflows):Public works 2,083,035 1,700,264 1,114,728 585,536

Total charges to appropriations 2,083,035 1,700,264 1,114,728 585,536

Excess of resources over (under) charges to appropriations (1,181,805) (719,698) (622,635) 97,063

Fund balance, June 30 (1,740,004)$ (1,277,897)$ (1,180,834)$ 97,063$

Budgeted Amounts

92

City of San BuenaventuraSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualMaintenance Assessment District Special Revenue FundFor the year ended June 30, 2011




Resources (inflows):Taxes - - 3,067 3,067 Charges for services 654,114 672,606 675,383 2,777 Use of money and property 1,529 1,529 11,770 10,241 Other revenue - - 535 535

Amount available for appropriation 655,643 674,135 690,755 16,620

Charges to appropriations (outflows):Public works 551,894 551,894 345,399 206,495 Transfers to other funds 103,749 122,241 122,241 -


Excess of resources over (under) charges to appropriations - - 223,115 223,115

Fund balance, June 30 664,027$ 664,027$ 887,142$ 223,115$

Budgeted Amounts

93

City of San BuenaventuraSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualStreet Lighting Special Revenue FundFor the year ended June 30, 2011



Fund balance, July 1 (63,846)$ (63,846)$ (63,846)$ -$

Resources (inflows):Taxes 10,703 10,703 3,276 (7,427) Charges for services 869,632 869,632 868,556 (1,076) Use of money and property 8,702 8,702 2,413 (6,289) Transfers from other funds 404,317 404,317 404,317 -

Amount available for appropriation 1,293,354 1,293,354 1,278,562 (14,792)

Charges to appropriations (outflows):Public works 1,293,354 1,293,354 1,265,321 28,033

Total charges to appropriations 1,293,354 1,293,354 1,265,321 28,033


Fund balance, June 30 (63,846)$ (63,846)$ (50,605)$ 13,241$

Budgeted Amounts

94

City of San BuenaventuraSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualMunicipal Improvement Revenue Bonds Debt Service FundFor the year ended June 30, 2011




Resources (inflows):Use of money and property 132,269 132,269 28,986 (103,283) Transfers from other funds 150,000 150,000 150,000 -


Charges to appropriations (outflows):Principal retirement 450,000 450,000 450,000 - Interest and other charges 456,532 456,532 456,031 501 Transfers to other funds 1,591,595 2,012,755 657,919 1,354,836

Total charges to appropriations 2,498,127 2,919,287 1,563,950 1,355,337

Excess of resources over (under) charges to appropriations (2,215,858) (2,637,018) (1,384,964) 1,252,054


Budgeted Amounts

95

City of San BuenaventuraSchedule of Revenues, Expenditures and Changes in Fund Balance - Budget and ActualRedevelopment Agency Debt Service FundFor the year ended June 30, 2011




Resources (inflows):Use of money and property - - 13,559 13,559 Transfers from other funds 1,178,976 1,178,976 1,177,626 (1,350)

Amount available for appropriation 1,178,976 1,178,976 1,191,185 12,209

Charges to appropriations (outflows):Principal retirement 305,000 305,000 305,000 - Interest and other charges 873,976 873,976 873,976 -

Total charges to appropriations 1,178,976 1,178,976 1,178,976 -


Fund balance, June 30 1,370,752$ 1,370,752$ 1,382,961$ 12,209$

Budgeted Amounts

96


Year Ended June 30



Year Ended June 30


Internal Service Funds


Year Ended June 30


City of San BuenaventuraCombining Statement of Net AssetsInternal Service FundsJune 30, 2011

Information Fleet Facilities Digital Technology Maintenance Maintenance Publishing

Current assets:Cash and investments 920,287$ 5,339,430$ 1,751,316$ 149,490$ Accounts receivable, net - 66,879 4,340 199 Due from other funds - - 23,035 - Due from others - 3,642 - - Due from other governments - - 84,513 - Prepaid items 5,500 - - - Notes receivable - - - -

Total current assets 925,787 5,409,951 1,863,204 149,689

Noncurrent assets: Capital assets:

Non Depreciable, net - 11,091 - - Depreciable, net 833,478 6,176,626 493,594 38,213

Total noncurrent assets 833,478 6,187,717 493,594 38,213

Total assets 1,759,265 11,597,668 2,356,798 187,902

Current liabilities:Accounts payable 122,523 249,146 265,528 8,361 Accrued payroll liabilities - - - - Deferred revenue - - 84,513 - Capital leases payble 177,192 - - - Due to other governments 10 12 21 35 Claims and judgments payable - - - - Compensated absences payable - - - - Long term debt - due within one year - - 50,922 -

Total current liabilities 299,725 249,158 400,984 8,396

Noncurrent liabilities:Capital leases payble 177,192 - - - Claims and judgments payable - - - - Compensated absences payable - - - - Long term debt - due in more than one year - - 125,340 -

Total noncurrent liabilities 177,192 - 125,340 -

Total liabilities 476,917 249,158 526,324 8,396

Invested in capital assets, net of related debt 479,094 6,176,626 317,332 38,213 Unrestricted 803,254 5,171,884 1,513,142 141,293

Total net assets 1,282,348$ 11,348,510$ 1,830,474$ 179,506$


ASSETS

LIABILITIES

NET ASSETS

97

Workers' Employee RiskCompensation Fringe Benefits Management Total

4,817,913$ 2,314,758$ 2,600,367$ 17,893,561$ - 60,869 - 132,287

1,996,413 - - 2,019,448 - 3,075 - 6,717 - - 440,204 524,717 - - - 5,500 - 1,151,345 - 1,151,345

6,814,326 3,530,047 3,040,571 21,733,575

- - - 11,091 - 2,259 11,680 7,555,850

- 2,259 11,680 7,566,941

6,814,326 3,532,306 3,052,251 29,300,516

15,207 551,139 38,225 1,250,129 - 1,603,872 - 1,603,872 - - - 84,513 - - - 177,192

61 212 40 391 2,209,949 - 328,366 2,538,315

- 533,183 - 533,183 - - - 50,922

2,225,217 2,688,406 366,631 6,238,517

- - - 177,192 4,742,340 - 1,458,848 6,201,188

- 4,575,844 - 4,575,844 - - - 125,340

4,742,340 4,575,844 1,458,848 11,079,564

6,967,557 7,264,250 1,825,479 17,318,081

- 2,259 11,680 7,025,204 (153,231) (3,734,203) 1,215,092 4,957,231

(153,231)$ (3,731,944)$ 1,226,772$ 11,982,435$

98

City of San BuenaventuraCombining Statement of Revenues, Expenses and Changes in Fund Net AssetsInternal Service FundsFor the year ended June 30, 2011

Information Fleet Facilities DigitalTechnology Maintenance Maintenance Publishing

OPERATING REVENUES:

Internal service charges 2,020,909$ 4,077,747$ 3,380,419$ 340,245$ Other operating revenues 4,077 37,927 103,043 -

Total operating revenues 2,024,986 4,115,674 3,483,462 340,245

OPERATING EXPENSES:

Salaries and benefits 955,156 808,871 671,684 206,657 Contractual services 377,975 265,916 1,096,008 48,284 Materials and supplies 282,780 1,497,571 251,865 35,960 General and administrative 629,501 196,523 1,066,023 21,045 Insurance premiums and settlements - - - - Depreciation 159,008 1,278,756 37,918 17,592

Total operating expenses 2,404,420 4,047,637 3,123,498 329,538

OPERATING INCOME (LOSS) (379,434) 68,037 359,964 10,707

NONOPERATING REVENUES (EXPENSES):Investment income 1,958 (87,214) (11,312) (1,575) Loss on disposal of assets 139 (55,172) - - Loss on investment - - - - Interest expense - - (10,028) -

Total nonoperating revenues (expenses) 2,097 (142,386) (21,340) (1,575) Income (loss) before transfers (377,337) (74,349) 338,624 9,132

Transfers in 40,000 20,151 34,760 - Transfers out (40,000) - (20,151) -

Change in net assets (377,337) (54,198) 353,233 9,132

NET ASSETS:

Beginning of year 1,659,685 11,402,708 1,477,241 170,374

End of year 1,282,348$ 11,348,510$ 1,830,474$ 179,506$


99

Workers' Employee RiskCompensation Fringe Benefits Management Total

1,002,225$ 6,340,309$ 1,501,332$ 18,663,186$ 58,883 12,080 19,834 235,844

1,061,108 6,352,389 1,521,166 18,899,030

108,652 789,588 190,579 3,731,187 320,011 94,395 81,959 2,284,548

29,434 - 32 2,097,642 319,565 93,176 (117,403) 2,208,430

2,209,949 5,208,546 1,162,585 8,581,080 - 602 1,674 1,495,550

2,987,611 6,186,307 1,319,426 20,398,437

(1,926,503) 166,082 201,740 (1,499,407)

51,746 123,433 39,569 116,605 99 - - (54,934)

- (43,000) - (43,000) - - - (10,028)

51,845 80,433 39,569 8,643 (1,874,658) 246,515 241,309 (1,490,764)

- - - 94,911 (8,000) - - (68,151)

(1,882,658) 246,515 241,309 (1,464,004)

1,729,427 (3,978,459) 985,463 13,446,439

(153,231)$ (3,731,944)$ 1,226,772$ 11,982,435$

100

City of San BuenaventuraCombining Statement of Cash FlowsInternal Service FundsFor the year ended June 30, 2011

Information Fleet FacilitiesTechnology Maintenance Maintenance

CASH FLOWS FROM OPERATING ACTIVITIES:Cash received from customers/other funds 2,023,469$ 4,037,567$ 3,271,839$ Cash payments to suppliers for goods and services (1,319,353) (1,699,482) (2,284,867) Cash payments for interfund services (19,596) (110,813) (105,018) Cash payments to employees for services (955,156) (808,871) (671,684) Insurance premiums and settlements - - - Other operating revenues 4,077 37,927 187,556

Net cash provided (used) by operating activities (266,559) 1,456,328 397,826

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Employee housing loans made - - - Payment of employee housing loans - - - Transfers to other funds (40,000) - (20,151) Transfers from other funds 40,000 20,151 34,760

Net cash provided (used) by noncapital - 20,151 14,609 financing activities

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Purchase of capital assets - (480,103) - Payment of Long-Term Debt (95,836) Proceeds from sale of assets 138 63,803 Repayment of capital leases (177,192) - -

Net cash (used) by capital and related financing activities (177,054) (416,300) (95,836)

CASH FLOWS FROM INVESTING ACTIVITIES:Investment income Gain (loss) 1,958 (87,214) (11,312)

Net cash provided (used) by investing activities 1,958 (87,214) (11,312)

Net increase (decrease) in cash and cash equivalents (441,655) 972,965 305,287

CASH AND INVESTMENTS:Beginning of year 1,361,942 4,366,465 1,446,029 End of year 920,287$ 5,339,430$ 1,751,316$

RECONCILIATION OF OPERATING INCOME (LOSS) TO NETCASH PROVIDED (USED) BY OPERATING ACTIVITIES:

Operating income (loss) (379,434)$ 68,037$ 359,964$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation 159,008 1,278,756 37,918 Changes in assets and liabilities:

Accounts receivable 2,560 (41,071) (2,947) Due from other funds - - (21,555) Due from others - 891 435 Due from other governments - - (84,513) Prepaid items 6,600 - - Accounts payable (55,297) 149,995 24,022 Accrued payroll liabilities - - - Deferred Revenue - - 84,513 Claims and judgments payable - - - Compensated absences payable - - - Due to other Gov't 4 (280) (11)

Total adjustments 112,875 1,388,291 37,862 Net cash provided (used) by operating activities (266,559)$ 1,456,328$ 397,826$

Noncash financing activities:Employee housing loans written off -$ -$ -$


101

Digital Workers' Employee RiskPublishing Compensation Fringe Benefits Management Total

340,756$ 1,202,225$ 6,405,843$ 1,663,841$ 18,945,539$ (86,653) (599,752) 5,054,394 67,930 (867,782) (20,480) (64,282) (5,222,879) (15,654) (5,558,722)

(206,657) (108,652) (789,588) (190,579) (3,731,187) - (2,048,281) (6,711,203) (1,225,743) (9,985,227) - 58,883 12,080 19,834 320,357

26,966 (1,559,859) (1,251,353) 319,629 (877,022)

- - (16,729) - (16,729) - - 117,163 - 117,163 - (8,000) - - (68,151) - - - - 94,911 - (8,000) 100,434 - 127,194

(28,300) - - - (508,403) - - - - (95,836) - 99 - - 64,040 - - - - (177,192)

(28,300) 99 - - (717,391)

(1,575) 51,746 80,433 39,569 73,605 (1,575) 51,746 80,433 39,569 73,605

(2,909) (1,516,014) (1,070,486) 359,198 (1,393,614)

152,399 6,333,927 3,342,244 2,241,169 19,244,175 149,490$ 4,817,913$ 2,271,758$ 2,600,367$ 17,850,561$

10,707$ (1,926,503)$ 166,082$ 201,740$ (1,499,407)$

17,592 - 602 1,674 1,495,550

511 - 65,453 - 24,506 - 200,000 - - 178,445 - - (2,875) - (1,549) - - 2,956 162,509 80,952 - - - - 6,600

(1,853) 4,915 18,994 16,875 157,651 - - (1,694,686) - (1,694,686) - - - - 84,513 - 161,668 - (63,158) 98,510 - - 192,029 - 192,029 9 61 92 (11) (136)

16,259 366,644 (1,417,435) 117,889 622,385 26,966$ (1,559,859)$ (1,251,353)$ 319,629$ (877,022)$

-$ -$ 43,000$ -$ 43,000$

102


Year Ended June 30



Year Ended June 30


Fiduciary Funds

City of San BuenaventuraCombining Statement of Fiduciary Assets and LiabilitiesFiduciary FundsJune 30, 2011

Ventura OxnardPortobello Property Based Camarillo Tourism

Assessment Improvement Business Improvement District District District Totals

ASSETS

Cash and investments -$ 1,281$ -$ 1,281$ Accounts receivable 83,225 29,829 - 113,054 Due from others - 2,018 19,935 21,953

83,225$ 33,128$ 19,935$ 136,288$

LIABILITIES

Due to others 83,225$ -$ -$ 83,225$ Deposits held for others - 33,128 19,935 53,063

83,225$ 33,128$ 19,935$ 136,288$


Agency Funds

103

City of San BuenaventuraCombining Statement of Changes in Assets and LiabilitiesFiduciary FundsFor the year ended June 30, 2011

Balance BalanceJuly 1, 2010 Additions Deductions June 30, 2011

Assets:Cash and investments 26,246$ -$ 26,246$ -$ Accounts receivable - 83,225 - 83,225

26,246$ 83,225$ 26,246$ 83,225$

Liabilities: Due to others 26,246$ 83,225$ 26,246$ 83,225$

26,246$ 83,225$ 26,246$ 83,225$

Assets:Cash and investments -$ 1,281$ -$ 1,281$ Accounts receivable 25,247 29,829 25,247 29,829 Due from others - 2,018 - 2,018

25,247$ 33,128$ 25,247$ 33,128$

Liabilities:Deposits held for others 25,247$ 33,128$ 25,247$ 33,128$

Assets:Due from others -$ 19,935$ -$ 19,935$

-$ 19,935$ -$ 19,935$

Liabilities:Deposits held for others -$ 19,935$ -$ 19,935$

-$ 19,935$ -$ 19,935$

Assets:Cash and investments 26,246$ 1,281$ 26,246$ 1,281$ Accounts receivable 25,247 113,054 25,247 113,054 Due from others - 21,953 - 21,953

Total Assets 51,493$ 136,288$ 51,493$ 136,288$

Liabilities: Due to others 26,246$ 83,225$ 26,246$ 83,225$

Deposits held for others 25,247 53,063 25,247 53,063

Total Liabilities 51,493$ 136,288$ 51,493$ 136,288$


Portobello Assessment District

Totals - All Agency Funds

Property Based Improvement District

Ventura Oxnard Camarillo Tourism Business Improvement District

104


Year Ended June 30


Statistical Section

City of San Buenaventura Index to the Statistical Section For the year ended June 30, 2011

STATISTICAL SECTION Page Financial Trends

These schedules contain trend information to help the reader understand how the government’s financial

performance and well-being have changed over time.

