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Home My WebLink AboutRESO 5635• JH~:KIJ:pl • CITY OF PALO ALTO SANTA CLARA COUNTY, STATE OF CALIFORNIA RESOLUl ION NO. 5635 A SERIES RESOLUTION AUTHORIZING THE ISSUANCE OF A . PRINCIPAL AMOUNT OF $1, 150,000 . C'"lTY OF PALO-ALTO ELECTRIC AND GAS REVENUE BONDS 1979 SERIES A Adopted Januar,y-1!_, 197 9 12/05/73 12/06/78 01/04/i9 ORIGINAL ., • CITY OF PALO AL TO SANTA CLA.qA COUNTY CALIFORNIA RESOLUTION NO. 563~- • A SERIES RESOLUTION AUTHORIZING THE ISSUANCE OF A PRINCIPAL N10UNT Of $1,150,000 CITY OF PALO ALTO ELECTRIC AND GAS REVENUE BONDS 1979 SERIES A TABLE OF CONTENTS ARTICLE I AUTHORITY, PURPOSE ANO DEFINITIONS 101. Authorization and Purpose. • • • • • • • • • • • • • • • • • • • • • • 2 102. 1979 Series A Resolution ••••••••••••••••••••••• 2 103. Definitions. • • • • • • • • • • • • • • • • • • • ••••••• 2 ARTICLE II AUTHORIZATION OF 1979 SERIES A BONDS 201. Principal Amount, Designation and Series • • ••••••••••• 3 202. Date and Maturities. • • • • • • • • • • • • • • • • • • •• o •• 3 203. Interest· ••••••••••••••••••••••••••••••• 3 204. Denominations, Number and Letters ••••••••••••••••••• 3 205. Paying Agent and Registrar and Treasurer as Fiscal Agent. • • • • • • • • • • • • • • • • • • • 4 206. Redemption of 1979 Series A Bonds and Terms •••••••••••••• 4 207. Sale of 1979 Series A Bonds ••••••••••••• ~ • • • • • • 4 ARTICLE Ill ESTABLISHMENT OF ACCOUNTS ANO APPLICATIONS OF 1979 SERIES A BOND PROCEEDS 301. · Bond Reserve Account • . • • • • • • • • • • • • • • • • • • • • • • • 5 302. Establishment of 1979 Series A Project Account ~ ••••••••••• 5 303. Application of Other Proceeds ••••.•••••••••••••••• 5 304. Application of 1979 Series A Project Account ••••••••••••• 5 ARTICLE IV 1979 SERIES A BONO COVENANTS 401. Non-Arbitrage Covenant •••••••••••••••••••••••• 6 . ( i) . " ,j . • • ARTICLE V FORMS ANO EXECUTION OF 1979 SERIES A BONDS ANO COUPONS 501. Forms of Bonds and Coupons of 1979 Series A Bonds • • • • • • • . • • • • • • • • • • • • • • • • • • • 7 601. 602. ARTICLE VI MISCELLANEOUS . . . . . . . . . . . Non-Arbitrage Certification. • Effective Date • • • • • • • • • . . . . . . . . . . . . ( 1i) • • • • 16 • 16 ·-. ~ • .. RESOLUTION N0.5635 A SERIES RESOLUTION AUTHORIZING THE ISSUANCE OF A PRINCIPAL AMOUNT OF $1,150,000 CITY OF PALO ALTO ELECTRIC ANO GAS REVENUE BONDS 1979 SERIES A ORIGINAL RESOLVED, by the Council of the City of Palo Alto, California that WHEREAS, the Council of the C~ty of Palo Alto, by Resolution ho.5634 • •A Resolution Autlior1z1ng the Issuance of City of Palo Alto Electric and Gas Revenue Bonds" has authorized an issue of Bonds for the purposes therein set forth; WHEREAS, said resolution authorizes the issuance of said Bonds in one or more Series pursuant to Series Resolutions authorizing each such Series; and WHEREAS, the Council has determined that it is necessary and required that the City issue at this time a Series of Bonds to be designated "City of Palo Alto Electric and Gas Revenue Bonds, 1979 Series A• for the purposes herein set forth; NOW, THEREFORE, IT IS ORDERED, as follows: " . ARTICLE I AUTHORITY, PURPOSE ANO DEFINITIONS 101. Authorization and Purpose. (A) The Council has reviewed all proceedings heretofore tuken relative to the authorization of the 1979 Series A Bonds and has found, as a result of such review, and hereby determines and declares that all conditions, things and acts required by law to exist, happen or be performed precedent to and fn tne issuance of the 1979 Series A Bonds do exist, have happened and have been per'f ormed in due t1me, form and manner as required by 1 aw, and tha Counci 1 is now authorized, pursuant to each and e'1ery requirement of law, to issue the 1979 Series A Bonds in the manner and fonn provided in the General Resolution and in this 1979 Series A Resolution. (B) The purposes for which the 1979 Series A Bonds are to be issued are to pravide funds (together with other available funds) for paying costs of the acquisition and construction of the 1979 Series A Project, including payment of costs incidental to or connected with such acquisition· and construction, and for paying the Costs of Issuance of the 1979 Series A Bonds. 102. 1979 .~eries A Resolution Th1s 1979 Series A Resolution is adopted in accorda: • .:.e with provisions of Article II, Section 202, and Article VIII of the General Resolution and pursuant to the authority contained in the Bond Law. · 103. Definitions. {A) Ail terms which are defined in Article I of the General Resolution shall have the same meanings, respectively, in this 1979 Ser1es A Resolution as such terms are given in said Articla I of the General Resolution. (B) In this 1979 Series A Resolution, (1) General Resolution means Resolution No. , •A Resolution Authorizing the Issuance of City of Palo Alto Electric and Gas Revenue Bonds", adopted by the Council on , 197_. (2) 1979 Series A Bonds means the Bonds authorized by Artfcle II hereof. (3) 1979 Series A Resolution means this resolution. (4) ]979 Series A Project means the acquisition and integration into the existing City gas and electric energy systems of the existing gas and electric distribution facilities within and for areas annexed to the City, the construction of utility office remodelling, and the construction of all work and the acquisition of all property and rights auxiliary to the above and necessary to carry out such acquisition, integration and construction. 2 ' a ARTICLE II AUTHORIZATION OF 1979 SERIE~ A BONDS 201. Principal Amount. Designat1on and Series. Pursuant to the provisions of the General Resolution, a Series of Bonds is hereby authorize1 1n the aggregate principal amount of $1,150,000. Such Bonds shall be designated as 11C1 ty of Palo Alto Electric and Gas Revenue Bonds, 1979 Series A". 202. Date and Maturities. The Issue Date of the 1979 Series A Bonds shall be January 1, 1979. The 1979 Series A Bonds shall be Serial Bonds and shal 1 mature on the dates and in the principal amounts set forth 1n the following schedule~ Maturity Maturity Date Principal Oate Principal July 1 Amount July 1 Amount "l980 $25,000 1990 $ 50,000 1981 25,000 1991 50,000 1982 25,000 1992 75,000 1983 25,000 1993 75,000 1984 50,000 1994 75,000 198~ 50,000 1995 75,000 1986 50,000 1996 75,000 1987 50,000 1997 75,000 1988 50,000 1998 .100,000 1989 50,000 1999 100,000 203. Interest. The 1979 Series A Bonds shall bear interest at such rate or rates, not e~ceeding eight percent (8%) per annl.81), as may be fixed by the Council at the time of sale of the 1979 Series A Bonds. The interest coupons attached to the coupon 1979 Series A Bonds shall be numbered in consecutive nt.merical order, and edch such coupon shall represent six months' interest on the 1979 Series A Bond to which it is attached. The Interest Pa,lKllent Dates of the 1979 Series A Bonds shall be January and July 1 of each year, comnencing January 1, 1980. Registered 1979 Series A Bonds shall bear 1r.terest from their date, payable on January 1 and July 1 of each year. 204. Denominations, NUllOers and Letters. The 1979 Series A Bonds shall be issued in the denomination of $5,000 each in the case of coupon .Bonds, and in the denomination of $5,000, or an integral multiple thereof not exceeding the aggregate principal amount of 1979 Series A Bonds maturing in the year of maturity of the registered Bond for which the denomiriation is to be specified, in the case of ·registered Bonds. The 1979 Series A Bonds shall be lettered as follows: coupon Bonds shall be lettered A and fully registered Bonds shall be iettered AR. The coupon 1979 Series A Bonds shall be m.anbered from one (l) consecutively upwards in order of maturity and the fully registered 1979 Series A Bonds sha 11 be numbered from cne ( l) consecut 1 ve ly upwards in order of issuance • . At the· written direction of an Authorized Officer of the City 11CUSIP11 identification nurmers shall be imprinted on the 1979 Series A Bonds, but such numbers shall not constitute a , p-art of the contra_ct evidenced by the 1979 Seri es A Bonds and any error or omission with respect thereto sh al 1 not constitute cause for refusal of any purchaser to accept delivery of and pay for the 1979 Series A Bonds. In addhion, failure on the part of the City to use .such CUSIP numbers in any notice ,t.o Holders of the 1979 Series A Bonds shall not constitute an event of default or any violation of the City's contract with such Holders. 3 205. Paying Agent and Registrar and Treasurer as Fiscal Agent. ~ (A) Bank of America National Trust and Savings Association, 1s hereby appointed as Paying Agent and Registrar. The principal and Redemptfon Price of, and interest on, the 1979 Series A Bonds shall be payable at the Principal urrice of Bank of Plnerka National Trust and Savings Association, the Paying Agent. in the City and County of San Francisco, State of California. (B) The Treasurer ·1s hereby authorized to do and perform all duties of the Fiscal Agent as identified in the General Resolution, except tile duties relating to Bond registration, which shall be performed by the Paying Agent as Registrar. 206. Redempt i Of1.. of 1979 Seri es A Bonds and Terms. Except as pi'"ovi ded in Section 401 of the General Resolution with respect to prior redemption from the Net Proceeds of insurance and eminent domain proceedings, 1979 Series A Bonds maturing by their terms on or before July 1, 1989 are not subject to redemption prior to their respective maturity dates. 1979 Series A Bonds maturing by their terms on or after July 1-, 1990 are subject to redemption prior to their respective maturity dates, at the option o( the City, as a whole, or in part in inverse order, of maturities and by lot within any one maturity if less than all of the 1979 Series A Bonds of such maturity be redeened, from any source of available funds, on any Interest Payment Date on or after July 1, 1989, at a Redemption Price equal to the principal amount thereof and accrued interest thereon to the date fixed for redemption, plus a 9remium of one-fourth of one percent (1/4 of 1%) of such principal amount for each whole year and for ariy remaining fraction of a year between the dates fixed for rede~tion and their respective stated maturities. 207. Sale of 1979 Series A Bonds. The 1979 Series A Bonds shall be sold at public sale afte_r advertisement for bids in such manner as may be hereafter prescribed. If satisfactory bids are received, the 1979 Series A Bonds shall be awarded to the highest responsible bidder. If no bids are received, or if the Council determines that the _bids received are not satisfactory as to price or responsibi 1 ity of the bidders, the Council may reject all bids received, if any, and either ·readvertise or sell the 1979 Series A Bonds at private sale. 4 ' ... . ' • ARTICLE II.I ESTABLISHMENT OF ACCOUNTS AND APPLICATION OF 1979 SERIES A BOND PROCEEDS 301. Bond Reserve Account. Upon receipt of thr proceeds of the sale of the 1979 Series A Bonds, there shall be deposited from such proceeds in the Bond Reserve Account an amount equal to the Bond Reserve Requirement. 302. Establishment o~ 1979 Series A Pro ect Account. There is hereby established an ccount to be des gnated as the 979 Ser es A Project Account11 • -303. ~lication of Other Proceeds. From the anount of proceeds of the 1979 Series A Bonds remaining after the deposit made pursuant to Section 301 hereof, there shall be paid to the Treasurer for deposit as follows: ( 1) Into the Bond Account the amount of 1 nterest accrued from January l, 1979, to the date of delivery of the 1979 Series A Bonds. (2) Into the 1979 Series A Project Account the balance of such proceeds. 304. Application of 1979 Series A Project Account. The money in the 1979 Series A Project Account shall be used in the r1•anner provided by 1c:.111 for the purpose of paying costs of the acquisition and construction of the 1979 Series A Project (or for making reimbursanents to the City for such costs theretofore paid by it), including all costs incidental to or connect~d with such acquisition and contruction, together with engineering, appraisal, inspection, legal and Fiscal Agent's fees, and Costs of Issuance of the 1979 Series A Bonds. Any balance remaining in the 1979 Series A Project Account after the coq>letion of such acquisition and construction shall be deposited in the Revenue Fund. -' 5 , ARTICLE IV 1979 SERIES A BOND COVENANTS 401. Non-Arbitrage Covenant. The C 1 ty hereby cnvenants th at it wi 11 make no use of the proceeds of the 1979 Series A Bonds at any time during the term thereof which. if such use had been reaonably expected on the Issue Date of the 1979 Series A Bonds. would have caused the 1979 Series A Bonds to be arbitrage bonds within the meaning of Section 103( c) of the Internal Revenue Code of 1954, as amended, and any applicable regulations promulgated thereunder. 6 • .. • ARTICLE V FORMS ANO EXECUTION OF 1979 SER!ES A BONDS ANO COUPONS 501. Forms of Bonds and Coupons of 1979 Series A. Bonds. Subject to the provisions of the G~neral Resolution, 1979 Series A Bonds in coupon form and the coupons to be attached thereto, and 1979 Series A Bonds in registered form, shall be of substantially the following forms and tenor with such additions thereto including but not limited to redemption schedules and prices, interest rates and place or places of payment, all as otherwise pro~ided for in this 1979 Series A Resolution. (Form of Coupon Bond of 1979 Series A) Na. A -- CITY OF PALO ALTO ELECTRIC AND GAS REVENUE BOND, 1979 SERIES A The City of Palo Alto, a municipal corporation duly organized and existing under its charter and the laws of the State of California \herein cal led the "City"), for value received, hereby promises to pay to the bearer hereof, on July 1, ~ , (subject to any right of prior redemption hereinafter provided for), the prlricipal Stan of Five Thousand Dollars ($5,000) in lawful money of the United States ·Of America, and to pay interest thereon in like lawful money from the date hereof until pa)lnent of such principal sll11 in full, at the rate of percent (_%} per annum, payable semiannually on January 1 and July l of each year, comnencing January 1, 1980, but only, in the case of interest due on or before maturity, upon presentation and surrender, and according to the tenor,. of the respective interest coupons hereto annexed as they severally mature. Both the principal hereof and interest hereon are payable at the pl"incipal office of the Bank of America National Trust and Savings Association, the Paying Agent and Registrar of the City, in San Francisco~ California, or at the option of the holder, at the principal office of any duly appointed paying agent. This Bond is one of a ~uly authorized issue of bonds of the City designated as its "Electric and Gas Revenue Bonds" {the "Bonds") issued and to be issued in various series und~r and pursuant to the charter of the City and Ordinance No. 3083. adopted by the Council of the City on October 2, 1978, . (the "Bond Law11 }11 and under and pursuant to Resolution No. __ adopted by the Council of the City on , 1979, {the "General Resolution,.), and a series resolution authorizing each such series. This Bond is one of a series of Bonds of various maturities designated as "Electric and Gas Revenue Bonds, 1979 Series A11 (the "1979 Series A Bonds11 ), issued in the aggregate principal amount of $1, 150,000, all of like tenor and date (except for such variations, if any, as may be required to designate varying numbr.rs, maturities, interest rates or redemption provisions), and issued under th~ General Resolution and a series resolution of the City, Resolution No. . , adopted by the Council of the City on . , 1979 (the iri9i9 Series A Resolution"), which resolutions are herein collectively called the "Resolutionsu. Copies of the Resolutions are on file at the office of the City Clerk and at the above-mentioned office of the Paying Agent, and reference to the Resolutions and any and all supplements thereto and modifications and amendments thereof and to the Bond Law is made for a de~cription of the terms on which the 1979 Series A Bonds are issued, the provisions with regard to the nature and extent of the Net Revenues, as that term 1s defined in the General Resolution, and the rights of 7 . . ' the holders and registered owners of the 1979 Series A Bonds and of the bearers of the appurtenant coupons. All the terms of the Resolutions and the Bond law are hereby incorporated herein and constitute a contract between the City and the hold~r or registered owner from time to time of this 1979 Series A Bond, and to all . the provisions thereof the holder or registered owner of this 1979 Series A Bond, °Jy his acceptance hereof, consents and agrees. Each taker and subsequent holder hereof and of said coupons, whether said coupons are attached hereto or detached herefrom, shal 1 have recourse to all of the provisions of the Bond Law and the Resolutions and shall be bound by all of the terms and conditions thereof. The 1979 Series A Bonds are issued to provide funds for the acquisition and construction of additions, betterments, extensions or improvements to an Enterprise consisting of the gas and electr1c systems of the City, as more particularly described in the Resolutions. The 1979 Series A Bonds are special obligations of the City and are payable, as to interest thereon, principal thereof and any premiums upon the redemption Ctf any thereof, from the net revenues of said Enterprise (which net revenues, as more particularly defined in the General Resolution, are therein and herein called the "tiet Revenues"). All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Net Revenues, and the Net Revenues constitute a trust fund for the security and payment of the 1nterest on and principal of and redemption premitms, if any, on all of the Bonds. Additional series of Bonds payable from the Net Revenues may be issued on a parity with the 1979 Series A Bonds of this authorized issue, but only subject to the conditions and limitations contained in the General Resolution. The interest on and principal of and redemption premiums, if any. on the Bonds are payable solely from the Net Revenues pledged for the payment thereof, and the City is not obligated to pay the Bonds except from the Net Revenues. The general fund of the City is not liable, and the full faith and credit or taxing power of the C tty is not pledge~. for the pa}ment of the interest on or principal of or redetll>tion premiums, if any, on the Bonds. