$5,600,000 Town of Danville, California

(Contra Costa Connty, California) Certificates of Participation

(2005 Capital Improvement Project)

NOTICE AND DISCLAIMER

This web site provides access to the electronic version of the Official Statement, dated March 23, 2005, relating to the Town of Danville (Contra Costa County, California) Certificates of Participation (2005 Capital Improvement Project) (the "Certificates").

The electronic version of this document was created in Adobe Portable Document Format (PDF) using Adobe Acrobat 5.0, and you will need Adobe Reader software to accurately read and print it. If you do not have the Adobe Reader, or if you are using a version earlier than that used in Adobe Acrobat 5.0, you may obtain an updated version of the Adobe Reader free of charge from the Adobe web site at www.adobe.com. Using software other than the Adobe Reader included in Adobe Acrobat 5.0 may cause the document that you view or print to differ from the document as it was posted on this web site or as it appears in the printed version, and you assume the risk of any such discrepancies as well as any discrepancies related to communication transmission or other printing problems. In the event of a conflict between the printed and electronic version of this document, the printed version shall control.

The posting of the Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the Certificates in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Any purchase of the Certificates may only be made through registered broker-dealers.

The information and expressions of opinion in the Official Statement are subject to change without notice, and the provision of electronic access to the Official Statement shall not create any implication that there has been no change since the date thereof. This Official Statement will not be updated after the dated date thereof and information in the Official Statement may cease to be accurate after such date.

By electronically accessing the Official Statement, you acknowledge that you understand and agree to the provisions of this page and also agree not to print the Official Statement except in its entirety.

NEW ISSUE - BOOK-EN1RY ONLY BANK QUALIFIED

RATING: Moody's: Aaa (See "RATING" herein)

In the opinion of Quint & Thimmig LLP, San Francisco, California, Special Counsel, subject, however, to certain qualifications described herein, under existing law, the portion of lease payments designated as and comprising interest and received by the owners of the Certificates is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings, and the Lease Agreement is a "qualified tax-exempt obligation" within the meaning of section 265(b}(3) of the Internal Revenue Code of 1986. In the further opinion of Special Counsel, such interest is exempt from California personal income taxes. See "TAX MATTERS" herein.

$5,600,000 Town of Danville, California

(Contra Costa County, California) Certificates of Participation

(2005 Capital Improvement Project) Dated: Date of Delivery Due: March 1, as shown on the inside cover

The Certificates will be delivered as fully registered certificates in denominations of$5,000 or any integral multiple thereof and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DIC"). DIC will act as securities depository for the Certificates and individual purchases of the Certificates will be made in book-entry form only, all as described herein. Interest with respect to the Certificates is payable semiannually on each March 1 and September 1, commencing September 1, 2005. Payments of principal, premiwn, if any, and interest with respect to the Certificates will be paid by The Bank of New York Trust Company, N.A., as trustee (the "Trustee"), to DIC which is obligated in tum to remit such principal, premium, if any, and interest to its DTC Participants for subsequent disbursement to the Beneficial O"Wllers of the Certificates.

The Certificates are subject to extraordinary, mandatory and optional redemption prior to maturity as described herein.

The Certificates are being executed and delivered to provide funds to (i) finance the acquisition and improvement of certain property for use as a public parking facility and other capital improvements within the geographical boundaries of the Town (the "Project"), (ii) fund a reserve fund for the Certificates and (iii) pay delivery costs incurred in connection with the execution, delivery and sale of the Certificates. See "PLAN OF FINANCE" and "THE PROJECT" herein.

The Certificates are being delivered pursuant to a Trust Agreement, dated as of April 1, 2005 (the "Trust Agreement"), by and among the Town, the Town of Danville Financing Authority (the "Authority") and the Trustee. The Certificates represent lease payments (the "Lease Payments") to be paid by the Town under a Lease Agreement, dated as of April 1, 2005 (the "Lease Agreement"), by and between the Authority and the Town for the lease of certain real property and improvements (the "Property"). The Authority will assign its rights to receive Lease Payments and substantially all of its other rights under the Lease Agreement to the Trustee pursuant to the Assignment Agreement, dated as of April 1, 2005 (the "Assignment Agreement"), by and between the Authority and the Trustee.

The Lease Payments to be made by the Town to the Authority pursuant to the Lease Agreement will be in amounts calculated to be sufficient to pay principal and interest with respect to the Certificates when due. The Lease Payments are payable by the Town from its General Fund for the right to the use and possession by the Town of the Property. The Lease Payments are subject to abatement during any period in which, by reason of title defect, damage or destruction, there is substantial interference with the use and occupancy by the Town of the Property or any portion thereof. See "SECURITY FOR THE CERTIFICATES -­Abatement" and "RISK FACTORS -- Abatement" herein.

Neither the full faith and credit of the Town, the County of Contra Costa, the State of California nor any agency or department thereof is pledged to the payment of the Lease Payments. The obligation to make Lease Payments does not constitute a debt, liability or obligation of the Town for which the Town is obligated to levy or pledge any form of taxation or for which the Town has levied or pledged any form of taxation.

For a discussion of certain risk factors which should be evaluated prior to purchase of the Certificates, see "RISK FACTORS" herein.

Payment of the principal of and interest with respect to the Certificates when due will be insured by a municipal bond insurance policy to be issued by XL Capital Assurance Inc. simultaneously with the delivery of the Certificates.

>I4!:CAP1TAL ASSURANCE This cover page contains certain information for general reference only. It is not intended to be a summary of the security

or terms of this issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used on this cover page not otherwise defined shall have the meanings set forth herein.

The Certificates are offered when, as and if executed and delivered, subject to approval by Quint & Thimmig LLP, San Francisco, California, Special Counsel, and subject to certain other conditions. Certain legal matters will be passed upon by Hawkins Delafield & Wood LLP, San Francisco, California, as Disclosure Counsel. Certain legal matters will be passed upon for the Town by the City Attorney. It is expected that the Certificates will be available for delivery through the DIC book-entry system on or about April 13, 2005.

Dated: March 23, 2005

MATURITY SCHEDULE $3,155,000 Serial Certificates

(Base CUSIP Numbert:236480)

Maturity Principal Interest Price/ CU SIP Maturity Principal Interest Price/ CU SIP (March 1) Amount Rate Yield Suffix! (March 1) Amount Rate Yield Suffix!

2006 $130,000 4.000% 2.25% CQO 2017 $150,000 4.100% 4.20% DB2 2007 105,000 4.000 2.60 CRS 2018 155,000 4.200 4.30 DCO 2008 110,000 4.000 2.75 CS6 2019 160,000 4.250 4.35 DDS 2009 110,000 4.000 2.90 CT4 2020 170,000 4.250 4.40 DE6 2010 115,000 4.000 3.10 CUl 2021 175,000 4.375 4.45 DF3 2011 120,000 4.000 3.40 CV9 2022 180,000 4.375 4.50 DGl 2012 125,000 4.000 3.57 CW7 2023 190,000 4.500 4.55 DH9 2013 125,000 4.000 3.75 cxs 2024 200,000 4.500 4.60 DJS 2014 130,000 4.000 3.90 CY3 2025 205,000 4.500 4.65 DK2 2015 140,000 4.000 100.00 czo 2026 215,000 4.625 4.70 DLO 2016 145,000 4.000 4.10 DA4

$965,000 4.625% Term Bonds due March 1, 2030 Yield 4.75% CUSIP Suffixt: DQ9 $1,480,000 4.625% Term Bonds due March 1, 2035 Yield 4.78% CUSIP Suffixt: DYS

t Copyright 2005, American Bankers Association. CUSIP date is set forth herein for convenience of reference only. The Town does not assume responsibility for the accuracy of such numbers.

No dealer, broker, salesperson or other person has been authorized by the Town to give any information or to make any representation other than those contained herein and, if given or made, such other information or representation may not be relied upon as having been authorized by the Town. This Official Statement does not constitute an offer to sell or a solicitation or an offer to buy nor shall there be any sale of the Certificates by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

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

The information set forth herein has been obtained from sources which are believed to be reliable but it is not guaranteed as to accuracy or completeness. The information and expression of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create an implication that there has been no change in the affairs of the Authority or the Town since the date hereof.

Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27 A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "budget" or other similar words. The achievement of certain results or other expectations contained in such forward­looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. No assurance is given that actual results will meet the Town's forecasts in any way, regardless of the level of optimism communicated in the information. The Town is not obligated to issue any updates or revisions to the forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur. See "CONTINUING DISCLOSURE" herein and Appendix F- "FORM OF CONTINUING DISCLOSURE CERTIFICATE" attached hereto.

The Certificates have not been registered under the Securities Act of 1933, as amended, in reliance upon the exemption contained in Section 3(a)(2) of such Act. The Trust Agreement has not been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon an exemption contained in such Act.

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TOWN OF DANVILLE TOWN OF DANVILLE FINANCING AUTHORITY

Town Council/Authority Board of Directors Mike Doyle, Mayor/President

Karen Stepper, Vice Mayor/Vice President Candace Andersen, Councilmember/Board Member Newell Arnerich, Councilmember/Board Member Mike Shimansky, Councilmember/Board Member

Town Staff Joseph Calabrigo, Town Manager

Elizabeth Hudson, Finance Director/Treasurer Robert Ewing, City Attorney

SPECIAL SERVICES

Special Counsel

Quint & Thimmig LLP San Francisco, California

Financial Advisor

William Euphrat Municipal Finance, Inc. San Francisco, California

Disclosure Counsel

Hawkins Delafield & Wood LLP San Francisco, California

Trustee

The Bank of New York Trust Company, N.A. San Francisco, California

(THIS PAGE INTENTIONALLY LEFT BLANK)

TABLE OF CONTENTS

INTRODUCTION ........................................................................................................................................................ 1

GENERAL .................................................................................................................................................................. 1

THE TOWN ................................................................................................................................................................ 1

THE CERTIFICAIBS .................................................................................................................................................... 1

BOND INSURANCE ..................................................................................................................................................... 2

CONTINUING DISCLOSURE ....................................................................................................................................... .3 SUMMARIES NOT DEFINITIVE ................................................................................................................................... 3

ADDITIONAL INFORMATION ..................................................................................................................................... .3

PLAN OF FINANCE ................................................................................................................................................... .3

THE PROJECT ............................................................................................................................................................ 4

THE PROPERTY ........................................................................................................................................................ 4

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

SCHEDULE OF CERTIFICATE PAYMENTS ........................................................................................................... 5

THE CERTIFICATES .................................................................................................................................................. 6

GENERAL PROVISIONS .............................................................................................................................................. 6

REDEMPTION OF THE CERTIFICATES .......................................................................................................................... 6

DIC AND THE BOOK-ENTRY SYSTEM ....................................................................................................................... 9

SECURITY FOR THE CERTIFICATES ................................................................................................................... 10

GENERAL ................................................................................................................................................................ 10

COVENANT TO BUDGET AND APPROPRIAIB ............................................................................................................ 10

INSURANCE ............................................................................................................................................................. IO EMINENT DOMAIN .................................................................................................................................................. 11

ABAIBMENT ........................................................................................................................................................... 12

RESER VE FUND ....................................................................................................................................................... 12

SUBSTITUTION OF PROPERTY AND RELEASE OF SITE .............................................................................................. 13

USE OF THE PROPERTY ............................................................................................................................................ 14

BOND INSURANCE FOR THE BONDS .................................................................................................................. 15

GENERAL ................................................................................................................................................................ 15

REINSURANCE ......................................................................................................................................................... 16

FINANCIAL STRENGTH AND FINANCIAL ENHANCEMENT RATINGS OF XLCA ......................................................... 17

CAPITALIZATION OF THE INSURER .......................................................................................................................... 17

INCORPORATION BY REFERENCE OF FINANCIALS .................................................................................................... 17

REGULATION OF THE INSURER ................................................................................................................................ 18

THE TOWN ................................................................................................................................................................ 18

GENERAL ................................................................................................................................................................ 18

BUDGETARY PROCESS AND ADMINISTRATION ........................................................................................................ 18

SUMMARY FINANCIAL INFORMATION ..................................................................................................................... 19

PROPERTY TAXES ................................................................................................................................................... 21

OTHER LOCAL REVENUES ....................................................................................................................................... 22

INVESTMENT POLICIES AND PROCEDURES .............................................................................................................. 24 OUTSTANDING GENERAL FUND OBLIGATIONS ........................................................................................................ 24 OVERLAPPING DEBT STATEMENT ........................................................................................................................... 25

PENSION PLANS ....................................................................................................................................................... 26

INSURANCE ............................................................................................................................................................. 26

RISK FACTORS ........................................................................................................................................................ 26

LEASE PAYMENTS NOT TOWN DEBT ...................................................................................................................... 26

No TAX PLEDGE ..................................................................................................................................................... 26

TABLE OF CONTENTS

No LIMIT ON ADDITIONAL DEBT ............................................................................................................................ 26 ABATEMENT ........................................................................................................................................................... 27 LIMITATION ON ENFORCEMENT OF REMEDIES ........................................................................................................ 27 BANKRUPTCY ......................................................................................................................................................... 27 CHANGES IN LAW ................................................................................................................................................... 27 EARTHQUAKES AND NATURAL DISASTERS ............................................................................................................. 27 STATE BUDGET ....................................................................................................................................................... 28 HAZARDOUS SUBSTANCES ...................................................................................................................................... 31 INVESTMENT OF FUNDS ........................................................................................................................................... 32

CONSTITUTIONAL AND STATUTORY LIMITS ON TAXES AND APPROPRIATIONS ................................ .32

ARTICLE XIII AOF THE STATE CONSTITUTION ....................................................................................................... 32 ARTICLE XIII B OF THE STATE CONSTITUTION ....................................................................................................... 33 ARTICLE XIII C AND ARTICLE XIII D OF THE STATE CONSTITUTION ..................................................................... 34 PROPOSITION 62 ..................................................................................................................................................... 35 PROPOSITION IA .................................................................................................................................................... 36 FUTURE ]NI TIA TIVES ............................................................................................................................................... 3 7

THE AUTHORITY ................................................................................................................................................... .37

FINANCIAL STATEMENTS ................................................................................................................................... .37

CONTINUING DISCLOSURE ................................................................................................................................. .38

TAX MATTERS ......................................................................................................................................................... 38

APPROVAL OF LEGALITY ................................................................................................................................... .39

LITIGATION ............................................................................................................................................................. 39

RATING ..................................................................................................................................................................... 39

SALE OF THE CERTIFICATES .............................................................................................................................. 40

FINANCIAL ADVISOR ........................................................................................................................................... 40

BANK QUALIFIED .................................................................................................................................................. 40

EXECUTION AND DELIVERY .............................................................................................................................. 41

TOWN OF DANVILLE ........................................................................................................................ APPENDIX A AUDITED FINANCIAL STATEMENTS OF THE TOWN FOR THE YEAR

ENDED JUNE 30, 2004 .................................................................................................................. APPENDIX B

SUMMARY OF PRINCIPAL LEGAL DOCUMENTS ......................................................................... APPENDIX C PROPOSED FORM OF OPINION OF SPECIAL COUNSEL ............................................................. APPENDIX D BOOK-ENTRY SYSTEM ...................................................................................................................... APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE ................................................................. APPENDIX F SPECIMEN BOND INSURANCE POLICY ........................................................................................ APPENDIX G

11

General

OFFICIAL STATEMENT

$5,600,000 Town of Danville, California

(Contra Costa County, California) Certificates of Participation

(2005 Capital Improvement Project)

INTRODUCTION

The purpose of this Official Statement, including the cover page and appendices hereto, is to provide certain information concerning the Town of Danville (the "Town") and the sale and delivery of the Town of Danville (Contra Costa County, California) Certificates of Participation (2005 Capital Improvement Project) (the "Certificates") in the aggregate principal amount of $5,600,000. The Certificates are being executed and delivered to provide funds to (i) finance the acquisition and improvement of certain property for use as a public parking facility and other capital improvements within the geographical boundaries of the Town (the "Project"), (ii) fund a reserve fund for the Certificates and (iii) pay delivery costs incurred in connection with the execution, delivery and sale of the Certificates. See "PLAN OF FINANCE," "THE PROJECT," "ESTIMATED SOURCES AND USES OF FUNDS" and "SECURITY FOR THE CERTIFICATES - Reserve Fund" herein.

The Town

The Town of Danville is a municipal corporation and general law city under the laws of the State of California operating under the council-manager form of government. The Town was incorporated in 1982 under the laws of the State of California. The Town, comprised of approximately 18 square miles, is located in the San Ramon Valley in central Contra Costa County (the "County") and lies approximately 30 minutes east of San Francisco by automobile. As of January 1, 2004, the Town had a current population of approximately 43,250.

For further information concerning the Town see "THE TOWN" herein and Appendix A attached hereto.

The audited financial statements of the Town for the year ended June 30, 2004 are attached hereto as Appendix B. These financial statements, including the auditor's report and the notes thereto, should be read in their entirety.

The Certificates

The Certificates are being executed and delivered to provide funds to (i) finance the acquisition and improvement of certain property for use as a public parking facility and other capital improvements within the geographical boundaries of the Town (the "Project"), (ii) fund a reserve fund for the Certificates and (iii) pay delivery costs incurred in connection with the execution, delivery and sale of the Certificates. See "PLAN OF FINANCE" and "THE PROJECT" herein.

The Certificates will evidence interests in the right to receive Lease Payments from the Town under a Lease Agreement, dated as of April 1, 2005 (the "Lease Agreement"), by and between the Town of Danville Financing Authority (the "Authority") and the Town. The Town will enter into the Lease Agreement pursuant to and in accordance with applicable laws of the State and a resolution of the Town adopted March 1, 2005. The Certificates are being executed and delivered pursuant to a Trust Agreement, dated as of April 1, 2005 (the "Trust Agreement"), by and among the Town, the Authority and The Bank of New York Trust Company, N.A., as trustee (the "Trustee"). The Town will lease certain real property and improvements (the "Property") to the Authority pursuant to a Site and Facility Lease, dated as of April 1, 2005 (the "Site Lease"), by and between the Town and the Authority, and lease the Property back pursuant to the Lease Agreement. The Lease Payments are payable by the Town from its General Fund for the right to use and possession by the Town of the Property. See "THE PROPERTY" herein. The Lease Payments are subject to abatement during any period in which, by reason of title defect, damage or destruction, there is substantial interference with the use and occupancy by the Town of the Property or any portion thereof. See "SECURITY FOR THE CERTIFICATES -­Abatement" and "RISK FACTORS -- Abatement" herein. The Authority will assign it rights to receive Lease Payments and substantially all of its other rights under the Lease Agreement to the Trustee pursuant to the Assignment Agreement, dated as of April 1, 2005 (the "Assignment Agreement"), by and between the Authority and the Trustee.

A portion of the proceeds of the Certificates in the amount of $347,491.02, equal to the initial Reserve Requirement, will be deposited in the Reserve Fund established pursuant to the Trust Agreement. If, on any Interest Payment Date, the moneys available in the Lease Payment Fund do not equal the amount of the principal and interest with respect to the Certificates then coming due and payable, the Trustee is required to apply the moneys available in the Reserve Fund to make delinquent Lease Payments on behalf of the Town by transferring the amount necessary for this purpose to the Lease Payment Fund. Upon receipt of any delinquent Lease Payment with respect to which moneys have been advanced from the Reserve Fund, such Lease Payment will be deposited in the Reserve Fund to the extent of such advance. See "SECURITY FOR THE CERTIFICATES - Reserve Fund" herein.

The full faith and credit of the Town is not pledged for the payment of the Lease Payments. The obligation to make Lease Payments does not constitute a debt, liability or obligation of the Town for which the Town is obligated to levy or pledge any form of taxation or for which any such entity has levied or pledged any form of taxation.

Bond Insurance

Payment of the principal of and interest with respect to the Certificates when due will be guaranteed by a municipal bond insurance policy (the Policy") to be issued simultaneously with the delivery of the Certificates by XL Capital Assurance Inc. (the "Insurer"). See "BOND INSURANCE FOR THE BONDS" herein and Appendix G attached hereto.

2

Continuing Disclosure

The Town has agreed to provide certain annual financial information and operating data to each nationally recognized municipal securities information repository, and notice of certain material events to the Municipal Securities Rulemaking Board. These covenants have been made in order to assist the purchasers in complying with SEC Rule 15c2-12(b)(5). See "CONTINUING DISCLOSURE" herein for a description of the specific nature of the annual report and notices of material events and a summary description of the terms of the disclosure agreement pursuant to which such reports are to be made.

The Town has not failed to comply in all material respects with its previous undertakings to provide annual reports and notices under the Rule within the past five years. See "CONTINUING DISCLOSURE" herein and "APPENDIX F - FORM OF THE CONTINUING DISCLOSURE CERTIFICATE" attached hereto.

Sunnnaries Not Defmitive

Brief descriptions of the Certificates, the Town, the Project and the Property are included in this Official Statement, together with summaries of the Lease Agreement and the Trust Agreement. Such descriptions and summaries do not purport to be comprehensive or definitive. All references herein to the Certificates, the Lease Agreement and the Trust Agreement are qualified in their entirety by reference to the actual documents, copies of all of which are available for inspection at the corporate trust office of the Trustee at 550 Kearney Street, Suite 600, San Francisco, California 94108.

Additional Information

The Town regularly prepares a variety of publicly available reports, including audits, budgets and related documents. Any Certificate owner may obtain a copy of any such report, as available, from the Town. The Town may charge a fee for copying, handling and postage in connection with such requests. Additional information regarding this Official Statement may be obtained by contacting the Town at the following address:

Town Manager Town of Danville

510 La Gonda Way Danville, CA 94526-1740

PLAN OF FINANCE

The Certificates are being executed and delivered to provide funds to (i) finance the acquisition and improvement of certain property for use as a public parking facility and other capital improvements within the geographical boundaries of the Town (the "Project"), (ii) fund a reserve fund for the Certificates and (iii) pay delivery costs incurred in connection with the execution, delivery and sale of the Certificates.

3

THE PROJECT

The Certificates are being executed and delivered to provide funds to finance the acquisition and improvement of certain property for use as a public parking facility and other capital improvements within the geographical boundaries of the Town (the "Project"). The real property to be leased under the Lease Agreement is different than the Project. See "THE PROPERTY" below.

The Project consists of, but is not limited to, the demolition of an existing building located at 177 Front Street and the construction of a public parking lot that will accommodate approximately 84 vehicles. The total cost of the Project is estimated to be approximately $5.0 million. The Project is estimated to be completed by summer 2006. There can be no assurance that construction of the Project will be completed for the budgeted amount.

The Town's obligation to make Lease Payments is not contingent on the completion of the Project.

THE PROPERTY

Under the Lease Agreement, the Town is obligated to pay Lease Payments to the Authority for the occupancy and use of the Property. The Property consists of the Town office building and the land on which the Town office building is located.

The Town office building, located at 510 La Gonda Way, houses all of the Town's administrative offices and the police department. The 20,000 square foot building was initially constructed in 1988, with an extensive remodel and expansion of the police department in 2002. Conference rooms in the building are frequently used for both official Town meetings and for neighborhood and community meetings with various Town departments.

ESTIMATED SOURCES AND USES OF FUNDS

The estimated sources and uses of funds are as follows:

Sources of Funds Par Amount Net Original Issue Discount

Total Sources

Uses of Funds Deposit to Project Fund Deposit to Reserve Fund Delivery Costs(!)

Total Uses

$5,600,000.00 ( 48,859.55)

$5,551,140.45

$5,005,000.00 347,491.02 198 649.43

$5,551,140.45

(l) Includes purchaser's discount, legal fees, printing costs, rating agency fees, title insurance, bond insurance premium, financial advisor fee and other miscellaneous expenses.

4

SCHEDULE OF CERTIFICATE PAYMENTS

The following table shows the annual debt service due with respect to the Certificates.

Year Ending March 1 Principal Interest Total

2006 $130,000.00 $217,491.02 $347,491.02 2007 105,000.00 241,016.25 346,016.25 2008 110,000.00 236,816.25 346,816.25 2009 110,000.00 232,416.25 342,416.25 2010 115,000.00 228,016.25 343,016.25 2011 120,000.00 223,416.25 343,416.25 2012 125,000.00 218,616.25 343,616.25 2013 125,000.00 213,616.25 338,616.25 2014 130,000.00 208,616.25 338,616.25 2015 140,000.00 203,416.25 343,416.25 2016 145,000.00 197,816.25 342,816.25 2017 150,000.00 192,016.25 342,016.25 2018 155,000.00 185,866.25 340,866.25 2019 160,000.00 179,356.25 339,356.25 2020 170,000.00 172,556.25 342,556.25 2021 175,000.00 165,331.25 340,331.25 2022 180,000.00 157,675.00 337,675.00 2023 190,000.00 149,800.00 339,800.00 2024 200,000.00 141,250.00 341,250.00 2025 205,000.00 132,250.00 337,250.00 2026 215,000.00 123,025.00 338,025.00 2027 225,000.00 113,081.25 338,081.25 2028 235,000.00 102,675.00 337,675.00 2029 245,000.00 91,806.25 336,806.25 2030 260,000.00 80,475.00 340,475.00 2031 270,000.00 68,450.00 338,450.00 2032 280,000.00 55,962.50 335,962.50 2033 295,000.00 43,012.50 338,012.50 2034 310,000.00 29,368.75 339,368.75 2035 325,000.00 15,031.25 340 031.25 Total $5,600,000.00 $4,620,242.27 $10,220,242.27

5

THE CERTIFICATES

General Provisions

The Certificates will be dated the date of delivery and will be payable as to interest from such date, semiannually on each March 1 and September 1, commencing September 1, 2005 ( each an "Interest Payment Date"). Interest with respect to the Certificates will be calculated on the basis of a 360-day year comprised of twelve 30-day months. The Certificates will be delivered in denominations of $5,000 or any integral multiple thereof. The Certificates will initially be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), which will act as securities depository for the Certificates. Payments of principal, premium, if any, and interest with respect to the Certificates will be paid by the Trustee to DTC which is obligated in tum to remit such principal, premium, if any, and interest with respect to the Certificates to its DTC Participants for subsequent disbursement to the Beneficial Owners of the Certificates. See "DTC and the Book-Entry System" below and "APPENDIX E - BOOK-ENTRY SYSTEM" attached hereto.

Interest with respect to the Certificates is required to be payable from the Interest Payment Date next preceding the date of execution thereof, unless: (i) it is executed as of an Interest Payment Date, in which event interest with respect thereto is required to be payable from such Interest Payment Date; or (ii) it is executed after a Regular Record Date (i.e., close of business on the fifteenth day of the month preceding each Interest Payment Date) and before the following Interest Payment Date, in which event interest with respect thereto is required to be payable from such Interest Payment Date; or (iii) it is executed on or before August 15, 2005, in which event interest with respect thereto is required to be payable from the date of delivery of the Certificates; provided, however, that if, as of the date of execution of any Certificate, interest is in default with respect to any Outstanding Certificates, interest represented by such Certificate is required to be payable from the Interest Payment Date to which interest has previously been paid or made available for payment with respect to the Outstanding Certificates. Payment of defaulted interest is required to be paid by check mailed to the Owners as of a special record date to be fixed by the Trustee in its sole discretion, notice of which shall be given to the Owners not less than 10 days prior to such special record date.

Redemption of the Certificates

Optional Redemption. The Certificates maturing on or before March 1, 2014, are not subject to optional redemption prior to maturity. The Certificates maturing on and after March 1, 2015, are subject to optional redemption in whole or in part on any date on or after March 1, 2014, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption , without premium, from the proceeds of the optional prepayment of Lease Payments made by the Town pursuant to the Lease Agreement.

6

Redemption From Net Proceeds of Insurance, Title Insurance, Condemnation or Eminent Domain Award. The Certificates are subject to maudatory redemption in whole or in part on any date from the Net Proceeds of an insurance, title insurance, condemnation, or eminent domain award to the extent credited towards the redemption of the Lease Payments by the Town pursuant to the Lease Agreement, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premmm.

Mandatory Redemption. The Certificates maturing on March I, 2030, are subject to mandatory redemption in part on March I in each year on and after March I, 2027, from the principal components of scheduled Lease Payments required to be paid by the Town pursuant to the Lease Agreement with respect to each such redemption date, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, as follows:

Year

(March I)

2027 2028 2029 2030'

Maturity.

Principal Amount of

Certificates to be Redeemed

$225,000 235,000 245,000 260,000

In the event that the Trustee redeems Certificates maturing on March I, 2030, in part but not in whole pursuant to optional redemption or redemption from net proceeds of insurance, title insurance, condemnation or eminent domain award, the amount of the Certificates to be redeemed in each subsequent year pursuant to the schedule above is required to be reduced to correspond to the principal components of the Lease Payments prevailing following such redemption as determined pursuant to the Lease Agreement.

The Certificates maturing on March I, 2035, are subject to maudatory redemption in part on March I in each year on and after March I, 2031, from the principal components of scheduled Lease Payments required to be paid by the Town pursuant to the Lease Agreement with respect to each such redemption date, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, as follows:

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Year

(March 1)

2031 2032 2033 2034 2035'

'Maturity.

Principal Amount of

Certificates to be Redeemed

$270,000 280,000 295,000 310,000 325,000

In the event that the Trustee redeems Certificates maturing on March 1, 2035, in part but not in whole pursuant to optional redemption or redemption from net proceeds of insurance, title insurance, condenmation or eminent domain award, the amount of the Certificates to be redeemed in each subsequent year pursuant to the schedule above is required to be reduced to correspond to the principal components of the Lease Payments prevailing following such redemption as determined pursuant to the Lease Agreement.

Selection of Certificates for Redemption. Whenever provision is made in the Trust Agreement for the redemption of Certificates and less than all Outstanding Certificates are to be redeemed, the Trustee is required to select Certificates for redemption from the Outstanding Certificates not previously called for redemption in such order of maturity as is required to be designated by the Town ( and, in lieu of such designation, pro rat a among maturities) and by lot within a maturity. The Trustee is required to select Certificates for redemption within a maturity by lot in any manner which the Trustee, in its sole discretion, deems appropriate and fair. For the purposes of such selection, Certificates will be deemed to be composed of $5,000 portions and any such portion may be separately redeemed. The Trustee is required to promptly notify the Town and the Authority in writing of the Certificates so selected for redemption. Selection by the Trustee of Certificates for redemption will be final and conclusive.

Notice of Redemption. Unless waived in writing by any Owner of a Certificate to be redeemed, notice of any such redemption is required to be given by the Trustee on behalf and at the expense of the Town, by mailing a copy of a redemption notice by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Owner of the Certificate or Certificates to be redeemed at the address shown on the Certificate Registration Books maintained by the Trustee or at such other address as is furnished in writing by such Owner to the Trustee; provided, however, that neither the failure to receive such notice nor any defect in any notice will affect the sufficiency of the proceedings for the redemption of the Certificates.

Notwithstanding the foregoing, in the case of any optional redemption of the Certificates pursuant to the Trust Agreement, the notice of redemption shall state that the redemption is conditioned upon receipt by the Trustee of sufficient moneys to redeem the Certificates on the anticipated redemption date, and that the optional redemption shall not occur if, by no later than the scheduled redemption date, sufficient moneys to redeem the Certificates have not been deposited with the Trustee. In the event that the Trustee does not receive sufficient funds by the scheduled optional redemption date to so redeem the Certificates to be optionally redeemed, such

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event shall not constitute an Event of Default. The Trustee shall send written notice to the Owners, to the Securities Depositories and to one or more of the Information Services to the effect that the redemption did not occur as anticipated, and the Certificates for which notice of optional redemption was given shall remain Outstanding for all purposes of the Trust Agreement.

Partial Redemption of Certificates. Upon surrender of any Certificate redeemed in part only, the Trustee is required to execute and deliver to the Owner thereof a new Certificate or Certificates of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Certificate surrendered and of the same interest rate and the same maturity.

Purchase of Certificates. In lieu of redemption of Certificates as provided in the Trust Agreement, amounts held by the Trustee for such redemption may also be used on any Interest Payment Date, upon receipt by the Trustee at least 75 days prior to the next scheduled Interest Payment Date of the written request of a Town Representative, for the purchase of Certificates at public or private sale as and when and at such prices (including brokerage, accrued interest and other charges) as the Town may in its discretion direct, but not to exceed the redemption price which would be payable if such Certificates were redeemed; provided, however, that no Certificates will be purchased in lieu of redemption with a trade settlement date less than 60 days prior to the relevant redemption date. Such purchases may be affected through the investment department of the Trustee or of an affiliate of the Trustee. The aggregate principal amount of Certificates of the same maturity purchased in lieu of redemption pursuant to the Trust Agreement will not exceed the aggregate principal amount of Certificates of such maturity which would otherwise be subject to such redemption. Remaining moneys, if any, are required to be deposited in the Lease Payment Fund.

DTC and the Book-Entry System

DTC will act as securities depository for the Certificates. The Certificates are being delivered in fully-registered form and, when issued, will be registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered Certificate will be issued for each maturity of the Certificates, each in the aggregate principal amount of such maturity, and will be deposited with DTC. So long as Cede & Co. is the registered owner of the Certificates, as nominee of DTC, references herein to the owners of the Certificates shall mean Cede & Co. and shall not mean the actual purchasers of the Certificates (the "Beneficial Owners"). The information in this section and in Appendix E concerning DTC and DTC's book-entry system is based solely on information provided by DTC, and no representations can be made by the Town or the Trustee concerning the accuracy thereof. See "APPENDIX E - BOOK-ENTRY SYSTEM" attached hereto for a further description of DTC and its book-entry system.

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SECURITY FOR THE CERTIFICATES

General

As rental for the right to use and occupy the Property, the Town covenants under the Lease Agreement to pay Lease Payments. The obligation of the Town to pay Lease Payments when due is a General Fund obligation of the Town. Neither the full faith and credit of the Town, the County of Contra Costa, the State nor any agency or department thereof is pledged to the payment of the Lease Payments.

For information regarding the Town, including financial information, see Appendices A and B attached hereto. The Town's audited financial statements for the year ended June 30, 2004 attached hereto as Appendix B should be read in their entirety. See also "RISK FACTORS" and "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS" herein.

Covenant to Budget and Appropriate

The Lease Payments will be payable from any source of available funds of the Town, subject to the provisions of the Lease Agreement. Under the Lease Agreement, the Town covenants to take such action as may be necessary to include all Lease Payments due under the Lease Agreement in each of its budgets during the term of the Lease Agreement and to make the necessary annual appropriations for all such Lease Payments. The Lease Agreement provides that the covenants on the part of the Town contained in the Lease Agreement will be duties imposed by law.

Insurance

The Lease Agreement requires the Town to maintain or cause to be maintained the following policies of insurance:

Public Liability and Property Damage Insurance. Under the Lease Agreement, the Town is required to maintain or cause to be maintained, throughout the term of the Lease Agreement, insurance policies, including a standard public entity liability insurance policy or policies in protection of the Town and the Authority as named insureds and the Trustee as additional insured, including their respective members, officers, agents and employees. Said policy or policies are required to provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage including events occasioned by reason of the operation of the Property. Said policy or policies are required to provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in each accident or event, and in a minimum amount of $100,000 for damage to property resulting from each accident or event. Such public liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried by the Town and may be maintained in the form of insurance maintained through a joint exercise of powers authority created for such purpose or in the form of self-insurance by the Town. Deductibles, if any, shall be subject to the written consent of the

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Insurer. The proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the proceeds of such insurance shall have been paid. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried by the Town, and may be maintained through a joint exercise of powers authority created for such purpose or, with the prior written consent of the Insurer, in the form of self-insurance by the Town. The Net Proceeds of such liability insurance are required to be applied toward extinguishment or satisfaction of the liability with respect to which the insurance proceeds will have been paid.

Fire and Extended Coverage Insurance. Under the Lease Agreement, the Town is required to maintain, or cause to be procured and maintained, throughout the term of the Lease Agreement, insurance against loss or damage to any structures constituting any part of the Property by fire and lightning, with extended coverage and vandalism and malicious mischief insurance, with the Trustee and the Insurer named as an additional insured and loss payee, with responsible and reputable insurance companies satisfactory to the Insurer. Such insurance may be maintained as part of or in conjunction with any other fire and extended coverage insurance carried by the Town and, with the prior written consent of the Insurer, may be maintained in whole or in part through a joint exercise of powers authority created for such purpose. Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. Such insurance shall be in an amount equal to the greater of one hundred percent (100%) of the replacement cost of the Property and the principal amount of the Certificates. The Net Proceeds of such insurance shall be applied as provided in the Lease Agreement.

Rental Interruption Insurance. Under the Lease Agreement, the Town is required to maintain, or cause to be maintained, throughout the term of the Lease Agreement rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of any part of the Property during the term of the Lease Agreement as a result of any of the hazards covered in the insurance required by the Lease Agreement, if any, in an amount at least equal to two times maximum annual Lease Payments. The Net Proceeds of such insurance are required to be paid to the Trustee and deposited in the Lease Payment Fund and are required to be credited towards the payment of the Lease Payments in the order in which such Lease Payments come due and payable.

Title Insurance. Under the Lease Agreement, the Town is required to provide on the Closing Date, a CLTA title insurance policy covering and, in the amount of not less than the principal amount of the Certificates, insuring the Town's leasehold estate in the Property, subject only to Permitted Encumbrances (as defined under the Lease Agreement). The Net Proceeds of such insurance are required to be applied to the redemption of Certificates as provided in the Loan Agreement and the Trust Agreement.

Eminent Domain

Under the Lease Agreement, if all of the Property is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the term of the Lease Agreement will cease as of the day possession is taken. If less than all of

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the Property is taken permanently, or if all of the Property or any part thereof is taken temporarily under the power of eminent domain, (1) the Lease Agreement will continue in full force and effect and will not be terminated by virtue of such taking and the parties waive the benefit of any law to the contrary, and (2) there will be a partial abatement of Lease Payments as a result of the application of the Net Proceeds of any eminent domain award to the redemption of the Lease Payments under the Lease Agreement, in an amount to be agreed upon by the Town and the Authority and communicated to the Trustee such that the resulting Lease Payments represent fair consideration for the use and occupancy of the remaining usable portion of the Property. The Net Proceeds of such eminent domain award are required to be applied to the redemption of Certificates as provided in the Loan Agreement and the Trust Agreement.

Abatement

Under the Lease Agreement, Lease Payments will be abated during any period in which, by reason of title defect, damage or destruction, there is substantial interference with the use and occupancy by the Town of the Property or any portion thereof ( other than certain portions of the Property which have been modified by the Town as described in the Lease Agreement) to the extent to be agreed upon by the Town and the Authority and communicated by a certificate of a Town representative to the Trustee. Pursuant to the Lease Agreement, the parties agree that the amounts of the Lease Payments under such circumstances will not be less than the amounts of the unpaid Lease Payments as are then set forth in the Lease Agreement, unless such unpaid amounts are determined to be greater than the fair rental value of the portions of the Property not subject to a title defect, damaged or destroyed (giving due consideration to the factors identified related to fair rental value as discussed in the Lease Agreement), based upon an appropriate method of valuation, in which event the Lease Payments will be abated such that they represent said fair rental value. Such abatement will continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of replacement, repair or reconstruction as evidenced by a certificate of a Town representative to the Trustee. In the event of any such damage or destruction, the Lease Agreement will continue in full force and effect and the Town waives any right to terminate the Lease Agreement by virtue of any such damage and destruction. Notwithstanding the foregoing, there will be no abatement of Lease Payments under the Lease Agreement to the extent that (a) the proceeds of rental interruption insurance or (b) amounts in the Reserve Fund and/or the Insurance and Condemnation Fund and/or the Lease Payment Fund are available to pay Lease Payments which would otherwise be abated under the Lease Agreement.

Reserve Fund

Upon the delivery of the Certificates, $347,491.02 of the proceeds of the Certificates, equal to the initial Reserve Requirement, will be deposited with the Trustee in the Reserve Fund. "Reserve Requirement" is defined under the Trust Agreement to mean an amount equal to $347,491.02 (an amount equal to the maximum annual Lease Payments);provided, however, that if the Certificates are partially refunded, such amount is required to be reduced to an amount equal to the maximum annual Lease Payments relating to the Certificates not so refunded, as specified in a certificate of a representative of the Town delivered to the Trustee. Moneys available to the Reserve Fund shall be held in trust as a reserve for the payment when due of the

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Lease Payments on behalf of the Town. See "APPENDIX C - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - THE TRUST AGREEMENT - Funds" attached hereto.

At any time, moneys on deposit in the Reserve Fund may be substituted by the Town with a letter of credit, surety bond, bond insurance policy or other form of guaranty from a financial institution, the long-term, unsecured obligations of which are rated in the highest rating category by Moody's Investors Service, Inc. ("Moody's) and Standard & Poor's Ratings Services ("S&P"), in an amount equal to the Reserve Requirement, upon presentation to the Trustee of such letter of credit, surety bond, bond insurance policy or other form of guaranty from a financial institution, with evidence from the Town that such letter of credit, surety bond, bond insurance policy or other form of guaranty from a financial institution rated in the highest rating category by Moody's and S&P. Upon such substitution, the Trustee shall transfer amounts on deposit in the Reserve Fund to the Town in an amount equal to the maximum limits or principal amount, as applicable, of such letter of credit, surety bond, bond insurance policy or other form of guarantee which shall be segregated by the Town and applied solely to the funding of capital projects.

Subject to the provisions of the Trust Agreement, the Trustee is required, on or before each February 1 and August 1, to transfer any moneys in the Reserve Fund then in excess of the Reserve Requirement to the Lease Payment Fund, to be credited to the Lease Payments next coming due and payable.

If, on any Interest Payment Date, the moneys available in the Lease Payment Fund do not equal the amount of the principal and interest with respect to the Certificates then coming due and payable, the Trustee is required to apply the moneys available in the Reserve Fund to make delinquent Lease Payments on behalf of the Town by transferring the amount necessary for this purpose to the Lease Payment Fund. Upon receipt of any delinquent Lease Payment with respect to which moneys have been advanced from the Reserve Fund, such Lease Payment will be deposited in the Reserve Fund to the extent of such advance.

If, on any Interest Payment Date, the moneys on deposit in the Reserve Fund and the Lease Payment Fund ( excluding amounts required for payment of principal and interest with respect to Certificates not presented for payment) are sufficient to pay all outstanding Certificates, including all principal and interest, the Trustee is required to transfer all amounts then on deposit in the Reserve Fund to the Lease Payment Fund to be applied to the payment of the Lease Payments on behalf of the Town, and such moneys shall be distributed to the Owners of Certificates in accordance with the Trust Agreement. Any amounts remaining in the Reserve Fund upon payment in full of all outstanding Certificates and all amounts due the Trustee under the Trust Agreement, or upon provision for such payment as provided in the Trust Agreement, shall be withdrawn by the Trustee and paid to the Town.

Substitution of Property and Release of Site

Pursuant to the Lease Agreement, the Town may substitute different real property for the real property currently comprising the Property and effect a release of the Site, but only after the Town has satisfied certain conditions under Lease Agreement. See "APPENDIX C SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - Lease Agreement" attached hereto.

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Use of the Property

Maintenance, Utilities, Taxes and Assessments. Under the Lease Agreement, throughout the term of the Lease Agreement, as part of the consideration for the rental of the Property, the Town covenants that all improvement, repair and maintenance of the Property will be the responsibility of the Town and that the Town covenants that it will pay, or otherwise arrange, for the payment of all utility services supplied to the Property which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and will pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Property resulting from ordinary wear and tear or want of care on the part of the Town or any assignee or sub lessee thereof. In exchange for the Lease Payments provided in the Lease Agreement, the Authority covenants that it will provide only the Property, as provided in the Lease Agreement.

Under the Lease Agreement, the Town will also pay or cause to be paid all taxes and assessments of any type or nature, if any, charged to the Authority or the Town affecting the Property or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the Town will be obligated to pay only such installments as are required to be paid during the term of the Lease Agreement as and when the same become due.

Under the Lease Agreement, the Town may, at the Town's expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority notifies the Town that, in the opinion of Independent Counsel, by nonpayment of any such items, the interest of the Authority in the Property will be materially endangered or the Property or any part thereof will be subject to loss or forfeiture, in which event the Town will promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority.

Modification of Property. Under the Lease Agreement, the Town covenants that it will, at its own expense, have the right to remodel the Property or to make additions, modifications and improvements to the Property. All additions, modifications and improvements to the Property will thereafter comprise part of the Property and be subject to the provisions of the Lease Agreement. Such additions, modifications and improvements will not in any way damage the Property, substantially alter its nature, cause the interest component of Lease Payments to be subject to federal income taxes or cause the Property to be used for purposes other than those authorized under the provisions of State and federal law; and the Property, upon completion of any additions, modifications and improvements made thereto pursuant to the Lease Agreement, will be of a value which is not substantially less than the value of the Property immediately prior to the making of such additions, modifications and improvements. The Town will not permit any mechanic's or other lien to be established or remain against the Property for labor or materials furnished in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the Town pursuant to the Lease Agreement; provided that if any such lien is established and the Town will first notify the Authority of the Town's intention to do so, the Town may in good faith contest any lien filed or established against the Property,

14

and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and will provide the Authority with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Authority. The Authority will cooperate fully in any such contest, upon the request and at the expense of the Town.

Installation of Town's Equipment. Under the Lease Agreement, the Town may, at any time and from time to time in its sole discretion and at its own expense, install or permit to be installed items of equipment or other personal property in or upon any portion of the Property. All such items will remain the sole property of the Town in which neither the Authority nor the Trustee will have any interest and may be modified or removed by the Town at any time provided that the Town repairs and restores any and all damage to the Property resulting from the installation, modification or removal of any such items. Nothing in the Lease Agreement will prevent the Town from purchasing or leasing items to be installed under a lease or conditional sale agreement, or subject to a vendor's lien or security agreement, as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest will attach to any part of the Property.

