Pomona Public Financing Authority

NEW ISSUE –BOOK-ENTRY ONLY RATINGS: S&P (Insured): “AA” (stable outlook)S&P (Underlying): “A+” (stable outlook)

(See “RATINGS” herein)

In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2016 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Series 2016 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Series 2016 Bonds. See “TAX MATTERS.”

$26,645,000POMONA PUBLIC FINANCING AUTHORITY

2016 LEASE REVENUE REFUNDING BONDS, SERIES BC

Dated: Date of Delivery Due: June 1, as shown on the inside cover

The Pomona Public Financing Authority 2016 Lease Revenue Refunding Bonds, Series BC (the “Series 2016 Bonds”) are being issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985 (Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code) and the provisions of a Master Trust Agreement, dated as of September 1, 2016 (the “Trust Agreement”), by and between the Pomona Public Financing Authority (the “Authority”), and Zions Bank, a division of ZB, National Association, as trustee (the “Trustee”). The Series 2016 Bonds will be special, limited obligations of the Authority payable solely from Revenues (as defined herein), consisting primarily of base rental payments (the “Base Rental Payments”) to be made by the City of Pomona (the “City”) for the right to the use of certain real property (the “Facilities”) pursuant to a Master Facilities Sublease, dated as of September 1, 2016 (the “Sublease”), by and between the Authority, as lessor, and the City of Pomona, California (the “City”), as lessee. The Authority may at any time issue Additional Bonds payable from the Revenues and secured by a pledge of and charge and lien upon the Revenues as provided in the Trust Agreement. As used in this Official Statement, the term “Bonds” means the Series 2016 Bonds and all Additional Bonds.

The City has covenanted in the Sublease to take such action as may be necessary to include Base Rental Payments and Additional Payments due under the Sublease in its annual budgets, and to make necessary annual appropriations therefor. The Base Rental Payments are subject to abatement, as described herein, during any period in which, by reason of material damage to, or destruction or condemnation of, the Facilities, or any defects in title to the Facilities, there is substantial interference with the City’s right to use and occupy any portion of the Facilities. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” and “RISK FACTORS.”

The Series 2016 Bonds are being issued to provide funds to (a) refund all of the outstanding principal amount of (i) the City’s Certificates of Participation 2003 Series AG (General Fund Lease Financing) (the “2003 AG Certificates”) and (ii) the Pomona Public Financing Authority 2005 Lease Revenue Bonds, Series AN (the “2005 AN Bonds,” and together with the 2003 AG Certificates, the “Refunded Bonds”); (b) purchase a reserve policy to provide for a reserve account for the Series 2016 Bonds; and (c) pay the costs incurred in connection with the issuance of the Series 2016 Bonds. See “ESTIMATED SOURCES AND USES OF FUNDS” and “REFUNDING PLAN.”

Interest on the Series 2016 Bonds is payable semiannually on June 1 and December 1 in each year, commencing December 1, 2016. The Series 2016 Bonds will bear interest at the respective rates set forth on the inside cover page hereof. See “DESCRIPTION OF THE SERIES 2016 BONDS – General” and APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”

Maturity Schedule See Inside Cover Page

The scheduled payment of principal of and interest on the Series 2016 Bonds maturing on June 1, 2023 through 2029 (inclusive), June 1, 2031, June 1, 2036 (CUSIP No. 73208MCT3) and June 1, 2036 (CUSIP No. 73208MCU0) (the “Insured Bonds”), when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Insured Bonds by ASSURED GUARANTY MUNICIPAL CORP.

The Series 2016 Bonds will be issued only in fully-registered form in denominations of $5,000 and any integral multiple thereof and, when issued, will be registered in the name of Cede & Co., as the nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Series 2016 Bonds. Ownership interests in the Series 2016 Bonds may be purchased in book-entry form only. So long as DTC or its nominee is the Owner of the Series 2016 Bonds, the principal, the redemption premium, if any, and interest on the Series 2016 Bonds will be made as described in APPENDIX D – “BOOK-ENTRY ONLY SYSTEM” herein.

The Series 2016 Bonds will be subject to optional redemption and extraordinary redemption from condemnation award or insurance proceeds prior to maturity as described herein. See “DESCRIPTION OF THE SERIES 2016 BONDS – Redemption” herein.

THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM AND SECURED SOLELY BY THE BASE RENTAL PAYMENTS AND AMOUNTS HELD IN CERTAIN FUNDS AND ACCOUNTS ESTABLISHED UNDER THE TRUST AGREEMENT. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY OF LOS ANGELES (THE “COUNTY”), THE STATE OF CALIFORNIA (THE “STATE”), OR ANY POLITICAL SUBDIVISION OF THE STATE IS PLEDGED TO THE PAYMENT OF THE BONDS. THE AUTHORITY HAS NO TAXING POWER. THE OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS UNDER THE SUBLEASE DOES NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. NEITHER THE BONDS NOR THE OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS CONSTITUTES AN INDEBTEDNESS OF THE AUTHORITY, THE CITY, THE COUNTY, THE STATE, OR ANY POLITICAL SUBDIVISION OF THE STATE, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.

This cover page contains information for general reference only. Potential purchasers are advised to read the entire Official Statement to obtain information essential to making an informed investment decision.

The Series 2016 Bonds are offered when, as, and if delivered to and received by the Underwriter, subject to the approval of legality by Orrick, Herrington & Sutcliffe LLP, Bond Counsel. Certain legal matters will be passed upon for the Authority and the City by Alvarez-Glasman & Colvin, City Attorney, and for the City by Orrick, Herrington & Sutcliffe LLP, as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, Fox Rothschild LLP, Los Angeles, California. It is anticipated that the Series 2016 Bonds will be available for delivery through the facilities of DTC in New York, New York on or about September 8, 2016.

Dated August 17, 2016

MATURITY SCHEDULE

POMONA PUBLIC FINANCING AUTHORITY2016 LEASE REVENUE REFUNDING BONDS, SERIES BC

(Base CUSIP No.† 73208M)

$15,305,000 Serial Series 2016 Bonds

Maturity Date(June 1)

PrincipalAmount

InterestRate Yield

CUSIPNo.†

2018 $1,085,000 2.000% 0.760% CE62019 1,105,000 2.000 0.890 CF32020 1,125,000 3.000 1.050 CG12021 1,160,000 3.000 1.230 CH92022 1,195,000 3.000 1.450 CJ52023* 1,230,000 3.000 1.570 CK22024* 1,265,000 4.000 1.630 CL02025* 1,320,000 4.000 1.770 CM82026* 1,370,000 4.000 1.900 CN62027* 1,425,000 4.000 2.050‡ CP12028* 1,485,000 4.000 2.190‡ CQ92029* 1,540,000 4.000 2.290‡ CR7

$3,250,000 2.625% Term Series 2016 Bonds due June 1, 2031* - Yield: 2.780% CUSIP No. CS5†

$4,090,000 3.000% Term Series 2016 Bonds due June 1, 2036* - Yield: 3.020% CUSIP No. CT3†

$4,000,000 4.000% Term Series 2016 Bonds due June 1, 2036* - Yield: 2.670%‡ CUSIP No. CU0†

† Copyright 2016, American Bankers Association. CUSIP data are provided by Standard & Poor’s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. (“CUSIP Service Bureau”). Such CUSIP data are provided only for the convenience of the reader and are not intended to create a database and do not serve in any way as a substitute for the services and information provided by the CUSIP Service Bureau. CUSIP is a registered trademark of the American Bankers Association. The City, the Authority and the Underwriter do not assume any responsibility for the accuracy of any CUSIP data set forth herein or for any changes or errors in such data.

* Insured Bond.

‡ Priced to June 1, 2026 first optional redemption at par.

CITY OF POMONA (County of Los Angeles, California)

City Council

Elliott Rothman, MayorGinna E. Escobar, Vice Mayor Paula Lantz, CouncilmemberJohn Nolte, Councilmember

Adriana Robledo, CouncilmemberCristina Carrizosa, Councilmember

Debra Martin, Councilmember

POMONA PUBLIC FINANCING AUTHORITY

Board of Directors

Linda Lowry, Chairperson/City ManagerOnyx Jones, Vice Chairperson/Finance Director/City Treasurer

Kirk Pelser, Board Member/Deputy City ManagerArnold M. Alvarez-Glasman, Board Member/Authority Counsel/City Attorney

Linda Poliakon, Board Member/Accounting Manager

AUTHORITY/CITY STAFF

Linda Lowry, Authority Chairperson/City ManagerArnold M. Alvarez-Glasman, Authority Counsel/City Attorney

Onyx Jones, Authority Treasurer/Finance Director/City Treasurer Eva M. Buice, MMC, Authority Secretary/City Clerk

SPECIAL SERVICES

Municipal Advisor Urban Futures, Inc. Orange, California

Bond Counsel and Disclosure Counsel Orrick, Herrington & Sutcliffe LLP

Los Angeles, California

Trustee Zions Bank, a division of ZB, National Association

Los Angeles, California

Verification Agent Grant Thornton LLP

Minneapolis, Minnesota

No dealer, broker, salesperson, or other person has been authorized by the City or the Authority to give any information or to make any representations other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the City or the Authority. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2016 Bonds by a person in any jurisdiction in which it is unlawful for such person to make an offer, solicitation, or sale. This Official Statement is not a contract with the purchasers of the Series 2016 Bonds. Statements contained in this Official Statement that 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 furnished by the City and by other sources that are believed to be reliable. The Underwriter has provided the following sentence for inclusion in this Official Statement: the Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibility to investors under the federal securities law as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City, the Authority, or any other parties described herein since the date hereof. All summaries of the Series 2016 Bonds, the Trust Agreement, the Sublease, and other documents summarized herein are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. This Official Statement is submitted in connection with the issuance of the Series 2016 Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.

This Official Statement contains forward-looking statements within the meaning of the federal securities laws. Such statements are based on currently available information, expectations, estimates, assumptions, projections and general economic conditions. Such words as expects, intends, plans, believes, estimates, anticipates or variations of such words or similar expressions are intended to identify forward-looking statements and include, but are not limited to, statements under the captions “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” and “CITY OF POMONA FINANCES.” The forward-looking statements are not guarantees of future performance. Actual results may vary materially from what is contained in a forward-looking statement. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. No assurance is given that actual results will meet the Authority’s or the City’s forecasts in any way, regardless of the level of optimism communicated in the information. The City and the Authority assume no obligation to provide public updates of forward-looking statements.

CUSIP data herein (Copyright 2016, American Bankers Association) is provided by Standard and Poor’s, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service. CUSIP numbers are provided for convenience of reference only. The City, the Authority, the Municipal Advisor and the Underwriter take no responsibility for the accuracy of any CUSIP data set forth herein or for any changes or errors in such data.

THE SERIES 2016 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE SERIES 2016 BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2016 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE SERIES 2016 BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE INSIDE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.

Assured Guaranty Municipal Corp. (“AGM”) makes no representation regarding the Series 2016 Bonds or the advisability of investing in the Series 2016 Bonds including, without limitation, the Insured Bonds. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading “BOND INSURANCE” and in APPENDIX H – “SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”

The City maintains a website. However, the information presented at such website is not part of this Official Statement, is not incorporated by reference herein, and should not be relied upon in making an investment decision with respect to the Series 2016 Bonds.

TABLE OF CONTENTS

Page

-i-

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

REFUNDING PLAN ................................................................................................................................................... 4 THE PROPERTY ........................................................................................................................................................ 5 ESTIMATED SOURCES AND USES OF FUNDS ................................................................................................... 6 DESCRIPTION OF THE SERIES 2016 BONDS ....................................................................................................... 6

General ........................................................................................................................................................ 6 Redemption of Series 2016 Bonds ................................................................................................................ 7

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS ......................................................................... 10

Pledge of Revenues ..................................................................................................................................... 10 Reserve Fund ............................................................................................................................................... 11 Base Rental Payments ................................................................................................................................. 13 Additional Payments ................................................................................................................................... 14 Insurance ..................................................................................................................................................... 14 Additional Bonds ......................................................................................................................................... 14 Abatement ................................................................................................................................................... 15 Addition, Substitution, or Release of Facilities ........................................................................................... 16 Investment of Moneys ................................................................................................................................. 17 Limited Obligations ..................................................................................................................................... 17 Action on Default ........................................................................................................................................ 17 Damage or Destruction of the Facilities ...................................................................................................... 17

BOND INSURANCE ................................................................................................................................................ 19

Bond Insurance Policy................................................................................................................................. 19 Assured Guaranty Municipal Corp. ............................................................................................................. 19

BASE RENTAL PAYMENT SCHEDULE .............................................................................................................. 22 THE AUTHORITY ................................................................................................................................................... 23 CITY OF POMONA ................................................................................................................................................. 23 CITY OF POMONA FINANCES ............................................................................................................................. 24

Accounting Policies and Financial Reporting ............................................................................................. 24 Budgetary Process ....................................................................................................................................... 25 Fiscal Sustainability Policy ......................................................................................................................... 26 Tax Receipts ................................................................................................................................................ 26 Assessed Valuations .................................................................................................................................... 29 Principal Property Taxpayers ...................................................................................................................... 30 Ad Valorem Property Taxes ........................................................................................................................ 31 General Fund Financial Summary ............................................................................................................... 34 State Budget Acts ........................................................................................................................................ 38 Dissolution of Redevelopment .................................................................................................................... 40 Investment of City Funds ............................................................................................................................ 40 City Investment Policy ................................................................................................................................ 40 Self-Insurance.............................................................................................................................................. 42 Retirement System ...................................................................................................................................... 42 Other Post Employment Benefits ................................................................................................................ 48 Collateral Benefits Plan ............................................................................................................................... 49 Public Employees’ Medical and Hospital Care Program (PEMHCA) Plan ................................................ 49 Long-Term Debt .......................................................................................................................................... 49 Overlapping Debt ........................................................................................................................................ 51 Future Borrowing ........................................................................................................................................ 52

TABLE OF CONTENTS(continued)

Page

-ii-

RISK FACTORS ....................................................................................................................................................... 52

Limited Obligations ..................................................................................................................................... 52 No Limit on Additional General Fund Obligations ..................................................................................... 53 Abatement ................................................................................................................................................... 53 Availability of Moneys for Base Rental Payments...................................................................................... 54 Limited Recourse on Default ...................................................................................................................... 54 Earthquake or Other Natural Disasters ........................................................................................................ 54 Substitution and Removal of Facilities ........................................................................................................ 55 Limited Recourse on Default; No Acceleration of Base Rental Payments ................................................. 56 Possible Insufficiency of Insurance Proceeds ............................................................................................. 56 Limitations on Remedies ............................................................................................................................. 56 Bankruptcy .................................................................................................................................................. 57 State Budget ................................................................................................................................................ 57 Secondary Market ....................................................................................................................................... 58 Loss of Tax Exemption ............................................................................................................................... 58 Audit by State and Federal Auditors and of IRS Audits of Tax-Exempt Bond Issues ................................ 58 No Liability of Authority to the Owners ..................................................................................................... 58 Economic, Political, Social, and Environmental Conditions ....................................................................... 59

CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS ................... 59

Article XIIIA of the California Constitution ............................................................................................... 59 Article XIIIB of the California Constitution ............................................................................................... 60 Articles XIIIC and XIIID of the California Constitution ............................................................................ 61 Proposition 1A............................................................................................................................................. 63 Proposition 22 ............................................................................................................................................. 65 Proposition 26 ............................................................................................................................................. 65 Proposition 62 ............................................................................................................................................. 66 Future Initiatives ......................................................................................................................................... 66