A. Net Assets by Component – Last Nine Fiscal Years ..................................................................... 107

B. Changes in Net Assets – Last Nine Fiscal Years ............................................................................ 109

C. Fund Balances of Governmental Funds – Last Nine Fiscal Years ............................................... 113

D. Changes in Fund Balances of Governmental Funds – Last Nine Fiscal Years .......................... 115

Revenue Capacity

These schedules contain information to help the reader assess the government’s most significant local revenue

source, the property tax.

A. Assessed Value and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years .... 117

B. Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years ......................................... 118

C. Principal Property Taxpayers – Current Year and Ten Years Ago ............................................. 120

D. Property Tax Levies and Collections – Last Ten Fiscal Years ...................................................... 121

Debt Capacity

These schedules present information to help the reader assess the affordability of the government’s current

levels of outstanding debt and the government’s ability to issue additional debt in the future.

A. Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ...................................................... 122

B. Direct and Overlapping Debt – June 30, 2011 ................................................................................ 124

C. Legal Debt Margin Information – Last Ten Fiscal Years .............................................................. 125

D. Pledged Wastewater Revenue Coverage – Last Ten Fiscal Years ............................................... 126

E. Pledged Water Revenue Coverage – Last Ten Fiscal Years .......................................................... 127

Demographic and Economic Information

These schedules offer demographic and economic indicators to help the reader understand the environment

within the government’s financial activities take place.

A. Demographic and Economic Statistics – Last Ten Calendar Years ............................................. 128

B. Full-Time City Employees by Function – Last Ten Fiscal Years .................................................. 129

C. Principal Employers – Current Year and Ten Years Ago ............................................................. 130

D. Investment Portfolio Statistics – Last Ten Fiscal Years ................................................................ 131

105

City of San Buenaventura Index to the Statistical Section For the year ended June 30, 2011

Operating Information

These schedules contain service and infrastructure data to help the reader understand how information in the

government’s financial report relates to the services the government provides and the activities it performs.

A. Operating Indicators by Function – Last Ten Fiscal Years ........................................................... 132

B. Capital Assets Statistics by Function – Last Ten Fiscal Years ...................................................... 133

C. Wastewater Service Rates – Last Ten Fiscal Years ........................................................................ 134

D. Wastewater Customers – Current Year and Eight Years Ago ..................................................... 135

E. Water Sold by Type of Customer – Last Ten Fiscal Years ............................................................ 136

F. Water Rates – Last Ten Fiscal Years ................................................................................................. 137

G. Water Customers – Current Year and Eight Years Ago ............................................................... 138

Annual Continuing Disclosure Requirements

On November 10, 1994, the Securities and Exchange Commission adopted a regulation requiring annual

disclosure for most municipal securities issued on and after July 3, 1995. The schedules in this section

contain the Annual Continuing Disclosure Requirements for all outstanding obligations issued since that

time. The specific requirements are identified in each of the financing documents specific to each outstanding

issue.

A. Public Facilities Financing Authority – Summary of Certificates of Participation .................. 139

B. 2002 COP, Series D – Buenaventura and Olivas Links Historic Operating Results ................ 140

C. 2004 COP, Wastewater Revenue – Historic Operating Results .................................................. 142

D. 2004 COP, Wastewater Revenue – Historic Usage, Connections, and Flow Charges ............. 143

E. 2004 COP, Wastewater Revenue – Top Ten Customers .............................................................. 144

F. 2004 COP, Water Revenue – Historic Operating Results ............................................................ 145

G. 2004 COP, Water Revenue – Historic and Projected Water Supply. .......................................... 146

H. 2004 COP, Water Revenue – Historic Service Charges and Sales Revenues ............................ 147

I. 2004 COP, Water Revenue – Top Ten Customers ......................................................................... 148

J. 2004 COPs, Water and Wastewater – Utility Rates ...................................................................... 149

K. Employee Relations and Collective Bargaining ............................................................................ 150

106


Year Ended June 30


City of San BuenaventuraNet Assets by ComponentLast Nine Fiscal Years(accrual basis of accounting)

2011 2010 2009Governmental activities: Invested in capital assets, net of related debt 77,321,482$ 75,888,305$ 74,354,906$ Restricted 34,753,149 35,392,720 39,856,243 Unrestricted 49,188,852 54,178,778 56,553,682 Total governmental activities net assets 161,263,483 165,459,803 170,764,831

Business-type activities: Invested in capital assets, net of related debt 141,883,333 135,783,591 129,877,532 Restricted 31,501,671 36,598,184 26,051,636 Unrestricted 18,251,002 46,699,760 60,072,866 Total business-type activities net assets 191,636,006 219,081,535 216,002,034

Primary government: Invested in capital assets, net of related debt 219,204,815 211,671,896 204,232,438 Restricted 66,254,820 71,990,904 65,907,879 Unrestricted 67,439,854 100,878,538 116,626,548 Total primary government net assets 352,899,489$ 384,541,338$ 386,766,865$

Source: The Comprehensive Annual Financial Report.

Fiscal Year

107

2008 2007 2006 2005 2004 2003

80,359,775$ 72,471,553$ 61,243,588$ 50,801,739$ 34,465,491$ 25,439,081$ 38,634,489 43,023,154 37,975,503 42,284,534 54,603,313 69,157,207 60,090,236 62,093,970 72,493,990 68,406,238 69,085,204 61,914,134

179,084,500 177,588,677 171,713,081 161,492,511 158,154,008 156,510,422

128,436,041 127,477,656 111,965,178 102,241,593 42,586,428 58,294,483 58,901,995 58,695,479 61,527,419 67,471,175 27,709,014 15,195,286 28,380,491 28,607,819 33,995,113 26,305,567 113,413,435 102,739,490

215,718,527 214,780,954 207,487,710 196,018,335 183,708,877 176,229,259

208,795,816 199,949,209 173,208,766 153,043,332 77,051,919 83,733,564 97,536,484 101,718,633 99,502,922 109,755,709 82,312,327 84,352,493 88,470,727 90,701,789 106,489,103 94,711,805 182,498,639 164,653,624

394,803,027$ 392,369,631$ 379,200,791$ 357,510,846$ 341,862,885$ 332,739,681$

Fiscal Year

108

City of San BuenaventuraChanges in Net AssetsLast Nine Fiscal Years(accrual basis of accounting)

2011 2010 2009 2008Expenses: Governmental activities: General government 2,938,785$ 4,057,019$ 5,384,838$ 8,326,371$ Human resources 757,721 998,303 2,104,947 816,553 Finance and Technology 8,974,168 7,211,920 7,784,466 5,707,691 Community development 9,784,289 8,061,820 6,671,042 8,294,180 Community services 12,857,684 7,662,891 7,593,435 7,913,144 Public safety - police 29,709,223 30,974,131 31,303,086 28,193,355 Public safety - fire 15,218,015 19,261,764 19,799,105 18,632,555 Public works 17,150,786 21,904,812 20,250,029 20,915,867 Depreciation expense - - - - Interest on long term debt 5,057,876 3,804,449 3,996,201 8,984,125 Total governmental activities expenses 102,448,547 103,937,109 104,887,149 107,783,841

Business-type activities: Wastewater 17,091,823 15,095,598 16,135,143 15,511,917 Water 20,940,661 20,196,960 21,685,740 20,433,068 Golf course 4,737,086 4,735,269 4,732,020 5,623,585 Paramedic services - - - - Total business-type activities expenses 42,769,570 40,027,827 42,552,903 41,568,570

Total primary government expenses 145,218,117 143,964,936 147,440,052 149,352,411

Program revenues: Governmental activities: Charges for services: General government 952,233 837,862 864,588 976,334 Human resources 132,793 132,913 147,832 143,389 Finance and Technology 1,725,803 1,886,441 2,002,324 1,833,833 Community development 1,048,606 783,815 946,668 1,116,341 Community services 2,693,611 2,464,904 2,422,566 2,497,263 Public safety - police 2,742,998 2,914,190 4,388,325 2,731,049 Public safety - fire 3,311,170 2,695,415 3,237,931 3,363,936 Public Works 2,146,823 2,377,214 3,082,181 3,117,158 Operating grants and contributions 10,589,500 12,243,054 11,703,876 12,396,400 Capital grants and contributions 1,475,426 1,713,185 825,577 2,847,047 Total governmental activities program revenues 26,818,963 28,048,993 29,621,868 31,022,750

Business-type activities: Charges for services: Sewer and sanitation 16,326,078 16,978,451 16,015,727 16,068,806 Water 20,946,374 21,828,283 21,283,447 20,710,539 Golf course 4,465,557 4,620,035 4,805,842 4,942,555 Paramedic services - - - - Operating grants and contributions - 16,467 21,433 32,284 Total business-type activities program revenues 41,738,009 43,443,236 42,126,449 41,754,184

Total primary government program revenues 68,556,972 71,492,229 71,748,317 72,776,934

Net revenues (expenses): Governmental activities: (75,629,584) (75,888,116) (75,265,281) (76,761,091) Business-type activities: (1,031,561) 3,415,409 (426,454) 185,614 Total net revenues (expenses): (76,661,145)$ (72,472,707)$ (75,691,735)$ (76,575,477)$

Fiscal Year

109

2007 2006 2005 2004 2003

8,886,145$ 7,363,125$ 6,328,043$ 4,483,013$ 2,440,653$ 3,301,372 1,794,494 2,432,266 1,918,203 901,052 4,491,565 4,214,527 4,406,547 4,299,847 5,269,505 7,441,301 5,843,104 4,195,179 4,581,043 4,596,322 6,342,292 5,914,499 7,670,919 4,324,879 5,281,398

27,092,687 26,149,759 24,818,010 23,340,765 21,459,057 16,325,884 15,259,270 15,090,774 14,285,426 12,799,179 14,143,598 16,523,873 17,314,971 23,212,404 20,451,528

- - - - 5,347,724 4,158,887 4,348,870 4,142,812 4,138,041 5,780,698

92,183,731 87,411,521 86,399,521 84,583,621 84,327,116

13,513,120 11,348,681 11,087,744 10,230,723 11,053,245 16,959,117 15,400,319 14,909,543 12,644,461 13,674,156

4,631,771 3,379,722 2,197,409 2,817,574 849,715 262,033 266,570 186,185 169,527 232,667

35,366,041 30,395,292 28,380,881 25,862,285 25,809,783

127,549,772 117,806,813 114,780,402 110,445,906 110,136,899

2,299,623 462,378 1,068,960 402,116 410,111 135,020 144,571 132,194 127,726 124,711

1,334,412 1,114,838 966,173 1,425,317 1,414,906 965,890 911,326 585,546 822,509 672,508

2,622,700 2,196,637 1,703,281 1,745,879 1,835,602 2,607,633 2,416,250 2,479,415 2,155,053 2,119,463 3,423,109 3,302,653 2,943,316 2,584,789 2,022,572 2,727,787 2,449,364 2,695,192 2,933,850 3,197,619

11,424,010 13,773,429 12,862,868 14,185,310 13,151,737 2,827,598 1,445,341 2,278,540 178,520 112,223

30,367,782 28,216,787 27,715,485 26,561,069 25,061,452

15,460,227 14,144,570 14,042,047 13,430,212 12,677,123 20,533,851 17,838,573 17,642,997 16,924,727 16,103,697

3,088,836 3,201,831 2,764,339 3,380,562 1,492,267 513,823 450,002 321,190 192,384 193,253

16,079 - - - - 39,612,816 35,634,976 34,770,573 33,927,885 30,466,340

69,980,598 63,851,763 62,486,058 60,488,954 55,527,792

(61,815,949) (59,194,734) (58,684,036) (58,022,552) (59,265,664) 4,246,775 5,239,684 6,389,692 8,065,600 4,656,557

(57,569,174)$ (53,955,050)$ (52,294,344)$ (49,956,952)$ (54,609,107)$

Fiscal Year

110

City of San BuenaventuraChanges in Net AssetsLast Nine Fiscal Years, Continued(accrual basis of accounting)

2011 2010 2009 2008

General revenues and other changes in net assets: Governmental activities: Taxes: Property taxes 23,498,798$ 21,562,198$ 21,207,266$ 23,783,852$ Sales taxes 19,171,669 19,629,415 20,132,921 22,613,278 Utility users taxes 8,774,360 8,719,232 9,019,829 8,796,097 Transient occupancy taxes 3,435,953 3,468,286 3,707,592 4,078,171 Franchise taxes 3,278,467 2,984,316 3,713,057 2,770,318 Other taxes 2,075,351 2,165,157 2,125,750 2,752,235 Grants & contributions not restricted to specific programs - - - - Motor vehicle license - intergovernmental unrestricted 8,342,441 8,194,617 8,480,754 8,308,227 Investment earnings (loss) 1,136,757 1,859,859 (3,332,065) 3,329,387 Gain (loss) on sale of assets - - (78,105) 2,960 Other general revenues 514 113 206 885 Transfers 1,823,954 1,999,895 1,968,407 1,038,110 Total govermental activities 71,538,264 70,583,088 66,945,612 77,473,520

Business-type activities: Investment income 301,096 1,663,987 2,678,368 2,573,463 Gain on sale of assets - - - - Transfers (1,823,954) (1,999,895) (1,968,407) (1,038,110) Total business-type activities (1,522,858) (335,908) 709,961 1,535,353

Total primary government 70,015,406 70,247,180 67,655,573 79,008,873

Changes in net assets Governmental activities: (4,091,320) (5,305,028) (8,319,669) 712,429 Business-type activities: (2,554,419) 3,079,501 283,507 1,720,967 Total primary government (6,645,739)$ (2,225,527)$ (8,036,162)$ 2,433,396$


Fiscal Year

111

2007 2006 2005 2004 2003

22,182,764$ 20,216,123$ 18,800,820$ 16,732,650$ 15,240,502$ 21,336,603 24,447,868 21,413,725 20,407,600 19,714,453

- - - - - - - - - - - - - - -

18,118,646 17,556,734 16,107,077 15,288,753 14,452,401 - - - - 34,342

7,887,568 7,697,659 7,909,188 4,770,850 5,922,778 3,976,243 2,568,014 2,330,922 1,266,955 2,931,952

969 914,131 28,567 142,835 19,562 2,580 62,058 135,399 47,720 42,090

86,987 (4,047,284) (4,703,159) 1,008,775 - 73,592,360 69,415,303 62,022,539 59,666,138 58,358,080

3,133,456 2,182,407 1,216,607 422,793 1,393,503 - - - - 1,920

(86,987) 4,047,284 4,703,159 (1,008,775) - 3,046,469 6,229,691 5,919,766 (585,982) 1,395,423

76,638,829 75,644,994 67,942,305 59,080,156 59,753,503

11,776,411 10,220,569 3,338,503 1,643,586 (907,584) 7,293,244 11,469,375 12,309,458 7,479,618 6,051,980

19,069,655$ 21,689,944$ 15,647,961$ 9,123,204$ 5,144,396$

Fiscal Year

112

City of San BuenaventuraFund Balances of Governmental FundsLast Nine Fiscal Years(modified accrual basis of accounting)

2011 2010 2009 2008General fund:

Nonspendable 6,630,047$ 6,888,290$ -$ -$ Restricted 5,260,641 613,989 - - Committed 15,873,858 16,304,014 - - Assigned 4,263,791 3,341,324 - - Unassigned - 6,254,052 - - Reserved - - 9,856,595 17,975,245

Unreserved, designated - - 19,002,989 19,925,883 Unreserved, undesignated - - 4,374,390 199,613

Total general fund 32,028,337$ 33,401,669$ 33,233,974$ 38,100,741$

All other governmental funds:Nonspendable 7,736,114$ 1,894,668$ -$ -$ Restricted 28,908,283 34,416,429 - - Committed 2,758,900 2,548,364 - - Assigned 8,716,452 10,935,174 - - Unassigned (8,052,579) (8,268,260) - -

Reserved - - 15,653,881 16,213,150 Unreserved, designated Reported in special revenue funds - - 6,134,572 22,025,619 Reported in capital project funds - - 1,350,390 6,126,887 Unreserved, undesignated: Reported in special revenue funds - - 20,890,119 6,429,326 Reported in capital project funds - - 2,811,406 (10,210,981)

Total all other governmental funds 40,067,170$ 41,526,375$ 46,840,368$ 40,584,001$

The City of Ventura implemented GASB 54 for the fiscal year ended June 30, 2010.