BOND INSURANCE FOR THE BONDS

The following information has been supplied by the Insurer for inclusion in this Official Statement. No representation is made by the Town or the purchaser of the Certificates as to the accuracy or completeness of the information.

The Insurer accepts no responsibility for the accuracy or completeness of this Official Statement or any other information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Insurer and its affiliates set forth under this heading. In addition, the Insurer makes no representation regarding the Certificates or the advisability of investing in the Certificates.

General

XL Capital Assurance Inc. (the "Insurer" or "XLCA") is a monoline financial guaranty insurance company incorporated under the laws of the State of New York. The Insurer is currently licensed to do insurance business in, and is subject to the insurance regulation and supervision by, the State of New York, forty-eight other states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Singapore. The Insurer has a license application pending with the State of Wyoming, the only state in which it is not currently licensed.

The Insurer is an indirect wholly owned subsidiary of XL Capital Ltd, a Cayman Islands corporation ("XL Capital Ltd"). Through its subsidiaries, XL Capital Ltd is a leading provider of insurance and reinsurance coverages and financial products to industrial, commercial and professional service firms, insurance companies and other enterprises on a worldwide basis. The common stock of XL Capital Ltd is publicly traded in the United States and listed on the New York Stock Exchange (NYSE: XL). XL Capital Ltd is not obligated to pay the debts of or claims against the Insurer.

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The Insurer was formerly known as The London Assurance of America Inc. ("London"), which was incorporated on July 25, 1991 under the laws of the State of New York On February 22, 2001, XL Reinsurance America Inc. ("XL Re") acquired 100% of the stock of London. XL Re merged its former financial guaranty subsidiary, known as XL Capital Assurance Inc. (formed September 13, 1999) with and into London, with London as the surv1vmg entity. London immediately changed its name to XL Capital Assurance Inc. All previous business of London was I 00% re insured to Royal Indenmity Company, the previous owner at the time of acquisition.

Reinsurance

The Insurer has entered into a facultative quota share reinsurance agreement with XL Financial Assurance Ltd ("XLF A"), an insurance company organized under the laws of Bermuda, and an affiliate of the Insurer. Pursuant to this reinsurance agreement, the Insurer expects to cede up to 90% of its business to XLF A. The Insurer may also cede reinsurance to third parties on a transaction-specific basis, which cessions may be any or a combination of quota share, first loss or excess of loss. Such reinsurance is used by the Insurer as a risk management device and to comply with statutory and rating agency requirements and does not alter or limit the Insurer's obligations under any financial guaranty insurance policy. With respect to any transaction insured by XLCA, the percentage of risk ceded to XLF A may be less than 90% depending on certain factors including, without limitation, whether XLCA has obtained third party reinsurance covering the risk. As a result, there can be no assurance as to the percentage reinsured by XLF A of any given financial guaranty insurance policy issued by XLCA, including the Policy.

Based on the audited financials of XLF A, as of December 31, 2004, XLF A had total assets, liabilities, redeemable preferred shares and shareholders' equity of $1,173,450,000, $558,655,000, $39,000,000 and $575,795,000, respectively, determined in accordance with generally accepted accounting principles in the United States ("US GAAP"). XLFA's insurance financial strength is rated "Aaa" by Moody's and "AAA" by S&P and Fitch Inc. In addition, XLF A has obtained a financial enhancement rating of" AAA" from S&P.

The obligations of XLF A to the Insurer under the reinsurance agreement described above are unconditionally guaranteed by XL Insurance (Bermuda) Ltd ("XLI"), a Bermuda company and one of the world's leading excess commercial insurers. XLI is a wholly owned indirect subsidiary of XL Capital Ltd. In addition to AM. Best's rating of "A+" (Negative Outlook), XLI's insurance financial strength rating is "Aa2" (Outlook Negative) by Moody's, "AA-" by Standard & Poor's and "AA" (Ratings Watch Negative) by Fitch. The ratings ofXLFA and XLI are not recommendations to buy, sell or hold securities, including the Certificates and are subject to revision or withdrawal at any time by Moody's, Standard & Poor's or Fitch.

Notwithstanding the capital support provided to the Insurer described in this section, the Certificateholders will have direct recourse against the Insurer only, and neither XLF A nor XLI will be directly liable to the Certificateholders.

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Financial Strength and Financial Enhancement Ratings ofXLCA

The Insurer's insurance financial strength is rated "Aaa" by Moody's and "AAA" by Standard & Poor's and Fitch, Inc. ("Fitch"). In addition, XLCA has obtained a financial enhancement rating of "AAA" from Standard & Poor's. These ratings reflect Moody's, Standard & Poor's and Fitch's current assessment of the Insurer's creditworthiness and claims-paying ability as well as the reinsurance arrangement with XLFA described under "Reinsurance" above.

The above ratings are not recommendations to buy, sell or hold securities, including the Certificates and are subject to revision or withdrawal at any time by Moody's, Standard & Poor's or Fitch. Any downward revision or withdrawal of these ratings may have an adverse effect on the market price of the Certificates. The Insurer does not guaranty the market price of the Certificates nor does it guaranty that the ratings on the Certificates will not be revised or withdrawn.

Capitalization of the Insurer

Based on the audited financials of XLCA, as of December 31, 2004, XLCA had total assets, liabilities, and shareholder's equity of $827,815,000, $593,849,000, and $233,966,000, respectively, determined in accordance with U.S. GAAP. Based on the unaudited statutory financial statements for XLCA as of December 31, 2004 filed with the State of New York Insurance Department, XLCA has total admitted assets of $341,937,445, total liabilities of $144,232,151 and total capital and surplus of $197,705,294 determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities ("SAP"). Based on the audited statutory financial statements for XLCA as of December 31, 2003 filed with the State of New York Insurance Department, XLCA has total admitted assets of $329,701,823, total liabilities of $121,635,535 and total capital and surplus of $208,066,288 determined in accordance with SAP.

Incorporation by Reference of Financials

For further information concerning XLCA and XLFA, see the financial statements of XLCA and XLF A, and the notes thereto, incorporated by reference in this Official Statement. The financial statements of XLCA and XLF A are included as exhibits to the periodic reports filed with the Securities and Exchange Commission (the "Commission") by XL Capital Ltd and may be reviewed at the EDGAR website maintained by the Commission. All financial statements of XLCA and XLF A included in, or as exhibits to, documents filed by XL Capital Ltd pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 on or prior to the date of this Official Statement, or after the date of this Official Statement but prior to termination of the offering of the Certificates, shall be deemed incorporated by reference in this Official Statement. Except for the financial statements of XLCA and XLF A, no other information contained in XL Capital Ltd's reports filed with the Commission is incorporated by reference. Copies of the statutory quarterly and annual statements filed with the State of New York Insurance Department by XLCA are available upon request to the State of New York Insurance Department.

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Regulation of the Insurer

The Insurer is regulated by the Superintendent of Insurance of the State of New York. In addition, the Insurer is subject to regulation by the insurance laws and regulations of the other jurisdictions in which it is licensed. As a financial guaranty insurance company licensed in the State of New York, the Insurer is subject to Article 69 of the New York Insurance Law, which, among other things, limits the business of each insurer to financial guaranty insurance and related lines, prescribes minimum standards of solvency, including minimum capital requirements, establishes contingency, loss and unearned premium reserve requirements, requires the maintenance of minimum surplus to policyholders and limits the aggregate amount of insurance which may be written and the maximum size of any single risk exposure which may be assumed. The Insurer is also required to file detailed annual financial statements with the New York Insurance Department and similar supervisory agencies in each of the other jurisdictions in which it is licensed. The extent of state insurance regulation and supervision varies by jurisdiction, but New York and most other jurisdictions have laws and regulations prescribing permitted investments and governing the payment of dividends, transactions with affiliates, mergers, consolidations, acquisitions or sales of assets and incurrence of liabilities for borrowings.

THE FINANCIAL GUARANTY INSURANCE POLICIES ISSUED BY THE INSURER, INCLUDING THE INSURANCE POLICY, ARE NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.

The principal executive offices of the Insurer are located at 1221 A venue of the Americas, New York, New York 10020 and its telephone number at this address is (212) 478-3400.

THE TOWN

General

For certain general and demographic information concerning the Town see Appendix A attached hereto.

Budgetary Process and Administration

The Town operates on a two-year budget cycle with fiscal years beginning July 1 and ending June 30. Development of the two-year budget begins in December of the second year of each budget cycle. At this time the Town Council adopts general policy statements which serve as guidelines for staff in preparation of the up-coming budget.

From January to April, Town staff develops specific budget requests which correspond to available resources and Town Council policy. During this period, revenue and expense projections are updated by staff and reviewed with staff, the Town Council finance committee and the Town Council at large. In May, the Town manager presents a proposed budget to the Town Council for review. By law, the budget for each year of the two-year cycle must be balanced. Town Council review of the budget includes numerous public study sessions which

18

culminate with a public hearing at the second Town Council meeting in June at which time the budget, with modifications or amendments reflecting Town Council policy, is adopted.

Subsequent to adoption of the budget, staff prepares revenue and expense projections which are reviewed with the Town Council quarterly. Based on these quarterly reviews, the Town Council amends the budget as is necessary to keep actual expenditures in line with revenues in order to maintain a balanced budget.

Summary Financial Information

The following table summarizes the Town's statement of General Fund revenues and expenditures for the fiscal years ending June 30, 2002 through 2005. The results for the years ending June 30, 2002 through 2004 were compiled by the Town based on the Town's audited financial statements for such periods. The figures for the year ending June 30, 2005 were compiled by the Town based on the proposed General Fund budget for such year. Actual results for the year ending June 30, 2005 could vary significantly from the figures shown in the table. The Town's audited financial statements for the year ended June 30, 2004 are included as Appendix B attached hereto and should be read in their entirety.

[Remainder of Page Left Intentionally Blank]

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Revenues: Property taxes Sales taxes Special Assessments Charges for services Licenses and permits Intergovernmental Fines and forfeitures Use of money and property Miscellaneous

Total Revenues

Expenditures: Legislative Town manager Legal services Police services Maintenance services Development services Transportation services Administrative services Parks and recreation services Special Events program Capital Outlay Debt Service- Principal

Total Expenditures

Revenues over (under) expenditures

Operating transfers in Operating transfers out

Total resources over total uses

Beginning of year fund balance End of year fund balance

Cll Derived from unaudited estimated results. Source: Town of Danville.

TOWN OF DANVILLE General Fund Revenues, Expenditures and Fund Balance

Fiscal Years Ended June 30

2002 2003 2004 2005(1)

$5,263,422 $5,623,615 $6,051,972 $5,865,542 4,021,589 3,952,005 3,977,272 3,450,055

86,400 86,850 86,471 86,450 1,086,727 1,050,899 1,354,077 1,794,375 1,378,027 1,427,898 1,514,391 1,503,196 2,847,989 3,159,243 2,104,095 2,450,203

324,832 242,344 329,895 268,528 1,148,619 1,106,277 95,375 477,881

169 769 141 944 177 789 149 341 $16 327 374 $16 791 075 $15 691 337 $16 045 571

$261,412 $271,499 $264,230 $339,595 392,145 385,814 431,050 414,356 382,765 615,068 514,299 590,754

4,599,412 5,232,390 4,905,876 5,564,824 2,742,181 2,812,975 2,691,087 2,894,693 2,299,638 2,562, 771 2,467,062 2,606,717

302,707 267,236 308,563 407,653 1,245,158 1,353,073 1,350,370 1,398,996 1,768,923 1,882,347 2,197,200 2,343,120

113,336 136,199 164,568 200,748 249,921 24,432 81,520 0

0 6 760 0 0 $14 357 598 $15 550 564 $15 375 825 $16 761 456

$\ 969 776 $1 240 511 $315 512 $(715 885)

$3,926,948 $4,174,576 $6,976,721 $4,315,599 (4,676,899) (5,499,045) (4,383,305) (3,150,000)

$\ 219 825 $(83 958) $2 908 928 $449 714

$6,864,263 $8,084,088 $8,000,130 $10,909,058 $8,084,088 $8,000,130 $10,909,058 $11,358,772

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Property Taxes

Property taxes are levied for each fiscal year on taxable real and personal property as of the preceding January 1. For assessment and collection purposes, property is classified either as "secured" or "unsecured" and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the assessment roll containing State-assessed public utilities property and real property the taxes on which are a lien sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the "unsecured roll."

Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year, and become delinquent on December 10 and April 10, respectively. A penalty of 10% attaches immediately to all delinquent payments. Property on the secured roll with respect to which taxes are delinquent become tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of a penalty of 1 % per month to the time of redemption, plus costs and a redemption fee. If taxes are unpaid for a period of five years or more, the property is deeded to the State and may be sold at public auction.

Property taxes on the unsecured roll are due as of the January 1 lien dates and become delinquent on August 31. A 10% penalty attaches to delinquent unsecured taxes. If unsecured taxes are unpaid at 5:00 p.m. on October 31, an additional penalty of 1% attaches to them on the first day of each month until paid. The County has four ways of collecting delinquent unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a judgment in the office of the County Clerk specifying certain facts in order to obtain a lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Recorder's office in order to obtain a lien on certain property of the taxpayer; and ( 4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee.

Beginning in 1978-79, Proposition 13 and its implementing legislation shifted the function of property tax allocation to the counties, except for levies to support prior voted debt, and prescribed how levies on county-wide property values are to be shared with local taxing entities within each county.

Teeter Plan. The County is obligated by law to prepare property tax rolls showing general ad valorem taxes and special assessments on property located within the County and to undertake legal remedies in the event of their nonpayment. Since 1950, the County has elected to follow the procedures of sections 4701-4717 of the California Revenue and Taxation Code, both as to general taxes and special assessments entered and collected on the secured tax roll, and has created a tax loss reserve fund for delinquencies in the payment of such taxes and assessments (the "Teeter Plan"). The table below presents the five-year history of tax delinquencies and tax loss reserve fund balances for Contra Costa County under the Teeter Plan.

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Fiscal Year Ending June 30

2000 2001 2002 2003 2004

CONTRA COST A COUNTY County-Wide Delinquencies and Teeter Plan Balances

County-Wide Delinquency Rate

1.62% 1.57 1.73 1.98 1.95

Tax Loss Reserve Fund Balance

$22,826,720 24,247,987 27,032,058 30,347,321 20,168,000

Source: Contra Costa County Audited Financial Statements.

Although delinquencies have occurred from time to time as a result of certain landowners failing to pay their property tax installments when due, since its adoption of the Teeter Plan, the County has always paid the Town 100 percent of the annual levy for properties on the secured roll pursuant to provisions of the Teeter Plan. However, the County has the power to unilaterally discontinue its practice of paying 100% of the tax levy to the Town. The Teeter Plan may also be discontinued by petition of 2/3 of the participant taxing agencies. Thus, no assurance can be given that the Teeter Plan will be continued in future years, or that the amount of the tax loss reserve fund will remain constant.

For additional information on assessed valuation of property in the Town, see Appendix A attached hereto.

Other Local Revenues

In addition to ad valorem taxes on real property, the Town receives other local revenues, certain of which are described below. Certain risks to these revenues are discussed under "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS" herein.

Sales & Use Tax. In accordance with the California Revenue and Taxation Code and the Bradley-Bums Uniform Local Sales Use Tax Law of 1995, the State of California imposes an 8.25% Sale & Use Tax on taxable sales in the Town. The Town receives an amount equal to 1 % of the levy.

Transient Occupancy Tax. The Danville Municipal Code authorizes the Town to levy a tax for the privilege of occupying lodgings on a transient basis. The current rate is 6.5%.

Franchise Fee. The Town imposes a gross receipts fee on Pacific Gas & Electric ("PG&E"), cable companies and solid waste disposal companies doing business in the Town for their use of the Town's streets or right-of-way, as applicable. The fee is 1 % on PG&E and 5% on cable companies and solid waste disposal companies.

Business License Tax. The Danville Municipal Code requires a license as a prerequisite for conducting a business, trade or profession in the Town. The Code further imposes an annual tax for the privilege of conducting such businesses. The annual tax is generally $100, plus $10 per full time employee. Pursuant to Proposition 62, the Town submitted the business license tax to the voters for ratification at a special election on March 2, 2002. The business license tax was approved by 67% of the

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voters. See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS - Proposition 62."

Real Property Transfer Tax. The Danville Municipal Code authorizes the imposition of a transfer tax on real property sold in the Town at a rate of 55 cents per $1,000 of property value or fractional part thereof.

Licenses; Permits and Development Fees. The California Government Code and State Constitution give cities and towns the authority to assess certain license and permit fees as a means of recovering the cost of regulating various activities. These fees are generally collected during the building permit process, and are used to defray the cost of operating the Town's development services functions, as well as to improve the Town's infrastructure that will be used by new and current residents. The rates are set by the Town Council and are reviewed annually. Development fees include fees for development planning, development engineering, building permit processing, building plan checking, park dedication, child care, and storm water pollution control.

Motor Vehicle License Fees. On July 31, 2004, Governor Schwarzenegger signed the 2004-05 Budget Act (the "2004-05 Budget Act") into law. Certain of the features of 2004-05 Budget Act affecting local governments include the reduction of the Vehicle License Fee (the "VLF") rate from 2.0 percent to 0.65 percent and the elimination of the VLF backfill. The State will provide increased property tax revenues to compensate for the reduction in revenues local governments previously received from VLF. See "RICK FACTORS- State Budget."

Fines & Forfeitures. The California Vehicle Code and the Danville Municipal Code mandate and/or allow for the imposition of civil penalties for parking violations. These penalties are collected by the Town. Fines assessed for moving violations of the California Vehicle Code and non-parking violations of the Danville Municipal Code are collected by the County of Contra Costa. The County retains an administrative fee and remits the balance to the Town.

Danville Street Lighting and Landscape Assessment District. The Town collects an assessment related to the Danville Street Lighting and Landscape Assessment District No. 1983-1 (the "LLAD"). The LLAD is a town-wide district with different zones. It pays for roadside landscape maintenance, street lighting and a portion of parks/public facility maintenance. For fiscal year 2004-05, the LLAD is expected to generate approximately $2,958, 188 in revenue. In 2003, the annual assessment was submitted to the Town's property owners for approval, as required by Proposition 218. The existing assessments were approved by approximately 56% of the voters. The approval did not contain any inflation or cost of living adjustments. The Town has not proposed any increases in the assessment since 2003. This assessment could potentially be subject to and impacted by the provisions of Proposition 218. See "CONSTITUTIONAL AND STATUTORY LIMITS ON TAXES AND APPROPRIATIONS- Article XIII C and Article XIII D of the State Constitution" herein.

Stormwater Utility Assessment. All cities and towns in the County, including the Town, collect a stormwater utility assessment. The assessment was first imposed in 1993. At that time, the Town Council established a permissible range for the assessment of $22-30 per dwelling unit. The actual assessment was set at $22 and was increased in fiscal year 2003-04 to $27.50. In 1996, prior to passage of Proposition 218, the County Counsel's office opined that the assessments were exempt under Article XIIID, Section 5( a). This opinion was widely disseminated and has never been questioned or

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challenged anywhere in the County. This assessment could potentially be subject to and impacted by the provisions of Proposition 218. See "CONSTITUTIONAL AND STATUTORY LIMITS ON TAXES AND APPROPRIATIONS- Article XIII C and Article XIII D of the State Constitution" herein.

Danville Community Facilities District No. 97-1 Mello-Roos Special Tax. A Mello-Roos special tax is imposed in a portion of the Town by the Danville Community Facilities District No. 97-1. It was imposed in February 1998 and at this time is applicable to only one subdivision in the Town consisting of approximately 200 units. The tax was approved by the developer of this portion of the Town through a Proposition 218 ballot process. For fiscal year 2004-05, this Mello-Roos special tax will generate approximately $86,450 in revenue. This tax could potentially be subject to and impacted by the provisions of Proposition 218. See "CONSTITUTIONAL AND STATUTORY LIMITS ON TAXES AND APPROPRIATIONS- Article XIII C and Article XIII D of the State Constitution" herein.

Charges for Services. Service charges or fees are imposed on the user for a service provided by the Town under the rationale that benefiting parties should pay for the cost of that service rather than the general public. Examples of such services include various recreation, police service, public building rental and public document production fees.

Reimbursement Agreements. Under a Reimbursement Agreement, dated as of April I, 2005 (the "Reimbursement Agreement"), the Agency will use, to the extent necessary and available, Tax Increment Revenues, as defined under the Reimbursement Agreement, to repay the Town such portion of all current or previously unreimbursed Lease Payments made by the Town to the Agency under the Lease Agreement. The obligation of the Agency to transfer such Tax Increment Revenue to the Town is subordinate to any existing or future Agency pledge of Tax Increment Revenue. Neither the Trustee nor the Certificateholders are third-party beneficiaries under the Reimbursement Agreement, and the Reimbursement Agreement may be terminated or amended at any time without consent of, or notice to, the Trustee or the Certificateholders. This Tax Increment Revenue is not pledged to the payment of the Lease Payments when the same are otherwise due and payable and may not be available to reimburse Lease Payments made by the Town to the Agency under the Lease Agreement.

The Agency also has agreements to transfer available tax increment equal to the 200 I Certificates (as defined below). Additionally, the Town has an agreement to collect other available tax increment for various past amounts advanced by the Town to the Agency.

Investment Policies and Procedures

The Town Finance Director/Treasurer manages the Town's investment portfolio. For information concerning the Town investments, see "APPENDIX B -AUDITED FINANCIAL STATEMENTS OF THE TOWN FOR THE YEAR ENDED WNE 30, 2004".

Outstanding General Fund Obligations

On October 4, 2001, $6,700,000 Town of Danville Certificates of Participation (2001 Capital Improvement Refinancing Project) were delivered (the "2001 Certificates"). The 2001 Certificates refunded certain obligations of the Town and the Agency. The 2001 Certificates are currently outstanding in the amount of$6,215,000.

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For information concerning the Town's other outstanding General Fund obligations as of June 30, 2004, see "APPENDIXB - AUDITED FINANCIAL STATEMENTS OF THE TOWN FOR THE YEAR ENDED mNE 30, 2004" attached hereto. The Town has incurred no additional long-term General Fund obligations since June 30, 2004.

Overlapping Debt Statement

Set forth below is a direct and overlapping debt report (the "Debt Report") prepared by California Municipal Statistics, Inc. and dated as of March I, 2005. This Debt Report is included for general information purposes only. The Town has not reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith.

TOWN OF DANVILLE DIRECT AND OVERLAPPING DEBT STATEMENT

2004-05 Assessed Valuation: Redevelopment Incremental Valuation: Adjusted Assessed V aluat:ion:

$7,502,943, 122 176 483 810

$7,326,459,312

OVERLAPPING TAX AND ASSESSMENT DEBT: Contra Costa Community College District San Ramon Valley Unified School District East Bay Municipal Utility District East Bay Regional Park District Town of Danville 1915 Act Bonds

TOTAL GROSS OVERLAPPING TAX AND ASSESSMENT DEBT Less: East Bay Municipal Utility District

TOTAL NET OVERLAPPING TAX AND ASSESSMENT DEBT

DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT:

% Applicable 7.062%

30.387 6.183 3.230

100.

Contra Costa County General Fund Obligations 7.052% Contra Costa County Pension Obligations 7.052 Contra Costa County Board of Education Certificates of Participation 7.052 Contra Costa County Mosquito Abatement District Certificates of Participation 7.052 Contra Costa Community College District Certificates of Participation 7.062 San Ramon Valley Fire Protection District Certificates of Participation 30.560 Town of Danville Certificates of Participation 100.

TOTAL DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT

GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT

Debt 3/1/05 $ 6,468,792

38, 160,977 188,582

4,697,712 12 275 000

$61,791,063 188 582

$61,602,481

$22,786,775 40,141,394

119,531 20,451 92,512

2,612,880 6,215,000

$71,988,543

$133,779,606 (!) $133,591,Q24

(1) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations.

Ratios to 2004-05 Assessed Valuation: Total Gross Overlapping Tax and Assessment Debt ........... 0.82% Total Net Overlapping Tax and Assessment Debt .............. 0.82%

Ratios to Adjusted Assessed Valuation: Combined Direct Debt ($6,215,000) ................................ 0.08%

Gross Combined Total Debt ............................................... 1.83% Net Combined Total Debt ................................................... 1.82%

STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/04: $0 Source: California Municipal Statistics, Inc.

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Pension Plans

The Town does not provide retirement benefits to its employees through contract with California Public Employees' Retirement System and its plan is not a defined benefit plan. Rather, all qualified Town employees participate in a Section 40l(a) qualified defined contribution pension plan as allowed under the Internal Revenue Code. The plan is a defined contribution retirement plan in which the employer's contribution is nondiscretionary and is based on a formula that is not related to profits.

The plan is funded by Town contributions of 10% to 15% of the participant's gross pay, which vests at 20% per plan year of uninterrupted employment for participants employed after June 1, 1993. Participants employed prior to that year are fully vested. Participants are eligible to begin receiving benefits at age 55 and are required to begin receiving benefits no later than age 70.5.

As of June 30, 2004, the plan had 132 participants and the market value of plan investments amounted to $7,564, 734.

Insurance

For information concerning the Town's insurance programs, see "APPENDIX A - TOWN OF DANVILLE" attached hereto.

RISK FACTORS

The following risk factors associated with investing in Certificates, along with all other information in this Official Statement, should be considered by potential inventors in evaluating an investment in the Certificates. The following list is not intended to be conclusive and no significance should be associated with the order of presentation of the risk factors.

Lease Payments Not Town Debt

Neither the full faith and credit of the Town, the County of Contra Costa, the State nor any agency or department thereof is pledged to the payment of the Lease Payments or any other payments due under the Lease Agreement. In the event the Town's revenue sources are less than its total obligations, the Town could choose to fund other municipal services before making Lease Payments and other payments due under the Lease Agreement.

No Tax Pledge

The obligation of the Town to pay the Lease Payments does not constitute an obligation of the Town which the Town is obligated to levy or pledge any form of taxation or for which the Town has levied or pledged any form of taxation. The obligation of the Town to pay Lease Payments does not constitute a debt or indebtedness of the Town, the State of California or any of its political subdivisions, within the meaning of any constitutional or statutory debt limitation or restriction.

No Limit on Additional Debt

The Lease Agreement does not prohibit Town from incurring additional obligations payable from general revenues on a parity with the Lease Payments. To the extent that additional obligations are

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incurred by Town, the funds available to make Lease Payments may be decreased. See "THE TOWN -Outstanding General Fund Obligations" herein.

Abatement

Under the Lease Agreement, Lease Payments will be abated during any period in which, by reason of title defect, damage or destruction, there is substantial interference with the use and occupancy by the Town of the Property or any portion thereof to the extent agreed upon by the Town and the Authority. See "SECURITY FOR THE CERTIFICATES -Abatement" herein.

Limitation on Enforcement of Remedies

The enforcement of any remedies provided in the Lease Agreement and Trust Agreement could prove both expensive and time consuming. Although the Lease Agreement provides that the Authority may take possession of the Property then subject to the Lease Agreement and lease such Property if there is a default by the Town and the Lease Agreement further provides that the Authority may have such rights of access to the Property as may be necessary to exercise any remedies, portions of such Property may not be easily recoverable since they may be affixed to property not owned by the Authority and even if recovered, could be of little value to others. Furthermore, due to the essential nature to the governmental functions of the Property, it is uncertain whether a court would permit the exercise of the remedies of repossession and leasing with respect thereto. See "THE PROPERTY" herein.

In the event of a default under the lease, there is no available remedy of acceleration of the total Lease Payments due over the terms of the Lease Agreement. The Town will only be liable for Lease Payments on an annual basis as they come due, and the Trustee would be required to seek separate judgments for the annual Lease Payments. In addition, any such suit for money damages could be subject to limitations on legal remedies against public agencies in California, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest.

Bankruptcy

In addition to the limitations on remedies contained in the Lease Agreement and the Trust Agreement, the rights and remedies provided in the Lease Agreement and the Trust Agreement may be limited by and are subject to provisions of federal bankruptcy laws, as now or hereafter enacted, and to other laws or equitable principles that may affect the enforcement of creditors' rights.

Changes in Law

There can be no assurance that the California electorate will not at some future time adopt initiatives or that the Legislature will not enact legislation that will amend the laws or the Constitution of the State of California resulting in a reduction of the funds legally available to Town to make Lease Payments, and consequently, having an adverse effect on the security for the Certificates.

Earthquakes and Natural Disasters

The obligation to pay Lease Payments may be adversely affected if the Property is damaged or destroyed by natural hazard such as earthquake or flood. The Town is located in close proximity to

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several seismically active earthquake faults, including the San Andreas and Hayward faults. The Town has experienced earthquakes with a magnitude of 6.0 or greater on the Richter scale and with the epicenter being within the San Francisco Bay Area. The Town is not obligated under the Lease Agreement to maintain earthquake, flood or terrorism insurance on the Property. In the event of damage or destruction to the Property caused by perils for which the Town is not required to provide insurance under the Lease Agreement, the Town will not be obligated to repair, replace or reconstruct the Property. See Appendix C- "SUMMARY PRINCIPAL LEGAL DOCUMENTS" attached hereto.

The Town is a member of the Contra Costa County Municipal Risk Management Insurance Authority ("CCCMRMIA"), along with 17 other cities in the County and the City of Manteca. CCCMRMIA purchases all of its property insurance through the PE PIP program organized by Robert F. Driver Associates. The Town currently has limited earthquake coverage through CCCMRMIA which has a pooled coverage limit of $25 million. Participation in the earthquake coverage is optional by city and by building. According to CCCMRMIA, the total valuation of buildings insured for earthquake through CCCMRMIA is approximately $125 million for this fiscal year. In the event that covered losses in the pool exceed the coverage limit, the losses will be covered on a proportionate basis among insureds. Although the Town is not obligated under the Lease Agreement to maintain earthquake insurance on the Property, the Property is currently covered under this program. This coverage could be discontinued at any time. See "APPENDIX A- TOWN OF DANVILLE- Insurance and Self-Insurance Programs."

State Budget

The following information concerning the State of California's budget has been obtained from publicly available information which the Town believes to be reliable; however, the Town takes no responsibility as to the accuracy or completeness thereof and has not independently verified such information. Information about the State Budget is regularly available at various State-maintained websites. Text of the budget may be found at the Department of Finance website, www.dof.ca.gov, under the heading "California Budget." An impartial analysis of the budget is posted by the Office of the Legislative Analyst at www.lao.ca.gov. In addition, various State of California official statements, many of which contain a summary of the current and past State budgets, may be found at the website of the State Treasurer, www.treasurer.ca.gov. The information referred to is prepared by the respective State agency maintaining each website and not by the Town and the Town can take no responsibility for the continued accuracy of the internet addresses or for the accuracy or timeliness of information posted there, and such information is not incorporated herein by these references.

State Budget for Fiscal Year 2004-05. On July 31, 2004, Governor Schwarzenegger signed the 2004-05 Budget Act (the "2004-05 Budget Act") into law. The 2004-05 Budget Act assumes General Fund revenues will increase from $76.6 billion in Fiscal Year 2003-04 to $77.3 billion in Fiscal Year 2004-05. General Fund expenditures are expected to increase from $77.6 billion in Fiscal Year 2003-04 to $78.8 billion in Fiscal Year 2004-05, or approximately 10 percent. The 2004-05 Budget Act projects a year-end reserve of $678 million as of June 30, 2005. Approximately $268 million of the reserve is designated for Proposition 98 and the remaining $410 million is designated for non-Proposition 98 purposes.

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Certain of the features of2004-05 Budget Act affecting local governments include the following:

I. The Vehicle License Fee (the "VLF") rate is lowered from 2.0 percent to 0.65 percent and the VLF backfill is eliminated. The State will provide increased property tax revenues to compensate for the reduction in revenues local governments previously received from VLF.

2. A diversion of $1.3 billion from local governments in Fiscal Years 2004-05 and 2005-06, including $350 million from counties, $350 million from cities, $350 million from special districts and $250 from redevelopment agencies. Each county's reduction reflects its proportionate share of statewide county VLF revenues, property taxes and sales taxes.

3. The 2004-05 Budget Act proposed a constitutional amendment to protect certain local government revenues ("Proposition IA"), which was approved by the voters in November 2004. Pursuant to Proposition IA, the State may not reduce local governments' share of the property tax below current levels, but may borrow up to 8% of local property tax revenues in the event of a fiscal emergency, provided the amount borrowed would be repaid within three years and certain other conditions are satisfied. Proposition IA also prohibits the State from reallocating local sales taxes. See "CONSTITUTIONAL AND STATUTORY LIMITS ON TAXES AND APPROPRIATIONS­Proposition IA" herein.

Proposed Governor's Budget for Fiscal Year 2005-06. On January 10, 2005, Governor Schwarzenegger released his proposed budget for Fiscal Year 2005-06 (the "2005-06 Proposed Budget"). The 2005-06 Proposed Budget projects General Fund revenues (not including transfers) for Fiscal Year 2005-06 of $83.2 billion, an increase of 6. 8 percent above the anticipated revenues for Fiscal Year 2004-05, and General Fund expenditures of $85.7 billion, an increase of 4.2 percent above the anticipated expenditures for Fiscal Year 2004-05.

The 2005-06 Proposed Budget identifies a budget shortfall of $9.1 billion without implementation of the policy changes proposed in the 2005-06 Proposed Budget. The budget shortfall is a result of an operating deficit in Fiscal Year 2004-05 of $1. 7 billion, a difference between the growth in baseline expenditures and revenues of $5. 2 billion, the absence of $2 billion of proceeds from the economic recovery bonds authorized by the voters in March 2004 (the "Economic Recovery Bonds") that were available in Fiscal Year 2004-05 and $170 million in other adjustments. The 2005-06 Proposed Budget proposes to address the budget shortfall through policy changes consisting primarily of reductions in the rate of increase of State spending in the amount of $7 billion. The 2005-06 Proposed Budget also proposes to address the estimated budget shortfall by increasing available resources using $1. 7 billion of proceeds from the Economic Recovery Bonds, approximately $300 million less borrowing than was included in the 2004-05 Budget, and a variety of proposals to increase revenues by $409 million without tax increases.

The revenue increase forecasted by the 2005-06 Proposed Budget includes gains in the personal income tax, sales and use tax and corporation tax. Personal income tax revenues are forecasted to be $39.5 billion in Fiscal Year 2004-05 and $42.9 billion in Fiscal Year 2005-06. This forecast assumes an increase in personal income tax revenue of 8.6 percent for Fiscal Year 2004-05 and 8.5 percent for Fiscal Year 2005-06. Sales and use tax revenue is forecasted to be $25.2 billion in Fiscal Year 2004-05 and $26.9 billion in Fiscal Year 2005-06. This forecast assumes a 5.7 percent increase in taxable sales for 2004 and that, as a result of an improving economy, taxable sales will continue to increase at similar

29

rates for 2005 and 2006, representing a 5.7 percent and 5.6 percent increase, respectively. Corporation tax revenues are expected to total $8. 7 billion in Fiscal Year 2004-05 and $9 billion in Fiscal Year 2005-06.

The 2005-06 Proposed Budget assumes local government revenues will increase during the next few years due in part to increases in property taxes and sales and use tax to local governments. Property taxes and sales and use tax are major sources of discretionary revenue for local governments, including the Town. The 2005-06 Proposed Budget projects property taxes to local governments to be approximately $22.4 billion, an increase of 9 percent above the amount expected to be received in the Fiscal Year 2004-05, as a result of the strong housing market and increased sales of non-residential real estate. The sales and use tax in Fiscal Year 2005-06 is also expected to increase by approximately 6 percent above the amount expected to be received in Fiscal Year 2004-05. The sales and use tax is expected to provide local governments with over $4 billion for discretionary purposes, in addition to $2. 7 billion for public safety, $2. 7 billion for health programs and $1.3 billion for county transportation purposes. In addition, the 2005-06 Proposed Budget projects VLF revenues, which provide funding for local health programs, to increase by 3.4 percent to 4.5 percent during the next two years.

Certain of the features of the 2005-06 Proposed Budget affecting the Town include the following:

1. The 2005-06 Proposed Budget includes funding in various budgets that support activities by local government agencies where the local agencies have significant discretion over the use of the funds. Such programs include law enforcement, realigned health and mental health services, public health, property tax administration, Williamson Act open space preservation contracts, libraries, recreational facilities, flood control, and housing. Funding for these programs will be approximately $5.6 billion in 2005-06, which represents a reduction of $368 million from the amount expected to be received in Fiscal Year 2004-05.

2. The 2005-06 Proposed Budget includes funding for local governments to make up the difference between the 0.65-percent rate of the VLF and the previous 2 percent rate through a reallocation of property tax from schools and community colleges to cities and counties. The General Fund expenditures for Proposition 98, which guarantees K-14 schools a minimum share of funding from General Fund revenues, are increased to offset the reduction in property taxes for schools.

LAO Overview of the 2005-06 Proposed Budget. On January 12, 2005, the California Legislative Analyst's Office (the "LAO") released its analysis of the 2005-06 Proposed Budget (the "LAO Budget Overview"). The LAO Budget Overview is available on the LAO website at www.lao.ca.gov. Information on the website is not incorporated herein by reference.

The LAO states that the 2005-06 Proposed Budget is a reasonable starting point from which to develop a State budget for Fiscal Year 2005-06 as it contains attributes such as preserving nearly $2 billion of the State's Economic Recovery Bonds (which are discussed above under "State Budget­Proposed Governor's Budget for Fiscal Year 2005-06") for use in subsequent years and not increasing current-year Proposition 98 funding. Further, the LAO notes that many of the proposed solutions provide ongoing savings. The LAO also notes that the 2005-06 Proposed Budget relies on reasonable estimates of caseloads, costs and revenues and accurately portrays the use of Economic Recovery Bonds.

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However, the LAO concluded that the 2005-06 Proposed Budget does not sufficiently address the State's ongoing structural shortfall as it relies on expenditure reductions that are targeted on relatively few major areas, leaving several areas largely unaffected, and that revenue increases are only a minor part of the 2005-06 Proposed Budget. In addition, some of the savings obtained by the 2005-06 Proposed Budget are subject to considerable risk such as court challenges and collective bargaining negotiations. The LAO notes that savings subject to such risks have, in years past, not met expected levels.

Future State Budgets. No prediction can be made by the Town as to whether the State will continue to encounter budgetary problems in this or in any future Fiscal Years, and if it were to do so, it is not clear what measures would be taken by the State to balance its budget, as required by law. In addition, the Town cannot predict the final outcome of future State budget negotiations, the impact that such budgets will have on its finances and operations or what actions will be taken in the future by the State Legislature and Governor to deal with changing State revenues and expenditures. Current and future State budgets will be affected by national and State economic conditions and other factors, including the current economic downturn, over which the Town has no control.

The Town relies on a number of revenue sources that could be reduced or eliminated by State legislation, including, among others, sales and use taxes, license and permit fees, and fines and forfeitures. See "THE TOWN - Other Local Revenues" herein. There can be no assurance that the State will not adopt legislation to reduce or eliminate one or more of these revenue sources.

In addition, a number of statutes and constitutional amendments have been adopted as measures that qualified for the ballot through California's initiative process as described under "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS." There can be no assurance that other initiative measures won't be adopted affecting the Town's revenues.

Hazardous Substances

Among the most serious factors in terms of the potential reduction in the sale and/or rental value of real property are costs or liabilities in connection with the presence of hazardous substances. In general, the owners and operators of real property may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or "Superfund Act," is the most well known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner ( or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner ( or operator) has anything to do with creating or handling the hazardous substance. It is possible that the discovery of a hazardous substance could affect the ability of the Trustee to re-let the Property or the amount of rent that could be obtained for the Property if the Town were to default on its obligations under the Lease Agreement, in which event, the owners of the Certificates would not receive their respective payments when due. Also, the effect, should the Property be affected by a hazardous substance, is to reduce its marketability and value by the costs of remedying the condition and the amount of related damages and expenses.

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The Town knows of no existing hazardous substances which require remedial action on or near the Property. However, it is possible that such substances do currently or potentially exist and that the Town is not aware of them. The Town does not currently carry insurance covering the risks of hazardous substances. It is also possible that liabilities may arise in the future with respect to the Property resulting from the existence of a substance not presently classified as hazardous, but which may in the future be so classified. Such liabilities may arise not simply from the existence of a hazardous substance, but from the method of handling it. All of these possibilities could significantly and adversely affect the operations and finances of the Town and/or the value of the Property.

Investment of Funds

The Reserve Fund and all other funds held under the Trust Agreement are required to be invested in Permitted Investments as provided under the Trust Agreement. See Appendix C attached hereto for a summary of the definition of Permitted Investments. All investments, including the Permitted Investments and those authorized by law from time to time for investments by municipalities, contain a certain degree of risk. Such risks include, but are not limited to, a lower rate of return than expected, decline in market value and loss or delayed receipt of principal. The occurrence of these events with respect to amounts held under the Trust Agreement or the funds and accounts held by the Town could have a material adverse affect on the security for the Certificates and/or the financial condition of the Town. See (i) "THE TOWN - Investment Policies and Procedures" herein and (ii) the audited financial statements of the Town for the year ended June 30, 2004 attached hereto as Appendix B for information concerning the Town's investment policy and portfolio of investments.

CONSTITUTIONAL AND STATUTORY LIMITS ON TAXES AND APPROPRIATIONS

Article XIII A of the State Constitution

Section l(a) of Article XIII A of the State Constitution limits the maximum ad valorem tax on real property to 1 % of full cash value ( as defined in Section 2 of Article XIII A), to be collected by counties and apportioned according to law. Section l(b) of Article XIII A provides that the 1 % limitation does not apply to (1) ad valorem taxes to pay interest or redemption charges on indebtedness approved by the voters prior to July 1, 1978, or (2) any bond indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978 by two-thirds of the votes cast by the voters voting on the proposition or (3) bonded indebtedness incurred by a school district, community college district or county office of education for the construction, reconstruction, acquisition, equipping or leasing of school facilities approved by 55 percent of the voters voting on the proposition. Section 2 of Article XIII A defines "full cash value" to mean "the county assessor's valuation of real property as shown on the 1975-76 tax bill under 'full cash value' or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment" ("Full Cash Value"). The Full Cash Value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or to reflect a reduction in the consumer price index or comparable data for the area under the taxing jurisdiction, or may be reduced in the event of declining property value caused by substantial damage, destruction or other factors.

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Legislation enacted by the State Legislature to implement Article XIII A provides that, notwithstanding any other law, local agencies may not levy any ad valorem property tax except to pay debt service on indebtedness approved by the voters as descried above.

The voters of the State subsequently approved various measures which further amended Article XIII A. One such amendment generally provides that the purchase or transfer of (i) real property between spouses or (ii) the principal residence and the first $1,000,000 of the Full Cash Value of other real property between parents and children, do not constitute a "purchase" or "change of ownership" triggering reappraisal under Article XIII A. Other amendments permitted the State Legislature to allow persons over the age of 55 who meet certain criteria or "severely disabled homeowners" who sell their residence and buy or build another of equal or lesser value within two years in the same county, to transfer the old residence's assessed value to the new residence. Other amendments permit the State Legislature to allow persons who are either 55 years of age or older, or who are "severely disabled," to transfer the old residence's assessed value to their new residence located in either the same or a different county and acquired or newly constructed within two years of the sale of their old residence.

In the November 1990 election, the voters approved an amendment of Article XIII A to permit the State Legislature to exclude from the definition of "new construction" certain additions and improvements, including seismic retrofitting improvements and improvements utilizing earthquake hazard mitigation technologies constructed or installed in existing buildings after November 6, 1990.

Article XIII A has also been amended to provide the there would be no increase in the Full Cash Value base in the event ofreconstruction of the property damaged or destroyed in a disaster.

Section 4 of Article XIII A provides that cities, counties and special districts cannot, without a two-thirds vote of the qualified electors, impose special taxes, which has been interpreted to include special fees in excess of the cost of providing the services or facility for which the fee is charged, or fees levied for general revenue purposes.

Article XIII B of the State Constitution

State and local government agencies in California are each subject to annual "appropriations limits" imposed by Article XIII B of the Constitution of the State of California ("Article XIII B"). Article XIII B prohibits government agencies and the State from spending "appropriations subject to limitation" in excess of the appropriations limit imposed. "Appropriations subject to limitation" are generally authorizations to spend "proceeds of taxes," which include all, but are not limited to, tax revenues, and the proceeds from (i) regulatory licenses, user charges or other user fees to the extent that such proceeds exceed "the cost reasonably borne by that entity in providing the regulation, product, or service" (ii) the investment of tax revenues, and (iii) certain subventions received from the State. No limit is imposed on appropriations of funds which are not "proceeds of taxes," appropriated for debt service on indebtedness existing prior to the passage of Article XIII B or authorized by the voters or appropriations required to comply with certain mandates of courts or the federal government.

As amended at the June 5, 1990 election by Proposition 111, Article XIII B provides that, in general terms, a county's appropriations limit is based on the limit for the prior year adjusted annually to reflect changes in costs of living, population and, when appropriate, transfer of financial responsibility of providing services from one governmental unit to another. Proposition 111 liberalized the

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aforementioned adjustment factors as compared to the original provisions of Article XIII B. If county revenues during any two consecutive fiscal years exceed the combined appropriations limit for those two years, the excess must be returned by a revision of tax rates or fee schedules within the two subsequent fiscal years.

Section 7900, et seq. of the California Government Code defines certain terms used in Article XIII B and sets forth the methods for determining the appropriations limit for local jurisdictions. Relying on these definitions, and Chapter 60, Statutes of 1990 effective August 1, 1990, which implemented Proposition 111, the Town has determined that its appropriations limit for "proceeds of taxes" for Fiscal Year 2004-05 is $20,540,449. Total appropriations for Fiscal Year 2004-05 that are subject to the limitation total $12,881,898.

Article XIII C and Article XIII D of the State Constitution

On November 5, 1996, the voters of the State approved Proposition 218, the "Right to Vote on Taxes Act." Proposition 218 added Articles XIII C and XIII D to the State Constitution, which contain a number of provisions affecting the ability of the Town to levy and collect both existing and future taxes, assessments, fees and charges.