TAX MATTERS ....................................................................................................................................................... 66 CERTAIN LEGAL MATTERS ................................................................................................................................ 68 MUNICIPAL ADVISOR .......................................................................................................................................... 68 FINANCIAL STATEMENTS ................................................................................................................................... 69 LITIGATION ............................................................................................................................................................ 69 VERIFICATION ....................................................................................................................................................... 69 RATINGS .................................................................................................................................................................. 70 UNDERWRITING .................................................................................................................................................... 70 CONTINUING DISCLOSURE ................................................................................................................................. 70 MISCELLANEOUS .................................................................................................................................................. 71

APPENDIX A - GENERAL DEMOGRAPHIC INFORMATION REGARDING THE CITY OF POMONA ....... A-1 APPENDIX B - CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE

YEAR ENDED JUNE 30, 2015 ..................................................................................................... B-1 APPENDIX C - SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS ....... C-1 APPENDIX D - BOOK-ENTRY-ONLY SYSTEM ................................................................................................. D-1 APPENDIX E - FORM OF CONTINUING DISCLOSURE CERTIFICATE .......................................................... E-1 APPENDIX F - PROPOSED FORM OF OPINION OF BOND COUNSEL ............................................................ F-1 APPENDIX G - FORM OF CITY INVESTMENT POLICY ................................................................................... G-1 APPENDIX H - SPECIMEN MUNICIPAL BOND INSURANCE POLICY .......................................................... H-1

OFFICIAL STATEMENT

$26,645,000 POMONA PUBLIC FINANCING AUTHORITY

2016 LEASE REVENUE REFUNDING BONDS, SERIES BC

INTRODUCTION

This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page, the inside cover page and appendices hereto and the documents described herein. All statements contained in this introduction are qualified in their entirety by reference to the entire Official Statement. References to and summaries of the laws of the State of California and any documents, reports, and other instruments referred to herein do not purport to be complete and such references are qualified in their entirety by reference to each such law, document, report, or instrument. All capitalized terms used in this Official Statement and not otherwise defined herein have the meanings set forth in the Trust Agreement or the Sublease, each as defined herein. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”

General

The $26,645,000 Pomona Public Financing Authority 2016 Lease Revenue Refunding Bonds, Series BC (the “Series 2016 Bonds”) are being issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985 (Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code) and the provisions of a Master Trust Agreement, dated as of September 1, 2016 (the “Trust Agreement”), by and between the Pomona Public Financing Authority (the “Authority”), and Zions Bank, a division of ZB, National Association, as trustee (the “Trustee”). The Series 2016 Bonds will be special, limited obligations of the Authority payable solely from Revenues (as defined herein), consisting primarily of base rental payments (the “Base Rental Payments”) to be made by the City of Pomona (the “City”) for the right to the use of certain real property (the “Facilities”) pursuant to a Master Facilities Sublease, dated as of September 1, 2016 (the “Sublease”), by and between the Authority, as lessor, and the City of Pomona, California (the “City”), as lessee.

The proceeds of the Series 2016 Bonds, together with other available funds, will be used provide funds to (a) refund all of the outstanding principal amount of (i) the City’s Certificates of Participation 2003 Series AG (General Fund Lease Financing) (the “2003 AG Certificates”) and (ii) the Pomona Public Financing Authority 2005 Lease Revenue Bonds, Series AN (the “2005 AN Bonds,” and together with the 2003 AG Certificates, the “Refunded Bonds”); (b) purchase a reserve policy to provide for a reserve account for the Series 2016 Bonds; and (c) pay the costs incurred in connection with the issuance of the Series 2016 Bonds. See “ESTIMATED SOURCES AND USES OF FUNDS” and “REFUNDING PLAN.”


2

Changes to Official Statement Since Dated Date of Preliminary Official Statement

This Official Statement includes updates and revisions to the Preliminary Official Statement dated August 5, 2016 with respect to the Series 2016 Bonds including terms for a reserve account for the Series 2016 Bonds, the Assured Guaranty Municipal Corp. (“AGM”) Debt Service Reserve Policy and the Municipal Bond Insurance Policy for the Insured Bonds, as well as pricing information.

The Series 2016 Bonds

The Series 2016 Bonds will accrue interest from their date of delivery and interest thereon will be payable semiannually on June 1 and December 1 in each year, commencing December 1, 2016 (each, an “Interest Payment Date”). The Series 2016 Bonds will bear interest at the respective rates set forth on the inside cover page hereof. See “DESCRIPTION OF THE SERIES 2016 BONDS – General” and APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.” The Series 2016 Bonds are being issued in fully registered book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Purchasers will not receive certificates representing their interest in the Series 2016 Bonds. Individual purchases will be in principal amounts of $5,000 or integral multiples thereof. Principal of, and premium, if any, and interest on the Series 2016 Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the beneficial owners of the Series 2016 Bonds. See APPENDIX D – “BOOK-ENTRY ONLY SYSTEM” herein. The Series 2016 Bonds will be subject to redemption prior to maturity as described herein. See “DESCRIPTION OF THE SERIES 2016 BONDS – Redemption” herein. So long as DTC or its nominee is the Owner of the Series 2016 Bonds, the principal, the redemption premium, if any, and interest on the Series 2016 Bonds will be made as described in APPENDIX D – “BOOK-ENTRY ONLY SYSTEM.”

Security and Sources of Payment for the Bonds

The Bonds (as defined below) will be special, limited obligations of the Authority payable solely from Revenues, consisting primarily of Base Rental Payments to be made by the City to the Authority pursuant to the Sublease, pursuant to which the City will lease the Facilities. See “THE FACILITIES.” The City has covenanted in the Sublease to take such action as may be necessary to include Base Rental Payments and Additional Payments due under the Sublease in its annual budgets, and to make necessary annual appropriations therefor. The Base Rental Payments are subject to abatement, as described herein, during any period in which, by reason of material damage to, or destruction or condemnation of, the Facilities, or any defects in title to the Facilities, there is substantial interference with the City’s right to use and occupy any portion of the Facilities. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” and “RISK FACTORS.”

The scheduled payment of principal of and interest on the Series 2016 Bonds maturing on June 1, 2023 through 2029 (inclusive), June 1, 2031, June 1, 2036 (CUSIP No. 73208MCT3) and June 1, 2036 (CUSIP No. 73208MCU0), inclusive (the “Insured Bonds”), when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Insured Bonds by Assured Guaranty Municipal Corp. (“AGM”). See “BOND INSURANCE” and APPENDIX H – “SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”

The Trust Agreement will require that the Trustee establish, maintain and hold in trust a special fund designated as the Reserve Fund and within such fund a separate account designated the Series 2016 Bond Reserve Account. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Reserve Fund.”

3

In order to further secure the payment of the principal of and interest on the Series 2016 Bonds, the Series 2016 Bond Reserve Account will be funded by the purchase of a Municipal Bond Debt Service Reserve Fund Insurance Policy (the “2016 Reserve Policy”) issued by AGM in an amount to provide additional coverage equal to the Series 2016 Bond Reserve Fund Requirement. The 2016 Reserve Policy will secure the Series 2016 Bonds. The initial Series 2016 Bond Reserve Fund Requirement is the amount of $1,974,312. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Reserve Fund” and APPENDIX I – “FORM OF DEBT SERVICE RESERVE FUND POLICY.”

The Authority may at any time issue Additional Bonds payable from the Revenues and secured by a pledge of and charge and lien upon the Revenues as provided in the Trust Agreement. As used in this Official Statement, the term “Bonds” means the Series 2016 Bonds and all Additional Bonds. The 2016 Reserve Policy is not available to secure the payment of the principal of and interest on any Additional Bonds.

Limited Obligations

The Bonds will be limited obligations of the Authority payable solely from Revenues, consisting primarily of Base Rental Payments to be made by the City and amounts on deposit in certain funds and accounts held under the Trust Agreement. The Bonds do not constitute a debt or liability of the State or of any political subdivision thereof (including any member of the Authority). The Authority shall be obligated to pay the principal of the Bonds, and the interest thereon, only from the Revenues.

NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY OF LOS ANGELES (THE “COUNTY”), THE STATE OF CALIFORNIA (THE “STATE”), OR ANY POLITICAL SUBDIVISION OF THE STATE IS PLEDGED TO THE PAYMENT OF THE BONDS. THE AUTHORITY HAS NO TAXING POWER.

THE OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS UNDER THE SUBLEASE DOES NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. NEITHER THE BONDS NOR THE OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS CONSTITUTES AN INDEBTEDNESS OF THE AUTHORITY, THE CITY, THE COUNTY, THE STATE, OR ANY POLITICAL SUBDIVISION OF THE STATE, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.

The Authority

The Authority was established pursuant to a Joint Exercise of Powers Agreement dated October 27, 1988, by and among the City, the Redevelopment Agency of the City of West Covina and the Redevelopment Agency of the City of Pomona (the “Members”). The Authority was created for the purpose of providing financing for public capital improvements for the Members or other local agencies in the State of California, the acquisition by the Authority of such capital improvements and the purchase by the Authority of local obligations within the meaning of the JPA Act. The Authority is authorized pursuant to Article 4 of the JPA Act to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations of, or for the purpose of making loans to, any Members or such other local agencies to provide financing for public improvements of such Members. See “THE AUTHORITY.”

4

City of Pomona

The City was incorporated in January 1888, and became a charter city in 1911. The City now encompasses approximately 22.9 square miles, and currently has an estimated 2016 population of 155,604 (as estimated by the State Department of Finance). The City is located approximately 30 miles east of downtown Los Angeles, in the eastern portion of the County of Los Angeles (the “County”), adjacent to Orange and San Bernardino counties.

The City Charter provides for a council-manager form of government, with an elected council of seven members including a mayor. City Councilmembers are elected by district for overlapping four-year terms. The Mayor is the presiding officer of the Council and is elected at large for a four-year term. The City Manager appoints department heads on the basis of specialized knowledge, experience and education in their area of responsibility. The City provides police protection, fire safety services (by contract with the Consolidated Fire Protection District of Los Angeles County), sewer maintenance, street sweeping, park maintenance, building inspection, library, water, and sanitation services. See APPENDIX A – “GENERAL ECONOMIC AND DEMOGRAPHIC REGARDING THE CITY OF POMONA.”

Forward-Looking Statements

Certain statements contained in this Official Statement reflect not historical facts but forecasts and “forward-looking statements.” All forward-looking statements are predictions and are subject to known and unknown risks and uncertainties. No assurance can be given that the future results discussed herein will be achieved, and actual results may differ materially from the forecasts described herein. In this respect, the words “estimate,” “project,” “anticipate,” “expect,” “intend,” “believe” and similar expressions are intended to identify forward-looking statements. All projections, forecasts, assumptions, expressions of opinions, estimates and other forward-looking statements are expressly qualified in their entirety by the cautionary statements set forth in this Official Statement. The achievement of certain results or other expectations contained in such forward-looking statements involves known and unknown risks, uncertainties, and other factors that may cause the 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 updates or revisions to these forward-looking statements are expected to be issued if or when the expectations, events, conditions, or circumstances on which such statements are based change. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF.

Miscellaneous

Copies of the Sublease, the Trust Agreement, and other financing documents may be obtained upon request from the Trustee at Zions Bank, a division of ZB, National Association, 400 S. Hope Street, Suite 500, Los Angeles, California 90071.

REFUNDING PLAN

The net proceeds of the Series 2016 Bonds, together with other available funds, will be applied to advance refund the following outstanding revenue bonds (the “Refunded Bonds”):

� The Certificates of Participation 2003 Series AG (General Fund Lease Financing) (the “2003 AG Certificates”) originally executed and delivered evidencing principal in the aggregate principal amount of $13,985,000 of which $10,450,000 is currently outstanding (the “2003 AG Certificates”). The 2003 AG Certificates were executed and delivered

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pursuant to a Trust Agreement, dated as of July 1, 2003 (the “2003 Trust Agreement”), by and among the City, the Authority and BNY Western Trust Company (currently known as The Bank of New York Mellon Trust Company, N.A.), as trustee. The 2003 AG Certificates evidence and represent undivided fractional interests in Lease Payments payable by the City under the Lease Agreement, dated as of July 1, 2003, by and between the City and the Authority (the “2003 Lease Agreement”); and

� The Pomona Public Financing Authority 2005 Lease Revenue Bonds, Series AN, originally issued in the aggregate principal amount of $19,910,000 of which $19,315,000 is currently outstanding (the “2005 AN Bonds,” and together with the 2003 AG Certificates, the “Refunded Bonds”). The 2005 AN Bonds were issued pursuant to an Indenture of Trust, dated as of May 1, 2005 (the “2005 Indenture”), by and between the Authority and The Bank of New York Trust Company (currently known as The Bank of New York Mellon Trust Company, N.A.), as trustee, payable from Lease Payments payable by the City under the Lease Agreement, dated as of May 1, 2005, by and between the City and the Authority (the “2005 Lease Agreement”).

On the date of issuance of the Series 2016 Bonds, a portion of the proceeds of the sale of the Series 2016 Bonds, will be deposited in an account for each series of Refunded Bonds to be established under separate Irrevocable Refunding Instructions, dated as of September 8, 2016 (the “Refunding Instructions”), among the Authority, the City, and The Bank of New York Mellon Trust Company, N.A., as successor prior trustee (the “Prior Trustee”). Such amounts held under Refunding Instructions, will be held in escrow (each, an “Escrow Account” and, together, in the “Escrow Fund”) and used to redeem the related series of Refunded Bonds. Grant Thornton LLP will verify the accuracy of the mathematical computation concerning the adequacy of the maturing principal amounts of and interest earned on the Escrow Securities to be purchased and held in the Escrow Fund. See “VERIFICATION.”

The funds deposited in the Escrow Fund will not be available for the payment of debt service on to the Series 2016 Bonds.

THE PROPERTY

Initial Facilities for purposes of the Lease and the Sublease. The Facilities constitute the land and improvements constituting the following:

� Pomona Public Library, a single-story (with basement) library building of approximately 53,546 square feet, located on approximately 1.46 acres. The building was completed in 1966, and is substantially reinforced concrete construction. The Pomona Public Library is located at 625 South Garey Ave. Pomona, CA 91766. The library facility includes a 65-space parking area.

� Fire Station No. 187, a single-story (with basement) fire station of approximately 6,200 square feet, including a 65-space parking area, located on approximately 7.05 acres. The building was completed in 1978, and is substantially reinforced masonry shear wall construction. Fire Station No. 187 is located at 3325 W Temple Ave. Pomona, CA 91768-3256. The site also includes the Los Angeles County Training Facility, composed of a fire-training tower, and support facilities including secondary buildings and trailers.

� Fire Station No. 181, a single-story fire station of approximately 13,309 square feet, which houses storage and living areas, located on approximately 0.59 acres. The building was completed in 1961, and is substantially reinforced masonry shear wall construction. Fire

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Station No. 181 is located at 590 S. Park Ave. Pomona, CA 91766-3038. The site also houses, in an adjoining two-story structure, police operations and holding cells of approximately 26,015 square feet, located at 490 W. Mission Ave. Pomona, CA 91766-3038.

The City has determined that the fair rental value of the Facilities exceeds the principal component of the Base Rental Payments. None of the Facilities has been updated for seismic retrofit since its original construction.

Substitution; Release; Addition of Property. The City may add, substitute or release real property for all or part of, or may release a part of, the Facilities for purposes of the Lease and the Sublease provided that, among other things, the City shall certify to the Authority that the annual fair rental value (which may be based on, but not limited to, the construction or acquisition cost or replacement cost of such facility to the City) of the Facilities that will constitute the Facilities after such addition, substitution or withdrawal will be at least equal to 100% of the maximum amount of Base Rental Payments becoming due in the then current fiscal year or in any subsequent fiscal year, or, in the event of a substitution only, that the annual fair rental value of the new Facility is at least equal to that of the substituted Facility. SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Addition, Substitution, or Release of Facilities.”