Fiscal Year

113

2007 2006 2005 2004 2003

-$ -$ -$ -$ -$ - - - - - - - - - - - - - - - - - - - -

18,783,034 18,837,506 17,352,143 17,004,738 17,859,686 24,013,323 24,763,519 28,907,664 26,009,715 32,025,719

17,316 3,965,697 2,386,387 4,085,445 174,963

42,813,673$ 47,566,722$ 48,646,194$ 47,099,898$ 50,060,368$

-$ -$ -$ -$ -$ - - - - - - - - - - - - - - - - - - - -

15,000,171 19,812,878 25,881,240 35,734,823 44,459,376

17,575,235 11,956,497 15,385,351 20,801,758 22,981,747 6,277,234 8,591,515 6,128,690 8,643,217 9,504,999

12,443,532 13,971,840 9,416,759 7,741,802 7,751,988 (8,769,673) (11,026,685) (8,498,950) (8,998,681) (8,683,767)

42,526,499$ 43,306,045$ 48,313,090$ 63,922,919$ 76,014,343$

Fiscal Year

114

City of San BuenaventuraChanges in Fund Balances of Governmental FundsLast Nine Fiscal Years(modified basis of accounting)

2011 2010 2009 2008Revenues: Taxes 61,612,097$ 60,192,659$ 63,653,856$ 66,216,070$ Licenses and permits 2,103,379 1,466,512 1,004,297 1,429,502 Intergovernmental 15,812,765 15,410,869 14,533,194 17,710,064 Charges for services 9,844,162 9,324,261 11,869,844 9,896,330 Fines and forfeitures 1,634,251 1,867,339 2,226,912 1,945,958 Use of money and property 2,311,668 3,311,893 5,432,453 6,071,537 Other revenues 3,074,872 2,678,112 3,016,857 4,303,991 Total revenues 96,393,194 94,251,645 101,737,413 107,573,452

Expenditures: Current: General government 2,677,327 3,291,986 4,701,884 7,698,414 Human resources 758,217 958,777 1,952,090 1,923,705 Finance and Technology 7,305,876 6,364,935 6,499,052 4,741,342 Community development 7,014,408 3,632,431 4,432,927 7,302,655 Community services 11,217,429 6,473,828 6,608,893 6,612,536 Public safety - police 28,255,496 27,887,580 30,576,837 29,429,286 Public safety - fire 14,460,517 17,478,861 19,398,973 18,391,152 Public works 9,679,476 15,529,183 16,967,429 17,223,138 Capital outlays 13,774,000 12,621,513 11,156,906 18,305,935 Debt service: Principal retirement 11,255,000 3,235,000 2,845,000 4,573,857 Debt issuance cost 492,589 - - - Interest and other charges 4,085,379 3,962,293 3,787,781 9,048,333 Total expenditures 110,975,714 101,436,387 108,927,772 125,250,353

Revenues over (under) expenditures (14,582,520) (7,184,742) (7,190,359) (17,676,901)

Other financing sources (uses): Issuance of certificates of participation 20,615,000 - - - Premium on issuance of debt 1,066,553 - - - Payment to refunded bond escrow agent (11,728,764) - - - Proceeds from long-term debt - - 8,785,000 9,413,899 Loss on investments - - (4,943,206) - Transfers in 10,664,454 11,493,910 20,335,387 11,892,935 Transfers out (8,867,260) (9,455,466) (15,597,222) (10,798,959) Total other financing sources (uses) 11,749,983 2,038,444 8,579,959 10,507,875

Net change in fund balances (2,832,537)$ (5,146,298)$ 1,389,600$ (7,169,026)$

Debt service as a percentage of noncapital expenditures 14.6% 7.6% 6.5% 12.3%


Fiscal Year

115

2007 2006 2005 2004 2003

66,434,879$ 63,438,858$ 59,388,852$ 55,517,938$ 52,312,822$ 1,880,019 1,780,881 1,579,719 1,337,911 1,124,381

16,011,106 14,339,327 15,485,211 10,541,690 13,496,819 8,987,034 9,029,969 7,287,355 7,736,141 7,073,747 1,865,739 1,802,109 1,820,848 1,734,950 1,568,361 6,395,623 6,152,912 4,127,490 3,355,993 5,065,327 4,420,729 3,257,395 4,844,575 3,672,874 2,733,981

105,995,129 99,801,451 94,534,050 83,897,497 83,375,438

8,276,104 6,707,261 5,706,403 3,964,093 2,458,220 1,867,800 2,597,156 2,402,167 2,163,885 2,365,650 4,357,976 4,039,047 4,308,317 4,117,355 5,674,665 4,284,899 3,249,855 3,360,216 2,953,387 2,942,465 6,066,137 5,780,510 5,825,207 5,575,664 5,195,320

27,504,321 27,560,257 26,243,467 24,352,859 21,698,793 16,505,456 15,816,543 15,828,561 14,878,097 12,913,181 15,494,191 14,638,986 13,964,871 13,205,851 12,636,440 18,894,966 14,167,948 21,175,816 22,230,168 14,605,554

2,885,689 2,864,960 2,748,074 2,371,232 21,221,361 - - - - -

4,199,188 4,382,321 4,174,214 4,130,575 5,013,445 110,336,727 101,804,844 105,737,313 99,943,166 106,725,094

(4,341,598) (2,003,393) (11,203,263) (16,045,669) (23,349,656)

- - - - - - - - - - - - - - - - - - - 43,695,000 - - - - -

18,084,380 10,686,822 16,914,994 13,465,071 31,800,410 (19,275,377) (14,769,946) (19,775,264) (12,471,296) (31,800,410)

(1,190,997) (4,083,124) (2,860,270) 993,775 43,695,000

(5,532,595)$ (6,086,517)$ (14,063,533)$ (15,051,894)$ 20,345,344$

8.4% 9.0% 8.9% 9.1% 39.8%

Fiscal Year

116

City of San BuenaventuraAssessed Value and Estimated Actual Value of Taxable PropertyLast Ten Fiscal Years(in thousands of dollars)

Fiscal Year Taxable Taxable TotalEnded Assessed Less: Assessed Direct Tax June 30 Local Secured Utility Unsecured Value Secured Unsecured Exemptions Value Rate

2002 6,687,434$ 3,626$ 579,842$ 7,270,902$ 192,306$ 25,963$ (630)$ 217,639$ 0.0197%

2003 7,273,077 5,594 580,029 7,858,700 209,337 27,155 (630) 235,862 0.0221%

2004 7,970,154 1,207 474,987 8,446,348 234,799 24,575 (707) 258,667 0.0192%

2005 8,685,289 1,363 510,098 9,196,750 267,968 23,193 (795) 290,366 0.0171%

2006 9,576,759 1,207 546,406 10,124,372 301,493 25,722 (805) 326,410 0.0161%

2007 10,631,830 1,078 571,736 11,204,644 333,500 26,320 (790) 359,030 0.0136%

2008 11,475,209 659 596,099 12,071,967 371,109 35,375 (809) 405,674 0.0127%

2009 11,919,084 659 591,251 12,510,994 395,229 28,207 (790) 422,646 0.0137%

2010 11,530,310 659 613,347 12,144,316 404,241 21,334 (770) 424,805 0.0142%

2011 11,539,817 439 553,851 12,094,107 395,003 20,491 (720) 414,774 0.0136%

Note: Data is stated at 100% of actual value as required under Section 135 of the Revenue and Tax Code. Exemptions are netted directly against the city property categories.

Source: Ventura County Auditor-Controller's Office

City Redevelopment Agency

117


Year Ended June 30


City of San BuenaventuraDirect and Overlapping Property Tax RatesLast Ten Fiscal Years(Rate per $100 of assessed value)

2011 2010

City Direct Rates: City Basic Rate 0.0136$ 0.0142$ Redevelopment Agency 0.0004 0.0004

Total City Direct Rate 0.0140 0.0146

Overlapping Rates: Ventura County Community College District 0.1242 0.1246 Ventura Unified School District 0.8118 0.8370 Oxnard Union High School District 0.0001 0.0001 Mesa Union School District 0.0022 0.0023 Oxnard School District 0.0002 0.0002 Rio School District 0.0001 0.0001 City of San Buenaventura 1915 Act Bonds 1.0000 1.0000 Ventura County General Fund Obligations 0.1242 0.1246 Ventura County Pension Obligations 0.0000 0.0000 Ventura County Superintendent of Schools Certificates of Participation 0.1242 0.1246 Ventura County Library Authority 0.0000 0.0000 Ventura County Community College District Certificates of Participation 0.0000 0.0000 Ventura Unified School District Certificates of Participation 0.8118 0.8370 Oxnard Union High School District Certificates of Participation 0.0001 0.0002 Oxnard School District Certificates of Participation 0.0002 0.0002 Rio School District Certificates of Participation 0.0001 0.0001 City of San Buenaventura General Fund Obligations 1.0000 1.0000

Total Direct Rate 4.0132$ 4.0655$

Source: California Municipal Statistics, Inc.

118

2009 2008 2007 2006 2005 2004 2003 2002

0.0137$ 0.0127$ 0.0136$ 0.0161$ 0.0171$ 0.0192$ 0.0221$ 0.0197$ 0.0004 0.0003 0.0003 0.0004 0.0004 0.0004 0.0004 0.0004

0.0140 0.0130 0.0140 0.0165 0.0175 0.0196 0.0225 0.0200

0.1252 0.1242 0.1242 0.1246 0.1245 0.1252 0.1255 0.00000.8363 0.8479 0.8448 0.8449 0.8435 0.8528 0.8507 0.84930.0001 0.0001 0.0002 0.0002 0.0002 0.0002 0.0002 0.00030.0023 0.0020 0.0021 0.0022 0.0024 0.0027 0.0000 0.00000.0002 0.0002 0.0003 0.0028 0.0004 0.0005 0.0005 0.00080.0000 0.0000 0.0001 0.0001 0.0001 0.0001 0.0001 0.00011.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.00000.1252 0.1242 0.1241 0.1246 0.1245 0.1252 0.1254 0.12520.0000 0.0000 0.1241 0.1246 0.1245 0.1252 0.1254 0.12520.1252 0.1242 0.1241 0.1246 0.1245 0.1252 0.0000 0.12520.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.20370.0000 0.0000 0.0000 0.0000 0.1245 0.1252 0.1255 0.12530.8363 0.8479 0.8448 0.8449 0.8435 0.8528 0.8507 0.84930.0001 0.0001 0.0002 0.0002 0.0002 0.0002 0.0002 0.00030.0002 0.0002 0.0003 0.0003 0.0004 0.0005 0.0005 0.00080.0000 0.0000 0.0001 0.0001 0.0001 0.0001 0.0001 0.00011.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000

4.0652$ 4.0842$ 4.2031$ 4.2104$ 4.3308$ 4.3554$ 4.2274$ 4.4258$

119

City of San BuenaventuraPrincipal Property TaxpayersCurrent Year and Ten Years Ago

Taxable Percent of Total Taxable Percent of TotalAssessed City Taxable Assessed City Taxable

Taxpayer Value (1) Assessed Value (2) Value (3) Assessed Value (4)

ASN Ventura LLC 135,976,600$ 1.18% -$ **

Community Memorial Hospital 89,137,951 0.77% 56,658,228 0.92%

Macerich Buenaventura, LTD 81,812,609 0.71% 72,684,591 1.19%

Jefferson at Pelican Point 59,313,000 0.51% ** **

Ventura Pines Associates, LLC 41,579,500 0.36% 20,498,359 0.33%

MBL Golf Course, LLC 30,442,999 0.26% ** **

Ventura Beach Ventures LLC 28,419,915 0.25% ** **

Center Promenade, LLC 28,250,000 0.24% ** **

Poinsettia Plaza, LLC 27,124,190 0.24% ** **

Newport Beach North LLC 26,010,300 0.23% ** **

Archstone Communities Trust ** ** 30,230,947 0.49%

Program 87A Ltd. ** ** 25,764,841 0.42%

County Center Ltd. ** ** 24,845,366 0.41%

May Department Stores Co. ** ** 23,948,784 0.39%

Telephone & Main Assoc. LLC. ** ** 22,956,000 0.37%

Sears Roebuck & Co. ** ** 16,879,470 0.28%

Koussay Okko ** ** 16,269,000 0.27%

412,090,464$ 3.57% 310,735,586$ 5.07%

(1) Source: Ventura County Assessor's Office(2) 2010-11 Local Secured Assessed Valuation: $11,539,816,985

(3) Source: Ventura County Assessor's Office(4) 2000-01 Local Secured Assessed Valuation: $6,131,887,597

** Data not available

2011 2001

120

City of San Buenaventura

Fiscal Year Taxes Levied Collections in Total Collections To-Date Ended for the Percent Subsequent PercentJune 30 Fiscal Year (1) Amount of Levy Years (2) Amount (2) of Levy

2002 12,491,663$ 12,114,098$ 96.98% 38,967$ 12,153,065$ 97.29%

2003 13,607,563 13,353,034 98.13% 57,854 13,410,888 98.55%

2004 14,679,933 14,549,118 99.11% 55,629 14,604,747 99.49%

2005 16,188,791 16,103,883 99.48% 39,942 16,143,825 99.72%

2006 17,598,566 17,226,875 97.89% 46,130 17,273,005 98.15%

2007 19,687,798 18,946,723 96.24% 59,258 19,005,981 96.54%

2008 20,806,443 19,969,645 95.98% 92,015 20,061,660 96.42%

2009 21,360,643 20,751,346 97.15% 174,888 20,926,234 97.97%

2010 20,369,228 17,640,817 86.61% 171,406 17,812,223 87.45%

2011 20,255,387 19,794,163 97.72% 103,915 19,898,078 98.24%

Source: (1) Ventura County Assessor's Office (2) Finance and Technology Department, City of San Buenaventura

Fiscal Year of Levy

Property Tax Levies and CollectionsLast Ten Fiscal Years

Collected within the

121


Fiscal Year Tax Total Wastewater WaterEnded Certificates of Allocation Governmental Revenue RevenueJune 30 Participation Bonds Loans Activities Bonds Bonds

2002 39,250,000$ -$ 8,449,886$ 47,699,886$ 7,602,671$ 13,535,000$

2003 54,355,000 8,000,000 7,963,812 70,318,812 7,186,696 13,085,000

2004 52,635,000 8,000,000 7,312,580 67,947,580 6,750,721 26,871,342

2005 50,760,000 7,795,000 6,852,506 65,407,506 24,569,447 26,023,027

2006 48,825,000 7,555,000 6,151,224 62,531,224 24,019,430 25,549,712

2007 46,830,000 7,310,000 5,806,898 59,946,898 23,444,413 25,056,399

2008 55,780,000 7,060,000 1,922,830 64,762,830 22,859,395 24,548,084

2009 53,190,000 15,590,000 1,844,206 70,624,206 22,254,376 24,029,771

2010 50,500,000 15,045,000 1,762,069 67,307,069 21,634,359 23,491,458

2011 49,055,000 14,740,000 1,676,262 65,471,262 20,989,341 22,933,142

Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.