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the C 1 ty or any of 1 ts income or receipts, except the Net Revenues. The City covenants that, so long as any of the Bonds are outstanding, it will fix, prescribe and collect rates, fees and charges in connection with the services and facilities furnished by said Enterprise so as to yield Net Revenues at least eq11al to the amounts thereof prescribed by the General Resolution and sufficient to pay the interest on and princir1l . of and redemption prem1lllls, if any, on the Bonds in accordance with the provisions of the General Resolution. The Bonds are subject to redemption on any interest payment date without premium under the circllTlstances prescribed -aod as provided in the General Resolution, at the option of the City, as a whole or in part, through the application of net proceeds of insurance and eminent domain pt"ot'eedings. 1979 Series A Bonds maturing by their terms-on or before July l ~--1989 are not otherwise subject to redemption prior to their respective maturity dates. 1979 Series A Bonds maturing by their terms on or after July 1, 1990 are al so subject to redemption prior to their respective maturity dates, at the option of the City, as a whole, or in part in inverse order of maturities and by lot within any one maturity if less than all of the 1979 Series A Bonds of such maturity be redeemed, from any source of available funds, on any interest pa.)'tlent date on or after July l, 1989, a_t a redemption price equal to the principal amount thereof, plus accrued interest thereon to the date fixed for reden.,t1on, plus a premit.111 of one-fourth of one percent (1/4 of 1%) of such principal amount for each whole year and for any remaining fraction of a year between the dates fixed for redemption and their respective stated maturities. 8 As provided 1n the Resolutions, notice of redemption shall be given by publication (unl_ess no Bonds are outstanding except regfstered Bonds) at least once a week for two successive weeks in a financial paper or newspaper of general circulation in San Francisco, California, and in a financial paper or newspaper circulated in New York, New York, and printed in the English language, the first such publication to be not less than thirty nor more than sixty days before the red~t1on date. Notice of redemption shall also be mailed not less than thirty nor more than sixty days prior to the redemption date to the· respective registered owners ~f any registered Bonds designated for redemption at their addresses appearing on the bond reg1stration books, but neither failure to mail such notice nor any defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption. If this 1979 Series A Bond is called for redemption and pa~ent is duly provided therefor as specified 1 n the Re so 1 ut ions, interest sha 11 cease to accrue hereon from and after the date fixed for redemption, and coupons for such interest subsequently maturing shall be void. If an event of default, as defined in the General Resolution, shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the General Resolution, but such declaration and its consequences may be rescinded and annulled as further provided in the General Resolution. This 1979 Series A Bond is negotiable and transferable by delivery except when registered as to principal otherwise than to bearer. It may be registered as to principal in the name of the owner on the books of the City kept for that purpose at the principal office of the paying Agent and Registrar, such registration to be noted hereon, after ~hich no transfer hereof shall be valid unless made on said books by the registered owner in person, or by his attorney duly authorized in writing, and similarly noted hereon; but this 1979 Series A Bond may be discharged from registration by being in like manner transferred to bearer, after which 1t shall again become transferable by delivery; and this 1979 Series A Bond may again and from time to time be registered or discharged from registration in the same manner. Registration of this 1979 Series A Bond shall not affect the negotiability of the coupons, which shall continue to be payable to bearer and transferable by delivery. The 1979 Series A Bonds are issuable in the form of coupon Bond.s, registrable as to principal only, in the denomination of $5,000, and in the _form of fully registered 1979 Series A Bonds without coupons in the denomination of $5,000 or any multiple thereof, not exceeding the aggregate principal amount of the 1979 Series A Bonds maturin9 in the year of maturity of the 1979 Series A Bonds for which the denominat1on of the 1979 Series A Bond is to be specified. Coupon Bonds of 1979 Series A, upon surren~er thereof at the principal office of the Registrar, with all unmatured coupons attached, may, at the optio~ of the holder thereof, be exchanged for an equal aggregate principal amount of fully registered 1979 Series A Bonds of the same maturity of any of the authorized denominations, in the manner,. su-bject to the conditions, and upon the payment of .the charg~s, if any, 1 nc lud1 ng after the first exchange, the cost of preparing a new 1979 Series A Bend, provided in the Reso·wtions. In like manner 11 subject to such conditions and upon the payment of such charges, if any, including after the first _exchange the cost of preparing a new 1979 Series A Bond, fully registered 1979 Series A Bonds, upon surrender thereof at the principal office of the Registrar with a written instrument of transfer satisfactory to the Registrar, duly executed by the registered owner or hi!t attorney duly authorized in writing, may, at the option of the registered owner ~hereof, be exchanged for an equal aggregate principal amount of coupon 1979 Series A Bonds, with appropriate coupons at.~ached, or of fully ,-egi stered 1979 Series A Bonds without coupons of any o~her authorized denominations, and of the same maturity. 9 • t The rights and obligations of the City and of the holders and registered owners of the B~nds may be modified or amended at any time in the manner, to the extent and upon the terms pro•1ided in the General Resolution. No such modification or amendment shall permit a change in the terms of redemption or maturity of the principal of any outstanding Bond or of any installment of interest thereon or a. reduction in the printipal Mtount or the redemption pdce thereof Of' in the rate of interest thereon without the consent of the holder of such Bond. or shall reduce the percentages or otherwise affP.ct the ~lasses of Bonds the consent of the holders of which is required to effect any such modification or amendment, al 1 as more fully set forth in the General Resolution. It is hereby certified that all of the conditions, things and acts required to exist, to have happened or to have h~en performed precedent to and in _the issuance of thfs 1979 Series A Bond do exist, have happened or have been perf1inned in due time, form and manner as required by law and that the amount of this 1979 Series A Bond, together with all other indebtedness of the City, does not exceed any limit prescribed by the Constitution or laws of the State of California, and is not in exei?ss of the <l'l!ount of Bonds pennitted to be issued under the Resolutions. IN WITNESS WHEREOF, the City of Palo Alto has caused this 1979 Series A Bond to be executed in its name and on its behalf with the signature of its Mayor and its seal to be reproduced hereon and attested by its City Clerk, and the interest coupons attached hereto to be executed with the facsimile signature of its Treasurer, all as of January 1, 1979. CITf OF PALO ALT.O By.,..,,._-~.,,.._-,--~-__,-=_,,_~.,,..._~~~-Mayor of the City of Palo Alto ·ATIEST: City Clerk of the City of Palo Alto (Form of Interest Coupon) THE CITY Of PALO ALTO, on unless the Bond herein mentioned shall have been ca11ed for previous redffil1)tion and pa)'lllent of the rederq:>tion price duly provided for, wi 11 · pay to bearer at the principal office Bank of America National Trust and Savings Association in San Francisc.o, California, upon surrender hereof, the sum set forth herein in lawful money of the United States of America, being interest then due on its CITY OF PALO ALTO ELECTRIC ANO GAS REVENUE BONO, 1979 SERIES A, dated January 1, 1979. 10 No. A ------ Coupon No. A ------ Treasurer • ? • (Form of Certificate of Registration) This 1979 Series A Bond is registered 1n the name of the reg1 stered owner last entered below and the principal thereof is payable anly to such owner. coupons evidencing interest remaining payable to bearer; provide~ -that this 1979 Series A Bond may be registered to bearer and thereby discharged from registration ar.d the negotiability hereof restored. NOTE: There must be no writing in the space below except by the Registrar. Date of Registry -Name of Registered Owner 11 Address of Registered Owner Signature of Registrar .. • !' {Form of Full Registered Bond) $ _____ _ No. AR ----- CITY OF PALO ALTO ELECTRIC AND GAS REVENUE BONO, i979 SERIES A The City of Palo Alto, a municipal corporation duly organized and existing under its charter and the laws of the State of California {herein called the "City"), for value received, ·-hereby promises to pay to or registered assigns, on July 1, (subject to any right of prior redemption hereinafter provided for). tneprincipal s1.111 of Thousand Dollars ($ ) in lawful money of the United States of America, and to pay interest thereon in like lawfui money from the interest payment date next preceding the date of registration of this Bond {unless this Bond is registered on an interest payment date, in which event it shall bear interest from such date of registration, or unless this Bond is registered prior to January l, 1980, in which event it shal 1 bear interest from January 1, 1979) until payment of such principal sum in full at the rate of percent ( %) per annum, payable semiannually on January 1 and July l in each year-:Soth the principal hereof and interest hereon are payable at the principal office of the Bank of Arnedca National Trust and Savings Association, Paying Agent and Registrar of the City, in San Francisco, California. This Bond is one of a duly authorized issue of bonds of the City designated as its "Electric and Gas Revenue Bonds" (the "Bends"} issed and to be issued in various series under and pursuant to the charter of the C1ty and Ordi_nance No. 3083, adopted by the Council of the City on October 2, 1978, (the 11 Bond Law"} and under and pursuant to Resolution No. , adopted by the Council of the City on , 1979 (thP. •General Resolution"}. and a series resolution authorizing each such series. This Bond is one of a series of Bonds of various maturities designated as "Electric and Gas Revenue Bonds, 1979 Series Au (the 11 1979 Series A Bonds"), issued in the aggregate principal anount of $1, 150,000, all of like tenor (exept for ~uch variations, if o.ny, as may be required to designate varying numbers, maturities, interest rates or redemption provisions), and issued 1Jnder the General Resolution and a series resolution of the City, Resolution No. , adopted by the Cour1ci 1 of the City on , 1979, (the ·1~ Series A Resolution"), which resolutions are herein collectively called the HResolutions". Copies of the Resolutions are on file at the office of the City Clerk and at the above-mentioned office of the Paying Agent, and reference to the Resolutions and any and al 1 supplements thereto and modifications and amendments thereof and to the Bond Law is made for a description of the terms on which the 1979 Series A Bonds are issued, the provisions with regard to the nature and extent of the Net Revenues, as that term is defined in the General R~solutions and the rights of the holders and registered owners of the 1979 Series A Bonds and c,f the bearers of the appurtenant coupons. All the terms of the Resolutions and the Bond Law are hereby incorporated herein and constitute a contract between the City and the holder or registered owner from time to time of this 1979 Series A Bond, and to all the provisions thereof the holder or registered owner of this 1979 Series A Bond, by his acceptance hereof, consents and agrees. Each taker and subseouent holder hereof shal 1 have recourse to al 1 of the provisions of the Bond Law and the Re so 1 ut ions and sha 11 be bound by a 11 of the terms and conditions thereof. The 1979 Series A Bonds are issued to provide funds for the acquisition and constrt.iction of additions, betterments, extensions or improvements to an Enterprise consisting of the gas and electric systems of the City, as more particularly described in the Resolutions. The 1979 Series A Bonds are 12 . •. special obligations of the City and are payable, as to interest thereon. principal thereof arid any premiums upon the red~tion of any thereof, from the net revenues of said Enterprise (which net revenues, as more particularly <lefined in the General Resolution are therein and herein called the 11Net Revenues"). A 11 of the Bonds are equally secured by a p 1 edge of, and charge and lien upon, all of the Net Revenues, and the Net Revenues constitute a trust fund for the security and pa.)111ent of the interest on and principal of and redemption premiums, ff any, on al 1 of the Bonds. Additional series of Bonds payable from the Net Revenues may be issued on a parity with the 1979 Serfos A Bond~ of this authorized issue, but only subject to the conditions and limitations contained in the General Resolution. The interest on and principal of and redemption premiums, if any, on the Bonds are payaple solely from the Net Revenues pledged for the payment thereof, and the City is not obligated to pay the Bonds except from the Net Revenues. The general fund of the City is not liable, and the: full faith and credit or taxing power of the City is not pledged, for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds. The Bonds ar~ not secured by a legal or equitable pledge of, or charge, 1 ien or encumbrance upon, any of the property of the City or any of its income or receipts, except the Net Revenues. The City covenants that, so long as any of the Bonds are outstanding, it will fix, prescribe and collect rates, fees and charges in connection with the services and facilities furnished by said Enterprise so as to yield Net Revenues at least equal to the amounts thereof prescribed by the General Resolution and· suffici~nt to pay the interest on and principal of and redemption premiums, if any, on the Bonds in accordance with the provisions of the General Resolution. The Bonds are subject to redemption on any interest payment date without premium under the circumstances prescribed and as provided in the General Resolution, at the option of the City, as a whole or in part, through the application of net procet>ds of insurance and eminent domain proceedings. 1979 Series A Bonds maturing by their terms on or before July 1, 1989 are not otherwise subject to redemption prior to their respective maturity dates. 