ESTIMATED SOURCES AND USES OF FUNDS

The following table details the estimated sources and uses of the proceeds of the sale of the Series 2016 Bonds and other available funds.

Estimated Sources:

Principal Amount of the Series 2016 Bonds $26,645,000.00 Net Original Issue Premium 2,239,031.40 Amounts released from the Reserve Funds for Refunded Bonds 2,154,574.42

Total Sources $31,038,605.82

Estimated Uses:

Escrow Fund (1) $30,400,037.17 Costs of Issuance Fund (2) 638,568.65

Total Uses $31,038,605.82 ________________________ (1) The Trustee will transfer to the Prior Trustee the amount of $10,622,425.00 for deposit into the Escrow Account

established under the Escrow Agreement for the 2003 AG Certificates and the amount of $19,777,612.17 for deposit into the Escrow Account established under the Escrow Agreement for the 2005 AN Bonds.

(2) Costs of Issuance for the Series 2016 Bonds to cover all eligible costs, including underwriter’s discount, $169,943.22 premium for the Policy and $54,293.59 premium for the Reserve Policy.

DESCRIPTION OF THE SERIES 2016 BONDS

General

The Series 2016 Bonds are being issued by the Authority pursuant the Act and the provisions of the Trust Agreement. The Series 2016 Bonds will be dated the date of their initial delivery and will mature on the dates and in the principal amounts set forth on the inside cover page hereof. Interest on the

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Series 2016 Bonds is payable semiannually on each June 1 and December 1 in each year, commencing December 1, 2016 (each, an “Interest Payment Date”), until the maturity or the earlier redemption thereof.

The Series 2016 Bonds will bear interest from the Interest Payment Date next preceding the date of registration thereof, unless such date of registration is an Interest Payment Date, in which event they will bear interest from such date, or unless such date of registration is prior to the first Interest Payment Date, in which event they will bear interest from their dated date. The amount of interest so payable on any Interest Payment Date will be computed on the basis of a 360-day year consisting of twelve 30-day months. Payment of interest on the Series 2016 Bonds due on or before the maturity or prior redemption thereof will be paid by check mailed by first class mail on each Interest Payment Date to the person in whose name the Bond is registered as of the applicable Record Date for such Interest Payment Date at the address shown on the registration books maintained by the Trustee; provided, however, that interest payable to an Owner of $1,000,000 or more aggregate principal amount of Series 2016 Bonds will be paid by wire transfer to such account within the United States as such Owner shall have specified in writing prior to the applicable Record Date to the Trustee for such purpose. Certain of the provisions described above will not apply as long as the Series 2016 Bonds are in a book-entry only system. See APPENDIX D – “BOOK-ENTRY ONLY SYSTEM.” As defined in the Trust Agreement, the term “Record Date” means the close of business on the fifteenth (15th) calendar day (whether or not a Business Day) of the month preceding any Interest Payment Date.

Interest on any Bond shall cease to accrue (i) on the maturity date thereof, provided that there has been irrevocably deposited with the Trustee an amount sufficient to pay the principal amount thereof, plus interest accrued thereon to such date; or (ii) on the redemption date thereof, provided there has been irrevocably deposited with the Trustee an amount sufficient to pay the Redemption Price thereof, plus interest accrued thereon to such date. The Holder of such Bond will not be entitled to any other payment, and such Bond shall no longer be Outstanding and entitled to the benefits of the Trust Agreement, except for the payment of the principal amount or Redemption Price, of such Bond, as appropriate, from moneys held by the Trustee for such payment.

The principal of the Bonds will be payable by check in lawful money of the United States of America at the Principal Office of the Trustee. No payment of principal will be made on any Bond unless and until such Bond is surrendered to the Trustee for cancellation.

Redemption of Series 2016 Bonds

Optional Redemption. The Series 2016 Bonds maturing on or after June 1, 2027 are subject to optional redemption prior to maturity on or after June 1, 2026 at the option of the City, in whole, or in part, on any date, at a redemption price equal to the principal amount of the Series 2016 Bonds to be redeemed, plus accrued but unpaid interest to the redemption date.

Special Mandatory Redemption. The Series 2016 Bonds are subject to redemption on any date prior to their respective stated maturities, as a whole or in part by lot, from payments made by the City from funds received by the City due to a taking of the Facilities or portions thereof under the power of eminent domain, from the net proceeds of insurance received for material damage to or destruction of the Facilities or portions thereof under the circumstances and upon the conditions and terms prescribed in the Trust Agreement and Sublease, or from the proceeds of title insurance in the event of defective title to the Facilities as provided for in the Sublease, at a redemption price equal to the sum of the principal amount thereof, without premium, plus accrued interest thereon to the redemption date.

Sinking Account Redemption. The Term Series 2016 Bonds maturing June 1, 2031, are subject to mandatory redemption, in part by lot, from Sinking Account payments set forth in the following

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schedule on June 1, 2030, and on June 1 in each year thereafter to and including June 1, 2031, at a redemption price equal to the principal amount thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption.

Term Series 2016 Bonds Maturing June 1, 2031

Redemption Date (June 1) Principal Amount

2030 $1,605,000 2031* 1,645,000

__________ * Maturity

The Term Series 2016 Bonds maturing June 1, 2036 and bearing interest at 3.00%, are subject to mandatory redemption, in part by lot, from Sinking Account payments set forth in the following schedule on June 1, 2032, to and including June 1, 2036, at a redemption price equal to the principal amount thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption.

Term Series 2016 Bonds Maturing June 1, 2036 and bearing interest at 3.00%


2032 $855,000 2033 885,000 2034 910,000 2035 705,000 2036* 735,000

__________ * Maturity

The Term Series 2016 Bonds maturing June 1, 2036 and bearing interest at 4.00%, are subject to mandatory redemption, in part by lot, from Sinking Account payments set forth in the following schedule on June 1, 2032, to and including June 1, 2036, at a redemption price equal to the principal amount thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption.

Term Series 2016 Bonds Maturing June 1, 2036 and bearing interest at 4.00%


2032 $835,000 2033 865,000 2034 900,000 2035 690,000 2036* 710,000

__________ * Maturity

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As provided in the Trust Agreement, if some but not all of the Series 2016 Bonds have been redeemed pursuant to the terms for optional redemption or special mandatory redemption from insurance or condemnation proceeds described above, the total amount of Sinking Account payments to be made subsequent to such redemption will be reduced in an amount equal to the principal amount of the Series 2016 Bonds so redeemed by reducing each such future Sinking Account payment on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, as will be designated pursuant to written notice filed by the Authority with the Trustee.

Selection of Bonds for Redemption. Whenever less than all of the Outstanding Bonds are to be redeemed, the Trustee will select, in accordance with written directions from the Authority, the Bonds to be redeemed in part from the Outstanding Bonds so that the aggregate annual principal amount of and interest on Bonds which will be payable after such redemption date will be as nearly proportional as practicable to the aggregate annual principal amount of and interest on Bonds Outstanding prior to such redemption date. Whenever less than all the Bonds of any one maturity are to be redeemed, the Trustee will select Bonds of such maturity for redemption by lot.

Notice of Redemption. So long as the Bonds are held in book-entry form, notices of redemption will be mailed by the Trustee only to DTC and not to any Beneficial Owners. The Trustee on behalf and at the expense of the Authority will mail (by first class mail), not less than thirty (30) nor more than sixty (60) days prior to the redemption date to (i) the respective Bondholders of the Bonds designated for redemption at their addresses appearing on the registration books of the Trustee, (ii) the Securities Depositories and (iii) one or more Information Services. Notice of redemption to the Securities Depositories and the Information Services will be given by registered mail or overnight delivery or facsimile transmission or by such other method acceptable to such institutions. Each notice of redemption shall state the date of such notice, the date of issue of the Bonds, the Series, the redemption date, the Redemption Price, the place or places of redemption (including the name and appropriate address of the Trustee), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such maturity is to be redeemed, the distinctive certificate numbers of the Bonds of such maturity, to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on said date there will become due and payable on each of said Bonds the redemption price thereof, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Series 2016 Bonds be then surrendered at the address of the Trustee specified in the redemption notice. Failure to receive such notice or any defect in such notice will not invalidate any of the proceedings taken in connection with such redemption.

The Authority may, at its option, prior to the date fixed for redemption in any notice of redemption rescind and cancel such notice of redemption by Written Request to the Trustee and the Trustee will mail notice of such cancellation to the recipients of the notice of redemption being cancelled.

Cancellation of Redemption Notice. The Authority may, at its option, prior to the date fixed for redemption in any notice of redemption rescind and cancel such notice of redemption by Written Request to the Trustee and the Trustee will mail notice of such cancellation to the recipients of the notice of redemption being cancelled.

Effect of Notice of Redemption. If notice of redemption has been duly given as aforesaid and money for the payment of the redemption price of the Bonds called for redemption is held by the Trustee, then on the redemption date designated in such notice Bonds so called for redemption will become due and payable, and from and after the date so designated interest on such Bonds will cease to accrue, and the Owners of such Bonds will have no rights in respect thereof except to receive payment of the redemption price thereof.

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SECURITY AND SOURCES OF PAYMENT FOR THE BONDS

Pledge of Revenues

All Revenues, any other amounts (including proceeds of the sale of the Bonds) held by the Trustee in any fund or account established under the Trust Agreement (other than amounts on deposit in the Rebate Fund created pursuant to the Trust Agreement and any other amounts (excluding Additional Payments) received by the Authority in respect of the Facilities will be irrevocably pledged under the Trust Agreement to the payment of the interest and premium, if any, on and principal of the Bonds as provided in the Trust Agreement, and the Revenues and other amounts pledged under the Trust Agreement shall not be used for any other purpose while any of the Bonds remain Outstanding; provided, however, that out of the Revenues and other moneys there may be applied such sums for such purposes as are permitted under the Trust Agreement. This pledge shall constitute a pledge of and charge and first lien upon the Revenues, all other amounts pledged under the Trust Agreement and all other moneys on deposit in the funds and accounts established under the Trust Agreement (excluding amounts on deposit in the Rebate Fund for the payment of the interest on and principal of the Bonds in accordance with the terms thereof. The Authority will as provided under the Trust Agreement assign to the Trustee all of the Authority’s right, title and interest in the Sublease and the Lease (as defined in this Official Statement) as security for payment of the Bonds.

At least three (3) Business Days prior to each date on which a Base Rental Payment is due, pursuant to the Sublease, the Trustee shall notify the City of the amount of the installment of Base Rental Payments needed to pay the principal of and interest on the Bonds due on the next following Interest Payment Date. Any failure to send such notice shall not affect the City’s obligation to make timely payments of installments of Base Rental Payments.

In order to carry out and effectuate the pledge, charge and lien contained in the Trust Agreement, the Authority will agree and covenant that all Revenues and all other amounts pledged under the Trust Agreement when and as received shall be received by the Authority in trust under the Trust Agreement for the benefit of the Bondholders and shall be transferred when and as received by the Authority to the Trustee for deposit in the Revenue Fund (the “Revenue Fund”), which fund is created under the Trust Agreement and which fund the Authority will agree and covenant to maintain in trust for Bondholders so long as any Bonds shall be Outstanding under the Trust Agreement. Within the Revenue Fund, the Trustee shall establish and maintain a separate account designated the “Series 2016 Interest Account” and a separate Account designated the “Series 2016 Principal Account.” Upon the issuance of Additional Bonds, the Trustee shall also establish and maintain, within the Revenue Fund, a separate Interest Account and a separate Principal Account for each Series of Additional Bonds. All Revenues and all other amounts pledged under the Trust Agreement shall be accounted for through and held in trust in the Revenue Fund, and the Authority shall have no beneficial right or interest in any of the Revenues except only as provided in the Trust Agreement. All Revenues and all other amounts pledged under the Trust Agreement, whether received by the Authority in trust or deposited with the Trustee as provided in the Trust Agreement, shall nevertheless be allocated, applied and disbursed solely to the purposes and uses set forth in the Trust Agreement, and shall be accounted for separately and apart from all other accounts, funds, money or other resources of the Authority.

The Bonds will be special, limited obligations of the Authority payable solely from Revenues, consisting primarily of Base Rental Payments to be made by the City to the Authority pursuant to the Sublease, pursuant to which the City will lease the Facilities. See “THE FACILITIES.” The City has covenanted in the Sublease to take such action as may be necessary to include Base Rental Payments and Additional Payments due under the Sublease in its annual budgets, and to make necessary annual

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appropriations therefor. The Base Rental Payments are subject to abatement as described herein. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” and “RISK FACTORS.”


Reserve Fund

The Trust Agreement will require that the Trustee establish, maintain and hold in trust a special fund designated as the “Reserve Fund” which shall be held by the Trustee and which shall be kept separate and apart from all other funds held by the Trustee. Within the Reserve Fund, the Trustee shall establish and maintain a separate account designated the “Series 2016 Bond Reserve Account,” which Series 2016 Bond Reserve Account shall be solely available to make up insufficiencies in the amounts required to be deposited in the Series 2016 Principal Account and the 2016 Interest Account under the Trust Agreement.

Moneys in the Reserve Fund shall be used and withdrawn by the Trustee solely for the purposes set forth in the Trust Agreement as summarized below. Within the Reserve Fund, in addition to the Series 2016 Bond Reserve Account, the Trustee may establish and maintain a separate account designated the “Common Reserve Account” and may establish and maintain one or more additional Reserve Accounts, each of which may secure one or more Series of Bonds pursuant to the Trust Agreement and to the Supplemental Trust Agreement authorizing the issuance thereof. At the option of the City, one or more Reserve Fund Credit Facilities may be substituted for the funds held by the Trustee in any Reserve Account such that the amount available to be drawn under such Reserve Fund Credit Facilities together with funds remaining in such Reserve Account satisfies the Reserve Fund Requirement.

As defined in the Trust Agreement, the term “Series 2016 Bond Reserve Fund Requirement” means (a) with respect to the Series 2016 Bonds an amount equal to the lesser of (i) Maximum Annual Debt Service on the Outstanding Series 2016 Bonds or (ii) 125% of Average Annual Debt Service on the Outstanding Series 2016 Bonds; provided however, that the Series 2016 Bond Reserve Fund Requirement shall in no event exceed an amount permitted by the Code. The Series 2016 Bond Reserve Fund Requirement with respect to the Series 2016 Bonds shall be satisfied by the delivery of the 2016 Reserve Policy, described herein, to the Trustee. The Trustee shall credit the 2016 Reserve Policy to the Series 2016 Bond Reserve Account, which subaccount is created under Trust Agreement. The Trustee shall comply with all of the terms and provisions of the 2016 Reserve Policy for the purpose of assuring that funds are available thereunder when required for the purposes of the Reserve Account, within the limits of the coverage amount provided by the 2016 Reserve Policy. All amounts drawn by the Trustee under the 2016 Reserve Policy will be deposited into the Series 2016 Bond Reserve Account and applied for the purposes of paying principal and interest on the Series 2016 Bonds.

In the event that, on any date on which the Trustee is to transfer money from the Revenue Fund to the Interest Accounts or to the Principal Accounts pursuant to the Trust Agreement, amounts in the Revenue Fund are insufficient for such purpose, the Trustee shall withdraw from the related Reserve Account, to the extent of any funds therein, the amount of the insufficiency of the related Series of Bonds, and shall transfer any amounts so withdrawn first to the related Interest Account and then to the related Principal Account. If the amount on deposit in any Reserve Account is not sufficient to make such

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transfer, the Trustee shall make a claim under any available Reserve Fund Credit Facility, in accordance with the provisions thereof, in order to obtain an amount sufficient to allow the Trustee to make such transfer as and when required. Monies on deposit in each Reserve Account shall be withdrawn and transferred by the Trustee to be applied for the final payment on the related Series of Bonds. As defined in the Trust Agreement, the term “Reserve Fund Credit Facility” shall mean a letter of credit, line of credit, surety bond, insurance policy or similar facility deposited in a Reserve Account in lieu of or in partial substitution for cash or securities on deposit therein.