Article XIII C requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the Town require a majority vote and taxes for specific purposes, even if deposited in the Town's General Fund, require a two-thirds vote. The voter approval requirements of Article XIII C reduce the Town's flexibility to deal with fiscal problems by raising revenue through new or extended or increased taxes and no assurances can be given that the Town will be able to raise taxes in the future to meet increased expenditure requirements.

Article XIII D contains several new provisions making it generally more difficult for local agencies to levy and maintain "assessments" for municipal services and programs. "Assessment" is defined to mean any levy or charge upon real property for a special benefit conferred upon the real property.

Article XIII D also contains several new provisions affecting "fees" and "charges," defined for purposes of Article XIII D to mean "any levy other than an ad valorem tax, a special tax, or an assessment, imposed by a local government upon a parcel or upon a person as an incident of property ownership, including a user fee or a charge for a property related service." All new and existing property related fees and charges must conform to requirements prohibiting, among other things, fees and charges which (i) generate revenues exceeding the funds required to provide the property related service, (ii) are used for any purpose other than those for which the fees and charges are imposed, (iii) with respect to any parcel or person exceed the proportional costs of the service attributable to the parcel, (iv) are for a service not actually used by, or immediately available to, the owner of the property in question, or (v) are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. Further, before any property related fee or charge may be imposed or increased, written notice must be given to the record owner of each parcel ofland affected by such fee or charge. The Town must then hold a hearing upon the proposed imposition or increase, and if written protests against the proposal are presented by a majority of the owners of the identified parcels, the Town may not impose or increase the fee or charge. Moreover, except for fees and charges for sewer, water and refuse collection services

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( or fees for electrical and gas service, which are not treated as "property related" for purposes of Article XIII D ), no property related fee or charge may be imposed or increased without majority approval by the property owners subject to the fee or charge or, at the option of the local agency, two-thirds voter approval by the electorate residing in the affected area.

In addition to the provisions described above, Article XIII C removes limitations on the initiative power in matters of local taxes, assessments, fees and charges. Consequently, the voters of the Town could, by future initiative, repeal, reduce or prohibit the future imposition or increase of any local tax, assessment, fee or charge. "Assessment," "fee" and "charge," are not defined in Article XIII C and it is not clear whether the definitions of these terms in Article XIII D (which are generally property-related as described above) would be applied to Article XIII C. If the Article XIII D definitions are not held to apply to Article XIII C, the initiative power could potentially apply to revenue sources which currently constitute a substantial portion of general fund revenues. No assurances can be given the voters of the Town will not, in the future, approve initiatives that repeal, reduce or prohibit the future imposition or increase oflocal taxes, assessments, fees or charges.

The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination. If upheld in full, Proposition 218 could substantially restrict the Town's ability to raise future revenues, subject to existing sources of revenue to reduction or repeal, and increase the Town's costs to hold elections, calculate fees and assessments, notify the public and defend its fees and assessments in court.

Except as described in this Official Statement, the Town is of the opinion that Proposition 218 will not materially impact any existing or future taxes, fees and assessments collected by the Town. No revenues collected by the Town have been challenged under Proposition 218. See "THE TOWN- Other Local Revenues" herein.

Proposition 62

Proposition 62, a statutory initiative that was adopted by the voters voting in the State at the November 4, 1986 general election, (a) requires that any new or higher taxes for general governmental purposes imposed by local governmental entities be approved by a majority vote of the voters of the governmental entity voting in an election on the tax, (b) requires that any special tax ( defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two-thirds vote of the voters of the governmental entity voting in an election on the tax, ( c) restricts the use ofrevenues from a special tax to the purposes or for the service for which the special tax was imposed, ( d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIII A of the California Constitution, ( e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities, (f) requires that any tax imposed by a local governmental entity on or after August 1, 1985 be ratified by a majority vote of the voters voting in an election on the tax within two years of November 5, 1986 or be terminated by November 15, 1988, and (g) requires a reduction of ad valorem property taxes allocable to the jurisdiction imposing a tax not in compliance with its provisions equal to one dollar for each dollar of revenue attributable to the invalid tax, for each year that the tax is collected.

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Following its adoption by the voters, various prov1s10ns of Proposition 62 were declared unconstitutional at the appellate court level. For example, in City of Woodlake v. Logan, 230 Cal.App.3d 1058 (1991) (the "Woodlake Case"), the Court of Appeal held portions of Proposition 62 unconstitutional as a referendum on taxes prohibited by the California Constitution. In reliance on the Woodlake Case, numerous taxes were imposed or increased after the adoption of Proposition 62 without satisfying the voter approval requirements of Proposition 62.

On September 28, 1995, the California Supreme Court, in Santa Clara County Local Transportation Authority v. Guardino, 11 Cal. 4th 220 (1995) (the "Santa Clara Case"), upheld the constitutionality of the portion of Proposition 62 requiring a two-thirds vote in order for a local government or district to impose a special tax, and, by implication, upheld a parallel provision requiring a majority vote in order for a local government or district to impose any general tax. In deciding the Santa Clara Case on Proposition 62 grounds, the Court disapproved the decision in the Woodlake Case.

The decision in the Santa Clara Case did not address the question of whether it should be applied retroactively. On June 4, 2001, the California Supreme Court released Howard Jarvis Taxpayers Association v. City of La Habra, et al. ("La Habra"). In this decision, the court held that a public agency's continued imposition and collection of a tax is an ongoing violation, upon which the statute of limitations period begins anew with each collection. The court also held that, unless another statute or constitutional rule provided differently, the statute of limitations for challenges to taxes subject to Proposition 62 is three years. Accordingly, a challenge to a tax subject to Proposition 62 may only be made for those taxes received within three years of the date the action is brought.

The Town is of the opinion that Proposition 62 will not materially impact any existing or future taxes, fees and assessments collected by the Town.

Proposition lA

Proposition lA, proposed by the Legislature in connection with the 2004-05 Budget Act and approved by the voters in November 2004, provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition lA generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county must be approved by two-thirds of both houses of the Legislature. Proposition lA provides, however, that beginning in fiscal year 2008-09, the State may shift to schools and community colleges up to 8% of local government property tax revenues, which amount must be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a severe state financial hardship, the shift is approved by two-thirds of both houses and certain other conditions are met. The State may also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Proposition lA also provides that if the State reduces the VLF rate currently in effect, 0.65 percent of vehicle value, the State must provide local governments with equal replacement revenues. Further, Proposition lA requires the State, beginning July 1, 2005, to suspend State mandates affecting cities, counties and special districts, excepting mandates relating to employee rights, schools or community colleges, in any year that the State does not fully reimburse local governments for their costs to comply with such mandates.

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Proposition lA may result in increased and more stable Town revenues. The magnitude of such increase and stability is unknown and would depend on future actions by the State. However, Proposition lA could also result in decreased resources being available for State programs. This reduction, in tum, could affect actions taken by the State to resolve budget difficulties. Such actions could include increasing State taxes, decreasing spending on other State programs or other action, some of which could be adverse to the Town.

Future Initiatives

Article XIIIA, Article XIIIB, Proposition 218, Proposition 111, Proposition 62 and Proposition lA were each adopted as measures that qualified for the ballot pursuant to the State's initiative process. From time to time other initiative measures could be adopted, further affecting Town General Fund revenues or the Town's ability to expend revenues. The nature and impact of these measures cannot be anticipated by the Town.

THE AUTHORITY

The Authority was established pursuant to a Joint Exercise of Powers Agreement, dated as of December 7, 1993, by and among the Town and the Agency, pursuant to Chapter 5, Division 7, Title 1 of the California Government Code (the "Act"). The powers of the Authority include assisting the Town with the financing and refinancing of public capital improvements. The Town Council of the Town serves as the Board of Directors of the Authority.

FINANCIAL STATEMENTS

Attached as Appendix B is the comprehensive annual financial report of the Town (the "Financial Statements") for the fiscal year ended June 30, 2004, prepared by the Town's Finance Department and audited by Caporicci & Larson of Oakland, California (the "Auditor").

The Auditor's letter concludes that the Financial Statements present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of Town as of June 30, 2004, and the respective changes in financial position for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America.

The Financial Statements should be read in their entirety. The Town has not requested nor did the Town obtain permission from the Auditor to include the audited Financial Statements as an appendix to this Official Statement. Accordingly, the Auditor has not performed any post-audit review of the financial condition or operations of the Town. In addition, the Auditor has not reviewed this Official Statement.

The Financial Statements and the audited comprehensive annual financial reports of the Town for prior years are on file for public inspection with the Town Clerk.

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CONTINUING DISCLOSURE

The Town has covenanted in a Continuing Disclosure Certificate for the benefit of the holders and beneficial owners of the Certificates to provide certain financial information and operating data relating to the Town by not later than March 31 following the end of the fiscal year ( currently their fiscal years end on June 30) (the "Annual Report"), commencing with the fiscal year ending June 30, 2005, and to provide notices of the occurrence of certain enumerated events, if material.

The Annual Report will be filed by the Trustee as Dissemination Agent with each Nationally Recognized Municipal Securities Information Repository, and notices of material events will be filed by the Dissemination Agent with the Municipal Securities Rulemaking Board. The Annual Report and notices will also be filed with any entity designated by the State as a state repository for continuing disclosure information. The specific nature of the information to be contained in the Annual Reports and the notice of material events is set forth in Appendix F-"FORM OF CONTINUING DISCLOSURE CERTIFICATE" hereto. These covenants have been made in order to assist the purchasers in complying with Rule 15c2-12(b)(5) promulgated under the Securities Exchange Act of 1934.

The Town has not failed to comply in all material respects with its previous undertakings to provide annual reports and notices under the Rule within the past five years.

TAX MATTERS

In the opinion of Quint & Thimmig LLP, San Francisco, California, Special Counsel, subject, however, to certain qualifications set forth below, under existing law, the portion of lease payments designated as and comprising interest and received by the owners of the Certificates is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations ( as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings, and the Lease Agreement is a "qualified tax-exempt obligation" within the meaning of section 265(b)(3) of the Internal Revenue Code of 1986 (the "Code") such that, in the case of certain financial institutions (within the meaning of section 265(b)(5) of the Code), a deduction for federal income tax purposes is allowed for 80 percent of that portion of such financial institution's interest expense allocable to interest payable with respect to the Certificates.

The opinions set forth in the preceding paragraph are subject to the condition that the Town comply with all requirements of the Code that must be satisfied subsequent to the delivery of the Lease Agreement in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The Town has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of delivery of the Lease Agreement.

In the further opinion of Special Counsel, interest payable with respect to the Certificates 1s exempt from California personal income taxes.

Owners of the Certificates should also be aware that the ownership or disposition of, or the accrual or receipt of interest with respect to, the Certificates have federal or state tax consequences other

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than as described above. Special Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Lease Agreement and the Certificates other than as expressly described above.

APPROVAL OF LEGALITY

Legal matters incident to the execution and delivery of the Certificates are subject to the approving the opinion of Quint & Thimmig LLP, San Francisco, California, Special Counsel. A form of such opinion is attached hereto as Appendix D and copies of such opinion with respect to the Certificates will be available at the time of delivery of the Certificates. Certain legal matters will be passed upon by Hawkins Delafield & Wood LLP, San Francisco, California, as Disclosure Counsel. Certain legal matters will be passed upon for the Town by the City Attorney. The compensation of Special Counsel and Disclosure Counsel is contingent upon the sale and delivery of the Certificates.

LITIGATION

There is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or, to the best knowledge of the Town, threatened against or affecting the Town, (i) which would materially and adversely impact the Town's ability to complete the transactions described in or contemplated by this Official Statement, (ii) to restrain or enjoin the delivery of the Certificates or the payments to be made by the Town pursuant to the Lease Agreement, (iii) in any way contesting or affecting the validity of the Trust Agreement or the Lease Agreement or the Certificates or the transactions relating to the Property as described in "THE PROPERTY" herein, or contesting in any way the completeness or accuracy of this Official Statement, or (iv) wherein an unfavorable decision, ruling or finding would materially and adversely affect the Town or the validity or enforceability of the Trust Agreement or the Lease Agreement or the Certificates.

RATING

Moody's Investors Service, Inc. ("Moody's") will assign its municipal bond rating of"Aaa" to the Certificates based on the issuance by the Insurer of the Policy. In addition, Moody's has assigned an underlying rating of "Aa3" to the Certificates. Such ratings reflect only the views of such rating agency and an explanation of the significance of such rating and any rating on any of the Town's outstanding obligations may be obtained only from such rating agency.

There is no assurance that such ratings will continue for any given period or that they will not be revised downward or withdrawn entirely by such rating agency, if in its judgment, circumstances so warrant. The Town, the Insurer and the Trustee undertake no responsibility either to notify the owners of the Certificates of any revision or withdrawal of the rating or to oppose any such revision or withdrawal. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Certificates.

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SALE OF THE CERTIFICATES

The Certificates were sold at competitive bid on March 23, 2005. The Certificates were awarded to Stone & Youngberg LLC, at a purchase price of $5,487,705.20 (representing the principal amount of the Certificates less an original issue discount of $48,859.55, less an underwriting discount of $33,060.25 and less a bond insurance premium of $30,375.00). The underwriter of the Certificates has represented to the Town that the Certificates have been re-offered to the public at the prices or yields stated on the inside cover.

FINANCIAL ADVISOR

The Town has entered into an agreement with William Euphrat Municipal Finance, Inc. (the "Financial Advisor"), whereunder the Financial Advisor provides financial advisory services to the Town with respect to preparation and sale of the Certificates. The Financial Advisor has read and participated in the drafting of certain portions of this Official Statement. The Financial Advisor has not audited, authenticated or otherwise verified the information set forth in the Official Statement, or any other related information available to the Town, with respect to accuracy and completeness of disclosure of such information, and the Financial Advisor makes no guaranty, warranty or other representation respecting accuracy and completeness of the Official Statement or any other matter related to the Official Statement. The compensation of the Financial Advisor is contingent upon the sale and delivery of the Certificates.

BANK QUALIFIED

The Town has designated the Certificates as "bank qualified" under the provisions of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See "TAX MATTERS" above.

[Remainder of Page Left Intentionally Blank]

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EXECUTION AND DELIVERY

The preparation, execution and distribution of this Official Statement have been authorized by the Town.

TOWN OF DANVILLE

By: ____ ~/s=/~J~o=se~p~h~C~a=la=b=r~ig~o~-----Town Manager

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(THIS PAGE INTENTIONALLY LEFT BLANK)

APPENDIX A

TOWN OF DANVILLE

General

The Town of Danville, located in the San Ramon Valley in central Contra Costa County (the "County"), was first established as a rural village in the 1850's. With construction of the Bay Bridge in 1936 and the Caldecott Tunnel in 1937, central Contra Costa County became accessible to the large, growing employment centers in the San Francisco Bay Area. During the 1950's and 1960's the Town evolved into a desirable residential community in the unincorporated area of Contra Costa County. The completion of I-680 in 1968, which extends from San Jose through Alameda and Contra Costa counties and into Solano County, contributed to increased residential and economic development throughout the San Ramon Valley. The Town was incorporated in 1982 as a general law town.

The Town, comprised of approximately 18 square miles, lies approximately 30 minutes east of San Francisco by automobile. Its population as of January I, 2004 was 43,250. The Town has new suburban neighborhoods, older, well-maintained neighborhoods and many rural neighborhoods. The Town is serpentined by natural creeks, has numerous hiking and biking trails and a significant amount of dedicated, open space, adding to its essentially rural character. Mt. Diablo, at 3,849 feet elevation, bounds the Town at the north, and Las Trampas Wilderness Park, elevation 2,049 feet, bounds the Town at the west.

Over the past several years the Town has experienced significant growth. While the Town has remained residential and rural in character, neighboring cities, such as Concord, San Ramon, Pleasanton and Walnut Creek, have developed job centers including major commercial and light industry business parks, all within easy commuting distance. The Town's general plan anticipates continued growth until the Town develops into a fully mature community of approximately 44,100 by 2010.

Town Government

The Town is a general law city under the laws of the State of California and has a council-manager form of government with a five-member council (the "Council"). Council members are elected at large, serving staggered, four-year overlapping terms. Council elections are held in November of even-numbered years. The mayor is elected by Council members for a one-year term. The position of town manager is filled by appointment of the Council to serve as administrator of the staff and to carry out the policies of the Council. The city attorney is also appointed by the Council.

Members of the Council and their terms of office are shown below.

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Member Mike Doyle Karen Stepper Candace Andersen Newell Arnerich Mike Shimansky

Position Mayor Vice Mayor Council Member Council Member Council Member

Senior staff of the Town include:

Term Expires November 2008 November 2006 November 2008 November 2006 November 2006

Joseph Calabrigo, Town Manager, has served as Danville's Town Manager since April 1993. Mr. Calabrigo has worked for the Town since 1985, serving as Planning Director, Administrative Services Director and Assistant Town Manager prior to his appointment as Town Manager. Before joining the Town's staff, Mr. Calabrigo worked in the private sector for nine years as a planning and land use consultant. His undergraduate degree in City and Regional Planning was earned at California Polytechnic State University in San Luis Obispo.

Elizabeth Hudson, Finance Director/Treasurer, has served in this role for the Town since December 1998. Prior to working for the Town, Ms. Hudson was the Administrative Services Director for the City of Orinda, where she was responsible the finance, treasury, information systems and human resources functions of the city. Ms. Hudson earned her undergraduate degree from Stanford University and her MBA from the University of Dallas.

Robert Ewing, City Attorney, was appointed by the Town Council in August 1995. Prior to working for Danville, Mr. Ewing served as the Town Attorney for the Town of Tiburon for five years and as the Deputy City Attorney for the City of South San Francisco. Mr. Ewing earned his undergraduate degree at the University of California, Santa Barbara and his J.D. at Hastings College of the Law.

Municipal Services

Town departments include Town Administration, Police Services, Developmental Services, Transportation Services, Community Services and Finance. The Town contracts with the Contra Costa County Sheriff's Office to provide police services. The Town has 114 Full Time Equivalent employees, including 36 Full Time Equivalent contract police officers. Full Time Equivalent refers to the number of regular full- and part-time positions employed by the Town, converted to the decimal equivalent of full-time positions based on 1,950 hours per year. Fire service is provided by the San Ramon Valley Fire Protection District, water service by the East Bay Municipal Utility District, sewer service by the Central Contra Costa Sanitary District, and elementary and secondary schools are in the San Ramon Valley Unified School District. The Town also contracts with private firms and individuals to provide portions of its building inspection, recreation and maintenance services.

The Town has 5 community parks, 11 neighborhood, mini and school parks, and 312.45 acres of open space, including parks and street medians.

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Labor Relations

The Town has no formal employee labor associations or employee bargaining units. An employee steering committee comprised of elected employee representatives meets bi-monthly or more often as is needed to review issues that directly affect employees, including compensation, personnel policies, the employee evaluation process and the Town's customer service program, and to make recommendations to the Town Manager.

Insurance and Self-Insurance Programs

The Town is a member of the Contra Costa County Municipal Risk Management Insurance Authority ("CCCMRMIA"). CCCMRMIA provides insurance coverage for liability, auto and workers' compensation claims under the terms of a joint powers agreement with the Town and seventeen other cities and governmental agencies.

CCCMRMIA insures for claims in an amount up to $15,000,000. The Town has a deductible of $5,000 per claim for liability cases and no deductible for worker's compensation claims. Once the Town's deductible is met, CCCMRMIA becomes responsible for payment of all claims. CCCMRMIA is self insured up to $1,000,000 per claim and has a commercial policy providing coverage above the self-insurance limit to a maximum of $10,000,000.

CCCMRMIA is governed by a board consisting of representatives from member public agencies. The board controls the operations of CCCMRMIA, including selection of management and approval of operating budgets, independent of any influence by member public agencies beyond their representation on the Board.

The Town's deposits with CCCMRMIA are made in accordance with formulas established by CCCMRMIA. Actual surpluses or losses will be shared among members according to a formula developed from overall loss costs and spread to members on a percentage basis after a retrospective rating.

The Town receives All-Risk and Difference In Conditions ("DIC") coverage through the PEPIP program organized by Robert F. Driver Associates. The All-Risk policy provides replacement cost coverage for all buildings and contents, subject to a $5,000 deductible. The DIC policy covers all property for flood and selected locations for earthquake, subject to a $100,000 deductible per occurrence. Although the Town is not obligated under the Lease Agreement to maintain earthquake or flood insurance on the Property, the Property is currently covered under the DIC policy. This coverage could be discontinued at any time.

The Town has had no settlements which exceeded insurance coverage in the last three fiscal years, and no changes in insurance coverage from the prior year.

Population

Comparative population data for the Town, the County and the State are shown in the following table.

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Population 2000 to 2004

As of January 1

Contra Town of Percent Costa Percent State of Percent

Year Danville Change County Change California Change

2000 41,550 946,300 33,753,000 2001 42,700 2.8% 964,500 1.9% 34,431,000 2.0% 2002 42,950 0.6 980,900 1. 7 35,049,000 1.8 2003 43,100 0.3 992,700 1.2 35,612,000 1.6 2004 43,250 0.3 1,003,900 1.1 36,144,000 1.5

Source: California State Department of Finance.

Housing

Approximately 93 percent of all dwelling units in the Town are owner-occupied single family homes. This proportion has remained constant throughout the last several years. The following table shows the historical growth of total dwelling units and the median sales price for single family dwellings.

Town of Danville Historical Dwelling Units and Median Single Family Dwelling Sales Prices

Year 1998 1999 2000 2001 2002 2003 2004

Total Dwelling Units 14,224 14,376 14,556 14,752 14,940 15,480 15,583

Source: Town of Danville.

Construction Activity

Median Sales Price Single Family Units

$476,200 528, 172 661,953 735,836 732,646 801,461 902,416

The following table shows construction activity in the Town for the past five years.

A-4

Town of Danville Building Permit Valuation

2000-04 (Valuation in Thousands of Dollars)

New Single Housing New Multi-dwelling Additions, Alterations, Repairs Total Residential

Non-Residential New Commercial New Industrial Additions - Non-Residential Total Non-Residential Total Valuation

Number of New Dwelling Units

Single Multi

Total Units

* Through 12-31-2004. Source: Town of Danville.

Employment

2000 $66,380

7,215 30 504

$104,099

$2,370 0

8,247 $10,617

$114,716

203 5

208

2001 $30,368

4,791 22,940

$58,099

$8,121 0

4 770 $12,891 $70,990

72 2

74

2002 $13,486

0 18,892

$32,378

$5,736 0

3,356 $9,092

$41,470

29 0

29

2003 $14,698

4,689 16 480

$35,867

$2,605 0

3,568 $6,173

$42,040

34 74

108

2004* $18,529

0 22,894

$41,423

$1,695 0

4 984 $6,679

$48,102

43 0

43

Most residents of the Town find employment outside Town limits. The Town is within ten minutes of major employment centers in Walnut Creek and Concord. The commute to Oakland and San Francisco is approximately 30 minutes and 45 minutes, respectively.

Unemployment rates for the Town have historically been lower than the comparable rates for the County and the State. The following table shows the annual average labor force, employment and unemployment statistics for the Town, the County and the State for the period 2000 through December 2004.

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Annual Average Civilian Labor Force Employment & Unemployment(!) 2000 through 2004

2000 Town of Danville Contra Costa County California

2001 Town of Danville Contra Costa County California

2002 Town of Danville Contra Costa County California

2003 Town of Danville Contra Costa County California

2004<2)

Town of Danville Contra Costa County California

Labor Force

20,870 499,600

16,892,000

21,170 508,400

17,171,600

21,440 519,900

17,375,800

21,300 517,700

17,460,000

21,680 522,400

17,684,000

<1l Benchmark 2003; data not seasonally adjusted.

<2l Preliminary data as of December 2004.

Employment

20,500 480,000

16,056,500

20,840 491,700

16,279, 100

20,900 493,000

16,214,900

20,730 489,000

16,282,700

21,260 501,400

16,724,600

Source: State of California Employment Development Department.

Unemployment

270 13,600

835,500

330 16,700

922,500

540 26,900

1,160,900

570 28,700

1,177,300

420 21,000

959,500

Unemployment Rate

1.3% 2.7 4.9

1.6% 3.3 5.4

2.5% 5.2 6.7

2.7% 5.5 6.7

1.9% 4.0 5.4

The following table shows average annual labor force and industry employment data for the County for the period 1999 to 2003.

A-6

Average Annual Labor Force and Industry Employment and Unemployment Contra Costa County

1999 through 2003

TITLE 1999 2000 2001 2002 2003 Civilian Labor Force 485,300 499,600 508,400 519,900 517,700

Civilian Employment 470,600 486,000 491,700 493,000 489,000 Civilian Unemployment 14,700 13,600 16,700 26,900 28,700

Civilian Unemployment Rate 3.0% 2.7% 3.3% 5.2% 5.5% Total, All Industries 326,600 336,600 338,300 343,200 336,300

Total Farm 1,300 2,200 2,100 2,100 2,100 Total Nonfarm 325,300 334,400 336,200 341,000 334,200

Total Private 278,100 286,200 286,600 290,500 283,600 Goods Producing 48,900 52,200 52,900 49,900 48,300

Natural Resources and Mining 1,800 1,700 1,200 700 500 Construction 24,600 27,100 28,900 27,300 27,100 Manufacturing - Durable Goods 9,800 10,700 10,000 8,800 7,500 Manufacturing - Non-Durable Goods 12,700 12,700 12,800 13,100 13,100

Service Providing 276,400 282,200 283,300 291,100 285,900 Trade, Transportation & Utilities 59,000 60,800 61,800 62,700 60,400

Wholesale Trade 9,000 9,200 9,700 10,100 9,300 Retail Trade 41,600 42,700 43,200 43,400 42,300 Transportation, Warehousing and Utilities 8,400 8,900 8,900 9,300 8,800

Information 15,900 17,400 16,800 16,000 13,700 Financial Activities 25,000 26,300 28,600 30,800 32,400

Finance and Insurance 18,100 19,300 21,400 23,300 25,100 Real Estate and Rental and Leasing 6,900 7,000 7,200 7,500 7,300

Professional and Business Services 55,300 54,100 48,800 48,000 45,000 Educational and Health Services 36,900 38,300 39,500 40,300 40,500 Leisure and Hospitality 26,100 25,900 26,600 29,100 29,900 Other Services 10,900 11,200 11,500 13,600 13,600 Government 47,200 48,200 49,600 50,500 50,600

Federal Government 6,600 6,700 6,400 6,400 6,300 State Government 900 900 900 900 900 Local Govermuent 39,700 40,600 42,300 43,200 43,400

March 2003 Benchmark. Note: County-only data not available for 2004. Source: California Employment Development Department.

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Retail Sales

The following table shows the ten largest sales tax payers within the Town. Sales tax payers are listed in alphabetical order. Sales taxes generated by these top ten tax payers totaled $1,644,125 during the year ended June 30, 2004, representing approximately 41.3% of the Town's total sales tax revenues.

Town of Danville Major Sales Tax Payers

For the Year Ended June 30, 2004

Top Ten Establishments (Alphabetical Order) Albertson's Food Centers Arco AM/PM Mini Marts Beverages & More Chevron Service Stations Costco Wholesale Longs Drug Stores Marshall's Stores Safeway Supermarket Shell Service Stations Trader Joe's

Top 10 Business Establishments All Others Town of Danville Total

Type of Business Food Markets Service Stations Liquor Stores Service Stations Department Stores Drug Stores Department Stores Food Markets Service Stations Food Markets

Percent 41.3% 58.7

100.0%

Source: Town of Danville, Comprehensive Annual Financial Report, June 30, 2004.

A-8

Amount $1,644,125

2,336,807 $3,980,932

The table below summarizes the value of taxable sales transactions for the Town for the period 1999 through the third quarter 2003.

Town of Danville Value of Taxable Transactions

1999 through Third Quarter 2003 (in OOO's)

Retail Outlets Total Outlets Number of Value of Taxable Number of Value of Taxable

Year

1999 2000 2001 2002 2003(!)

Permits

661 648 630 651 686

<11 Data through third quarter 2003.

Transactions

$292,201 317,527 306,896 299,194

74,969

Source: California State Board of Equalization.

Permits Transactions

1,384 $345,222 1,378 375,608 1,347 359,776 1,380 350,355 1,394 85,154

The table below provides a detailed summary of taxable retail sales transactions by type of retail business for the Town for the period 1999 through the third quarter 2003.

Town of Danville Taxable Retail Transactions

1999 through Third Quarter 2003 (in OOO's)

Type of Retail Busiuess 1999 2000 2001 2002 2003

Apparel Stores $ 14,096 $ 15,266 $ 15,449 $ 17,199 $ 4,403 General Merchandise* 105,671 109,518 104,116 Food Stores 27,557 30,345 29,888 29,973 7,817 Eating & Drinking Places 39,438 42,625 43,168 43,444 11,031 Home Furnishings & 11,444 16,163 13,631 11,744 3,021 Appliances Building Materials!F arm 8,953 8,060 7,420 7,859 2,006 Implements Auto Dealers and Supplies 5,874 4,902 4,022 3,995 936 Service Stations 23,351 27,266 25,761 23,156 7,418 Other Retail Stores 55 817 63,382 63 441 161,824 38 337

Retail Stores Total $292,201 $317,527 $306,896 $299,194 $74,969

All Other Outlets 53,021 58 081 52,880 51 161 10 185 Total All Outlets $345,222 $375,608 $359,776 $350,355 $ 85,154

* For the years 2002 and 2003, taxable sales transactions in these categories included with Other Retail Stores. Source: California State Board of Equalization.

A-9

Assessed Valuation

The following table sets forth a ten-year history of the Town's assessed valuation.

Fiscal Year Ended

June30

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Town of Danville Assessed Valuation of Real and Personal Property

Real Property Personal Property Total Secured Value Unsecured Value Assessed Value

3,636,934, 707 61,096,978 3,698,031,685 3,871,275,330 63,418,117 3,934,693,447 4,091,023,308 64,547,160 4,155,570,468 4,271,406,214 63,187,123 4,334,593,337 4,606,901,345 63,013,320 4,669,914,665 4,999,136,401 66,314,865 5,065,451,266 5,480,979,363 73,633,166 5,554,612,534 5,983,472,168 82,183,622 6,065,655,790 6,390,678,351 77,811,238 6,468,489,589 6,869,339,535 79,910,651 6,949,250, 186

Percent Change

4.99 6.40 5.61 4.31 7.74 8.47 9.66 9.20 6.64 7.43

Source: Town of Danville Town of Danville, Comprehensive Annual Financial Report, June 30, 2004.

Largest Assessees

The following table shows the ten largest property assessees and the proportionate share their respective assessed valuations represent as a percent of the Town's total fiscal year 2003-04 total assessed valuation of $6,949,250, 186. No single property represents in excess of one percent of total assessed valuation, and in the aggregate they represent approximately 2.4 percent of the Town's total 2003-04 total assessed valuation.

A-10

Town of Danville Fiscal Year 2003-04

Ten Largest Assessees

Type of 2003-04 Percent of ProQertv Owner Business Assessed Valuation Total AV Danville Livery & Mercantile Specialty Shops $37,120,786 0.53% Regency Centers LP Shopping Center 31,663,777 0.46 Iron Horse Plaza LLC Shopping Center 17,810,089 0.26 Fostoria Associates Ltd Shopping Center 14,045,907 0.20 TanDFCLLC Office 12,492, 156 0.18 Danville-San Ramon Medical Medical Center 12,386,919 0.18 Montair Associates LLC Office 11,762,835 0.17 Green Valley Lodge Partners Senior Care Facility 11,266,259 0.16 Danville Park Investors Apartments 9,173,764 0.13 Crow Canyon Management Country Club 8 853 750 0.13

Total $166,576,242 2.40%

Town of Danville, Total Assessed Valuation $6,949,250, 186

Source: Town of Danville, Town of Danville, Comprehensive Annual Financial Report, June 30, 2004.

Education

The San Ramon Valley Unified School District serves the Town, unincorporated portions of the County of Contra Costa and the neighboring cities of Alamo and San Ramon. It educates approximately 20,000 students and operates 17 elementary schools (grades K-5), six middle schools (grades 6-8), three high schools (grades 9-12) and three alternative facilities.

Police and Fire Services

Police Services are provided pursuant to a contract with the Contra Costa County Sheriff's Department.

The San Ramon Valley Fire Protection District provides for fire protection facilities and services to the Town and other communities within the San Ramon Valley. The District currently maintains two fire stations in the Town.

Utilities

Pacific Gas and Electric Company provides electricity and natural gas to the Town. Telephone service is supplied by Pacific Bell Telephone. Water is supplied by the East Bay Municipal Utility District. Sewer service is provided by Central Contra Costa County Sanitary District.

A-11

Parks and Recreation

The Town owns, operates and maintains approximately 167 acres of parkland and 20 acres of trails and special use recreational facilities. The San Ramon Valley Unified School District provides an additional 71 acres of playing fields and recreational facilities. Almost 20 of those acres were improved and are maintained by the Town through a joint use and maintenance agreement. Immediately adjoining the Town, the State owns the 10,000 acre Mt. Diablo State Park, while the East Bay Regional Park District owns approximately 4,600 acres of open space in and adjoining the Town.

[Remainder of Page Intentionally Left Blank]

A-12

APPENDIXB

AUDITED FINANCIAL STATEMENTS OF THE TOWN FOR THE YEAR ENDED JUNE 30, 2004

(THIS PAGE INTENTIONALLY LEFT BLANK)

TOWN OF DANVILLE, CALIFORNIA

DA.NVJI,LE

COMPREHENSIVE ANNUAL FINANCIAL REPORT For the FlBCiil Year Ended June 30, 2004

TOWN COUNCIL Newell Arnerich, Mike

Candace Andm·s;in, Co1mcilmmube Mike Sbimansky, Councilmembcr Kare11 Slepper, Coimcilmcmber

TOWN MANAGER A. Calahrigo

the

Hudson, Finance Diredor/Treasnrer Attonnting Supervisor

crms PAGE INTENTIONALL y LEFT BLANK)

Town Fina:neial R¢port

Fm the year ¢1tdt:td June 2004

'fabJ~ of Ctinf¢nls

f.tl:g£

Lett11r u{TrMm\ttm!,..,,.,., .......... m •• , •• .""'"'" i o,,~ruzaummlCh~rt ............................................................................................................... , ................ ~

Dire;;;loty uf PublkOI:ficials,,,.,"'·'"" """"'""'""""'"'"""'"'''" , .• ,.,.,,.,,, ..... ,,,, ..... :;<

Certifkate of Achit.¥vemtlnt fur Ex(.'{;llcni;:e in Pinancjul Reporili1g -

Wverrun€1\t l1inance Officers AimOd£\tiOn.,.,,,,,, ... " .. xi

C,,JJ!t'IJ'J1fa Sc>cii,ty of MMkijpnlLV'.'.:'.:: OHicvrs ""'·"·-""'······ '"' , •. ,,,,."."'"''""""""""" '"''"' ''"" Xn

FINANCIAL S~Ol',l

Uld~rtdcnt Audit-0rS" .Report .. .. ............................ !

Ma:nagruncnt's Disem1,1ion AAd Analy.sia "'""'"'''"''"''"'"''"'""·"""''""'''"''"''' ............................. 3

Town of Danville l'lrumdal R<lport

year ended June 30, 2004

T1l,le of Contents, Continued

Sttppleme.rrlal Inf-0nnati9ru

No,t-M'Jm G<:r,enimenrnl f u.nds,

O:mu,inmi: Stat.!m<dofl!e•rerme•, J;i;:,;~ndltures

Page

nnd Cltangvs in F1..1rid Bnlattces ...... ,. .............. , ....... ,. ................ , ... ,,,.,v,,,,,,,,,." ..... , ...... ,.,m ,/7()

{c,vmut:$-, E,q,endihlres

and Changes in Fund Irala:nce1;- Bu.dgoct aod Mtual: low and Moderate fu OO!'m± Housing Debt &!rvioe l;und" .... ,,,,. ... .,.,.."'"'""""'····· .. ,,,.,,,13 Conuowtlty ben,Iop:;;ru:mt Debt Servic,¢ Fund ...... ,,,_ "'" ...................... ,,,,,., ... 74

.1'1m'1 .............................................. . "' ................ 76

B.3¥!i<: !lln4nci;d Stat1;11:W:nts: t'htltl Ci!rn Medal Revenue Furul.. '"""'""""' .. """"'"'"'"'"'"'""'"·"""""""'"''"'""'"' .•... 78

Govttr:nment-Wldt,- Flirtancin1 Stah!:ments: Stat.:UlA!nt "of Net AS!!t:l:SH, .. . . •. ''"" ..• ,,.. ,,,,.,.,,. •. , ...... ,.,.,.,,,, ,.,,_ ... ""''"'""''"' ., ...... ,m, ....... "''' 15 Statement o! Acllvilies

Fwtd Finanewil Statements:

Gowr:n:rncnml Fund Pi;oandal Staooments: ».iaro,SMet ........................................................................ . """' .......... 20 Reconciliation cl the Goverru:nen!al Fl,l,rn,U Flahu1:et: Sheet

ro the Gove:t'lltnent~Wiru> St'ii.t~ntof Nt:t Asi;eUL,,.,,.,.,,.,.,.," .............. " .. ,,.,,. . .,,.,M.,"''"""23

5:tateitlQ:f\t of Revenues, EXpcnditux.;,a: and Q1~ in Furul Srunn«tt ................... ___ ,,- ...... , .. 24 Rew;u;:lliation of tl1'! Govttru'nental Funds

Expmili~and Oiange1> in Fund Balances to the Govemt'.i:\~t-Widc qt Net:Assets: ... .,., .. ,,,,,,,,,,.,., ............. .,. """"'"""".'""'"2ii

Stat0ment of Fiduci..uy N,;t A£1lf,1$ ......................................... , ................................................................. zo

Indi'x to N'¢W:s to Buie Finaxtdal Sta.tt;tt'\mts .......... ,. ....................................... , ................... 29

Notes m Bask Ftnancinl Statement$, .. .,,,,,,,,,,. ............ "'""'""'"'"""'"'""' .... ,. . .,, ..... ,,.,,,,'"'"'""'""'"""''"31

Ulll'\bining: Statement of Chat1ges in Assets and Liablll!Jes .... ,,"" .............. , ... .,.,",.""'··"·"""'"" .. "' ... Sl

G~:ral Govet'J.uxrcntal Dqv~pJtll!1rt F.ces anUSe:rv:io:Chmges

Assessed and Estimated Actual Values , Prindpal Tf>Xl>ay<!tlJ ....................... , ..... ,, ...................................................... ..

Sales Tax - Principal 'faxpayffl,, .. ,,,.,,.,,..,.,,,.,., __ .............................. ,, . ., .. , ....... ., •. .., • .,"'"""

"" ............... 88

.. ..... , .......... ll\l

Town of Danville Comprehensive Annual Fin4nc-ial Reyort Fm

Table-Of Conlcitt~; C9otlntu:d

~

............................................ , ............. .,90 CencFal Bondod Debt t¢ Assessed Valll#,

and Collec!ians .. INTRODUCTORY SECTION ........................... 94

Property Vu Jue, Omstructi.;rn ilnd Bank Deposits.,""""""""''"''"'"""" ........ 96 Misct"llaneous SL,M•olus. . ............................................................................................................................ /)7

a "e -- ---~ urn ™™=™

Nov<lftlb?r 16, 2004

1' own Council i-Own of Uanvllle

Yor,'2003-0!Co.mprehcosive Aruiual financial

The Conopr,:,hen,lvc <if tht: Town of l)anviUe tor the fiscal Government Code of ihe State of CJtliforrda and as pnescrib<ed Acco,,nling Standards Il04rd the Town Danville Flnance D•pa11mcfit, dnta an,i the: comr,le,ten,e;;s rests with the Toxvn, To lhe best: of our l;r,ov,lcdgc, .accutatc in fill material rcspocts, and is reported in a thl? finattcf;):l position and r~sult~ of operation;; of the vadou:; ()f the Town, All to enable the reader to tht: Town's ftnactciJtt[ activities have indudeds

of the

The CAFR rl:pr1?3£nlti the culn'Unatloo of all and ctttivllios- of the T{)tvn during PY ;;;m@.()rt The CAFR is in sections: Bask FiMndal Statt>mrnts and Stati:;.tk£1L

1, Tiu, iniroduclory sec,,'tiott f-0:miliari:1,es the re1;1diet with th-e Tov.-:n. and includes this h:an,-;nUUnl letter, th~ Town's chm, a dir1qetory the Goverruncnt Finanr£ of t;crl.ifkate of A<:hievement for Cal!fornlA for Outstandinf;_ Financial ,Reporlin.R to Ll1e Town of DauviUe

for the Hsral ye11.r ,enfl1ng June 30, 2003.

SUI LA G<JNOA WAY, UANVIL LE, C ALll'Oll:NlA 9432:6

2. Tl1€ Basie l;inl1ru'.:ial Sta.rements and Requited Supple:tncotary lufqr:mation include Man.agement"s Discussion rui<l Analysis, Gov~mmt•nt-WidP Financial

Fiu.nu:ial Statements-, Notes to the Fit1anc1al SL?itcmt?:nts and required SupplNnt"nt;,ey lfifotrnahon as w~l as the auditors' report on the

schedules. The Town of Danville al'KI incl1..ul~ an Supplcmentu:rf Scd:lon that lnch1des tJ~ Co1nblrung Fund l•irmnci:al

Stntemextls and i,;; not a the report

3. The: statistical 8P<'lion cont:±111$ scht•duk,s to reile,ct fitliJ:.rtclal trends and fiscal capacity of the to,Nn,, as v,rell as aonon1ic dam,

GE'NERAL !Nf0RMA'l10N AllO!JT THE TOV\'N OF DANVILLE

Incorporated in 1982, lJanville is located In Contra Coota Cow:tty, approximately miloo east of San Francisco, and Hes in the ccnb±r o( the San Rurnon

ttnd htU:i 43-,243 re:;faleut&,

D.:lnville as µ small rural during th<? 18501s, The f1rsl establrnhed iu 18:60, The Towri is now suburban white

office was

character, Older weU .. maintained ueigbborhvoUw C,tµ;X:1$t with new subdiviflions and their modern a1ne.i:1itie. 11-u: curntnuruty natural <'f('(:k<:a,, and biking trJiLs, and dedicatOO Mt. fJiahln. at an of 3,:849 to the ,east and the Las Park; elevation 2,049 feet, crc;ates the Town'1, wesoon,

Danville's commcrt'iaJ di;;.ti•iet ht:s itt the center o( the con:ununity and uffcrs rai,idenii-&irv·ing Cflffi)J1('f('.j,1j bustfll!$$CS, boutique shopping, and fine: di:ttingv The Old Town ar<1a is lli!}loricul <.:icntcr of the Town, It is a soun:e of to our residents ar.d is: the filt-c of rnuny holiday and specl4J eve.uts whk:h " throughout th.e yea, frol'.n arou:n<J the " · cities have dw~kJped joh centers including major commercUll and business

The Town under the Conne'it"'MAnag<:>r a T<Jtvn CouncjJ efc<:tiJd at large, te:rrtm:.

Council elections rue held in Noveml>t.'.T of yeun:,. Th.cc Town Ma,ruig;,r and the Aitorn:t;y are appointed by th<: Town Council The 'fown M,,ruig.ir

Departrn0nt Dirrct-Ohi and tiuL,ugh thrun, ;;JU other employees of the ·rown.

Town include Town Adtniofatt:{;tion Services. and Ii'ttrr\ll:fl

Services and Re,crn,,ti,m).

ii

Fictnrti;e;

Sheriffs

Ofrkttlo

ill'.'XViCc

schools aru J;t the San RJJntm

the Ban Rrurton Valley Fire Utility Districl:1 sewe:r

aru:! seccmda,ry 111:t' To\.V11 nltn cnntrll(ts

o! !ls buJ!dutg uwp,eciiun, v."ith firm,; nnd individuals re,cre·alion, and t:1Utlnt0Mnc,e servi.ces,

REPORTING ENTITY

A prelimiru,ry preP'l'hl£ thP (~APR for the Town Wi\S the ld\lntification of the with Government AcCoun!:ing Standards Board

nllilted govc1rm1cr,uil eitl-lties vven'1 evalll<li!.;'.J tu determine if the T<iWn \VM financially aecountable (or their This report indttdes atl h1r1,rl

and aanunt groupi of th£' Tot</fi of 1r.11t11mo,

lmpr,,vemeni Corporation i1J1d tf1(; Community Df!veiopmenl:

lmprovc::trt<:nt (:orporatum sarne rnernbetsltip as component unitsf induding _

111ete 11:J'.lt also Ihuutt:ful bcuc!it/Lun1:t:n between and The TO\Vfi of Danvill<: financing Authority (a pow.ers authority of the Town of ft1nvtllt? and the Co1rununity Devek;;pmil:Ht Ag<1ncy) is not im:1uded a& a .:::orup-0nent unit since it is financinJly independent.