1979 Series A Bonds maturing by their terms on or after July 1, 1990 are also subject to redemption prior to their respective maturity dates, at the option of the City, as a whole, or in part in inverse order 1>f maturities and by lot within any one maturity if less than all of the 1979 Series A Bonds of such maturity be redeemed, from any source _of available funds, on ar.y interest pa}ment date or or after July 1, 1989, at a redemption price equal to the principal amount thereof, plus accrued interest thereon to the date fixed for redemption, plus a premitin of one-fourth of one percent (l/4 of 1%) of such principal amount for each whole year and for any remaining fraction of a year between the dates fixed for redemption and their respective stated maturities. As provided in the Resolutions, notice of redemption shall be given by publication (unless no Bonds are outstanding except registered Bonds) at least once a week for two ~uccessive weeks in a financial paper or newspaper of general circulation in San Francisco, California, and in a financial paper or newspaper circulated in New York, New York, and printed in the English language, the first such publication to be not less than thirty nor more than sixty days before the redemption date. Notice of redemption shall also be mailed not less than thirty nor more than sixty days prior to the redemption date to the respect1ve registered owners of any registered Bonds designated for redemption at their addresses appearing on the bond registration books> but neither failure to mail such notice nor any defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption. If this 1979 Series A Bond is called for rede111>tion and payment is d~ly provided therefor as specified in the Resolutions, interest shall cease to ~ccrue hereon from and after the date fixed for rede111>tion. 13 . . . . ' In an ~vent of default, as deffoed ir: the General Resolution, shall occur, the pri nc i pa 1 of a 11 Bonds may be dee 1 ared due and pay ab 1 e upon the conditions, in the manner and w1th the effect provided in the General Resolution, but such declaration and its consequences may be rescinded and annulled as further provided in the General Resolution. This 1979 Series A Bond is transferable, as provided in the Resolutions, only upon the books of the City kept for that purpose at the principal office of the Registrar by the registered owner hereof in person, or by his attorney duly authorized in writing, upon the surrender of this 1979 Series A Bond together with a written instrument of transfer satisfactory to the Registrar duly executed by the registered owner or his attorney duly authorized in writing, and thereupon a new registered 1979 Series A Bond or Bonds, without coupons, and in the same aggregate principal amount and of the same maturity, shall be issued to the transferee in exchange therefor, as provided in the Resolutions, and upon the payment of charges, if any, including, after the first exchange, the cost of preparing new 1979 Series A Bonds therein prescribed. The 1979 Series A Bonds are issuable in the form of coupon Bonds, registrable as to principal only, in the denomination of $5,000, and in the form of fuily registered 1979 Series A Bonds without coupons in the denomination of $5,000 or any multiple thereof, not exceeding the aggregate principal amount of the 1979 Series A Bonds maturing in the year of maturity of the 1979 Series A Bonds for which the denomination of the 1979 Series A Bond is-to be specified. Coupon Bonds of 1979 Series A, upon surrer:der thereof at the principal office of the Registrar, with all unmatured coupons attached, may, at the option of the holder thereof, be exchanged for an equal aggregate principal amount of fully registered 1979 Series A Bonds of the ,s::une maturity of any of the authorized denominations, in the manner, subject to ~he conditions, and upon the pa.)111ent of the charges, if any, including after the first exchange, the cost of preparing a new 1979 Series A Bond, provided in the Resolutions. In like manner, subject to such conditions and upon the pa}'Rlent of such charges, if any, including after the first exchange the cost of preparing a new 1979 Series A Bo11J, fully registered 1979 Series A Bonds, upon surrender thereof at the principal office of the Registrar with a written instrlllient of transfer satisfactory to the Registrar, duly executed by the registered owner or his attorney duly authorized in writing, may, at the option of the registered owner thereof, be exchanged for an equal aggregate principal amount of coupon 1979 Series A Bonds, with appropriate coupons attached, or of fully registered 1979 Series A Bonds without coupons of any other authorized deno.~inations, and of the same maturity. The rights and obligations of the City and of the holders and registered owners of the Bonds may be modified or amended at any time in the manner, to the extent and upor. the terms provided in the General Resolution. No such modification_or amendment shall permit a change in the terms of redemption or maturity of the prinC:ipal of any outstanding Bond or of any installment of interest thereon or a reduction in the principal anrount or the redemption price thereof or in the rate of interest thereon without the consent of the holder of such Bond, or shall reduce the percentages or otherwise affect the classes of Bonds the consent of the holders of which is required to effect-dny such modification or amendment, all as more fully set forth in the General Resolution. It is hereby certified that all of the conditions, things and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this 1979 Series A Bond do exist, have happened or have been _perfonned in due time, form and manner as required by law and that the amount of this 1979 Series A Bond, together with all other indebtedness of the City, does not exceed any limit prescribed by the Constitution or laws of the State of California, and is not in excess of the amount of Bonds pennitted to be issued under the Resolutions. 14 " . .. ·' • IN WITNESS WHEREOF, the City of Palo Alto has caused this 1979 Series A Bond to be executed in its name and on fts behalf with the signature of its Mayor and its seal to be reproduced hereon and attested by its City Clerk, all as of the day of _ • 19_. ATIEST: City Clerk of the City of Palo Alto CITY OF PALO ALTO By~~~~-=--=-,,..,..._.~,.....,,,-=-~~~~~~~ Mayor of the City of Palo Alto (form of Corresponding Coupon Bond Endorsement) Notice: No writing below except by the Registrar. This fully Registered 1979 Series A Bond is issued in lieu of or in exchange for coupon 1979 Series A Bond(s) of this issue, intetest rate and maturity, numbered ~----~-----·-~~---~~------~-~~---- in the denomination of $5, 000 each not contemporaneous 1 y outstanding aggregating the face value hereof; and coupon 1979 Series A Bond(s) of this issue and of the same interest rate and maturity aggregating the face value hereof (and bearing the above serial number( s} which has (have) been reserved for such coupon 1979 Series A Bond(s) will be issued in exchange for this Registered 1979 Sedes A Bond and upon surrender and cancellation hereof and upon payment of charges~ a11 as provided in the within-mentioned Resolution. (Form of Assignment) For value received the undersigned do(es) hereby sell, assign and transfer unto the within-mentioned Registered 1979 __,,S,_e-r""'i e-s-A...--.... B.-o-nd-.---a-n .... d_h_e-re_b,,_y-..,..i-rr_e_v_o_cab ly constitute( s) and appoint(s) attorney, t"l, transfer the same on the books of the Registrar with full power of subsdtution in the premises. Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Registered Bond in every particular, without alteration or enlargement or any change whatsoever. 15 ; , .. ARTICLE 'II MISCELLANEOUS 601. Non-Arbitrage Certific~tton. On the b~sis of the facts, estimates and circumstances now in existe·1ce on the Issue Date of the 1979 Series A Bonds as determined by the Treasurer, the Treasurer is authorized to certify that it is not expected that t~e prciceeds of th6 1979 Series A Bonds will be used in a manner that would cause such obligations to be arbitrage bonds. Such certification shall be delivered to the purchaser, together with 1979 Series A Bonds. 602. Effective Date. This Resolution shall take effect invnediately. * * * * * I hereby certify that the foregoing is a full, true and correct copy of a resolution duly passed and adopted by the Council of the City of Palo Alto, Ca 11 f orn i a, at a meeting thereof held on the 29th day of January , 1979, by the following vote of the members thereof: ~ AYES, and in favor thereof, Councilmembers: Brenner, Carey, Clay, Eyerly, Fazzino, Fletcher, Henderson, Sher, Witherspoon NOES, Councilmembers: None ABSENT, Councilmembers: None NOT PARTICIPATING: None APPROVED: ~·~ ndoel 16 .. , . . NEW ISSUE: SALE DATE: February 12, 1979 CITY OF PALO ALTO SANTA CLAa.~ COUNTY. CALIFORNIA Sl,150,000 1979 SERIES A ELECTRIC & GAS REVENUE BONDS The bonds described in the Official Statement are rev!nue bonds of the City of Palo Alto, a charter city of the State of California. The bonds are secured by a first lien on net revenues of the city electric and gas systems. Neither the full faith and credit nor the taxing power of the City of Palo Alto, State of california, or any othei: political sub- division of the state are pledged to the payment of the bonds. Proceeds of the bonds wW be used to acquire and improve to the city's electric and gas facilities ltnd to re-~del utility offi::es. The bonds are issued under the Palo Alto City Charter and Chap~er 12.28 of Title 12 of the Palo Alto Munldpal Code. BONDS DATED: January 1, 1979 0£NOM1NATION: $5,000 (or inteqral multiple) DUE: JWy-l, as shown below: Yield or Year Amount Rate Pric• 1980 $25,000 I I 1981 ZS,000 1982 25,000 1983 25,000 1984 50,000 1985 50,000 1986 S0,000 1987 S0,000 1988 50,000 1989 50,000 RATINGS: Moody'~ Investors Service...,..,... ___ _ Standard & Poor•s COrporauon __ _ Yield or Year Allaunt Rat!! Price 1990 $ 50,000 I I 1991 50,000 1992 75,000 1993 75,000 19S4 75,000 1995 75,000 1996 75,000 1997 75,000 1998 100,000 1999 100,000 The bonds are issued as coupon bond."'. payable to beanr, registrable as to principal only. and exchangeable for fully registered bands, or as fully registered bonds with pro- vision for deregistration and reregistration. Interest is payable semiannually on January l and July l, beginning January l, 1980, both al: the principal offices of the payin9 agent. Bank of kAerica, N.T. & S.A., San Franclsco. Bond"5 maturing on or before July l, 1989 (bonds numbered 1-80) are not callable prior to maturity. except from the net proceeds Qf insurance or eminent domain. Bonds matl.!r- ing on or after July l, 1990 (bonds numbered 81-230) are callable prior to maturity at the city's option on terms stated in the Notict of sale, Including payment of a prelllium. The City of Palo Alto is offering these bondS when, a.s, and lf issued, subject to the legal opinion of Jones Hall Hill and White, bond counsel, San Francisco, approving the validity of the bonds and stating that interest on the bonds ls exempt from federal in- come taxes and from callfornia personal income taxes . under existing statutes, requ!a- tions. and cou~t decisions. Terms and conditions of the offering are fully set forth in the Notice of 5ale dated January 29, l9i9. Bids will be received on Monday, February 12. 1979 at Bartle Wells Associates, 100 Bush Street, 28th Floor, San Francisco, Callfornia, up to and including 11:00 a.m. Pacific Time. Bids will not be accepted for less than 98.S percent of par. Following acceptance of a bid, Information on bond coupon rateS and reoffering pMces will be Imprinted in the spaces provided on this page. This page supplements the accompanying Official Statement dated January 29, 1979. . . OFFICIAL STATE.\fENT or CITY OF PALO ALTO SANTA CLA.::tA COUNTY, CALIFORNIA Incorporated April 23, 1894 A Charured City CITY COUNCIL Scott T. Carey, Mayor Frances H. Brenner Roy S. Clay Fred s. Eyerly Gary p. F&Uino Ellen Fletcher Alan Henderson . Anne R. Witherspoon George A. Slpel; C'efi MMager Alfred J. Mitchell ·ti C?ntroller Roy C. Abrams, City ttorney Ann J. Tmner, elty Clerk Edward It. Aghjayan, Director of Utilities Mark R. Harris, City Treasurer PROFESSIONAL SERVICES Jones Hall Hill and White, San Francisco, Bend Counsel ~tes. San Fr?ndsco, Financing Consultant This Official Statement provides Information about the issuer and its bonds. The Offidel Statement includes: l. Data supplied by the issuer and by others, as indicated here1n; 2. t.thnates or projections which may or may not be realiud and which should not be construed as assertions of fact; and 3. Summaries U\<!. desc:riptlons of legal and financial documents, or their contents. which do not purport to ducri.be suc:h. documents completely and which an made e>qiressly subject to the full pro'J'isions of the documents cited. The Official Statement ®e5 not c:cnstitute a reccmmendation, express or Im.pi.fed, to pur-chase er not to purchase these bonds or any previous bonds of the issuer. The date of this . Official Statement ls Jan- uary 29, 1979. Prepared en behalf of the issuer by BARTLE WELLS ASSOCIATES Mu:nicipal Financing Consultants 100 Bush StrHt, san Franclsoo, CA 94104 (415) 981-5751 : . TH£ BONDS Sl,150,000 City of Palo Alto 1979 Series .::\ Electric and Gas Revenue Bonds O.te: January l, 1979 15iiiomination: SS, 000 Eitiiiitea Annual Bond Servlc6: ear Ending lntel'flt Principal July : at ~1 . Mlturfng l.980 $W,1ZS2 $ zs.ooo 1981 73,US 25,000 1982 n,soo 25,000 1983 ,. 69,8/5 ZS,000 1984 68,250 50,000 1985 65,000 so.ooo 1986 61,750 50,000 1987 58,500 50,000 1988 55,250 50,?00 1983 52,000 50,000 1990 48,750 so.coo 1991 45,500 50,000 1992 42,ZSO 75,000 1993 37,375 75,0CO 1994 32,500 75,000 1995 27,625 75,000 1.996 U,750 75,000 1997 17,875 75.000 199& 13,000 100,000 1999 6,500 100.000 $911,500 n.1so.ooo Total $ 137,125 98,125 96,500 94,875 US,250 115,000 W,750 108,500 105,250 102,000 99,750 95,SOO U7,Z50 W,375 107,500 102,625 97,750 92,875 lU,000 1061500 a.n1.soo I · 80i1d intirut hat bien ntflNltied at the an..~1 rate shown. Actual coupon rates will ti. set by COl!Petitive bfd, and are likely to vary fro11 the atin41a1 rate estiaaUd. As a result, both fnter&st Mel bond service are eJq>eeted to differ fn. the annual mounts utiMted. - 2 • Includes annual coupon payable Jeniiary 1, 1980 and safaMIHll coupon 1>4Yable July 1, ueo. Intuest: lniere.t for the ftnt JW' is payable ]anWJrY l, ~-Thereaiter interest is paYible semiannually on July 1, and January 1. R~!L"!!.: 8ontt• !!!!!'.!!'!~ 19!0 through 1989 ($400,000 principal illDOunt) n.ot callable except &em net proceeds of insurance and eminent domain. Bonds maturing 1990 through 1999 (!750,000 prindpal amGUnt) callable as a whole or ill part on any interest payment on ar after July l. 1989 tn inverse order of maturity and by lot Within uch maturity. Premium ls cne-quarter of l ~~ent for each year or portion of a year from date of redemptlon to date of maturity. , · The bond resolutiOn provides that in the event of loss of. damage to, or condemnation of the project. the bonds then outstanding may be redetsraed on aity interest payment date for the principal amount plus acerw!d interest to the date of redemption Without premium. ~tration: Coupon bonds. registrable u to principal only. and fully registered • With prMledoe of exchange. Registered bonds may be deregistered and re· registered at the expense of the holder. · • Pl!ymtnt: Ai the prtndp&l l)ffice of Bank of America, :'·LT. & S.A .• Sen Francisco. Tax Sta.tut: ln the opinion of bond COW\.Sel, interest is exempt from present federal in- come tiXii end frcm c.ll!om.la pv-sonaJ inccxne wees wider existing statutes, regula- tiona. and court decisions. Authority' far Istuance: Sl,150,000 Clty of Palo Alto 1979 Series A Electric and Gas Rivmue BOiidi were auttwri2ed under Chapter 12.28 of Title 12 of the Palo Alto N\lnid- pal Code Uld by Resolution Nos. 5634 and 5635 of the City Council dated January 29, 1979. ~: The bonds will be U8Cd for acquisition lihd improvemena to the electric: and qas ~ C.CIUU.., Md aUUty omc. ~. ~: The bonds an secured by a first lien on net revenues of the enterprise ccm- gthe city's electric: and gas department. The bonds are net 9eneral obligations of the dty. Neither the full faith and crea.it no1' the taXing power of the City of P3lo Alta, tha State of California, or MY political $u.bdi'l[isfon of the state are pledged to the payment of the bouds. City covenants to establlsn aJ'ad collect rates and charges for utWty lel'9ice ~dent to prochKe net revenues, after operation and maintenanc~ expen14111, eq1W to 1.25 times the annual bund Hl'Yice for the sucaeding year. The Clty will me fllnd, frcm bond pl"OCeeds, a Bond Reserve Account equal fll) maximum mmual debt service. Acl.dftiou1 Bobds: Addldonal parity revenue bonds may be issued subject to certain re-~ ind restrictfon.s as provided in the resolutions. The city may also pledge revenues af one or more utility on a parity basts wtth the bonds under long-term COlltr'Kt Of 1ubleases few purposes includinq bu.t not Umited to the purchase of power or suhleael for capacity :n eleetrlcal gueratioft fadlities. The dty c:oveJWlts ta establish and coBlct ram .ad charges so that net revenues will eqva1 or exceed 1.25 times the ~year~ mcl other peyments secured by a pJedge of rievenues. payable ~ SALE OF THE BONDS The mtual offering of these bonds is made 1n accordance with the Notice of sele dated Janway 29 •. 1979. Matten d!scussed In tb1s sec:tioll an expnsaly subjtct to the terms and c:ondltiGDs f)f Aid Notice, to which reference should be made f01" further detail. LEGAl. OPJMJON The legti opln!on of Jones Hall Hill and White. Bond ~. Gf san F~. Calif• ornJa, Will be furnished to the ~uccessful bidder and printed on MCh bond at the dty's expenM. CONTIRGENT FEES Bond eauUll's f• ls ~t upon the sale of tht ~; flnancinG consultant's fee Is pu1Mllf COlltmget. CLOSUKI DOCtJNENTS At the ti11ae of deUvary oi the bonds to the successful bidder, !n a~d1tion to customary clos1nQ' docuaents' tbe lsauar will furn!sh f.he following document:I; sl9tve and No uu:zauon Cartlfk:ate: A eertiflcate stating that the slQMtures on th• bOn an .iu.tfiiriBC Chilj auihOriied and that no llc:iq41tion ls pending °" in progress ~ tha valldlty of the bonds. • • Certificate Concerning Cfficial Statement: ..