In the event of any withdrawal or transfer from a Reserve Account, the Trustee shall, within five days thereafter, provide written notice to the City of the amount and the date of such transfer. If at any time the balance in any Reserve Account shall be reduced below the Reserve Fund Requirement, the first of Base Rental Payments thereafter payable by the City under the Sublease and not needed to pay the interest and principal components of Base Rental Payments payable by the City under the Sublease to the Owners on the next Interest Payment Date, Principal Payment Date or Mandatory Sinking Account Payment Date shall be used to increase the balance in such Reserve Account to the Reserve Fund Requirement; provided, however, that such Base Rental Payments shall be allocated among all Reserve Accounts ratably without preference or priority of any kind, according to each Reserve Account’s percentage share of the total deficiencies in all Reserve Accounts. If after the payment of principal and interest on any Interest Payment Date the balance in the any Reserve Account shall be in excess of the Reserve Fund Requirement the Trustee shall, upon Written Request of the City, transfer such excess first to the Rebate Fund to the extent the amount on deposit therein is less than the Rebate Requirement, and thereafter to the Revenue Fund. At the termination of the Sublease in accordance with its respective terms, any balance remaining in any Reserve Account shall be released and may be transferred to such other fund or account of the City, or otherwise used by the City for any other lawful purposes, as the City may direct in writing. For purposes of determining the amount on deposit in each Reserve Account, all investments shall be valued annually at the amortized cost thereof (exclusive of accrued but unpaid interest, but inclusive of commissions). Investments in each Reserve Account shall mature, or be subject to tender, redemption or withdrawal at the option of the holder thereof, not later than five years from the date of investment.

At the option of the City, one or more Reserve Fund Credit Facilities may be substituted for the funds held by the Trustee in any Reserve Account such that the amount available to be drawn under such Reserve Fund Credit Facilities together with funds remaining in such Reserve Account satisfies the Reserve Fund Requirement.

If the City exercises its option to substitute a Reserve Fund Credit Facility for all or a portion of the moneys held by the Trustee in a Reserve Account, then such moneys, on or after the date that the Reserve Fund Credit Facility becomes effective, at the option of the City, shall be used to redeem the related Series of Bonds or transferred to a construction fund to be held by the City and used for capital projects of the City in accordance with the Tax Certificate. Neither the City nor the Trustee may invest such amounts transferred so as to produce a yield greater than the yield permitted under the Tax Certificate. In the event any Reserve Fund Credit Facility is scheduled to terminate prior to the final maturity date of the Bonds and such Reserve Fund Credit Facility is not extended, renewed or replaced with another Reserve Fund Credit Facility or with cash or Permitted Investments in the amount of such Reserve Fund Credit Facility, the Trustee shall draw on or make a claim under such Reserve Fund Credit Facility ten days prior to the date of such expiration in an amount equal to the lesser of (i) the maximum amount available thereunder or (ii) the Reserve Fund Requirement, in either case for deposit into the related Reserve Account.

In the event a Reserve Fund Credit Facility is substituted for all or a portion of the moneys held by the Trustee in a Reserve Account pursuant to the terms of the Trust Agreement, then, notwithstanding

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any other provision of the Trust Agreement, (1) the Trustee shall draw upon the Reserve Fund Credit Facility for amounts which the terms of the Trust Agreement require to be transferred from the related Reserve Account; provided that the Trustee shall first draw upon any cash or Permitted Investments on deposit in the related Reserve Account before drawing upon any Reserve Fund Credit Facility, and thereafter shall draw upon all such Reserve Fund Credit Facilities on a pro rata basis, and (2) amounts required by the terms of the Trust Agreement to be deposited or transferred to a Reserve Account (a) in the event the Reserve Fund Credit Facility has been drawn upon, shall be first paid to the provider of such Reserve Fund Credit Facility if the City has an outstanding reimbursement obligation to such provider resulting from such draw, which payment shall result in an increase in the amount then available under the Reserve Fund Credit Facility equal to such payment and (b) to the extent all such draws on Reserve Fund Credit Facilities have been paid, then, second, shall be transferred or deposited to the related Reserve Account in amount such that after giving effect to the deposit the amount on deposit in such Reserve Account is equal to the Reserve Fund Requirement.

The City shall be permitted to make use of a Reserve Fund Credit Facility pursuant to the Trust Agreement at any time.

As used above, the term “substitution” shall include such initial funding of the Reserve Fund Requirement by means of a Reserve Fund Credit Facility instead of by deposit of moneys, and shall not be read to mean that the City must first make an initial cash deposit in a Reserve Account before invoking this section and satisfying the Reserve Fund Requirement by securing and implementing a Reserve Fund Credit Facility.

Base Rental Payments

For the right to the use and occupancy of the Facilities, the Sublease requires the City to make Base Rental Payments to the Trustee, for deposit into the Revenue Fund, on each May 25 and November 25, an amount sufficient to pay the principal of and interest on the Series 2016 Bonds due on the following June 1 and December 1, respectively. Base Rental Payments for the Facilities will be paid by the City from lawfully available funds of the City and the City has covenanted in the Sublease to take such action as may be necessary to include Base Rental Payments and Additional Payments due under the Sublease in its annual budgets, and to make necessary annual appropriations therefor. The Base Rental Payments are subject to abatement, as described herein, during any period in which, by reason of material damage to, or destruction or condemnation of, the Facilities, or any defects in title to the Facilities, there is substantial interference with the City’s right to use and occupy any portion of the Facilities. See “Abatement” below, and “RISK FACTORS.”

Pursuant to the Trust Agreement, on or before each Interest Payment Date and each Principal Payment Date, the Trustee will transfer amounts in the Revenue Fund as are necessary to the Interest Account and the Principal Account to provide for the payment of the interest and principal in respect of the Bonds. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – Trust Agreement – Establishment of Funds and Accounts; Flow of Funds.” See also “RISK FACTORS” and “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS” for a discussion of the risks and constitutional limitations applicable to the payment of Base Rental Payments. Scheduled Base Rental Payments relating to the Series 2016 Bonds are set forth below under the heading “BASE RENTAL PAYMENT SCHEDULE.”

THE OBLIGATION OF THE CITY TO MAKE THE RENTAL PAYMENTS, INCLUDING THE BASE RENTAL PAYMENTS, DOES NOT CONSTITUTE A DEBT OF THE CITY, THE COUNTY OR OF THE STATE OR OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR RESTRICTION, AND

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DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY, THE COUNTY OR THE STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY, THE COUNTY OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.

Additional Payments

The Sublease requires the City to pay all amounts, costs, and expenses incurred by the Authority in connection with the execution, performance, or enforcement of the Sublease, the Trust Agreement, the Authority’s interest in the Facilities, and the lease of the Facilities to the City, including but not limited to payment of all fees, costs, and expenses and all administrative costs of the Authority related to the Bonds and the Facilities, including without limiting the generality of the foregoing, salaries and wages of employees, all expenses, compensation, and indemnification payable by the Authority to the Trustee under the Trust Agreement, fees of auditors, accountants, attorneys, or architects, and all other necessary administrative costs of the Authority or charges required to be paid by it in order to maintain its existence or to comply with the terms of the Bonds or of the Trust Agreement; but not including in such Additional Payments amounts required to pay the principal of or interest on the Bonds.

Insurance

The Sublease requires the City to cause to be maintained casualty insurance insuring the Facilities against fire, lightning, and all other risks covered by an extended coverage endorsement in an amount equal to the lesser of 100% of the replacement cost of the Facilities or 100% of the outstanding principal amount of the Bonds. The City may, subject to the restrictions contained in the Sublease, self-insure against such risks. The Sublease does not require that insurance be maintained for earthquake or flood risks.

The Sublease requires the City to cause to be maintained, throughout the term of the Sublease, rental interruption insurance to cover the Authority’s loss, total or partial, of Base Rental Payments resulting from the loss, total or partial, of the use of any part of the Facilities as a result of any of the hazards covered by the insurance described in the preceding paragraph, in an amount sufficient at all times to pay maximum annual Base Rental Payments for any two year period. The City is also required to obtain certain public liability and property damage insurance coverage in protection of the Authority and the City and worker’s compensation insurance. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – Sublease,” for additional information regarding the insurance requirements contained in the Sublease.

Additional Bonds

The Authority may at any time issue Additional Bonds payable from the Revenues and secured by a pledge of and charge and lien upon the Revenues as provided in the Trust Agreement equal to the pledge, charge, and lien securing the Outstanding Bonds theretofore issued under the Trust Agreement, subject to, among other things, the following specific conditions:

1. The Authority shall be in compliance with all agreements and covenants contained in the Trust Agreement and no Event of Default shall have occurred and be continuing.

2. The Supplemental Trust Agreement shall require that the proceeds of the sale of such Additional Bonds shall be applied to finance or refinance Projects, or for the refunding or repayment of any Bonds then Outstanding, including the payment of costs and expenses of, and incident to, the authorization and sale of such Additional Bonds.

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3. The aggregate principal amount of Bonds issued and at any time Outstanding under the Trust Agreement shall not exceed any limit imposed by law, by the Trust Agreement or by any Supplemental Trust Agreement.

4. The Sublease shall have been amended, if necessary, so that the Base Rental Payments payable by the City thereunder in each fiscal year shall at least equal Debt Service, including Debt Service on the Additional Bonds, in each fiscal year, and if Base Rental Payments are being increased, a Certificate of the City shall be delivered to the Trustee certifying that the annual fair rental value (which may be based on, but not limited to, the construction or acquisition cost or replacement cost of such facility to the City) will be at least equal to 100% of the maximum amount of Base Rental Payments becoming due in the then current fiscal year or in any subsequent fiscal year.

5. If additional facilities, if any, are to be leased and are not situated on property described in the Master Facilities Lease, dated as of September 1, 2016 (the “Lease”), by and between the City and the Authority, and the Sublease, (A) the Lease shall have been amended so as to lease to the Authority such additional real property; and (B) the Sublease shall have been amended so as to lease to the City such additional real property.

See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – Trust Agreement.”

Abatement

Base Rental Payments and Additional Rental Payments are paid by the City as provided in the Sublease for and in consideration of the right to use and occupy the Facilities and in consideration of the continued right to the quiet use and enjoyment thereof during each such period. The Base Rental Payments and Additional Payments shall be abated proportionately, during any period in which by reason of any material damage or destruction (other than by condemnation which is hereinafter provided for) there is substantial interference with the use and occupancy of the Facilities by the City, in the proportion in which the cost of that portion of the Facilities rendered unusable bears to the cost of the whole of the Facilities. 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 Sublease shall continue in full force and effect and the City waives the benefits of California Civil Code Section 1932(2) and 1933(4) and of Title 11 of the United States Code, Section 365(h) and any and all other rights to terminate the Sublease by virtue of any such damage or destruction or interference. The amount of such abatement shall be agreed upon by the City and the Authority; provided, however, that the Base Rental Payments due for any Rental Period shall not exceed the annual fair rental value of that portion of the Facilities available for use and occupancy by the City during such Rental Period. Such abatement shall continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation or title defect and, with respect to damage to or destruction of the Facilities, ending with the substantial completion of the work of repair or replacement of the Facilities, or the portion thereof so damaged or destroyed; and the term of the Sublease shall be extended as provided in the Sublease, except that the term shall in no event be extended ten years beyond the stated termination date of the Sublease. The Trustee cannot terminate the Sublease in the event of such substantial interference. Abatement of Base Rental Payments and Additional Rental Payments is not an event of default under the Sublease and does not permit the Trustee to take any action or avail itself of any remedy against the City. See APPENDIX C – “DEFINITIONS AND SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS – The Sublease – Rental Abatement.”

Notwithstanding the foregoing, to the extent that proceeds of rental interruption insurance are available for the payment of Base Rental Payments due under the Sublease, Base Rental Payments shall

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not be abated as provided above but, rather, will be payable by the City as a limited obligation payable solely from such Net Proceeds.

Addition, Substitution, or Release of Facilities

The City and the Authority may add, substitute, or release real property for all or part of, or may release part of, the Facilities for purposes of the Lease and the Sublease, but only after the City has filed with the Authority and the Trustee, with copies to each rating agency then providing a rating for the Bonds, all of the following:

1. Executed copies of the Lease and the Sublease and any amendments thereto containing the amended description of the Facilities, including the legal description of any real property component of the Facilities as modified, if necessary.

2. A Written Certificate of the City, certifying that the annual fair rental value (which may be based on, but not limited to, the construction or acquisition cost or replacement cost of such facility to the City) of the Facilities that will constitute the Facilities after such addition, substitution, or withdrawal will be at least equal to 100% of the maximum amount of Base Rental Payments becoming due in the then current fiscal year or in any subsequent fiscal year. At the sole discretion of the City, in the alternative, in the event of a substitution only, the Written Certificate of the City will certify that the annual fair rental value of the new Facility is at least equal to that of the substituted Facility.

3. With respect to an addition or substitution of property, a leasehold owner’s title insurance policy or policies or a commitment for such policy or policies or an amendment or endorsement to an existing title insurance policy or policies resulting in title insurance with respect to the Facilities after such addition or substitution in an amount at least equal to the aggregate principal amount of Bonds Outstanding; each such insurance instrument, when issued, shall name the Trustee as the insured, and shall insure the leasehold estate of the Authority in such property subject only to such exceptions as do not substantially interfere with the City’s right to use and occupy such property and as will not result in an abatement of Base Rental Payments payable by the City under the Sublease.

4. A Written Certificate of the City stating that such addition, substitution or withdrawal, as applicable, does not adversely affect the City’s use and occupancy of the Facilities.

5. With respect to the substitution of property, a Written Certificate of the City stating that the useful life of the property to be substituted is at least equal to the useful life of the property being released.

6. An opinion of bond counsel stating that any amendment executed in connection with such addition, substitution or withdrawal, as the case may be, (A) is authorized or permitted under the Sublease; (B) will, upon the execution and delivery thereof, be valid and binding upon the Authority and the City; and (C) will not cause the interest on the Bonds to be included in gross income for federal income tax purposes.

The Facilities or portion thereof for which other real property is substituted, pursuant to the Sublease, shall be released from the Lease and the Sublease, and shall no longer be encumbered thereby or by the Trust Agreement at such time as the City shall have caused said substitution.

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Investment of Moneys

Amounts on deposit in any fund or account held pursuant to the Trust Agreement will be invested in Permitted Investments, subject to the conditions provided for in the Trust Agreement. All investment earnings on moneys on deposit in the Rebate Fund shall be retained therein and all investment earnings on moneys on deposit in any other fund or account held under the Trust Agreement will be transferred to the Revenue Fund, subject to the obligation of the City and/or the Authority to rebate certain amounts to the United States government as required under the Internal Revenue Code of 1986, as amended. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – Trust Agreement.”

Limited Obligations

The Bonds are limited obligations of the Authority payable solely from Revenues, consisting primarily of Base Rental Payments to be made by the City and amounts on deposit in certain funds and accounts held under the Trust Agreement. The Bonds do not constitute a debt or liability of the State or of any political subdivision thereof (including any member of the Authority). The Authority shall be obligated to pay the principal of the Bonds, and the interest thereon, only from the Revenues, and neither the faith and credit nor the taxing power of the State or of any political subdivision thereof (including any member of the Authority) is pledged to the payment of the principal of or the interest on the Bonds. The issuance of the Bonds shall not directly, indirectly, or contingently obligate the State or any political subdivision thereof (including any member of the Authority) to levy or pledge any form of taxation. The Authority has no taxing power.