Governmental Activities

Ratios of Outstanding Debt by TypeLast Ten Fiscal Years

Business-Type Activities

122

Safe Total Total Percentage DebtDrinking Business-Type Primary of Personal Per

Water Loan Activities Government Income Capita

-$ 21,137,671$ 68,837,557$ 2.26% 669

- 20,271,696 90,590,508 ** **

- 33,622,063 101,569,643 3.46% 966

- 50,592,474 115,999,980 3.84% 1099

13,156,599 62,725,741 125,256,965 4.10% 1194

20,000,000 68,500,812 128,447,710 4.04% 1213

19,209,485 66,616,964 131,379,794 3.88% 1235

18,399,964 64,684,111 135,308,317 4.07% 1286

17,987,933 63,113,750 130,420,819 3.64% 1186

17,149,042 61,071,525 126,542,787 3.53% 1151

Business-Type Activities

123

City of San BuenaventuraDirect and Overlapping DebtJune 30, 2011

2010-11 Assessed Valuation: 12,094,107,122$ Redevelopment Incremental Valuation: 330,375,182 Adjusted Assessed Valuation: 11,763,731,940$

Total Debt Percentage City's Share of6/30/2011 Applicable (1) Debt 6/30/2011

OVERLAPPING TAX AND ASSESSMENT DEBT Ventura County Community College District 314,522,814$ 12.420% 39,063,733$ Ventura Unified School District 67,275,000 81.180% 54,613,845 Oxnard Union High School District 92,889,913 0.014% 13,005 Mesa Union School District 7,695,000 0.223% 17,160 Oxnard School District 118,733,139 0.019% 22,559 Rio School District 15,653,540 0.013% 2,035 City of San Buenaventura 1915 Act Bonds 200,000 100.000% 200,000

Total Overlapping Tax and Assessment Debt 93,932,337

DIRECT AND OVERLAPPING GENERAL FUND DEBT: Ventura County General Fund Obligations 101,290,000$ 12.416% 12,576,166$ Ventura County Superintendent of Schools Certificates of Participation 12,140,000 12.416% 1,507,302 Ventura Unified School District Certificates of Participation 3,840,000 81.180% 3,117,312 Oxnard Union High School District Certificates of Participation 9,280,000 0.014% 1,299 Oxnard School District Certificates of Participation 5,285,900 0.019% 1,004 Rio School District Certificates of Participation 7,930,000 0.013% 1,031 City of San Buenaventura General Fund Obligations 48,925,000 100.000% 48,925,000

Total Direct and Overlapping General Fund Debt 66,129,114

Combined Total Debt 160,061,451$ (2)

(1) Percentage of overlapping agency's assessed valuation located within the boundaries of the city.(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations.

Source: California Municipal Statistics, Inc.

124

City of San BuenaventuraLegal Debt Margin InformationLast Ten Fiscal Years

(1)Total Net Debt Total Debt Applicable to Applicable to

Fiscal Year (2) Adjusted Limit:General the Limit as aEnded Assessed Conversion Assessed Debt Limit Obligation Legal Percentage ofJune 30 Valuation Precentage Valuation Percentage Debt Limit Bonds Debt Margin Debt Limit

2002 8,078,385,165$ 25% 2,019,596,291$ 15% 302,939,444$ -$ 302,939,444$ 0%

2003 8,817,820,626 25% 2,204,455,157 15% 330,668,273 - 330,668,273 0%

2004 9,579,866,892 25% 2,394,966,723 15% 359,245,008 - 359,245,008 0%

2005 10,514,075,917 25% 2,628,518,979 15% 394,277,847 - 394,277,847 0%

2006 11,616,549,581 25% 2,904,137,395 15% 435,620,609 - 435,620,609 0%

2007 11,204,644,465 25% 2,801,161,116 15% 420,174,167 - 420,174,167 0%

2008 12,071,967,113 25% 3,017,991,778 15% 452,698,767 - 452,698,767 0%

2009 12,510,994,901 25% 3,127,748,725 15% 469,162,309 - 469,162,309 0%

2010 12,144,316,207 25% 3,036,079,052 15% 455,411,858 - 455,411,858 0%

2011 12,094,107,122 25% 3,023,526,781 15% 453,529,017 - 453,529,017 0%

The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation.However, this provision was enacted when assessed valuation was based upon 25% of market value. Each parcel is assessed at 100% of market value (as of the most recent change in ownership for that parcel).The computations shown above reflect a conversion of assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted bythe State of California for local governments located within the state.

Source: (1) Finance and Technology Department, City of San Buenaventura (2) Ventura County Tax Assessor's Office

125


Fiscal Year Less Net Ended Operating Operating Available TaxJune 30 Revenue Expenses Revenue Principal Interest Coverage Increment Principal Interest Coverage

2002 11,162,654$ 7,884,657$ 3,277,997$ 430,000$ 416,553$ 3.87 1,229,838$ -$ -$ -

2003 12,677,123 9,184,042 3,493,081 450,000 396,343 4.13 1,636,510 - - -

2004 13,430,212 8,563,847 4,866,365 470,000 408,768 5.54 1,935,314 - 173,519 11.15

2005 14,042,047 8,725,668 5,316,379 495,000 1,042,147 3.46 2,463,949 205,000 279,332 5.09

2006 14,144,570 9,882,656 4,261,914 625,000 1,108,375 2.46 2,686,766 240,000 274,882 5.22

2007 15,460,227 12,425,787 3,034,440 650,000 1,092,750 1.74 2,988,728 245,000 270,032 5.80

2008 16,068,806 14,440,917 1,627,889 660,000 1,076,500 0.94 3,527,287 250,000 265,082 6.85

2009 16,015,727 13,598,741 2,416,986 680,000 1,060,000 1.39 3,584,809 255,000 334,702 6.08

2010 16,978,451 14,062,948 2,915,503 695,000 1,039,599 1.68 3,558,045 545,000 877,126 2.50

2011 16,326,078 16,081,472 244,606 720,000 1,018,750 0.14 3,408,602 305,000 864,977 2.91

Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest or depreciation expenses.

Source: Finance and Technology Department, City of San Buenaventura

Last Ten Fiscal YearsPledged Wastewater and Tax Allocation Revenue Coverage

Debt Service

Wastewater Fund Revenue Bonds

Debt Service

Governmental Tax Allocation Bonds

126


Fiscal Year Less Net Ended Operating Operating AvailableJune 30 Revenue Expenses Revenue Principal Interest Coverage

2002 16,174,010$ 11,210,864$ 4,963,146$ 770,000$ 667,448$ 3.45

2003 16,494,638 11,437,328 5,057,310 450,000 628,343 4.69

2004 17,640,075 11,015,003 6,625,072 880,000 1,202,325 3.18

2005 17,642,997 13,561,877 4,081,120 880,000 1,347,666 1.83

2006 17,838,573 14,176,287 3,662,286 505,000 1,181,550 2.17

2007 20,549,930 15,418,196 5,131,734 525,000 1,166,100 3.03

2008 20,742,823 18,804,452 1,938,371 540,000 1,151,475 1.15

2009 21,304,880 18,946,447 2,358,433 550,000 1,136,475 1.40

2010 21,844,750 18,638,004 3,206,746 570,000 1,118,963 1.90

2011 20,946,374 19,421,019 1,525,355 590,000 1,099,375 0.90

Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest or depreciation expenses.


Last Ten Fiscal YearsPledged Water Revenue Coverage

Debt Service

Water Fund Revenue Bonds

127

City of San BuenaventuraDemographic and Economic StatisticsLast Ten Calendar Years

Per CapitaCalendar Personal Income Personal Unemployment

Year Population (1) (in thousands) Income (1) Rate (2)

2002 102,938 3,041,200$ 29,544$ 4.5%

2003 ** ** ** 4.8%

2004 105,145 2,938,698 27,949 5.8%

2005 105,558 3,016,953 28,581 5.2%

2006 104,912 3,056,401 29,133 4.8%

2007 105,919 3,178,417 30,008 4.3%

2008 106,360 3,385,439 31,830 5.2%

2009 105,226 3,325,036 31,599 5.2%

2010 109,946 3,586,988 32,625 9.0%

2011 (3) 109,946 3,586,988 32,625 9.8%

(1) Source: Ventura City Economic Outlook by the UCSB Economic Forecast Project(2) Source: State Employment Development Department(3) For fiscal year 2011, the Population data and Per Capita Personal Income was from prior year since the Economic Outlook by UCSB is no longer available.

** Data not abailable for fiscal year 2003

128

City of San BuenaventuraFull-time City Employeesby FunctionLast Ten Fiscal Years

Function 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

General Government 14 18 26 25 25 23 17 17 17 17

Human resources 13 13 13 13 13 13 12 11 12 10

Finance and Technology 46 46 48 51 51 51 50 50 51 49

Community Development 47 29 34 35 35 34 34 30 30 30

Parks, Recreation & Community Partnerships 62 32 32 33 32 32 37 36 36 36

Public safety - police 161 172 185 181 176 179 184 182 183 193

Public safety - fire 74 104 112 111 108 106 105 103 102 101

Public Works 178 218 227 224 218 224 229 228 227 227

Total 595 632 676 673 657 660 667 657 657 662

Source: City Budget Office

Adopted Full-Time (FTE) Employees as of June 30th

129

City of San BuenaventuraPrincipal EmployersCurrent Year and Ten Years Ago

Percent of Percent ofNumber of Total Number of Total

Employer (1) Employees Employment (2) Employees Employment (3)

County of Ventura 7,991 35.29% 7,500 **

Ventura County Health Care Agency 2,493 11.01% 1,820 **

Ventura Unified School District 1,916 8.46% 2,342 **

Ventura County Community College 1,913 8.45% 2,000 **

Community Memorial Healthy System 1,881 8.31% 1,440 **

Argon St Inc 990 4.37% ** **

City of San Buenaventura 595 2.74% 650 **

Employer's Depot Inc. 550 2.43% ** **

Meditech Healthy Services Inc. 400 1.77% ** **

Judicial Council of California 370 1.63% ** **

(1) Principal employers are located within City limits. (2) "Total Employment" as used above represents the total employment of all employers located within City limits.(3) 2011 data shown is as prior year due to the UCSB Economic Forecast is no longer available.

Source: Ventura City Economic Outlook by the UCSB Economic Forecast Project

2011 2001

130

City of San BuenaventuraInvestment Portfolio StatisticsLast Ten Fiscal Years

Year ended Average Average Effective Average Average EffectiveJune 30 Portfolio Rate of Return Portfolio Rate of Return

2002 143,093,161$ 4.40% 15,385,789$ 4.08%

2003 145,180,617 3.15% 32,710,919 3.00%

2004 140,789,775 2.61% 42,722,911 2.54%

2005 137,034,504 2.56% 53,012,582 2.62%

2006 138,953,579 3.30% 52,508,444 2.91%

2007 141,555,410 4.11% 37,076,372 3.90%

2008 140,351,262 4.63% 30,318,080 3.85%

2009 135,394,186 3.62% 26,498,280 3.70%

2010 134,577,573 2.09% 21,328,504 1.74%

2011 121,893,067 1.61% 29,625,916 0.63%


City Trustee - Debt Financing Reserves

131

City of San BuenaventuraOperating Indicatorsby FunctionLast Ten Fiscal Years

2011 2010 2009 2008 2007 2006 2005 2004 2003 2002Police: Arrests (number of persons) 5,473 5,751 6,009 5,772 5,633 5,400 5,314 5,483 4,750 ** Parking citations issued 10,304 12,830 12,768 12,981 12,597 9,690 13,478 10,624 7,480 9,196

Fire: Number of emergency calls 11,506 11,662 11,607 11,343 10,655 9,990 9,986 9,213 9,167 9,020 Inspections 11,151 14,807 15,638 17,999 21,697 25,083 25,440 20,209 20,518 11,699

Public works: Street resurfacing (lane miles) 91 26 63 60 36 45 109 51 94 71

Parks and recreation: Number of recreation courses 1,438 1,434 1,163 1,481 1,449 1,631 1,308 1,193 1,366 1,284 Number of facility rentals per event 521 987 1,259 1,312 1,282 1,255 947 19 26 24 Number of park rental reservations per attendees (in thousands) 298 315 537 537 777 1,256 1,445 585 ** **

Water: Total system connections 30,311 30,289 30,279 30,222 30,199 29,929 29,420 29,420 29,420 29,591 Average daily consumption (million gallons per day) 12.2 13.1 13.9 15.0 15.9 14.1 15.2 14.8 15.1 14.7

Wastewater: Total system connections 25,197 25,178 25,163 25,131 25,115 24,865 24,475 24,475 24,475 24,317 Average daily sewage treatment (million gallons per day) 8.8 8.8 8.6 8.5 9.4 9.4 9.3 9.4 9.1 9.1

Golf courses: Buenaventura golf rounds played 66,569 68,522 65,254 67,895 77,507 77,650 65,929 23,086 (1) 78,637 81,227 Olivas Park golf rounds played 59,879 65,387 61,422 54,078 11,670 - (2) 57,656 88,902 81,602 84,383

(1) Buenaventura Golf Course was closed for renovation from May 16, 2004 to March 17, 2005. (2) Olivas Park Golf Course was closed for renovation from October 2005 to May 17, 2007.

** Data not available due to system conversion.

Source: City of Ventura

Fiscal Years

132

City of San BuenaventuraCapital Assets Statisticsby FunctionLast Ten Fiscal Years

2011 2010 2009 2008 2007 2006 2005 2004 2003 2002Police: Station 1 1 1 1 1 1 1 1 1 1

Fire: Fire stations 6 6 6 6 6 6 6 6 6 6

Public works: Street (miles) 297 297 297 294 294 294 294 294 294 294 Streetlights 1,058 1,058 1,058 1,058 1,058 1,058 1,058 1,058 1,058 1,050 Traffic signals 133 133 133 132 132 132 132 132 132 129

Parks and recreation: Parks 33 33 33 33 33 33 26 26 26 26 Community centers 4 4 4 3 3 3 3 3 3 3

Water: Water mains (miles) 380 380 380 500 500 500 500 400 400 400 Maximum daily capacity (million gallons per day) 30 30 30 30 30 30 30 30 30 30

Wastewater: Sanitary sewers (miles) 290 290 290 475 475 475 475 475 475 475 Storm sewers (miles) 100 100 100 310 310 310 310 310 310 310 Maximum daily treatment capacity (million gallons per day) 14 14 14 14 14 14 14 14 14 14

Golf course: Municipal golf courses 2 2 2 2 2 2 2 2 2 2

Source: City of Ventura

Fiscal Years

133

City of San BuenaventuraWastewater Service RatesLast Ten Fiscal Years

Fiscal (1)Year Ended Tier Tier Tier Tier Tier Tier Non-

June 30 1 2 3 4 5 6 Residential

2002 20.95$ 25.70$ 30.44$ 35.18$ 39.93$ 44.67$ 13.46$

2003 23.67 29.04 34.40 39.76 45.12 50.48 15.20

2004 24.14 29.62 35.09 40.56 46.02 51.49 17.63

2005 25.11 30.81 36.49 42.18 47.86 53.55 16.12

2006 26.49 32.50 38.50 44.50 50.49 56.50 17.01

2007 27.55 33.80 40.04 46.28 52.51 58.76 17.70

2008 30.00 36.98 43.78 50.57 57.36 64.16 13.95

2009 32.04 39.50 46.75 54.01 61.26 68.52 14.90

2010 34.27 42.24 50.00 57.76 65.51 73.27 16.07

2011 34.27 42.24 50.00 57.76 65.51 73.27 16.07

NOTE:1 HCF = 748 gallonsThe City bills bi-monthly and by hundred cubic feet (HCF).Rates are based on 3/4" meter, which is the standard household meter size.The tier structure is in place to encourage wastewater conservation by customers.