\ certificate. si;ned by a r.sponsible official representing the usuer. to Che enect that to the best of his or her knowledge and belief, and after reasonable investigation. {a) neither th~ Official Statement nor any amendment or supplement thereto contains any untrue statement of a <ll&terial fact er omits to state any material fact necessary to make the st.stements thereln, in the light cf the drcumstances in which they were 11".ade, not mislead.Ing; (b) since the date of the Official Statement, no event has occurred wh.ich should h.ave been set forth 1n an amend- ment or supplement, which has not be ~t forth; and (c) there has been no material ad- verse change in the '>Peration or financial affairs of the City of Palo Alto since the date of such Official Statement. Non-Arbitrage Certification: A certificate at the Palo Alto City Treasurer that, on the &SiS oI the facts and circwnsta.nces in effect at the time of delivery of the bonds, lt is not expec9..ed that the proceeds of the bonds will be USEd in a manner that will ca11Se the bonds to be arbitrage bonds. In addition, bond counsel will provlde its opinion with respect to the reasonableness of matters contained tn the nonarbitraqe certification. Treasurer's Receipt: The receipt of the Palo Alto City Treasurer showing that the pur- c:liiSi pnce of the bonds, including intere:t and accrued to the date of delivery (if any) has been received by the city. • THE RESOLUTION On January 29, 1979, the Pa.Jc Alto City Counc:U adopted R~lutions 5634 and 5635, uthorizing the issuance of the bonds. The resolutions were adopted under the city's authority to wue charter revenue bonds aa set forth in Chapter lZ.28 of Title 12 of the Palo Alto Munidpal Code. Resolution 5634 (the "c.Jenenl resolution") authorizes the City of Palo Alto to wue electric: and gu revenue bonds. The ;enenl resolution sets forth the general terms and provisions of electric and gas revenue bonds, disposition of bond proceeds and utillty nvenuea, duties of the flsea1 agent, covenant$ of the city, and l'emed1es available to the fiscal agent and bondholders. The general resolution aU.,ws the dty treasurer tO perform the duties of tha f1sQl agent, if so specified in a series ruolu- tion. Resolution 5635 (the •series resolution") authortze.s the dty to issue Sl,150,000 1979 series A bonds under the provtsioru11 of the general resolution. The series resolu- tion establishes the specific terms and conditions of the 1979 Series A bonds. FLOW OF REVENUES The general . resolution establl.ches a "City of Palo Alto £1ectric and Gas Revenue Fund• (•Revenue Fund"), to reeeive all elecnic and gas revenues. The Revenue Fund must be held by the dty in trust, apart from other dty funds, and may be used solely far the purpose and priorities 'pedfied ln the general resalution. The series resolution appoints the city treasurer as fiscal agent, so all funds for the 1979 Serles A bonds are held by the dty. Revenues are to be distributed to accounts, established by the general rnolu- don, Within the Revenue Fund. in the following order of priority: o Maintenance and Operado.'l Account -Used to pay maintenance and operation ex- penses of the enterprise. The maintenance and operation account consists of the ex1stlng ~ and gas maintenance funds. This account ls held by the dty; de- posits will be made at the beginning of each month to pay expenses budgeted for that month. o Bond Ac:count -Held by the fiscal agent, If any, and used to pay p~pal and interest on bonds when due. On or before eadl December lS, begiMlng Dec- ember 15, 1979, funda will be deposited which, together With any belaftca cm hand, will equal the Interest coming due on the succeeding January 1, and one--half the principal coming due on the succeeding July 1. On or before each June 15, begin- ning rune 15' 1980. funds will be deposited which. together with the balance on hand, will equal the interest and principal coming due on the succeeding July 1. o Sinking Fund Acx:ounts -Used to receive sinkil'lg fwid installments to retire term bonds. The 1979 Series A bonds do not include any term bonds, so this account will not be used. o Bond Reserve Account -Used ro ensure t1mely payment ·of bond prtndpal and Interest. lf the balance tn this account Is less than maximum annual debt service, any revenue then available from the Revenue Fund wW be used to restore the Bond Reserve Account. This fund is held by the ilsc:al agent, if any, and is initially funded from bond ~s. Any <\!ftOW1t in the Bond Reserve Account in excess of mufmum annual debt servtce will L... transfarred to the Revenue Fund. o Surplus Account -Used to receive all enterprise revenues remailllng after deposits to the above accounts .. The dty holds thiS acc:ount &nd may use such fur.ds as specified by the city charter. The g&teral ruol•Jtion also calls for the establishment of a Project Account, i..dd by the city, for each series of bonds. The city trusurer will pay into the Project Account for each series of bonds the amount specified In the particular sanes resolution. Any bal- ance remaining . ln the Project Account upnn completion of the project will be deposited ln the Revenue Fund. ; ALLOCATION OF BONO PilOC£EDS The aerie.~ ruolution stipulates the allocation of 1979 Series A bond proceeds. Upon re- ceipt of bond proceeds, the city will deposit in the E!ond Reserve Account an amount equal to max1mwn annwtl debt service on the 1979 Series A bonds. The remaining bond proceeds Will bet deposited ln the 1979 Series A Project Account and will be used for aU costs of acqulsltion, conaU'Uction, and development of the proj~ct and issuance costs of the bonchl. Estimated projecr. costs are ta.bu.lated in "The Project" section of this Official Statement. COVENANTS Revenue Pledge: Thi! general resolution pledges all net revenues of the enterprise to the punCiiiit payment of ·interest and principal on the bonds. The city covenants to establish and collect rates and charges which Will yield net revenue equal to at least 1.25 times the following year's annual bond service on all outstanding electric and gas reve- nue bonchl. Net revenue ls defined u gross reven1.te less operation and maintenance expenu. The city ls currently paying all bond service on the Sl,930,000 ouutanding general obligation utWty boncb from revenues of the utilities. The existing outstanding general obllgatitm utility bonds will only be paid from surplus reven11es, after all the requirements of the general resolution have been met. Insurance coverage: The city wW maintain Insurance on the enterprise against such rlib. iricl1idliig . .aQ:ideni: to or destruetion of t.'1e enterprise. as are usually insurable ln cmuiection With similar-enterprises. Such insurance must be at least sUfflcient to retire all outstanding bonds. In the event of damage to or destruction of the enterprise. the clty Will use Insurance proceeds to pay the c.osts of repairing the entel'i)rlse, or to re- deem all outstanding bonds. The city wUl 6lso maintain fidellty insnran~ in an amount equal to onE•balf maxhaum annual dd)t service on city employees handling enterprise funds: title insurance for the cost of acquisition of real property, excluding improve- ments; public Uablllty insurance in amounts and against such risks as are usually covered in connection with s!m1lar enterprises. and WQrke-"'S' compensation insurance as required by c.llforrua lew. The city may meet part or all of its public liability and workers' compensation insurance requirements through self,lnsurance. Other covenants • The ;eneral resolution Hts forth covtnants by ?he city for the p~ tectiOri Of the bOndholders, including the following= o To pay principal and interest pnxnptly o To observe all covenants o To allow no encumbrance on the enterprise or lts net revenues. except permitted parity liens o To comtruct improvements promptly o To operate ud mahl!ai.'l the enterprise c To pay all claims agai!lst the enterprise o To keep separate accounts for the enterprise o To protect the ri9bts of the ~bondholders o To allow no competitive facilities o To pay any taxes o To aUow no free service o To use any eminent domain proceecls as stipulated In the resol~tion o To forbid the Nit of any property necuaa.."'Y [or operation of the enter-prise. In the Mtia1 nsolutitm, th• city covenants that it will not use proceeds of the 1979 Serlu A bondl in any way which would cause the bonds ta be considered arbiuage bonds. ADDITIONAL BONDS The reaolutlon perm!ta the luuanc:e of eddlUonal bonds to complete the project, with th• coverage test to apply upon project eamp!etfon. Parity Uen bonds may be laued under the following conditions: (l) the dty ls not in default: (2) ntn and chargu are suffldent to product 125 percent net revenue cover-•o• for existing and proposed bond servtc:e; (3) bond proceeds are used in 111 amount sufficient to lncreMa the Revenu.1 Bond Raservo Fund by an amount equal to maximum annwsl bond service on the edditfonal bond aeries: (4) bond proceeds of additional bonds are to be \&ted far electric: and ges purpoat9 only. Additional bonds may also be Issued U net revenues for preceding fiscal or bond year plus 75 percent of revenue antidpated from extensions or rate Increases provides 125 peramt C:0Vtl"a9•. The city may also pled;e revenues of one or more utilities on a parity bas!s With the bonds under lonq-term contracts or leases for purposes Including but not limited to the purc:hue of power or subleases fOC' capadty In electrical generation facilities. AMENDMENT Any llDelldmant of the 9enenl ruo!uUon my be !Mde by a supplemental rnolution, Wfth the written consent of holders of 1t leat two-thirds of th• principal amount of ou.t· standing bonds of any series affected by such amendnMnt. No amendment may permit a chlnoe in the terms of rtdemptlon or maturity or interest Installment without tbe consent of the holder of such bond, or reduce th9 percent of bond ownership reiqUlred for amendment. REMEDIES In tlle event oi def~ult, the fisc:al agent or the holders of a majority of aqgngate prtnc:i· pal of outstanding bonds, my declare all prtnc:ipa1 Md accruad lnW'Ut . to be due and payable. At any time after th• bondl are declared due and payable, the bondholders may annul the declaration lf the city depmlr. nf!lc:llnt funds With the flscal agent to pay all overdue debt s"!'Vic:e. If the boftda are decland due and payable, all revenues of the enterprise will be used, first, tc pay th• cons of the f1iCl1 agent and bend· holders In dedari.'lg the dellult: aec:ond, to the pilYment of maintel'..mce ed operation costs Qf the enterprise; wid third, to t.he peyment Of interest and prtndpal. with over• due payments bearing lnterut et 7 pucent per year. Events of defau.It are defined as f&llure to p.y prtr.dpel or lnterut wlthm 30 days of due date. failure to obhrve covenants for 60 "-YI, or the filing of a bankruptq· petition, or court control of the city for 60 days under i.ws for relief or aid of debtors. Copiu of resolution are available from Bartle Wells Asaodttes 'lpon requut prior to deli· very of the bonds. , . ' TH£ £NTERPRIS£ ALLOCATION OF BOND PROCEEDS Proceeds of , i;he 1979 Serles A Electric and Gali Revenue Bonds will be u.sed to acquire and integrat., gas and electric distrtbu.tion facilities which serve areas annexed to the City of Palo Alto and to remodel utility offices in the civic center. The city end Pacific Gas & Ele<:trlc Company (PG&E) have signed agreements establishing the pur:.:-~:~ 'rice and schedule for the transfer of the ;u and eleetric distribution facilities. The &gree- ments have been . approved by the Palo AltD Cit)' Council and the California Public t,;tiliti';:; Commission. The acccmpanytng table summarizes the project costs and allocation of bond proceeds. The purc.ltase price for gas and electric f~cilities are S293, 300 and S422, 700, respectively. These c:osts are subject to a final inventory to reflect any system additions or retirements not considered in the lnv,.entory which WU used to determine t.'te p~hase price. Addi- tional acquisition costs include PG&E's costs to phy&kally sever the system's and the ctty•s caets to Integrate these-facilities into its utllicy system. Severanc9 and integration costs are hi;her for the gas facillties than for the elec:tric, because the gas system will require underqround work and constrUction of new mains. CITY OF PALO Al.TO 1979 UTIUTY R£YEHUE &»IOS ESTIMATED ALUiCATION OF BOflO PROCEEDS Acquisition Costs E1eetl"ic P'u:ocN.se pr-ice $ 4Z2.700 Severance and fntegrat;on zz.m Contingency ·29.401 Subtotal -Elec;tric: $ 475,000 Gas JU'"rc:h&se pri;;e $ 293,300 SevCH"an<:e olnd integration 85,892 Cathodic protection 30,000 CWttfngency 20 1808 Subtotal -Gas $ 430,000 Total Acquisition Costs $ 90S,OOO Utflfty offfce rellOdelfng 50,000 Reserve kcount 127,750 Issuance Costs so.ooo Allowanc• for cif scO\lllt ~l7.25Cll Total 8ond Issue Sl, 1511, 000 Appro<Cimately $50,000 of t.tie bond proceeds will be U5ed to nmodel utility office space. Remaining proceeds will establish a Bond Reserve Account equal to maximum· annual debt service and pay the costs of issuing the bonds. . . PALO AL TO UTILITIES DEPARTMENT The Palo Alto Utilities Oeparanent provides elecUic, gas. wawr. sewer. and refuse serv• Ice Within the dty. Undu Article VU. Section Z of the city charter. utility r-eve!'luas are applied in the following order 01' priority: o Operating and maintenmce eX)Mnses o Debt service o cap1ta1 expenditures " ~tillty reserves. After these expen9e1 }aa,,. been Mt, the r-ein~ net Avenues are transferred to the ~ fund. Sw::A tranafws _.. expec:t8d tlO .uppon a significant share ol general gcweummt expense. Transfers fram utW.ty fund.S totaled $5,139,401 or r7 percent of Uenenl fund revenues ln J.!J76m, and S4,144.864. or 19 percent in 19T1nB. The !978179 adjusted budget calls for transfers of $5,305,393, or 25 percent of general fund rev~ues. Edward K. Aghjaya.n has "been Palo Alto's Director ~cf Utilities since 1974. He heads a staff of 160 employees. Utility customers are billed monthly by the dty controller'3 of· fice. The delinquency rate oa utility bills was 0.12 percent in l977n8. The acaapanytnq table swmerl~s sales by all utilities fer the past five ~. The 1979 Serltts A bcliiu::s are secured bv electric and gas net revenues only. which are dis· cussed tn more detail later in this 5.:ictton. ~ Of PALO Al.TO J ICIPAL UTIUTY SAW 1973174 l974n5 1975176 U76m l977na w.ter 1Gi6it-of •te1"! 18,005 18,316 18,362 18,418 18,520 Quntity sold-hcf 1,m,019 7,951,496 s.m.ns 6,792,856 5,225,130 ...... $2,642,343 $2,760,924 $3,on.122 u.an.z'" $2,923,154 El et:t.!'i c iG&r of •ttrs 22,947 23,554 Zl,643 23,828 23,955 Quantity sa1cf'obundred kwh 7 ,128.121 6,900,649 7,2~.376 7,349,965 7,392,549 Re'lenue $9,037,737 n,SlS,246 $l0,409,609 $10,659,637 $11,264,513 G.as .· . Riiiber of •ten 20,318 n,029 Zl,107 21.262 21,381 ~fty sold-tberw 40,753,789 40,884,776 42,143,342 37,157,401 n,249,144 Revenue $3,803,118 $5 0028,m $7,028,663 $6,832,775 $6,244,652 14fuse iiiiiiir of customers 17,650* 17,750* 17,SSS . 17,892 17,977 ........ $1,224,SIS $1.37'9,541 $1,672,467 $1,194,279 $2,112,759 Sewer Aiiliir of custo.rs 19,500* 19,600* 20,379 20,327 20,518 Rev9"Ue $1,138.842 $1,l&l,589 $1.227 ,585 $1,381,217 $1,416,781 *£stf•te. Sourc1: This t~l8 ha$ bfffl developed by Bartle Wells A'!socfates fl'OGI f~nancial reporu of the hsuer, prepared by the City of Palo Alto and Arthur Andersen & Caapany. co.plete copiet of the ffnancbl report for the year-ending June 30, 1978 are available frm tmt fssuer llf)On request. I • t . . ELECTRIC SUPPLY Palo Alto purchases all of its electrical energy from the U.S. Bureau of Reclamation (the Bureau) and distribute$ it throughout the city through a 60 KV subtransmission system whlch L'lcludes two sW'itching stations and eight substations. Since July l, 1965, all new lines and facilities installed have been placed underground, and the department has a policy of replacing existing overhead lines with underqround conduits when economically and technically feasible. According to r.~e city, electric rates in Palo Alto, whi..:h are set by the city council. average 50 percent below rates in sUJTOunding areas. The city's contract with the Bureau ls dated December 4, 1963 and expires December 31, 2004. Under terms of the contract, and a July ll, 1967 ame?\dm~1t, Palo Alto can pur- chase all lts growth power needs until the Bureau's capacity is fully allocated, which is expected to be 1985. Betw~en 1985 and 2~, the city will be able to purchase power equal to lt.s 1985 purchases. Growth needs above the 1985 level "'ill be available from a pool which will serve all cities contracting with the Bureau. The city has a current allo- cation of 160 megawatts of Bureau power. The elecu,c system peak load is 147 mega-watts. The Bureau contract will be renegotiated in 2004. Bureau rateS are set by the U.S. Department of Energy. The Bureau must give the city 180 days• notice of any rate increase. and the city may challenge any increase for up to three years. In 1976m, the city received a $2,010,ZSS rate refund as a result of a sUit in response u. a Bureau rate increase. The city anticipates a Bureau rate incn:Me of about 30 percent in 1979/80. Palo Alto also has a c:ontract, dated July 16, 1970, to purcltase power from PG&E. Under this contract, the city can purchase supplemental power in addition to its purchases from the Bureau. The city currently purchases all its power frcm the &unau and maintains the contract with PG&£ as an additional sou.n:e of power if necessary. Palo AJto is a member of the Nc.rthern California ~r Agency (NCPA), a joint powers aqency formed by 12 rnun.lcipal electric systems to help fulfill their electrical power needs. NCPA Is currently pursuing several sources of power. Its calaveras h1•dro- electric project, which was approved by Calaveras COunty voters In November 1978, will generate 206 tMgawatts of electrical energy. Palo Alto will receive 46 mega~""atts of this power. Construction of the Calaveras project ls expected to start in 1980, and should be ccmpfeted in 1983. · GAS SUPPLY Palo Alto purchases natural gas from PG&E under a contract amendment dated Dec- ember 30, 1964. Under fts contract PG&E agrees to make available all the required to meet Palo Alto's neP.ds. U for an1 reason PGScE's gas supply Ls c:urtailed, Palo Alto ls entitled to its equitable share of the available gas supply. The City of Palo Alto sets its own gas rates and follows a policy of charging its custo- mers the same rates as PG&E does. In 197Sm and 19TI/18, the gas department showed a deficit, caused by a margin. between gas purchases and l"eVenues ot less than 10 per- cent. On Sep:ember 6, 1978, the California Public Utilities Camilssion r-eviewed PG&E's wholesale rate strUcture and found it prejudicial to Palo Alto. The PUC's decision ordered PG&E to revise Its wholesale rate to Palo Alto. The PUC'S decision stated that "Palo Alto's gross operating margin has been seriously eroded by the tra- ditional approach to wholesale rates ..