Action on Default

Should the City default under the Sublease, the Trustee, as assignee of the Authority under the Sublease, may terminate the Sublease and recover certain damages from the City, or may retain the Sublease and hold the City liable for all Base Rental Payments thereunder on an annual basis and will have the right to re-enter and re-let the Facilities. In the event such re-letting occurs, the City would be liable for any resulting deficiency in Base Rental Payments. Base Rental Payments may not be accelerated upon a default under the Sublease. See APPENDIX C – “DEFINITIONS AND SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS – The Sublease – Events of Default and Remedies. See also “RISK FACTORS – Limited Recourse on Default; No Acceleration of Base Rental Payments” herein.

For a description of the events of default and permitted remedies of the Trustee (as assignee of the Authority) contained in the Sublease and the Trust Agreement, see APPENDIX C – “DEFINITIONS AND SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS – The Sublease – Default” and “– The Trust Agreement – Events of Default,” “– Other Remedies of the Trustee,” and “Limitation on Suits.”

Damage or Destruction of the Facilities

In the event of any damage to or destruction of any part of the Facilities caused by the perils covered by such insurance, the Authority, except as hereinafter provided, will cause the proceeds of such insurance to be used for the repair, reconstruction or replacement of the damaged or destroyed portion of the Facilities, and the Trustee will hold said proceeds separate and apart from all other funds in a special fund to be designated the “Insurance and Condemnation Fund,” to the end that such proceeds will be applied to the repair, reconstruction or replacement of the Facilities to at least the same good order, repair and condition as it was in prior to the damage or destruction, insofar as the same may be accomplished by the use of said proceeds. The Trustee will withdraw said proceeds from time to time upon receiving the

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Written Request of the Authority, stating that the Authority has expended monies or incurred liabilities in an amount equal to the amount therein requested to be paid over to it for the purpose of repair, reconstruction or replacement, and specifying the items for which such monies were expended, or such liabilities were incurred, and containing the additional information required to be included in a Written Request of the Authority prepared pursuant to the Trust Agreement. Any balance of said proceeds not required for such repair, reconstruction or replacement will be transferred to the Trustee and treated by the Trustee as Base Rental Payments and applied in the manner provided by the Trust Agreement.

Alternatively, if the proceeds of such insurance, together with any other monies then available for the purpose, are at least sufficient to redeem an aggregate principal amount of Outstanding Bonds equal to the amount of Outstanding Bonds attributable to the portion of the Facilities so destroyed or damaged, the City may elect not to repair, reconstruct or replace the damaged or destroyed portion of the Facilities and thereupon will cause said proceeds to be used for the redemption of Outstanding Bonds pursuant to the provisions of the Trust Agreement.

The Base Rental Payments and Additional Payments shall be abated proportionately, during any period in which by reason of any material damage or destruction (other than by condemnation which is hereinafter provided for) there is substantial interference with the use and occupancy of the Facilities by the City, in the proportion in which the cost of that portion of the Facilities rendered unusable bears to the cost of the whole of the Facilities. Such abatement will 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 Sublease will continue in full force and effect.

See APPENDIX C – “DEFINITIONS AND SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS – The Sublease – Abatement,” “– Substitution or Release of the Facilities” and “– Damage or Destruction.”

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BOND INSURANCE

Bond Insurance Policy

Concurrently with the issuance of the Series 2016 Bonds, Assured Guaranty Municipal Corp. (“AGM”) will issue its Municipal Bond Insurance Policy (the “Policy”) for the Series 2016 Bonds maturing on June 1, 2023 through 2029 (inclusive), June 1, 2031, June 1, 2036 (CUSIP No. 73208MCT3) and June 1, 2036 (CUSIP No. 73208MCU0) (the “Insured Bonds”). The Policy guarantees the scheduled payment of principal of and interest on the Insured Bonds when due as set forth in the form of the Policy included as Appendix H to this Official Statement.

The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law.

Assured Guaranty Municipal Corp.

AGM is a New York domiciled financial guaranty insurance company and an indirect subsidiary of Assured Guaranty Ltd. (“AGL”), a Bermuda-based holding company whose shares are publicly traded and are listed on the New York Stock Exchange under the symbol “AGO”. AGL, through its operating subsidiaries, provides credit enhancement products to the U.S. and global public finance, infrastructure and structured finance markets. Neither AGL nor any of its shareholders or affiliates, other than AGM, is obligated to pay any debts of AGM or any claims under any insurance policy issued by AGM.

AGM’s financial strength is rated “AA” (stable outlook) by S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC (“S&P”), “AA+” (stable outlook) by Kroll Bond Rating Agency, Inc. (“KBRA”) and “A2” (stable outlook) by Moody’s Investors Service, Inc. (“Moody’s”). Each rating of AGM should be evaluated independently. An explanation of the significance of the above ratings may be obtained from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such ratings are subject to revision or withdrawal at any time by the rating agencies, including withdrawal initiated at the request of AGM in its sole discretion. In addition, the rating agencies may at any time change AGM’s long-term rating outlooks or place such ratings on a watch list for possible downgrade in the near term. Any downward revision or withdrawal of any of the above ratings, the assignment of a negative outlook to such ratings or the placement of such ratings on a negative watch list may have an adverse effect on the market price of any security guaranteed by AGM. AGM only guarantees scheduled principal and scheduled interest payments payable by the issuer of bonds insured by AGM on the date(s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of the relevant insurance policy), and does not guarantee the market price or liquidity of the securities it insures, nor does it guarantee that the ratings on such securities will not be revised or withdrawn.

Current Financial Strength Ratings

On July 27, 2016, S&P issued a credit rating report in which it affirmed AGM’s financial strength rating of “AA” (stable outlook). AGM can give no assurance as to any further ratings action that S&P may take.

On August 8, 2016, Moody’s published a credit opinion affirming its existing insurance financial strength rating of “A2” (stable outlook) on AGM. AGM can give no assurance as to any further ratings action that Moody’s may take.

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On December 10, 2015, KBRA issued a financial guaranty surveillance report in which it affirmed AGM’s insurance financial strength rating of “AA+” (stable outlook). AGM can give no assurance as to any further ratings action that KBRA may take.

For more information regarding AGM’s financial strength ratings and the risks relating thereto, see AGL’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Capitalization of AGM

At June 30, 2016, AGM’s policyholders’ surplus and contingency reserve were approximately $3,841 million and its net unearned premium reserve was approximately $1,459 million. Such amounts represent the combined surplus, contingency reserve and net unearned premium reserve of AGM, AGM’s wholly owned subsidiary Assured Guaranty (Europe) Ltd. and 60.7% of AGM’s indirect subsidiary Municipal Assurance Corp.; each amount of surplus, contingency reserve and net unearned premium reserve for each company was determined in accordance with statutory accounting principles.

Incorporation of Certain Documents by Reference

Portions of the following documents filed by AGL with the Securities and Exchange Commission (the “SEC”) that relate to AGM are incorporated by reference into this Official Statement and shall be deemed to be a part hereof:

(i) the Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (filed by AGL with the SEC on February 26, 2016);

(ii) the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016 (filed by AGL with the SEC on May 5, 2016); and

(iii) the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016 (filed by AGL with the SEC on August 4, 2016).

All consolidated financial statements of AGM and all other information relating to AGM included in, or as exhibits to, documents filed by AGL with the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, excluding Current Reports or portions thereof “furnished” under Item 2.02 or Item 7.01 of Form 8-K, after the filing of the last document referred to above and before the termination of the offering of the Insured Bonds shall be deemed incorporated by reference into this Official Statement and to be a part hereof from the respective dates of filing such documents. Copies of materials incorporated by reference are available over the internet at the SEC’s website at http://www.sec.gov, at AGL’s website at http://www.assuredguaranty.com, or will be provided upon request to Assured Guaranty Municipal Corp.: 1633 Broadway, New York, New York 10019, Attention: Communications Department (telephone (212) 974-0100). Except for the information referred to above, no information available on or through AGL’s website shall be deemed to be part of or incorporated in this Official Statement.

Any information regarding AGM included herein under the caption “BOND INSURANCE – Assured Guaranty Municipal Corp.” or included in a document incorporated by reference herein (collectively, the “AGM Information”) shall be modified or superseded to the extent that any subsequently included AGM Information (either directly or through incorporation by reference) modifies or supersedes such previously included AGM Information. Any AGM Information so modified or superseded shall not constitute a part of this Official Statement, except as so modified or superseded.

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Miscellaneous Matters

AGM makes no representation regarding the Insured Bonds or the advisability of investing in the Insured Bonds. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading “BOND INSURANCE”

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BASE RENTAL PAYMENT SCHEDULE

Following is the schedule of Base Rental Payments due with respect to the Series 2016 Bonds:

Date Principal Interest Total Payments Annual Payments December 1, 2016 -- $ 205,035.94 $ 205,035.94 --June 1, 2017 -- 444,656.25 444,656.25 $ 649,692.19 December 1, 2017 -- 444,656.25 444,656.25 -- June 1, 2018 $ 1,085,000 444,656.25 1,529,656.25 1,974,312.50 December 1, 2018 -- 433,806.25 433,806.25 -- June 1, 2019 1,105,000 433,806.25 1,538,806.25 1,972,612.50December 1, 2019 -- 422,756.25 422,756.25 -- June 1, 2020 1,125,000 422,756.25 1,547,756.25 1,970,512.50December 1, 2020 -- 405,881.25 405,881.25 -- June 1, 2021 1,160,000 405,881.25 1,565,881.25 1,971,762.50December 1, 2021 -- 388,481.25 388,481.25 -- June 1, 2022 1,195,000 388,481.25 1,583,481.25 1,971,962.50 December 1, 2022 -- 370,556.25 370,556.25 -- June 1, 2023 1,230,000 370,556.25 1,600,556.25 1,971,112.50 December 1, 2023 -- 352,106.25 352,106.25 --June 1, 2024 1,265,000 352,106.25 1,617,106.25 1,969,212.50December 1, 2024 -- 326,806.25 326,806.25 -- June 1, 2025 1,320,000 326,806.25 1,646,806.25 1,973,612.50December 1, 2025 -- 300,406.25 300,406.25 -- June 1, 2026 1,370,000 300,406.25 1,670,406.25 1,970,812.50 December 1, 2026 -- 273,006.25 273,006.25 -- June 1, 2027 1,425,000 273,006.25 1,698,006.25 1,971,012.50December 1, 2027 -- 244,506.25 244,506.25 --June 1, 2028 1,485,000 244,506.25 1,729,506.25 1,974,012.50December 1, 2028 -- 214,806.25 214,806.25 --June 1, 2029 1,540,000 214,806.25 1,754,806.25 1,969,612.50December 1, 2029 184,006.25 184,006.25 --June 1, 2030 1,605,000 184,006.25 1,789,006.25 1,973,012.50December 1, 2030 -- 162,940.63 162,940.63 --June 1, 2031 1,645,000 162,940.63 1,807,940.63 1,970,881.26December 1, 2031 -- 141,350.00 141,350.00 --June 1, 2032 1,690,000 141,350.00 1,831,350.00 1,972,700.00December 1, 2032 -- 111,825.00 111,825.00 --June 1, 2033 1,750,000 111,825.00 1,861,825.00 1,973,650.00December 1, 2033 -- 81,250.00 81,250.00 --June 1, 2034 1,810,000 81,250.00 1,891,250.00 1,972,500.00December 1, 2034 -- 49,600.00 49,600.00 --June 1, 2035 1,395,000 49,600.00 1,444,600.00 1,494,200.00 December 1, 2035 -- 25,225.00 25,225.00 --June 1, 2036 1,445,000 25,225.00 1,470,225.00 1,495,450.00

Total $26,645,000 $10,517,635.95 $37,162,635.95 $37,162,635.95

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THE AUTHORITY

The Authority was established pursuant to a Joint Exercise of Powers Agreement dated October 27, 1988, by and among the City, the Redevelopment Agency of the City of West Covina and the Redevelopment Agency of the City of Pomona (the “Members”). The Authority was created for the purpose of providing financing for public capital improvements for the Members or other local agencies in the State of California, the acquisition by the Authority of such capital improvements and the purchase by the Authority of local obligations within the meaning of the JPA Act. The Authority is authorized pursuant to Article 4 of the JPA Act to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations of, or for the purpose of making loans to, any Members or such other local agencies to provide financing for public improvements of such Members.

Except as provided in the Trust Agreement, the Authority has no liability to the owners or Beneficial Owners of any of the Series 2016 Bonds and has pledged none of its moneys, funds or assets toward the payment of any amount due in connection with the Series 2016 Bonds.

The Authority has no financial liability to the Owners of the Bonds with respect to the payment of Base Rental Payments by the City or with respect to the performance by the City of the other agreements and covenants it is required to perform.

The Authority is governed by its own Board of Directors consisting of City staff. The Authority is dependent upon the officers and employees of the City to administer its programs.

CITY OF POMONA

The City was incorporated in January 1888, and became a charter city in 1911. The City now encompasses approximately 22.9 square miles, and currently has an estimated 2016 population of 155,604 (as estimated by the State Department of Finance). The City is located approximately 30 miles east of downtown Los Angeles, in the eastern portion of the County of Los Angeles (the “County”), adjacent to Orange and San Bernardino counties.

The City Charter provides for a council-manager form of government, with an elected council of seven members including a mayor. City Councilmembers are elected by district for overlapping four-year terms. The Mayor is the presiding officer of the Council and is elected at large for a four-year term. The City Manager appoints department heads on the basis of specialized knowledge, experience and education in their area of responsibility. The City provides police protection, sewer maintenance, street sweeping, park maintenance, building inspection, library, water, and sanitation services. See APPENDIX A – “GENERAL DEMOGRAPHIC INFORMATION REGARDING THE CITY OF POMONA.”

The City continues to enjoy a broadly based diverse economy, albeit one with an emphasis upon government, healthcare, and other service-oriented industries. Among the City’s large employers are the Pomona Unified School District, the City itself, California State Polytechnic University, and the Department of Social Services. Notable private sector employers include Anheuser Busch, Consolidated Foundries, First Transit, Hayward Industries, Inland Valley Care and Rehab, Kittich Corporation, Verizon, Walmart, Los Angeles County Fair Association (Fairplex) and Target. As a regional healthcare hub, the City boasts a premier facility in the Pomona Valley Hospital Medical Center and the non-profit Casa Colina Centers for Rehabilitation. As reported by the Labor Market Information Division of the California Employment Development Department (the most recent such data available), the City’s employed civilian labor force presently stands at approximately 62,700 workers.

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CITY OF POMONA FINANCES

The following selected financial information provides a brief overview of the City’s finances. This financial information has been extracted from the City’s audited financial statements and, in some cases, from unaudited information provided by the City’s Finance Department. The most recent audited financial statements of the City with an unqualified auditor’s opinion is included as APPENDIX B hereto. See APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2015.”

Accompanying the Independent Auditor’s Report in APPENDIX B is the City Management Discussion and Analysis, which is not audited, but is supplementary information required by the Government Accounting Standards Board. The Management Discussion and Analysis presents a summary and overview of the City’s financial condition. Such Management Discussion and Analysis should be reviewed in conjunction with the information presented below to obtain an understanding of the City’s financial condition.