(1) Commercial Group 1 (1-8 HCF)

Source: Ventura Water Division

Wastewater Volume Rates Per Hundred Cubic Feet (HCF)Residential

134

City of San BuenaventuraWastewater CustomersCurrent Year and Eight Years Ago

Percent of Total Percent of TotalWastewater Customers Wastewater Wastewater Wastewater Wastewater

Based on Revenue Revenues Revenues Revenues Revenues

Community Memorial Hospital 123,956$ 0.76% 129,276$ 1.02%

Jefferson At Ventura APTs 120,300 0.74% ** **

Ventura County 118,046 0.72% 56,772 0.45%

CPM Peppertree HOA 109,944 0.67% 70,452 0.56%

Crown Plaza VTA 104,412 0.64% 51,984 0.41%

Buenaventura Gardens HOA 97,730 0.60% ** **

Archstone Smith 94,800 0.58% ** **

Saticoy Lemon 94,678 0.58% ** **

Ventura Pines 88,065 0.54% ** **

Ventura Community College 86,556 0.53% ** **

1,038,487$ 6.36% 308,484$ 2.44%

(1) 2003 was the earliest year this data was available.



2003 (1)2011

135

City of San BuenaventuraWater Sold by Type of CustomerLast Ten Fiscal Years(in Hundred Cubic Feet)

Fiscal Year Total DirectEnded Rate perJune 30 Residential Commercial Industrial Municipal Other Total HCF HCF

2002 4,684,036 1,575,168 104,660 152,269 673,707 7,189,840 1.99$

2003 4,712,158 1,593,584 128,434 212,437 739,117 7,385,730 2.05

2004 4,757,729 1,602,611 101,379 188,047 900,914 7,550,680 2.17

2005 4,800,912 1,701,385 70,985 178,051 968,369 7,719,702 2.15

2006 4,510,956 1,508,515 63,691 201,674 797,963 7,082,799 2.40

2007 5,157,275 1,676,746 83,423 251,689 849,979 8,019,112 2.40

2008 4,918,824 1,584,420 73,926 270,013 772,258 7,619,441 2.67

2009 4,688,698 1,518,433 50,373 262,832 423,340 6,943,676 3.07

2010 4,507,579 1,358,768 27,980 215,015 386,140 6,495,482 3.36

2011 4,330,911 1,326,449 29,763 194,651 208,416 6,090,190 3.44

Note:1 HCF (hundred cubic feet) = 748 gallons


HCF by Type of Customer

136

City of San BuenaventuraWater RatesLast Ten Fiscal Years

Fiscal Bi-Monthly Single Family Single Family Single FamilyYear Service HCF 1-16 HCF 17-42 HCF 43+

Ended Charge Multiple Family Multiple Family Multiple Family Non-ResidentialJune 30 Base Rate HCF 1-10 HCF 11-24 HCF 25+

2002 7.97$ 1.29$ 1.72$ 2.75$ 1.72$

2003 8.69 1.41 1.87 3.00 1.87

2004 8.69 1.41 1.87 3.00 1.87

2005 9.40 1.53 2.02 3.24 2.02

2006 9.82 1.60 2.11 3.39 2.11

2007 10.22 1.67 2.20 3.53 2.20

2008 11.14 1.82 2.40 3.85 2.40

2009 12.94 1.91 2.52 4.04 2.52

2010 15.03 2.02 2.66 4.27 2.66

2011 15.03 2.02 2.66 4.27 2.66

NOTE:1 HCF = 748 gallonsThe City bills bi-monthly and by hundred cubic feet (HCF).Rates are based on 3/4" meter, which is the standard household meter size.The tier structure is in place to encourage water conservation by customers.


Residential

Water Volume Rates Per Hundred Cubic Feet (HCF)

137

City of San BuenaventuraWater CustomersCurrent Year and Eight Years Ago

Percent of Percent of Water Customers Water Total Water Water Total Water

Based on Revenue Revenues Revenues Revenues Revenues

Aera Energy LLC 255,582$ 1.22% $ ** **

Dairy Farmers of America 232,842 1.11% ** **

Calif. Mushroom Farm 134,091 0.64% 127,235 0.79%

Community Memorial Hospital 129,006 0.62% ** **

Ventura County 125,178 0.60% ** **

Harris Water Conditioning 96,283 0.46% ** **

Ventura County Medical Center 88,771 0.42% 55,876 0.35%

Peppertree HOA 83,569 0.40% 69,340 0.43%

Jefferson At Ventura Apts 76,065 0.36% ** **

USA Petrochem 61,782 0.29% ** **

1,283,169$ 6.13% 252,451$ 1.57%

(1) 2003 was the earliest year this data was available



2003 (1)2011

138

City of San BuenaventuraAnnual Continuing Disclosure RequirementsSummary of All Certificates of ParticipationsFor the year ended June 30, 2011

San Buenaventura Public Facilities Financing Authority Summary of All Issues:

Amount Outstanding General Fund

6,585,000$ 2001 Certificates of Participation, Series C, $16,345,000

1,455,000 2002 Refunding Certificates of Participation, Series B, $19,765,000

10,685,000 2002 Refunding Certificates of Participation, Series D, $15,930,000

9,715,000 2007 Refunding Certificates of Participation, Series E, $11,420,000

20,615,000 2010 Refunding Certificates of Participation, Series F, $20,615,000

Wastewater Fund

21,045,000$ 2004 Revenue Certificates of Participation, $25,075,000

Water Fund

23,250,000$ 2004 Revenue Certificates of Participation, $27,410,000

· No significant or material events to report for the above financings.


139

City of San BuenaventuraAnnual Continuing Disclosure RequirementsSan Buenaventura Public Facilities Financing AuthorityFor the year ended June 30, 2011

2011 2010 2009 2008 2007 2006Operating Revenues:

Charges for Services:Greens Fees - Buena 1,450,336$ 1,473,052$ 1,474,056$ 1,614,122$ 1,811,017$ 1,715,579$ Electric Carts - Buena 370,734 315,580 360,710 407,240 442,144 421,151 Coffee Shop - Buena 116,000 116,000 116,000 116,870 92,136 60,239 Pro Shop - Buena 105,639 92,449 134,820 161,431 191,987 182,654

Greens Fees - Olivas (3) 1,604,167 1,765,304 1,754,540 1,829,224 402,278 469,294 Driving Range - Olivas 241,410 147,431 82,778 120,533 39,193 60,594 Electric Carts - Olivas 297,487 286,570 320,583 339,162 79,611 125,559 Coffee Shop - Olivas 53 45,381 22,097 100,878 1,024 105,658 Pro Shop - Olivas 132,577 272,548 324,495 253,094 21,440 61,103

Total charges for services 4,318,403 4,514,315 4,590,079 4,942,555 3,080,829 3,201,831

Other Operating Revenues 147,154 105,720 215,763 - - -

Total Operating Revenues 4,465,557 4,620,035 4,805,842 4,942,555 3,080,829 3,201,831

Operating Expenses:Personal Services 173,382 196,927 202,617 168,445 202,040 189,322 Contractual Services (1) 3,284,732 3,381,398 3,234,707 4,143,377 3,444,301 2,820,708 Materials & Supplies 22,893 6,769 25,302 4,199 625 2,398 General & Administrative 342,445 226,510 339,063 366,507 604,377 236,925 Depreciation 913,634 917,206 917,443 917,621 370,732 130,369

Total Operating Expenses 4,737,086 4,728,810 4,719,132 5,600,149 4,622,075 3,379,722

Operating Income (Loss) (271,529) (108,775) 86,710 (657,593) (1,541,246) (177,891)

Non-Operating Revenues (Expenses):

Interest Income (2) - - - 10,452 126,331 88,854 Interest Expense - (6,459) (12,888) (23,436) (9,696) - Gain on Sale of Assets - - - - 8,007 - Total Non-Operating Revenues (Expenses): - (6,459) (12,888) (12,985) 124,642 88,854

Net Income (Loss) (271,529)$ (115,234)$ 73,822$ (670,578)$ (1,416,604)$ (89,037)$

Notes:(1) Fiscal year 2002 includes $335,836 in preliminary golf course renovation design.(2) Interest income includes unrealized gain (loss) on investments.(3) Olivas Park Golf Course was closed for renovation from October 2005 to May 2007.


Actuals

Buenaventura & Olivas Links Golf Courses$15,930,000 2002 Certificates of Participation, Series D

Ten-Year Historic Operating ResultsFiscal Year Ended June 30

140

2005 2004 2003 2002

554,290$ 806,148$ 490,485$ 506,195$ 54,358 218,737 135,399 137,278 13,624 38,751 54,772 55,268 17,753 71,549 - -

1,179,281 1,290,011 565,499 586,017 233,536 212,288 89,216 88,472 310,371 336,533 138,553 148,825 262,851 262,522 18,343 22,601 138,276 144,023 - -

2,764,338 3,380,562 1,492,267 1,544,656

- - - -

2,764,338 3,380,562 1,492,267 1,544,656

143,794 177,652 167,161 172,740 1,669,598 2,202,983 236,471 591,890

348 344 329 583 304,033 373,100 371,379 391,471 79,636 63,495 74,375 56,841

2,197,409 2,817,574 849,715 1,213,525

566,929 562,988 642,552 331,131

111,149 53,461 184,467 296,288 - - - - - - - -

111,149 53,461 184,467 296,288

678,078$ 616,449$ 827,019$ 627,419$

Actuals

141

City of San Buenaventura Annual Continuing Disclosure Requirements, ContinuedWastewater Fund - $25,075,000-2004 Wastewater Revenue Certificates of ParticipationFor the year ended June 30, 2011

2011 2010 2009 2008 2007 2006 2005 2004 2003REVENUESService Charges and Sale Revenues $ 16,326,078 $ 16,978,451 $ 16,015,727 $ 16,068,806 $ 15,460,227 $ 14,144,570 $ 14,042,047 $ 13,430,212 $ 12,677,123 Transfers In - 18,690 109,519 - - 7,003 56,789 - - Gain on Sale of Assets - - - - - - - - 373 Investment Income 225,582 1,104,443 1,771,660 1,734,356 1,797,241 1,513,379 574,053 262,306 817,907 TOTAL REVENUES 16,551,660 18,101,584 17,896,906 17,803,162 17,257,468 15,664,952 14,672,889 13,692,518 13,495,403

OPERATION AND MAINTENANCE EXPENSE 16,081,472 14,062,948 13,598,741 14,440,917 12,425,787 9,882,656 10,045,597 9,893,922 10,630,077

NET REVENUES 470,188 4,038,636 4,298,165 3,362,245 4,831,681 5,782,296 4,627,292 3,798,596 2,865,326

DEBT SERVICE1993 Bonds (1) - - - - - - 880,738 878,768 880,368 2004 COP 1,738,750 1,734,599 1,740,000 1,736,500 1,742,750 1,733,375 230,911 - - TOTAL DEBT SERVICE 1,738,750 1,734,599 1,740,000 1,736,500 1,742,750 1,733,375 1,111,649 878,768 880,368

DEBT SERVICE COVERAGE 0.27 2.33 2.47 1.94 2.77 3.34 4.16 4.32 3.25

NET REVENUES AVAILABLE FOR SUBORDINATE DEBT SERVICE $ (1,268,562) $ 2,304,037 $ 2,558,165 $ 1,625,745 $ 3,088,931 $ 4,048,921 $ 3,515,643 $ 2,919,828 $ 1,984,958

Of Participation on Dec. 1, 2004.(1) 1996 Sewer Revenue Refunding Bonds were refinanced into 2004 Wastewater Revenue Certificates


WASTEWATER SYSTEMNINE-YEAR HISTORIC OPERATING RESULTS

FISCAL YEAR ENDED JUNE 30

142


Fiscal Year Ended June 30

Daily Average Flow (Million Gallons per

Daily) Increase (Decrease)

2002 9.20 -3.36%2003 9.11 -0.98%2004 9.26 1.65%2005 9.31 0.54%2006 9.40 0.97%2007 8.98 -4.47%2008 8.73 -2.78%2009 8.56 -1.95%2010 8.80 2.80%2011 8.81 0.11%

Fiscal Year Ended June 30 Service Connections Increase (Decrease)

2002 24,317 1.38%2003 24,475 0.65%2004 24,475 0.00%2005 24,475 0.00%2006 24,865 1.59%2007 25,155 1.17%2008 25,131 -0.10%2009 25,163 0.13%2010 25,178 0.06%2011 25,197 0.08%

Fiscal Year Ended June 30Service and Flow Charge Revenues Increase (Decrease)

2002 $ 11,162,655 -2.93%2003 12,677,123 13.57%2004 13,430,212 5.94%2005 14,042,047 4.56%2006 14,144,570 0.73%2007 15,460,227 9.30%2008 16,068,806 3.94%2009 16,015,727 -0.33%2010 16,978,451 6.01%2011 16,326,078 -3.84%

Source: Water Division, City of San Buenaventura, and the Comprehensive Annual Financial Report.

HISTORIC WASTEWATER SYSTEM USAGE

HISTORIC WASTEWATER SYSTEM SERVICE CONNECTIONS

HISTORIC WASTEWATER SYSTEM SERVICE AND FLOW CHARGE REVENUES

143


Percent of Wastewater Customers Classification Average HCF (1) Total Wastewate

Based on Volume Per Day Revenues

Peppertree HOA Residential 173.0 0.67%

Ventura Pines Residential 142.0 0.54%

Community Memorial Hospital Commercial 129.0 0.76%

Ventura County Commercial 123.0 0.72%

Jefferson At Ventura Apts. Residential 90.0 0.74%

Ventura County Medical Center Commercial 88.0 0.67%

Buenaventura Gardens HOA Residential 70.0 0.60%

Vedder Community Mgmt-Lemonwood MH Residential 66.0 0.67%

Paseo Del Mar Residential 63.0 0.67%

Ventura Marina MHP Residential 62.0 0.67%

(1) HCF stands for Hundred Cubic Feet.


Top 10 Wastewater Customers for 2010-2011

144

City of San Buenaventura Annual Continuing Disclosure Requirements, ContinuedWater Fund - $27,410,000-2004 Water Revenue Certificates of ParticipationFor the year ended June 30, 2011

2011 2010 2009 2008 2007 2006 2005 2004 2003REVENUESService Charges & Sale Revenues $ 20,946,374 $ 21,844,750 $ 21,304,880 $ 20,742,823 $ 20,549,930 $ 17,838,573 $ 17,642,997 $ 16,924,727 $ 16,103,697

Transfers In 1,007,343 865,525 916,459 840,954 675,517 619,089 854,927 901,249 - Gain on Sale of Assets - - - - - - - - 1,547 Investment Income 75,514 559,544 906,708 828,655 1,193,564 573,009 529,375 106,757 390,941 TOTAL REVENUES 22,029,231 23,269,819 23,128,047 22,412,432 22,419,011 19,030,671 19,027,299 17,932,733 16,496,185

OPERATION AND MAINTENANCE EXPENSE 19,421,019 18,638,004 18,946,447 18,804,452 15,418,196 14,176,287 13,561,877 12,128,513 13,050,651

NET REVENUES 2,608,212 4,631,815 4,181,600 3,607,980 7,000,815 4,854,384 5,465,422 5,804,220 3,445,534

DEBT SERVICE1993 Bonds (1) - - - - - - - 1,078,328 1,078,343 2004 COP 1,689,375 1,688,963 1,686,475 1,691,475 1,691,100 1,686,550 2,082,325 209,340 - TOTAL DEBT SERVICE 1,689,375 1,688,963 1,686,475 1,691,475 1,691,100 1,686,550 2,082,325 1,287,668 1,078,343

DEBT SERVICE COVERAGE 1.54 2.74 2.48 2.13 4.14 2.88 2.62 4.51 3.20

NET REVENUES AVAILABLE FOR SUBORDINATE DEBT SERVICE $ 918,837 $ 2,942,852 $ 2,495,125 $ 1,916,505 $ 5,309,715 $ 3,167,834 $ 3,383,097 $ 4,516,552 $ 2,367,191

FISCAL YEAR ENDED JUNE 30NINE-YEAR HISTORIC OPERATING RESULTS

WATER SYSTEM


(1) 1993 Water Revenue Refunding Bonds were refinanced into 2004 Water Revenue Certificates Of Participation on January 1, 2004.