• because Palo Alto's system ls pre- dcminately residential, compared to PG&E's system average. As a result, the revenues derived from rate increases that have been applied to _nonlife- llne residential sales have been inadeqUate in Palo Alto's system to cover increases in the wholesale rate calculated ori a system average t.asis. We CA.'\ find no satisfactory alternative in this case to adjusting the whole~ sale rate to allow a greater differential ... We conclude that the. actual dif'." ferer&t.!al s.hould be set ... to allow a 20 percent differential between gross revenues and purchased g&a expen~." The PUC's findings srated that in 1969 Palo Alto rW!zed a V percent d..lfferential between gross gas sale revenues an.d plll'chaffd gas exp~nses, and by 1978, this had de• clined to 8 percent. The PUC decision allows Palo Altc to rullze a reasonable rate cf renz..-n on lts gas system. As a result of the decision. Palo Alto's wholesale qas rat.e will be established to provide a 20 percent differential between its gross gas S<Ue revenues and purchaS.ed gas expense. ENTERPRISE FINANCES The accompanying tables present revenues and expendituru and a balance .'"heel for the eleetric: and gas enterPrise. · CITY OF PALO ALTO ELECTRIC All(l GAS ENTERPRISE BALANCE SHEET Current Asset$ CiSh in tnasury Accounts receivable, net from: Cusic-r sales Other revenue Total Cat'nnt Assets Ff>eed Auets Oti1tt?es plant in service and wxfer construction Less acCU11Ulatfve depreciation Total Ffxed Assets Total Ass.u Current Lfabfl;t1es kCounu payable Accrued expenditures Total Current Liabilities Sond Principal Current Long-ter. To~l Bond Prfncfpal Munict!al Eguit~ 'Fund B.1anc•s2 Inves in fixed assets (net of DOnd <lebt) Reserved for~ Encumbrances & reappropriations Working capital Enrgency plant repl•ce11ent Systell h1prov ... nts Total Reserves Total Municipal Equity iotal Lilbilfties & Equity June JO June 30 19n 1978 $2,nE,094 $3,882,708 SM.US l,106,303 1a1892 u.D!l.zu 39.596 B,oza,607 $28,675,553 $29,178,791 poa7S9 1487) 17,91',056 i111ns1119> 17,403,672 m,JOS.zn $22,431,679 $ 36,430 $ SS,0Ci9 $ 3091518 345,948 $ 579.717 634,786 $ 76,052 $ 55,000 $ 2051000 m.osz J iso 1000 zos.ooo $17,635,014 $17 ,198,072 132,294 344,998 SSf.,200 1,145,900 314,514 384,338 21c10125s $ J,043,Z&l 21s1e 1sas s 4,393,861 $20,678,277 $21,591,893 Zl,305,277 22,431,ti79 Gas Srsteas $ s June 30 1977 550,180 281,155 ll1666 m.001 SS,169,847 ~1.920.350} ~.z49,497 $4,092.4~ $ ll,774 s 373.765 385,539 $3,249,497 l2,ns 367,600 !17,146 $ 347.145 $3,7~.959 4,092,498 $ $ s .·v:e 30 1978 4'0,342 348,497 71839 m.61a $5,321,501 j21ozs 1sso) 3,2§2,921 $4,109,599 $ ll,825 $ 3461255 358,080 $3,29Z,9ll 27,212 356,300 75,086 2,1§1,21 $3,:151,519 4,109,599 - SOun:e: TMs table has bftn developed Dy 81rtle Wells Anocfatn. , . . CITY Of PAlO ALTO ELECTRJC AND GAS ENTERPRISE ~EVENUES ANO EXPENDITURES 1974ns 197Sfl6 is1&m unna ELEmrc Reve~s sales to Ct.IStOMrs S9,2u,ns $10,l.Z7,31C $10,382,742 $10,962.237 City department sales 273,532 282,300 276,895 302,276 Connection ch~rges & misc. 97,303 10S,9SS 113,901 144,427 Other city department revenue 239.567 267.499 287.476 310.668 Tot.al Revenue .$9,87Z,117 Sio,783,o64 $ll,1ZI,o14 $11. 719,608 Expenses Purchase cf power $3,708,744 $ 3,878,605· $ 3,391,842 $ 3,4S3,670 Administration & genera11 802,226 917,223 1,130,561 1,085,073 Engin~ering & construction 135,722 214,llS 194,225 211,4ll Operation & 111anteinance2 472,498 517,731 "' 486,00S 653,810 Custolller services & b111fng 209,419 236,821 z44.n4 266,132 Bond service {110.600) (1001689) ~801917) (62.443) Total ExpenMS $5,493,215 $ 5,865,184 $ 5,28,324 $ 5,742,609 Inc:ome before deprecfation $4,432,902 $ 4,917,880 $ 7,602,9453 $ 5,976,999 Less depreciation (1,014,959) (1,01Z,7ilD) (l,lll,124) (l,169,135) Loss or retaoval of fixed assets ,1681528) ~31676) ~52 092) (481923) Net Electric lncOM $3,24§,zIS $ s. 5,184 $ s.~s.Jz4 $ 5,742,&09 GAS Revenues . sales to customers $4,ao0,949 $ 6,755,852 $ 6,514,932 $ 5,954,143 City departllent sa14!S 227,828 272,811 317,843 290,509 · Connection charges & •iscellaneous 351961 JS1&n 83.210 681142 Total Revem.e.s $5,064,738 $ 7,064,334 $ 6,915,§85 f"i.312,794 ~nses : ili"Chase of gas $4,180.ru $ 5,991,608 $ 6,185,665 $ 5,750,662 Administration & genera 1 318,203 2•7,728 358,246 323,917 Engineering & construction 10,040 22,454 23,921 22,794 Cperation & maintenance 120,903 Ul,102 196,248 196,020 Customer service • billing 139,541 166,730 229,501 247,895 Bond service .1 p61557) ~13.749) d) Total Expenses R.~.963 $ '· 73,371 rr. t $ 6,541,281 Income before depN!Cfat1on $ 278,775 $ 490,963 $ (77,826) $ (?28,494} Less deprec1atf0fl (119,388) (123,993) (127,9Z3) (133,315) Loss or removal of fixed assets ~11973) ~21448) ~3.636) " 664) Net Gas lncGme $ 7,414 $ 4,522 $ (2 9,ES) LI~~;473> Net Enterprise Incoaie $3,406,829 $ 4,166,026 $ 6,277,344 $ 4,394,468 1 -InclUdes employee benefits. -2 • Includes interfund and outside work. 3 • Includes extrao?dinary t~ of $2,Gl0,2S5, settlement fro11 U.S. Source: This table ha~ baen developed by Bartle Wells AsSO<:iates. Bureau of ReclaHtioa. .. -"! ·- -. / • ' r • ' CITY OF PALO ALTO £l£CTR!C AHO GAS REVENUE PROJECTED REVENUES ,'.ND ~XPENSES Adjusted Budget 1978179 1979/80 1980/81 1981/82 ELEC1'RIC SYSTEM ltt!Yenuff ~a1~s to c~st~rs $15,082,000 $15. 892. (!()() $18,074,000 $19,339,000 Cfty dlpart9ent sales 416,000 500,000 525,000 551,000 Connection cha1"9es & •isc. 202,000 214,000 227,000 240,000 Other city department reve~ue 417.000 437 1000 463:000 4911000 Total Revenue su.n7.ooo ns,o43,ooo U9,zM,ooo szo,621,000 ~enditures .,, urcfue of powers $ 7,012,000 $ 9,116,000 $10,027,000 Sll,030,000 Administration & general 917,000 972,000 l,031,000 l,093,000 Engineering & constructio~ 295,000 302,000 320,000 339,000 ~rat1on & 11aintenance 475,000 504,000 534,000 565,000 Ac:quisitfon & canstruc:tion 1,721,000" l,065,000 1,538,000 1,576,000 Se1"V1ce frolli other funds 8031000 ·8511000 902.000 9561000 Total Expenctitures $11,zn.ouo $1Z,ato,ooo n4,3sz.ooo ns.ss9,ooo Net Electric :nc1111e $ 4,904,000 $ 5,233,000 $ 4,937,000 $ 5,062,000 GAS SYSTEM hY!f!!l!S Siles to custc.ers s 7,819,000 $11,100,000 SlZ,093,000 SU,188,000 City det)art.ent sales 373,000 500,000 545,000 594,000 C:Hlneetion Chal'ge$ & •isc. uo.ooo iso 1000 159.000 11;91000 Total Rev~s $ 8.302,ooo $11.750,0M $12,803,00b $13,951,000 ~turn of gas s 5,571 $ 9,938 $10,932,000 $12,0ZS,OOO Adllt~f stratf on & general 283,000 300,000 318,000 337,000 Engi.,..rfng & constMICtion 59,000 62,000 66,000 70,000 Operation & .. tntenanc:e 174,000 184,000 196,000 207,000 Ac:qufsitfon & construction 643,000" 212,000 231.000 244,000 Sel"V1C. frca other funds 423 1000 4483000 47Sz000 50310CJ Toul Expenses s 8,zSJ,ooo $11,144,006 s12.2ta.ooo $13,386,ooo Met Gas lnc:oa $ 49,000 $ 606,000 $ sas.ooo $ 565,00 Net Enterprise R•venue 4,953,000 c;,839,000 5,522,000 S,627,000 Esti11eted 1979 Series ~ bond service p7,000 98,000 97,000 Met Revenue Coverage 42.62 56.35 58.01 tl9nera1 obHgation bOnd servic:e 60,619 59,031 57,444 21,100 ,..t Y"ftenue c:overage, all bond 81.73 str'f1Ct ·. 29.79 35.53 47.69 *lnc:1Udis 1equ1s1tion cost of Bar!'On Par~ distribution fac~lftie$ to ti. financed frot1 1979 Series A bonds. Source: City of Pa1o Alto Utilities o..,.rU..nt and Bartle Wells Associates •. Electric • Sela to cust.omen make up about 94 percent cf electric syste:n revenues. The tiiieit single expens. Is the purchase of powf'r. The purchase of power acc:ounted for 6S percent of total expenditures in 1974/75. The cost of power as a percent of total ex- penses dropJ*! In each of the foW' years shown, to 66 percent in 1975/76, 61 percent in 1mm. and 60 pen:ent i.n 1m 178. In 1976m, the electric system received I rate refund of S2,010,ZS5 fnlm ~ Bure&u of Redlmatkm u a result of a suit over a Bureau rate increaa.. This amount was used to establish a n5el'Ve for electric: system improvements to help finance the development of pGW9I" sourca and major Improvements to the dlstribut%cn system. The dty1s electric: rates inclW:. a ch.ar9e of one mill per kilowatt hour for-this fund. In 1977/78, this cMrQit ralNd . $739 .•-. TM ballnea in the nstl'Ve fer system h:Dpl'ovwnts as of June lO. l.911 .. .sa.su.•. SL.'lce 1974/1S. the ekctric sysum has produced net mcame before depredation equal to •t least 45 percent of g:tQSS revenue. Net income .tter depreciation hu equaled or ex- ceeded 33 percent of gross revenue. After provision for utillty capital improvements and resarves, n•t revenues U: transferred to the gene.-.J fund. Gu • Th• rewftue and expense history of the qu system ~emonstrates the dedlning CDJfenndal between the : OlSt of supply anci revenue !:ram gas sales which was the basis fer tba PUC's SCp 6 ruling. Slnce l974i75, the gas system's total revenues have ma 1ed at: an avenge annual compowid rate of 7 .6 percent, while the costs for purcbMe af gas have lncreued at 11.2 percent per year. For the past two ff!al"S, the gas System ha shown a c:leftcit. The 1978/79 adopted budget showed a $400,000 deficit for the pa system. The city's second quarter financial report projects an annual-net inc:a. Won depredlltfan of $545,000. as a result of the rate relief granted by the PUC. PROJECTED REVENUES AND EXPENSES The ~ table projects enterprise revenue and expenses. and revenue bond c:ovez-ae from the 1978/79 adjusted budget through 1982/83. The pro}ectlons were pnpend by the paig Alto Ut111ties Department. The basis fer th• projections are de- tailed below. Electric c SAia to custcmers • 10 percent rate increne in 1979/80 plus 2 percent growth; 5 pelQDt r.te inc:nae plus 2 percent growth tllereafte.r. 0 Qty depanment $Iles • 10 percent rate increase in 1979/80 plus $40,000 fram MW sewage treaODent plu.t, S ~t per year thereafter. o Other rennue ·Increased 6 percent per year after lm/80. o PurcbMe of power -30 J*Cent rate inaease frcm Bureau of lleclarQadorr ln 1979/80. 10 parcent annually thereafter. · o Acqul8tdon and c.onal:rW:tlcn -1.978179 indudes S475.0CO for purchase of Barron Park distribu.tian system. to be financed from 1979 Series A bonds:; 1979/80 a. city's actual pleud ~--- 0 Orher expeues • lJlcnMed at S percent per year after 1979/80. gy_ o Sliel to custGlllerS • Assumes rates are kept equ.l to PGtd:'s. PG&E Is requesting a rate tncnue of about 40 percent in 1979/SO. Projection btcludes an additional 2 perc9ftt fol" Barran Park. After 1919/80, rwoJec:dons include no growth ln unit Ala, but a 9 perunt per yeer increue ln rate. · o Conuet1on charges -36 percent lncreue in 1979/80 to catch up with c:Oste; 6 per· cent incnue per Ylll' thereafter. , ' 1 .. o Sales to ci.:y departments -lncrea.nd i\t 9 percent per year aftitr 1979/80. o Purchase of gas -PG&E rate increase in 1979/80; 10 perc~nt increase per year there- after. o Acquisition ~d construction -1978119 incl\ldes S430,000 for purchase of Barron Park distribution system to be fi.Mnee<i from 1979 Series A bonds. o Other expenses -lncreased at· 6 percent per year after 1979/80. REVENUE BONO COVERAGE The table computes net revenue: coverage on thie 1979 Series A bonds. based upon the debt service estimate shown in "The Bonds• section of this Official Statement. Projected net revenues are 54,953,000 in 1978/79 and exceed SS million thereafter. Average annual . electric v.d gas bond service is about '100,000, producing an average coveraga ratio of over 5Q times bond service. The city pays debt service on its general obliga~ion utility bonds from net utility revenues. The table also coa:putes -.he coverage ratio after pay- INDt of general obligation debt servii:e. CITY FINANCES ANO ORGANIZATION The City oI Palo AltO iS a c:hArter city, governed under a chart~r sd.opted by the elec- torate in. 1950. The citY uses the council-manager form of governJMnt. Palo Alto bas a nine-member city council. elected at large for stag9e.'"ed four-yur urms COf!MM"Cin.g July 1. The cowicil elects a majar and vice-mayor frcm its members for one-year terms. Th• ccundl appoints the city manager. clerk, attorney, end c:ontraUer. who serve at lts pleasure. The dty manaver appoints all offieen, de~t b;:ad.S, and employees of th• departments under his control. The dty man.';er, George A. Sipe!, heads a staff~ 778 city employees. lnformaE!on ~t general dty finances and funds ether than the enter,rise funds are presented for information only. FINANCIAL ORGANIZATION AND PI.lli"NING Annual· and long-term financial planning 111.d &dJl'linlstntfCln responsibilities are shared mnong the dty manager, citY contl"oUer. city tnasut'U', and budget iiirt:ctc.r. The city JDPMget' ls respc;.nsible foe budget preparatio=l and administration and financial planning and research. The. city trHSurer ts appointed by the city ~ger t;.., c:ollect, deposit, and invest aU dty fundl. and administer sale cf dty bonds and relationships with banks. The dty treMUrer also serves as utilities business manager. The dty controller's re- sponsibilities include establishinQ acc:ounling procedures, mointainlllg fillimcial records, preparing fiM.ndal reµons, admlniaterfng insurance and at.a prcce.sstng ill'Ogt'llllS. and assisting and adYbln; ~-.. city man~.r and COt.\ftdl. Palo Alto's finandal planbfng inwlves three doc:Ulmnts: (1) tbe compreheiulve plan, (2) capital improvsent plan, and (3) annual operating budget. Tbe aapnhensive plan projects land use over an extended puiod Of ume, and is the basis fDr amldpal and utilities planning. The capttal Improvement plan, annually projeeted on a fkre-year basis. ls a description and cost estimate af future capital facility neect.. Tbe annuat operatinq budget is the financial plan for the current fiscal year and lmplemeftts the first year of the capital improVement plan. The dty publish~ an annual ftnandal repon following the perfannaace of an audit, Jn accon:iance with venerally accepted accouating prindples. The i.m /18 audit wes per• formed by Arthur Andersen & Co. Coples Of the 1977n8 annual OMll(:fal report are available upon req-..&e:St from the Palo Alto City Controller. The dty's annual finandal report sets forth the ilnandal prtndples which guide the dtr's actions. Some of these prtndples are Pumcwuiz~ below: Current Fmandng o Current operating expenus, lncluc:Ung operating equipment, are financed tram cur-rent revenue. o Service c:herges hued on cost are used to finance services of special l:ieneDt to the user. o Mllniclpal utilities are not only self-supportiru;, but are expected to suppon: a sig- nificant $hare of general government expuse. o cash bahnc:es are pooled to permit maximum Interest earninq. Capital F!nandnq o General fund revenue in excess of the amount needed to balance the current gen-eral fUbd expenditureS ls transferred to the C.plul ~nt Fund to finance r " major taFitai improvements on a pay-as-you-go l'>asls. Centrally. such contributions should not be less than 10 percent of general fund ex~nditures. o To Llie degree that street improve~ents, including unde:-ground utility mains, bendit adJacent properties. the costs are financed by assessments against such properties. o State and federal financial aid are .sought if available Without compromlsir.g city polidu. - o Current utilities revenues finance normal additiohl and replacements of the utiltties' fixed assets . o UtUitie.s .nay a.::c..ml.llate revenue for -specific capital improvements and em-rgenc:y plant replac~,u. Emergency reserves may not exceed five percent of the net book value of auets in sel'Vice . Debt Financing o General obligatio'!\ bonded debt for general gcivernmet\t improv~nts plus spKi.al assessment debt may not exceed 15 percent of total assessed valuation. o All bonded debt is repaid in the shortest practical period of time, and £n no event longer than the useful Ufe of the improvements. o Serial bond maturities are arranged to conform best to existhlg debt structure and availahWty of revenues !or debt retirement, with initial matu..