Accounting Policies and Financial Reporting

The City’s accounting records are organized and operated on a “fund” basis, which is the basic fiscal and accounting entity in governmental accounting. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental funds include activities of the City that are not proprietary or fiduciary. These funds are used to account for, essentially, the same functions reported as “governmental activities” in the government-wide financial statements. Unlike the government-wide financial statements, however, governmental fund financial statements use the modified accrual basis of accounting and focus on near-term inflows and outflows of spendable resources, as well as the balances of spendable resources available at the end of the fiscal year. Only assets expected to be used and liabilities that come due during the year or soon thereafter are reported on the Balance Sheet. No capital assets are included. Revenues for which cash is received during or soon after the end of the year, and expenditures for goods and services that have actually been received during the year, are included within the Statement of Revenues, Expenditures, and Changes in Fund Balance.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds in the fund financial statements with similar information presented for “governmental activities” in the government-wide financial statements. By doing so, the reader may better understand the long-term impact of the City’s near-term financing decisions. Both the Governmental Fund Balance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund Balance provide a reconciliation to facilitate this comparison.

The City maintains 20 individual governmental funds. Individual fund information is presented for the “major” funds in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance. The major funds presented include the General Fund, the Housing Authority Fund, the Miscellaneous Grants Fund, the General Debt Service Fund, and the Public Financing Authority Debt Service Fund. Information for the remaining governmental funds is combined into a single “other governmental funds” column on the face of the financial statements. Individual fund data for each of these non-major governmental funds is provided in the form of “combining statements” presented in the Supplemental Data portion of the report.

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Proprietary funds are used to report two types of funds: enterprise funds and internal service funds. Enterprise funds report the same functions presented as “business-type” activities in the government-wide financial statements. These include activities that the City operates similar to a private business. The City uses enterprise funds to account for the operations of the City and Canon Water Company all of which are considered “major” funds. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its self-insurance activities, equipment maintenance activities, information technology activities, and printing/mail service activities. Because these four services predominately benefit governmental rather than business-type functions, the activity has have been included within “governmental activities” in the government-wide financial statements. All internal service funds are combined into a single aggregated column presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements presented in the Supplemental Data portion of the report.

Proprietary funds use the accrual basis of accounting and focus on the accumulation and use of economic resources. Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses, and Changes in Net Position, and a Statement of Cash Flows. All assets and liabilities, both financial and capital, short and long-term are included within these statements. All revenues earned and expenses incurred during the year are also included, regardless of when cash is actually received or paid.

Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reflected in the government-wide financial statements because the funds are custodial in nature, and therefore, these resources are not available to fund City programs.

The Government Finance Officers Association has awarded its Certificate of Achievement for Excellence in Financial Reporting to the City for each of the past 22 years.

Budgetary Process

The budgetary process is guided by City Council’s priorities, with input from residents, neighborhood groups, boards, commissions, and businesses following fall neighborhood meetings and various year-round opportunities for suggestions and comments. Annual budgets are adopted on a basis consistent with generally accepted accounting principles in the United States for all governmental funds, except that encumbrances are shown in the year incurred for budgetary purposes. All annual appropriations lapse at fiscal year-end.

On or before the last day in January of each year, all operational units submit requests for appropriations to the City Manager for budget preparation purposes. The City Council holds public hearings and a final budget must be adopted no later than June 30.

The appropriated budget is prepared by fund, function, and department. The City’s department directors, with approval of the Finance Director and City Manager, may make transfers of appropriations within a department and between departments within a fund. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the fund level. The City Council made several supplemental budgetary appropriations throughout the year. The supplementary budgetary appropriations made in the various governmental funds are not detailed in the required supplementary information.

Under encumbrance accounting, purchase orders, contracts and other commitments for expenditures are recorded to reserve that portion of the applicable appropriation. Encumbrance

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accounting is employed as an extension of formal budgetary accounting. Unexpended appropriations lapse at year-end regardless of encumbrances. Following are the budget comparison schedules for the General Fund and all major special revenue funds.

Fiscal Sustainability Policy

The City’s ongoing review and control over expenditure growth has been, and will continue as, a critical factor in maintaining and improving the City’s overall financial health. To ensure its fiscal health, on May 2, 2011, the City Council adopted resolution number 2011-49 approving the City’s Fiscal Sustainability Policy. This policy established guidelines for the City’s overall fiscal planning and management and is intended to foster and support continued financial strength and stability of the City. The policy is quite comprehensive and covers areas of Budget, Economic Development, Risk Management, Accounting-Auditing-Financial Reporting, Cash Management and Investments, and Debt Management. The policy also required a separate Fund Balance Policy to ensure fiscal health of the City. Part of the Fund Balance Policy adopted by the City Council on June 20, 2011, requires the General Fund to have a ‘Committed Fund Balance’ of 17% of operating expenditures by June 30, 2020. The policy provides a scale for reaching the 17% starting with 8% as of June 2012 and ending with the 17% in 2020. Based on 2014-15 General Fund expenditure and fund balance numbers, the General Fund had then already exceeded the final goal of 17%.

Tax Receipts

Taxes received by the City include Property Taxes, Utility User’s Taxes, Sales Taxes, Transient Occupancy Taxes, and Business License Taxes, and other miscellaneous taxes. The City has a diversified tax base; for Fiscal Year 2014-15, the major tax sources listed below account for nearly 75% of General Fund revenues. See APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2015.”

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The following table sets forth General Fund revenues received by the City, by source:

Table 1 City of Pomona

General Fund Tax Revenues by Source For Fiscal Years 2010-11 through 2014-15

Fiscal Year Ended June 30 Source 2011 2012 2013 2014 2015

Property Taxes $26,148,996 $25,685,624 $26,568,985 $27,691,873 $29,737,992 Sales & Use Tax 12,970,574 13,229,055 15,416,787 16,738,955 18,344,382 Utility Tax 17,718,623 17,374,682 16,926,244 17,326,794 17,465,817 Other Taxes 10,895,371 11,455,829 12,171,814 12,548,336 13,059,521 Fines 1,713,962 1,783,744 1,946,355 2,106,227 2,191,813 Rev from Use of $ and Prop 2,053,948 517,146 297,474 300,829 449,439 Intergovernmental Revenue 1,059,091 246,271 967,941 121,942 352,160 Licenses, Permits & Fees 1,949,388 2,728,348 3,980,050 4,797,037 4,474,941 Other Miscellaneous Revenue 395,907 1,536,593 1,935,647 360,720 693,649 Charges for Services 1,691,527 2,312,630 2,757,951 2,790,545 3,217,606 Other Financing Sources 24,100 71,720 35,370 1,041,849 32,830 Transfers In 2,497,260 114,145 15,705 -- 80 Total $79,118,747 $77,055,787 $83,020,323 $85,825,107 $90,020,230 _______________________ Source: City of Pomona Finance Department.

A brief discussion of Property Taxes, Utility User’s Taxes, Sales Taxes, Transient Occupancy Taxes, and Business License Taxes follows:

Property Taxes. Property Tax receipts of approximately $31,029,000 (before adjustment of approximately -$1.3 million attributable to SB 107 as discussed below under the caption “General Fund Financial Summary”) provided the largest tax revenue source of the City, contributing approximately 39% of General Fund tax revenues and approximately 33.3% of total General Fund revenues during Fiscal Year 2015-16. See “PROPERTY TAXATION” and “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUE AND APPROPRIATIONS” for discussion of pertinent aspects of the City’s property tax revenues. The City’s receipt of property taxes is affected by property tax delinquencies, appeals, refunds and collection of delinquent amounts. The countywide delinquency rate in Fiscal Year 2014-15 was approximately 0.75%.

Utility User’s Tax. Utility user’s tax receipts of approximately $16,985,000 provide a major tax revenue source for the City, contributing approximately 21.4% of General Fund tax revenues and approximately 18.3% of total General Fund revenues during Fiscal Year 2015-16. The Utility User’s Tax is imposed on all users of natural gas, electricity, water, wastewater, cable television and telecommunication services within the City limits. The tax rate is 9% of all utility charges. The Utility User’s Tax does not sunset. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUE AND APPROPRIATIONS.”

All utility companies, including the City’s water and wastewater operations, collect and transmit the Utility User’s Tax monthly to the City’s Finance Department which then deposits the tax revenues into the General Fund.

Sales Tax. Sales tax receipts of approximately $18,117,955 (before adjustment of approximately -$600,000 attributable to third party calculation errors”) provide another major tax revenue source for the

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City, contributing approximately 22.8% of General Fund tax revenues and approximately 19.5% of total General Fund revenues during Fiscal Year 2015-16.

A sales tax is imposed on retail sales or consumption of personal property. The statewide sales tax rate is established by the State Legislature and local overrides may be approved by voters.

As of the date of this Official Statement, the Statewide tax rate is 7.5%. The State collects and administers the tax, makes distributions on taxes collected within the City, and transfers tax receipts to the City’s General Fund each month. In the City the sales tax rate is 9%, of which 7.5% is collected and administered by the State on taxes collected within the City.

Additional sales tax totaling 1.5% are authorized locally under Propositions A and C and Measure R by the Metropolitan Transportation Authority for transportation including bus, rail and some streets and road projects. These funds are collected by the State but administered by the Los Angeles County Metropolitan Transportation Authority. A portion of Propositions A and C and Measure R funds are returned to cities for use on approved projects.

Transient Occupancy Tax. Transient occupancy tax receipts of approximately $1,500,000 represent another significant revenue source for the City in Fiscal Year 2015-16, contributing approximately 1.89% of General Fund tax revenues and approximately 1.61% of total General Fund revenues during Fiscal Year 2015-16. A transient occupancy tax (“TOT”) is imposed on persons staying 30 days or less in a hotel, motel, inn, hostelry, tourist home, rooming house or other lodging place within the City. Exemptions are granted to federal, State of California and City of Pomona officials or employees on official business. Exemptions account for a very minor amount of the total TOT base. Payments are made to the City on a monthly basis and are deposited to the City’s General Fund. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUE AND APPROPRIATIONS.”

Business License Tax. Business license tax receipts of approximately $3,450,500 are an additional significant source of tax revenue for the City contributing approximately 4.34% of General Fund tax revenues and approximately 3.71% of total General Fund revenues during Fiscal Year 2015-16. The business license tax represents a City tax upon gross receipts of certain business activities located in the City. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUE AND APPROPRIATIONS.”

Other Taxes. The City also imposes a real property transfer tax, which have contributed approximately $1,900,000 in Fiscal Year 2015-16, approximately 2.39% of General Fund tax revenues and approximately 2.04% total General Fund revenues. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUE AND APPROPRIATIONS.”

Proposition 1A. City services are funded with money from local taxes, fees and user charges, State aid and other sources. Property tax, sales tax, transient occupancy tax, utility user’s tax, business license tax, parking revenues and development-related fees constitute the majority of City revenue sources. The California Constitution and existing statutes give the State Legislature authority over property taxes, sales taxes, and the vehicle license fee. The State Legislature has authority to change tax rates, the items subject to taxation, and the distribution of tax revenues among local governments, schools, and community college districts. The State has used this authority for many purposes, including increasing funding for local services, reducing State costs, reducing taxation, addressing concerns regarding funding for particular local governments, and restructuring local finance. Proposition 1A (“Proposition 1A”), 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

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existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS - Proposition 1A.”

Assessed Valuations

The City uses the facilities and services of the County of Los Angeles (the “County”) for the assessment and collection of taxes. City taxes are collected at the same time and on the same tax rolls as are the County, City and special district taxes. Assessed valuations are the same for both City and County taxing purposes.

The valuation of property in the City is established by the Los Angeles County Assessor, except for public utility property, which is assessed by the State Board of Equalization. Assessed valuations are reported at 100% of the full value of the property, as defined in Article XIIIA of the California Constitution. Prior to Fiscal Year 1981-82, assessed valuations were reported at 25% of the full value of the property. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS” herein.

The California State Legislature adopted two types of State-reimbursed exemptions beginning in the tax year 1969-70. The first currently exempts 100% of the full value of business inventories from taxation. The second exemption currently provides a credit of $7,000 of the full value of an owner-occupied dwelling for which application has been made to the Los Angeles County Assessor. Revenue estimated to be lost to local taxing agencies due to the above exemptions is reimbursed from State sources. Reimbursement is based upon total taxes due upon such exemption values and therefore is not reduced by any estimated amount of actual delinquencies.

Certain classes of property such as churches, colleges, not-for-profit hospitals and charitable institutions are exempt from property taxation and do not appear on the tax rolls. No reimbursement is made by the State for such exemptions.

The following table shows the assessed valuation of taxable property within the City from Fiscal Year 2005-06 through 2014-15.

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Assessed Value of Taxable Property For Fiscal Years 2006-07 through 2015-16

(In Thousands of Dollars)

Fiscal Year

Ended June 30

Residential Property

Commercial Property

Industrial Property Other

Unitary Values

Unsecured Property

Less: Tax Exempt

Property(1)

Total Taxable Assessed

Value 2006 $4,871,752 $ 753,876 $ 875,823 $548,455 $7,077 $383,627 $359,681 $7,080,929 2007 5,555,560 850,046 927,732 619,284 5,880 376,178 274,419 8,060,261 2008 6,175,439 946,442 1,012,035 690,821 790 372,791 429,662 8,768,656 2009 6,486,480 1,019,941 1,104,778 754,630 790 384,081 447,378 9,303,322 2010 5,759,284 1,039,418 1,197,842 830,321 788 381,397 459,461 8,749,589 2011 5,441,493 1,034,597 1,244,142 885,973 788 352,403 538,120 8,421,276 2012 5,571,482 998,040 1,226,077 905,772 655 360,777 652,301 8,410,502 2013 5,679,812 1,019,770 1,178,211 884,418 655 350,896 678,279 8,435,483 2014 5,932,623 1,059,762 1,233,924 869,787 374 372,621 647,264 8,821,827 2015 6,396,012 1,070,267 1,261,918 942,134 -- 379,640 814,565 9,235,406

__________________________ (1) Exemptions are exclusive of homeowner exemption. The City is reimbursed by the State for taxes lost because of these exemptions. Source: Los Angeles County Assessor data. MuniServices, LLC.

Principal Property Taxpayers

The ten principal property taxpayers in the City and their gross assessed values are listed below. The table of principal property taxpayers appearing in the City’s audited financial statements for the fiscal year ended June 30, 2015 is attached as APPENDIX B hereto misstates the taxpayer’s percentage of total taxable assessed value.

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Largest 2015-16 Local Secured Taxpayers

Property Owner Primary Land Use 2015-16 Assessed

Valuation % of

Total(1)

1. Crest Financing LP Apartments $ 83,535,719 0.88% 2. KTR Pomona LLC Industrial 37,004,717 0.39 3. Monterey Station LLC Apartments 35,515,060 0.38 4. Los Angeles County Fair Association Event Center 31,357,882 0.33 5. LBA Realty Fund III-Co. VII LLC Industrial 30,666,314 0.32 6. CMC Dragon LP Industrial 29,112,221 0.31 7. Pomona II LLC Industrial 28,858,509 0.31 8. Rexford Industrial Realty LP Industrial 27,743,454 0.29 9. Pine Club Apartments LLC Apartments 24,624,203 0.26 10. Weiss Family LP Shopping Center 23,747,641 0.25 11. FDS Manufacturing Co. Industrial 22,836,714 0.24 12. Pomona Valley Hospital Medical Center Medical Buildings 22,401,695(2) 0.24 13. Friedland Realty LLC Industrial 21,318,600 0.23 14. Familian Corp. Industrial 20,554,816 0.22 15. MG Terramonte Apartments LP Apartments 19,739,974 0.21 16. Henkels and McCoy Inc. Industrial 19,302,049 0.20 17. Target Corporation Shopping Center 18,908,996 0.20 18. Bonnie L. Pryor Apartments 17,643,469 0.19 19. DCT PSA Pomona LLC Industrial 17,403,005 0.18 20. Wal Mart Real Estate Business Trust Commercial Store 17,330,114 0.18

$549,605,152 5.81% __________________________ (1) 2015-16 Local Secured Assessed Valuation: $9,455,760,390 (2) Net taxable value. Source: Los Angeles County Assessor data, MuniServices, LLC.