145

City of San Buenaventura Annual Continuing Disclosure Requirements, Continued

For the year ended June 30, 2011

Fiscal Year Ended June 30 Pumped Water

Purchased Water (1) Total

2002 13,330 6,043 19,3732003 13,020 6,178 19,1982004 16,030 5,964 22,0032005 12,337 7,867 20,2042006 11,657 6,658 18,3152007 12,818 6,120 18,9382008 12,923 6,079 19,0022009 12,211 5,364 17,5752010 10,877 6,002 16,8792011 10,077 6,041 16,118

Fiscal Year Ended June 30 Pumped Water

Purchased Water Total

2006 18,300 8,000 26,3002007 18,300 8,000 26,3002008 18,300 8,000 26,3002009 20,562 8,000 28,5622010 21,900 8,000 29,9002011 21,900 8,000 29,9002012 21,900 8,000 29,9002013 21,900 8,000 29,9002014 21,900 8,000 29,9002015 21,900 6,000 27,9002016 16,000 6,000 22,000


(1) Reflects Casitas Municipal Water District certification letters

PROJECTED WATER SUPPLY(in Acre-feet per year)

Water Fund - $27,410,000-2004 Water Revenue Certificates of Participation

(in Acre-feet per year)HISTORIC WATER SUPPLY

146


2002 $ 15,353,505 2.12%

2003 16,103,697 4.89%

2004 16,924,727 5.10%

2005 17,642,997 4.24%

2006 17,838,573 1.11%

2007 20,549,930 15.20%

2008 20,742,823 0.94%

2009 21,304,880 2.71%

2010 21,844,750 2.53%

2011 20,946,374 -4.11%


Service Charges and Sales Revenues Increase

Fiscal Year Ended June 30

HISTORIC WATER SYSTEM SERVICE CHARGES AND SALES REVENUES

147


Percent of Water Customers Classification Average HCF (1) Total WaterBased on Volume Per Day Revenues

Olivas Links Golf Course Reclaimed 2,212 0.31%

Aera Energy LLC Ground 355 1.14%

Buenaventura Golf Course Reclaimed 209 0.21%

CHM-Peppertree HOA Residential 173 0.43%

Ventura Pines Residential 142 0.65%

Dairy Farmers of America Commercial 138 0.40%

Calif. Mushroom Farm Commercial 135 0.98%

Community Memorial Hospital Commercial 129 0.64%

Ventura County Commercial 123 0.25%

Harris Water Conditioning Commercial 98 0.52%

(1) HCF stands for Hundred Cubic Feet.


Top 10 Water Customers for 2010-2011

148

Customer ClassificationBimonthly

# HCF Bimonthly Commercial # HCF Rate $Meter Size City County ** Rate $ Group 1: 0 - 8 $16.07

Water Usage City County $ $ Single Family & 0 - 8 34.27 9 + per unit $2.63HCF $ $ 5/8 & 3/4 15.03 25.55 Multiple Dwelling 9 - 10 42.24 A. Laundromats1-16 2.02 3.43 1 28.74 48.86 11 - 12 50.00 B. Car Wash17-42 2.66 4.52 1.5 47.76 81.19 13 - 14 57.76 C. Professional Offices43+ 4.27 7.26 2 66.76 113.49 15 - 16 65.51 D. Convalescent homes

3 150.42 255.71 17+ 73.27 E. Wholesale Establishments4 245.49 417.33 F. Offices6 483.06 821.20 **Usage established during determination G. Retail Establishments

Water Usage City County 8 720.60 1,225.02 period November 1 thru April 30. Charge H. Public BuildingsHCF $ $ 10 958.15 1,628.86 based on lowest water usage during I. Barber & Beauty Shops1-10 2.02 3.43 12 1,100.68 1,871.16 determination billings. J. Gas Stations & Garages11-24 2.66 4.52 K. Bars w/out dining facilities25+ 4.27 7.26 Schools*** 131.89 L. Theaters

Meter Size City County M. Gyms$ $ Churches*** 73.27 N. Hospitals

1 6.93 11.78 O. Grocery stores w/out garbage grindersWater Usage City County 2 6.93 11.78 *** Per Single Family Dwelling Unit

HCF $ $ 3 20.80 35.36 Equivalent. Rates will vary;See Ordinance Group 2 0 - 8 $24.26Per HCF 2.66 4.52 4 41.60 70.72 chapter 22.220, section 020 for rate factors 9 + per unit $3.15

6 115.58 196.49 A . Hotels & Motels w/out dining facilities8 242.71 412.61 B. Commercial laundries10 416.08 707.34 Industrial (Billed Monthly)

Each Add'l inch 6.93 11.78 Group 3 0 - 8 $36.38Water Usage City County Dom/Res."U" 1" 2.11 3.59 Flow per million 2,470.10 9 + per unit $5.39

HCF $ $ gallons A. Hotels w/dining facilitiesPer HCF 1.40 1.40 Meter Size Bi-Mo Monthly

$ $ COD per 1000 280.51 Group 4 0 - 8 $56.795/8 & 3/4 15.03 7.52 pounds 9 + per unit $7.03

1 28.74 14.37 A. MortuariesWater Usage City County 1.5 47.76 23.88 SS Per 1000 597.62 B . Grocery stores with garbage grinders

HCF $ $ 2 66.76 33.38 poundsPer HCF 0.50 0.50 3 150.42 75.21 Group 5 0 - 8 $47.74

4 245.49 122.75 Misc. User Fees (As of 8/1/2010) 9 + per unit $6.57Temporary Meter Charge 6 483.06 241.53 NSF Check 35.00 A. BakeriesTemp Mtr Deposit 300.00 8 720.60 360.30 Open or Change Service 52.00 B. RestaurantsTemp Mtr Set/Remove 121.00 10 958.15 479.08 Post 48 Hr. Turnoff Notice 52.00 C. Multi-use shopping centersTemp Mtr Relocate 41.00 12 1,100.68 550.34 Shut off & Lock Service 62.00Temp Mtr Daily Chg 2.00 Conduct Flow Test 346.00 Group 6 $73.271 HCF = 748 gallons A. Plant Nurseries*Non Potable, Non Fully Treated Water

Source: Water Division, City of San Buenaventura

City of San BuenaventuraAnnual Continuing Disclosure Requirements, ContinuedWater Fund - $27,410,000-2004 Water Revenue Certificates of Participation

FY 2010-2011 Water Rates FY 2010-2011 Wastewater Service Rates

& Municipal Parks

Customer Classification

Wastewater Fund - $25,075,000-2004 Wastewater Revenue Certificates of ParticipationFor the year ended June 30, 2011

Water Volume Rates Bimonthly Service Charge

City Reclaim Meter Charge

Per Hundred Cubic Feet (HCF) (Based on Meter Size)

Reclaimed Water

Single Family Residential Residential & Non-Residentia

Multiple Family Residentia

Fire Line Bimonthly Charge

Raw Water*, Irrigation*,

Non-Residential

149

Employee Relations and Collective Bargaining

Salary ScheduleNumber of Regular Employees Covered Term of MOU

Maintenance Unit (Non-Supervisory Maintenance, Operations and Laboratory Employees)

121 Jul. 1, 2010 – Jun. 30, 2013

General Unit (Non-Supervisory Clerical, Technical, Para-professional, Inspectors and Civilian Public Safety Employees)

127 Jul. 1, 2010 – Jun. 30, 2013

Supervisor Unit (Supervisory Employees) 75 Jul. 1, 2010 – Jun. 30, 2013

Professional Unit (Professional Employees) 30 Jul. 1, 2010 – Jun. 30, 2013

Police Unit (Police Officers, Corporals and Sergeants) 115 Jul. 1, 2010 – Jun. 30, 2013

Fire Unit (Basic Unit: Firefighter Trainee, Firefighter/Paramedic Trainees/ Firefighter, Firefighters/Paramedics and Fire Engineers) and (Fire Captain’s Unit: Fire Captain)

54 Jan. 1, 2011 – Dec. 31, 2013

Police and Fire Recruits (1) (Police Officer Trainee, Firefighter-Paramedic Recruit and Firefighter Recruit. Trainees in unit for less than six months)

3 No MOU

Police Management Unit (Police Commander and Assistant Police Chiefs)

6 Jul. 1, 2010 – Jun. 30, 2012

Fire Management Unit (Fire Battalion Chiefs, Assistant Fire Chiefs)

5 Jan. 1, 2011 – Dec. 31, 2013

Executive (Department Heads, City Attorney, City Manager)

11 No MOU - Unrepresented

Management (Division Heads and other managers) 27 No MOU - Unrepresented

Administrative Confidential (Administrative professional)


Confidential (Administrative Secretaries, Human Resources non-analyst staff, Legal Administrative Secretaries)


Source: Human Resource Division, City of San Buenaventura

For the year ended June 30, 2011

City employees are divided into thirteen (13) separate salary schedules (excluding temporary support staff) for the purpose of salary and benefit administration, eight (8) of which are represented by a bargaining union/association. These salary schedule groups are listed below:

(1) The positions within this unit are non-safety trainee positions that upon completion of required training are promoted to either Police or Fire Unit represented positions.

City of San BuenaventuraEmployee Relations and Collective Bargaining

150

In compliance with the Americans with Disabilities Act, this document is available in alternate formats by contacting the Finance & Technology Department at 805/658-4787 or 805/654-7804 or by contacting the California Relay Service.

www. c i t yo f ve n t u r a . n e t

10 11

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APPENDIX B

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE

The following is a brief summary of the provisions of the Indenture not otherwise summarized in the text of this Official Statement. Such summary is not intended to be definitive, and reference is made to the complete Indenture for the actual terms thereof.

Definitions

As used in this Summary, the following terms have the following meanings. In addition, terms defined elsewhere in this Official Statement and not otherwise defined in this Summary have the meanings given them in this Official Statement.

“Additional Revenues” means, with respect to the issuance of any Parity Debt, any or all of the following

amounts: (a) an allowance for Net Revenues arising from any increase in the charges made for service

from the Wastewater System which has become effective prior to the incurring of such Parity Debt, in an amount equal to the total amount by which the Net Revenues would have been increased if such increase in charges had been in effect during the whole of the most recent completed Fiscal Year or during any more recent 12-month period selected by the City under the provisions of the Indenture relating to the issuance of Parity Debt, all as shown by the certificate or opinion of an Independent Accountant or Financial Consultant employed by the City.

(b) An allowance for Net Revenues arising from any increase in the charges made for service

from the Wastewater System which has become effective prior to the incurring of such Parity Debt but which, during all or any part of such Fiscal Year or such other 12-month period selected by the City under the provisions of the Indenture relating to the issuance of Parity Debt, was not in effect, in an amount equal to the total 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 such other 12-month period, all as shown by the certificate or opinion of an Independent Accountant or Financial Consultant employed by the City.

“Authority” means the City of San Buenaventura Public Facilities Financing Authority, a public body

corporate and politic duly organized and existing under Ordinance No. 85-17 adopted by the City Council of the City of San Buenaventura on May 28, 1985, and under the Constitution and laws of the State of California.

“Bond Counsel” means (a) Jones Hall, A Professional Law Corporation, or (b) any other attorney or firm of

attorneys appointed by or acceptable to the City of nationally-recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Tax Code.

“Bond Year” means any twelve-month period commencing on January 2 in a year and ending on the next

succeeding January 1, both dates inclusive; except that the first Bond Year commences on the Closing Date and ends on January 1, 2013.

“Business Day” means a day (other than a Saturday or a Sunday) on which banks are not required or

authorized to remain closed in the city in which the Office of the Trustee is located, and on which the Federal Reserve Bank system is not closed.

“Closing Date” means the date of delivery of the Bonds to the original purchaser of the Bonds.

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“Debt Service” means, as of any Fiscal Year or other 12-month period selected under the Indenture, the sum obtained for such Fiscal Year or other 12-month period by totaling the following amounts:

(a) the aggregate amount of principal of and interest on the Bonds coming due and payable in

such Fiscal Year or other 12-month period; and (b) the aggregate amount of principal and interest coming due on all outstanding Parity Debt, if

any, in such Fiscal Year or other 12-month period, including the principal of Parity Debt coming due and payable by operation of mandatory sinking fund redemption.

Notwithstanding the foregoing, if any issue of Parity Debt has more than 25% of the aggregate principal

amount thereof coming due in any Fiscal Year, the amount of Debt Service on such Parity Debt will be calculated on the assumption that the amount of principal of and interest on such Parity Debt were payable over a 25-year term on a level debt service basis. Furthermore, with regard to any issue of Parity Debt bearing interest at a variable rate, such interest will be calculated at an assumed rate equal to the most recently published Bond Buyer “Revenue Bond Index” (or comparable index if no longer published) plus 50 basis points.

“Escrow Agreement” means the Escrow Deposit and Trust Agreement dated as of the Closing Date, among

the City, the Authority and the Escrow Bank relating to the payment and prepayment of the 2004 Installment Payments and the 2004 Certificates.

“Federal Securities” means: (a) any direct general non-callable obligations of the United States of America,

including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America; and (b) any obligations the timely payment of principal of and interest on which are fully guaranteed by the United States of America or which are secured by obligations described in the preceding clause (a).

“Financial Consultant” means any consultant or firm of such consultants appointed by the City and who, or

each of whom: (a) is judged by the City to have experience in matters relating to the financing of wastewater systems; (b) is in fact independent and not under domination of the City; (c) does not have any substantial interest, direct or indirect, with the City other than as purchaser of the Bonds or any Parity Debt; and (d) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make reports to the City.

“Gross Revenues” means all gross charges received for, and all other gross income and receipts derived by

the City from, the ownership and operation of the Wastewater System or otherwise arising from the Wastewater System, including but not limited to investment earnings thereon; but excluding (a) customer deposits, (b) the proceeds of any special assessments or special taxes levied upon real property within any improvement district for the purpose of paying special assessment bonds or special tax obligations of the City relating to the Wastewater System; and (c) connection charges, if any.

“Independent Accountant” means any accountant or firm of such accountants appointed and paid by the

City, and who, or each of whom (a) is in fact independent and not under domination of the City; (b) does not have any substantial interest, direct or indirect, with the City; and (c) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make annual or other audits of the books of or reports to the City.

“Net Revenues” means, for any period, an amount equal to all of the Gross Revenues received during such

period minus the amount required to pay all Operation and Maintenance Costs becoming payable during such period.

“Office” means the corporate trust office of the Trustee in Los Angeles, California, or such other or

additional offices as the Trustee may designate in writing to the City from time to time as the corporate trust office for purposes of the Indenture; except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term means the office or agency of the Trustee at which, at any particular time, its corporate trust agency business is conducted.