-tttes within two year:s of the date of issue. o General government d9bt ts designed so that annual debt service costs do not exceed 10 percent of ger.eral fund exi:enditures. o It ls the city's policy to obtain competent legal and financial counsel in the meric:etlng of all bond issues uid to provide fllll and accurate flnandal reporting to all invest- ment agencies. o Authorized bonds are not sold until the money is needed. o Bond retirement funds are established to account for and ensure the availability of cash for bond service requirements. o Land annexed to the dty must assume the city's ~eneral liablllty for bonded debt. o Spedal UHSM1ent bonds (except those issued U."1der Bond Plan A of the dty's im- provement procedure ordinance) ore the c:ontingent liability of the city. FUNDS Palo Alw's operations are eonducc.d through six groups of fWlds. each of which is a complete set of balancing accounts. Insofar as practical, these funds are maintained on an accrual buis. Utilities revenues are recogniud as they are earned, and expenaes as they Are incurnd. Othe:-funds revenues are recogn.12ed as they beccxne available, and ex~es u they are incurnd. lnterfund transfers an recognized Ir. the account period ln which they are authortzed. The six grOilps of funds and the plll"'p()US are: General Fund -to ~unt !or general government.al cpentlons. caeltal ~ects Fund -to account for financial relOW'ces sevregated for major nonutility capital !a uu. S~l Revenue Funds -to account for speclflc re'lenu.ea resti'fcted by law er admlnis-tra YI actiOn. Special reveirne funds CUSTently maintained include the street improve• ment fund, ftderal revenue sharing fu:1d. community development fund, housing improve- ment fund, and wastewater treatment fund. -----------------------·---- CITY ~F PAlO ALTO BAL.AMCE SHEET Current· AsseU Treasury ba1~c• Net accounu recehai> 1 e Accrued fnurest earned Granu authorized Sto1'95 filWefttOt'y ~ec i.l l US"' Slllel'tt o-4 tsiric\ . project.I .uthori z.d Tctal Generitl Ftxed Assets Lind arid 1ind improvements Buildings and struc:tuNs • Equf})Mnt, vehicles, furniture Total Utilities Ffxed ~.Sitts tn sffV'fce MCI Ullder c:onstl"UCt.ion LeH accu1111lat.d depreciation Total Fut.ur. hveftU9 fol" Bond ilellt General praflel"ty taxes Stanford IJnfvePSfty Ho'pit41 SJiecfal asusu.nt dfstJ-fcU Total Toul AsMU RefWMlable clepo$fts Accounts payable Acc"'ld s.lar1es and benefits Qt.tier KCl"UH e>qMtnditures ITT land purchue Total Bond Debt General oOligation for: General ctty f11Prov-.nts Stanford Ltnfversfty Hospf tt.l Ut111t1es fi~ed assets Spacial dht'l"fct iiiprov.ants Total Fund Bal~es Invesiid~ fix.cl as1ets-·net ReHrv .. for: Untransftl'rld spec1a1 r9venuc EncUllbranc:n~99ri or yHr RuppropriatfOM-pr1or yHr Stora fnwentory replac-.nt Se 1 f-inaur.cf lOSIH Loan guanntff-Otl Worting Cif)i~l ut n i ty p 1 ant rep 1 ac111tnt Utility 1y1t8m h1prov-.nt Total ~l"Ot)r11~ fund .,.llftCll To~l Liabtlfti11 and Fuacl Balance Combined FunlJs"' 6/3C/77 6/30/78 $ 14,128,552 1,734,731 341,965 408,506 353,873 $ 16,§67,617 $ ~3.504, ,696 13,~..0,503 3,900.854 $ 40,696,06! $ 61,571,904 (19,S98,76ti) s 41,9n.m s 200,000 1,604,699 4,341,930 $ 6,146,t!!§ $105 '783' 457 $ 220,273 $ $ 285,065 647,855 1,263,604 1.000,000 $3,416,7§7 258,125 1,649,625 2,382.475 511281390 9,41§,615 $ 80,663,149 s 1,520,668 2,254,&72 400.000 J:OO,OOQ. 1,709,900 526,497 3,601.847 S lb,w,SP 2,110·iff $105,738, s 15,999,222 3,988,786 36S,6n 9,636,995 364,783 169,000 s 30,524,457 $ 25,875,322 U,735,749 4,2ll,4CO $ 43,846,471 $ 63,183,900 (21.394,538) $ 41,789,362 s 15(),000 1,460,724 3,958,404 s 5,5'9,m $121,729,418 $ 119,661 $ $ 475,101 m.1n 1,660,524 l,000,000 $4,011,457 206,500 l,SOS.115 1,979,862 41no 1469 a.aoz,b&i $ 84,030,833 $ u,n4,aoo 2,006,444 417,275 250,000 47.6,383 3,222,396 619,273 31608 1911 I Z2,445,W 2,8341640 1121,729,418 G11n1ra I F':.lnd 6/30/77 6/30/78 $2,462,203 159,3!2 341,965 6,200 353,873 $3,323,553 $3,323,553 $ U8,803 200,562 596,699 340,020 1,000,000 $l,H6,084 $ (283,118) 361,050 173,537 400,000 100,000 296,000 $2,047,469 $3,323,553 $3,246,662 263,746 36s,m 364,783 $4,240,SQ $4,240,862 $ 4a,516 322,798 686,772 u2.~ 1.000.000 $2,114,448 $ 218.356 15,000 417,275 250,000 476,383 61'9,400 SZ.056,414 $4,240,862 *foul of 111 city finis: Gtnoral, C1Pit..ll Projects, Special R1vam., Municipal Utilities, Gene"t'al Fixed AIHts, aftd Bond Debt ~ Reti,....,.t.. Source: Thh table Ml been developed ~ 81rtl1 V.111 Anociatas fro11 financial nportt of the hwer, pf'ePflred try tht Cfty of P1lo Alto and Arthur ~.ndersen & COllpany. C011Plet1 copies of tht ffMnei•l ~rt for U.. year ending JYM 30, 1978 are available fl'Oll u,. fssun upon requHt. Sti!cial Assessme1\t Fund • to account for the financing of improvements by assessments against ben'=lited properties. :-.t:unicipal Utilities Fund • :o account for provision of utilities to the general public. Debt Retirement Funds -to account for the accu.mulaticn of resources to pay. prilicipal and mterest on generil obligation, utility. and special assessment debt when due. General fund revenues in excess of current yeat" expenditu1 !S are transferred to the capital projects fund. Transfers to the capital projects fund are also made from special revenue, assessment. and bond proceeds to fund projects designated for financing from th :>Se sources. Utility revenues are used to pay ?peration and maintenance. lx>nd sr:rvice. capital ex· pend.itures. and reserve accumulations. The remaining balance is transferred to the general fund. Th~ accompanying table presents the city's 1976n7 and 19i7 /78 balance sheets for the general fund and combined fu11ds. The table was compiled by Bartle Wells Associates from the city's annual financial reports and has been reviewed by the city controller fur· conformance with the financial report. GENERAL fllNO R£VtNUES AND EXPENDITURES The accompanying table summarizes qeneral fund revenues and expendir..u-es for the pa.st three years, and those budqeted for 1978/i9. The table includes the 1978179 adopte.1 budget. and the adjusted 1978/'79 budget which reflects property tax and state surplus allocations made by the California legislature. In the past, the largest revenue sources have been property taxes. sales ta.Xes, and transfers from the utility funds. As of the 1978179 budget, property tax revenue has dropped by over 70 percent froo:i 1977178, due to passage: of a <:alifornia constitutional amendment limiting property taxes. In the 1978179 budget, the larqest single revel'.lue source was sales taxes, followed by transfers from the e!actric utility. Transfers from utilities to the general fund total over SS.3 million in the 1978/79 budget. Budgeted revenues for 1978179 also include $808,000 of state surplus distributed to local govern!l'ents to use the adjustment to reduced property tax revenues; actual state aid payments will total about 5960,000. During 1976/n. Palo Alto entered into contracts with Stanford University and Santa Clara County to proVide fire protection to Stanford lands and emeJ"gency communications services to the north portion of Santa Clara County. The city was reimblU"Sed $1,072,817 in 1976m. and $2,138,559 m 1977/78 for these sarvices. The 1978179 budget includes $2,124,894 for these services. The expenses are su.mmarlzed by city department or division. The city fU.'lCtions in· duded within each category are: Admin!stratfon -Cit"! COWlcil, clerk, manager. and attorney. rafcrt services -c;ty ce.ntroller, treasurer, personnel, and budget and staff services. c workS • Administration. engineering. streets and park maintenance. commum9; Envkonment • Planning and ins~ction. _P\i6rlc sa ety -Pohce, fire and animal. soaat servtces L Admin.istntion. recru.tion, arts. .nature and science. and library. Also Included in this section is the adopted 1978179 budget for all funds. Expenditure' in this table are shown by object rather than by department. Employee services mak.: UJ> 78 percent ol the general fund budget al'\d 62 percent of total departmental expendi- tures for the combined funds . CITY OF PALO ALTO Sl.H4AAY Of GENERAL FUHO REV£HUES MO EXj>Er.DITURES Adopted Adjusted Blldget ~~ 197Sfl6 197&m Hnna l978f/9 Rewenues Pro~rty tax s 2.989,602 $ 3,99(\. 602 S 4,42S,3S8 $ l,23S,12S $ 1,650,000 Sales t.ax 3,483,55.9 3,!XW,054 4,733,419 4,850,000 5,100,000 Gasoline tax 274,019 280,769 280,954 285,000 335.000 Motor vehicle in-lfeu tax ~93,207 687,lU 812,677 80C,OOO 850,000 OU1er taxes 935,707 1,0662,297 1,035,802 1,355,000 1,318,000 Interest income 1,085,310 n3,094 l,079,37a 830,000 l,l25,000 Depart11ent revenue 692.450 1,097,694 1,047,562 820,815 345,925 COYrt ff nes 277,235 306,843 347,"85 305,000 350,000 Joint ffre and COii'" 11U11ications 1.072,817 2,138,559 2,l24,894 . 2,124,894 Miscellaneous revenue 569,192 704,733 810,270 1,688,0001 2,178,616• Reven~ transfer from utiliti.,s water 673,743 530,214 503,787 614,557 614,557 Gas 218,266 (291,978) (409,032) (400,000) 405,000 Electric 4,074,175 5,109,655 4,050,109 4,285,838 4,285,838 Ref use . (28,400) Sel"'lfce to utilities 1,455,721 971,S4Z l,03?,320 1,059,ns 1,059,T.a.S Transfers fra11 non-- ut fl i ty funds 120,256 162,565 363,925 990,337 361,sn Transfers to other funds ,2271259) (922.000) di 11s2 12n) 990,337 ~·963.366) Total Re~ $17,4B,Dz $19 ,481,275 ,370,2§6 szo,844,3n s ,841.m ~ditures n1stration $ 537,217 $ 601,457 $ 679,836 $ m.ua $ 692,413 Support servfces 4,280,310 4,169,492 4,695,682 4,680,878 4,896,946 Public 'lllOrU 2,755,810 30027,SSZ 3,244,965 2,861.505 2,933,980 COllllWlity envil"Onllent 872,748 894,088 938,970 923,669 1,0U,W Public safety 6,038,178 7,044,621 7,~54.282 7,525,872 7,790,654 Social services 2,101,Jn 2,na,su 2,649,060 3,050,259 3,135,720 CETA progr• 223,532 .310,809 509,631 540,000 540,000 Contingency allOlolance •• $18,88,562 SM:37Z,426 600,000 5891182 Total U7 ,U5,I7z $Zb,859,1ZI $21,590,017 1 ~ ine1ucies $15&,ooo state aid. 2 -Includes $960,000 state aid. Source: This table has been developed by Bartie Wells Associatirs fro. financi•l reports of tbe issuu, ?Y'eP&rff by the City of Palo Alto ar.<1-Al"thur Antlersen & Co. CCllt"' plete copies of the ffnancfal nport far tlllt year' ended June 30, 1978 are avafl- Ible fM)ll the issuer upon request. RECENT CONSTITUTIONAL AMENDMENT Under Slate law all properties generally are assessed at 2S per.:ent of fuU cash value. caUfornia voters, on June 6, 1978, approved an uiendment (commonly known as both Proposition 13 and the Jarvis-Gann Initiative) to the California Constitution. This amendment, which adds Article Xlll A to the californla Constitution. among other things. shown on the 1975/76 tax bW under 'full cash value', or thereafter. the appraised value of real property when purchased, newly construction. or a change ln ownership has occurred after the 1975 ususment period." This f\IU cash value may be increased at a • . , CITY OF PALO ALTO ADOPTED BUOGET 1978/79 SW91ARY OF ALL FUHOS Ali funds Total Gef\eral Operating Capital Projects Special lie\len~ Municipal Bond Debt Utilities Retirement Fund Balances Unappropriated June 30, 1978 R•ve~ (By Source) ,-roperty tax State aid Assessment ~ bond proceedi Sales tax Other taxes and fines Re<tenue fl'Olll other agenci 2i Interest on treasury balance 5eNtce fees and charges Utilities sales-net of purchases Miscellaneo.is revenue Total Revenue ~endttu!'ff 1oyees services Professional services Technical services Sup;>lfes Materials Equfp.iient purchase and rent Insurance and general expense Sub~fdfes and sp.cial •X?ense Facilities 1equ1sition Contingent accoU11t Bond retil'dent Capital projects Other Transactions Prior year re1P9ropriations Grants/special assess119nt " $ 2,834,640 $ $ l,290,000 808.000 1,750,000 4,850.000 3,080,000 5,192,662 830,000 1,533,949 11,153,145 $ 1,235,125 808,000 4,850,000 2,460,000 2,664,S94 840,000 800,815 : 360,000 360,000 530,847,756 $14,008,834 $19,336,6CS 514,004 734,360 1,043,478 1,557,944 &98.sn l,012.760 l,OU,733 1,299,584 600,000 802,032 2,805,831 $31,418,911 $16,319,508 290,224 586,690 609,528 374,999 616,092 691,4a7 755,793 600,000 $20,844,321 Sl,860,64-0 S 974,000 $ 2.805,831 52,805,831 l,750,000 620,000 1,082,000 106,600 1,261,068 62{;,534 11,153,145 $3,sSS,600 $13,040,747 $ 3,017,100 223,790 147,670 433,950 1,1.82,945 82,4a5 3ll,273 257,940 l,299,584 $6,966,727 district projects authorized $ 9,805,995 $ $ $ 406,254 $ 9,399,741 232,340 466,285 s s,101,ns Encumbrances 12,100,233 Reapproprfati ons 2 ,006 ,444 $ 4,lb0,682 $ Inter-fund Transactions Deiiartmenta1 service Provided 268,356 11,599,537 lS,000 1,525,159 ZSJ,35' $13,124,696 $ 406,254 Received $ 4,977,892 .s 1,437,932 3,918,177 2,497,647 $ l,059,715 $ l,059,715 $ 285,000 $ 1,486,707 ($1,780,207) $ 8,500 280,000 (280,000) $ •a $ 54,875 184,700 $23§.575 $802,032 $802,032 Stl'fft l11Prowe11ent Fund Revenue Sharing Fund COMUnity Development Fund AssesS11tnt and bond proceeds Gas 76,544 921,SOS (998,049) --1,216,694 (2,217 ,494) 905,000 $ 95,800 (400,000) 400,000 Wastw.ter Treataent Fund General Fund 10,196,587 (10,196,587) 633,833 {633,833) ~- $ 6,a35,487 ~13.ts7,6mJ $5",z>),750 $15,3M,i1s:l $562,.fS7 (277,695) 683,058 Prior year • transactions $ 4,300,682 Uti1ities ~1ant rep1acet1ent 277,695 Fund Balances Unappropriated July 1, 1978 $ 1,302,732 $ $ 642,932 $ 659,SOG .$ Source: Thh table has been developed by Bartle Wells-Associates frOll financial reports of the hsuer, p1"t9ared by the Cft~ of Palo Alto and Arthur And-rsen & Co111pany. C011Plete copi's of t1'e finan• cial report fer the year 1nding June JO, 1978 are available fro111 the issuer upon request. ••1---...... ·----~-~, --- rate net to exceed 2 ;Mrc:tnt per year to account !or !n!lat!on. Th.e amendment further limits the amount of any ad valorem tax on real property to l percent of the full cash value, or 4 percent of the usessed value. On S.p~r 22. 1978, the Califomla Supreme Court upheld the amendment over chal· · 1enges on several state and federal constitutional ;rounds (Amador Vall<f' Joint Union H!qh SCho41 District v. State Board of Equalization). The court nserv certam con· stitutlOriil issues and ttie vilidlty Of legisli&n implementing the amendment for future determination in prcper cuu. In the past, properties ln Santa Clara County have been su!>jec:t to taxation at varying ntes by municipalities and spec.ial districts. Each entity has set its budgetad e~. and then deterrained, 1ubj<x:t to certain legal ltmitatiOns, the property we rate which would raise sufficient funds. In fiscal year imna. the typical tax rate in Palo Altt. was $9.287 per SlOO ol assessed valuation. As a result of the amendment, the maximum tax 1-.ie ls $4 per SlOO of assessed valuatlOn, plus the additional amowit necessary to cover cercaln outstanding indebtedness. The California. leqlslature has adopted legislation apportioning the property taX raised by the $4.00 tax rate among the various taXing agencies 'hithin each county. This legisla· Uon, as well as legislation ellocating surpius state funds to loc:a1 government. was far 1978/79 only. There can yet be no assurance that future tax a.pporticnments or: state surplus .UOC.tions wtl1 be as ln 1978/79. The amendment does not alter the levy or col· lection of wces for debt service on general obligations authorized priOl' to July 1, 1978. ASSESSED VALUATION The santa Clara County Assessor assl':SSeS all pn>peny wtthin the dty except utility property. which ls assessed !>y the State Board of Equalization. State law requires that au property subject to general property wcadon be as·;essed at 2S pa-cent ol full cuh value. Du.e to the changes in assessments under Article XIIIA. the caunty assessment roll no longer purpons to be proportional ro full cash value. Under California law, SO perce."'t.t of the use5Sed valuation of business inventories are exempt frCllD taxation. owner~pied dwelling units also have a. current tax ~ption of $7,000 of the full cash wue which ls equivalent to Sl,750 of the assessed valuation. Revenues lost to tax-supported public agencies due to these t'WO exemptions are fully re- imbursed by a state subvent1on. The acccmpany1ng tables summari2e Palo Alto's assessed valuation for the past five years. All valuations shown Include hameowners 4nd business inventory exemptions. over the five-year period shown, the city's assessed wluation has increased at e average annual compounded rate ct 9.<i percent per year. Th• 1978179 assessed valuation dedtned 2.6 percent from the prior year, as a ruult of reevaluations under Article XIIIA (Proposi- tion 13). CITY Of PALO ~LTO ASSESSED VALUATION HISTORY Vear 1973/74 1974/75 l97Sfl6 1976/n 1977/78 1978/79 Total S.."'246. ns, 264 382,26S,506 429,012,649 490,373,725 S58,nS,4St:i 544,2S7,299 *Rates per $100 assetsed valuatfon. so~rce: S.nta Clara County. Perctnt Increase -· % 10.2 12.2 14.3 13.9 ·2.6 Tax Rate* $0.74 0.74 0.70 0.83 0.75 0.01 . t The tabie also shows .::ity tax rates per SlOO of assessed valuation. Openting tax rates for 1978/79 can no longer be determined because the :r.ethod o! tax distribution has been altered by Article Xllli>.. Palo Alto's 1978179 tax rate for general obligation debt serv- ice is W.01 per SlOO of assessed valuation. The accompanying table shows the combined 1978n9 tax rate for the largest tax rate c1rea in the city. CITY OF PALO At.TO TOTAL 197Si79 '(AX RATES1 TAX RATE AREA 6·014 lS MXillUll tax levy s.nta Clara Ceunty bonds City of Palo Alto bonds w SCl'lool district bonds CQllllUn~ty college district bonds Total Flood control district bQnds Total All Rates r-JtitH per $100 assessed valuation. 2 -Tu on land and i11proveMnts only. Sourca: Santa Clara County. CITY Of PALO ALTO TAX LEVIES AHO OELINQUENCIES Fiscal Year 1973fi4 1974ns it7sn& 191&m unna Secured Tax Levy $1,830.593 1,913,544 2,096,725 2,907,613 2,944,898 source: santa Clal'a CGl.lllty. Department of Fi nanc:e. TA."