ECONOMIC CONDITION AND OUTLOOK

A& of lune 31), 2004, t1t10 Town of DJnville's finan:cial cml<lltion rt:1mained adequatt\ An lndJevtor of flnruteial condition L'+ the 1<:vel of fund bafance, re~rved and nnre:serve:rl., in

funds. wWc:h in<:lud<.: the G:nerai, Revenuefr Debt Projects Fund:;, The Tc:r\'\<".t't has a policy of al le&sl 20'}}. o!

opc.ra!Jng expendllurcs a:, ,a the General $7,100, 100, or :17%, wa.~ for this

Qpe:raling res'4'1:V<i is r0:p<lttt1d rtet in the financial statements as $6,6561140, tmenl, tlw )une 30, 2004

JXt~rk<:t value on invest.rnents that is le;s than tht:! value, GASH inv,;stn1r•111s b0 t'il'}Jorli:d .at fair market value. ~ince

re,1uiree inv.;istments be held to the ToW11 ean oot r,:alizc market g-&iro or l05Scit An additional $1,489,749 has beett ;i:e4e1ved oc the Gt<ne:rltl Fund for variou.<:. future costs. including General pur<ha~P order e11eo101bw•1,ce e•i:ryov,ers, compcn.":>ated abSf;nces, new finat10:/ account:ing softwai;e and

iii

funds r€:St:ricl'ed for transfers to, other

in .:addltk,n? $2)763~16911as been d<'-11gna_te<l for

1'he total Gtfflf'riil F1u1d fund bai.::tnc,e -Of $10,.909.,008 represents 71 % of i0tvl FY 2003-04 General Fund Additio:na11y, approxiomtely $7 ,832,888 has been r~rved and desist.Mted Suex:ial RevPr111P F1u,df! 1:1 'Jf\'J; h?f'I in Debt ScfVice Funds, and

ThP T()wn has m:rintained a relatively stable' and diversified !"ts'Vettue base. tax, sales tax and intergoverrunent:al o:wenues arc the ToW+t's three OOtJJ:L'ell. In l'Y 2003~04., tlws0 .lCCOtJfltCd for 25.7%, 13.7%, and

Property tax reveru.1es, which were to tllo !::itatt± ,and addltlorutl through in the CDA, increased

$'707f082 or 105%f Town's location and housing Soles tax increased by or .6%. wJtieh is reflf:({ive of i:ll(l current flat

eo:motny. Jnb;rgovt>rnmertt:11 revenuP:t< decreased by? $2,645$20, or 49%., reflttting Slaw's raid of 5n14,2iH froth Ve.hide Lkerum Fees to bu.lance the State r0tnm tono,cm.;l jif&11l proj($('.f:s.

a

Durtvillc's jobless rate as uf June 2004 was 2.5%,, as <:ompah?rl to th¢ national rate of SJJ%, tht;! Smre rate of 62%, and tht:' c:nnt:rf\ C'osta Cow11y :rate of !it%, Danville, rm:tlonal, s1.1tn anrl Contra Costa rates arc 10.1'%, 12.5%, 7.5% {+rtd 13.6% low+ir r<:spKUtri:'ly thnn the previmm year. 1111'+ reverses the ove;i:aU trend of unemployment scr::u for the previous: thrct: yeru;::;,

lM 1'own USPS financJ;,1 plaru1ing process, whkh iotludes cstirnaJ;i?S of future revenue: ar1d C:~petiditure grmvth as wen <:2\piraI needs to be fiMflA.~>d frou1 the General a.nd other funds over the next The JMuu1

o.f th.ts model,- <:omp[eted iri Mny 1004 .and adopted on Tune 2004, indicared under conservative u:venue the Town wiU generally be able to

continue its curren1; St!Tvk,; leveJs and n suffkient !eve! of :reserves Qver the next five yeartL This out!Mk was h~s~ on modest property tax growth,, but: d«:foting :u:1.le.s t,ax Md deve[opm<':nt ft:oo as a TnSult of the slowing ecu11orny and the Tov.'1\ approaching build-out. C£1s tax revenues alone wUJ nut support alt of thP costs 251.,~ated with the Town1s street ovf'r the next five y(0:trs, The Town wilt need to maint.-'lin or irn:1·t".a.,w, Hs Fund to,nmintain current street f!>ys.lem Stktvice !evcl!;, the Town1 s Program will 01nJinut> to

an annual it1fu,t;,lon frurrt the othflr available re:sourc:1;s, btil it be ve1,-y diffkuit to maintain tb1: current- funding l,evels the rcverulc and

e, penrli!v:re proje<:tions whi:h were used ln the

IV

'11te abiiily ul lhe Town fa; continue .::u:rrenl :rervkc fw1tling of and str~t system service level,; depends on the stren,;th

MAJOR ACCOMPLISHMENTS AND INITIA'J'IVES

l\or f ioc;a,I Yey:?O(p,-04

took finandal e!£ecL'5 on~ the 1 own in

during FY 2{XJ3-04 that Md or t•.rlU lmvesignilicant The Town:

L Actively in critira1 statewide <:fforts to prrncct kxal rCvQnnes from the State to balan.:e the State

2, Coo<im,ed wlln il'11l'''"'" and Md f,ndlitif'ti, including fl(':tr rompllttion

area and LUru,truction of a new the new construction oi the AU Wars at 11.iH Park, nnd planning

cu1muunlly building ul Oak Hill Pur""

:l lrtitiation -0f a progrnm, to a;dd ramps. sidcwn:!ks us nG:ded,

4, Cont:iriutid with lo im1,ro,1e ;,;•alkwa,10 indudinr, a coru:rett: sldfwalk at Holbrook vvall<.way 9n [lj,ilJJu RuatJ anQ S+tu Ran:1on m.1intenance and replact"mcnt in various locJ1tions

5, vvcr $1,3 rniJlion iu pavctnent nw,inicnan(e uvt:cla:1s am! seJlls lllrou1,hc,ut'Tm~rl

~' flashing b<:aconl> in

7, lrn,ltlcca11nii<tg ntcasures electronic ra.imr disr>lav other rr11tasures in st:veral locnll,sns th1:ough,ool

K Continued ,vith capital to revitalize the downtown area, lot Jtl tht; ~ock Tower fvlunkipal

crnnplenion uf comrnercW\1 and rcl.alI of DZinvlll.e uthvt oHit:e ,:ui<l

downt<nt.rn ar01L

v

'9. C",.0111:inued cilOJ:ts: to promote bu:s:iness and economic developureut through with thic Danville: Area Chanibcr of C'i:mtmerre and the fJiscover Associntion, business funding for:

aciivitiet. and dovmtovm.

10. Formed an undCttgroundinr; district :for undergrounding of overhood lines

program ii.lid external activities that a impact on lhe Town's

1. OV'tt Sl mlf!ion dallarn in T(M.•nwide pave:rnent malntcnaru:e and overl<1ys,

2. initiate or continue a l:of'.11 with a total vuluc to $6,426)1'.i:34.

}, the Clock Tower Municipal lot to provide 56

4, Acquire land to develop a MW 84 spacc­M:'t"Vt!: <lownluwn busi:nmsses J-01;:at~d

5, constru<'tion tlt'I Hu: Cnmino

k''n"'"'lf. Jot Olt F1-0nt Street to l·Iartz Averu:ie. Front Street and

lines on fr-om Blackh.'.iWk Roa,l

6. ProvJde dcdk:ab'?d 1.'een Centers a:t all 3 middle schools in l)anvillc and fµrnishirut portable lJuil<li1mE- at the school sitt::S,

1. Renovation of Sport:; Ple!dt> Sit:cS, tui weH as m.aintentn'l<'B: projects tit

$_ MajnlT>nartce of downtown business district sl;rttt and traffi< rcJparnll.ns poles and power 1:iattcrics.

9. Provision of addltional traffic 6 it1terseclions,.

10, C,0mpfete and con'.'.l":rtKtion c;i( the Oak Hill Park Community

11, Complete the All Warfl Memorial at ()nk P:1r(c

vi

FINANCIAL CONTROLS AND INFORMATION

The Town\t-. fin:u1d.1d feo'.)rd& for opcr.ations are: maintain<:d on a mod!f:ied a,ccro<JJ l:ntsls,. with revenues: recorded when avaituble and measurable, untl ex1,mdinires m·or<l<d when incun~d.

Mmlll<!m(:fl! of the Town is rPsponsib[t: for and maintaining an intt2:Yfl& structure d<?8ip;ned to ,ensure th.it .assets arc from loss, theft or mis.u5c,

<liiffl \v)'\J.:;h is for the oi fiM1t<:iavl st:atenu~nts ln cottlotirtity 'rhe intenvil eontr-0l structure is but that lltcse object:ives ara met. lho lh<>t (1) the cost of a control should not t::xcccd the Hkely to be derived~ (2:) the vaJuati0n of (,OSbi

ond benefil:s: by m.4lUagen1enL

bu:dg:eh>ry controls. The- obje.;tive of the'Jlt controls is to ensure co1rnplirnnce

level of c9nlr9l 1,.1ra}f tlw indivitlu()l the eru::urnbraoce expenditures. appropriailon

encumbrances are :reviewed and, vvhttn

The Town is a member of the Conlt4 C(J$ta Cuunly fv1:unkipal ru8k Man;1g1,ment Authority, a tont;ortiom oi 18 (',.aJifornia citieJJ Jn CortlTa Ctt'lta and 1

The Rfak is a ooH-f unded

pn?<r,iu,nsarr <let<2Tmined was liable for the firnt $5,000 and police auto

memlx:rs. f nsururtCT: activities ate financed lor,g-t,;irn dovl Imo t>een Incurred by the Authority.

its own claim!t

vii

11"te Town ;1150 pay& a proportionate sha;re of irtdividual elaim t<.mts tn t"Xcess of this deductible amount up to a max:in;,urn :ranging !rorn $750))00 im auto luribJlity to $15 million tot liability, for its OWTI and other mernbe:rs1 rlaims. The Town has established the Genentl Fw.d a $22/}87 uppropda:twn to fi.tw1111:e claJm<i in excess of previou$ly bJUed dcposiV},

The 1'01".1n is also a n1eo,:Wtr of the Au:tn,,rlly's IS rcsporu;ibk for tl1£ ern,plc,yet•'s share of individual daims amount, up to :;,;;:::<1J,lJIJIJ. progr,nn

J1.e4Jth i.,,,wfltB are tlu.! Town 1,vhich offer;;, two health one preferred pr,,vi,de1 orga••iu•lion,

The Town hail implementro various risk control techniqu,es1 artd lass prevention and reducl::ion programs:, including. employee t:ruining und education.

OTHER INfORMA TION

JI i, th,;, ol tlw Town of DanvHlc to have an ,audit ft("tfonn¥!><l an:nwtlly independent certified puh1W a<;'t:ountant The audit of lhe Juruc:

st<1:tements was p,;Jrforrrwd by (:PAs. lfle'b: included with the ~cncral purpose financial st,1te1ncnts.

The prcparaJjon aM of thi, :repurt wq4Jtt :not have been Without thtz spt:Cj41_l efforts of the- Pinan<:e Department £\00 most

Yu. Sp.;ciai recognitk;:,n also goes to Director excellent Information on the Town'!> infra5lrllclure.

opporl'unity tocontpli111enl and expre68 our gratitude to all' our iru:l1;pcndcnt auditln•

leadership and suppott of

firrn who \Vet<:

l.;OUOCil, it would respoiwit,l.e and

Firta11t.J: Director/Treasurer

vfai

i i "

;;;

i.

r ii f

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i ~

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~

f ~

f ~

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i I

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"';; I I L"__J

I 1 ~

ix

f I

'

OJ:F!(;IAl,S

DIRECTORY OF PUBLIC OFFICIALS

Newell Arnerich Mike

Mike Karen

Robert Ewihg Marte Sunsert ChrisWenZlll Marola Somers Steve Lake Kevin Jed Johnson Michelle Lacy Tai Wiiiiams

TOWN COUNCIL

V!C!i Councilmember Coundlmembsr Councilmember

APPOINTED OFFICIALS

Maintenance Recreation Services

'

California Society of '7vtunicipal Jina nee Officers

Certificate of Award

Outstanding Financial Reporting 2002-2003 Presented to the

City of Danville

Mwch 1, 2flfU

... -a ..

STATEMENT OF PURPOSE

DANVILLE rs A COMMUNITY DEDICATED TO PROVIDING AN EXCEPTIONAL QUALITY OF l.lFI! FOR lTS C:rTIZENS

To achieve this 1,wllJ of excellence, Danville will:

• Veru,:, and mhance its narural environment

• processes for citizen inwlvement and stimulate active pa!llcipation ln

• Footer personal responsibnify, ethfcal standards and commitment

• quality development in scale with the

•

cultural and recreation activities,

leadership in regional Issues.

These enhance a SMSe of neighborhood and community.

"email town' values related to 11\e

!JUOf'tJRP ,OOC

x;ii:i xiv

FINANCIAL SECTION

'

C&L Caportcd & tmioa C4rtij'ted hhlk Aoxn..ntttnts

IND!ll'l!:NDIN! AIJDITORS' REPORT

Honorable Mayor and Mru:nbcrn of die To\\-'n Council

Danvil1e1 C,lifornia

We have au4Uk!d the accompanying Mandul statements of the activities, each 1mjo.r furtdr and the aggregate remaining fund infurrru,tl¢1t of t:he 1-0v.•11 California {Town), as of and for ended June ::.0, 2004 which oollectively comprise the Town';;: bamc firumdru statemmts a:s: listed in tabltt of ~:oo:tenw, Thiet«: f:lnancial smtcmoott: atf!' tho responsibility of the: Town1s

""'JXmsibilify is to express an o'pinlon <>:n these fin;111dal stvifu1:n¢n(s based on uur

We conducted our audit in accord,1rtte with generally ao::?pt:;,;d auditing standards in Hw tJttitnd Stntns md the standan:Is applkublc to financial audits ,x;intnined itt GotJt:nnr.ent A«dttlng Slmultffds~ issued by the Comptroller General of the lJnited States. "those s:Wtdards require that wq pl;tn <And pe,:form 1:1.e audit to obtain a.ssuraiice: about whether the flt1Jmt:1aI siat-0mmtu are free -Of material misstab:ffllent ,.'\fl audit Uoclutltts on a test hasisf evidfflre the !Ul:\Oti:nl'> and

disclotlW"es ill !Ile fuwntial staremenw, includes ""'''·'"'"f "'.~~:'~::fi:i;;;:;;;P/;:.;:~~ and Bi8J1if:kant estimates mad<' by mrmagvmrn.t, as WPU as ovaltmn:ng t! statement prescmration. '" ' " ·· · ·-- · ·

In oot ()pinion, the~ fjftllnci,al #f:ntt1me:rrts referred to above p.:resenr ra1rJy, the firutncial position o! the octivHies, (:D('.h major f mrudnir•g fund infonrurtion of thr: Tovm as of June 30, 20041 and the respective

aggn:i:gate ll1 financial

position the yea:r t:hen ended in conformity \'\'ilh ge:uerally «txi!pte<l prlndples in th<! U:nit£d Sta:ras.

In aa::ordance V.'ifh (';()'Vernmatt Auditing S11u1dards1 WP havP also 1$$\ted our 2004- on our ronntrlerati<m c( Towrt's inh?rna! controJ over ftnartdal reporting QJ<mJpil'1>J< v,rith-certain provi"iions of laws, contracbi, and part of an audit pe:r.furmed in aceordance in conjuru::tk1n with this report in considering the results of our audit

The aL'Companying Required Supplementary W-on:nation,

""'"'lsted prlru:lpally of --.--· _presentfltion of (he Requjred Supplementary ln(or_1nativt1, HuwevCJ:, and exp~ no opiuiqn on it

Tull frq:, Ph: (8.J"J) Ui:b2200

............ 'l<Jll !'fiml'u:~4::;6,-0n7 ·--

Meml>et, of the Town CoWICil

DtUwill"', Cillfonrla

Our audit ivas conducted fm the comprlse the Town'&

inforutatkm is prestmtod fm

of lon:xiiJ,g an finaru.:lat statemenm.

of addHioruil firumdm smtementtL The supplementary

in the audit of the basic financial statenen;b, and, fn our respects in relation to the- basic financial statements taken as a

not~ subjected to the auditing pr~ures , accordingly, wt express no opinion un

~-'f~ O•klim,J, Califumla Ocrob& l, 2004

,

financja1 state:mt'nt& thitt ~ The Tmvu of Danvilk{ s flnaudal Mtatcrnents tue- issued in Government Accounting Standards Boord Statem~nt No. 34 {CiASB No.34). This discussion md

u1clal pe.rfotmanc<: provides an overview of the Town's financial activities

noiet. to thu!:ie linoraial stat1Z.1ncnts.

FINANCIAL HIGHLIGHTS

• Tht: Town's ni:t asi;:ets iru::te,as:ed L5% front $1Y3,4Tl,662 to $1%,326/126 as a :result of this

•

• The net cost of all

The Basic Financial State.Jnents Town as a Whole

The Basic l;i:rtAncial SnUert'ients comprise tbe Government-\Vide Financial Stdte1nent$ an.ti the Fund Financial Stat:e:n:i: ... u1ts; these two sets of finaru:1al financial activities and financial pru:lltiMt

financial health. Other :fa:cttu:s tu eonsidcr arc <:onditwn of the To"l'\'n'S roads, The Stalinnenl

the•mJpllo:;ls 01,m1,a,v111n1!n•t ni11em1es ru1d expe!lS<!,rnf ,,ad; "ftlhoT,,=,'• p1rograms 't!w S!alml1mt Net A;,sets i<• tt,c year,

,

Tmvnacts as a trustee or agent for bi?n¢.fat of those outside

of Activitres and activities

in Net Ai,;ets, th!': Tnwn

Govern.mental Artiviti{'S - _4.n of th<r Town's bask Sltl'Vites rue considered to be gaverrunmtl:'!l activities, lntluding gtJrtet~ g~vemmentI pc,!ice, '""inli!\rumce a.nd recreation und general administration.

rrrcrmred on thf;; accrual basis, which ls similar to the

at~ taken expe.nses

Reporting the Town's Most Si;,nlfkanT' I

Fund Financial Statements:

•

a detaih;d sfwrt-tenn view of the Town's g01mp;umnt ()!)Cl:l!U(Jn!l ,Md the, basl, servic.'5 ilprovid•'5. Govemmmtru fund lnfurmalioo

future to f:i.11ance the r owJtN programs.

(or

reconciliation :µ;:h~dule following each Governmental

11,e Ti;:rvrn is th<! trustee, or :Fiduciary, for certain nJnounts hcld on behalf of devdoptn'B, property

fidluclary activities are rep¢;rtect Fidludru:y Ncs ,'\,""""·

seJ,llrate Staternents of Net Asscta Ittid

Tmvn cannot use these assets to finance Hs oper.,t1'?DS other financial

The Town is mporuible for eris.utirtgthat tlttc assets reported 1nm,,setu,H!S an, wsedllor t],s:ir i:nt,md.edpurp<JScs.

No:Ws to the Finandal Statements

in the Uoverrux1xtnt-Vv'ide- and _Fund Financial statements.

OU1.e1; lnforn,ation

revenue fund, infr~s.Lrucl w1:>

5

THE TOWN AS A Wl!OLll

The Towr{s combiMd NE-t Assets fi)1'

ll!l1IU N.i~,.,

rune 30, 2004 wertt:

(S¢e page 15 for detail)

Current and -O'ihcr .usets

Cu?J"{;nt fj41;>j!Jffl!$

Lons--ttTm liabilitim outsm:ndmg

't olal HahUidft6

Net?<mv!tr. lnvt!$:Wd tn capital ag;ew., net of debt Rmtrlcted t-Or:

Gov&mmenfaJ AdhdtJe•

:!ll!2,! i<l!!!! $ 61,703,.518 $ 56,21?,613 $ 5,<'1!1,!IDS

l51t2~555 {2,!2~,Q~_l ~.ij ~~lJli<'!;2

3,650,54!) 10,348,934

l3,221,i7J, --~Jil!ii _,J!,Zl

1&~.670,99S 141,MS/ID6 (2,374,311)

1,947,885 iA79M3 400,442 1,Z;,3,6;:ii) 3,,701.600

-,-14,30S,'772 20,!\63'.3'.!6 SpvcW projects. ,Subtotal for rt->sllie!Md: ~19f~?! 25/144)\1!7

Unreocttcted ®145,:1§4 1§,!,1?,2§9 3.317,585 T ota1 net il$f,llltB I 1% i3t!6,ffl I 193.412@ L 2 W ffl

$2.908il6'1 comes !r-0rrt tlw Activities: and fl(nV.S through the Statement revenues by major soun:e:, CXC€SS and or detidency of revenue:+ over expcnSttS bcfore<:onttibutions

and extraordinary iteu:w. and total US9Ctf! are pte.'lented ct.mg« in Net Nl11ets.

•

as shown in table

To{al assets increai,ed $2,884,952:

• Current and other ruisets lncrea,,ed ,,,,,,sn,,965 prl11eip•lly a~bt. of $4.875,680, accounts receivable

• •ssel!I de,:re,s.d by$2,!l02,033 oi depreciation) as follows:

Lmd

Park lm1,rm,ements

CoNttuction Infrastructure i runJ tncreZL'lC

IncrcruJe

$

iticrease in Pmk impravem0nt<; 0.nd the i:najority of t·he ducreasedn Ccmstru~lion ln Prt>gress additions, wErre offset by in Building Improvements, Irurostruclure,

Total !mbili!ies decreased $24,032:

to ~ d1?C:n1as\t in deferred mvfflt10 ofl!iC't by i1t1 ln<:rot1Se a!W:'nces due in

one year,

• Noucurrent lia,bilitii.::; increased a total of $61,55(l This t<:flect:s a netlnnc~s.!ln. oomf,mSlll:ed

forme.t::w1

Net hoots:

• due rood-

• l!cslrldod net il&Se!ii iru:rel!Sed $1,965)390 due lo an incrc•se of $4611,442 n! encumbered funds fur caf)ita.l pr{)jer:tt:l, tiri..1 $3,945,436 of restricted special J:J;!VffiUfJ funds offset by a dt'crease of

restrkted for debt service.

FY 200,-04. <:ontrol rncasure3 and ge.net'al Town improvellcnts,

7

Govunme:ntal Activities..C:ro&s Revcn.u.zs and Expenditures

Table presents tho grcos ,,ev,mue;; ruad ,cx;,en,dih1rcs the Town as a whole,

Tabte:2 Gross Revent1tffl and 13-xpendituret

GOVf1rnmenta! Activiti>?S

Revenues

5

Ti>tal revenues

£Kpcnses ~ Govetnmiil:tt:a! A"tiviti69:

Maitlt\:'1\#t\CC' StlfViCti

Developmt'tlt scrvkes :tvtVkvs S<:tVl('.(lf;

~ ro,;;i tlXtCttUun

D.tpredation

Totalexperusee

h1mNisc (dc:cr£aaeJ in net assets •

~

13232,161 $

= 2,8.,'114,878

265,;!63 436,4:SS 515,345

5,l16,t06 s,250,;;us U,Ul?,524 t759,175 1,oc\2,3S3 0;102,094

164,568 581,785

---- 16,005/:114

2iQa~ •

WJ

IU,534,ll76 $ ~ _z:g, 977 Jl5'.l

2.7$,897 :\85,$14 615,0AA

523:t39ll 4.553,719 6,747,704

267,236 t,389,029 2,07B;l{lll

136,199 676,959

3,3116,441)

25,!ii>JJ!U

a llll,2z2 s

lm.:.rease (Decreaoo)

2,697,2BS

6,tl4

116,284 {69tl,.436)

565.-152

(2ll,3"9) ~:t5,J74

3$16,440

(MS,!!!!)

!40Sley!n

Varianc~ shmvn above are- reflected in the net numb¢rs of Table 3 md are discussed foUowing Tobte3.

•

Tab lo 3 presents !llleb program'• ttel coot (ltl!al rost leoo rev<lllttes genera red by !he aclMtJes). 'fhenet coot shows thiJ fi:rulndal burden The net oost of programs

TabIE;,

Govemrn£ntal Activities Coot of Services

(Cwwral 1l\W-OJtl!li!ii and lilt}}l}tHiM- Nflt of Pro,gram Revenues) (See pagv.s 16- ttncl 17 Wt drti:!:il)

Ma inl:vrun1m -sW:Vite,,

Patka and r-eaeationservice»

Deyr.,::llltion

!ncniase ( decrca5!.!) in net asscm

Maten•! b<!low:

ZOO< !llm ~PM

$1$,682 717 l!!Wl,llZ l~l.~\lill

439,795

(1,.428,524) f/65,715) (136,199)

$,litn

154-,284 {191,610)

l,$9,486 (1;)92:,07)

{243,:;,$'1} (6fi2J3!19}

_ (3Jl)e,~ _,_,_

$ 2 2P§2td S 3.311 :229 ffi W ?®l

t Revenues for tlu:: Gcnt'Tttl Cov01cru:rrer1tv,crc $:2,7'59,"4601 !rnwcirthanthc,pt<>Vimxqs=, reftle;;ting opproximalely $814,000 of vehlcle llceru,c

it, intc~t raws ru1d booking of the Ufllltal:iz-ed decline in fair value: invc.stmrnts in romplianc-e V.'ith G,ASB Statement No, 31 .

• • • •

•

•

lower £:.rant rl;!veru+e::. of $75,246,

• an increa".!le in Opera:ting Grants of

• Parks and tecro,atlon s.erviees increased by a nft of $662,809 due to ~n i~nse in

• • • tvhlch 11vere reported for J,I 2002.-03, are allocut-cd to

• net coot nf servkes Jrullcates tlwt the OV{}r,i.UJ it, 1'.hi.& is a bv the Tov...'TI

a.n efficient manner and that th~ Tmvn j:. r-ffreient inre,:o,,<rring services wcith

Activities on program revenues revenues,

FINANCIAL ANAl.Y5IS 01' THE TOWN'S FUNDS

year-end the fund baluncc for the Tmvn's General Fund was $101909,058, $-2,908,926 over lMt ye.ax, 11te IJ;'\O;'eue is attributable ·ro revenues above the budgeted

inti!rgovemm0ntat reve:iueJ:J of $121,.539,

reflcdlng lower Parks and Recreation reven1J.C8 ofbe:t by expenditure• and use moruiy and propol'.ly of ($756,039), reflecttne

10

The LQ\'1' ro:1d lvtvderate lrtcouu: Housing DebtSe;rvice FlUJd increaseJ slightly by$8,782 due t:o intt:res1

The fund bal once in the Civic F adlirles Capital Prnfe<:ts Fund grew the General

TM Community rkvi"loprnrot &i?rviCf: Funds dccrt:a:sed $2,456,770 as tru,; increment in the CDA (00;'.tJt:ded debt service on the 2001 Certifkates partial loon puyrnenL of $2,9Q9,79!J to !rm Gcneral Fund from the CDA.

• net of 5819,1,86, ttecoHected

Furul of $107,986; Moasrnre C fund of $153,595 -0mil LLAD !ctnd of $239,318. These increrums were off~t by a dci;:line in the Bui1ding and Fm1d o! $J85,l88 and a decline in the Engirreering Fund -0! $::,,.560 as deveiopr:nent :,ervices are c01t1pleled for funds in previous years,

on fund oolaru::es,

General Fund Budgetary Highlights

Thtt Gt:neral Fund fund ha:lant'e m.:cnded budget hy $21.,2R2,702_ Actual revenues excreded ttt,; finnl $27,252, This is due to conservative estirnates for t.i:x, sales tax nnd

n

CAPITA!. ASSET AND DEBT ADMINISTRATION

Caplt•I As•!!!•

Atthe end of FY 200!, the Town had• book value of $14$,622,522 invostedln • broad m,,:,, 01,:ap1ta1 buildings, furniture and equipment. Improvements. and inJ'm,trt1chtre.

imprc,vccmontS, due lo tho decr,.,,es of $232,0:lll Jn

I paxking .lots, 5-02,855 in fotTtlture, an.d fixuirm,, $l,7:l4,,l18ln c-0mtrncl:ion in pro~,

Tttble4

depreciated hut rather TM pave:rrumt condition as of June

the fjnancial siateiucnts Jn

Cnpitttl AS£t1t11 :it jun~ /JO, 2~

Origin;,J C rutt ~:rnchltion Book Value

Latld $ 16,ffi,097 $ $ 16,89;:i,097 1s,111,m 5,956,091

Park improvemmts 17,4%,339 13,E.Sl,004 Furniture il.rtd equipment 3,7{10,651 3,{)16,356 684,295 Coruit.mction m prog:nms 1,2(17,71:1 1,'207,713

1tl,'14H,%l 41.5$4,3;:!6 114,15'),635

1otnb $ Z1fi '761200 $ ftl lAAffl $ 1%22 522

"

tro,d

'fl)cble5 Capital Assfrb. at Jun~ .30, ;UIN

(Net of D&p-Ieciation) Oove1:1unent Aci:JvltiM

<lil!f m > Jo,i9$,l)i1 $ 16,595,091 $

lner-0:,;,se {O<:r,te_<!:§e)

flt1ildings nnd parldng: Iim; 11,761,:347 11,993,37;;; Park :impro,,"-Om..nl:fl 3,914,'135 524,115

684,295 747,1.50 1,20'7,71'5

1nfrastrm:tnre

Ti;,tals $ 1!18.§~66 $ 15] ,624..S@:i $ Q,602 033)

2008-09. No debt firta:ncing is rnquirad balances :and prOje('ted revenues over the next <i9o;nil'keml projects include

Debt

the Tov.'11' 112004,,05 to

TahJe6

Ot1Jstandint1, De'bt, at Ye~d

QgVgmm,v:ut &ttvltilUI

21l'1i = :lt 6,385,000 $ 6:555,000 $ (170Jlil0)

CPmpt'.'Dm\l'M ttb%'tll'.'M (bftcked h)f fuv TfrWn)

Tot.ls

13

3,570,000 3.,71>,<JOO !}9.e;,01$ 349,B~ -~/737

$ 1PW615 $ 1A4+4Mll $ {2$}'7

ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES

assumptions in the Ccneral Fund revenue forecast for FY 2004,,05 wt;n;:

1. Property

2, g, 4, lnveeitme:nt earnings

cu:rrent lower :rates.

d1t0- to an estimated nsc in as:sesst!td vah.1Jltion and

t\Vo yiears. lnnger-ttmt1 tnvestments matur,e md ate reirrvoswd at

5, Approximately 103 new :residential housing units wiU be coru.tructed. 6. Thfr State subventions will be bas¢<'! upon a population ol 43,24.q.

COl\!TACTING THE TOWN'S FINANCIAL MANAGEMENT

or need ad<litionµ,l financial Wormat:ioo, t'ontzict DanvllJe, 510La GOflda Way, nanvllle, Califorrdt1

,.

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS

Town of Danville St<J;l<m<nt of Ne! A• .. i. JuneS0,2004

ASSlITS

Cnrrettt ru:m.:tm Lacl:.11ndiriv¢1rrt1,i,11hl

R«;tivab1¢$ (lltl Qt ;i!kfwm«r)' .AiXO\Ulffi

S..!ru; tal:ih'l

"""'' Tu!;;l wa:t¥i.d.drs '.fomietdPtfltMSW

NM<',U'ffl)l MrA:!$: .lw$tri..~ <ath and (tWm:tmmil!; hcld wjtJt tlw:lll lll,;tm:

l<,w~ u•l't, ID:11) W,Vffl!lll!1Ellh'i fu.!<l by 11rn Oty 'l'nlil! tmllriel!!!J cW Md invalmrmfo

()$,;( n«Y:11:rrortt tttt'W

l,md held K>t ru4:vdopmmt

1),?l4lt\?~t1\i i11$(,{t

lililtJaJ.#ttil

1JAlilUTiil5

CUtrtmtfutbi4h;

U~revm11e

'f<WII JJ»Hl:lt!M

NU ASSETS fim.Ahncll1 ,lt, c.1p:i1,i1 ilMeht ficl uf m!;rt.,,.1 debt Reio!rl,;k:d Jm;;

t.,'~1¢:l

'totialnrl-1$

5e!t t1ctt.mpanyq Noteli lo llafi,;; !lliwncial:Statm:rwnl£

15

2'1;7()6,163

\,405AID !l6S,??7

1,685,3'.l{

lUOO!l

JOi,m,891

:.tJ)i,ll,3,2

"'"' 21fL201 129S7

ff}'J!l71 l'J()Jl{)tl

l;\®?,4N

1$,ii,tl10,!191!

1)?47,885

'"""" t f96Jl26§2fr

Town of Danville

For the

flirucii..aw{~'.~m$

M,ruuy pv=m-t

Gi'lv11oom,nml Mfivllitfl:

Lfgislliff.V£ f{rnm,r,<lrni~ti!

U:gf!loo!YliK!ll t'>Jlk,:£tivkiIB

Mamti:rumn, ~"" & lishti>'ii & lru"1liGJop,., !Jty.:!opmm•~ 'frnmpatTo.!:l,;m ttfl'it<m

Admirntclt;,l:ii!t!~fl'I

l"ar¥Ji 'lfld ~tjromirvl=

Sptdlll tr'tuilhl fr!{}gmm

~ton~=m&l,t

T 6W !¢WttmnCJ!hll ilct:IY!tttt

8111! acrumpi111y!ng N01rti ro twlic Jli!\ill:1Cial Shittmen!A.

~-1 i()per!ltforu1

;M,5,,©J ' 4:15,illll

S:lffe:145 tl,l1?i1C6

5,072,162

s,rM$,1,w $13,S:B

1,f41,-02'J

Z,!):20,7:!l\

1MJ,fili

16

Y><pt<1m1

CnpiW Owrg,mfor M111I1mrumw T""1 -·

• 265,263 ' '" 436-,458 515,345

s,:11n,100

_,,, '""" S,2!ill,215 2/15.j,401

1,i::H:3.'15 6,152,522 U\6;)/ji'lfi

"''""" 2,759,17,',

! 0154 1,632:3& 1ll1.1Ji,6 3,192004 t,519,:123

Ftint:riOM_/J'lt.j~illli

~"­'fownmruwger Lip;al~

Pn!k,u~

M4in!tm!iMl 1tt1,!l,:w &, Ugli l\rlJ'l k bml?;'.:>.pt

~truml ttr!Vitml

framp,,rlatlm,, a!H"Vlrai;

Arlmlnl'ltmtlvi, !Wn'lrnar

P4tbimtlr<:cr1111U!)f\¥1,vi(f!f

S~t-nw r,rogmm ln!itrust tm longh:rm dt4it

TouJ g.lNITTltfHJ'!l!Jil urtvhlih

Gtattffilllld GmnMan,l

C'6r.hib>1ht,ru ('__onhl1,atiru,,,

1%',100

1,JS0,33$

C<1MIJ"lif'!lvm!ffl;

r­Prop(!rty

&a!&li taXfl1

Olfu<-

't;;brl W)ttN.

:V~inW!Jttt;t~

~~(NO!ti"J}

Gmmaaluof~

~ltli>:!OOii-

Tut.!lgtnl!i.dl!l!V-

3,95$,3-11

154245

~~it!ll*t-fll'I

'W!lfll!withl ·~oiyllll!f

17

-

' l9 • '>26;1$6

Z,96\1.A(fl

li,£12,$17

1~!10,J.3&

1,6'.tJ,,!f7tl

G::w,,m.n'ajnhr!J

k::!hrilli.WNu!

(TI>;p1W<111j

Jw:ven11U11

(2~,214) (436A5!1)

!pl5,3i15) (4,4!!'),6,z)f

(2,291J,lll4J 43?,7'95

(1A.OS,IB7j

\1,632,a!!:Jj

{1;U&Jli4}

7,4%~ 2,m,m i,514,o.19!

lil;l,715 . Z!l,7\16

J}J3,7lU

2Jlrn/lri4

FUND FINANCIAL STATEMENTS

ID.J\NVILIE

1$

GOVERNMENTAL FUND FINANCIAL STATEMENTS

Town of Danville Govemm<!ntat Fu11d Financial Statements

Qnera1 fvnd

The Genera1 Fund t& the lo bUCCQPDt.d

~s, i'.ldles tuxes, utttestricled revenues from the Stare,

G!pital [mpruvement Praj<'!dlJ f.u:ud

lt 1$ used LO ni;count for all tirwrnclal ($$6\lrtim

sour.oos for i:hw fund .ire and furfoittJscs1 ru:td interest lncomr. Expe11'llt111'e

This ftu\d rceeive~ developer fees Jud conixibu:tiorn:, from the General Fund for futwe rapilal hnprovetncnts, in

CiVk Fai::ilitits: Ca pit~ ;J'rojertu Fund This fund is used ro aet't'.ltu,t f-0r tl:!J: eoruttuci:i011-0f tlw com:muNty fa<"ll!tit& t~h as Danv!lh1 lJ.bta:ry, Cooun11ruty (,'.enter, Tovvn Offtces ru:td future:m\\· park and recreation fuciltti.:::;:.

I.Jghting and [,;uidsraping Special Revenue Fw;d Attoo&s111imt pa.id by OM!n&rs who rncruve :,;tnmt ruainternmce n:re this fund,. TJut lflcome 15 community roadside, med)l:m arul park lautlM'nPf' rosfB_

Lffl¥ and ~erate Jneome HomJing Debt Servloo Fund

=d rnsidents fur Andocnpe and pnrk for t1m Jlrflt Jwtt:in,g system, and

1'w®ty JX'f'i'f'rrt of ml! ms, inetittMnil' reveours rollecl{;d Mthio Um Community [Ncwlluµm,ot .A,;,mry

fbi1 tunrl t-0 1wtv1re debt ist,mcd by the Town fur I.he comm«:tron oflow and moderatt ™""""wultm <if Druwillr_ Jn lmt't'ffl!wt 2001, the Town tsnu:ed Taxable ~venue tlondfl for llioe oonstmetioo rommunlty project

Comntunily D~"clopmeut 1'.rebt Service fund

~ ,of n1J tax incn:ruoot revenues c0lt.x:ted within the Cot:l\tliurdty ";~!:~:~:s:~:~::·~::::;: to :5£!'Vke rlebt t.:U!tcd to the develop:mcnt and td!.ll:bllitutton of the

Meeting Ha:11, the Village Tht:a ter, and other p:rojoct improvcmenrn,

19

Town of Danville Balance Sheet Gov1:nuntntal Fund~ June 30, 2004

Ci.vit Modtr.1tt1 Ulpj!ft! Fdrat# """"""'"""' -·~ $p,Jti4! 14:vni.w D<PJ! s«rtio; FMd - 7""1 ,~, ,_, - ASSl!'r!l

MSlftS ¥1¥bfa}l'ldinvtllfmtrnta • oo,m ' 14,SZJ,263 ' S9,.21!!,,'14i! C.awi11m<l OOV>mtl1""'1tt ' l;JAM,\17 • :!t006Mil • S;V0,59,S ' 1,656,tlro • 'l')OJ,00 «:ei:V~ {fl#{ nf nl4)WAl:W$$J)

~ktJ (h¢lCf&:lll)WiU'>cilii)J A«rnmbi Ul!,459 -~ - $1,112 'l(f),'?Y(t '1,421 U'4 -- """' Sali&i1axw 27Cti00 213,t7& 'llA'I -· 11,1~ - l1&f>A1S -Ml iM,693 "'""' 1A7(1 = ,~an lli,,Arum..n6ifr ~.~Jlblf, 00.,

3(),493 md hfil,:ffrn: t;,d&i:V!!lopn'«ut

Laitd fi!ld fur :reilev.Joprmnt T®iiJM&M

'f'fillll~ l..L\.1lltl'l'J ANf} rtJNO l).AJ:,ANf'tlS

llAll:lLIT'f!lS :\Nfi 1lUNU llAJ.AN01$ --IJabilll::it~ At.;:mmw f"'IYlll>k • $ '"'""' • ZSQ!,334

~wp,wnW¢ ' 1)399,!)l!l: ' 2lS93/! ' 44'79 • 11l!rll9i! ' ""-lpayrull "" Yll,"'9

A«=,iid "'"" 42,10 °"""- !,1..<;1!1

""''"' --- '"' ..,,,,,,,

~dtt'\let\lJV mnv 1*-l96 M\'-~q!t,,msfu:od!; ---~- "'""" """"' Mv,imzym1fuymot.Jwtfull.<b -- ·-- Tml&lill!!:i;;;: --·· 1r~ '""'"" 1'-0tnl liabill~te 2'15,134 ___ 1,2:m 194,2111 >lli11bt~

1:\mdlll.:l;m-~ei,tkit:

Rti&erved fur: -- '""""' -""' -- ""''" 502.?49 c~• "'""' .U>,000 1.2!3""1 7'}1,,$7!) ""-- """ """ t.1.lmiryl\'~ -- ,,,..,,,. 6,.li(:o),Y2$

""·"" 1;11$,500 _An,funi;I ,.. 104 °""""""*"' -13,117,r;&l '75,00() """

~hi!idfot~\~ '"""" ~!OOM8¢.llRW '""'"' ,'m,(,15 """""""""' UtlMMiwd lriv<'drn,ml gnln 400,000

Pavwmni RVlll!irm"*t <00))00 J\.!JRt~ · Of,Mhcticmrf "5.000 """"" ll!0,000 ~ ... ,_.,...,,,- ""'""' "'1;100 7'7"95

Nw,mk 745,774 Olpital~tct;; ~!1,700 16,"3$,:UO

!l,O\X3,6ilfl '""'"' ~-, """'140 6,6!16,140 Fj.rJ\l\i'.¢/ ¢;,;tiw;,tit~ ")'i\liim: ,ro,oo,

250,j)OO J~ 1mdraigtll<ftd fur; (>pi"1p- -~prnjl!ct$ 1'-0taliitndlnllftnre, (Nute10) ~6,16S

'ftllal fund balnruH {Nole lOJ tiJ,?Q?,(1$$ Zl,/jlj.23$ ~732 l,!!.517 """"' 'l'c.td ij..b1Htlta tirt& :l'vF<d lmJann,11 ! "·""""' Tnbd ilnWllti® aw:i fund ha1And\ll ' 1'.t52ll.440 ..!__A.9$9.4,17 .. $ ... ~ S Ui!!l,,,, ' ... ~

St.! ll0W:mp1rt1,yffi¥-N,,ie& W IIMk l''lm~iajZl1*tti:1WPI$. Zl

"'

Town of Danville Rec:OnciHation of the Governmental Funds Baalt("e Sheet

to the Government-Wide stateu:u?nt of Net Afmet:s

June 30, 2004.

Tohd Fund fl:.lanttt~ 'fttfnt G-01kniin.rnt.1! Fundtl

A,r,.9\-lr,!$ r¢porWd fur g0Ve;rntn:¢:t,Ml s,;tivlclt>$ Jn !h¢ ~al'¢~l of Net A4#>:'14 arc d:iff,;r¢r,{ bo:nwat

Capn:at- used in goverrnw.mtal actlvi:tic& 11re not rurront!iruint:fu! reliOllt'i.:® ti.lid thernforq are Gtrvennrientn! Pimds !mlnflf:tr Shee

Nel1--ileprednblec11plw.l 11r,sew Ll!lproeiahle t:lipital usmt!i-, na

T"'1<1

Dd,:,rn:d ft<V<.!fl""* t-•Wr<g t,:\)m n tttEi rPN<lvah Ir thilt cl<) m:it ~ tlw n•vm:u,m nh::ogr,rtwn critcrin in go1rommmtal 11.tnd HMtldal attitauents are reelawed o& revenues It\ the govermnent-wi<l0

SL

fmutt(tal rm;,,ruf(:es Thett:fure, U'ltervst p-0yablt, Is: not 1eportifd M a Jiabil11y in h Gnvernmen!lll I'und!i Bal.ance Sheet.

!lrn nn:1:'t:nt period a.ml then&ore they are mx --r.-0ng-tttt,lt\ ,;1¢bt due within omi ymt C+>mpcrumt>nl t1b<'W\e;ti$ payiibkt dW? within oae ~nr

T.-0ng-tM'm U1it,illtioo - du11 In rnflre tlwm ,:,ru, ysr; -<'~t<rl:e2-of pm:iclpation

- f,t;4p. p!'lf"l:>lll "UlJnJHtriiiaTI:d am:?'11.(IW JNY:Wbi<?

1Ctal

N'M Ast1<lhl m'Gnvemmtw,t11l: ArtivitIJM

S<e~mP'iJ.!1¥in&N4!\Wttrt!MtrVl~Stil~

"'

10! ,322,691 ii1;499,6;U

070,()00} (29"'1)

(6,ilS,()00} (3$<\000)

(563,'334l

fi\ ~!l!! R "~· 1i!!,i!Jij1~~!iii i 5 !~ !! ~lf·,il ~~~ J <', ;.{!..;, l i!,l"6tii; iiflil-~ :'l n~ ! ;::? "" "" .~:$<:<".;fri: "'1' •

~

J; :ii ·s~!!!!l . I •• 'i I Ii 0 ; " ~ ~ !§"S ¥iE:ilB ~i ~ • ""' s: § N ii ~.

'.z c

" ~

~· lji 1 t >\ ' ' ' ' I :, f "' :;i " § ill • ;j

J § :,; 6t

~

~

I '""! ''

I I

Town of Danville Reconciliation of the Govern,nental ftm:ds Statement Revenue5-, Expenditmes and Changes in

Fund Balances to 'the Government" Wide Statement of Activities and Changes For the ytrar f'.!nded Jut'l:e 301 2004

N>tt Chll:nge irt Flilt1d l};il:mlltJ> -Total Govtimn1t1ntnl Furu:la

Am:ounw repmteil Jnr gmenurwmvti ;u:fr.-JU¢s in thr Stuttmw,1t uf Attiv:itie,i me <lifful?n! bm:111Jse

n. £:,.;p¢ru:l1mro1;, Ho\v-Ovt:r, ID ilir Guverrtm.enP'Wl.k ; Attwts,. !l,1; ,::,x;t ,;f tJn:,:w U!itibi !u 11lb:11tcd Q.VEf tlwlr

lltls is the amount of ,capitill 11S!ietlf roconied ln the

is reported 1n the Covemment-Wide Slntemen1 of A;;tivjtk,;; the use of rurrent tinnntinl l'Clffint!'t'h

~~:~~:::: ""'"""'' iP!bi; Ocve¥r1mi:m~W~e ~toi AetwrtiC'! ewJ Clw,nges if, !bi::y ,.l;;, nvl tt:qu.fr;; llm uat, of !fif1tm.t f'<ltlffitilll i'te&:mrt.;;.-1. Tfoitc.h::mt, it i$ not ropwrud rui ~cl•tu:N$ in jy)Vemtllrtntlil fu:rtda.