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“Operation and Maintenance Costs” means the reasonable and necessary costs and expenses paid by the City for maintaining and operating the Wastewater System, including but not limited to (a) the reasonable expenses of management and repair and other costs and expenses necessary to maintain and preserve the Wastewater System in good repair and working order, (b) the reasonable administrative costs of the City attributable to the operation and maintenance of the Wastewater System, and (c) transfers made to other funds of the City for the purpose of paying or reimbursing the payment of Operation and Maintenance Costs. “Operating and Maintenance Costs” do not include (i) interest expense relating to obligations of the City with respect to the Wastewater System, (ii) depreciation, replacement and obsolescence charges or reserves therefor, and (iii) amortization of intangibles or other bookkeeping entries of a similar nature.

“Parity Debt Documents” means all leases, installment sale agreements, trust agreements, indentures of

trust and other documents prescribing the terms and provisions applicable to any issue of Parity Debt. “Parity Debt” means, collectively all bonds, notes, loan agreements, installment sale agreements, leases or

other obligations of the City payable from and secured by a pledge of and lien upon any of the Net Revenues issued or incurred on a parity with the Bonds under the provisions of the Indenture.

“Permitted Investments” means any of the following which at the time of investment are legal investments

under the laws of the State of California for the moneys proposed to be invested therein: (a) Federal Securities; (b) Any direct or indirect obligations of an agency or department of the United States of

America whose obligations represent the full faith and credit of the United States of America, or which are rated A or better by S&P.

(c) Interest-bearing deposit accounts (including certificates of deposit) in federal or State

chartered savings and loan associations or in federal or State of California banks (including the Trustee), provided that: (i) the unsecured obligations of such commercial bank or savings and loan association are rated A or better by S&P; or (ii) such deposits are fully insured by the Federal Deposit Insurance Corporation.

(d) Commercial paper rated in the highest short-term rating category by S&P. (e) Federal funds or bankers acceptances with a maximum term of one year of any bank which

an unsecured, uninsured and unguaranteed obligation rating in the highest rating category of S&P.

(f) Money market funds registered under the Federal Investment Company Act of 1940, whose

shares are registered under the Federal Securities Act of 1933, and having a rating in the highest rating category of S&P (such funds may include funds for which the Trustee, its affiliates, parent or subsidiaries provide investment advisory or other management services).

(g) Obligations the interest on which is excludable from gross income pursuant to Section 103

of the Tax Code and which are either (a) rated A or better by S&P, or (b) fully secured as to the payment of principal and interest by Federal Securities.

(h) Bonds or notes issued by any state or municipality which are rated by S&P in one of the

two highest rating categories assigned by S&P. (i) Any investment agreement with, or guaranteed by, a financial institution the long-term

unsecured obligations or the claims paying ability of which are rated A or better by S&P at the time of initial investment.

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(j) the Local Agency Investment Fund of the State of California, created under Section 16429.1 of the California Government Code, to the extent the Trustee is authorized to register such investment in its name.

“S&P” means Standard & Poor's Ratings Services, a Standard & Poor’s Financial Services LLC business,

of New York, New York, and its successors. “Tax Code” means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as

otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date, together with applicable temporary and final regulations promulgated, and applicable official public guidance published, under said Code.

“2004 Certificates” means the $25,075,000 aggregate principal amount of 2004 Wastewater Revenue

Certificates of Participation, executed and delivered and at any time outstanding under the Trust Agreement dated as of December 1, 2004, among the City, the Authority and The Bank of New York Trust Company, N.A., as trustee.

“2004 Installment Payments” means the semiannual installment payments which the City is obligated to

pay under the 2004 Installment Sale Agreement, including any amounts payable upon delinquent installments and including any prepayment thereof under the 2004 Installment Sale Agreement.

“2004 Installment Sale Agreement” means the Installment Sale Agreement dated as of December 1, 2004

between the City and the Authority, together with all duly authorized and executed amendments thereto. “Wastewater Fund” means the existing fund by that name established and held by the City with respect to

the Wastewater System. “Wastewater System” means the public utility owned, controlled and operated by the City for the

collection, treatment and disposal of wastewater within the service area of the City, including, without limitation, the existing sewer systems, plans, works or undertakings together with any additions, improvements or extensions at any time constructed or acquired by the City for such purposes, and including facilities for the disposal of recycled wastewater.

Establishment of Funds and Accounts; Flow of Funds

Costs of Issuance Funds. The Trustee will establish the Costs of Issuance Fund for each series of Bonds

under the Indenture, into which a portion of the proceeds of the related series of Bonds will be deposited on the Closing Date. The Trustee will disburse moneys in the Costs of Issuance Fund from time to time to pay costs of issuing the related series of Bonds upon submission of requisitions of the City. On February 1, 2013, the Trustee will transfer any amounts remaining in the Costs of Issuance Funds to the Bond Service Fund to be applied to pay a portion of the interest next coming due and payable on the Bonds and the Trustee will thereupon close the Costs of Issuance Funds.

Wastewater Fund. The City has previously established the Wastewater Fund, which it will continue to hold

and maintain for the purposes and uses set forth in the Indenture. The City will deposit all Gross Revenues in the Wastewater Fund promptly upon the receipt thereof, and will apply amounts in the Wastewater Fund solely for the uses and purposes set forth in the Indenture and the Parity Debt Documents. In addition to withdrawals of Net Revenues required to pay principal of and interest on the Parity Debt in accordance with the Parity Debt Documents, the City will withdraw Net Revenues on deposit in the Wastewater Fund and apply such Net Revenues at the times and for the purposes, and in the priority, as follows:

(a) Bond Service Fund. On or before the 3rd Business Day of the month preceding each

Interest Payment Date, so long as any Bonds remain outstanding, the City will withdraw from the Wastewater Fund and pay to the Trustee for deposit into the Bond Service Fund (which the Trustee will establish and hold in trust under the Indenture) an amount of Net Revenues which, together with other available amounts then on deposit in the Bond Service Fund, is at least equal to the aggregate amount of principal of and interest coming due and

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payable on the Bonds on such Interest Payment Date, including the amount of any term Bonds which are subject to mandatory sinking fund redemption.

The Trustee will apply amounts in the Bond Service Fund solely for the purpose of (i)

paying the interest on the outstanding Bonds when due and payable (including accrued interest on any Bonds purchased or redeemed under the Indenture), and (ii) paying the principal of the Bonds at the maturity thereof or upon the mandatory sinking fund redemption thereof. Upon the payment in full of all Outstanding Bonds and Parity Debt, the Trustee will transfer any moneys remaining in the Bond Service Fund to the City for deposit into the Wastewater Fund.

(b) Redemption Fund. If the City elects to redeem outstanding Series B Bonds (other than by

operation of mandatory sinking fund redemption), the City will transfer to the Trustee for deposit into the Redemption Fund (which the Trustee will thereupon establish and hold in trust) an amount at least equal to the redemption price of the Series B Bonds, excluding accrued interest, which is payable from the Bond Service Fund. Amounts in the Redemption Fund will be applied by the Trustee solely for the purpose of paying the redemption price of Bonds to be redeemed under the Indenture (other than mandatory sinking fund redemption, which will be paid out of the Bond Service Fund). Following any such redemption of the Bonds, any moneys remaining in the Redemption Fund will be transferred by the Trustee to the City for deposit into the Wastewater Fund.

The City will manage, conserve and apply moneys in the Wastewater Fund in such a manner that all

deposits required to be made as described above and under the Parity Debt Documents will be made at the times and in the amounts so required. Subject to the foregoing sentence, so long as no Event of Default has occurred and is continuing, the City may at any time use and apply moneys in the Wastewater Fund for any one or more of the following purposes:

(i) the payment of the Operation and Maintenance Costs of the Wastewater System, (ii) the acquisition and construction of extensions and betterments to the Wastewater System; (iii) the redemption of any of the Bonds or Parity Debt which are then subject to redemption or

the purchase thereof from time to time in the open market, at prices and in such manner, either at public or private sale, or otherwise, as the City in its discretion may determine; or

(iv) any other lawful purpose of the City relating to the Wastewater System.

Investment of Funds Investment of Funds Held by City. All moneys in the Wastewater Fund will be invested by the City from

time to time in any securities in which the City may legally invest funds subject to its control. Investment of Funds Held by Trustee. The Trustee will invest moneys in the funds and accounts held by it

under the Indenture in Permitted Investments specified in a written request of the City delivered to the Trustee at least two Business Days in advance of the making of such investments. In the absence of any such direction from the City, the Trustee will hold such moneys in cash, uninvested.

General Investment Provisions. Obligations purchased as an investment of moneys in any fund or account

shall be deemed to be part of such fund or account. Whenever in the Indenture the City is required to transfer any moneys to the Trustee, such transfer may be accomplished by transferring a like amount of Permitted Investments. All interest or gain derived from the investment of amounts in any of the funds or accounts held by the Trustee under the Indenture will be retained in the respective fund or account from which such investment was made. For purposes of acquiring any investments hereunder, the Trustee may commingle funds held by it upon receipt by the Trustee of the written request of the City. The Trustee may act as principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor. The Trustee shall incur no liability for losses

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arising from any investments made under the Indenture. The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made by the Trustee under the Indenture.

Covenants of the City

In addition to the covenants made by the City under the Indenture which are described elsewhere in this

Official Statement, the City makes the following covenants for the benefit of the Bond owners: Operation of Wastewater System in Efficient and Economical Manner. The City covenants and agrees to

operate the Wastewater System in an efficient and economical manner and to operate, maintain and preserve the Wastewater System in good repair and working order.

Sale or Eminent Domain of Wastewater System. The City covenants that the Wastewater System will not

be encumbered, sold, leased, pledged, any charge placed thereon, or otherwise dispose of, as a whole or substantially as a whole if such encumbrance, sale, lease, pledge, charge or other disposition would materially impair the ability of the City to pay the principal of or interest on the Bonds or any Parity Debt, or would materially adversely affect its ability to comply with the terms of the Indenture or any Parity Debt Documents. The City may not enter into any agreement which impairs the operation of the Wastewater System or any part of it necessary to secure adequate Net Revenues to pay the Bonds and any Parity Debt, or which otherwise would impair the rights of the Bond Owners with respect to the Net Revenues. If any substantial part of the Wastewater System is sold, the payment therefor will either (a) be used for the acquisition or construction of improvements and extensions or replacement facilities of the Wastewater System or (b) be applied to redeem the Bonds or any Parity Debt in accordance with the Indenture and the Parity Debt Documents, respectively.

Any amounts received as awards as a result of the taking of all or any part of the Wastewater System by the

lawful exercise of eminent domain, if and to the extent that such right can be exercised against such property of the City, will either (a) be used for the acquisition or construction of improvements and extensions or replacement facilities of the Wastewater System, or (b) be applied to redeem the Bonds or any Parity Debt in accordance with the Indenture and the Parity Debt Documents, respectively.

Records and Accounts. The City will keep proper books of record and accounts of the Wastewater System,

separate from all other records and accounts, in which complete and correct entries are made of all transactions relating to the Wastewater System. Said books shall, upon reasonable request, be subject to the inspection of the Trustee and the Owners of not less than 10% of the outstanding Bonds or their representatives authorized in writing.

The City will cause the books and accounts of the Wastewater System to be audited annually by an

Independent Accountant not more than nine months after the close of each Fiscal Year, and will make a copy of such report available for inspection by the Bond Owners at the office of the City and at the Office of the Trustee. Such report may be part of a combined financial audit or report covering all or part of the City’s finances.

Compliance With Parity Debt Documents. The City will observe and perform all of the covenants,

agreements and conditions on its part required to be observed and performed under the Parity Debt Documents. The City will not take or omit to take any action within its control which would, or which if not corrected with the passage of time would, constitute an event of default under and within the meaning of the Parity Debt Documents.

Tax Covenants Relating to Series B Bonds. The City will not take, nor permit nor suffer to be taken by the

Trustee or otherwise, any action with respect to the proceeds of any of the Series B Bonds which would cause any of the Series B Bonds to be “arbitrage bonds” or “private activity bonds” within the meaning of the Tax Code. The City agrees to comply with all provisions of the Tax Code relating to the rebate to the United States of America of excess investment earnings derived from the Series B Bond proceeds.

Enforcement of Net Revenues. The City will reasonably and diligently enforce payment of all bills for

wastewater services supplied by the Wastewater System. If a bill becomes delinquent and remains so for a period to be determined in accordance with City policy from time to time, the City will discontinue wastewater service, in accordance with applicable provisions of state law and the City’s established procedures, to any premises the owner or occupant of which is so delinquent. The City will not resume such service to such premises until all delinquent

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charges and applicable penalties have been paid in full or provision for payment has been made to the satisfaction of the City. The City will do all things and exercise all remedies reasonably available to assure the payment when due of all charges for services supplied by the Wastewater System.

Refunding of 2004 Installment Payments and 2004 Certificates. The City will cause the proceeds of the

Bonds to be applied to the payment and prepayment of the 2004 Installment Payments and the 2004 Certificates in accordance with the provisions of the 2004 Installment Sale Agreement, the 2004 Trust Agreement and the Escrow Agreement. From and after the Closing Date, the 2004 Installment Payments and the 2004 Certificates will be fully discharged and will no longer be secured by a pledge of or lien on the Net Revenues.

Amendment of Indenture

The Indenture may be modified or amended at any time by a supplemental indenture with the written

consents of the Owners of a majority in aggregate principal amount of the Bonds then outstanding. No such modification or amendment may (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the City to pay the principal, interest or redemption premiums (if any) at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the Owner of such Bond, (b) permit the creation by the City of any mortgage, pledge or lien upon the Revenues superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as expressly permitted by the Indenture), or reduce the percentage of Bonds required for the written consent to any such amendment or modification, or (c) without its written consent thereto, modify any of the rights or obligations of the Trustee.

The Indenture may also be modified or amended at any time by a supplemental indenture, without the

consent of any Bond Owners, to the extent permitted by law, but only for any one or more of the following purposes:

(a) to add to the covenants and agreements of the City contained in the Indenture, other

covenants and agreements thereafter to be observed, or to limit or surrender any rights or power therein reserved to or conferred upon the City; or

(b) to cure any ambiguity, or to cure, correct, supplement any defective provision contained in

the Indenture, or in any other respect whatsoever as the City deems necessary or desirable, provided under any circumstances that such modifications or amendments do not materially adversely affect the interests of the Owners of the Bonds, in the opinion of Bond Counsel filed with the City and the Trustee; or

(c) to provide for the issuance of any Parity Debt, and to provide the terms and conditions

under which such Parity Debt may be issued, including but not limited to the establishment of special funds and accounts relating to such Parity Debt and any other provisions relating solely to such Parity Debt; or

(d) to amend any provision of the Indenture to assure the exclusion from gross income of

interest on the Series B Bonds for federal income tax purposes under the Tax Code.

Events of Default and Remedies Events of Default. Each of the following events constitutes an Event of Default under the Indenture: (a) Failure to pay any installment of the principal of any Bonds when due, whether at maturity

as therein expressed, by proceedings for redemption, by acceleration, or otherwise. (b) Failure to pay any installment of interest on the Bonds when due. (c) Failure by the City to observe and perform any of the other covenants, agreements or

conditions on its part contained in the Indenture or in the Bonds, if such failure has continued for a period of 60 days after written notice thereof, specifying such failure and

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requiring the same to be remedied, has been given to the City by the Trustee; provided, however, if in the reasonable opinion of the City the failure stated in the notice can be corrected, but not within such 60-day period, such failure will not constitute an Event of Default if the City institutes corrective action within such 60-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time.

(d) The City commences a voluntary case under Title 11 of the United States Code or any

substitute or successor statute. (e) The occurrence and continuation of an event of default under and as defined in any Parity

Debt Documents. Remedies. If an Event of Default occurs and is continuing, the Trustee may, and at the written direction of

the Owners of a majority in aggregate principal amount of the Bonds then outstanding the Trustee shall, (a) declare the principal of the Bonds, together with the accrued interest thereon, to be due and payable immediately, and upon any such declaration the same will become immediately due and payable, anything in the Indenture or in the Bonds to the contrary notwithstanding, and (b) exercise any other remedies available to the Trustee and the Bond Owners in law or at equity to enforce the rights of the Bond Owners under the Indenture.