( LEVIES AND DELINQUENCIES $4.000 0.109 O.OlD 0.260 0.058 $4.447 ~t $4.467 Delinquent as of June 30 All!Ount Percent o.~ 1.14 0. 7Z 0.55 0.64 The ac:ccmpanytng table shows Palo Alto's secured taX levy for each Qf the past five fi!cal years. The table also includes the dollar amount delinquent and percent as of June 30 of eac.'l year. Tax delinquencies have exceeded one percent in only one yeu shown. In ac~dance With California Revenue and Taxation Code, the Santa Clara County Tax CoUecoor c:oilects secured tax levtu for each fiscal year. One· half of the taxes are cue November 1, a.nd become delinquent O.Cember 10; the second installment ls due February l, and delinquent April 10. A 6 percent penalty is adcted to &ny late inatallrnent. On Jwie 30, deUnquent propertie~ a.re sold to the state. Prcperty ownars may redeem property upon peyment of delinquent taxes and penalities. Propertiu sold to the st.te incur a redemption penalty of one percent per month of the taxes due. Properties may be redeem6d under an installment plan by paying currtnt taXtS plus 20 percent of dellnqu.ent taXeS for !lve years. Interest accrues at one-half of one percent per month on the 1:nP"ld balance. U no payments h6ve been made on delinquent taxes at the end of five fiscal years, the property ls dffded to the state. Such properties may thereafter be conveyed to the county ux collector .u provided by law~ BONDED DEBT The 1977/78 audit re~ the city's outstanding bonded debt as of June 30, 1978. to be $3,590,000 of general obligation bends, and S4.493,2S9 :uilllon of uses.sn:ent bonds. The accompanying table summarizes outstanding general oo!iqation bonds. The ratio of general c;bligation bonds to 1978179 a5$e5Sed valuati')n is 0.60 percent. The debt ratio, including ~t debt is 1.49 percent, well withln the 15 perc:ent charter dei>t limit. CITY OF PAW Al.TO OUTSTAHOifll GENERAL OBLIGATION BOHOS Bond Issue 1956 c. Library Bonds 1955 A, Hospital Bonds 1955 8, rtospit.al Bonds 1556 B, Utility Bonds 1956 D, Utility Bonds 1956 E, Utility Bonds 1970 Seiler Bonds Original ~t $1,000,000 1,000,000 3,000,000 500,000 soo.ooo 250.000 3,500.000 Outstandil'Q IS of 6/"YJfl8 $ 200,000 360,000 1,100,000 60,000 100,000 45,000 1.725,000 vear of Final Mat:.ir1t.y lS82 lsa& 1987 19Sl 1983 isao l9az Tu Roll Stanford University Stanford University Utility funds Ut i1 it)' funds Ut.11 ity funds Ut11fty funds SOurc•: This table has been developed by Bartle Wells Assocfatts from financial reports of the issuer, prepared by the City of Palo Alto and Arthur Andenen & Co. Car plete copies of the ffoancial report for the year ending June 30, 1978 are avat• lable fl"Oll the issuer upon request. The only gen..-al obligation bonds currently paid from the taX roll are the l.lbnry bonds. Seies 1950 C. Bond service on 1965 hospital bonds ls paid by Stanford University, under terms of the sale cf the city's equit)• in the hospital to the Wllversity on July l, 1968. Bonds sold to filw\ce utility improvements and acquisitions are supported by utility fund revenues. The accompanyinq table shows direct and overlapping bonded debt of the City of Palo Alto u of January 15, 1979. PENSION 08LIGl.TIONS The city covers all of its permanent employees under the Public Employees Retinmant System (PERS) of the State of California. Pension costs are funded by monthly eontrt· butlons to PERS by the city and the employee. The acccmpanyin«;i table shows the number of employees and city contribution to the retirement program. f . • t .. , CITY OF PALO ALTO DIRECT AHO OVERLAPPI~G BONDED OEST Santa Clara Ca1inty Santa Clara CoU11ty Building Auth<Jrities Sant.a Clara Co. FC & "9'CO, Zones W·l & NW-1 Bay Ai"ea Pollution Control Authority ~O()t~•ll Co...,,nity College Oi•trict Palo Alto l.lnified SCnool Ofstrict City of Palo Alto Palo Alto Golf Course Corporation City of Palo Alto 1915 Act acnds City Parking District Other Schoo1 Oi~trfcts ~ Other Special Districts Total Gross Oirtet and Overlapping Bonded D~t Less: Palo Altc self-supporting bond! Santa Clara Co. Zone W-1 (lDOi self-supporting) s.nta Clara Valley Water Conserv~tion (lOOl self-supporting) Total Net Oii-ec::t and Overlapping Bonded Debt Gross direct debt ($4,910,000)l Net direct debt ($2,000,000):J T:it.a1 g1'1)$S debt Tot.al n.t debt A$$essed Valuation $544,2.57,299 o. 90X 0.31 S.23 4.64 fl Percent Appltcable 8.237% 8.237 0.746-41.131 2.114 23.40Z-23.43S 92.023-92.0b4 lOO. 100. 100. 100. Various Various Ratio To Est'iuted Marbt Value $2.18 b111ion2 0.23: 0.09 1.31 1.16 Debt February 12, 1979 s 3,153,535 3,738,774 l,019,142 27,122 3,05'1,247 8,408,563 3,110,0001 1,800,000 1,031,160 2,975,000 56,053 6,579 $28,455,175 2,910,000 283,107 4,315 $25,257,153 PopulaUon 54,600 $ 89.93 36.63 521.16 462.60 1 -EXcluaes Sl,lS0,000 utility revenue bonds to be sold February 12, 1979. 2 • Based upon assess1Nr.t of all property at ZSS of market valu.. 3 -Includes li»alo Alto Golf Course Corporation debt; excludes utility re11enue bonds. Source: Compiled in cooperation with California Municipal Statistics, lnc. CITY OF PALO ALTO PERS CONTRIBUTION Year 1972173 1973/74 1974/75 1975/76 1976/n 19n118 l978n9"' *8ud9•t. Partkipating Employees 744 749 766 ?SS 1n 788 778 City Contribution $ 846,091 980,787 l,345,022 1,573,663 1,876,287 2,063,753 2,082,712 Soun;e: This table has been de11eloped by Bartle Yells Assaciates fl"Olli financial reports of the issuel", prepand by the City of Palo Alto and Arthur Andersen & Co. Cor plete copies of the financial report for th~ year ending June 30, 1978 are available from the fssuer upon re~uest. • PERS ls • Gtatewide system operated pursuant to Title 2, Division 5, Part 3 of the Gov- ernment Code. The system has about 900 agency accounts. Detailed ;>ublic disclosure of investments is reqwred by law. State law at.o requires that PERS undergo !ctuarial review not less ofte~ than every fourth year. A review for the period ending June 30, 1977 Is in progress. Coopers & Lybrand, Certified PubUc Accountants, have made actuarial reViews of PERS as of June 30, 1975 and June 30, 1976. In their report, certain member groups' unfunded supplemental Ua.biUtlu were Identified, and sre ~ing emortiz.ed. Notwithstanding, the report concluded that PERS was fiscally sound. Additional information about ?£RS may be obtained from the system's office at 1416 Ninth Street, Sacramento, California 95814. usoa RUA1'10ii~-:- Palo Alto's municipal employees are represented by three enployee organizations. The accampanying tabla lists the unions and expiration dates of current as;reements. The dty's contract With the Palo Aito Polii=• omcers' Association expired on June 30, 1978, anct was extended without c~e until Janu.a..j' is. 1979. Negotiations on a new agree• ment began in January ~79. The city's contract with the International Association of Fire Fighters expired December 31, 1978, and negotiations on a new contract are under- way. 1'he city has lost no time to strikes since a 23-day strike by SEW in 1975. The city's total salary and benefit exper.se in 1977173 was sl9,l62,85e. This amount tn• eluded S2,356,19Z. 12.3 percent, in paid absences and S3.422.294. 17 .9 percent, in dty contrtbadona to retirement, ina~ce and medical plans, dl.3ability expense, and em- ployae aUow.nces. The city's uabillty for accrued but unused vacation, hoUdays, and sick l8IV8 was SS,118,642 u of June 30, 1978. *-ber Cl us 80 Pflltce W Fire 472 Other c1~ nployees source: City of Palo Alto. CITY IRSURANCE COVERAGE: Union Palo Alto Paace Offfct!"t A1soctation Inurnat1onal Association of Fire Fighters Service &ploy"• International Unton Ten1 of ~t l/1Sn9 12/3l/78 4/30/80 Pa.lo Ako maintains tn.surance coverage against property loss (SJ7 mllllon), comprehensive pv.blk UabUlty, umbrella liability (S2S million); and workers• ccmponAtion ($3 mllllon). TM c:1ty ia ulf•inlund for the flrat $.500,000 of llabllity cl&fms and the first Sl mllllon of \lillOri:enl' campensation. * . I ~· . . I • CITY OF PALO AL TO LOCATION The City of Pa.lo Alto is loc~ted in northern Santa Clara County, about 30 miles south of San Francisco. and 15 miles northwest oi San rose. The city limits extend from San Francisco Bay tc Skyline Ridge ln the Santa Cru~ Mountains, covering an area of about 25 square miles. Although the city is best ~nown as a residential community, it has a substantial base of high tedu-.ology indusa y. Palo Alto ls c!osely Identified with Stanford University. wrJch is adjacent to the city. The un!verslty is a large employer and land owner. as well as a factor in attracting specialized industry to the area. , POPULATION The California Department ot Finance estimates that the population of the City of Palo Alto was 54,600 in January 1978. The accompanying table, which compares population growth In Palo Alto and in Santa Clara County. shows that the city's populatio~ has been declining sin:e 1970. While the county's population has grcwn by 14. 7 percent, the city's popul~tlon has decreased by Z.3 percent over the past seven y~. notwithstand- ing a 5.3 percent increase in 1915, due to the annexation of Barron Park. Acc:orii1ng to the city's planning commission and the california Employment Development Department, declL'ling birth rates, a lack of available land in the city for new housing development, and an ins•Jfficient supply of housing have been responsible for the city's decline in population. CITY OF PALO ALTO, SANTA C:.ARA COUNTY POPULATION, 1960-1978 City of Year Palo Alto 1960 52,287 1970 55,835 1975 52,400 1976 55,200"' 19n 54,900 1978 54,600 ~Includes population increase of 3,200 due to annexation of Barron Park. Source: U.S. Census; California Department of Finance. HOUSING ANO BUILDING ACTIVITY Santa Clara County 642.315 1.066,174 1,165,800 1,184,100 1.202,100 1,222,800 The a~c.ompanying table proVides building activity data for t.'te city since 1974. OVer the period shQwn, most new construction has been in the nonresidential sector which has anm1ally a~~t1,nted for over 60 percent of the valuation of new constructian in the city. As lndlcaw:t earlit!r. there ls little land available in the city for n!!W housing construc- t1on. The "Palo Alto Comprehensive Plann reJiQrts that about 40 percent of the city's hol.lSing wes built before 1950 and another 40 percent between 1950 and 1960. Among cities withi11 S11nta Clara County, the city in r'!cent years has had one of the lowest mun- ber of new building permits issl!ed. Since 1972, 325 permitS for new single-family homes have been issued in the city. • • CITY OF PALO ALTO BUILDING ACT1VITY, 1974·1978 C{ty of P•lo Alto 1974 1975 1976 19n 1978ft N..O.r of Owle111!'.!9 Units ~lngit f•ity 36 17 41 n 26 flllllt1•f•11y 322 18 249 245 198 fM 1 d~!!S ~ua-:. ~-M:it'mf liii&ntiaf Ii 11 ons $ 9,498 $ 3,693 $11,ns $14,501 $15,035 ~ref al 5,886 B,361 7,708 15,024 6.233 Industrial 9,009 837 300 1,675 287 Other nonre1fdential & alterations 101030 e1211 Tot&l m,423 $21,lM 111991 Jn.m 10.714 $42,914 151405 $~.960 • *Ja."We.ry ilil'Oii@i August 1978. Source: Security Pacific H.ational Sank. IN CONE Ac:ctllrd:lng to 5afas and Marketing Ma'mement ~guine, Palo Alto's median hou4ehold effecttve buylnij IJUiiiii iri lffl was , 16§, a.oout seven percent higher than that of Santa Clara COunty, 39 percent higher than all of californi$, and 45 percent higher than the United Slates u a whole. Median household effective buying inccane da~ for the dty, county. state, and nation are shown in the ac:mmpanying table. cm OF PALO ALTO. W.TA CLARA COUHTY. CAUFORHIA, UHITED STArES MEDIM EFFKT1V£ BUYING lHCOME, 1973•19n 1973 1974 1975 Palo Alto $U,&l0 $17,333 $18,232 Santa Clara County 12,509 15.857 16,804 C&lifornia 10.083 12,480 13,206 Un1ted States 9,544 ll,890 12,824 1916 m.1•s 18,~l 14,299 U,781 Niite: EBI is difined as inco.e resafnfng after "'fthboldfng taxes Md Social dlclul:t ions. Sou1'Cll: Sales and Plariet1ng Manageaent Survey of Buying Power. EMPLOYMENT AND ECONOMY un sn.7&9 20.421 15,6!9 15,01& Security Elearonics, electrlcal IDIChlnery, sc:lentific and technical research and development, pub- lishing, and medical equipment and supplies an Palo Alto's prindpel Industries. In· dusU1es employing more than 100 are listed in the accompanying table. The1 city's two Jarvest lndusttial employers are Hewlett•Plackard, whose several divisions in the dty em· ploy over 6,000 penona. and the Ford Aerospace ;md Communications Corporation, which Is engaged ln urospaca research o.nd development and employs over 2,000. Palo Alto ls .tSQ Within caaawting distance of Santa Clara County's largest Industrial tmployers. They lndllda Lockheed Missile and Space Center, International Busmess Machine.a (IBM), GeMnl £1tctric, FMC COrporatior., and Ford Motor Company. . . I • . ·- ?ALO ALTO LARGEST EMPLOYE~S 1.000 or Hore Employees ~lett·Packard C0111Pany Hewlett-?ackard COfllPany H""'lett-Packard Cocnpan~--Stanford Varian Associates Watkins·Jo~nson Company 501-1 1000 Emplcyees Alza Corporation ~lusan lnstrwDe11ts Eastaan Kodak Company Kaiser •el"Ospace and Electninics Corporation Syntex Laboratories, Inc. Teledyne, !nc. 101-500 Emolove-.s Alza Phanaaceuticals A~systellS Aydin Energy Systems Coherent Radiation DO'll Jones , Inc. Drexler Tec~nology Corporation Fairchild Caaera and Instruaients Corporation Galamar Industries, Inc. Hewlett-Packard COlll)any Houghton Mifflin CQ11Pany Monsanto Company·•Electronics Division Palo Alto Times Peninsula Ml!'lfspapers Tab Products Corporate Office Tab Products Company Telesensory Systems, Inc. Wiltron COllpally Zoecon Corporation Servi ce/PrOducts Computers, electro~ic equipnent, medical equip!nent Printed circuit boards, die castinQ.S, tr&nsformers M'lcrowa11e generators and pO"W1tr eeurs Elactronic equip11ent Electronic co;11pOnents and accessories Therapy 5y5tem Precision instrU!ltnts Photography equipment Aircraft electrical parts Phanaaceuticals Microwa,·a ~uipment Phanaaceut kals ~ter systetas Electronic equipeient Laser ~ptical systl!!ll!S Nelitspaper publishing Photo plates Electronic components and accessories Silicon wafers Mfcr'O'olave transistors and COlllPOnents Books Diodes Newspaper publishing Newspaper publ istiing Data electronic systalls Data equip11ent Electrical reading afd Electrical measuring equipment Agl-icultural chetlicals. Source: Business Infoniiation Systems, Inc., 1977 Industrial Directory, Sant.a Clara County. The city is included in the ~n Jose Standard Metropolitan Statistic~! Area (SMSA), wruch is coterminous with Sdnta Ciara County. AMu.U employmer.t statistics In the SMSA are provided tn the foUollting table. The California Employment Development Department eBtimated that total employment In the SMSA in 1977 was 537 ,800. Manufacturing is the largest employment sector. accounting for 21.0 percent of the total employment. Services (21.3 percent) and trade (19.0 percent) are the next largest o?mp!oyment sectors. As shown in the accompanying table. the unemployment rate in th! SMSA ls currently lower than that of both the State of California and the nation. • SAH -.1QSE METROPOUTAH AREA AN.llttJAL AVERAGE EMPLOYMENT BY INDUSTRY, 1973-19771 1973 1974 1975 1976 l9n Construction &nd mining 20,600 20,000 l7,l00 17,500-.21, 700 M.llnuf.cturfng 147,100 162,800 153,600 162, 500 172,300 Nondurable gociGs 25,900 27,200 26,400 26,600 25,600 Ourult QOOds lZl,200 US,600 127,200 135,900 '1~.700 Tr1Mportatfon equipment 23,000 24,900 24,900 24,100 23,100 Electric and elect~fc 49,600 56,100 50,500 &Z,200 equipnnt 56,000 Ins tTU11et1t! 14,500 15,100 15,000 lS,900 16,700 Hone lectti ca i NChf ncn 25,100 19,900 18,100 30,600 U,100 . Other ®rab1e goods 9,000 9,600 8,700 9,300 11,500 TransportatiOl'I, comunicatfon, Md utfHtft$ 18,200 18,SOO 17,900 18,100 18,400 Trade 83,600 87,500 91,300 91,100 102,100 Wholesale 17,400 18,300 19,900 21,3CO 22,800 Retail 66,200 69,200 71,400 75,800 79,300 Ffnance, insurance, and real estate 17,300 18,200 lS,700 19,900 Zl,400 Services 98,500 92,800 95,900 101,700 U4,600 Govel'IWleftt 67,300 69,500 72,200 75,200 80,000 Federal 9,300 9,100 9,000. 9,100 9,100 State and local 58,000 60,400 63,200 66,100 70,900 Agriculture sf ·ggg 81700 91300 91600 SJI:= Total 4 I ns.ooo l76,COO 501,600 Cfvilfan labcr forcel 544,000 536,200 543,SOO 574,100 6l0,900 Employed SU,000 501,100 491,800 527,900 569,100 Unemployed 31,000 35,100 51,700 4a,2CO 41,800 1 • COiiPiled by plact of lijQrk. 2 • CC11p11ed by residence. Source: C..Hfomia &iployment Devel~t l>epcf'tant, Ellplo)IC!ent Data and Research Dhision. · SAH JOSE SMSA, CAUFORNIA, UNITm STATES ANNiJAL AVUACE UNEMPLOYMENT RATES, 1973·19n San Jose SMSA California United States 1973 5.7S 7.0 4.9 1974 6.~ 7.l 5.6 1975 9.SS 9.9 8.5 1976 8.1% 9.2 7.7 1977 6.81 8.2 7.0 source: Cal1fornfa Elnployment Oevelop11ent !)epartment; U.S. Bureau of l.abgr Statistfcs. INDUSTRIAL PARKS Palo Alto's major industrial employers ue clustered in the city's three industrial parks. The largest of the three, Stanford Industrial Park, covers 660 acra; approximately 65 tenants employ a.bout 22,000 workers. The park is zoned for light manufa~turing. The ten largest tenants are: ' ., •• Jo .. • l. Alza COrporatio'l. 2. Eastman Kodak. Q:lmpany. 3. Electric Power Research Institute. 4 • Hewlett-Packard Company. 5. IBM Corporation. 6. Syntex. 1. Syva Research Institute. 8. Tab Products Co. 9. Varian Associates. 