RtWt:UW':1 that huVl!'. nu! 1n ti;;, Fund }'if;,;;nclttl $1.iilkmenls ii.B

Imtda,

~ umivun·m debt:rcvu~: v Cettifli.;a1nS,Of pM1Kit:rnoot\

in the Govemnmnl~Wide Stntem;mt of Activl!Jr;; the w¢ ,;,f .:.amnt ~ resou:r«'4,

rep0ritJ il1:I w,pmvlillu,::. in svv<.=uue116tl

¢xp«(ti#: vl\ king-tenn debt ia reported in tM Gtwemmtmt, Wide Sttmtmrmt n( htlvitrea and n in Net ~. hut they do not require the J.l5e -0f cummtJmancial reaourcat nu.itTikm:1,

lnfurullt expm:we 1$ not :rcpn:rb,:1 M !}J<;pendihrro~ in gmmrmnrnlni fondR 11w following ,nntrunt ~15thrd

Changit ln Ncl Atllltl.S ,;,( <wv~-nht.1 Arthtitit!~

~IKCtmlpnrrying Nole!! W ~ l'irt;,mi,J Sfu1mtw;rtt,;. ,.

$ 5,BM,5%

1,4AfiA60

(4,006,flli)

~;VJ())

14,l!ii

(243,7;!7)

1~,QIJIJ

FIDUCIARY FUND FINANCIAL STATEMENTS

Town of Danville Fiduciary Fund Fin.:u1cial Statements

AGllNL'Y FUNQS

'fhls h1nd ts ttsed to $k'.CDunt for fl.'1$els he!d for cmploye#i< ln att0rdance with Internal Revenue Service Code ~on 401(a), The p!;f!fflon plan, which ls entirely fut1dcd, COVL'T9 all -0mptoyees, 'Irus plan is

Depm;tts Pt.tn4 This fund is compri&txl

seit...iiret:U!d 1:

tmnporarily ~ired with thu Town, E::mmples of deposit& include ash hortds posted hy cori!n1.ctot1>, :n>nlul deposit; a:ntl

Bpeei.tl A&ilel!Amertt T }JRtrid Ag&ney .P!ntds

the, period from 1985 l:o 1990, the Sycamore Valley Assee:att1ict'IL tiistrict improvement A:.sesitrntnl Dislrit;l (N:ERl!At))

with.in J:lm Town of Danville to construct lmpuw,,1ru,nb in the'«:' areas, TitCSft tltr¢¢ UT¢ w;ed to ilt<;(ront :fox the i;pednl assessrw;mb levied properly wiUW, the Asse5s1nent subsequently paid

Ci!clJ AsseimmPI,t District's long-tenu debt !bit honQt of tMire ~o ~~$lltr;tlt D:i5trlcl:9 are fron1 Ui¢ mmwtl npcclul i!Qll!M:<nwnlr., The OOn& are not an ob1i,gation of fflf: TOW;t\; and

,activity of the AsseHmcnt Di4itkts aru being areoum:ed

"

Town of Danville Statement of Fiduciary Ntrt Assets Fidttt:i.Jiry Funds

Juno 30, 2004

ASi1ll'rn

POOk:d cash Md inVt:fitment1

C4£h and Jtl\11%\m'i'nla with liJK':al agents

fnt,mmt reozivabfo

l.lm:nOO t-Otlhihulloo pe11$1tm pfurt inydi~t'/

Total M!>eta

U.ADttJtJl!S

Att':ill.mti flilJ'&hl#

O.,pmrit'i

Du-0 oo &~men< &tr;et ht.ndhnklen:

Held :!rt ,m1pl?y11t tt';J!it't

Tll!al fi4bJJ:ltWJ

Sitt> $iXW!J'fil'Jims N,,ro, to li'ilii¢ lliruqtri111 $t:1Wllli1t'its.

""

Ai!<"'!'

$ 2:,-064,005

3,.(157,576 1,<l4

$ 8,427

s

2,054,460

3,060,130

Town of Danville 1ndex to Note& to Basic Financial Statemeo:fs Fur lh< year ended June 30,

!ail!

1.Sum"'1nrycl!iignific~~AoooMtingP~cietL, ... , ...................................... • ... ,,, ., .31

2. Cash and Investmmw ......................................................... ,.................................... .. . .. _. _______ .. 39

3. C.pltru Asse!B ............................................................................... , ............. ,.,,, ... ,,,,,,,, .................. ..44

4. lnti!Yi'.'fw"ld Tra.J1Sactions," "'"' "'' ....... ., ""''""',".,, ,, ., , ,., , , ,., , , ,. ,,., ,., ,.,, , " ,, "" ,., ,,., , '", .,, ., ,, , ",, "',.,,,., "" "45

5. t.rm.ilAat'ld Notefl Receivable""""", ...................... ,..46

6, Unea,rned Revenu.e '""''"'"._.,,.,,,,,, ··"·'·'··'·"···•······--··········"'" ,,,,,, .. ,,,,.,47

7.

s ................................. 50

9.

10. Fund Balmces , . ., .... ., ............... 01

11. Risi, Ml!.!la1!1!ment................................................. ................................................................ .. .. 52

12. Defined Co:ntributio:n Pension Plan~·-·-···· ............... , .... , . ., .... ,.., .. , .... ~·····""'"''" " .................. , ..... ,.53

!3, O:,m.mitll><mW llM 'O:,nitingeroe• .......................... .,,,,.,,,, ................... , .... , ... ,,,.,,,,,,.,,.,., ............. S!

29 '"

Town of Danville Note?> to Basi<' Firui:neia! Statements

year ended June 30, 2004

l. SlJMwlARY Ol' SIGNll'ICANT ACCOUNTING POLIO:Eff

A.. De,cription of the i<epm-ting Entity

"Th{! Town of Danvill\! located in the San Rrution .,.,.,. Town was inotlrporr,ted u, 1962, and encotnp.:iliisetii eig,,h,en

Tlw 'f own operates m1der tl1e fo.tJtt of goverfm\eni, wjth five Council m-11:mbern served a fuli,.time Tm\fti and stafL The ToVl!n's staff of 84 as 1.v0:ll as 32 l)C'p.artrritmt e:rnploy~ under contract With the: Town

* Public Town provides round-the-clock services from a central stilt:lol\, using tt1,irn,d J>CfS(lMel p,,n,id,ild 1urul<r contract with ,,i., Cc,uu.ty 15ruerifPs Dcptttt:ntent

+ S~ and R<mclfl "The Town bud® and m&intaifi8 its str<'ets, curbs, ,and related property

• Parks and R<:ereation, PubHe Improvements. Plitnnlng, bvTm.;,,"11

• In addiUQt\, Uu: Tovrn e:1nploys vzu:ying n1.unbers of i'!eMO>lai personn~t fur 1nainrena.ra.:€ an4 recreation.

TM sa:c,mp;111y1ng

component unit'>,

Blend<id Component Units

includes th0 finnnt:iat Mtiviffl'J< or cnmpnneint unia. 111£' comporumt tirllts dm,ussed