Notice to Bond Owners. Immediately upon becoming aware of the occurrence of an Event of Default, but

in no event later than five Business Days following becoming aware of such occurrence, the Trustee will give notice of such Event of Default to the City by telephone confirmed in writing. Such notice must also state whether the principal of the Bonds has been declared to be or have immediately become due and payable. With respect to any Event of Default described in clauses (a) or (b) above the Trustee shall, and with respect to any Event of Default described in clause (c) above the Trustee in its sole discretion may, also give such notice to the Owners in the same manner as provided in the Indenture for notices of redemption of the Bonds, which must include the statement that interest on the Bonds will cease to accrue from and after the date, if any, on which the Trustee declares the Bonds to become due and payable under the preceding paragraph (but only to the extent that principal and any accrued, but unpaid, interest on the Bonds is actually paid on such date).

Application of Funds Upon Acceleration. All amounts received by the Trustee pursuant to any right given

or action taken by the Trustee under the provisions of the Indenture will be applied by the Trustee as follows and in the following order:

(a) First, to the payment of any fees, costs and expenses incurred by the Trustee to protect the

interests of the Owners of the Bonds; payment of the fees, costs and expenses of the Trustee (including fees and expenses of its counsel, including any allocated costs of internal counsel) incurred in and about the performance of its powers and duties under the Indenture and the payment of all fees, costs and expenses owing to the Trustee, together with interest on all such amounts advanced by the Trustee at the maximum rate permitted by law.

(b) Second, to the payment of the whole amount then owing and unpaid upon the Bonds for

interest and principal, with interest on such overdue amounts at the respective rates of interest borne by those Bonds, and if such moneys are insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and interest on overdue amounts without preference or priority among such interest, principal and interest on overdue amounts ratably to the aggregate of such interest, principal and interest on overdue amounts.

Power of Trustee to Control Proceedings. If the Trustee, upon the happening of an Event of Default, takes

any action, by judicial proceedings or otherwise, in the performance of its duties under the Indenture, whether upon its own discretion or upon the request of the Owners of a majority in aggregate principal amount of the Bonds then outstanding, it has full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action. The Trustee may not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a

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written request signed by the Owners of a majority in principal amount of the outstanding Bonds opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.

Limitation on Owners’ Right to Sue. No Owner of any Bond has the right to institute any suit, action or

proceeding at law or in equity, for any remedy under or upon the Indenture, unless: (a) said Owner has previously given to the Trustee written notice of the occurrence of an Event

of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then outstanding

have requested the Trustee in writing to exercise the powers granted to it under the Indenture or to institute such action, suit or proceeding in its own name;

(c) said Owners have tendered to the Trustee indemnity reasonably acceptable to the Trustee

against the costs, expenses and liabilities to be incurred in compliance with such request; and

(d) the Trustee has failed to comply with such request for a period of 60 days after such written

request has been received by, and said tender of indemnity has been made to, the Trustee.

Defeasance of Bonds The City has the right to pay and discharge the entire indebtedness on any Bonds in any one or more of the

following ways: (a) by paying or causing to be paid the principal of and interest on such Bonds, as and when the

same become due and payable; (b) by irrevocably depositing with the Trustee or an escrow bank, in trust, at or before maturity,

an amount of cash which, together with the available amounts then on deposit in the funds and accounts established under the Indenture, in the opinion or report of an Independent Accountant is fully sufficient to pay such Bonds, including all principal, interest and redemption premium, if any;

(c) by irrevocably depositing with the Trustee or an escrow bank, in trust, Federal Securities in

such amount as an Independent Accountant determines will, together with the interest to accrue thereon and available moneys then on deposit in any of the funds and accounts established under the Indenture, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premium, if any) at or before maturity; or

(d) by purchasing such Bonds prior to maturity and tendering such Bonds to the Trustee for

cancellation; Upon such action, and notwithstanding that any such Bonds have not been surrendered for payment, the

pledge of the Net Revenues and other funds provided for in the Indenture and all other obligations of the Trustee and the City under the Indenture with respect to such Bonds will cease and terminate.

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APPENDIX C

FORMS OF OPINIONS OF BOND COUNSEL

Upon issuance of the Bonds, Jones Hall, A Professional Law Corporation, Bond Counsel, proposes to render its final approving opinions in substantially the following forms:

FORM OF OPINION OF BOND COUNSEL RELATING TO SERIES A BONDS

November 15, 2012

City Council City of San Buenaventura 501 Poli Street Ventura, California 93001

OPINION: $2,560,000 City of San Buenaventura 2012 Taxable Wastewater Revenue Refunding Bonds, Series A

Members of the City Council: We have acted as bond counsel in connection with the issuance by the City of San Buenaventura (the

“City”) of $2,560,000 aggregate principal amount of bonds of the City designated the “City of San Buenaventura 2012 Taxable Wastewater Revenue Refunding Bonds, Series A” (the “Series A Bonds”), issued under the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code (the “Bond Law”), and under an Indenture of Trust dated as of November 1, 2012 (the “Indenture”), between the City and The Bank of New York Mellon Trust Company, N.A., as trustee, and a resolution of the City Council of the City adopted on October 8, 2012. We have examined the Bond Law, an executed copy of the Indenture and such certified proceedings and other papers as we deem necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon representations of the City

contained in the Indenture and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.

Based upon our examination we are of the opinion, under existing law, that: 1. The City is a charter city and municipal corporation organized and existing under the

Constitution and laws of the State of California, with power to enter into the Indenture, to perform the agreements on its part contained therein and to issue the Series A Bonds.

2. The Series A Bonds have been duly authorized, executed and delivered by the City and are

legal, valid and binding obligations of the City, payable solely from the sources provided therefor in the Indenture.

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3. The Indenture has been duly approved by the City and constitutes a legal, valid and binding obligation of the City enforceable against the City in accordance with its terms.

4. Pursuant to the Bond Law, the Indenture establishes a valid lien on and pledge of the Net

Revenues of the Wastewater System (as such terms are defined in the Indenture) for the security of the Series A Bonds and any obligations issued on a parity therewith.

5. The interest on the Series A Bonds is exempt from personal income taxation imposed by the

State of California. The rights of the owners of the Series A Bonds and the enforceability of the Series A Bonds and the

Indenture may be subject to bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity.

To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you

that any U.S. federal tax advice contained in this opinion (a) was not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties under the Internal Revenue Code or for the purpose of promoting, marketing, or recommending to another party any transaction or matter addressed herein, and (b) was written to support the promotion or marketing of the Series A Bonds.

Respectfully submitted, Jones Hall, A Professional Law Corporation

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FORM OF OPINION OF BOND COUNSEL RELATING TO SERIES B BONDS

November 15, 2012

City Council City of San Buenaventura 501 Poli Street Ventura, California 93001

OPINION: $15,915,000 City of San Buenaventura 2012 Wastewater Revenue Refunding Bonds, Series B

Members of the City Council: We have acted as bond counsel in connection with the issuance by the City of San Buenaventura (the

“City”) of $15,915,000 aggregate principal amount of bonds of the City designated the “City of San Buenaventura 2012 Wastewater Revenue Refunding Bonds, Series B” (the “Series B Bonds”), issued under the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code (the “Bond Law”), and under an Indenture of Trust dated as of November 1, 2012 (the “Indenture”), between the City and The Bank of New York Mellon Trust Company, N.A., as trustee, and a resolution of the City Council of the City adopted on October 8, 2012. We have examined the Bond Law, an executed copy of the Indenture and such certified proceedings and other papers as we deem necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon representations of the City

contained in the Indenture and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.

Based upon our examination we are of the opinion, under existing law, that: 1. The City is a charter city and municipal corporation organized and existing under the

Constitution and laws of the State of California, with power to enter into the Indenture, to perform the agreements on its part contained therein and to issue the Series B Bonds.

2. The Series B Bonds have been duly authorized, executed and delivered by the City and are

legal, valid and binding obligations of the City, payable solely from the sources provided therefor in the Indenture.

3. The Indenture has been duly approved by the City and constitutes a legal, valid and binding

obligation of the City enforceable against the City in accordance with its terms. 4. Pursuant to the Bond Law, the Indenture establishes a valid lien on and pledge of the Net

Revenues of the Wastewater System (as such terms are defined in the Indenture) for the security of the Series B Bonds and any obligations issued on a parity therewith.

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5. The interest on the Series B Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding sentences are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Series B Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted in the Indenture to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Series B Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Series B Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Series B Bonds.

6. The interest on the Series B Bonds is exempt from personal income taxation imposed by the

State of California. The rights of the owners of the Series B Bonds and the enforceability of the Series B Bonds and the

Indenture may be subject to bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity.

Respectfully submitted, Jones Hall, A Professional Law Corporation

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APPENDIX D

FORM OF CONTINUING DISCLOSURE CERTIFICATE

Upon the issuance of the Bonds, the City proposes to enter into a Continuing Disclosure Certificate in substantially the following form:

This Continuing Disclosure Certificate, dated as of November 1, 2012 (the “Disclosure Certificate”), is executed and delivered by the City of San Buenaventura (the “City”) in connection with the issuance of the City’s 2012 Taxable Wastewater Revenue Refunding Bonds, Series A and 2012 Wastewater Revenue Refunding Bonds, Series B (collectively, the “Bonds”).

WHEREAS, the Bonds are being issued pursuant to an Indenture of Trust, dated as of November 1, 2012 (the “Indenture”), between the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).

WHEREAS, the Bonds are payable from Net Revenues of the Wastewater System (as such terms are defined in the Indenture); and

WHEREAS, this Disclosure Certificate is being executed and delivered by the City for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriters in complying with the Rule (defined below).

NOW, THEREFORE, the City covenants as follows:

SECTION 1. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

“Annual Report” shall mean any Comprehensive Annual Financial Report provided by the City pursuant to, and as described in, Sections 2 and 3 of this Disclosure Certificate.

“Beneficial Owner” shall mean any person which: (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds for federal income tax purposes.

“Disclosure Representative” shall mean the City Manager of the City, the Finance Director of the City or their designee, or such other officer or employee as the City shall designate in writing from time to time.

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

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

“MSRB” shall mean the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.

“Official Statement” shall mean the Official Statement relating to the Bonds, dated November 2, 2012.

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

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“Repository” shall mean the Municipal Securities Rulemaking Board, which can be found at http://emma.msrb.org.

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

“State” shall mean the State of California.

SECTION 2. Provision of Annual Reports.

(a) The City shall, or shall cause the Dissemination Agent to, not later than the 270 days after the end of each fiscal year of the City (the “Annual Report Date”), commencing with the report for the 2011-12 fiscal year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate, with a copy to the Trustee. Not later than five (5) Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent, if other than the City. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate. If the City’s fiscal year changes, the City, upon becoming aware of such change, shall give notice of such change in the same manner as for a Listed Event under Section 5(c). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the City and shall have no duty or obligation to review such Annual Report.

(b) If by five (5) Business Days prior to the Annual Report Date, the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall notify the City of such non-receipt.

(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the Annual Report Date, the Dissemination Agent shall provide to the MSRB (with a copy to the Trustee and the Participating Underwriters) a notice, in substantially the form attached as Exhibit A.

(d) Unless the City has done so pursuant to Section 3(a) above, the Dissemination Agent (if other than the City) shall: (i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the City, file a certificate with the City to the effect that the Annual Report has been provided pursuant to this Disclosure Certificate, stating, to the extent it can confirm such filing of the Annual Report, the date it was provided.

SECTION 3. Content of Annual Reports. The City’s Annual Report shall contain or include by reference the following:

(a) The City’s audited financial statements for the prior fiscal year, prepared in accordance with generally accepted auditing standards for municipalities in the State of California. If the City’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

(b) Principal amount of the Bonds outstanding.

(c) An update of the information in the following tables in the Official Statement:

1. Historic Wastewater System Connections;

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2. Historic Wastewater System Daily Average Flow;

3. Historic Wastewater System Service Charge Revenues;

4. Top Ten Wastewater Service Customers;

5. Wastewater Service Rates; and

6. Historic Operating Results (Fiscal Year Ended June 30).

(d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The City shall clearly identify each such other document so included by reference.

SECTION 4. Reporting of Significant Events.

(a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not more than ten (10) days after the event, if material:

1. Principal and interest payment delinquencies;

2. Unscheduled draws on debt service reserves reflecting financial difficulties;

3. Unscheduled draws on credit enhancements reflecting financial difficulties;

4. Substitution of credit or liquidity providers, or their failure to perform;

5. Issuance by the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposal Issue (IRS Form 5701-TEB);

6. Tender Offers;

7. Defeasances;

8. Rating changes; and

9. Bankruptcy, insolvency, receivership or similar proceedings.

Note: For the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.

(b) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material in a timely manner not more than ten (10) days after occurrence:

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1. unless described in Section 5(a)(5), adverse tax opinions or other notices or determinations by the Internal Revenue Service with respect to the tax status of the Series A Bonds or other events affecting the tax status of the Series A Bonds;

2. modifications to the rights of Bondholders;

3. optional, unscheduled or contingent Bond calls;

4. release, substitution or sale of property securing repayment of the Bonds;

5. non-payment related defaults;

6. the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; and

7. appointment of a successor or additional trustee or the change of the name of a trustee.

(c) If the City determines that knowledge of the occurrence of a Listed Event under subsection (b) would be material under applicable federal securities laws, and if the Dissemination Agent is other than the City, the City shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to file a notice of such occurrence with the MSRB in an electronic format as prescribed by the MSRB in a timely manner not more than ten (10) Business Days after the event.

(d) If the City determines that the Listed Event under subsection (b) would not be material under applicable federal securities laws and if the Dissemination Agent is other than the City, the City shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence.

(e) The City hereby agrees that the undertaking set forth in this Disclosure Certificate is the responsibility of the City and, if the Dissemination Agent is other than the City, the Dissemination Agent shall not be responsible for determining whether the City’s instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule.

SECTION 5. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

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

SECTION 7. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Certificate. The Dissemination Agent may resign by providing thirty days written notice to the City and the Trustee. The Dissemination Agent shall not be responsible for the content of any report or notice prepared by the City and shall have no duty to review any information provided to it by the City. The Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination Agent be responsible for filing any report not provided to it by the City in a timely manner and in a form suitable for filing.

SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived,

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provided that, in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted by the Rule; provided that the Dissemination Agent shall have first consented to any amendment that modifies or increases its duties or obligations hereunder. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the City shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements: (i) notice of such change shall be given in the same manner as for a Listed Event under Section 4(c); and (ii) the Annual Report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

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

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

No Bond Holder or Beneficial Owner may institute such action, suit or proceeding to compel performance unless they shall have first delivered to the City satisfactory written evidence of their status as such, and a written notice of and request to cure such failure, and the City shall have refused to comply therewith within a reasonable time.

SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees, to the extent permitted by law, to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney’s fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. In performing its duties hereunder, the Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the City, the Bond holders, or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

SECTION 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, if any, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.


By: Johnny Johnston, Interim City Manager

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ATTEST:

Cyndi Rodriguez, City Clerk

APPROVED AS TO FORM:

Ariel Calonne, City Attorney

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APPENDIX E

THE BOOK-ENTRY SYSTEM

The information in this Appendix concerning DTC and DTC’s book-entry system has been obtained from sources that the City and the Underwriter believe to be reliable, but neither the City nor the Underwriter takes any responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, premium, if any, accreted value and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered bond will be issued for each annual maturity of the Bonds, each in the aggregate principal amount of such annual maturity, and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

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

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts

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such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

A Bond Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant’s interest in the Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Bonds to the Trustee’s DTC account.

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

The City may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, bonds will be printed and delivered to DTC.

THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.

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