Ad Valorem Property Taxes

Taxes are levied for each fiscal year on taxable real and personal property which is situated in the County as of the preceding January 1. However, upon a change in ownership of real property or completion of new construction, State law permits an accelerated recognition and taxation of increases in real property assessed valuation (known as a “floating lien date”). 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 and County assessed property secured by a lien which is sufficient, in the opinion of the assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.” See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS” herein.

The County levies a one percent property tax on behalf of all taxing agencies in the County. The taxes collected are allocated on the basis of a formula established by State law enacted in 1979. Under this formula, the County and all other taxing entities receive a base year allocation plus an allocation on the basis of “situs” growth in assessed value (new construction, change of ownership, inflation) prorated among the jurisdictions which serve the tax rate areas within which the growth occurs. Tax rate areas are specifically defined geographic areas which were developed to permit the levying of taxes for less than

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county-wide or less than city-wide special and school districts. In addition, the County levies and collects additional approved property taxes and assessments on behalf of any taxing agency within the County.

Property taxes on the secured roll are due in two installments, on November 1 and February 1. If unpaid, such taxes become delinquent after December 10 and April 10, respectively, and a ten percent penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is declared tax-defaulted on or about June 30. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus costs and redemption penalty of one and one-half percent per month to the time of redemption. If taxes are unpaid for a period of five years or more, the tax-defaulted property is subject to sale by the Treasurer and Tax Collector of the County of Los Angeles.

Property taxes on the unsecured roll are assessed as of the January 1 lien date and become delinquent, if unpaid, on August 31. A ten percent penalty attaches to delinquent taxes on property on the unsecured roll and an additional penalty of one and one-half percent per month begins to accrue on November 1. The taxing authority has four ways of collecting delinquent unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for recordation 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 taxpayer. City taxes are collected on the same bill as County taxes.

See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Article XIIIA of the California Constitution” herein for information on the effect, if any, of current litigation on assessed values in the City or the availability of revenue sources which may be provided by the State to replace lost property tax revenues.

The following tabulation shows the secured taxes levied by the City during the past ten fiscal years, together with the total amounts and percentages of taxes collected as of June 30 of each fiscal year.

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Property Tax Rates, Secured Levies and Collections and Delinquencies For Fiscal Years 2005-06 through 2014-15

Fiscal Year

Total Secured Tax Levy

Current Secured Tax Collections

Percent of Levy

Collected

Delinquent Secured Tax Collections(1)

Total Tax Collections

Total Secured Tax Collections

as Percent of Total Tax

Levy

Outstanding Delinquent

Taxes(2)

Outstanding Delinquent

Taxes as Percent of

Total Secured Tax Levy

2005-06 $10,222,688 $ 9,994,413 97.8% $1,369,939 $11,364,352 111.2% $207,622.27 2.04% 2006-07 11,542,995 11,208,880 97.1 1,627,684 12,836,564 111.2 300,842.57 2.38 2007-08 12,434,540 12,278,199 98.7 1,355,970 13,634,169 109.6 527,423.18 4.12 2008-09 13,488,955 12,976,085 96.2 977,302 13,953,387 103.4 515,404.04 3.82 2009-10 12,344,605 12,099,841 98.0 608,391 12,708,232 102.9 248,893.23 2.02 2010-11 11,962,439 11,830,918 98.9 697,738 12,528,656 104.7 216,447.07 1.81 2011-12 12,329,907 12,113,998 98.2 377,392 12,491,390 101.3 157,342.72 1.28 2012-13 12,528,234 12,434,130 99.2 349,337 12,783,467 102.0 83,829.37 0.67 2013-14 13,596,705 13,442,112 98.9 637,832 14,079,944 103.6 102,468.16 0.75 2014-15 14,612,641 14,510,121 99.3 613,771 15,123,892 103.5 110,377.54 0.75 __________________________ (1) Exclusive of penalties and collections related to tax overrides for debt service on general obligation bonds. (2) Reflects City of Pomona proportionate share of county-wide outstanding delinquencies. The Los Angeles County property tax system does not provide City of Pomona specific statistics

related to delinquencies. Should the County change their system to include specific city data, the table will be updated to adjust delinquent taxes by year. Sources: Los Angeles County Auditor-Controller; City of Pomona Finance Department.

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General Fund Financial Summary

The information contained in the following tables of assets and liabilities, and General Fund revenues, expenditures and changes in fund balance, has been derived from the City’s audited financial statements for Fiscal Years 2012-13 through 2014-15.

Table 7 below shows General Fund budget information, and actual results, for Fiscal Years 2013-14, 2014-15 and 2015-16 and the proposed budget for Fiscal Year 2016-17. The City currently expects no materially adverse changes in year end 2015-16 General Fund budget results as compared to the summary information shown below.

The City obtains current assessed values and tax rate calculation yielding property tax revenues from Los Angeles County Assessor data processed by an independent outside vendor (the “Outside Vendor”). After its approval of the 2016-17 budget, the City was advised by the Outside Vendor that certain of its calculations for the 2016-17 tax roll were flawed, which information resulted in an overstatement of the City’s 2016-17 budgeted property tax revenues of approximately $1.5 million. With respect to its 2015-16 budget, the City identified revenue adjustments as a result of similar calculation errors, which resulted in an overstatement of the City’s 2015-16 budgeted property tax revenues of approximately $1.3 million. See Table 7 – “General Fund Budget Summary.” Upon review, the City is informed that as a result of the dissolution of redevelopment agencies in the State, and the passage of Senate Bill No. 107 (“SB 107”) which, among other things, eliminated certain plan limits on the receipt of tax increment revenues applicable to redevelopment project areas, a portion of property tax revenue previously distributed to the City is now being treated as tax increment revenue for deposit into a redevelopment trust fund, known as the Redevelopment Property Tax Trust Fund (“RPTTF”). This fund is used to pay obligations listed on the Successor Agency’s Recognized Obligation Payment Schedule (ROPS). Due to existing pass through agreements with the County, the additional property tax revenue is being absorbed by the County at the expense of revenues previously assumed for deposit to the City’s General Fund.

For Fiscal Year 2015-16, the City currently expects that the General Fund budget will be balanced at year’s end after all final adjustments are made. For Fiscal Year 2016-17, the City expects to adjust its budget mid-year (as it usually does) for this and all other changes, and that the General Fund budget will be balanced (in the worst case) at year’s end, with results expected slightly positive. The refunding of the Refunded Bonds, for example, is expected to generate savings in Fiscal Year 2016-17 of approximately $1.5 million ($0.5 million was already assumed in the Fiscal Year 2016-17 budget), offsetting approximately $1 million of the property tax loss from SB 107.

The 2016-17 budget information presented herein does not update the approved budget to correct such error, however, the City expects further actions on the budget to make any necessary adjustments to revenues as known, and to adjust expenditures to maintain the general fund balance.

The City’s Comprehensive Annual Financial Report, including the City’s audited financial statements for the fiscal year ended June 30, 2015 is attached as APPENDIX B hereto. Audited financial statements for prior years are available upon request from the City’s Finance Department.

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General Fund Balance Sheet For Fiscal Years 2012-13 through 2014-15

2012-13 2013-14 2014-15 Assets:

Cash and investments $ 3,779,783 $ 7,614,495 $12,482,973 Receivables (net):

Accounts 2,327,828 3,674,323 3,446,859 Notes and loans -- -- -- Interest 3,519 8,534 14,649

Prepaid costs 15,850 15,391 16,089 Due from other governments 5,697,244 3,598,635 4,710,463 Due from other funds 1,611,737 1,636,525 1,736,087 Advances to other funds -- -- -- Advances to Successor Agency -- -- -- Inventories 94,099 97,045 86,191 Land held for resale -- -- -- Other investments -- -- Restricted assets: -- -- --

Cash -- -- 41,258 Total Assets $13,530,060 $16,644,948 $22,534,569

Liabilities, Deferred Inflow of Resources and Fund Balances: Liabilities:

Accounts payable $ 2,748,159 $ 1,549,720 $ 1,323,928 Payroll payable 733,142 963,186 1,254,742 Accrued liabilities 11,574 14,481 12,915 Deferred revenues 2,306,032 -- Unearned revenues -- -- -- Deposits payable -- -- -- Due to other governments -- -- -- Due to other funds -- -- -- Interest payable -- -- -- Advances from other funds 304,435 304,435 304,435

Total Liabilities $ 6,103,342 $ 2,831,822 $2,896,020 Deferred Inflows of Resources:

Unavailable revenues 1,439,881 2,350,446 Total Deferred Inflows of Resources 1,439,881 2,350,446

Fund Balances: Nonspendable

Inventories 94,099 97,045 86,191 Prepaid costs 15,850 15,391 16,089 Land held for resale -- -- -- Notes and loans -- -- -- Advances to other funds -- -- Advances to Successor Agency -- -- --

RestrictedUrban development -- -- -- Public safety -- -- -- Neighborhood services -- -- -- Capital projects -- -- -- Assessment district improvement -- -- -- Debt service -- -- --

Committed Fiscal sustainability 7,316,769 12,260,809 14,467,914

Unassigned -- -- 2,717,909 Total Fund Balances $ 7,426,718 $12,373,245 17,288,103 Total Liabilities, Deferred Inflow of Resources and Fund Balances $13,530,060 $16,644,948 $22,534,569

_________________________ This statement is a summary statement only. The complete Comprehensive Annual Financial Report of the City, including the Notes to the Financial Statements therein, is an integral part of this statement. For Fiscal Year 2014-15 results, see APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2015.” Source: City of Pomona Comprehensive Annual Financial Report for Fiscal Years 2012-13 through 2014-15.

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Table 6 City of Pomona General Fund

Summary of Revenues and Expenditures For Fiscal Years 2012-13 through 2014-15

2012-13 2013-14 2014-15 Revenues:

Taxes $71,083,830 $74,341,949 $78,607,713 Special assessments -- -- -- Licenses and permits 3,980,051 4,797,126 4,566,429 Intergovernmental 967,942 121,942 352,160 Charges for services 2,757,955 2,790,058 3,246,764 Interest and rentals 297,471 300,833 447,838 Fine and forfeitures 1,946,354 2,106,227 2,051,647 Contributions -- -- 51,581 Miscellaneous 1,925,999 360,719 663,195

Total Revenues $82,959,602 $84,818,854 $89,987,327

Expenditures: Current:

General government 3,515,785 3,102,523 3,978,320 Public safety 58,592,709 61,402,778 65,116,912 Urban development 7,292,270 8,231,564 7,809,025 Neighborhood services 3,534,194 3,271,204 3,160,848

Capital outlay 24,141 75,473 105,557 Debt service:

Principal retirement 212,255 211,809 292,945 Interest and fiscal charges 8,655 24,960 20,136

Total Expenditures $73,180,009 $76,320,311 $80,483,743

Excess (Deficiency) of Revenues Over (Under) Expenditures 9,779,593 8,498,543 9,503,584

Other Financing Sources (Uses): Transfers in 15,704 35,413 80 Transfers out (4,551,968) (4,629,278) (4,621,636) Proceeds from sale of capital assets 35,370 1,041,849 32,830

Total Other Financing Sources (Uses) (4,500,894) (3,552,016) (4,588,726)

Net Change in Fund Balances $ 5,278,699 $ 4,946,527 $ 4,914,858

Fund Balances:Beginning of year, as originally reported 2,148,019 7,426,718 12,373,245

Restatements -- -- --

Beginning of year, as restated -- -- 12,373,245 Net Change in Fund Balances -- -- 4,914,858

End of Year $ 7,426,718 $12,373,245 $17,288,103 _________________________ This statement is a summary statement only. The complete Comprehensive Annual Financial Report of the City, including the Notes to the Financial Statements therein, is an integral part of this statement. For Fiscal Year 2014-15 results, see APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2015.” Source: City of Pomona Comprehensive Annual Financial Reports for Fiscal Years 2012-13 through 2014-15.

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General Fund Budget Summary For Fiscal Years 2013-14 through 2016-17(1)

Fiscal Year 2013-14

Final Budget

Fiscal Year 2013-14 Audited Amounts

Fiscal Year 2014-15

Final Budget

Fiscal Year 2014-15 Audited Amounts

Fiscal Year 2015-16

Final Budget

Fiscal Year 2015-16

Estimated Actuals

Fiscal Year 2016-17 Initial Budget

Budgetary Fund Balance, July 1 $ 7,426,718 $ 7,426,718 $ 12,373,245 $ 12,373,245 $ 17,229,836 $ 17,229,836 $ 17,475,369 Resources (Inflows):

Taxes 72,580,500 74,341,949 77,093,616 78,607,713 81,519,226 79,533,790(2) 81,115,142(2)

Licenses and permits 3,836,790 4,797,126 5,385,160 4,566,429 6,829,151 6,718,287 7,065,299 Intergovernmental 164,000 121,942 120,000 352,160 202,900 202,900 212,500 Charges for Services 2,583,365 2,790,058 3,281,101 3,246,764 4,142,732 3,472,527 2,748,095 Interest and rentals 299,008 300,833 286,408 447,838 366,108 344,363 340,363 Fine and forfeitures 1,790,850 2,106,227 1,660,700 2,051,647 1,812,000 1,821,000 1,760,500 Contributions -- -- 50,000 51,581 -- -- -- Miscellaneous 331,300 360,719 733,400 663,195 662,388 906,954 270,000 Transfers in -- 35,413 -- 80 -- -- -- Proceeds from sale of capital assets -- 1,041,849 -- 32,830 -- -- --

Amounts Available for Appropriations $89,012,531 $93,322,834 $100,983,630 $102,393,482 $112,764,341 $110,229,657 $110,987,268

Charges to Appropriations (Outflows): General government $ 3,074,898 $ 3,102,523 $ 4,441,648 3,978,320 4,787,027 4,937,425 3,415,095 Public safety 61,665,043 61,402,778 66,703,040 65,116,912 69,993,526 69,100,039 72,465,805 Urban development 8,285,528 8,231,564 8,922,490 7,809,025 9,915,530 9,470,758 9,688,664 Neighborhood services 3,609,186 3,271,204 3,483,882 3,160,848 3,725,072 3,453,265 3,796,198 Capital outlay 168,364 75,473 142,317 105,557 717,050 636,640 872,000 Debt service:

Principal retirement 211,809 211,809 217,944 292,945 300,611 230,104 349,225 Interest and fiscal charges 23,605 24,960 18,824 20,136 -- -- 17,071

Transfers out 4,629,278 4,629,278 4,621,636 4,621,636 5,919,177 4,926,057 4,751,358 Total Charges to Appropriations $81,667,711 $80,949,589 $ 88,551,781 $ 85,105,379 $ 95,357,993 $ 92,754,288 $ 95,355,416

Budgetary Fund Balance, June 30 $ 7,344,820 $12,373,245 $ 12,431,849 $ 17,288,103 $ 17,406,348 $ 17,475,369 $ 15,631,852 _________________________ (1) Fiscal Years 2013-14 and 2014-15 are taken from the City’s audited financial statements. Fiscal Years 2015-16 and 2016-17 reflect the City’s General Fund analysis, prepared on a cash basis. (2) Fiscal Year 2015-16 and 2016-17 property tax revenues are overstated as a result of property tax attributable to SB 107 as discussed above. Fiscal Year 2015-16 sales tax revenues are overstated

by $600,000 attributable to third party calculation errors. This statement is a summary statement only. The complete Comprehensive Annual Financial Report of the City, including the Notes to the Financial Statements therein, is an integral part of this statement. For Fiscal Year 2014-15 results, see APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015.” Sources: City of Pomona Comprehensive Annual Financial Reports for Fiscal Years 2013-14 and 2014-15 and City of Pomona Finance Department.