of tlw significance of their opemtiorutl (;ottndl, which acts Ill! tl,c

adm!nistraii1te and accounting 1undk,n, to tho TOWJ:1. Th.ose !,!erulcd

subs:tante,~ part of thB TOWrt's

~~~~=~ed- Tru, Com!u:;u:r~::;;~:i;;;:::,; Section

.. The Town of Danville Ctvic CorporatiOl\ W•s pur,;uillll to the stale of Oiliromiit Non-Profit Public llenl!fit

"!'""' i, to provide iinanciru MSlstance to the Town fur the rl!SidcnJ» of tltc Town an<l the surrounding areas.

,,

Town of Danville Notes to Basi.: Finilni'.'tll:1 St,Jl:tements, Cootin1Jed

tho yeru: en<led June 3-0.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Con!inued

A, Description Reporting Entity" Continued

The Town of Danville Financing Authority (Authority) l uru:I the A~mcy under the laws of the State o! Califomio.

authority of the Town

the is finuncially ind:ep1side,1L Aoconfuoi,Jy, ae<,001.par,ymg !>,rue lilllllndru statcmenw, Se<: Note AS>Ci!Slrtent

f-01' fu~ discUSSIOft

c,,m1olere financial statements of the above entitit!S can b<l obtaitled fr{)m the 'rown's Finance

AcctJUnti1"111; (GAAP).

-ly 1111plmru,c,tatlnn

B, Basis of ACJJtlUJ1tlng and Mensurenu1nt Focus

are described year ended June 2001 and thi:1. i5 thi;< third

'Ille mote si~cant of the

The aecounts of th<: Town are organized on the baBiii of funds, each of which is considered u ,.!>ru:atc 11C<:9untiog entity. Th.c operations of each fttnd are accounted for with a separate set

1:1ccounb; that 1.,--ompds1:: its asSt:l8, lial;,illtius, {unU equity, reveru:tes, and e;,;penditures or C:XPfiIBCS,

accountt1d for in individual Gov1?:tnmental K'tlomccs are allocated to and

purposes for which are robe sp,,ntana the means by ,vhich spending activities are control1ed,

4::;;;~~~~;;;;~~~~-Th;!;•:,r~~uwri's iimooru smrorru,rn,i Include a ol '1llrl O..nge, in Net Assets. n-ot j!QVCmrmrntlll a,;ii v ili"8 for the Town. fir! ocoo:y activitie,; ol the

not included in tllillie Htatcmenti;.

These staternents are pr~ented on an "ernnomic resmtttes"' MMSttfflm&mt f(Jtilll aftd the accm£11 •ccotmting. AcrordhlJ!ly, all oi !h• Towns - and liabilitkls, lncludinS

as weU +\$ infrastructure assets, and arc IDC1uded IT} the accompanying: Statcrnct1t of Net-· The~! accroal basis of a<:counting, reven11!':S expenses are recognized in the oerlod in which ~ ,;program

Sl

Town <:>f Danville No~s to Basie Financial Statements, Contintutd For the year ended June 30, 2004

1. SUMMARY OF SIGNIFlCAJlrI' ACCOIJN'flNG l'OL!ClllS, Con!ixlu•d

R Continued

Certain eJiJninatians have been made- k!S poeseribud interiund activities~ payables ,and All internal balances

he :following inhor!tmd activities have been clirnirra:te<l:

• Advances to/ from other funds

* Transfers in/ out L<Yog-ter,rn n,ceivable and related deferred revcrruc:

The Town pronooncerncttts all NCGA StJt.eTne:nts anrl as the following issued oo or before

Nc,v~bw: >nourn:<'mcnts with or coutradict CASB Accounting Standards Board Sl:at0:rr1<:nts and tnte:rprela:tions, • OpirUu115, aud Bulletins (ARB} of tlt€

~~;;~:,1,;;~~f;f.~~11:1~~ = Govttmrnm.ral furul firuu1Clal statement~ include a I Rt>Vtrn1e:1, Hxp&11tlihtri'<t and in Fttrtd Balances for all

all ullljOr fu1-.ds

ac,wnpu1yitig schedule is

The Town has pm,.ut,~ prouvw1ccn:1t:nt8,

All funds ar-e accouoted fu.r on a sp,;nuu,g Qr f'CtJOUf<:eS,,,

<tlm!ffl measu:oott'\et1J: fr:Ktis and the modified ace:rual b.1His as~ts and (1.trf€.'nt 11.abilitit<.S are iMluded on thit b;;,1,:t»;e shffi!L Bxpc11dllimes and in Fund BalanO;:$ in,:;,1'.eases {r,;,venu,,o sources) und und other in net cuxrieul: ~.

Under the rruxlif:ie:d u:~ basis of accanntingf :revenues are in the accounting ht wltlch they b(:(.'.'.otue both u10as.uruble un<l availilblc to finance expmditures of

<:ur:rent period, Accordingly,, revenues are reoordcd when rcce:ivM in cruihr ex-cept that (generally 60 '1fter are rooogruzed when due. Thi! · have been treated M lo aecrui!I by th!? Town, axe primary revenue SOW'i,':izs,

property taxes, s!Yes taxes, intQff"!4t revMiuc, rental r1•venuP and

revenues are not susice,otil,le received in cosh. Expenditures

is incun:ed.

itr1trgovet1uni:rtlal revenu~1 other taxt:s, charn:e,!o, Fines, forleit:m'es, hc:t:rues and

they are usually not measurable until in the accounting period in ,.rhkh the related fund

"

Town ,;,f D;,nville Notes fo Basic Financial Statements, Continued For the year ended June 30, 2004

l. SUMMARY OF SlGNif1CANT ACCOUNTING POLlCIHS, Conli:ttued

fl 8asi$ of Acctn11tti1tg at1d Mensuremttnt Foau,, contftliteil

Dcien:ed revenues arise when potential revenues do not meet both the "rr1.t''<\Burabl0" and "<ivailabie" criteria for recognition in the current period, De/erred revenue5 nlso arise when the governnwnt receiveS resources before it ha$ a daim trythem, af'! when

to incurring qualifying ~penditures, In subseque:tt pericds

The Reconciliation of the Fund Financial Statements to the Goverrunent-\Vide Pirt.UlCi!ll Stutement1 is provided to explain the diUcronces -created by the npproo<:h of CASS Statement No,

ft~~:~:~::~~:~~,a~~:'dluc,ary fund :l:ltll1Udal sraten1ents include a Statcuwnt 0£ Net Net Asoolli. The Towns lil:luctary funds

C. Cm,h and J,w,.tment•

ln a(X;Ordanc-e with GASB StutenMl No, 31, Accvuntirtg and Financial Reporting far Certain 1nvcstmenf5 Exutrtur! lnvet1ttnfflt P.ooi.s, highly liquid market investfnmtfl ;with maturities of one year or t1l tin1e of purchase ;:txc sttited a,t amrn:tized coot All other L"tvesune1tts ru'e stated at fair value, Mai:kel vuluc i$ use<l a, :fair value for thooe t,c.;ur,itics f9r V.'llich n1ark~t qu(ltations are: readiiy available.

~ T<YWn rru,intains a rnsb and investment whleh inrludes ca...h balanceJ; and authoriz~d investments af all funds, ,.vhlch the T0tvn invests to ~e interest earnings. 'I11e

it\trscst t\runed is allocated to each fund based on it!l average month-end CU$h artd ,ent balru1C'iM

The Town participates in an invesUuent lrwestment Fuud (LAIP) which

and Asset .. J3l3cked Secu:rities. LAfF' :S inviesto:ients at¢

faith md credir of !l1'l St,,t.e of Oilifomia colilare,.U:,ing Structun>d Notes ond Ass<H)ocked Se<:uril:illll an,su.bje,cl rstes,

34

Ill\! Stale of Calllocnia tide,! Local of the pooled fund, ln Structuted

lo <redl! risk with th< full Tn addition, lhl,S(!

to chang£'. irt interest

Town of Danville Notes to Basic Fin+\ncial Sta~ments, Continued

ended June JO, 2004

1. SUMMARY OF SIGNlflCANT ACCOUNTING POLICIES, Continued

C. Cash and Investment:;, Contfmu:d

D.

The To'Nn reviewtJ a.:nd refines its Investment Nov<:mber 2003. The Policy states that

investments and

annually, Yl'ith the moot rt1eent :investment ~¥1th

1uid to meet needs:, eartlif\!s" is • r.urther, the Policy ,tate:, truit the

ras,po,t1S!lbillly to protect, and niaintaio "'"'S<h and intrn"rtal controls reporting requiremerrrn and

stipu.lules 11P¥<tn1itted Invf'stment:'4 2 for further

of the- T ov.n hNB acquired one of its primary pw:pose to At<:OOt

E. Ct'JpittltMtll!ts

include lands1 buil<lings, twniture, and infra&tructurc assets rouds, signal £tnd 2imilar in the applicable aetivitie:1 in asscts are at l:rii,ro:rit;:r1J c9st or estiut+ttod rusrorkld <:ost if actual CC!St ivas not available. Donated~ arc valued at their :estimate] fair value on the dam donated. Town policy haR .set

• $20,000 for roads: and brldR•CB/box c1lllverls

• $3.000 for eatch bruliru! + $2,0(10 for mm,Mkrs

The Town has chosen the Modified Approach for reporting the stu;el:s subsystem of Depreciation is recorded on a straight-line I,.wis over tlw useful Uves

J'ru:kj--

3IJ.50y;ms

"'

Town of Danville Notei, to Basic Finaru:ittl Statements., Continued For the year ended J:une: 30, :2004

1. SUMMARY OF SIGNIFICANT ACCOUNTING POUQES, Continued

E. tiaptrru A.ss~rs, CotJtitttf#,4

'Ihe Governmental Ac<:murting requires the inclus:ion of infrastru<:ture

issued Statement No, 34 i·vhich :in (infrastructure) in !he local govemrrumls

financial 'statements. ln accordance with Statement Net 34, the Town has in.duded lh.e vvluc of all infrastructw:e- into its basic financial statmru:nts,

The Town dl1lfinoo infrastt:uchlre BS th,, tt1·iln,arv its bu.sine$$, The assets include:

* Street system

• sy.,;tems

assets that aU,OW the Town t:o conduct

• f';iJ:k and reereation lands and imp:rovement systems

llctiklin.g,<co,m1J•in•id with the site amenities iluch aR areas

in&astructure syi,;:t,;µn cam be divided into, Fut the street e subdivided into the fo1UO'wi,,g:

+ Pavement

+ Curb and gutters

+ Mediiai\S

'the dittail of the';Se, snb~tems hTP not in these Mak financiaf st:a.tem(:t"!ts. HowltfVer, the open:tting depart:rnents maintain inforrnalform,garding tlmrub~y,rborns.

The Town elected to t1Sft the Modified Approach :infrastructure reportin~ uf its tU:tSUi:illletlt will

• + conditi9n -+ PMr ccmdiri<ln

•

71-100 51-70 26-.50 0-25

,,.

GASll Statement No. 34 for pavements. This condition

hou1ogenoous scginent of Town owned potentia1 dcfe<:ts. A Pave.rnent Ct.Jtiditibn

Town of Danville NQtes to Dasie Financial StateJUCni:s, Continued

30, 2004

l, SUMMARY OP SJGNIFlCANT ACCOUNTING POLICIES, Cornlnued

b. Capital Assets, Continued

trulintruning the 111treet assets in to aclli0:v0: an zrvMa~ of 65, of the

trm,clir1g at the allows minor and

minor rouglmess be noticeable to

For µ.U other infrasmtcture oy,,teins, CASB Statement No. 34. appr,dS<,d its own infrastructure as cu1nplcit:d un :internal update fur June 2003. Thi:t. determ.ined

defined as tho m:tllru cost to acquire new i,ro1perty the tim1: of first <:oustruction/ acquisition costs were developed

1) Histor:i<:~l r,;:cotds 2) Stamlanl for 3) 'Pr'f'A;ent cost i:ndexOO by a tartar of th& prk'r innv11St? from the

coruitruc:ticn/•"t"isinandatc to t;h.+curr<,nt date

The aczumulatcd from the date of ca:ru;trm:tion/ao;1uu1in,on ~"as usi:ng for book was th<m by deducting: cost

E Unearned Re:,rmue

r«:og,ru,md in conneetiun with a traruiaction be!ore the earfUngs p!'(K'i.:SS is )tint incliided as a Habilify irt the government-wide :financial stutemerus

reiat1:d a',kets_

G. Campensatell Absim,.,,

Cwnpt;t1Satet;l abrern;-~ include ac:cumulated k>ave when an cmpioyce: recc,g,u,,es each em1pl<ry'ee's

Fl Long· Term Obligations

ln the govcmrrwnt--wide applkable governmental activities, BOT1d prentlUitlS

J$$~ coots,, if ,o;mterial, a_re d¢[t;!].,:f,!(t -(;_ni;l mnorlized m'tn: the effective inteffllt method. Band& payabu:, are net of lh<! npplirnhle discOQflt Bond i$$U11tt<:e costs a;ri\ -as delerreci the related cl ebl

37

75% of !he

the

Town of Danville Notes to Basic Finartrial Statements? Continued For the year ended June- 30, 2004

1. SUMMARY OF SJGN!FICANT ACCOUNTING l'OLICll!S, Conlirmed

H. Long,,'lmn ObTtgatitn«s, C(rfftinuea

In the fund firum.;;W statem1:nts, bond premiums -and dwcounts1 ilS \\"ell ,38 bond issu!lll:C\) costsJ 1ne face amount of debt Lq:,ued is- re_ported as other financial sources. on debt iMuttt'ltt: are reported a.1

other finaru.:ing sources while diK1Jt:urts QT\ debt iBsuam1t reported as other financing uses, whether or Mt withheld from the a<:hui:l debt proceed!+ recoivc:d, ar£> t<::~cl a..:

1, Fund B1Jla1u:tm - Re:5l!rves and Designatimm

In tlw fund :f:inantial stat-erMnts, governmental funds report reservatioru;; of fund balances for not av.rdlab1c for-appropriation or ttre: legally outside

balaft\w-se :r,;;pre~t ~g:cme:nt

J. Net Aesel:!i

";;:;;;;;;!;1"'J;;'~,':,l:;;~~:"°;:;~(~~~;;';~'"j; -This a11tourrt l'.:Ori$ists cl capi~ll .13:,etf> nt:t of a, outstar11:Hntt rlcbt th.it contributed to the

~l;~~~~:\;;~ !~ amount is restricttci 'V)' e:xtmrrnl creditors, grantors1 contributors, o of govemmll:ttts,

This amo1.tJ1t m all net """'ts that do not meet !lie d<lirtilloo ol '~inv-l±SU:d in fi&.~t14, nt:t of rell'itt'A debt'-' fir "restricted net &SRet~" '15 defined above.

JC

purpc,se, for whiC'h both re_stricred and -unrestricted net assets is first.

L. Prop,,rty Ta:<es

Pxopcrty tax revenues are reeogniZkid in t1 of Contra Costa {Counly)

aSB~entt! for the Tawn. propmy ta<es or• levied

"'

Town of Danville Notes to Basic flrum<l•I Statements, Continued For the- yttar €¥tded June 30, 2004

1. StJMMARY OF S[GNfF[CANT ACCOUNTING POLlCIES,. Contirttti?d

M, Ilse of&limates

The p:repm-ation 9f b;.wk !Jnancial stut<tmcnts in with gefle:rally accept<>d acooun'Urtg T O\vn rrt:O:f!il~rrtcnt

amounts

N. Reclt188ifiC(ltiot151

runinm1,s J)l:esenred Im the bcf'ft redaQgiflM in order to 00 consistent

2. CASH AND INVESTME.>;TS

<ash and investments1 and investmC'nts hefd by fiscal agentS, at Juno 30, 2004:

G<:Ni·1tm\cl'.i.t,. fidudHJ"_y

Wide- F'm1rllJ SbtM:nrnt of

NetAoocru Gnv=l:al Btatffl1tl\t of

Cash MO IDVestuwnW

...,."',..i"'"' aoo mv-;, .htld by fiscal agent

• 57.:!31,116 $ 2,IJM,OO!l

Total

lm•et1tmentsgroup,,d by maturity date at )uue 30, 2004, are ;;hmm below:

C1Arret1t to one year OMtotwo~

'Three to five years

Tot.J

,,

$ 'iJ,-1$8,903

l4,il94,ll2lt

12,0V,934

9,iJWA<,o

_____!!!!! $ 59,395,121

Town of Danville Notes to Bai.de Fin.1,ncial St;tt:emenh•, Continued For the year ended

2, CASH ANP INVESTMENTS, C<mtim,ed

A.

The C,i[!fomla Government Code ~oc!Ati,;:ins to secure: the Tov,rn's s!llms Iha! collateral in this in tsu<:h rol1nteral thooe of'. a general creditor. Thus, OOUateral ,oooklu•d t-o be hc1d in, tltc 1 vwn's name,

is

t'~"""CI"''"' securities 1n11;ii, equal al lea'1t 110% of U1e Jow,1:t'& c~i d,c~W. institutions to sccuru To'WTI by f:imt trust

mo:rtgag-e notes A v.alut of 150% of tht;: T0Wf\'s tottil w.uv.:,d collat.mtl for cash dt:prmits, whit;h -1\t'<t fully insured up to $100,-000 b'y tl1t1 Fede.".U Deposit Insurance Corporation,

B, 1nv"8tmm,tti

The Town is authutizad _ (ca!lfornia Government Cooe 53601) and in i!Ccurdmoo with the To¥7fi\s Investmefl:r Policy

' '

' + Co~ • Medium~Term Corporate Nota~ , Ref}Ul'Chase Ag=nc'Tlt. cnllotcrali7""1 U,S, Sccurll:ie,; or l),S, Goverrurumt Federal

, Califomil'.I LO<:at ,;;,gc"1Cy lm•es!menlJFw:1d . ~-- - - -• ' • •

tn addition, sp,:dfic• the J:rulXimwn perc1IDtagu of the total

40

Town of Danville Nokts: to Buie Financial Statements,, Continued For the yollX ended Jun• 30, 2004

2. CASH AND INVESTMENTS, Continued

B, Investments~ Cotftitt!l£d

stat~s thai the is to tnaximize the in addition to State statut01:1, establishes that funds on

feeler.illy instlred or co1latera.li7£d and investments Rhiiil: havt: m,,tmdtv not to exceed years; (2) be laddered ,and based on cash flow forecasts;

to limitations to a co:rtaln pc,xcnt of the portfoUo for each of th<: authuri~d invest:meru.s.

In a~'(:'.C!rdance v.'1th OASB Statement N,), 311 Accounting mtd Finam;:ial RefJ(trlilJg Inve::t1m:rti# urtd for External InvetJtrnerd Pools, investrnent1;; were 1:;tatOO at aggregate method it1 an fundfl and ctirttp0:rumt ut1its? hi the folttlwing eamirtgs in all furuis and compoo#:nt units:

Utm'.rcsl ear ,ting&

Vmeallzed 10tis in t'.tlllnges m fair value of investmemJi

T ntal tnver.tmf'rlt ,parnn1gn

$ 1,907,630

in ,:orr,pliaru:ewltlt t:alliorrua Gove:rrunent Code 53601 "'

losses in tlili valuation of the investments.

C. Ri,;k Cat<forles

In ao::orclance with GASB StiU::emefit No. separ.:itety to give m indic!ktiOn of tl:iQ'

Cash D•!"""ls

arc purchai«cd with 110

cannot realize

ash deposits Md lnv-t,; are cutegorlz1:d of risk rutsum.:d by th1<- Town, Th1t crish

!w!~'!p!.A, ffl!lu:red Ol' collateralized with securities held bv tire its agent in the

~_gorv 4 ~ Collaterullzed witli ~"Curities hdtl by the pledging financial institution's tru:rt department or agent In tfu! mtlty's mrmc.

Deposits 1rvhkh are uninsured or un<:ol1ub:!n1lbed.

41

Town of Danville N-0tes to Basic Finantiat Statements, Continued

· the year ended June 30, 2004

2. CASH AND INVE..:;Tl\tENTS, Contirttu1d

C, Risk CattJ£oriesi' Cotttittued

Tnvesi:liu?:nts

Cit!§gim;.l ~ Irui:urcd ox registered or secudti(:'.S held by tl:\e entity or its agent name.

the

- Un.insurt!:d and with securities ho2ld bv the counl(:.'l'party's t:rwt name,

Citt<Zo(!l 3 Uninsured and unregistered, ii> trust department or agent, but nm Jrt the entity's name,

~;!:~f,,~~~!!~~;f,;~:,~-1,Inv0stments- iu the C'f\Iifornill

It as GASS No. 3 does not categorization L..ertain filical ar;ent in,•estments

int<,rp,~th•e g11id,£i!ru,s lssu•d (;A!,J!.

D. Pvcled Cash and Jnvestm(mi:s

Pooled <'.ash and io:vw;UJ-ieuW,, indutling rt!$lrkled caab md inv~tn1enls, and c<JIBh +lJ\d

invest:rne'\ts with fitwal tif.{?nts, WCI'(' daMificd by rink category as follmvs at lune 30,

Pooled em1h and inv-estu;enbl~

Ctwb Dep(,JtJl-!s: 041'.fulfld J;J¢p-O&its

lnVe&tmClliti:

U Jt TMl!auey Secuxifies

Money Marloot Mutual Funds A;c,;ncylnw,tm,ent l'und (LAI>)

1""'1in-T Qtal r1111h llTki inve&tmenbl

°'"'li"'l'.'

42

3,A,76,{157

41,"4D,462 Slfi,750

zm

J,47,V,657

,!zli!0,4<;2

507,750 2,91'

Town of Danvill• N,ot,es to Bask Finane:ial Statements, Continued

ended June 30, 2004

2. CASH 11.NIJ INVllSTMllNTS, Continued

L:. &temaJ lrwcstmamt Pon1

The ·rov.-n :lnveats in Local. Agency lrrvestment Fund investment pool LAJf detennirtes :t:air value on its irrve,5tmmt portfolio OOsed on ma:rkct

those se:urities where mark+1t are readily available and bas«d on ls not readily available.

The Town's investmitints with LAIF 2004, include a portion of the inv~ in Structured Notes and Asset-Biack<::d Serur(ties., These inves:Lments may

Structured Notes are debt SffU!itles than asset .. baJ;:k{!tl ,eccuri'tic,) .;:hara('t1,;ri1,tic1, rtrte, amount, or stated matw:ity) mare ln<lices forwards or optronR

~;;;~:;';!;;!~~ the hulk of which axe securities, entitle their I to a share oi the cash flows from a of AllSets: such as principal and

As of June 30, 2004, th~ TCIWTI rutd $12,:'i%fo'7R invesmi iri LAlF, \Vhich Md invested 1.60:3% 61 the investment funds In Stn:xcturod Notes fllld Asset-Backed Se<:urities. The LAll:; fuix v;due of 05~177 was used to caleulate the. (air value of the investments in LAIF.

F. Restricted Cniih u:nd 1nttttstmcnt$

Restricted cash flnd investmenrt. in the lh1nd Fi:rutru::ictl Statement art'l:t':!Unh!::d to $4,942,902 ifl:dude certain runounts1 which are held by fis<"al tt:gcnts to 00 only used for payment of certain debt iLnd maintainl:1,1g required n~erves. lnvet.red unly a;; by ap~ific State statutes- their investment or applicable Town nrrlinanrf',,, resolution or bond indmt:ur~,

43

Town of Danville Notes to Basic Financial statements~ ConttnuM For the year ended J1.111e 30, 2004

3. CAPITAL ASSllTS

30, 2004, consisted

Baw= Additions/ RPtirmmri!s/ ""'--ll!!!.h""' ... Y.:itrfflifiailion Aditmfmtmls

~Acti .. 1tru$:

C&plful ~ not bein,e d.;pr;;dam&

""""' $ 16$16,09:7 ' $ $ 16J!!n,097

O;.irutn.c!iun irtptog:1- ,t,94ZJ3l <l3,9!9 (tl~ l,201,7t} I:nfrMtruttnnt ~, CTlllll'e1£:and

4$pJlAU pa~ i!l',lW;MJ :,,;re& 89,220,QSl

Tollll <:ITTJlltai 11,-i:K'W, not bcing depYednt:cd 111,tet,4:n 42b,%7 {4,lr;gJU,?J 107,,322,891

Ypittil ~!$, being dcpm:lat:cd; tlu!I.Jir~ ltritl par klng kltn 11i,562,(11J 165,U6 1$;7):71,t?,9 --· J3,092.:J02 &11,066 4J1Jl,9?1 17A%.339

Ftu".rutttre flM vqutproent f!,JlfljJW "9j'All flS?,1"4) s-;10J,t'Sl ,_ Drainage S)-'$1tlm i'.9,92&,161: IW<li! ~

~,11M 16!iUS'1 5,-

~ J0,714,749

Total eaplhtlf\Yiclti. ~~l#J: l\lifi~,3§3 '""''""' 3!9'11,253 109!~

~tk~

!Juil"""" ""'""""' "'" {SJ'mB,698} (387.394)

!:'mk im,prt'A'crt~ {12,,568/187) (l,0!3,71'7)

lhimrtureimd tqlll~ !'.""'-7"7J {411,213) """"' (3/llb)l&l) --Dn!~rryHklm (39'~14.'?r'Jl4) Q"61l.1"') {'f,l;IJJ3,673)

ra.,.i '¥''*"' {4106,527) (192145) (','111,671)

llrulge,

Total acrnw\UiiteiJ d!::predation

TOi'Al ¢apita1 ~, l:clng ~ntoo. nm 40,,190,084 4,1'66Mt 41~.001

~ffll:V'ftleaapital41!~ net I 1st~ I (".600,54'.\) $ ~,48tl) I 148~"2

,;

Town o£ Danville No,.,. to Ila$!< Flnnncilll Statemet1lll, Continued For the year ended June 30, 2004

3. CAPITAL ASSETS, Lot).tinued

Depreciation cxpemcs program for assets for the year ended June 20, 2004 are as

LeginiatiVC $ 1,(13;;!-

T !)Wt! rnllnr.gt:r S,400 U!gal sCTVJccs 1,046

Pulicemt:rv:i~, 210,23!} MAtn1¢t1;11'('¢: t0rv1~ 763,98~ Development 11ervices 2,1ft4,U:l1

Ttlmllpvt:klti® j)(,ff'ViC#$ 204,960 Ad:utini;; tmt:iv0 scrvkeil 36,922 PatM md rvuealiun HU"Vices 674.384

Total df!predatJ;;,n flXJlllm!i $

4. TNTERFUND TRANSACTIONS

A. Alfvances TQ/From Other l'unas

As baJ4f~'t;!& of '1dvt1ncc& frtJn1/ to \<\'(;re ITT& follo\vi;;

Ft1nd

[ill Non-fvlajor Fw:;p

8

This amont'i.t represents a loan from the General Fund to the Community Development -0pera1tin41experues incurred in ·

45

Town of Danville Nmes to Basie Financial Statements.- Continued Jlor the yeor ended June 30, 20M

4.

ll

rransfers in/ out fo:r the year ended 3-0, 2004 were as follows:

I Tl'Wfen. ln j

(:Apltal Clvic NO!l,Majrn G-0-.,l lmpr,:rveme!lt '.Fai;:lilties Cov¢mm¥)fltal

Fwd(!) Prof!t Fund (2) Ci'F !!> Fund11 Q:1 TotaJ

G11nmlFund $ $ t,'7"'>0,000 $ 1,208:3-05 $ 1AZS,ooo $ u,i;io;; Ctlpltnl lmprot'(fll'\l'!nt

itojoct fut)d 115,$87 5,943 W,9$5 5'6i3Afti!1 Civic Fadlitietl Cr'l' 30,$7{ 1ti,'9!.lU ltr/,4&1

& Lighting .md Lnndst11p«: Spirdat Rev£1u1e Fm\tl 1,{»G,864 •,tf),i)(l(t 1,114,864

t Law and Modvr.1111! lncom0

l Housing: Debt Servic,; F®d l.71l5 1,7;$$

Community 04';.'Clvptne!lt

lnbl Servlc11 flUfld ).,9()9,700 1951154 3,1-04,944 Noo,.Mhjm \~tal

Furuls

Tfitnf -Tiu,

1, To rcimb=se tlw G!ri"'al Fund fur e;,;:petlS(tz chru:ge:able to Reirenue Funds and 1eyayu1ent -Of tr;J,ru;fcrs Cominurlity Development prior years

2, 1he: transfer$ are for capital projects in the various funds. i. Tiu: transfers: are for capital projects 'and :reimbursement of f:XI}i:!rtditu:res incurred bv other

5. LOANS ANO NOTES Rl!Cll!V ABLE

Parent Preacltool Loan

irttt $93,000 loon from the ChiidcJn•c Pt1nd to

d0!14lrl(!i!!o to cover• funding ohortf.U for their m-"1V•tiou eifum at,thein,ew J"':ation ,,t 9135 Tk agreement requires monthly imm'estonly payments

16 until Di!<'ember 2002. _ n,e rui<l further provide, that ii

46

Town of Danville Notes to :Bas:k Financial Statements. Continued For the year ended June 30, 2:004

6. UNl!ARNEDREVENUE

A. Governrmint-Wirur Financial State:m<nts

Untm:rned revenue in Government-Wide Finaricial Siaktments a:mourtts for which revenites have not bcon ca:rnt;d. At Jttne 30, ~ ttflearned revenuoo tht! Government-Wide Fjnancial State,nents: wJ?re as iollO\vs,

flw.hll)m:; Lk ITTqi('S

rtbl:#

7. LONG·TERM Ol!LIGAT!ONS

$

Govvt1uuei1UJJ Aellvitie5

309,167 24;'.,,.tl-31

8,5?\i

A sumrruuy of tht; }'(nVIr's long~term debt trar'.!Sactions for the year ended June .'.30r 201J4, is

Lleixrlf!!.on C¢rtfflcttWs ,;,f P0rtltip11timt:

,tOi;llW*.W Loan J>ayuble Cvm~lifud AWi.moos

T(lt;1t

!Ja1am.c

July l,:.lU!IJ

$ 6,.00!1,,0QO $

3,!'i70AIDO

~

47

"""'""' Reti~tx Juru,2,0,~

$ (l/ll,00!)) $ 6,,_18S,OO!) $

2,57!}.(100

T>ueinMore

Orte YiU!t ttmttOtlll Year

l'l01{lfll} $ 6,215,000

¢,57!),000

Town of Danville Notes to Bn1dc Financial St.ttements, Continued For the vcar ended June 30, 2004

7. LONG.TERM OBLIGATIONS, Conllnu~d

The. Lease Pa.ytnent&

thf? Town under a Lcat.e Auth~ri!y ,;,,i tho Town. for u !ease of Lease Payments will be in amounts

to the Certificates when due. for the right to tlU! uru, and

The .1nrrual debt service requiremenbl: £or the 2001 COPs at June SO, 2004, are Fm

follov.·tt:

ZOO> • 170,000 $ 282,$35 $ 452,535

WW 100.-000 216,410 456it10

WW 185,!IO& 2'.'l0,023 4.'>5,JJ23

woo l~tl,000 263,372 458,372

woo 2.0DAO!! 255,960 455,%-0

atn0.:2014 1,1zi000 1,151,766 '4276,766 IDJ5'-21Jl9 !,375,000 890,347 2,:165,W 1020,2024 t,710,00!1 5:\t}lgi :i.,241,8:)2

2025'"2028 '!'otal

amoont anntirl'L The lloruls in Iha miount of $261J,000 mature at the rate of '7.25% pe:r 11m11trn, The Bonds in the amount

Augustl, 2020, and bt:ar lnrerc'l!ltat tl1e r•re of 8.15% I"'' """""" Tho llo1w, in lh< amount of $2,105,000 nlllttm, llltoogh August 1, 2028, nnd benr tntere11t at the ral<' o! 8,50% annum, Tito Bonds are p•y!lble semimntwly on each l and August l, co,nm,m,;:lng

1, 2002, The Bonds are to opti"""l and mandatory cwly n:dcmption provil!iow.

"'

Town of Donville Note& to Basic Financlal Statcments1 Continued

y•ar ended Jun• 30, 2004

7. LONG-TERM OBLIGATIONS, Continued

obligu!tiorlli of the Authority unrie,r tt,e Loan and certain other amounts

esiabliisr,ed u:ntler the The Loan Agreement is Bee.cured increment revenuo:\S ()f the AJ!lll1CJI.

The annual for the Bonds outstanding at June 30, 2004,, are a:s toUows:

P'rincipa! i:nrerest TotaL

2005 $ $ 295,282 $ 295,282 2006 1$,000 294,822 309,S:U 2007 20,000 2%,745 IH3,?45 woe 35,000 29'L861 3'26Jlb1 200!) 45)J(!O l!IB,961 333,961

201~2014 ;J.;5,00() 1,3'78,'.TJ3 1,7'J3,77:i 20~2019 65J},OOQ: un.~ 1,!127;!:l-O ?JY,M),.21'124 980,000 84b;5fm l.H2.S~16b

2025-2029

Total

oom1,ermal,>d absences {arcrued vacation and Metz fJHY ! arr,ou.nh; to $5•93i615 at June SO, 200.1, 'rhis i't a Cen~rul Fund's !lonw,ry,

49

Town of Danville Note:s lo Basic F:i:njlndal Statements,. Continued

30, 2004

8, PANVILLEFINANClNG AUTHOl!lTI'

The Aulhoril:y !he

authority of the Town "1:ld !ho Tho Alllhor1ty issued oil of TtJv\rn is the agent for bonds outstanding at

TAA:lajlim Rnncll Spectal /\&$Itrt1ent: Oinmct Sya,mm>! Valley 5pw,1,,_...,,, District

Northmst Rru>d lmpt°""""tSpccful- Dis!1kt

Total O"rwille :Firundng Atlfhorlty dt;bt

~ 7,38(),Kl<)

2,375,000

Thi:' T(lM'll has no direct or lll\bility or moral far the: payment Assets held by tha Towrt Wl of these district$ are recorded :in these a,1sets- and outstanding bond ubli$4ations are not presonted in the finaru::iid stat~men~-

9. COMMUNITYVEVEWl'MEN'f AGENCT

The is required to ~t aside a portion of the p,roperty tax incrcnrent revenue U teceivi;s to improve the Imvn's 1ot,v and moderate income housing, 'I'he a11100nt set asJde must

ptope:tt,Y tfiX inctt!:fli£tfit teV!JrtU!z,

of ]and in (ru; Downtown D,a;iiville area, the p'ffif0Ct ,am and j& bei'fl~ htld fzyr

amount of $125,000

entered into a f{1SP6,-'iiltion tlu, amount of $4,100,000.

At this time,, the To,v.n is uncertain if the: future ca,sh fio'r'\1'6 of the senior _ _ _ support repayment Ao:::mdingly,. this receivable has Mt been p:roocnted :in

aecompanyirtg basic financial statements.

50

Town of Danville Notes to J3Mk Financial Sta:tcmentsr Contin11ed

ended June JO, 2004

10. FUND l!AUNCE$

The fund fin41ncia1 statt\ments cons1$t of teoot"Ved and uru~·ed ;;;monnts_ R<,$PffVed fund ba1n:nrt¥. roprosr:mts that portion of a fund bruanc.z which ruts b<:m appi:opriated for expendttur€ se,rr•:,••ed for a twii!, The ~ming portion Js lll1K-'SCrved and may be dcsignutcd

Reserva:tk;ifl$ and of fHod b;.Jilnces <1:rr d£<;tTihed as fn11ows:

• Reserved (or encumhrnnces is the ; for expenditure;

set aside {or purenruio cotrl::tacts, artd other

..- Re:scrved term note reruivable is the Sldt H,$Jd.:; to :indicate that th(>,$,t funds are

• Rfc,sv.,rved for debt s01'Vic<t is the portion rit$trktert tn the paymmt of pnntipa! on the Tfi't,\.'n'R

funds nre funds do!lllred spo•ci&•lly for !t<:luwlogy purcruiseo benefitiJo~ fr,e ut,rruv

+ N!llffl'edfor revenutts are funill:, mtrlctcd !or pu;rpnse as defined

• Reserved for-arts fund is the remaining donation for the arts.

• Resenred f-01; $

- , portlorui set :not represent rurrently ava1lah1e? spendable resources

+ R•!!llrved for oomperarared ableru:es ill the portion t<!Strlcred for future payment of om,ple,y"" abseru::es,

• Oesignamd for pavement management is additi0l1lll

• Designawd f9r ASset n;placeu1ent fMitirie&, Finance/ Aocounting system and

•

j)j

fur nu1inienanL1t of the Town'!>

lmJ:>ro1o<rricnt f=d, are set aside- for

rev--enue s.h.ortfa:lls required reserve level must be

conditions, as of JMO: 30, req u!re., that all

Town of Danville Notes to Basic Financial Statements, Continued For the v•ar ended Jone 30, 2004

11, R!SK MANAGEMENT

The Town participates

for llru,ility, when it fa pr.,bablc

esllinated.

citiP~,;, ,vhkh insu:rani:-1; compensation cl.;l.Uns. liabilities -are

ronnunt of that loss ean be reasonably

The Town has a deductible of $S,(J(J(J workers1 <X'.impernmtion daims. Once the Tovrn1s

CC(:MRM!A bec,omcs rn,prut'liblefor The CCCMRMlA and lms <tXCMSS covertagc to a, maximum-Of $15,000~000,

Ttio CCCMR1\UA is ~vern,!d Too

a board corisi&tint; of 'i;~:~~t: from eo.ch U'l.¢mber ( including selection of

budgetsf and ts independent nf any :influenc€: by member rnucruciplililiet.S l:teyond ti,e!rre,•resenlatk,n on the Board,

- liability paymenlll to frlO C£CMRMIA in the amount of S2lMA21l 2(l[t3.a20U4 are in accordance 'With fonnulas established by the CC'L'.MJ{MlA. A.c

BUipluses urwss,,s are sha:rad dev0loped from ovonill loss costs and!ip:OOad member entities on a P"''""''tl\ll" provides- a

L'umm:t Year Claim

Bc{;Wllflti: Claim 11:nd Pay;menti, tt)r End

otYeilX Crurn~sin Cunentand of);(\lf

tii!!tiliti Thitimates Prior Yeaxs Liahili~

2001·2002 $ 2?;10{; $ (6,800) $ $ 20,606 200~3 20,<i06 {l/178) 19,,12'! 2003-20!14 19,428 :{,559 '2,9ll'l

The T o~'ll Ms. had no ~em@nts whit"h ~M i:nsut1u1ce t'ovemgf! irt the la.<Jt three fiscal years, t insurance coverage from Ute prlo

R-itimates of inrurred, but not liability claims are included in the Town's claims ~ates lful CCCMRMlA

the Town received a dividend ol $72,112 from the CCCMRM!A based on results of D:rlor Year's ·octlvities. '1'm: divklend was n,"CW"t!OO a& revenue,

;2

Town of Danville Nows to Basie Fbu1ncial Statements, Continue<! J!or the year en,ded June 30, 2004

11. RISK MANAGEMENT, Continued

lHSIJl,uict:4:0llt

less:. dtvidend w:civctl

Net tt\iluttil(e coot

$ 204,428

8ocuuse dividends cannot be illld may fluct:uat<: sig;n\!'icanlly, should not be used result:i:,

th.zoo typos of results

At Jux,e 3(1, 2004, the CCG\1IL1v:UA audited condensed financial information showed:

toWi!Sl)!i!hJ Totailiabilltis

T0Weqttitit:S1

Tola! WV('l)um;

Total e:.:peruws

Revenues ry,,.;zr ex,penMiti

Detailed fhootciul info:rma{io:' fnl}J be obtained from the CCC'.JYfRMIA in \\ialnutCreek, California.

12. DEFINED CONTRJB1J1'10N PENSION PLAN

employ'ees participate :irt thi> Si?diM 4{U(a} qualified dt'fined <nntrihntinri as allowed under

Purclmse Plan R.yvenue Cod~. The plan type by {he Town is the

whieh w .. las! mnendcd oo July 1, Thls Plan is • delincd oontribution retimn,1;:ut pla,n in which the ei:nployelff <.:ontri?ution tm a formula that is not related to profits. TIIC Plan sptJnSur guantniees

employees who eontribut:e less than these mrtotu'its

bears no gi.10.rantet'A leve1 of

cootnVUtkms ve.t:;t at 20% :p<:rr plan year· of uninierrupled ii!!nploynient employed att,,r June I, 1993. Partlclpants employed prior to that date are {ul

provisions and contribution requirernerds ant €Stablishoo. and may be amended Putidpllnt,; are eligible lo begin bcnclits at ag,, 55 aru:I are required

;;

Town of Danville Notes to Basic Fi:ruincilU Si;rt:em1;nts, Continued For the vear 4;'nded June 30# 2004

12. DEFINED CONTRIB1J1'JON 1'1:NSION l'LAN, C<>nllno.cd

The Tov.Tt's the Plan fot the year ended )tme 30, 2004, was thD Town amounted lo $659,086 or 12.88% o!

The Pi.art's assets are inva:le:i \N'ith a muttutl fund <(J;rnpany fund category sclcctiornl from which !o choose. Al, cl nnd the markel

13. COMMITMENTS AND CONTINGENCIES

participants multiple mutual Plan hnd 132 pmticipar,l!l

0..ff S('Ve;ral the 1'own'H General Fund h~ ioaJ11cd appn:,xilm!l.cl, interest to the a emrtponent unit of the Town, relhat•ilitati,on

agresiment dated lJe:ernber 1, 1994 and Navcmbcr IS, 1997, the runoutlt, General Fund shall (:ornc frvn1 lux inueu\ct\l revenues.

are used to pc1y fnr related debt service h a ~-suit, the Genera.I Fund will be this receivabl£. Acmrdingly, thl!! tootlng-eru f()Ct'!iV.l:blci

report:ed in statfilttents.

~

The TO'lt'>'TI: is- a: defendant in a number of la1t1t·suits whicllfu.rv(: arj$(:f! in th~ normal oourse nf hu!UM!ML

1'Vhile substantial damag:.cs are alleged in some of these ndions, their outcome cannot be pn,:Jkted in !;he opinion of tht! Town Attomev, th<:Be' actio:tt,<t, when finally ru;iiudicated, wi!i not

operating lease ag;<ements in the conduct cl its day..J:o<lay opetatio.ns to provid<" for :facilities and/ or services. None of th.lJ8C leases are a1nsidcrad to be mgnificanl commi!men!S.

..

Town of Danville Not .. lo !losi< F!nuwial Statement., Contln.,,<I

13. COMMITMENTS ANO CONTINGENCIES, Continued

tlrni<r Artide Xlllll 0£ 1he Callforrua Con•otutlon Initiative), tlID Town js reBtriCted a,:; to th<; amnunt of ant'!ttn1 appropriation.<1~ and if rertai:n proccMs of taxes exceed :allowed appropriations, the -excess must either be refurtde'd to' be the State Controller or :refunded to the taxpayers through revised tux rirtcs or revised fee schedules, For the &Cill fCl!ll' ended

T-01,vn's appropriatiOJ:18i limit totals and the To'W'tl's approprlatiom: llmimtion wwi S12,&1,8!l8,

-o! town :r'J\llnagernent, there were no additiorutl ootstarniing uignilicmt effe.:t011 lirutJ'tcial pc~itlon •ol the fund• ol ~,c Town,

5$

""

REQUIRED SUPPLEMENTARY INFORMATION

Town of Danville Required Suppl1znt<tntary Information For the year •nded June 30, 2004

1, BUDGETARY PRINCIPL!!S

TM T OV.'TI follows these p:rocedure5 in estab!i"lhing

* Tcttvn Cound1 detennine:'4 community ~s, priorities .11nd for the upccnning

•

• Formal budg.eting

Burlg,,ts are •dopted

Budgeted mnonnm ate ru; origirutl!y ru:ntendnicnts were not owte·1tl in rclatiurt

mdudes prr>po1;ed ex,,emlitures l:ht!

i,aimaizy, <>! • resolution during

the Town Council. lndivjduat

,,

Town of Danville

For the year ended Jutte

1. BUDGET A.RY 1;,RINCIPLES,. Continued

RllVllNU17'

lJCtMW mti,l Jl('tl,tdW

tJw of iilJiMY mn pmperty Mi11t<:Tilfl¢t>U~

Tuwl.rwermru

IlXFfiNtJrrtmilS:

L\1.glplllk"Vtr

""""-"" \.'.WJ'I~ Mt-wl'lW

IJiweli:ipmtrtt t;t,Mru\

Ttmspmalkm w.ni.o:lt A\W!l;;Wit#IW1 ~n-i,;em PilJks anJ ru<;;!l.Nfton$0¥lc'W

Tutnl~irnrfil

IUJ:VLNIJES OVER (UNJJI;RJ EXPEND111J1Ulfl-

crrHEJ\ fl'N:ANONG SOtlltCES (US£$);

'f1Wf¢1"1litJ

Ttilll!lfurn:1111

Tl:llal Q!b#tfhl&ru.iug,00\ll\,o,m jwi#)

NUT Cl IA,,~GE IN FUND f;,\LA.'ls[Ql

Fl.U\'U 5ALA.t-s;Cif5:

~UJigi;fy'!ilT

tfidolyoor

5,SSll-,065

!l,665);,i7 00.!!5(!

J,4Mi,%;, 1,347,721 2,4\lli).ii\4

"'""' 6~,$\1

"""" 439,S'J?

"""' $;¢%At,7 46*7,'.#J'l 2.f>Zl.6%

~l,165

'-"""" 2,231,0U 17JJ,11)2

16)41,211

(779,691!)

,,145,.~,, ('.>.~

995/1(,5

"

Aduii.l

Am-

• S,Zlll,066 • u,001,m $ $,fjl:5,917 'J,W!Z/2

"'"" 36,471 lMb"'3 l,™,077

l,367,721 1,514,YJJ

1.~ t1ot!i95 Z!S,000 329,"5 1181,414 "'""

;!,11,;ilil ""·""" 482,499 4,11.ff){;

613,(ffl 51'1}2?? Spl&,114 4,llOS,i-7& '.V)l)$,4>14 'V'll'I..{1117

''""""' 41»7Al64 373.,,317 .,..,,.,

1,5'#'\,546 1,:iSl),311)

2011,91!: 2,JB'l,200 17fi,104 '""'"

16,914,4£18

(J.,:no,403)

4,:1.M.}'i~ 6,~-0,ffl

,'!""1,1100) !(.183,305)

""'"' 2,:i-93,4]0

i~,92!!

~'-~!131)

PtMitt\ft

""".,_____ ""'"" lM,355

~"') -14ii,6?0

1Zl,N'l9 91,695

(,lib,"")

47,1$6 51;148

11$,7(19

61!'.l'AS 174,157

Z;l?,9(,Z

"·"' 246,176 114,71.8

"""' ~ Ui9!t,~

2,19o)l92

11.13,1,3U5J .~ .. , .......

S1.lppl!l1mentuy Xnfoxmation. Continued the year ended June 30J 2004

l, &OOGBTARY PRINCIPLllS, Cmmmml

Rl'Vl!NL'll!k

Spedi-l i!1$Mmi'UtS $ 2,967,7'.:!ll $ tlire of morwy 1rnd property 21,134

Misrellaru:;=

Totaf wv11nn,is 2)188,86')

EXPliJ',IT)[flJRES:

Cturnnt

Ughtifig itild limtbeap,t

Total expenl!irutt&

lUfV5:Nt.li:t,~ O'\elt (!JNOEltt EX?llNU111,JRJ,S 1,,207,&&5

OTiruR FIN A NCING somtra (USES);

'l'mrufrawWll

Totfil rrtherfiM~ t!l}t,ret,li (f.!Jjl¢1},

REVENUES ANDOTifER

ITTNANCING SOURCESOVl!R

(tJNDEro WE.J'.101TUJ\fi5 ANO UTH ER FINANCING t!SE:S •

IVN!> MLANCl!ll,

llcgltlnlllj <if yw

End of;'tmr

$;)

2,9tii,128 $ 21,134

Arnml -· Variattt1;wlt'h

4't*59",>t01 :$ 47,Gill\

14SL''111

lf.8/Jll

(h16l,5::llr) {1,114.,661) 46,:fil:\4

(1,161,516-) fu~!~l

40.147 2119,218

Town of Danvill• Required fri_tpp~e~:n~:n!::':':1ation# Continued

2, MODIFIED APPROACH FOR CITY STRl!ETS !NFRASTRUCTURE CAPITAL ASSETS

1n arcrn"danro With GASS Statl1ment No. 34, tt\ft Town ji; required inftustruct:u;rc the street syst~ truffic control improvemL,:rts; p.:trk stm'ro watet eonvey~ce nn<l sit(; ~itie, the Town lrt the conduct its business.

Fu:r the ~t and gut:tcrs., median&, traffic <'<ln1ro1 <IThi lnnd_ Snh':lvstem detail

dG[>;tt'.ldle,:l unu,;,c

:ma:rmges the infrastructu:re capital Afu11ets

an up-to-date inventory;

GASB Stat,cment No. 34 for State1nent No, M, eligible •llowlng n:iquirunrents;

an aAset :rrm:nagerncnt condition nt:isessmt&nts

""' ii measurement scale; a nwlnWI\ and pt(!$CrVf! at the establWtoo condition assessment: level,

• The Tov.'11 doet.ltnents that the eligible in&ast:ructure ~ nv above ihe (>flt,1bH,;hM and di..'4t'1ru1ed eonilition t.~mmt leveL

In June 2003, the Town commissioned a f!tudy to update the physical condition assessment of the streets:. 'The prior assc.s,..:mcut pavetne,,ts,were dcfiMd 88 rur phy8ieal J;¢,llft1J'e8

exist within, the llutlbi: <Ji right of way. To\Vft owned sU:eets are das:ilf:led based Un land use, aCGeSs w:id tn1ffk utiliz?tiun jntu the following four dv55ific;ltio1w; cnll«tnr and local ihL'> conclititlfl aAf:les&fr'lant will be perfortftfilf at lea."lt every .

«:mditiori batlt"d M pntentiaJ deff'<'b:. A Pavement (nfldition nationally re.:ogni:red Jndftx, 11vas ll!,signed tu each street a;nd i

- · is assigned to th~ k::ast acccptabk: physical

The following conditions were d!:!il.'1{[:(.1:

Poor Very P9or

"'

RatiJll! 7!).!{]0

50-69 2M9 0.25

n a <:ontinucn,1s scale 100 is ru;signed !ho

Town 0£ Danville

For the year mded

2, MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTU!U! CAPITAi, ASSETS, Contirtued

"'" Very Poor

to an-est the d~terioratfrm sweeping,. and sidttwalk niHln!- fur the hrn.,v,evl;;f'

)999-00 s 1,(IIJ0,000 2000-01 ltJOO;f)OO

2001-02 1,(ill<J,00()

2002:'4)3 1,000,000

21lm-04 1,(I00,()00

$ 1,544,4'!9

981,753 l,023,107

1J)39,71h

9&i,931

$

for all streets, whkh ts a systmn was i-at.ed at a PCI ind~ of 75 oo tl1<.:

iii%

'"

3,285,775 4,716,000

4,6611,572

~,140,999

1;541,220

rnai:utenanc.+i expentliturcsrcquircd to mnlnblln

a minitrHm:'i o1

Tota.I

---$ il,!l;l0,214 75

5-697,758 74 !;i,687,679 70 4JB0,715 76 Z,530,151 75

'fhe To"W'n l\'\lso ~s an onrgoing stl:'(;{;t r~~biUt+ltion progr~m funded h1 the Program that is intended to the coodil:ion rating of Tov."Tl streets. program is formula:ttid ba:S(?(l on identified as a part of its Pav~nt Ml'1l>!l"'ll<lnl System, Ni of June 00, 2004, appromTill!ely Z7% of the Town's streets were rated below the ••croge standard of 7(l 'l11B Town will continue to rehabilitilto these oegment,; of the slr"'1tll, Total defkieru:ies (defemd maintenance) l.derrtiflild in the Pavement Management amounted to approximately $6,513,351 for all s!reell!,

bl

SUPPLEMENTAL INFORMATION

" '

NON-MAJOR GOVERNMENTAL FUNDS

Town of Danville Non-Major Fund Financial Statements

Sl'EOAl RllV!iNJ,lfi f\JNDS

Gu Ta,; IJqnd

Thls :fund It- 'Med u:, #('(t)tmt itlr thf" pnrtinn of the taxes pnid on the vurerutoo of gar;oJ.me v.'hich the Town tttelVe$, .vid are r'11ltrk!#tl to sl:tiiwtnnd rel4tat improvements and mamtcnaru:e co&ta.

Building !n5Pedion Fund

Thjs :fund rett:bft'S

Oevelupment Et1gin\\!?fl:ng :Futtd nn,row,,ru,"'llid subdivisfort d('<J>:'fopment fop;; col~d during: thv building permit ptOCT'illL

Child Cime P«rut 'Th.is :fund ret:clV<$ Child: Ca ttt fut:¥

fad~ 1vithm Darr by nvw d1.,velopnv;,'W.!i. Jill {ands iii(' Ie$ttkl:td tr, the clevelopro,ent{!r p!Vtnoti;:::m

Stormwrtli!:f Pollu1l-0n t:Ontrol l:rognut1 (SfCP) Thhl fund is used tn account lu1 N11tional f'o1l1.1H01l D).!lC!;targt £111minalkm Servkv#

fllHinfFI111ru;;0 nf stnrm drain syttrn:m

Mosure C Retwn To $Qllt('.(,1

for by

In JOOS, C<mtt.n CQ#tit vqrers approved a 00..(;.,halt eent sales !Ax 1vr tri!rn>porta!ion pw:pusvt,. Rlgh!.¢¢lt peA«nt of the fun& rollectud throUgh(}Ut thit O,mnty Mt! dlstrlbuteU back to ead! local: jurisdiction on the basis of JXipulalkm and niod miltxl. The Town utlliz+:s a _pgrijµu vf Uw:.i: futtd,; fut pav~ manl\gl!Jnent and tran,portntion

CAPITAL PROIF&J, '.FUNDS

Yuk Fu.otlc Park fu..lteu f(l('S paid by devcl,oprn.t!nt and outside grants lot park dt1vclo-11nwnt are depmiitetl i:n!c iliw fund fur park

tapital impttW-emenw,

A.ffet Replafiilllent Ganer.ti fund ConttWUti()l1jj rtre made into thlt; fund friim tl:1e Glftwn I fw,tJ for (he cvCJ:dua1 i;«pla.:cnienl .utd rel urblshment of vdlkl<m and o~ ¢qrupmmt,

Amlet ReplacetneJ1t U:brnry FuJtd Con1trll>utk1rm «re made int-0 tJUs fum:l fn1m ptiv.itc <JQ!;atlot\S and the Genernt Pund for thv nvcntuai t,eplaet:ment aru.t refurbwhme:nt of L:ibx;uy cq uipi:uent

Tlt< WflS m.t!Jhllshl;l:C jn t 91$5 fcyr the clootaru:e at1.d rt!habilitatwn of an:rui determi:rud The Fund is used

63

Town Danville Non··M,ajor F1,1,.nd Fina11eial Statements,. Continued

Pavem<rnt Manafj'.t:ttteni Fu:rtd

Thitl fund is ut!M 00 $:((9'\Urt rot &UE?t s_ysl£m at li high level of servlw, The at StH;tatntn.g m QVetaU pavemt"ltl cv11dili01t index {PCI) -0! an average ralillg of

for an &troot segments,

Sy<:amure Valley fi,fU:i?lion Fund Tiii! ,;ye;m91< V;u~,y l\!li:Jg,,ti,miees,recolll,x·,.,Hm,n '""!"'''"" whld1 bet,tlit ftont ru,sessnli"J\t disitlct hnprcvem®W but are not In !lie m:,v~1¢:nl district d4!Vcloper, Fues are 110w uscil by the Towu ptopert«,1S.

Special A1111511JIB1111 DWtri.::h liunds

rrimbunred the .developer for impruvenv'ni:s f:u,anced by Um ttilllelill.lllfff'll dis!xkf imprnvemeuts or NlnEfil the benefit didrkt

the period from 1~? W 199{}, (?\e Sycaµu;,re V!Wtty ~fr.11.¢nt Di:,Li:kt (SVAD), TiillITTt,nttt Ranch At$t:Stt,;oent . .:u'J) and the No:;Uwosl Road lmprovem?Hb k;svji)jflteHt Distikl ,;NERlAD/ Vtt>i!:m fotttwd wHh!rt !:he ToWn of e01\Struct JmproveUl-'(.'UW iu thf;Jf#t aJ'1M, 'fll<eiie fuml:s a.re wed Ix) ih'.Wll:tlt frrr U1c flmds

ailoode<l for eaµ!t.1!: imp;:o:ven1env+ of Uw -05$(',5sn1ent dist,rids hilli bee:rt COirtf'letcd ih the SVAO l!nd TI<AD. Capi!Al p,oietlx filtl stillooing <@1Strn"lea in ~Jfµl]AO,

64 65

• < 12 i1 Q ;{ 8 :, ;ii

li 11; \ll i I '*' ,. !!! " "' "

~ ~ 11 } D ~ I ,I !

"' t ~

<A

!:

~

t ~ ~ ~ " ; i !'l .I I '

~ "' ii l:i ~ ~ "' "' ~ I ' " • s " i ::: if < "' «;

! ~ ! ~ ' ~ '

! i ;! "' ~ i ~ ~

~ ~ ~ !:!

~ "' ~

1 ~ ~ ~ ~ iii !:; " "'

;~ ; I ~ ii! § "' ~

' '

f

~ I l;1 ~ ~ ~ $1 § ~ ~ ~ § l!! iii 1 :,! '.;. «( g ~ i~iii ~ ! lli :I """ ,r? ,,,,)'

~ ~

• I '1ll a ~ '§ l! ~~11 ,, ~ !le '5 l! i w

, < ~

Town of Danvllle Combining Sf.tdem@rtl of Revenues~ ExpendUµrff and Chaxtgt?s in Fttnd BAlantes

Non,,Major Governmental Funds

For th-e year ended June 30, 2004

"" ""''""1! Developarwnt Cblld

'" Tu~!mn ""'"'- -JU!VENU!!l!, ~- • • • • • £~lat ll-"'1111;

"'""' 111{)~!;

Cl:mrg,m for!Wn'ffl 165,75!! <Lat ~andp:;,m.1M

Dcv-e!orrm.ml feet. },4.!J'WOO 13!1,~ 407}100

ltireq;4YertlllW)!al

Uu dtru:mey and proptrty $1,103 (2.116f)j -'fomltmr+t!IUII 177.ASS

m'ENDITutU!.s:

Q""'" ~-0~~ '""

DlibtOOl'\'ke: -~tanil ilooaJ ctwges --- a;m

REVENUES OVfilt ({JNUERl liiG'ENUTHJlUlS

OTmIR FJNANCINGBOURCES (USSSjt

~dnftomWecl:~ _,m Tran!!rn!'sffltt

Total mirur fimmclng,~ {tw>a)

ANTI OTlffill. FINANCING USE& "',89£1 {185,1118} ~,560) 4(13,84(!

Fv'NOUM.ANO!S;

~-Ofy,Jttr

End cly€lll

70

SPCI' M<u,,m,C

$

45\tffl

'='\99

SAfUID:i 3,4,'57 '71,001

$i,00.9 '" '1.257

107,9S6 153,5'}6

S}'filllltifr

""'' "'"' Valley P,m Rtplar,nrumt tl:rp!atm.tnt Comm,rnify Pa,rtrmtnt M!tigaii.m

fund tillMrnl LIDr~ l)evcJopmtml Mwmigenvmt Fund REVENUES:

~rtyl.llte& • • • • • $

8per lPl a,lii¢i4.¢1;;t11$

GM!iix

C1IBtse1 for services )2'1),~

Lltt:rui.w m,,1 pW'1il.lW

Wel0JW!ffi<~ \lltOOO)

ln~o\vrumml:ru

U~e of mmwy ruid prnpcrty 77,14$ ,,,,,., 1%,€47 J,:ws (7,4'>) ,<"2 ~w\l11rt00HJ)

TotJ.,;;v.,nuiiii

HXl'R,,"'llll11JRlili:

O:ttttmt'.

Oi'ivvl.Djjm¢nl OO)'i!fo;t$ '"" 2.'!63 !,!mi 746 %

Pa:rl:» ,aml JIJQ'!lllil,:,n ~11P1M, 4'£1,144

Opluil outtij.• lm,,%i?, ,,,,,.,,, A,'.)()() 1!t'7;'l6 1,11:6,ilXJ

:Ol!W?Hlf'li@:

Prmcipnl tnMra<;t fiM flS<.':ru chargcn

'fttlai c,qiot~ll

R!Nt'N(JES OVICR (UNDER) EXPENDf.rtIR:£5 (1&,10-1)

OTIIJ!R VJ:NANCJNG OOURCE.S (IJ5V,};:

:P~ lrlll!l !la1c ui lllW!!IB 30,211$

'ruli.Mt:¢fil lti 100,000 00,!)00 '1),-000 1•- 1,()00,000 37il,'T.:il

't'lfllWtli'l out

T-Otd othll1f !im:ncil!g ij\JU[C\$ (m11:,)

RJNm.JUiiii ANlJ <5f1lial: J1JNANCJNC

SOURCES UV& {UNDER) [OO'ENO~

ANDOUim l'lNANONG \JSES (119,476) ""·""' SS}/91 """"' i"'<,7US) "3.U,

f"()Nfl bALANCllS:

Bi!girutlng of f.t\U Hn4qfy-eat

(t'Mtinood)

71

Town of Danville Combining Statement of Revenu-es,. ltxpcnditufii:s and Changes in ftund Balances: Non,.Majtrr Governmental Funds, Continued

Rl\VENtmS:

Vrqw,rtytnJti!ll

Sp&tiAJ Uet!!'Jlll\i!iUl

"""'" Cl!lll'!fl;iorim~:;,

lnwguvefl'\!llilfltal Use uf m.illli:Y Mt<l p,topqrty 1,1.;r.J;llarnltm,,;

1:cl::tlnw,in-

IOO'ENDffl,'11:ES;

eut:tttlt'.

'.0¢v<t'lopuient !W!'ih'$

Pm:bimd~t(1r,,lt;¢7

t'mpilll.l nvflay l)qbl; £lJX<l),:e;

Prlndp11l Jtlh!i'(<!lt MIA fl\Kttl chat!)JW

Ttltilltxp;.m~

W,2004

F.'IN£Nt,'JlS ovt5R (tTNi)Ett) ~

wnttK FlNAN(lNG sounas {USES}t

f'r(x:fi!Rk; &\ltU !IDle of at&eW

f'mru;f,ernin

Tt\\NWtswt 'fu!ill (!lb(,( i;in;,l)('.itq; OO!'tt«JJ (tt$llll)

IUiVlfNUl!S AND 0'1'.Hlm 11'}!'/AN<'.l!<G S-0\JRCliSOVE~(tiNbM) ~~

ANPOill&R:flN~NC:INGUSM

ftlNt') ftAT.ANCPS:

~ciycitr

Endofyw

Caf'1J:ul

R®d

hnptOV\tUWftt#

"'""" Aimetbunt o_,

'

15,07.,8

i,545

SAM

236,ill

,.,,,..

$

Too,J

4$9,!,13 SHl,:K'l!i '\1S,§92

~l,Q9

1,<fl4;'kk'i 54-0Jl0'%

'I'J:4,61:A,

!l4ti)i53

49,144

1,7<;4,91¥,1

YJ,:m.6

2,560,1176

""""'

72 (la1du1kd)

Town of D•nville

REVENUES:

Pt,;perty h!li:¢¥

UMi: ,;;{ money md prrpcrly

't"oflll revvnut'J

t!XIJEND~E:'k

c~, Dt1vdoprn;;ttt ;mrvliX!t

lJcl)l mtrVicti:

lrt!enwt nrtd fit1tm! d'irtrge&

Toti.I ,up,:md:itur<n

REVENUES OVER (UNUlffl) liXl'liNfJfrt)11;[!$:

OTimR FINANCJNG SOU.RC"JIS {USES),:

Tr1U:Wf«rli oot

't',;rtal i)\:h,,tliti.ti1C1rt~.Jl])t!Y,::(!S (Will!!)

IUWENUES ANO i'.YTH£1t l'JNANONG &OUR:CUS OVBR {UNDER) HXf'ENDlTURi:8 AND omn JIINANONGU5E&

FUND UALANCES:

~Nngtjfyar

Er!doiyRer

$

"

2,132

Income Housing Debt Se:rvke: Fund

$ 2:£3DS-9 $

2,1tl'.1

Aerua1

Amoi,,nu.

''""" m,w m,&76

112567

S,1~

Pmiil.ive

(Neg:4.!iVV}

V .. rmnwwlth

$ 69,625

{1,161)

Town of Danville

ended Jun..30, 2004

UVENUl1$;

~fl(e,;,g

Use nf money l\lld propnrty

l'fflat revirnUH

EXl'END!TUR11S:

Cvrr,mt:

Oev11il¢p1:oimtt111~

D<:bt:tt:rvk:e! .t'riudpal

~t imd f!K;a! dwt!l)i:$

~ t:l!pettdftat;;;:

REVENUES OVER (ONO ER) 1:XPl:NDifilIU!S

OTHERFtNANUNG SOURaiS (llSES):

Trnn~fmvut

'flltal tither fln.mclrtg 51RlfC£5(11ile11)

P\11!.NUE:5 AND onmR: ff'.NANCINV rovnas: OVER tUNIJERj EXPlJNIJBlJR~ AND OTHER.FINANCh'"\IG U5ti8

JiON1' BALANCES;

l!c~ofyw

Fxt<l or year

$ 89$.590 53,626

957J:16

!!))32

74

$

S.i:rvice Fund

!9:a,590 $

11,941

17U,OOJ

ili89,799

Actual ,\mounltl

14.9711

170,!}t){l

:Wfl&fl5

47.3,463

{2)IB6,7W}

P<)$itlve (N'tgatiVt:}

V iH'llifii:e with

1W.M7

(6,{)46)

Town of Danville Budget.try Comparison Sch@dulit,G.as

For the year ended June 30, :2004

REVENUES:

GM;iiix

U1rn of ui-0ru:y and proptitty Misrelli,rmou,

TohJ rw,mues

exl'!NOITl'fll:S:

Cntt¥nt

l'.M;v<!lfifitill!illll-

'.l'r>tal expendihlTI:11

REVENUES ova (UNDER) f(Xf'ENt)mJRES

OTHER FINANCING souru::::r:& (USES):

Ttru:lfiltrrsout

Total ()th+r £lil'landns;wwxet1 (twe$)

Rt{\flll\"Uef ANPOTITER FJNANGNG SOURCES OVER

(UNJ)ER} EXPilNOffiJRUS AND cn11Ell FlNANCNC tl'SIIB

FUND~~CES::

Begummt of yar

Ertd nfy1J>aF

$

Revenue fund

ALiunI

""'="

T'Ofiltly,z

(N;;gfitiv.1')

V;;,riiuw:" wlth

--·---

74?,545 $ 147,S43 !Ii 41,616 41,.Wt<t

"'

810,$25 $

D1,lC3

5'.J,fl:9(\.

·~7\)() ?,48/

Town of Danville lJudg:ebuy Comparison Schedule, Building, lns:pectiori

For the year ended June 30, 2004

REVENUES:

c::!:m:rgw, fo< ~r11µ;,:JS

l'.lrwtlopment (ooa

MisrelJftf!WU$

Total ftWCflllC!i.

REVENUESQ\'ER (UNDI!K) F!XP'flNtJl'tUili:S

UfllER HNANCING 8UURCU$ ('i.lSt'~};,

T~qut

TotITT otlmt finaoring ~OOJtTma (111¢11)

Ri\''ENURSANDonlER FINANCING $0IJR(:ES OVER {UN'DERj RX'rBNDl'TIJR:Etl ANU OTHER FINANCfN€'i USES:

;FUND 111\L\NCES;

Bcglm,ing -0f yi.lrn:

nt«i ofyMt

$ 130,!}l)} $

76

Revenue Fund

Pusttwe ,N~tiv,ej

VnriArv:e with

I Jc.&,75$ $ $$,{~

191,360

jlM<l,9?4) (lJ)lh)

{lSS,188) $

2,167,098-

Town of Danville Budgetary C,omparlso11 Sdtedu)e;, Development Engineering Special Revenue Fund For the yeat .:trtded J1.1ne 30, 2004

Atluel

Ammmw

RE\'11NUES:

Ch&rp fut s,:;rvi;.mi; I 10;1](!0 • 10,000 $ 41,23-1 I:.w,¢lt<ptw¢rtt !¢m1

Totalflf!!mrn&1

k:EVENUFJJ ovntt \UNIJ:tm.; EXJ:fENIJffDIIBS

0'110!R fltNANCTNG SOURCES (USES}:

Tnt11sfem out \1&1,i1Hl \Ufl;l'lS) ~ISJ,4llll

T-0h1I other fj.u~ng 11mtretrn (uH,t) {J!ll,416) (181.411:J

REVEr•ams AND OTHER, :FINANCING &OURt:'.:.mi OVEt

{UNDER) EXPENDlTlJlt f'.$. AND

OTHI!R FINANCJNG U$),i$ {S,.56Df

f'UND JJALANCBS:

~VJ1ning: ofymtr

Emivf year

77

Pooiti\'t

(Ncsali,:¢)

Vurian.o:wlth

$

Town of Danville Budgetary Comparison Schedule, Child Care For the year ended J urte 30, 2.004

it!MiNUES:

~·'jlJQt r-UMJ. uf m011ey and propm:ty

Total teVer,uu

JONC!'.:it,JJ!S OVER (UNOB'.lt) EXPENDJ11JltES

O'lliUR l')NANONG $9URCES {USES):

Trarmfrui'l em

Total other flru,titirtg S-Ourres (U5es)

RJWEJWJ!S AND onfl!k

FlNANc:rNG SQURCt!S(lVEI{

{UJ\l:OHRJ JiXPEND[HJRE.8 ANO OllJJ;m l'lNANClNG USE$

FUND 1ALAt'i'CRS:

n..,irmrung of }'W.ll

fuld pf !'Mr

$

Revenue Fund

10,000 $ -100,000 m

U),!JOO

l!""l (600)

is

Acttm1 Anu:runt,

"'7,300

<W,MD

e (60<,)

403,840

j'.>q:;ftlvr

{Negative)

Varianre vith

1,300

Town of Danville

For the y•ru, end•d Jun• 30, 2004

REVENUES:

Sperfu:111s!lesllmrmw Llcet1,1f$ ,n:nd pt:rmltll

UMi «f ti19tV,f ..nJ pi ()p<fty

Total ft\'Cl'!Ue&

El(J'ItNDmm.ES:

Cur:r.::nt,

Tot;;t <m<fHi:tid1tttrot

ltIWCNU£S OVER (UNDER} IlXl'llNDllUKEt;;

OT'.MfiR f'[NANCIN9 SOtJRCB5 (US.ES):

Ttaruiersonl

Tol!d otlwr i'Ul'lndnij ,111,lllt!t (il#i!!!I)

REVP.NIJ'.F,.._'i AND O'fl:{RR:

FINANCING SOURCES OVER

(1,INDmJ IOCPBNOtTURES AND (rJ1mit MN,A:NONG USES

FUND tlAlANCE&

Dvglruilng: 0f ,Y('Af

J31td 4'f year

$

Revenue Fund

4/i0,000 $ 460,000 $

500 5{10

47~:!1'1 Gi.i(i,!;1$:}

476,119 500,553

\'I)

Actual

Amoonffi

459,273

:m,m

z:n:,639

133!!<()

101,9(1&

P0sinv0

(Negative}

V Ariaitot Mth

(727)

J,1199

1,252

1,4;!4

l68,ll'l4

'i6$,$S,.j

17f)Jll}

Town of Danville Bttd¢ary Comparb,on Schedule, Measure C Special Rev-entH:: For ~nded June '.;O, 2004

REVENUrlS,

ink:r!:F'"emmentai

Uooc of 1:m:iney nm:! pro per!y

Mist1;!J~

Tfltiil rev,;;,nt!c!

lt<FfiNDJTtJRES:

Cu,:ront

DUYt!loprnem 11ervffl U\:pi;tal l)Utlt\j'

Total o:11enditmvi.

REVENUESOVM (!JNDIIR} t'Xr1lNDJT0RES

OTHER fllNANCJNG 6<.HJKC!&& {UShS):

funsfm oul

'roW ctMt ftniu;dng: ro1.t«tIB {11-}

ruN!lNUHS AND cn1i1J~ m.JANONG souncns OVllll

{11.NU.RR) EX1:'6NilfI'URfiS ANT) OiHClt FINANONtl US.ES

FUND BALANCES:

Beginning of y,:mr

$ 559,500 $ 15,733

549,156

•

""

559,$00 $ 15,733

1,425

$71!"'3

J\JSitlY¢

"''"'"~) Aftw:i:l VariruKe with

A¥1W1.11\ft:

540))1)3 $

09! ,tl,257

42148

511,151

1i.l.::\,595

~"497) 5,29$

SM ,.,,.

(9,J:62:/'

(61.001)

(61,5?,l}

AGENCY FUNDS

Town of Danville Combining Statement of Changes :in Assets and Liabilities

Funds For the 2004

Biilwi.<11 Net Ch!lngt,a In

hr,ctsM>.d

Llnbiliti.eti

A,;ITTllll: t'.J«fuwcl ContriWOOn:Perwio:1' 'P,!)n f,nv,.~tmvr,t;

U1tbflit!e&: Hisld ill: rmpJoy.m trusb

llsml,ll!,J:w,JI AMett.:

Pooled rnllh nm:i inv.wtmwntl fu'.t'Ohftll$ Mtxtl'lflb!E

Tutalm111Ct!f

LfahUif:ic,;z

Acn:mrmJ paynhlc Deposlts

Tout ffabiUtl.m

Asmtl;

PoolNI t"1iMi and invedh'rients

C45h arid ffifflffllfint:s with fl%'dl agerus ~treceivablc

1'*1d"!ltldiJ

Ufibilitiat

~pii:fi;bk Oqe tu .J:i~$©cr,t dli:ttjrt b,:mdholdcrn

Tot:dli11bllitir1<

~ta:

~itJanm Spytjaf IWffl!ljtnEnt Dl11trk1

Pooled :i:m,h md i11v;,$tllumb,,

Cash i!J'.\d in1,"f:rl:menbi with (:id,;al dflil:nhi

lnteres:t rea:ivnblc TtltaiW!ttG

Uabilitlff:

Aa:ounts pnyahm Due to 11.i&IJCS!lmenl dibi.rkt brtndhukl!Jrn

l'-0tiil Ut1b;IU!itii

•

$

$

"

l,1$),plj2

14fi,1AA $

2,.414 $ "!,60!,Jll

(57,J131J ll!

(!'8,057) $

(z,474) $ (olm,554)

Ihtlm1n1

1J;62,0:7J

S,211

1,211,R'lll

<C,-mtim,1¢4)

Town Danville /\""et. •nd Li•l:>llill••

Agert<'Y Funds:, Continued

For the ;,eat wded June 30, 2004

flnlm~f At:1ck~ nnd JkJlM<, J14ly 1, 2003 l.!l'll!Jtlh¢$ Jrnne ;l(t {004

Met«: Piiow<l cmih and in:¥¢JJ!Juentfi. • 2,W6 • • .,. Cx;J, Md itflf¢i,(fi•ittil5 with fim:Jl azenlti '719,389 621!,,Z29 1m¢resl re,;;eivable som

T-Otal MHffl ' 723,396

Liah:ill:tj¢o/.

Ac,;:olltltll payabie • 6-0 f)Ulf to A$Mt$%1Pf'r1t (h4trict !JOnflht_,IJ;,:rs 'nf'.}t,16

T-0tal liahili:tilj& s 772, 3%

Tgial A&;'-"11\)' J!ul!ill\l Amicm

Ptmlod umh :&n<l iAVQt@@W- • ~1:!7,{}72 • • 2,~005 Casi, l\fid J.nvuatmenbi with fiM::!lJ 41S1!Hh ;),700,138 :3,057$)1 Arooimt!i wo>ivablr 15 Jt1tereat reecr'<11t>Je S,Wl 1,424 Dhftncd eo.ntrlbut:lon pension plan lnvttmrumW 7,$trl,7,}i

T1;1htJ ru:ioobl • 1:2~~1

U11hlli:tis A«:ounu payable $ 163,991 $ (lM,564) $

p0$l'l$ 1.974,'Z:49 $0,ZU ft'W~rt dktrlct bondholdew 3,700,0lf, (644,

Heid m empl°'l'tt trutiW

K%mtl11durl} ,.

Town of Danville G..,.,,.i Governmental l!q,<,ndltur .. by !lum:tlOJl Lll!II Ten Fiscal y..,..

-l'l,e~ y.,, .. d>ld ""'"'' """'"" P0Ht1a Mnitm6nan<m Ctpital Debt 'l\llul

199!< $ 2,141,636, • '""""" • >,714,200 $ 2,793,'946 $ 1,.VS,7?D if 3,A~ ' 995)i32 $ 1S,(IM,9ill

19% 2,018)143 795,W Ull'i/'74 """'""' 2,S,I.W ,_... t,3.1t>Ai9i 11n!ln

STATISTICAL SECTION I 19!17 2,1&,842 1)l44,561 3-,337,116

,_ UWHr109 3,.5(12,103 L(laaNJl litffl,476

'* """'""' """""' 3,329,!WS M- ',990,MJS 3/1S8JXl2 ,,., Z169ll43 1A2?,91$ 3,!J.7IM2 3~,106 3,406,001 2;550,991

""' '2,32i'l,92:1 1,655,.W 3J178,!l28 -· ll/01.SW r,Ji'MJ12 Ul1!40"2 J.2.941,926 ,001 2,384,056 1,53l.7&5 ~IOl,111 ' 4,1{)«171 '""'""' 4,.'tl3,,'S53 l,o53)!32. :21,16%,0?6

""" "3ll!1ll1' 1,765,923' 4,UW,41:Z """"""' 7,206,912 ,,,,..,,, 916,.'102 25,$35,261 - 2/761,653 ""''""' 5-'l'Jll 3,7,1:18~ lMWl,247 1;%3JIP2 11,t@) """"'""' - 2,724&1,7 2,?A#~ 1;<'ffl5)W'6 4,l',M,173 :;.;an,099 '""'""' 758)'!$ 23,3:tl,()17

~' ~t olReVMuea,Expl!rutltlJNl;MUX<lw!p m,itu.td ~~lll1 for a1l

~«,llttmful Fmi&; .iru-1n.fing Um Gmtral, ~l l<nven,111, Debt Setvk,11, md 0.pital P~ Fltn~

~h~~tinl11!!CPA

G$tifJrl;d (k;vommffliru !xpffld~i"'* by Funcikm fat FY 2003'-04

Qt1M;>rot Gow:.f'f!l'mnl . 12% -

..

Town of Donville Gmtml Gov~u:rum:ntal R~Vt;U\Wl'I

Loi .... Fl!l<al y..,.

"""" DwelopIDAmt y.., r't!t!!land - -· 8,,dlli{ _,.,, ....

""' • S,1lroffet $ • ,,,,,,... I ""'·"" $ '"""""" I ~,734

19'6 S,9?2,922 2,517,115 2,321,940 fil.lS,375 1,512,%11 ~A:01 1'97 V.677,.700 """'""' ""'""' """"' "''""' ,,400,-0!iS

"" ,_

4,861,'llZ 2,609,121 ' 1,113,Jtr3 ""'1!!12 5,SC,111$

'"" 7- Q,305,(113 4-756,303 1,l(ID,ffl '""'""" a,7>ffiM!3 - B,oo?'JU .,,..,,.. :7,785)19:t 1,,162,7»2 3,16;j,21lJ >1'1'""4 ~ """""" - "-il<li,919 l..;z3$.1?ti ~,667,izt &fl(fl,m - 10,ffl:,574 ,.,..,,,. 2,928,702 tM!l,100 :3;110,968 4,'ltifl,3,'-0 - I0,681,596 :3,6'ni,6{16 :3,oo2,796 ,,.,.,?02 2,710,666 ..,,..,,,,, - 11,413,945. 7,531,312 ~,10 Ull6,7il0 619,$74 lJW7,ffl

~stntemmtoi:Rtwerm,es,nxp«;d!ttima:nd ~m ¥uoo 11fiwmwfur all ~J!ulrnh,

W.Spooia1 ~jj,J fuctrti.k! LLAO 1utd srcP whkh bt\PJI iu FY'f~ mid PJfu-Jmm wliJi::1'

~in FY2000-0L

~~•ndl'ermlffl lrn:lud!lliFtaw::hil:m FeesandDfflllruwi lkt!rtaeF-.

FINS, 'p;>:Nfu!ts and Ob$

. '%

I<

by SourMfor FY2~

•

11 ....

""·"" $ 16,l!llfllIB

<lll,9'14 U.:rt92lG

"""'" 11!.7&314 348,108 u.3511""6 544,llffl """"""' ffi,919 2',l!ll,;ot

1,Q00,004 29,763,147

'""'""'' l?,1!.14,146 l,f7Z3(il 16,%()~

716A!J8 2',ffl,"2

Town of Danville General Governmental Tax Rwenues by Soun:e lQt Ten Fiscal Yea:m

Comnumlty !!l#;;a! Yiilill f',etl¢(1ll ~rntnt T""11 Ptoprtly ·- Pmp;;rtj' Sahmund TNMr,,

1W6 "'"'""' 541,$1;!1 2,9-11,205 z,,,t,<li< 316,1163

1997 """'""' 679,16\ '"""""" 3-,£l79;f.ln '.13.1,106

19911 2,705,324 i50,S96 !,45$,91(1 3.41Ull< «:;,m ,.., '2/+1'.7,6&2 '?7'7,75!! 3,?25,410 ({,fj@Jll'J 45'll.2ti:l

""" 3203,13.1 827.2611 4,031,001 ;,,,,,;m 53-Sii'.100 2001 ·1""'"61 1,2;,11,251) 5,e,m.,v3-7 4,2!3061! #7,4;!6

""' 4,769,418 1,21Y;!,563 ~9lll 4,U21,511!1 494JKl4

""" ;},131,213 1,105,S'r!i 6~,199' ,,_ 492.392 - Ji.M,2,ft!i UM,1111 6,1126,!16 s,m;tn 600,'"'7

Soutt:c: C-0mbll'l(l,;f~fmmmt of~, ~ttdltww .md ~ It; l\l;,;15ul,uu:« kn: ail

Giverrutteu!ai fimvltr, !ru:!udlng: 11:w Ckoorrtl, Spcdal lwvm:me. u.mt Sttvlce, .md (\1piliil l'rnjt:c!s llu!i<b.

{11 <bpka Cl¥ltll County, 111 ivhkh fur ThW11 of 11Mwilk 1!I wrnli:!d, la a ''TBlbet PIM" «:illtltyt

Im Cmmly ni!l\lll'! 100% t,f the ]!RI~' Wi aro®J\l 1evfud tu !lie Towt1, #.00 !1w ();)1)J:>Jy hm,dlill! at! dclinqttitncles, tttatn1tig W~ rtnd JiPllaflttl&. 'l"Mtffllw, thll 'Town has no propet!y 1ux

delffiqutmtloo,

(2)c ThEC~ lkvclopllllittl: Agerneywns l!SUblw!Wtltn l986. Tax ~Revtitll1'1'!

.u¥ te4.wx! b)'.;U:w gd,IIGlitlt;mii RvvllliYll Augnmnlilt:km. Tuw.d '1ll!J#J,it$ jr

to ihtr cfflmty m 4et4r'dn11t.t with p~lllt<Jtlgh 1>Jt0ffllfflllL Siptiamt Yllrlnti<m11 ro:tt IWttXl: ll¢l¢W'.'

1995- $'$61,116 Intl ~.rndumi by $U,4961;itAPlU'ld $36,Mt, pi1$Hbt001):hf!,;t)'lli¢1\IS .