10. "'•tkin.s· Johnson Company. • Si!es ar-e !eased from Stanford University for • maximum term of 51 YP.arS on a net rent b&sis With the tenants paying ali taxes :md assessments. Each tenant constructs its own bu.ildinq. Stanford exerclses architectural control, requiring lessees to submit complete plans for approval prior to construction. The Palo Alto Industrial Park U. the city's second largest industrial park. covering 92 acres, the park ts also zoned for light manufacturing. Ford Aerospace and Communica- tions Corporation is the park's largest tenant. Baylands Industrial Park is the thh'd industrial park. The park covers 52 6Cl'es and houses 11 tenants. RETAIL TRADE The Directory of Shopping Centers in the United States lists six shopping centers in Palo Alto. The two liii'gest are the Stanford ShOppmg C~nter and the Town &: Country Vil- lage. The Stanford Shoppinq Center houses about 90 stores, which include BullOck's, The Emporium, and MaC'"/'s. Town &r Country Village incl.udes over 100 t~ants, primarily specialty shops. The following table shows taxable sales data for the City of Palo Alto since 1973. Retail sales for the city rose from S21S million in 1973 to SJOS million in 1977. CITY OF PALO ALTO TAXABLE SALES, 1973·1977 Total Retail Stores Year 1973 1974 1975 19;6 1977 Penitts 652 651 664 733 777 Taxable Transactions $215,479,000 218,300,000 241,964,000 258,606,000 304. 983. 000 source: California State Board of Equalization. ST AN FORD UNIVE~SITY Total All Outlets Pen1its 1,917 2,0M 2,102 2,267 2,417 Taxable Transactions $.314. 910. 000 325,082,000 342,SU,OOO 363,699,000 435,986,000 Stanford University was established in 1885 by Senator atid Mrs. Leland Stanford as a memorial to their son, t.ela.nd, Jr. According to surveys of the Americal Council on Education and a 1974 survey of graduate and professional school deans nationwide, the University's school and programs in law. medicine, business eaueation, engineering. and journalism rank among the top ten nationally. Student enrollment in 1977fl8 was about 11,700 consistil'lg of about 6,500 unde<qraduate and S,200 graduate students. • • The wuverslty ls a major employer in the PaJo Alto area. · ... ;th a total faculty and staff employment of 10, 700. The university's total endowir.ent, including its S21 million Ctrtglnal endowment, had -- market value on Auoust 31, 1978 of SS03 million. Stanford University owns 8,129 acres of land, of which about 1,135 aeres are within the Palo Alto dty limiu. The Stanford Industrial Park and the Stanford Shopping Center i.n Palo Alto e.w:e both owned by the university and discussed In otllet sections of th!s offici&l statement. TRANSPORTATION U.S. ~--101, .UO known u the Bqshore Freeway, end Interstate 280, or the Junlpero Serra Freeway, connect _Palo Alto to san Francisco to the north and san Jose to the south. S6n Jose Mun1dpal Airp;)rt is located nearby. Ten certified and four commuter air car· riers provide lntemat:l.onaj., national, and lntrasta.te'a.ir service. The dty is also about 15 mUa from san Francisco International Airport. Rall pusenger service ts available through AMTRAK, which has a unninal in San Jose, and Southern Padflc Railroad, which proVide:s commuter train service between Sm Fran- cisco an:l San Jose. The Santa Clara County Transit District provides local bus service in and around the dty. Bus service to other points in callfomla i.s available through Greyhound Bus IJnes. MED:CAL FACILITIES Stanford University Medical Center (613 beds} and a Veteran's Administration Hospital are loaatlld In the city. -The Medical Center is a recognized center of medical research and is famous for Its pioneering in transplant swvery. In addition, dty residents are close to the El Camino Hospital (464 beds) in Mountain View, the Kaiser Foundation Hos· pitals ln Santa Clara md Redwood City, and hcspitais ln the San Jose area. RECREATION The City of Palo Alto owns about 3 ,400 acres of park and recreational lands. These properties range frcm one-half to two-acre mini parks, neighborhood parks of three tt> five acres, to citywide parks covering 1,400 to l,800 acres. Several c:ounty regional parks are also located near the clty. These city and county parks and recreational lands g=de residents to Palo Alto with a variety of recreational opportunities that in- clude · g. fishing, plc:.'liclr::ing, tenni.s, and swUnming. There are three 90lf courses in the dty, Including a municipal course. ' ... ~ ' 1345A • .:KIJ:nr CITY OF PALO ALTO COUNTY OF SANTA CLARA, CALIFORNIA NOTICE OF SALE FOR $1s150,000 CITY OF PALO AL TO flECTRIC AND GAS REVENUE BONDS, 1979 SERIES A 01/16/79 NOTICE IS HEREBY GIVEN that sealed proposals for the purchase of $1, 150,000 principal amount of City of Palo Alto Electric and Gas Revenue Bonds, 1979 Series A, will be received by said City at the place and up to the time specified. Dat.e: , 1979. Time: 11:00 o'clock A.M. (PST) Place: Office of Bartle Wells Associates, 100 Bush Street Penthouse, San Francisco, California 94104. Openings of Bids. The bids will be received at the above time and place, will be opened by the Financial Consultants and Bond Counsel and will be presented to the City Council at its meeting to be held at 7:30 P.M. on that day. Offering: . The bonds are designated 11City of Palo Alto Electric and Gas Revenue Bonds, 1979 Series A11 (the. "Bonds11 ) t and consist of 230 bondst numbered 1 to 230, inclusive, of the denomination of $5,000 ·each, dated January 1, 1979. Maturities: The Bonds will matur-e on July l, in the following years: 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Amount Principal $ 25,000 25,000 25,000 25,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 75,000 75,000 75,000 75,000 75,000 75,000 100,000 100,000 Interest: The Bonds shall bear interest at a rate to be fixed upon the sale thereof-but not to exceed eight percent (8%) per ann11n, payable semiannually on each January 1 and July l, comnencing January 1, 1980. fayments. The Bonds and the interest thereon and any premi1.111s on the redemption thereof prior to maturity are payable in lawful money of the United States of America and (except for interest on Fully Registered Bonds, which is payable by check or draft} are payable at the principal office of Bank of America National Trust and Savings Association, Paying Agent, in San Francisco, California. Form, Registration and Exchange. The Bonds are authorized t~ be issu!d as coupon Bonds, registrable as to principal only with privilege of discharge • • ,,. . • • from registration. or as fully registered Bonds without coupons, or 1n both such forms. Coupon Bonds may be exchanged for fully registered Bonds, and fully registered Bonds may be exchanged for coupon Bonds, al 1 as provided and subject to the conditions prescribed in the Resolution hereinafter referred to. Denominations: Each coupon Bond issued pursuant to the Resolution shall be of the denomination of $5,000. Each Fully R~gistered Bond issued pursuant to the Resolu4:.ion shall be of a denomination which is $5,000 or an integral multiple thereof. Redemption: A 11 or any part of the Bonds may be redeemed on any interest payment date from the net proceeds of insurance or eminent domain by payment of the principal amount and accrued interest to the date of redemption without premium as set forth in the Resolution. The Bonds due on or before July 1, 1989, are not otherwise subject to call and rede~tion prior to maturity. Bonds ma_tuting on or after July l. 1990, may be cal led before maturity and redeemed, at the option of the City, -in whole or in part, from any source of funds, on July l, 1989, or on any interast pa.)'ment date thereafter prior to maturity. If less than all of the Bonds outstandfrtg are to be redeemed at any one time, the Bonds are to be redeemed in inverse order of maturity and by lot within a maturity. Bonds called for redemption are to be redeemed at a redemption price for each redeemed Bond equal to the principal amount thereof, plus accrued interest to the redemption date and a rede1113tiern premium (percentage of premil.111 amount) of 1/4 of 1% for each year or fr·action of a year between the redemption date and the date of maturity, but not to exceed 2-1/2%. Notice of cal 1 and redemption shall be given as pi~ovided in the Resolution hereinafter referred to~ Purpose of Issue. The Bonds are to be issued under the terms of the Resolution for the purposes of financing the 1979 Series A Project defined as the acquisition and fntegration into the existing City gas and electric energy systems of the existing gas and electric distribution facilities within and for areas annexed to the City, the construction of utility office remodelling, and the construction of all work and the acquisition of all property and rights auxiliary to the above and necessary to carry out such acquisition. integration and construction. The Bonds are to be issued pursuant to Resolution No. (the nseneral Resolution"} and Resolution No. · (the 11Series Resolution11 ) each adopted by the Counci 1 on , 1979, and herein collectively referred to as the 11Resolutions11 • Reference is made to the Resolutions for particulars. Security. The Bonds are to be secured by a pledge of and lien upon the Net Revenues of the Enterprise, as said Net Revenues are defined in the General Resolution. The Bonds are not a debt, liability or obligation of the City of Palo Alto, of the State, or any political subdivision thereof~ TERMS OF SALE Interest Rate: The rate or rates bid may not exceed eight percent (8%) per annum, payable January l, 198v and thereafter on July l and January 1 of each year. Bidders may specify any nuniler cf separate interest rates and the same rate or rates may be repeated as often as desired, provjded that (1) each interest rate specified in any bid must be a multiple of l/20th of one percent; (2} a zero rate of interest cannot be specified; (3) no Bond shall bear more than one r~te of interest, no interest payment shall be evider.ced by more than one coupon, and supplemental coupons will not be permitted; (4) each Bond shall bear interest from its date to its sta~~d ma,uri~y at the interest rate specified in the bid; (5) all Bonds of the same maturity rrust bear the- same rate of interest; and (6} for the period beginning July 1, 1989 and terminating July l, 1999, the interest rate for ~he Bonds maturing 1n any year 2 . . I • • "' · . .. • • in such period shall not be less than the interest rate specified for afly Bonds maturing in the preceeding year in such period. Aw~rd: The Bonds shall be sold for cash only. All Bids must be for not less than 98-1/2X of the par value of the Bonds hereby offered for sale and each bid shall state that the bidder offers accrued interest to the date of delivery, the purchase price, and the interest rat~. not to exceed that specified herein, at which the bidder offers to buy the Bonds. Each bidder shall state in his bid the total net interest cost in dollars and the average net interest rate determined thereby, which shall be considered informative only and not a part of the bid. Highest Bidder: The bonds will be awarded to the highest responsible bidder considering the interest rate specified and the premium offered or discount bid, if any. The highest bid will be determined on the basis of the lowest net interest cost to the City by deducting the amount of the premium bid (if any) or by adding the amount of the discount bid (if any) from the total amount of interest which the City would be required to pay from the date of the bonds to the matur;ty date thereof at the coupon rate specified in the bid. The purchaser must pay accrued interest from the date of the bonds to the date of delivery computed on a 360-day year basis. The cost of printing the Sonds will be borne by the City. Right of Rejection: The City reserves the right, in its discretion, to reject any and all bids and, to the extent not prohibited by law, to waive any irregularity or informality in any bid. Prompt Award: The City will take action awarding the Bonds or rejecting all bids not later than 25 hours after the time herein prescribed for the receipt of bids, provided that the award may be made after the expiration of the specified time if the bidder shall not have given to the City notice in writing of the withdrawal of such bid. CUSIP: CUSIP identification numbers will be imprinted on the Bonds, but such nunt>ers shal 1 not constitute a part of the contract evidenced by the Bonds and no liability shall hereafter attach to the City or any of the officers or agents thereof because of or on account of said numbers. Any error or omission with respect to said numbers shall not cor:stitute cause for refusal by the successful bidder to accept delivery of and pay for the Bonds. Delivery and Payment: Delivery of the Bonds will be made to the successful bidder at the principal office of the Paying Agent in San Francisco, California, or at such other pl ace as may be agreed upon by the successful bidder and the City, as soon as the Bonds can be prepared, which the City estimated will be within 30 days from the date of sale. Payment for the Bonds must be made in funds inmediatel,y available to the City in San Francisco, California. Any expense of providing imnediate San Francisco funds, whether by transfer of Federal Reserve Bank funds or otherwise, shall be borne by the purchaser. The successful bidder shall have the right, at his option, to cancel the contract of purchase if the City shall fail to execute the Bonds and tender them for delivery within sixty (60) days from the date herein fixed for the receipt of ~ids and in such event the successful bidder shall be entitled to the return of the proceeds of the check accompanying his bid. . Form of Bid: Each bid, together w1th the bid check, must be in a sealed . envelope, addressed to the City, with the envelope and bid clearly marked "Bid for Bor.ds of the City of Palo Al to Electric and Gas Revenue Bonds11 • Each bid rrust be 1.mconditional and in accordance with the terms and conditions set forth herein,· or permitted· nerein, and must be submitted on, or in substan~ ial accordance with, bid f onns provided by the City. 3 • • • . ...-• • 81d Check: A certified or cashier's check on a responsible bank or trust co111>any in the amount of ten thousand dollars ($10,000), payable to the order of the City must accompany each bid as a guaranty that the bidder, ;f successful, will accept and pay for the Bonds in accordance with the terms of his bid. The check acto1r1>anying any accepted bid shall be cashed and the proceeds thereof applied to the purchase price. If such bid is accepted but not performed, unless such failure of performance shal 1 be caused by any act or omission of the City, the proceeds of the check accol'IJt)anyi ng any accepted bid shall be retained by the City. The check accompanying each unaccepted bid will be returned promptly. Arbitrage: On the basis of the facts, estimates and circ•1mstances in existence on the date of issue of the Bonds, it is not expected that the proceeds of the Bonds will be used in a manner that will cause the Bonds to be arbitrage bonds and the City will furnish to the successful bidder at the time of delivery of the Bonds a non-arbitrage certificate certifying to the foregoing. Tax Exempt Status: In the event that prior to the delivery of the Bonds (a) the income received by private holders from securities of the same type ilJ1d character shall be declared to be taxable (either at the time of such declaration or at any future date), under any federal income tax laws, either by the terms of such laws or by ruling of a federal income tax authority or offki al which is fol lowed by the Internal Revenue Service, or by decision of any federal court, or (b) any federal income tax law is adopted which will have a substantial adverse tax effect upon holders of the Bonds as such, the successful bidder m!y, at his option, prior to the tender of said Bonds by the City be relieved of his obligation under the contract to purchase the bonds, and in such case the deposit accompanying his bid will be returned. Legal Opinion: The legal opinion of Jones Hall Hill & White of San Francisco, California, approving the validity of the Bonds, will be furnished to the successful bidder without charge. A copy of the legal opinion certified by the official in whose office the or·;gina1 is filed, will be printed on each Bond without charge to the purchaser. No litigation Certificate: At the time of payment for and delivery of the Bonds, the City will furnish the succ~ssful bidder a certificate that there is no litigation pending or threatened affecting the validity of the Bonds. Official Statement: The City will furnish to the successful bidder, at no charge, loO copies of the Official Statement for this issue for use in connection with any resale of the Bonds. At the time of delivery of the Bonds to the successful bidder, the City will furnish a certificate to the effect that, at the time of sale of the Bonds and at all times subsequent thereto, up to and including the time of such delivery, the Official Statement did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circ1.1nstances under which they were made, not misleading. Infonnation Available: Request for copies of the Resolution and the Official Statement pertaining to he Bonds, or for other information concerning the City, should be addressed to Bartle Wells Associates, Financial Consultants to the City, 100 Bush Street Penthouse, San Francisco, California. Telephone (415} 981-5751. GIVEN by order of the City Council adopted on , 1979. -------- ANN TANNER City Clerk of the City of Palo Alto 4