1996- 5541,5111 has boon reduced II}' $3.9,537 pnss4:hw«?,h p;i,y mmM 1997" $679,?64 b,l!ll 'hN,11 l"t'durnd by $42,0M p.1.u-throuiti pny1rumti.. 19911 • $700,596- lw beeri: redttrerlby~pnss-througil p11~

1999 • $777,753 !ms l.»ron raduevd by §1,412 Jm!i...thwuzh vi:iy:mmd\1.

2000 • $8i! ,1{ia lum Ul!#ll rndtk<td by $5$,6'71 p¢1~ i14.fll'tM\K

2001· $1,253,250 hM oot'll redlil:Cf.l t,yl%0,774 pnd4ht~ Pftj"l)Wfi\;'I;

2002: - $1..:163,51i;l. hM ~ r«lttecd by $65,774 ptl.llS>fru'ougl\ pa:ymcnis,

2()(!$ ~ ~7 hm> htwtl red11"*1 by $45,26(1 mt.AF imd ~,412 pami ffumrg!t paynwn~

1004- $1,541.,636 has b<wJl f«lw:ed by $78),17 WtAfl aruf $73,411 (WlS ~ l}bj'mt1tl!S

.,

Total t~

S,992,922

f,J;,'J7,76$ 7,,Mi.,662

1.692..704

"""1,7"\ 10,~ 10,584374

1J),651,.!r%

11,4113,94;5

Town of Danville General Goverttmental D<lvelopmenf Fees Last Ten Fiatal Yeau

""'1Y= RuJldifi$ Mis<:clhooo1.1&

Ilt1dt:d frui:pet:tk,r, Dm'clnp.:lt I!ng~ ChildQre ""'"' lttnc30, - - ,~, ·- °"""" ""' I t,s3Z719 I "'·"' • "'Ml I t74;00t '

,,.;mi '"" 1;1!15,255 ?;14,"'2 31!1,.ool !OJµ;! !iJ0,1&1

,rn t,tS4,4$8 m""' """" "rm 474,.()5-0

'"" Ull'llW ,..,,,,952 7!!\,'!42 "'""' 677,054

'"" 2,l!Ja,000 2:ntUXw- ""'""' nl,lH 007A66 - i,7S0Jll}B 1..,20(),.1.1'} ""'""" 67A'7 'tfi1(1,1$,3

""" 1,&,13S 1$,'?,.~ ""Jml '"""' ,.,,,,,. - 1,582,631 %1,1'2 "178.582 26;142 1,-086,727 - 1,314,369 1,:153,W 111,497 6,1'.ltl 1,088,241

2004 1,617,119 ,,,,,.,.,, 177,856 4-07JOO 1,484,(\ilil

B.)u:r01; $hi~nl <l1 R.w;,1111Wi:1,, lixpertdltirnt5 .. ltd Outrtg;;s in Jtunti Billanres Ctwett1!tlNl!til Pu ,W art<l

C-0mWnlrtg: Shltt;rn1rnt fif Revtinuffil, ExpenciltUTmi 1md Chtingfl! ill Fund !kli!FK:e'l Non-Mrtjnr Governmt;ntai

"'""'·

"'

Tt>ti!l

Devclopruent

'-""' Servlct: Ch;;qi,c

flew;rtll;;,&

I MSl,,.,9 Z,SJ'l,lt?

:,:,S$6,4~ 4S61,m 6.00SJ)t'}

3,63S,)24

3,6'1ll,<iM

7,531,&12

Town of Danville Asseswd and &Jt:imah.'!d Actual Value• M Taxable hooortv Last Tett Fiscal Years.

Jlimit Yt11n

Eruied Re,d l'tvPIJx!y Pmo:.111 r't¢Ptrt:v

~ Seeuwd Value !Jrum:uro<l Vrthl&

""" ' 3,6.1i.il3i;7t11 I 11,096,PJR ,,,,. 3,1)71,275;:lli{l 93.418,117 i"7 ,j,(l91:,~,d0$ 64,547,100 1m 4,Z:71,ffli.1,214 63,1&7,123-199. 4.006,901,345 63»!,}c,320 - 1,999,136,,1:0l ®,3t{Jl!IB

'""" $,4$0)179,368 73&55,100 - 5,iltLl,172,1(:,S 61,1,$$-&i; 2000 V,ii90.-0?ff,J07 11,.SH,;ZM - 6.$69,Y,195111 7li,91(l»s,J

,u:occ: (;t,rtlf'kll.lM M A-d v al<.ud1r11W fuJID. Conn <:oom C®nt.· Audi«rr-Coo-itrrulnr'+ Offkr.

"

Tutat Pmfflm~ Ama.1!i£00 Valtm Chans,;

• 3,69!!,00W5 4.99% :3;914,691,447 6ilO'lt. 4;155,57(;~ !tilt% ~J,'.:+37 4.l\1j 4,(,()9,914,li&'i 7.74% 5,!M5,,j;)l,2® lt47% ti,Sll.i,61?,,!!!?1 9J'l6% 6,.065,655,?W '120%-6,46$Aa9,5t!9 6,647" 6,949,W(l,Jii(, 7-13%

Town of Danville l'rol'ffl)' Tax, l'rincipill Taxpayers Yeu llllded l•ne ilO, 201)(1

Tw:1;r.2:ru Ptt1~ LOCA!ioo

Dm:willt Ll,;my & 1\<1im::,wtlle DnuviJfo. Lwmy &: Metnmtlfu

Lg,mcy Cenwrs LP Multiple

Imo &rnie 1'ktta UC &nllrunon Valrey Ulvd

Fos~ :\1)$QeiutAf, ttd roo~W&y

T.mDKU.C !,rt G<)nd« W*J PMwiJJe.San Ramon Mt-dkal Sim hmoo Valley 1U;;,i

Mutdnh- Ali~~ LLC TiinbloRmni

~ Vtillcy L#rlgr P~ Dlablo l.otlgt v.rnville Park~t$ Viimili¢ Pm:Vs i\pa:rtmer!ltt Crow Om,yoo Maru1gm1wnt CrowOmyon f«im:t

]-

S::.ttr,:;r, Cootm t'fr!W Cm.u:ay Au<l1h)~ontn.ij.,r«O#i,:m,

..

'"'""' Tt£!-Ot' lhwinmm Valimtloo

Spt'dalty Slwps tJ7,110,7Afi Shoppffi,g C(.nt.,t ;1,~m Slw~Cmter 11,810,()M

Sl,op¢ng Omfut UM'l,907

OlOOl 12,492,,15b Medkn.l Cenror 12,3$6,919

Oflhw "-Silrut!r Care F'lli.:!lliy 11,,..,,,. Ap11rtm£rit Complex 9,173,764

CQµnb:'y Chtb $,81.13,l'W

1\- ul'fohll ,,,,,._ Valll<dion

(t53%

QA:$% (t26.%

1120%

0,16%

il.111~

iL17t4

0j6%

ll.13$

0.13%

Town of Danville !lnles TilX, l'riru:lp<I! Tro<p•yem llear l!uded Juno 30, 201)(1

2l:J!e cl Bu.irwRI

A1h.fmruf11 Forni CN1lefs Food Ml!Tl«il:ii At:rv AMJPM MW t<1Jam. S¢flrW, stntlow l!>Wittl>gii$ &; M¢t,e liquor~ Chwwn S<!tvke Sw:tlot1s SmvltnS'futfon&

C\Wtt1 mowsm Dapartnmnt St»Ns

1£ings Drugs St-Ore. '""'""-M11rstw.tF, Stvtm; AppaWStun~

&fuw11y~rlwt flood Markffl SJ»ill &wiL"t- Sh!Uvus Betvk:e 5tbtklm

'trader loo's f1oml Markrls

S;m Ramon vzy Xd &: Dlnbl1t Rd

Onnbtl} 'fa111#1Jf!t11 e, ~ <;t_

Ditrn1o Road Crow Canyon M

!!OffllrV\ Vv'ny

&n Rmrum Vly ikl & Gilmi!W 'IMMjtira Fm.filria l'v'ny

<:ammo Tawiapira Camino Rillt\Oti

f:ltmvilk squaw

Suurr:e; Municipdl RrlKlu.tt,;; COMultrm!a for tl'l£ 12 mo»1ha ended Jmw 30, 2QQ4,

Nrn,e -&res h.oo:ii nre &ted in nlp1mbrtkal-0tder, Sales fux<m ~w.l by t!IBoo lop lmt Wx payvrn

wtaJ«l $J,6«,125-\lurif1£1!.\i91is,;11yoor,rnpru'W1!tin,&41J% n! tl:w"fowrtft tntal ""1llrh tax r.w-,e1;(

..

Town of Dimvllle

Yw 1!11M<!Jmto 30, 2004

Am.l'!lli!!d Vfttunt\\m

1-0gal l)rht I lmlt ~ 3-75% .;f T-0!al A-.,.;,i,I V,dui,tioo

A.nt<m:rtt ct lJfibt App!itnbh:i W Limit

Legal Debt Mattph

l',J«:<1ntoil9ll)(!httim!t:

So~ C'.'ertificattw of ~rud Vahmt!tnmffom C-0ntm Cn\tA O:nrnty Audlror-Ctm:tro!ler'sOffice,

Nt1t;, "'th,, gt:rti'!'iil ia{o\.':$ oi 1lli' !ibo.Jt< ,){ t'allfnnlia fut ttt11nkip$1itlt<rt p.-(nfjd,; !:Or .ii k,ga1 d,;bt li:rnit

ot1S% of iftOiIBa&~ vaiu11ifutL Howi!V!lf, 1hlli pwvwmn wru; en!\ruid whtm amw;rud

vitluatttm wai; ffldblilllmd b.iscd ¢11 l.5% u( mntkct:vrthae, Bffcttiv# tvlth PY 1ffi·112. taxable p~ty W~at rOO% oftUtlwtValue, AlUWU,ghdw;;l&btl:iml:tp(OVitl,$rtht1$ti-Otht;en

llllll!!1dt,;l by llre 91.am !illl!:e !hib U\W1g.r, the ~ W Dt1e!l propm:I.N!m!cly !lH.u.Utred ht

$-,75% for Urn puryw11 .,( lt!i:i ml®tfun fvr OO"fil$ivl"'}' wil;& thw ~l inwnt: of th'1 SW!xtt:

dehtlmtlt

"1

S6,W:92-0,1Jl6

:Z(l(l,596,$82

0

Town of Danville G•ne,al Borul•d Debt lo A••• .. ed Valu•, Last Tl!tl Flwl y..,.

11l#tn! Ycilt Qmeml

Ended IJ;m<fu<l Debt

1""1 $ I""' -1m vm -'1lll1 --2lllJ4

S!)urres:

(1} Qictttt!l C'.oo!a Collllfy Audlltr- Cooirt4!B's: Offltv,

~Callfumht ~tlntenfofrinatRJr

1,:,trtl

$ J,69!!,001,fjgtj

3}!3U'fl,M7

41WS,!i70,468

1,33\t~ 4,669,?14,-066

5,1}65,451,266

5,51l<,i1';>'4

<\!)<i5,6'i5:J9-0

....,,.,,,,""" -0,949.a!.IU,l!.16

(3; Cumbin«I ~UM\! of RRVenue5, ~diru:re:, and Om:ngw iti Fm!d Bitlan«i 141' all Govemmcnml, l11l.Tlim, in<:JIMllll.$111(1 Gqn9tiil, Spi!Wll Rtm!ttt:W, Dclrt Servlo!, ttnd

Capital Prop,>m llunda,

••

·r1ru111 Gm.tim!I

Gm.-rmrnwnl f'opu.latkm(,l)

$ ,;,m $ 15,(W')lO:I

37W 2LJllll;l72 3!1,104 16,898,.426

39,168 17,!Wi,-047 39,881 111,]dl!J}'ll

4U,4ll4 'A9'1))2ll

""" 21,166,098 43']03 2s,a~1 43,215 26,449,228 43,~3 23~17

L .. tTenPlscalYllUII

Plw:alYQilt Curomt C,-1

lmd<!<l ,wcamimtti ;\®®$11\{Tib:

Jttne30, Oti¢ Cv1l0.:W

1005 $ ::U!l!l;Hz $ """'" 19% Z3I2A!)4 2,.'21,lj.ffl

'"" zt;$3,,143 t-,m z.111,:100 Z,609,121

1999 W3Pl!J 2,756,200

""" 2$1?.;nl '"""" ,001 "'"'"" 2,~,itlO

'""' :a,927.,?12 ,, .. ,,,. """ l},iJ:1.(i,1)94 '""""" - 3,514,571:l 3)ro!i,145

Soun,-m OJntr.a Cmi!a CoITT".;,y A u<Jlwr-Cm1toolh;r•,. Ofii\;,? fur C1nµmt Am!lmw?Pt Duo

"'

Rlltio of

Ccllectiorui ro Au1001WJ Pue

' WM%

'""'' %2% -·· 'll!l,9%

lJJU>,

100,4'%

99ii%

99,'1%

Town of Danville lllrect •nd O\ferlapplng De~t

Comm Coma Cmmty General Ftmd ObJ!:gatlom WITTtta Costa Y\lllfy fvro;iml Obtiptlmw Comm C:mti ~nty DQmd-0fEdut11.UQn, CCW ConltaC-WtaOxmty ~ffl Amlmmtmt 'rnl!lni,i, <;:Of

SM Rtm!QP V •ll¢'Y Ut1in:M fkhool [h:Strlcb {"Ol> Sa!n U.11moo Vtiltei' Jllu, P~ D!;trlct, COP

f<>ll:!:I Ovlithlp~ IA!bt

'ffrt.Vt! Of1~rdllv ·WI* ToMi (>f 0&.iiVll,k, 1115 ,\fl At,&¢S!1Utt.1l I)Js lfitJ Uond:,

T-Otat J11{ttt Dool

TotttlGtum! lJkiXldn<l °'1edt1:ppb,g Dcl.>t

TotJJ Net Dlit«:t Mid O\•eru\ppit!J Debt

MWmlt -7,199:'l{, $2:l,673,192 7,199% 40,978.148 7,1'\19'*, 146,299

7.t99%c 40,314 'l.206% "'"" 6Jii4% ""'"" 3,242% ··-3().$,Sfl'!i 40-

3(Ul50% 6,()73,\193 31.034% 2,797,7t5

~ J00,000% 6,385,000 100Jj{IM, 13,Mfi,MI!

tll,,,3'9,81)9

2'3.6ll0

~Vclu,,twn $6. 9t9,251t,UI(,

Ratto/; tu Ass,:me<l VaJru\tion: Town uf Darwilli!'s: Dhvtl Dttbt

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APPENDIXC

SUMMARY OF PRINCIPAL LEGAL DOCUMENTS

The following is a brief summary of certain provisions of the Site and Facility Lease, the Lease Agreement, the Assignment Agreement and the Trust Agreement prepared for Certificates. The following also includes definitions of certain terms used therein and in this Official Statement. Such summary is not intended to be definitive. Reference is directed to said documents for the complete text thereof Except as otherwise defined in this summary, the terms previously defined in this Official Statement have the respective meanings previously given. Copies of said documents are available from the Town and from the Trustee.

DEFINITIONS

"Assignment Agreement" means the Assignment Agreement, dated as of April I, 2005, by and between the Authority and the Trustee, together with any duly authorized and executed amendments thereto.

"Authority" means the Town of Danville Financing Authority, a joint exercise of powers authority organized and existing under and by virtue of the laws of the State.

"Authority Representative" means the Chairman, Executive Director, Treasurer, Secretary, or the designee of any such official, or any other person authorized by resolution of the Authority delivered to the Trustee to act on behalf of the Authority under or with respect to the Site and Facility Lease, the Lease Agreement, the Assignment Agreement and the Trust Agreement.

"Business Day" means a day which is not a Saturday, Sunday or legal holiday on which banking institutions in the state in which the Principal Corporate Trust Office is located are closed or are required to close or a day on which the New York Stock Exchange is closed.

"Certificate of Completion" means the certificate of a Town Representative certifying that the Project has been completed by the Town and that all costs relating thereto have been paid.

"Certificates" means the $5,600,000 aggregate principal amount of certificates of participation to be executed and delivered pursuant to the Trust Agreement which evidence direct, undivided fractional interests of the Owners thereof in Lease Payments.

"Closing Date" means the date upon which there is a physical delivery of the Certificates in exchange for the amount representing the purchase price of the Certificates by the Original Purchaser.

"Code" means the Internal Revenue Code of 1986 as in effect on the Closing Date or ( except as otherwise referenced in the Lease Agreement or the Trust Agreement) as it may be amended to apply to obligations issued on the Closing Date, together with applicable temporary and final regulations promulgated under the Code.

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"Completion Date" means the date of completion of the Project as evidenced by the filing with the Trustee of a Certificate of Completion.

"Continuing Disclosure Certificate" shall mean that certain Continuing Disclosure Certificate executed by the Town and dated the date of delivery of the Certificates, as originally executed and as it may be amended from time to time in accordance with the terms thereof.

"Defeasance Obligations" means:

(a) Cash.

(b) U.S. Treasury Certificates, Notes and Bonds (including State and Local Government Series-SLGS).

(c) Direct obligations of the U.S. Treasury which have been stripped by the U.S. Treasury itself.

( d) The interest component of obligations of the Resolution Funding Corp. (REFCORP) obligations stripped by request to the Federal Reserve Bank of New York.

(e) Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S&P ( although if rated by S&P only, the pre-refunded bonds must have been pre-refunded with cash, direct U.S. or U.S. guaranteed obligations or AAA rated pre-refunded municipals).

(f) obligations issued by the following agencies which are backed by the full faith and credit of the U.S.:

I. U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership

2. Farmers Home Administration (FmHA) Certificates of Beneficial Ownership

3. Federal Financing Bank

4. Federal Housing Administration Debentures (FHA)

5. General Services Administration Participation Certificates

6. U.S. Maritime Administration Guaranteed Title XI financing

7. U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures - U.S. government guaranteed debentures

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U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds

"Delivery Costs Fund'' means the fund by that name established and held by the Trustee pursuant to the Trust Agreement.

"Delivery Costs" means all items of expense directly or indirectly payable by or reimbursable to the Town or the Authority relating to the execution and delivery of the Site and Facility Lease, the Lease Agreement, the Trust Agreement and the Assignment Agreement or the execution, sale and delivery of the Certificates, including but not limited to filing and recording costs, settlement costs, printing costs, reproduction and binding costs, costs for statistical data, initial fees and charges of the Trustee (including the fees and expenses of its counsel), financing discounts, legal fees and charges, insurance fees and charges (including title insurance), financial and other professional consultant fees, costs of rating agencies for credit ratings, fees for execution, transportation and safekeeping of the Certificates and charges and fees in connection with the foregoing.

"Event of Default" means an event of default under the Lease Agreement.

"Facility" means those certain existing facilities more particularly described in the Site and Facility Lease and in the Lease Agreement.

"Fair Market Value" means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction ( determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Code) and, otherwise, the term "fair market value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Security-State and Local Government Series, that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment Fund of the State but only if at all times during which the investment is held its yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States. The Trustee shall have no duty in connection with the determination of Fair Market Value other than to follow the investment directions of a Town Representative in any written directions of a Town Representative.

"Federal Securities" means direct general obligations of (including obligations issued or held in book entry form on the books of the Department of the Treasury) the State of California, or obligations the payment of principal of and interest on which are guaranteed by, the State of California.

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"Fiscal Year" means the twelve-month period beginning on July I of any year and ending on June 30 of the next succeeding year, or any other twelve-month period selected by the Town as its fiscal year.

"Independent Counsel" means an attorney duly admitted to the practice of law before the highest court of the state in which such attorney maintains an office and who is not an employee of the Authority, the Trustee or the Town.

"Information Services" means Financial Information, Inc. 's "Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, NJ 07302, Attention: Editor; Mergent/FIS, Inc., 5250-77 Center Drive, Charlotte, NC 28217, Attention: Called Bond Dept.; Kenny S&P, 55 Water Street, New York, NY I 0041, Attention: Notification Department; and, in accordance with then current guidelines of the Securities and Exchange Commission; or to such other addresses and/or such other national information services providing information or disseminating notices of redemption of obligations similar to the Certificates.

"Insurance and Condemnation Fund" means the fund by that name established and held by the Trustee pursuant to the Trust Agreement.

"Interest Payment Date" means the first (!st) day of each March and September, commencing September I, 2005, so long as any Certificates are Outstanding.

"Lease Agreement" means that certain agreement for the lease of the Property by the Authority to the Town, dated as of April I, 2005, together with any duly authorized and executed amendments thereto.

"Lease Payment Date" means the fifteenth (15th) day of February and August in each year during the Term of the Lease Agreement, commencing August 15, 2005.

"Lease Payment Fund' means the fund by that name established and held by the Trustee pursuant to the Trust Agreement.

"Lease Payments" means a portion of the total payments required to be paid by the Town pursuant to the Lease Agreement, including any prepayment thereof pursuant to the Lease Agreement, which payments consist of an interest component and a principal component, as set forth in the Lease Agreement.

"Moody's" means Moody's Investors Service, New York, New York, or its successors.

"Municipal Bond Insurance Policy" means the Municipal Bond Insurance Policy issued by the Municipal Bond Insurer insuring the payment, when due, of the principal and interest with respect to the Certificates.

"Municipal Bond Insurer" means the XL Capital Assurance Inc.

"Net Proceeds," when used with respect to insurance or condemnation proceeds, means any insurance proceeds or condemnation award paid with respect to the Property, to the extent remaining after payment therefrom of all expenses incurred in the collection thereof.

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"Original Purchaser" means the first purchaser of the Certificates upon their delivery by the Trustee on the Closing Date.

"Outstanding," when used as of any particular time with respect to Certificates, means (subject to the provisions of the Trust Agreement) all Certificates theretofore executed and delivered by the Trustee under the Trust Agreement except -

( a) Certificates theretofore canceled by the Trustee or surrendered to the Trustee for cancellation;

(b) Certificates for the payment or redemption of which funds or Defeasance Obligations in the necessary amount shall have theretofore been deposited with the Trustee or an escrow holder (whether upon or prior to the maturity or redemption date of such Certificates), provided that, if such Certificates are to be redeemed prior to maturity, notice of such redemption shall have been given as provided in the Trust Agreement or provision satisfactory to the Trustee shall have been made for the giving of such notice; and

( c) Certificates in lieu of or in exchange for which other Certificates shall have been executed and delivered by the Trustee pursuant to the Trust Agreement.

"Owner" or "Certificate Owner" or "Owner of a Certificate," or any similar term, when used with respect to a Certificate means the person in whose name such Certificate shall be registered on the Registration Books.

"Participating Underwriter" shall have the meaning ascribed thereto in the Continuing Disclosure Certificate.

"Permitted Encumbrances" means, as of any particular time: (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the Town may, pursuant to provisions of the Lease Agreement, permit to remain unpaid; (b) the Assignment Agreement; ( c) the Site and Facility Lease; ( d) the Lease Agreement; ( e) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (f) easements, rights-of-way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the Closing Date or the date of any substitution which the Town hereby certifies do not materially impair the use of the Property; and (g) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the date of recordation of the Lease Agreement which the Town certifies in writing do not materially reduce the value of the Property.

"Permitted Investments" means any of the following, but only to the extent that the same are acquired at Fair Market Value:

(a) Direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America.

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(b) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the Untied States of America ( stripped securities are only permitted if they have been stripped by the agency itself):

1. U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership

3. Farmers Home Administration (FmHA) Certificates of Beneficial Ownership

3. Federal Financing Bank

4. Federal Housing Administration Debentures (FHA)

5. General Services Administration Participation Certificates

6. Government National Mortgage Association (GNMA or Ginnie Mae) GNMA - guaranteed mortgage-backed bonds (GNMA - guaranteed pass-through obligations

7 U.S. Maritime Administration Guaranteed Title XI financing

8. U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures - U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds

( c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies which are not backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself):

1. Federal Home Loan Bank System Senior debt obligations

2. Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) Participation Certificate Senior debt obligations

2. Federal National Mortgage Association (FNMA or Fannie Mae) Mortgage-backed securities and senior debt obligations

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3. Student Loan Marketing Association (SLMA or Sallie Mae) Senior debt obligations

5. Resolution Funding Corp. (REFCORP) obligations

6. Farm Credit System Consolidated systemwide bonds and notes

( d) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G; AAA-m; or AA-m and if rated by Moody's rated Aaa, Aal or Aa2, including funds for which the Trustee and its affiliates provide investment advisory or other management services.

(e) Certificates of deposit secured at all times by collateral described in (A) and/or (B) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral.

( f) Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF, including those of the Trustee and its affiliates.

(g) Investment agreements, including guaranteed investment contracts, forward purchase agreements and reserve fund put agreements acceptable to the Municipal Bond Insurer.

(h) Commercial paper rated, at the time of purchase, "Prime-1" by Moody's and "A-1" or better by S&P.

(i) Bonds or notes issued by any state or municipality which are rated by Moody's and S&P in one of the two highest rating categories assigned by such rating agencies.

(j) Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime-1" or "A3" or better by Moody's and "A-1" or "A" or better by S&P.

(k) Repurchase agreements ("repos") for 30 days or less must follow the following criteria. Repos which exceed 30 days must be acceptable to the Municipal Bond Insurer.

Repos provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specified date.

1. Repos must be between the municipal entity and a dealer bank or securities firm.

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a. Primary dealers on the Federal Reserve reporting dealer list which are rated A or better by S&P and A2 or better by Moody's, or

b. Banks rated "A" or better by S&P and A2 or better by Moody's.

2. The written repurchase agreement must include the following:

a. Securities which are acceptable for transfer are:

(1) Direct obligations of the United States of America referred to in paragraph (a) above, or

(2) Obligations of federal agencies referred to in paragraph (b) above

(3) Obligations of FNMA and FHLMC

b. The term of the Repos may be up to 30 days.

c. The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee is (if the trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities).

d. Valuation of Collateral.

(1) the securities must be valued weekly, marked-to-market at current market price plus accrued interest

(2) The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by the municipal entity, then additional cash and/or acceptable securities must be transferred. If however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105%.

3. A legal opinion which must be delivered to the municipal entity that states that the Repo meets guidelines under state law for legal investment of public funds.

(I) the Local Agency Investment Fund of the State, created pursuant to section 16429.1 of the California Government Code, to the extent the Trustee is authorized to register such investment in its name.

(m) other forms of investments (including repurchase agreement) approved in writing by the Municipal Bond Insurer.

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"Principal Corporate Trust Office" means the corporate trust office of the Trustee in San Francisco, California, or any other such location so designated by the Trustee; provided, however, for transfer, registration, exchange, payment and surrender of Certificates, "Principal Corporate Trust Office" means the corporate trust office of the Trustee in New York, New York, or such other address as may be specified in writing by the Trustee.

"Proceeds," when used with reference to the Certificates, means the face amount of the Certificates, plus accrued interest and original issue premium, if any, less original issue discount, if any.

"Project Costs" means all costs of payment of, or reimbursement for, the Project.

"Project Fund" means the fund by that name established and held by the Trustee pursuant to the Trust Agreement.

"Project" means the capital improvements to be financed with the proceeds of the Certificates, all as more particularly described in the Trust Agreement.

"Property" means, collectively, the Site and the Facility.

"Rating Category" means, with respect to any Permitted Investment, one of the generic categories of rating by Moody's or S&P applicable to such Permitted Investment, without regard to any refinement or graduation of such rating category by a plus or minus sign or a numeral.

"Registration Books" means the records maintained by the Trustee pursuant to the Trust Agreement for registration of the ownership and transfer of ownership of the Certificates.

"Regular Record Date" means the close of business on the fifteenth (15th) day of the month preceding each Interest Payment Date, whether or not such fifteenth (15th) day is a Business Day.

"Rental Period' means each twelve-month period during the Term of the Lease Agreement commencing on March 2 in any year and ending on March 1 in the next succeeding year; provided, however, that the first Rental Period shall commence on the Closing Date and shall end on March 1, 2006.

"Reserve Fund' means the fund by that name established and held by the Trustee pursuant to the Trust Agreement.

"Reserve Requirement" means an amount equal to $347,491.02; provided, however, that if the Certificates are partially refunded, such amount shall be reduced to an amount equal to the maximum annual Lease Payments relating to the Certificates not so refunded, as specified in a certificate of a Town Representative delivered to the Trustee.

"S&P" means Standard & Poor's Credit Market Services, a division of The McGraw-Hill Companies, Inc., New York, New York, or its successors.

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"Securities Depositories" means The Depository Trust Company, 55 Water Street, 50th Floor, New York, NY 10041-0099, Attention: Call Notification Department, Fax (212) 855-7232; or to such other addresses and/or such other registered securities depositories holding substantial amounts of obligations of types similar to the Certificates.

"Site" means that certain real property more particularly described in the Site and Facility Lease and in the Lease Agreement.

"Site and Facility Lease" means the Site and Facility Lease, dated as of April I, 2005, by and between the Town, as lessor, and the Authority, as lessee, together with any duly authorized and executed amendments thereto.

"State" means the State of California.

"Term of the Lease Agreement" means the time during which the Lease Agreement is in effect, as provided in the Lease Agreement.

"Town" means Town of Danville, a municipal corporation and general law city organized and existing under and by virtue of the constitution and laws of the State.

"Town Representative" means the Mayor, the Town Manager, the Assistant Town Manager, the Finance Director, the Town Treasurer, the Town Clerk, or the designee of any such official, or any other person authorized by resolution to act on behalf of the Town under or with respect to the Trust Agreement and/or the Lease Agreement and/or the Site and Facility Lease and identified as such to the Trustee in writing.

"Trust Agreement" means the Trust Agreement, dated as of April I, 2005, by and among the Town, the Authority and the Trustee, together with any duly authorized amendments thereto.

"Trustee" means The Bank of New York Trust Company, N.A., or any successor thereto, acting as Trustee pursuant to the Trust Agreement.

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SITE AND FACILITY LEASE

The Site and Facility Lease is entered into between the Town and the Authority. The Town agrees to lease the Property to the Authority for a term continuous with the term of the Lease Agreement. The Town and the Authority agree that the lease to the Authority of the Town's right, title and interest in the Property pursuant to the Site and Facility Lease serves the public purposes of the Town by enabling the Authority to lease the Property back to the Town.

LEASE AGREEMENT

Deposit of Moneys

On the Closing Date, the Authority shall cause to be deposited with the Trustee the proceeds of sale of the Certificates. Amounts estimated to be required to pay Delivery Costs shall be deposited in the Delivery Costs Fund, an amount equal to the Reserve Requirement shall be deposited in the Reserve Fund, and the remaining amount shall be deposited in the Project Fund.

Tenn of Agreement

The Term of the Lease Agreement shall commence on the date hereof, and shall end on March 1, 2035, unless such term is extended as hereinafter provided. If, on March 1, 2035, the Trust Agreement shall not be discharged by its terms or if the Lease Payments payable hereunder shall have been abated at any time and for any reason, then the Term of the Lease Agreement shall be extended without the need to execute any amendment to the Lease Agreement until there has been deposited with the Trustee an amount sufficient to pay all obligations due under the Lease Agreement, but in no event shall the Term of the Lease Agreement extend beyond March 1, 2045. If, prior to March 1, 2035, the Trust Agreement shall be discharged by its terms, the Term of the Lease Agreement shall thereupon end. The Trustee shall notify the Authority of the termination of the Lease Agreement pursuant to the Trust Agreement.

Lease Payments; Abatement

The Town is required under the Lease Agreement to make Lease Payments on each Lease Payment Date for use and possession of the Property. The obligation of the Town to make Lease Payments ( other than to the extent that funds to make Lease Payments are available in the Lease Payment Fund, Insurance and Condemnation Fund and the Reserve Fund) may be abated in whole or in part if the Town does not have full use and possession of the Property.

The Lease Payments for the Property for each Rental Period shall constitute the total rental for the Property for each such Rental Period and shall be paid by the Town in each Rental Period for and in consideration of the right of the use and occupancy, and the continued quiet use and enjoyment, of the Property during each Rental Period. The parties have agreed and determined that the total Lease Payments for the Property do not exceed the fair rental value of the Property. In making such determination, consideration has been given to the obligations of the parties under the Lease Agreement, the uses and purposes which may be served by the

C-11

Property, the total amounts which have been expended on the Property, the value of the Site and the benefits therefrom which will accrue to the Town and the general public.

Lease Payments shall be payable from any source of available funds of the Town. The Town covenants to take such action as may be necessary to include all Lease Payments due under the Lease Agreement in each of its budgets during the Term of the Lease Agreement and to make the necessary annual appropriations for all such Lease Payments. The covenants on the part of the Town shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of the Town to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the Town to carry out and perform the covenants and agreements in the Lease Agreement agreed to be carried out and performed by the Town.

Lease Payments will be abated during any period in which, by reason of damage or destruction, there is substantial interference with the use and occupancy by the Town of the Property or any portion thereof to the extent to be agreed upon by the Town and the Authority. The parties agree that the amounts of the Lease Payments under such circumstances shall not be less than the amounts of the unpaid principal component of the Lease Payments as are then set forth in the Lease Agreement, unless such unpaid amounts are determined to be greater than the fair rental value of the portions of the Property not damaged or destroyed (giving due consideration to the factors identified in the Lease Agreement), in which event the Lease Payments shall be abated such that they represent said fair rental value. Such abatement shall continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, the Lease Agreement shall continue in full force and effect and the Town waives any right to terminate the Lease Agreement by virtue of any such damage and destruction. Notwithstanding the foregoing, there shall be no abatement of Lease Payments under to the extent that (a) the proceeds of rental interruption insurance or (b) amounts in the Reserve Fund and/or the Insurance and Condenmation Fund and/or the Lease Payment Fund are available to pay Lease Payments which would otherwise be abated, it being declared that such proceeds and amounts constitute special funds for the payment of the Lease Payments.

Additional Payments

In addition to the Lease Payments, the Town shall pay, when due, all costs and expenses incurred by the Town and the Authority to comply with the provisions of the Trust Agreement, or otherwise arising from the financing of the Property, including without limitation all Delivery Costs (to the extent not paid from amounts on deposit in the Delivery Costs Fund), compensation, reimbursement and indemnification due to the Trustee in accordance with the Trust Agreement and all costs and expenses of the Authority, auditors, engineers, attorneys and accountants. The Town shall compensate and reimburse the Trustee within thirty (30) days of receipt of an invoice for such compensation, reimbursement and indemnification.

The Town shall pay or reimburse the Municipal Bond Insurer any and all charges, fees, costs and expenses which the Municipal Bond Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in the Lease Agreement or the Trust Agreement; (ii) the pursuit of any remedies under the Lease

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Agreement or the Trust Agreement or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, the Lease Agreement or the Trust Agreement whether or not executed or completed, (iv) the violation by the Town of any law, rule or regulation, or any judgment, order or decree applicable to it or (v) any litigation or other dispute in connection with the Lease Agreement or the Trust Agreement or the transactions contemplated thereby, other than amounts resulting from the failure of the Municipal Bond Insurer to honor its obligations under the Municipal Bond Insurance Policy. The Municipal Bond Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the Lease Agreement or the Trust Agreement.

Insurance; Eminent Domain

The Town agrees to maintain or cause to be maintained with respect to the Property the following insurance against risk of physical damage to the Property:

Public Liability and Property Damage. The Town shall, maintain or cause to be maintained, throughout the Term of the Lease Agreement, insurance policies, including a standard public entity liability insurance policy or policies in protection of the Town and the Authority as named insureds and the Trustee as additional insured, including their respective members, officers, agents and employees. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage including events occasioned by reason of the operation of the Property. Said policy or policies shall provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in each accident or event, and in a minimum amount of $100,000 for damage to property resulting from each accident or event. Such public liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Deductibles, if any, shall be subject to the written consent of the Municipal Bond Insurer. The proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the proceeds of such insurance shall have been paid. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried by the Town, and may be maintained through a joint exercise of powers authority created for such purpose or, with the prior written consent of the Municipal Bond Insurer, in the form of self-insurance by the Town. The Net Proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the insurance proceeds shall have been paid.

Fire and Extended Coverage. The Town shall procure and maintain, or cause to be procured and maintained, throughout the Term of the Lease Agreement, insurance against loss or damage to any structures constituting any part of the Property by fire and lightning, with extended coverage and vandalism and malicious mischief insurance, with the Trustee and the Municipal Bond Insurer named as an additional insured and loss payee, with responsible and reputable insurance companies satisfactory to the Municipal Bond Insurer. Such insurance may be maintained as part of or in conjunction with any other fire and extended coverage insurance carried by the Town and, with the prior written consent of the Municipal Bond Insurer, may be maintained in whole or in part through a joint exercise of powers authority created for such purpose. Said extended coverage insurance shall, as nearly as practicable, cover loss or damage

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by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. Such insurance shall be in an amount equal to the greater of one hundred percent (100%) of the replacement cost of the Property and the principal amount of the Certificates.

Rental Interruption Insurance. Rental interruption or use and occupancy insurance, if commercially available, to cover loss, total or partial, of the use of any part of the Property during the Term of the Lease Agreement as a result of any of the hazards covered in the insurance required with respect to protection for fire and extended coverage, in an amount at least equal to two times the Reserve Requirement. The Net Proceeds of such insurance shall be paid to the Trustee and deposited in the Lease Payment Fund, and shall be credited towards the payment of the Lease Payments in the order in which such Lease Payments would otherwise come due and be payable.

Title Insurance. A CLT A title insurance policy in the amount of not less than the aggregate original principal amount of the Certificates insuring the Town's leasehold estate in the Property, subject only to Permitted Encumbrances.

All required insurance must be maintained under policies requiring at least thirty (30) days prior written notice before expiration, cancellation or reduction of the coverage produced thereby. Insurance proceeds will be made payable to the Trustee ( except in the case of public liability and property damage insurance) and, in the case of the Property, damage insurance must be payable in the amount of the full replacement cost of the Property or such greater amount as required by the Lease Agreement.

The Trust Agreement provides that, any Net Proceeds of insurance against accident to or destruction of any part of the Property collected by the Town in the event of any such accident or destruction shall be paid to the Trustee and deposited by the Trustee promptly upon receipt thereof in the Insurance and Condemnation Fund. If the Town determines and notifies the Trustee in writing of its determination, within ninety (90) days following the date of such deposit, that the replacement, repair, restoration, modification or improvement of the Property is not economically feasible or in the best interest of the Town, then such Net Proceeds shall be promptly transferred by the Trustee to the Lease Payment Fund and applied to the prepayment of Lease Payments and to the corresponding redemption of Certificates ( as described above under the heading "THE CERTIFICATES--Redemption"). In the event of damage or destruction of the Property in part, such Net Proceeds may be transferred to the Lease Payment Fund and applied to the prepayment of Lease Payments only if the resulting Lease Payments equal or less than the remaining portions of the Property.

All Net Proceeds deposited in the Insurance and Condenmation Fund and not so transferred to the Lease Payment Fund shall be applied by the Town to the prompt replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of the Property. Net Proceeds deposited in the Insurance and Condenmation Fund shall be applied for such purpose by the Town, upon submission to the Trustee of requisitions signed by the Town. Notwithstanding the foregoing, if the period of replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of the Property will exceed the period of time for which rental interruption insurance will be available for the payment of Lease Payments, such Net Proceeds shall not be applied for such purposes but shall be transferred to the Lease

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Payment Fund and applied to the prepayment of Lease Payments unless the Town shall elect to deposit moneys to the Lease Payment Fund to pay Lease Payments in excess of the amount of rental interruption insurance for the full period of such replacement, repair, restoration, modification or improvement. The Town declares that, since the Property is essential to the operations of the Town, it will use its best efforts to so deposit moneys to the Lease Payment Fund to pay Lease Payments in excess of the amount of rental interruption insurance for the full period of such replacement, repair, restoration, modification or improvement so as to accomplish such replacement, repair, restoration, modification or improvement

The Trust Agreement provides that, if all or any part of the Property shall be taken by eminent domain proceedings ( or sold to a government threatening to exercise the power of eminent domain) the Net Proceeds therefrom shall be deposited with the Trustee in the Insurance and Condemnation Fund.

If the Town has given written notice to the Trustee of its determination that (i) such eminent domain proceedings have not materially affected the operation of the Property or the ability of the Town to meet any of its obligations with respect to the Property under the Lease Agreement, and (ii) such proceeds are not needed for repair or rehabilitation of the Property, the Town shall so certify to the Trustee and the Trustee, at the written request of the Town, shall transfer such proceeds to the Lease Payment Fund to be credited towards the prepayment of the Lease Payments and applied to the redemption of Certificates ( as described above under the heading "THE CERTIFICATES--Redemption").

If the Town has given written notice to the Trustee of its determination that (i) such eminent domain proceedings have not materially affected the operation of the Property or the ability of the Town to meet any of its obligations with respect to the Property under the Lease Agreement, and (ii) such proceeds are needed for repair, rehabilitation or replacement of the Property, the Town shall so certify to the Trustee and the Trustee, at the Town's written request, shall pay to the Town, or to its order, from said proceeds such amounts as the Town may expend for such repair or rehabilitation, upon the filing with the Trustee of requisitions of the Town. If (i) less than all of the Property shall have been taken in such eminent domain proceedings or sold to a government threatening the use of eminent domain powers, and if the Town has given written notice to the Trustee of its determination that such eminent domain proceedings have materially affected the operation of the Property or the ability of the Town to meet any of its obligations with respect to the Property under the Lease Agreement or (ii) all of the Property shall have been taken in such eminent domain proceedings, then the Trustee shall transfer such proceeds to the Lease Payment Fund to be credited toward the prepayment of the Lease Payments.

Assignment and Subleasing by the TownThe Lease Agreement may not be assigned by the Town. The Town may sublease the Property or any portion thereof, but only with the written consent of the Authority and the Municipal Bond Insurer and subject to, and delivery to the Authority of a certificate as to, all of the following conditions:

(a) The Lease Agreement and the obligation of the Town to make Lease Payments hereunder shall remain obligations of the Town;

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(b) The Town shall, within thirty (30) days after the delivery thereof, furnish or cause to be furnished to the Authority and the Trustee a true and complete copy of such sublease;

(c) No such sublease by the Town shall cause the Property to be used for a purpose other than as may be authorized under the provisions of the Constitution and laws of the State; and

( d) The Town shall furnish the Authority, the Trustee and the Municipal Bond Insurer with a written opinion of nationally-recognized bond counsel, which shall be an Independent Counsel, stating that such sublease does not cause the interest components of the Lease Payments to become subject to federal income taxes or State personal income taxes.

Amendment of Lease Agreement

Substitution of Site or Facility. The Town shall have, and is granted, the option at any time and from time to time during the Term of the Lease Agreement to substitute other land ( a "Substitute Site") and/or a substitute facility or substitute facilities (a "Substitute Facility") for the Site (the "Former Site"), or a portion thereof, and/or the Facility (the "Former Facility"), or a portion thereof, provided that the Town shall satisfy all of the following requirements which are hereby declared to be conditions precedent to such substitution:

( a) If a substitution of the Site, the Town shall file with the Authority and the Trustee an amendment to the Site and Facility Lease which adds thereto a description of such Substitute Site and deletes therefrom the description of the Former Site;

(b) If a substitution of the Site, the Town shall file with the Authority and the Trustee an amendment to the Lease Agreement which adds thereto a description of such Substitute Site and deletes therefrom the description of the Former Site;

(c) If a substitution of the Facility, the Town shall file with the Authority and the Trustee an amendment to the Site and Facility Lease which adds thereto a description of such Substitute Facility and deletes therefrom the description of the Former Facility;

(d) If a substitution of the Facility, the Town shall file with the Authority and the Trustee an amendment to the Lease Agreement which adds thereto a description of such Substitute Facility and deletes therefrom the description of the Former Facility;

( e) The Town shall certify in writing to the Authority and the Trustee that such Substitute Site and/ or Substitute Facility serve the purposes of the Town, constitutes property that is unencumbered, subject to Permitted Encumbrances, and constitutes property which the Town is permitted to lease under the laws of the State;

(f) The Town certifies to the Trustee and the Authority that the Substitute Facility has a useful life equal to or greater than the Former Facility;

(g) The Town certifies to the Trustee and the Authority and, if required by the Municipal Bond Insurer, provides further evidence, that the Substitute Site and/or Substitute Facility,

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together with the remaining portions of the Site and/or Facility are of equal or greater value than the Outstanding principal amount of the Certificates;

(h) The Substitute Site and/or Substitute Facility shall not cause the Town to violate any of its covenants, representations and warranties made in the Lease Agreement and in the Trust Agreement;

(i) The Town shall obtain an amendment to the title insurance policy required pursuant to the Lease Agreement which adds thereto a description of the Substitute Site and deletes therefrom the description of the Former Site;

(j) The Town shall certify that the Substitute Site and/or the Substitute Facility is of the same or greater essentiality to the Town as was the Former Site and/or the Former Facility;

(k) The Town shall obtain the prior written consent of the Municipal Bond Insurer to such substitution and notice of such consent shall be given by the Town to any rating agency then rating the Certificates; and

(1) The Town shall furnish the Authority, the Municipal Bond Insurer and the Trustee with a written opinion of Bond Counsel stating that such substitution does not cause interest on the Certificates to become subject to federal income taxes.

Release of Site. The Town shall have, and is hereby granted, the option at any time and from time to time during the Term of the Lease Agreement to release any portion of the Site, provided that the Town shall satisfy all of the following requirements which are hereby declared to be conditions precedent to such release:

( a) The Town shall file with the Authority and the Trustee an amendment to the Site and Facility Lease which describes the Site, as revised by such release;

(b) The Town shall file with the Authority and the Trustee an amendment to the Lease Agreement which describes the Site, as revised by such release;

( c) The Town certifies to the Trustee and the Authority and, if required by the Municipal Bond Insurer, provides further evidence, that the Site, as revised by such release, together with the Facility, is of equal or greater value than the Outstanding principal amount of the Certificates;

( d) Such release shall not cause the Town to violate any of its covenants, representations and warranties made in the Lease Agreement and in the Trust Agreement;

( e) The Town shall obtain an amendment to the title insurance policy required pursuant to the Lease Agreement which describes the Site, as revised by such release;

(f) The Town shall obtain the prior written consent of the Municipal Bond Insurer to such release and notice of such consent shall be given by the Town to any rating agency then rating the Certificates; and

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(g) The Town shall furnish the Authority, the Municipal Bond Insurer and the Trustee with a written opinion of Bond Counsel stating that such release does not cause interest on the Certificates to become subject to federal income taxes.

Release of Facility. The Town shall have, and is hereby granted, the option at any time and from time to time during the Term of the Lease Agreement to release any portion of the Facility, provided that the Town shall satisfy all of the following requirements which are declared to be conditions precedent to such release:

( a) The Town shall file with the Authority and the Trustee an amendment to the Site and Facility Lease which describes the Facility, as revised by such release;

(b) The Town shall file with the Authority and the Trustee an amendment to the Lease Agreement which describes the Facility, as revised by such release;

(c) The Town certifies to the Trustee and the Authority and, if required by the Municipal Bond Insurer, provides further evidence, that the Facility, as revised by such release, together with the Site, also as revised to reflect a corresponding release of a portion of the Site required because of such release of a portion of the Facility, is of equal or greater value than the Outstanding principal amount of the Certificates;

(d) Such release shall not cause the Town to violate any of its covenants, representations and warranties made in the Lease Agreement and in the Trust Agreement;

(e) The Town shall obtain the prior written consent of the Municipal Bond Insurer to such release and notice of such consent shall be given by the Town to any rating agency then rating the Certificates; and

(f) The Town shall furnish the Authority, the Municipal Bond Insurer and the Trustee with a written opinion of Bond Counsel stating that such release does not cause interest on the Certificates to become subject to federal income taxes ..

Generally. The Authority and the Town may at any time amend or modify any of the provisions of the Lease Agreement, but only with the prior written consents of the Owners of a majority in aggregate principal amount of the Outstanding Certificates and the Municipal Bond Insurer, but only if such amendment or modification is for any one or more of the following purposes:

( a) to add to the covenants and agreements of the Town contained in the Lease Agreement, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power reserved to or conferred upon the Town;

(b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Lease Agreement, or in any other respect whatsoever as the Authority and the Town may deem necessary or desirable, provided that, in the opinion of Bond Counsel, such modifications or amendments will not materially adversely affect the interests of the Owners; or

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( c) to amend any provision thereof relating to the Code, to any extent whatsoever but only if and to the extent such amendment will not adversely affect the exclusion from gross income of interest with respect to the Certificates under the Code, in the opinion of Special Counsel.

Written notice of any such amendment or modification shall be given by the Town to Moody's and S&P at least thirty (30) days prior to the effective date of such amendment or modification.

Other Provisions

The Town has the right to remodel the Property or to make modifications and additions to it, provided such modifications and additions do not damage the Property, substantially alter its nature, cause it to be used for unauthorized purposes or reduce its value to a value less than that existing prior to such modifications and additions. All such additions and modifications become part of the Property and subject to the provisions of the Lease Agreement. The Town may add or substitute items of equipment or improvements to or for those items of equipment or improvements initially leased from the Authority if, among other requirements set forth in the Lease Agreement, such items do not require an expenditure of amounts in excess of amounts appropriated for such purpose by the Town, and have a useful life and are of a value equal to or greater than the items being leased.

The Town is responsible for the improvement, repair, and maintenance of the Property and shall pay or arrange for payment of the cost of repair and replacement resulting from ordinary wear and tear.

The Town shall pay any taxes, assessments and other governmental and utility charges relating to the Property as due; provided, however, that the Lease Agreement permits any such taxes, assessments and charges to remain unpaid if the Town in good faith contests and diligently pursues to conclusion such taxes, assessments or charges and provides the Authority and the Trustee with an opinion of independent counsel to the effect that such nonpayment will not materially endanger the Authority's interest in the Property or subject any item of the Property to loss or forfeiture.

The Authority makes no warranty as to the value, design, condition, merchantability or fitness for the use by the Town of the Property or any part thereof. The Town has all rights with respect to the warranties of the contractors regarding the Property, and the right to enforce such warranties against the contractors.

The Authority has the right at all reasonable times to examine and inspect the Property and to have reasonable access to the Property to cause its proper maintenance in the event of failure by the Town to perform its obligations.

Tax Covenants

Private Activity Bond Limitation. The Town shall assure that the proceeds of the Certificates are not so used as to cause the Certificates or the Lease Agreement to satisfy the

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private business tests of section 14l(b) of the Code or the private loan financing test of section 14l(c) of the Code.

Federal Guarantee Prohibition. The Town shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Certificates or the Lease Agreement to be "federally guaranteed" within the meaning of section l 49(b) of the Code.

Rebate Requirement. The Town shall take any and all actions necessary to assure compliance with section l 48(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Certificates or the Lease Agreement.

No Arbitrage. The Town shall not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the proceeds of the Certificates which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date would have caused the Certificates or the Lease Agreement to be "arbitrage bonds" within the meaning of section 148 of the Code.

Small Issuer Exemption from Bank Nondeductibility Restriction, The Town designates the Lease Agreement for purposes of paragraph (3) of section 265(b) of the Code and represents that not more than $10,000,000 aggregate principal amount of obligations the interest on which is excludable (under section 103(a) of the Code) from gross income for federal income tax purposes ( excluding (i) private activity bonds, as defined in section 141 of the Code, except qualified 50l(c)(3) bonds as defined in section 145 of the Code and (ii) current refunding obligations to the extent the amount of the refunding obligation does not exceed the outstanding amount of the refunded obligation), including the Lease Agreement, has been or will be issued by the Town, including all subordinate entities of the Town, during the calendar year 2005.

Maintenance of Tax Exemption. The Town shall take all actions necessary to assure the exclusion of interest with respect to the Certificates from the gross income of the Owners of the Certificates to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the Closing Date.

Default and Remedies

The following constitute "events of default" under the Lease Agreement:

( a) Failure by the Town to pay any Lease Payment or other payment required to be paid under the Lease Agreement at the time specified Therein.

(b) Failure by the Town to observe and perform any covenant, condition or agreement on its part to be observed or performed under the Lease Agreement or under the Trust Agreement, other than as referred to in clause (a) above, for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied has been given to the Town by the Authority, the Trustee, or the Owners of not less than five percent (5%) in aggregate principal amount of Certificates then outstanding; provided, however, if the failure stated in the notice can be corrected, but not within the applicable period, the Authority, the Trustee and such Owners

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shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the Town within the applicable period and diligently pursued until the Default is corrected.

( c) The filing by the Town of a voluntary petition in bankruptcy, or failure by the Town promptly to lift any execution, garnishment or attachment, or adjudication of the Town as a bankrupt, or assignment by the Town for the benefit of creditors, or the entry by the Town into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the Town in any proceedings instituted under the provisions of the Federal Bankruptcy Act, as amended, or under any similar acts which may hereafter be enacted.

Whenever any Event of Default shall have happened and be continuing, it shall be lawful for the Authority to exercise any and all remedies available pursuant to law or granted pursuant to the Lease Agreement; provided, however, that notwithstanding anything in the Lease Agreement or in the Trust Agreement to the contrary, there shall be no right under any circumstances to accelerate the Lease Payments or otherwise declare any Lease Payments not then in Default to be immediately due and payable. The Authority may (i) protect and enforce the Lease Agreement by such judicial proceedings as the Authority or its assignee shall deem most effectual, either by suit in equity or by action at law, whether for the specific performance of any covenant or agreement contained in the Lease Agreement, or in aid of the exercise of any power granted in the Lease Agreement, or to enforce any other legal or equitable right vested in the Authority or its assignee by the Lease Agreement or by law; (ii) take possession of the Property and exclude the Town from using it until the default is cured, holding the Town liable for the Lease Payments and other amounts payable by the Town prior to such taking of the Property under and pursuant to the Lease Agreement and the curing of such default; or (iii) take whatever action at law or in equity may appear necessary or desirable to enforce its rights as the owner of the Property, including termination of the Lease Agreement and the repossession and lease of the Property.

Security Deposit

Notwithstanding any other provision of the Lease Agreement, the Town may, on any date, secure the payment of all or a portion of the Lease Payments remaining due by an irrevocable deposit with the Trustee or an escrow holder under an escrow deposit and trust agreement, of: ( a) in the case of a security deposit relating to all Lease Payments, either (i) cash in an amount which, together with amounts on deposit in the Lease Payment Fund, the Insurance and Condenmation Fund and the Reserve Fund, is sufficient to pay all unpaid Lease Payments, including the principal and interest components thereof, in accordance with the Lease Payment schedule attached to the Lease Agreement, or (ii) Defeasance Obligations in such amount as will, in the written opinion of an independent certified public accountant or other firm of recognized experts in such matters, together with interest to accrue thereon and, if required, all or a portion of moneys or Federal Securities or cash then on deposit and interest earnings thereon in the Lease Payment Fund, the Insurance and Condemnation Fund and the Reserve Fund, be fully sufficient to pay all unpaid Lease Payments on their respective Lease Payment Dates; or (b) in the case of a security deposit relating to a portion of the Lease Payments, a certificate executed by the Town designating the portion of the Lease Payments to which the deposit pertains, and either (i) cash in an amount which is sufficient to pay the portion of the Lease Payments

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designated in such Town certificate, including the principal and interest components thereof, or (ii) Defeasance Obligations in such amount as will, together with interest to be received thereon, if any, in the written opinion of an independent certified public accountant or other firm of recognized experts in such matters, be fully sufficient to pay the portion of the Lease Payments designated in the aforesaid Town certificate.

In the event of a security deposit as to all Lease Payments and the payment of all fees, expenses and indemnifications owed to the Trustee, all obligations of the Town under the Lease Agreement shall cease and terminate, excepting only the obligation of the Town to make, or cause to be made, all payments from the deposit made by the Town, and title to the Property shall vest in the Town on the date of said deposit automatically and without further action by the Town or the Authority. Said deposit and interest earnings thereon shall be deemed to be and shall constitute a special fund for such payments and said obligation shall thereafter be deemed to be and shall constitute the installment purchase obligation of the Town for the Property. Upon said deposit, the Authority will execute or cause to be executed any and all documents as may be necessary to confirm title to the Property in accordance with the provisions of the Lease Agreement.

Termination

The Lease Agreement terminates (i) upon the payment or prepayment by the Town of all Lease Payments due during the term of the Lease Agreement, (ii) upon the occurrence of an event of default by the Town and the Authority's or its assignee's election to terminate the Lease Agreement, or (iii) upon taking the Property in whole pursuant to eminent domain proceedings or in part to such extent that the remaining portion of the Property is no longer useful for the purposes originally intended.

ASSIGNMENT AGREEMENT

The Assignment Agreement is entered into between the Authority and the Trustee, pursuant to which the Authority assigns and transfers to the Trustee, for the benefit of the Owners, the rights of the Authority under the Lease Agreement, including the right to receive Lease Payments under the Lease Agreement and the rights and remedies of the Authority under the Lease Agreement to enforce payment of Lease Payments or otherwise to protect and enforce the Lease Agreement in the event of default by the Town. Certain rights of the Authority to payment of advances, indemnification and attorneys' fees and expenses are not assigned.

TRUST AGREEMENT

The Trustee is appointed pursuant to the Trust Agreement to act as a depository of amounts held thereunder. The Trust Agreement authorizes the Trustee to prepare, execute and deliver the Certificates. Transfers of the Certificates are to be registered in a register maintained by the Trustee.

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Funds

The Trust Agreement creates several funds to be maintained by the Trustee for the benefit of the Authority and the Town.

Delivery Costs Fund-A portion of the proceeds from the sale of the Certificates will be deposited with the Trustee in a Delivery Costs Fund and shall be applied to pay costs of the execution, delivery and sale of the Certificates upon the instructions of a Town Representative. Any funds remaining in such fund after all such costs have been paid or upon the date occurring six months after the date of initial delivery of the Certificates, whichever occurs first, will be transferred to the Project Fund.

Project Fund-A portion of the proceeds from the sale of the Certificates will be deposited with the Trustee in a Project Fund and shall be applied to pay Project Costs upon the instructions of a Town Representative. Any funds remaining in such fund after all Project Costs have been paid will be transferred to the Lease Payment Fund.

Lease Payment Fund-The Trustee will deposit in the Lease Payment Fund all Lease Payments received from the Town and any other amounts required by the Lease Agreement or the Trust Agreement. From proceeds of the Certificates and accrued interest, if any, the Trustee will deposit in the Lease Payment Fund amounts to be used for payment of a portion of the interest portion of the Lease Payment obligation.

In the event that on a Lease Payment Date there is not on deposit in the Lease Payment Fund an amount equal to the Lease Payment obligation payable by the Town on such Lease Payment Date then the Trustee shall immediately transfer from the Reserve Fund to the Lease Payment Fund an amount necessary to increase the balance of the Lease Payment Fund to an amount equal to the Lease Payment obligation.

The Trustee will withdraw from the Lease Payment Fund on each Interest Payment Date an amount equal to the Lease Payments due from the Town on the Lease Payment Date preceding such Interest Payment Date for payment to the Owners of the Certificates.

Reserve Fund-If, on any Interest Payment Date, the moneys available in the Lease Payment Fund do not equal the amount of the principal, interest and redemption premium (if any) with respect to the Certificates then coming due and payable, the Trustee shall apply the moneys available in the Reserve Fund to make delinquent Lease Payments by transferring the amount necessary for this purpose to the Lease Payment Fund. Upon receipt of any delinquent Lease Payment with respect to which moneys have been advanced from the Reserve Fund, such Lease Payment shall be deposited in the Reserve Fund to the extent of such advance.

If, on any Interest Payment Date, the moneys on deposit in the Reserve Fund and the Lease Payment Fund ( excluding amounts required for payment of principal, interest and redemption premium (if any) with respect to Certificates not presented for payment) are sufficient to pay all Outstanding Certificates, including all principal, interest and redemption premiums (if any), the Trustee shall transfer all amounts then on deposit in the Reserve Fund to the Lease Payment Fund to be applied to the payment of the Lease Payments, and such moneys

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shall be distributed to the Owners of Certificates in accordance with the Trust Agreement. Any amounts remaining in the Reserve Fund upon payment in full of all Outstanding Certificates and all amounts due the Trustee under the Trust Agreement, or upon provision for such payment, shall be withdrawn by the Trustee and paid to the Town.

Insurance and Condemnation Fund-In the event the Trustee receives net proceeds of insurance in connection with damage or destruction of the Property or net proceeds from eminent domain proceedings, such proceeds will be deposited in the Insurance and Condemnation Fund and will be applied by the Trustee as described under the heading "LEASE AGREEMENT-­Property Insurance; Eminent Domain" above.

Payment Procedure Pursuant to Municipal Bond Insurance Policy

As long as the Municipal Bond Insurance Policy shall be in full force and effect, the Authority and the Trustee agree to comply with the following provisions:

If, on the third Business Day prior to the related scheduled interest payment date or principal payment date ("Payment Date"), there is not on deposit with Trustee, after making all transfers and deposits required under the Trust Agreement, moneys sufficient to pay the principal and interest with respect to the Certificates due on such Payment Date, Trustee shall give notice to the Municipal Bond Insurer and to its designated agent (if any) (the "Municipal Bond Insurer's Fiscal Agent"), by telephone or telecopy, of the amount of such deficiency by 10:00 a.m., New York City time, on such Business Day. If, on the Business Day prior to the related Payment Date, there is not on deposit with the Trustee moneys sufficient to pay the principal and interest with respect to the Certificates due on such Payment Date, the Trustee shall make a claim under the Municipal Bond Insurance Policy and give notice to the Municipal Bond Insurer and the Municipal Bond Insurer's Fiscal Agent (if any) by telephone of the amount of any deficiency in the amount available to pay principal and interest, and the allocation of such deficiency between the amount required to pay interest with respect to the Certificates and the amount required to pay principal with respect to the Certificates, confirmed in writing to the Municipal Bond Insurer and the Municipal Bond Insurer's Fiscal Agent by 10:00 a.m., New York City time, on such Business Day, by delivering the Notice of Nonpayment and Certificate.

For the purposes of the preceding paragraph, "Notice" means telephonic or telecopied notice, subsequently confirmed in a signed writing, or written notice by registered or certified mail, from the Trustee to the Municipal Bond Insurer, which notice shall specify ( a) the name of the entity making the claim, (b) the policy number, ( c) the claimed amount and ( d) the date such claimed amount will become Due for Payment. "Nonpayment" means the failure of Town to have provided sufficient funds to the Trustee for payment in full of all principal and interest with respect to the Certificates that are Due for Payment. "Due for Payment," when referring to the principal with respect to the Certificates, means when the stated maturity date has been reached and does not refer to any earlier date on which payment is due by reason of call for redemption ( other than by application of required acceleration or other advancement of maturity, unless the Municipal Bond Insurer shall elect, in its sole discretion, to pay such principal due upon such acceleration; and when referring to interest with respect to the Certificates, means when the stated date for payment of interest has been reached. "Certificate" means a certificate in form

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and substance satisfactory to the Municipal Bond Insurer as to the Trustee's right to receive payment under the Municipal Bond Insurance Policy.

The Trustee shall designate any portion of payment of principal with respect to the Certificates paid by the Municipal Bond Insurer at maturity on its books as a reduction in the principal amount of Certificates registered to the then current Owner, whether DTC or its nominee or otherwise, and shall issue a replacement Bond to the Municipal Bond Insurer, registered in the name of the Municipal Bond Insurer, as the case may be, in a principal amount equal to the amount of principal so paid (without regard to authorized denominations); provided that the Trustee's failure to so designate any payment or issue any replacement Bond shall have no effect on the amount of principal or interest payable by the Town with respect to the Certificates or the subrogation rights of the Municipal Bond Insurer.

The Trustee shall keep a complete and accurate record of all funds deposited by the Municipal Bond Insurer into the Policy Payments Account ( as hereinafter defined) and the allocation of such funds to payment of interest and principal paid with respect to any Bond. The Municipal Bond Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Trustee.

Upon payment of a claim under the Municipal Bond Insurance Policy, the Trustee shall establish a separate special purpose trust account for the benefit of the Owners referred to as the "Policy Payments Account" and over which the Trustee shall have exclusive control and sole right of withdrawal. The Trustee shall receive any amount paid under Municipal Bond Insurance Policy in trust on behalf of the Owners and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the Trustee to Owners in the same manner as principal and interest payments are to be made with respect to the Certificates. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments.

Funds held in the Policy Payments Account shall not be invested by the Trustee and may not be applied to satisfy any costs, expenses or liabilities of the Trustee.

Any funds remaining in the Policy Payments Account following a Payment Date shall promptly be remitted to the Municipal Bond Insurer.

Investment of Moneys; Allocation of Eantlngs

The Trustee is required to invest and reinvest all moneys held under the Trust Agreement in time or demand accounts (including accounts of the Trustee) or certificates of deposit pertaining to such accounts which accounts shall be fully collateralized at all times as trust accounts or invested in Permitted Investments so as to obtain the highest yield which the Trustee deems practicable, provided that, upon instructions from a representative of the Town, the Trustee shall invest the Permitted Investments as directed by the Town.

All interest or income received by the Trustee on investment of the Lease Payment Fund shall as received, prior to the Completion Date, be transferred to the Improvement Fund and

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thereafter shall be retained in the Lease Payment Fund. Amounts retained or deposited in the Lease Payment Fund shall be applied as a credit against the Lease Payment due by the District pursuant to the Lease Agreement on the Lease Payment Date following the date of deposit. All interest received by the Trustee on investment of the Reserve Fund shall be retained in the Reserve Fund in the event that amounts on deposit in the Reserve Fund are less than the Reserve Requirement. In the event that amounts then on deposit in the Reserve Fund on the valuation date described in the Trust Agreement equal or exceed the Reserve Requirement, such excess shall, prior to the Completion Date, be transferred to the Project Fund and thereafter shall be transferred to the Lease Payment Fund. Transfers to the Lease Payment Fund from the Reserve Fund shall be made by the Trustee on or prior to each February 1 and August 1. All interest or income in the Project Fund shall be retained in the Project Fund until the Project Fund is closed. All interest or income in the Delivery Costs Fund shall be retained in the Delivery Costs Fund until the Delivery Costs Fund is closed.

Certificates

The Trustee is directed by the Trust Agreement, upon written request of the Authority, to prepare, execute and deliver to the Original Purchaser, the Certificates in their aggregate principal amount.

The Trust Agreement contains procedures and regulations with respect to exchanges and transfers of Certificates, for conditions of delivery of temporary Certificates, for procedures for Certificates which are mutilated, lost, destroyed or stolen, for evidence of signatures of Certificate Owners and ownership of Certificates and for procedures with respect to payment of Certificates. The Trustee shall not be required to transfer or exchange any Certificate after the mailing of notice calling such Certificate or portion thereof for redemption, nor during the fifteen days preceding the giving of such notice of redemption.

The Trustee is appointed as a paying agent for the Certificates. Principal and premium, if any, with respect to the Certificates is payable at the principal office of the Trustee. Interest with respect to the Certificates is payable by check or draft of the Trustee mailed to the owner of record at the address shown on the certificate register required to be maintained by the Trustee as of the fifteenth day of the month preceding the interest payment date (provided, however, that at the option of any Owner of at least one million dollars in aggregate principal amount, interest will be wired to an account designated by such Owner).

Limitation of Liability

The Trust Agreement contains certain prov1S1ons limiting the liability of the parties thereto, including, but not limited to, the following provisions:

(a) Neither the Authority nor the Town shall have any obligation or liability to the Owners of the Certificates with respect to the performance by the Trustee of duties imposed upon it by the Trust Agreement;

(b) Except as provided in the Trust Agreement, neither the Authority nor the Trustee shall have any obligation or liability to the Owners of the Certificates with respect to the

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payment of the Lease Payments by the Town when due, or with respect to the performance by the Town of any other covenant made by it in the Lease Agreement; and

( c) The Trustee shall not be responsible for the sufficiency or the validity of the Lease Agreement or for the sufficiency of the Trust Agreement or the Certificates; the assignment made to it of rights to receive moneys pursuant to the Lease Agreement; or the value of or title to the Property. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it under the terms of and in accordance with the Trust Agreement.

The Trustee shall not be responsible for the sufficiency of any insurance required by the Lease Agreement, other than to check that the casualty insurance shall be in an amount at least equal to the principal amount of Certificates then outstanding (subject to the deductible), that the rental interruption insurance shall be in the amount required and that the certificate of the Town regarding conformance with the insurance requirements of the Lease Agreement is filed annually with the Trustee in the form and substance required by the Lease Agreement, and the Trustee shall be fully protected in accepting payment on account of such insurance.

Rights of Owners to Institute Proceedings

No Owner of any Certificate shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon the Trust Agreement, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an event of default under the Lease Agreement; (b) the Owners of at least a majority in aggregate principal amount of all the Certificates then outstanding shall have made written request upon the Trustee to exercise its powers or to institute such action, suit or proceeding in its own name; ( c) said Owners shall have tendered to the Trustee reasonable indenmity against the costs, expenses and liabilities to be incurred in compliance with such request; and ( d) the Trustee shall have refused or omitted to comply with such request for a period of sixty days after such written request shall have been received by, and said tender of indenmity shall have been made to, the Trustee. The right of any Owner of any Certificate to receive payment of said Owner's fractional interest in the Lease Payments as the same become due, or to institute suit for the enforcement of such payment, shall not be impaired or affected without the consent of such Owner.

Miscellaneous

Upon the occurrence of an event of default by the Town under the Lease Agreement, the Trustee, as assignee of the Authority, shall exercise the remedies provided under the Lease Agreement and any other remedies which Trustee may have by contract or law.

The Trust Agreement and the Lease Agreement may be amended by written consent among all parties thereto, but no such amendment shall become effective as to the Owners of the Certificates until approved by the Owners of a majority in aggregate principal amount of the Certificates then outstanding, and no amendment shall impair the right of any Certificate Owner to receive his fractional share of any Lease Payment without his consent. Notwithstanding the foregoing, the Trust Agreement and the Lease Agreement may be amended at any time without the consent of any of the Certificate Owners for the purpose of (1) curing any ambiguity or

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defective provision, (2) clarifying any questions not inconsistent with the Trust Agreement or the Lease Agreement and which shall not adversely affect the interests of the Owners of the Certificates, or (3) complying with the requirements of section 148(f) of the Code or regulations promulgated with respect thereto.

The Trust Agreement terminates and becomes void when principal and interest due with respect to the Certificates has been paid in full or provision for payment thereof has been made by the deposit of cash or Federal Securities in an amount sufficient (together with interest earnings thereon) to pay said principal and interest.

Parties Interested

Nothing in the Trust Agreement expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the Town, the Authority, the Trustee, the Municipal Bond Insurer, their officers, employees and agents, and the Owners any right, remedy or claim under or by reason of the Trust Agreement, or any covenant, condition or stipulation of the Trust Agreement, and all covenants, stipulations, promises and agreements in the Trust Agreement shall be for the sole and exclusive benefit of the Town, the Authority, the Trustee, the Municipal Bond Insurer, their officers, employees and agents, and the Owners.

Notwithstanding any other provision of the Trust Agreement, if the Trustee is required to determine whether the rights of the Owners will be adversely affected by any action taken pursuant to the terms and provisions of the Trust Agreement, the Trustee shall consider the effect on the Owners as if there was no Municipal Bond Insurance Policy.

The Municipal Bond Insurer shall be deemed to be a third-party beneficiary of the Trust Agreement. The Municipal Bond Insurer shall be granted the same security interest as Owners with respect to the funds and accounts held under the Trust Agreement.

Rights of the Municipal Bond Insurer to direct or consent to Town, Trustee or Owner actions under the Trust Agreement shall be suspended during any period in which the Municipal Bond Insurer is in default in its payment obligations under the Municipal Bond Insurance Policy ( except to the extent of amounts previously paid by the Municipal Bond Insurer and due and owing to the Municipal Bond Insurer) and shall be of no force or effect in the event the Municipal Bond Insurance Policy is no longer in effect or the Municipal Bond Insurer asserts that the Municipal Bond Insurance Policy is not in effect or the Municipal Bond Insurer shall have provided written notice that it waives such rights.

The rights granted to the Municipal Bond Insurer under the Trust Agreement or the Lease Agreement to request, consent to or direct any action are rights granted to the Municipal Bond Insurer in consideration of its issuance of the Municipal Bond Insurance Policy. Any exercise by the Municipal Bond Insurer of such rights is merely an exercise of the Municipal Bond Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit or on behalf of the Owners nor does such action evidence any position of the Municipal Bond Insurer, positive or negative, as to whether Owner consent is required in addition to consent of the Municipal Bond Insurer.

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Consent of Municipal Bond Insurer

Any provision of the Trust Agreement expressly recognizing or granting rights in or to the Municipal Bond Insurer may not be amended in any manner which affects the rights of the Municipal Bond Insurer under the Trust Agreement without the prior written consent of the Municipal Bond Insurer.

Unless otherwise provided in the Trust Agreement, the Municipal Bond Insurer's consent shall be required in addition to Owner consent, when required, for the following purposes: (i) execution and delivery of any amendment, supplement or change to or modification of the Trust Agreement or the Lease Agreement, (ii) removal of the Trustee and selection and appointment of any successor trustee; and (iii) initiation or approval of any action not described in (i) or (ii) of this paragraph which requires Owner consent.

Anything in the Trust Agreement to the contrary notwithstanding, the Municipal Bond Insurer shall be deemed to be the sole holder of the Certificates insured by it for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Owners insured by it are entitled to take pursuant to the Trust Agreement.

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APPENDIXD

FORM OF FINAL OPINION OF SPECIAL COUNSEL

Town Council of the Town of Danville

510 La Gonda Way

[Letterhead of Quint & Thimmig LLP]

[Closing Date]

Danville, California 94526-1740

OPINION: $5,600,000 Certificates of Participation (2005 Capital Improvement Project) Evidencing Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to be Made by the Town of Danville (Contra Costa County, California), as the Rental for Certain Property Pursuant to a Lease Agreement with the Town of Danville Financing Authority

Members of the Town Council:

We have acted as special counsel in connection with the delivery by the Town of Danville (the "Town"), of its $5,600,000 Lease Agreement, dated as of April I, 2005, by and between the Town of Danville Financing Authority (the "Authority") and the Town (the "Lease Agreement"), pursuant to the California Government Code. The Authority has, pursuant to the Assignment Agreement, dated as of April I, 2005 (the "Assignment Agreement"), by and between the Authority and The Bank of New York Trust Company, N.A., as trustee (the "Trustee"), assigned certain of its rights under the Lease Agreement, including its right to receive a portion of the lease payments made by the Town thereunder (the "Lease Payments"), to the Trustee. Pursuant to the Trust Agreement, dated as of April I, 2005, by and among the Trustee, the Authority and the Town (the "Trust Agreement"), the Trustee has executed and delivered certificates of participation (the "Certificates") evidencing direct, undivided fractional interests of the owners thereof in the Lease Payments. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon representations of the Town contained in the Lease Agreement and in the certified proceedings and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation.

Based upon our examination, we are of the opinion, under existing law, as follows:

I. The Town is duly created and validly existing as a municipal corporation and general law city organized and existing under the laws of the State of California with the power to enter

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into the Lease Agreement and the Trust Agreement and to perform the agreements on its part contained therein.

2. The Lease Agreement has been duly authorized, executed and delivered by the Town and is an obligation of the Town valid, binding and enforceable against the Town in accordance with its terms.

3. The Trust Agreement and the Assignment Agreement are valid, binding and enforceable in accordance with their terms.

4. Subject to the terms and provisions of the Lease Agreement, the Lease Payments to be made by the Town are payable from general funds of the Town lawfully available therefor. By virtue of the Assignment Agreement, the owners of the Certificates are entitled to receive their fractional share of the Lease Payments in accordance with the terms and provisions of the Trust Agreement.

5. The portion of the Lease Payments designated as and comprising interest and received by the owners of the Certificates is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that, for the purpose of computing the alternative minimum tax imposed on corporations ( as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The Lease Agreement is a "qualified tax-exempt obligation" within the meaning of section 265(b )(3) of the Internal Revenue Code of 1986 (the "Code"), and, in the case of certain financial institutions (within the meaning of section 265(b )( 5) of the Code), a deduction is allowed for eighty percent (80%) of that portion of such financial institutions' interest expense allocable to interest payable with respect to the Certificates. The opinions set forth in the preceding sentences are subject to the condition that the Town comply with all requirements of the Code that must be satisfied subsequent to the delivery of the Lease Agreement in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The Town has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of delivery of the Lease Agreement. We express no opinion regarding other federal tax consequences arising with respect to the Lease Agreement and the Certificates.

6. The portion of the Lease Payments designated as and comprising interest and received by the owners of the Certificates is exempt from personal income taxation imposed by the State of California.

The rights of the owners of the Certificates and the enforceability of the Lease Agreement, the Trust Agreement and the Assignment Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases.

Respectfully submitted,

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APPENDIXE

BOOK-ENTRY SYSTEM

The information in this Appendix E concerning The Depository Trust Company ("DTC"), New York, New York, and DTC's book-entry system has been obtained from DTC and the Town takes no responsibility for the completeness or accuracy thereof. The Town cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners ( a) payments of interest, principal or premium, if any, with respect to the Certificates, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Certificates, or ( c) prepayment or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Certificates, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC.

DTC will act as securities depository for the Certificates. The Certificates will be issued as fully­registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered security certificate will be issued for each issue of the Certificates, each in the aggregate principal amount of such issue, and will be deposited with DTC.

DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instrument from over 85 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in tum, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock

Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its

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Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for the Certificates on DTC's records. The ownership interest of each actual purchaser of each Certificate ("Beneficial Owner") is in tum to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Certificates are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Certificates, except in the event that use of the book-entry system for the Certificates is discontinued.

To facilitate subsequent transfers, all Certificates deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Certificates with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC's records reflect only the identity of the Direct Participants to whose accounts such Certificates are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Certificates may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Certificates, such as prepayments, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of the Certificates may wish to ascertain that the nominee holding the Certificates for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Prepayment notices shall be sent to DTC. If less than all of the Certificates within an issue are being redeemed, DTC' s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Certificates unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. 's consenting or voting rights to those Direct Participants to whose accounts the Certificates are credited on the record date (identified in a listing attached to the Onmibus Proxy).

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Prepayment proceeds, distributions, and dividend payments on the Certificates will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Town or the Trustee on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the Trustee, or the Town, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of prepayment proceeds, distributions, and dividend payments to Cede & Co. ( or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Town or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as securities depository with respect to the Certificates at any time by giving reasonable notice to the Town or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, bond certificates are required to be printed and delivered.

The Town may decide to discontinue use of the system of book-entry-only transfers through DTC ( or a successor securities depository). In that event, Certificate certificates will be printed and delivered to DTC.

The information in this Appendix concerning DTC and DTC's book-entry system has been obtained from sources that the Town believes to be reliable, but the Town takes no responsibility for the accuracy thereof.

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APPENDIXF

FORM OF CONTINUING DISCLOSURE CERTIFICATE

This CONTINUING DISCLOSURE CERTIFICATE (the "Disclosure Certificate") is executed and delivered by the TOWN OF DANVILLE (the "Town") in connection with the execution and delivery of$5,600,000 Certificates of Participation (2005 Capital Improvement Project) (the "Certificates"). The Certificates are being executed and delivered pursuant to a Trust Agreement, dated as of April 1, 2005, by and among The Bank of New York Trust Company, N.A, as trustee, the Town and the Town of Danville Financing Authority (the "Trust Agreement"). The Town covenants and agrees as follows:

Section I. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Town for the benefit of the holders and beneficial owners of the Certificates and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5).

Section 2. Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the following meanings:

"Annual Report' shall mean any Annual Report provided by the Town pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.

"Dissemination Agent" shall mean The Bank of New Yark Trust Company, N.A, or any successor Dissemination Agent designated in writing by the Town and which has filed with the Town a written acceptance of such designation.

"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate.

"National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule.

"Participating Underwriter" shall mean any of the original underwriters of the Certificates required to comply with the Rule in connection with offering of the Certificates.

"Repository" shall mean each National Repository and each State Repository.

"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

"State Repository" shall mean any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Certificate, there is no State Repository.

Section 3. Provision of Annual Reports.

(a) The Town shall, or shall direct the Dissemination Agent to, not later than nine months (March 31) after the end of the Town's Fiscal Year ( currently June 30), commencing with the report for the 2004/2005 Fiscal Year, provide to each Repository and Participating Underwriter an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate with a copy to the Trustee. Not later than five (5) Business Days prior to said date, the Town shall provide the Annual Report to the Dissemination Agent (if other than the Town). The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Town may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the Town's Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5( c ).

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(b) If the Town does not provide, or cause the Dissemination Agent to provide, an Annual Report to the Repositories by the Annual Report date as required in subsection (a) above, the Dissemination Agent shall send a notice to (i) either the National Repositories or the Municipal Securities Rulemaking Board and (ii) the appropriate State Repository, if any, in substantially the form attached as Exhibit A, with a copy to the Trustee (if different than the Dissemination Agent).

( c) With respect to the Annual Report, the Dissemination Agent shall:

(i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and

(ii) if the Dissemination Agent is other than the Town, and if, and to the extent, the Town has provided an Annual Report in final form to the Dissemination Agent for dissemination, file a report with the Town certifying that the Annual Report has been provided to the Repositories pursuant to this Disclosure Certificate, stating the date it was provided and listing all the Repositories to which it was provided.

Section 4. Content of Annual Reports. The Town's Annual Report shall be in a format suitable for filing with each Repository and shall contain or incorporate by reference the following:

(a) Audited Financial Statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Govenunental Accounting Standards Board. If the Town's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

(b) Unless otherwise provided in the audited financial statements filed on or prior to the annual filing deadline for Armual Reports provided for in Section 3 above, financial information and operating data with respect to the Town for preceding Fiscal Year, substantially similar to that provided in the corresponding tables and charts in the official statement for the Certificates:

(i) Major Sales Tax Payers

(ii) Assessed Valuation of Real and Personal Property; and

(iii) Ten Largest Assesses.

Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Town or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Town shall clearly identify each such other document so included by reference.

( c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the Town shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.

Section 5. Reporting of Significant Events.

(a) Pursuant to the provisions of this Section 5, the Town shall give, or cause to be given, notice of the occurrence of any of the following events (the "Listed Events") with respect to the Certificates, if material:

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(i) Principal and interest payment delinquencies.

(ii) Non-payment related defaults.

(iii) Unscheduled draws on debt service reserves reflecting financial difficulties.

(iv) Unscheduled draws on credit enhancements reflecting financial difficulties.

(v) Substitution of credit or liquidity providers, or their failure to perform.

(vi) Adverse tax opinions or events affecting the tax-exempt status of the security.

(vii) Modifications to rights of security holders.

(viii) Contingent or unscheduled bond calls.

(ix) Defeasances.

(x) Release, substitution, or sale of property securing repayment of the securities.

(xi) Rating changes.

(b) Whenever the Town obtains knowledge of the occurrence of a Listed Event, the Town shall as soon as possible determine if such event would be material under applicable Federal securities law. The Dissemination Agent shall have no responsibility for such determination and shall be entitled to conclusively rely on the Town's determination.

(c) If the Town determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Town shall promptly file a notice of such occurrence with (i) each National Repository or the Municipal Securities Rulemaking Board and (ii) the appropriate State Repository, if any, with a copy to the Trustee (if different than the Dissemination Agent). Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(viii) and (ix) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Certificates pursuant to the Trust Agreement.

Section 6. Termination of Reporting Obligation. The Town's, the Trustee's and the Dissemination Agent's (if different) obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Certificates. If such termination occurs prior to the final maturity of the Certificates, the Town shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).

Section 7. Dissemination Agent. The Town may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent, if other than the Town, shall not be responsible in any manner for the format or content of any notice or Annual Report prepared by the Town pursuant to this Disclosure Certificate. Any person succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any papers or any further act. The initial Dissemination Agent shall be The Bank of New Yark Trust Company, N.A. The Dissemination Agent may resign, with or without appointment of a successor Dissemination Agent, upon thirty days' prior notice to the Town. The Dissemination Agent shall be entitled to reasonable compensation for its services hereunder and reimbursement of its out-of-pocket expenses including, but not limited to, attorneys' fees.

Section 8. Amendment Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Town may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:

(a) if the amendinent or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Certificates, or type of business conducted;

(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the

F-3

Certificates, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(c) the proposed amendment or waiver either (i) is approved by holders of the Certificates in the manner provided in the Trust Agreement for amendments to the Trust Agreement with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond coW1Sel, materially impair the interests of the holders or beneficial owners of the Certificates.

Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Town from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Armual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Town chooses to include any information in any Armual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Town shall have no obligation under this Disclosure Certificate to update such information or include it in any future Armual Report or notice of occurrence of a Listed Event.

Section 10. Default. In the event of a failure of the Town to comply with any provision of this Disclosure Certificate the Trustee may (and, subject to payment of its fees and expenses and receipt of satisfactory indemnity as set forth in Section 9.02(n) of the Trust Agreement, at the request of the holders of at least 25% aggregate principal amount of Outstanding Certificates, shall), or any holder or beneficial owner of the Certificates may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Town to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the Town or the Dissemination Agent to comply with this Disclosure Certificate shall be an action to compel performance.

Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Town agrees to indemnify and save the Dissemination Agent (if other than the Town), its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including, but not limited to, the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. Such indemnity shall be separate from and in addition to that provided to the Trustee under the Trust Agreement. The obligations of the Town under this Section shall survive resignation or removal of the Dissemination Agent, payment of the Certificates and termination of this Disclosure Certificate pursuant to Section 6. The Dissemination Agent (if other than the Town) shall have no liability for failure to report any event or item of financial information as to which the Town has not provided it in an information report in format suitable for filing with the Repositories. The Dissemination Agent (if other than the Town) shall have no obligation or liability for the accuracy or completeness of any Annual Report or report of materiality under Section 5(b) hereof and shall not be deemed to be acting in any fiduciary capacity hereunder for the Town or for any Certificate owner The Dissemination Agent shall be paid reasonable compensation for its services provided hereunder.

Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Town, the Trustee, the Dissemination Agent, the Participating Underwriters and holders and beneficial owners from time to time of the Certificates, and shall create no rights in any other person or entity.

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Section 13. Alternative Filing Location. Any filing under this Disclosure Certificate may be made solely by transmitting such filing to the Texas Municipal Advisory Council (the "MAC") as provided at http://www.disclosureusa.org, unless the United States Securities and Exchange Commission has withdrawn the interpretive advice in its letter to the MAC, dated September 7, 2004.

Date: [Closing Date]

ACKNOWLEDGED

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Dissemination Agent

Authorized Officer

TOWN OF DANVILLE

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Joseph A Calabrigo, Town Manager

EXHIBIT A

NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD AND EACH STATE REPOSITORY OF FAILURE TO FILE ANNUAL REPORT

Name oflssuer: TOWN OF DANVILLE

Name of Issue:

Date of Issuance:

Certificates of Participation (2005 Capital Improvement Project) Evidencing Direct, Undivided Fractional Interests of the Owners Thereof in Lease Payments to be made by the Town of Danville, as the Rental for Certain Project Pursuant to a Lease Agreement with the Town of Danville Financing Authority

[ Closing Date]

NOTICE IS HEREBY GIVEN to [(i) each National Repository or the Municipal Securities Rulemaking Board and (ii) each appropriate State Repository] [ the Municipal Securities Rulemaking Board] that the Town of Danville (the "Issuer") has not provided an Annual Report with respect to the above-named Certificates of Participation as required by the Continuing Disclosure Certificate, dated [Closing Date], executed by the Issuer and countersigned by The Bank of New Yark Trust Company, N.A, as dissemination agent. The Issuer anticipates that the Annual Report will be filed by

-----

Dated: _______ _

TOWN OF DANVILLE

By _________________ _ Authorized Officer

cc: Trustee

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APPENDIXG

SPECIMEN BOND INSURANCE POLICY

(THIS PAGE INTENTIONALLY LEFT BLANK)

MUNICIPAL BOND INSURANCE POLICY

ISSUER:

BONDS:

1221 Avenue of the Americas New York, New York 10020 Telephone (212) 478-3400

Policy No: [

Effective Date: [

XL Capital Assurance Inc. (XLCA), a New Yark stock insurance company, in consideration of the payment of the premium and subject to the terms of this Policy (which includes each endorsement attached hereto), hereby agrees unconditionally and irrevocably to pay to the trustee (the "Trustee") or the paying agent (the "Paying Agent") (as set forth in the documentation providing for the issuance of and securing the Bonds) for the benefit of the Owners of the Bonds or, at the election of XLCA, to each Owner, that portion of the principal and interest on the nds that shall become Due for Payment but shall be unpaid by reason of Nonpayment.

XLCA will pay such amounts to or for the benefit of the Owner th day on which such principal and interest becomes Due for Payment or one(!) Business Day followin e B on w ·chXLCA shall have received Notice of Nonpayment (provided that Notice will be deemed receiv on giv. s1 ay 1 it is received prior to 10:00 a.m. Pacific time on such Business Day; otherwise it will be ee e re 1ved n e ext siness Day), but only upon receipt by XLCA, in a form reasonably satisfactory to it, f e e o he r' right to receive payment of the principal or interest then Due for Payment and (b) evide e, i p riate · struments of assignment, that all of the Owner's rights with respect to payment of sue is D e for Payment shall thereupon vest in XLCA Upon such disbursement, XLCA shall beco y appurtenant coupon to the Bond or the right to receipt of payment of principal and i fully subrogated to the rights of the Owner, including the Owner's right to receive payme s t of any payment by XLCA hereunder. Payment by XLCA to the Trustee or Paying Age t e all, to the extent thereof, discharge the obligation of XLCA under this Policy.

become Due for Payment the Owner pursuant to f preference to such O ner w · XLCA to the extent f ~!(JieCQ~

The following meanings specified for all purposes of this Policy, except to the extent such terms are expressly modified by a ent to this Policy. "Business Day" means any day other than (a) a Saturday or Sunday or (b) a day on which bank, inst' lions in the State of California, the State of New Yark or the Insurer's Fiscal Agent are authorized or required by law or executive order to remain closed. "Due for Payment", when referring to the principal of Bonds, is when the stated maturity date or a mandatory redemption date for the application of a required sinking fund installment has been reached and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by application of required sinking fund installments), acceleration or other advancement of maturity, unless XLCA shall elect, in its sole discretion, to pay such principal due upon such acceleration; and, when referring to interest on the Bonds, is when the stated date for payment of interest has been reached. "Nonpayment" means the failure of the Issuer to have provided sufficient funds to the Trustee or Paying Agent for payment in full of all principal and interest on the Bonds which are Due for Payment. "Notice" means telephonic or telecopied notice, subsequently confirmed in a signed writing, or written notice by registered or certified mail, from an Owner, the Trustee or the Paying Agent to XLCA which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount and (d) the date such claimed amount became Due for Payment. "Owner" means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that "Owner" shall not include the Issuer or any person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds.

XLCAP-005 (Muni Spec - California 12-2001)

1

XLCA may, by giving written notice to the Trustee and the Paying Age , Fiscal Agent") for purposes of this Policy. From and after the date of receipt b notice, which shall specify the name and notice address of the Insurer's Fisc

oint a fiscal agent (the "Insurer's e and the Paying Agent of such

o s of all notices required to be Fi al Agent and to XCLA and de b XLCA under this Policy

iscal Agent is the agent y t of the Insurer's Fiscal Agent

aue hereunder.

delivered to XLCA pursuant to this Policy shall be simultaneously delive i:I t shall not be deemed received until received by both and (b) all paym ts r may be made directly by XLCA or by the Insurer's Fiscal Agent oryoOQa'l of XLCA only and the Insurer's Fiscal Agent shall in no event be I or any failure of XLCA to deposit or cause to be deposited s c'i,.r1M1.i\od

Except to the extent expressly modified by an (b) the Premium on this Policy is not refundable £ or other acceleration payment which at any tim XLCA, nor against any risk other than No:.,rv··, modified, altered or affected by any othe

IN THE EVENT THA~;J,'C THIS POLICY ARE NOT ARTICLE 12119(b) OFT

!icy is non·cancelable by XLCA, and lie e not insure against loss of any prepayment

cl o any Bond, other than at the sole option of o the full undertaking of XLCA and shall not be mg any modification or amendment thereto.

E INSOLVENT, ANY CLAIMS ARISING UNDER A GUARANTY INSURANCE FUND SPECIFIED IN

CE CODE.

olicy to be executed on its behalf by its duly authorized officers.

SPECIMEN Name: Name: Title: Title:

XLCAP·005 (Muni Spec· California 12·2001)

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