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State Budget Acts

The following information concerning the State of California’s budgets has been obtained from publicly available information which the City believes to be reliable; however, the City 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 State budget may be found at the Department of Finance website, www.dof.ca.gov, under the heading “California Budget.” An impartial analysis of the State budget is posted by the Office of the Legislative Analyst (the “LAO”) 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 City or the Underwriter, and the City and the Underwriter 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.

The State’s fiscal year begins on July 1 and ends on June 30. The annual budget is proposed by the Governor by January 10 of each year for the next fiscal year (the “Governor’s Budget”). Under State law, the annual proposed Governor’s Budget cannot provide for projected expenditures in excess of projected revenues and balances available from prior fiscal years. Following the submission of the Governor’s Budget, the Legislature takes up the proposal.

Under the State Constitution, money may be drawn from the Treasury only through an appropriation made by law. The primary source of the annual expenditure authorizations is the Budget Act as approved by the Legislature and signed by the Governor. The Budget Act must be approved by a two-thirds majority vote of each house of the Legislature. The Governor may reduce or eliminate specific line items in the Budget Act or any other appropriations bill without vetoing the entire bill. Such individual line-item vetoes are subject to override by a two-thirds majority vote of each house of the Legislature.

Appropriations also may be included in legislation other than the Budget Act. Continuing appropriations, available without regard to fiscal year, may also be provided by statute or the State Constitution. Funds necessary to meet an appropriation need not be in the State treasury at the time such appropriation is enacted; revenues may be appropriated in anticipation of their receipt.

Proposition 30. The passage of the Governor’s November Tax Initiative (“Proposition 30”) placed on the November, 2012 ballot results in an increase in the State sales tax by a quarter-cent for four years and, for seven years, raising taxes on individuals after their first $250,000 in income and on couples after their first $500,000 in earnings. These increased tax rates will affect approximately one percent of California personal income tax filers and in effect starting in the 2012 tax year, ending at the conclusion of the 2018 tax year. The LAO has estimated that, as a result of Proposition 30, additional state tax revenues of about $6 billion annually from 2012–13 through 2016–17 will be received by the State with lesser amounts of additional revenue available in fiscal years 2017–18 and 2018–19. Proposition 30 also places into the State Constitution certain requirements related to the transfer of certain State program responsibilities to local governments, mostly counties, including incarcerating certain adult offenders, supervising parolees, and providing substance abuse treatment services.

California Public Employees’ Pension Reform Act. On September 12, 2012, Governor Brown signed Assembly Bill 340, creating the Public Employees’ Pension Reform Act (“PEPRA”). Among other things, PEPRA creates a new benefit tier for new employees/members entering public agency employment and public retirement system membership for the first time on or after January 1, 2013. The

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new tier has a single general member benefit formula and three safety member benefit formulas that must be implemented by all public agency employers unless the formula in existence on December 31, 2012 has both a lower normal cost and a lower benefit factor at normal retirement age. PEPRA requires that all new employees/members, hired on or after January 1, 2013, pay at least 50% of the normal cost contribution. The normal cost contribution is the contribution set by the retirement system’s actuary to cover the cost of a current year of service. The City believes that the provisions of PEPRA will lessen its pension benefit liabilities in the future as compared to the prior trend.

Fiscal Year 2016-17 State Budget. Governor Brown approved the final 2016-17 State Budget on June 27, 2016 (the “2016-17 Budget”) which includes $122.5 billion in general fund spending and $44.6 billion in special fund spending, along with $3.6 billion in proposed bond financings. The 2016-17 Budget directs an additional $3 billion into the State’s Rainy Day Fund, increasing the reserve to $6.7 billion by June 2017, and also includes a $171 billion spending plan to increase funding for State-subsidized child care, removing limits on welfare payments for families who have additional children while receiving benefits. The 2016-17 Budget supports climate change efforts with a $3.1 billion Cap and Trade expenditure plan that will reduce greenhouse gas emissions through programs that support clean transportation, reduce short-lived climate pollutants, protect natural ecosystems, and benefit disadvantaged communities. As a result of both increased General Fund revenues and local property taxes, the 2016-17 Budget reflects Proposition 98 Guarantee increases in Fiscal Years 2014-15 and 2015-16 relative to the 2015 Budget Act levels creating an increase in the Proposition 98 Guarantee for Fiscal Year 2016-17 to $71.6 billion which, combined with more than $257 million in settle-up payments for prior years, results in increased K-14 school spending of $5.4 billion.

The 2016-17 Budget notes that between Fiscal Years 2011-12 and 2014-15, $3.6 billion in general-purpose property tax revenue has been returned to cities, counties, and special districts. The 2016-17 Budget anticipates that in Fiscal Years 2015-16 and 2016-17, cities will receive an additional $643 million in general-purpose revenues, with counties receiving $684 million and special districts $203 million. The 2016-17 Budget also anticipates Proposition 98 General Fund savings resulting from the dissolution of Redevelopment Agencies will be $1.1 billion in Fiscal Year 2015-16 and $1 billion for Fiscal Year 2016-17 and that Proposition 98 General Fund savings are expected to be $1 billion.

Other significant adjustments included in the 2016-17 Budget affecting California cities include:

• Local Streets and Roads - an increase of $342 million in shared revenues to be allocated to cities and counties for local road maintenance according to existing statutory formulas.

• Traffic Congestion - an additional $148 million from loan repayments to reimburse cities and counties for funds already spent on traffic congestion relief program projects.

• City Law Enforcement Grants - $20 million General Fund to increase positive outcomes between city police and the homeless community, persons with mental health needs, as well as high-risk youth populations.

• Transit and Intercity Rail - an increase of $409 million Cap and Trade for transit capital investments that provide greenhouse gas reductions.

• Siting Incentive Grants - $25 million General Fund for incentive payments to cities and/or counties that approve, between January 1, 2016 and June 30, 2017, new long-term permits for hard-to-site facilities that improve public safety and support the criminal justice system through the provision of services, such as substance use disorder treatment, mental health, and reentry programming.

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The City cannot predict the impact that the 2016-17 budget, or subsequent budgets, will have on its finances and operations. The State Budget will be affected by State and national economic conditions and other factors over which the City will have no control.

Future State Budgets. Changes in the revenues received by the State can affect the amount of funding, if any, to be received from the State by the City and other cities and counties in the State. The City cannot predict the extent of the budgetary problems the State will encounter in this or in any future Fiscal Year, and, it is not clear what measures would be taken by the State to balance its budget, as required by law. In addition, the City cannot predict the final outcome of current or 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 are being and will be affected by national and State economic conditions and other factors, including the current economic conditions, over which the City has no control.

Dissolution of Redevelopment

On December 29, 2011, the California Supreme Court issued its decision in the case of California Redevelopment Association et al v. Matosantos et al. The net effect of the decision was to require all California redevelopment agencies, including the Redevelopment Agency of the City of Pomona (the “Former RDA”), to be dissolved as of February 1, 2012. On January 9, 2012, the Pomona City Council elected to become the Successor Agency to the Former RDA in order to satisfy obligations of the former agency, as well as to retain housing assets and functions of the former agency.

On June 27, 2012, as part of the Fiscal Year 2012-13 State budget package, the State Legislature passed and the Governor signed AB 1484, a measure meant to clarify existing legislation related to the dissolution of redevelopment. The Successor Agency submitted to the California Department of Finance (DOF) an inventory of all housing assets and an accounting of all available cash and cash-equivalent housing assets (the Housing Due Diligence Review) and non-housing assets (the Non-Housing Due Diligence Review).

On May 9, 2013, the DOF issued a Finding of Completion to the Successor Agency. With the Finding of Completion, the City had six months to prepare a Long Range Property Management Plan (“LRPMP”), which details disposition of the various Successor Agency properties; at this time, the City is awaiting final confirmation that no previous redevelopment properties are subject to disposition. On October 7, 2014 the DOF approved the LRPMP, approving the Successor Agency’s use or disposition of all the properties listed on the LRPMP. Accordingly, all real property and interests in real property are required to be transferred to the Community Redevelopment Property Trust Fund of the Successor Agency, unless that property is subject to the requirements of an existing enforceable obligation. Pursuant to California Health and Safety Code section 34191.3 the approved LRPMP shall govern, and supersede all other provisions relating to, the disposition and use of all the real property assets of the former agency.

Investment of City Funds

The City may invest moneys not immediately required for operations in a manner consistent with the City’s Investment Policy (the “Investment Policy”) and State law.

City Investment Policy

The City may invest public funds until such time as the funds are needed to pay the obligations of the City. The City maintains an Investment Policy adopted in 2016, which sets forth guidelines of the City

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Treasurer’s investment of such funds. The Treasurer is a trustee and therefore a fiduciary subject to the prudent investor standards, and the primary objective shall be to safeguard the principal of the funds under its control. The secondary objective shall be to meet liquidity needs, and the third objective shall be to achieve a market rate of return.

The City matches its investments with anticipated cash flow requirements. Pursuant to the California Government Code, maximum maturities shall not exceed five (5) years, without specific approval of the City Council. The City’s current investment policy is attached hereto as APPENDIX G – “FORM OF CITY INVESTMENT POLICY.”

The Treasurer renders a quarterly report to the City Council, providing the type of investment, financial institution from which the investment was purchased, the date of maturity, the date upon which the investment becomes subject to redemption provisions, amount (to include both par and book value) of the investment, and the current market value of all investments. Additionally, the report includes the rate of interest, accrued interest earned and other data so required by the City Council. The report also includes a statement denoting the City’s ability to meet its expenditure requirements for the following six month period, or an explanation as to why sufficient moneys will not be available. The City only transacts business with banks, savings and loan institutions, and registered investment securities dealers.

Collateralization is required for investments in certificates of deposit (in excess of the FDIC insured amount) and all repurchase agreements, with a collateral level of at least 102% of market value of principal and accrued interest of eligible securities for certificates of deposit and repurchase agreements.

The City may not invest any funds in inverse floaters, range notes, or interest only strips that are derived from a pool of mortgages. The City may hold previously permitted but currently prohibited investments until their maturity dates.

From time to time, the City Council may authorize the issuance of debt in accordance with State and Federal laws. Given the special requirements of such debt-repayment schedules and arbitrage/rebate requirements, the Treasurer may choose to place the investment of these funds with the City’s fiscal agent or trustee. In such instances, the policy, objectives and investment restrictions shall be established by the Council by separate action and investment of such funds shall be governed by the indenture of trust or other bond documents.

The City’s investment portfolio accounted for investments of approximately $217 million (of which approximately $92 million were held by various fiscal agents in connection with outstanding bonded indebtedness). With respect to funds not held by various fiscal agents, the following table presents a breakdown of the City’s investment portfolio by type of security as of June 30, 2016.

Investments Percentage of

Total Market Value LAIF 66.37% FHLB 2.40 FHLMC 4.79

Source: City Finance Department

The Underwriter has not made an independent investigation of the City’s investments and has made no assessment of the current Investment Policy.

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Self-Insurance

The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees and others; and natural disasters. The City’s Self-Insurance Internal Service Fund is part of the City’s self-insurance program for general liability, workers compensation, and unemployment insurance. The City is a member of the California State Association of Counties Excess Insurance Authority (CSAC-EIA). Through CSAC-EIA, the City has a program limit of $25 million dollars with a self-insured retention of $1 million for its excess liability program and its worker’s compensation program. Additionally, the City purchases catastrophic excess liability coverage that provides an additional $25 million in coverage.

CSAC-EIA is a governmental joint powers authority created by certain California counties and cities to provide a pooled approach to the members’ liability and excess workers’ compensation coverage as allowed under the California Government Code. The authority manages various types of pooled coverage programs for participating members.

As of June 30, 2015, estimated claims payable amounted to $12,101,548.

Retirement System

The City contributes to the State of California Public Employees’ Retirement System (CalPERS), an agent multiple-employer public employee retirement system that acts as a common investment and administrative agent for cities in the State. CalPERS provides retirement and disability benefits, annual cost-of living adjustments, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of CalPERS annual financial report may be obtained from their executive office: 400 P Street, Sacramento, CA, 95814 or on their website: www.calpers.ca.gov. The information on such website is not incorporated herein by such reference or otherwise. See Note 5 in APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015.”

The City makes two types of contributions for covered employees. The first contribution represents the amount the City is required to make (the employer rate). The second represents an amount, which is made by the employee, and not reimbursed to the employee by the City (the member rate). The member rate is set by contract and normally remains unchanged. The employer rate is an actuarially established rate, is set by CalPERS, and changes from year to year.

A menu of benefit provisions as well as other requirements are established by State statutes within the Public Employees’ Retirement Law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance.

All full-time City employees and part-time City employees who have worked over 1,000 hours during a fiscal year are eligible to participate in CalPERS, with benefits vesting after 5 years of service. Employees are designated as safety (police officers and others designated as safety by law) or miscellaneous (all others). The City’s payroll for employees covered by CalPERS for the year ended June 30, 2015 was $27,707,165. Total payroll for the City for the year ended June 30, 2016 is projected to be $37,760,278. For the year ended June 30, 2015, the employer contributions recognized as a reduction to the net pension liability for all the Miscellaneous Plan and Safety Plan were $2,691,762 and $6,210,220 respectively.

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Police officers currently reimburse the City 9.0% of their annual eligible PERS salary. Miscellaneous employees currently pay for the cost of an enhanced benefit at the rate amount of 7.0% of covered PERS salary. Police employees currently reimburse the City for the value of the employer paid member contributions (9% for safety). The total amount paid by employees towards retirement was $3,153,786, or 21% of the total cost of retirement contributions, in Fiscal Year 2015-16. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration. The contribution requirements of the plan members are established by State statute and the employer contribution rate is established and may be amended by CalPERS.

The defined pension benefit is payable monthly for life, in an amount that varies. See Note 11: “Defined Benefit Pension Plan Obligations” in APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015.” The Plan also provides death and disability benefits.

The City and miscellaneous employees agreed to create a second tier benefit for those hired on or after August 14, 2011, and City and safety employees agreed to create a second tier benefit for those hired on or after November 21, 2010, in each case through those hired before January 1, 2013, which are subject to PEPRA (as described below).

The Governor, in September 2012, signed AB 340 and AB 197, two bills which enacted the California Public Employees’ Pension Reform Act of 2013 (PEPRA). AB 340 made several changes to the pension benefits that may be offered to employees hired on or after January 1, 2013, including setting a new maximum benefit, a lower-cost pension formula for safety and non-safety employees with requirements to work longer in order to reach full retirement age and a cap on the amount used to calculate a pension. Among other things, AB 340 also enacted pension spiking reform for new and existing employees, required three-year averaging of final compensation for new employees, and provided employers with new authority to negotiate cost-sharing agreements with current employees. AB 340 also contained limitations on the use of retired annuitants, requiring that an annuitant have a six-month break in service prior to returning to work.

The legislation created mandatory benefits tiers for new employees who have not worked for another CalPERS agency hired beginning January 1, 2013 ranging from 2.0% at age 50 to a maximum of 2.7% at age 57 for police safety and fire safety employees and 1.1% at age 50 to a maximum of 2.4% at age 62 for miscellaneous employees.

CalPERS also provides death and disability benefits. These benefit provisions and all other requirements are established by state statute and City ordinance.

For Fiscal Years 2013-14 and 2014-15, employer contribution rates are as follows:

Miscellaneous Police Annual Rate Components 2013-14 2014-15 2013-14 2014-15

A. Normal cost rate 8.201% 7.994% 21.571% 21.503% B. Unfunded liability $46,890,137 $61,102,094 $66,414,167 $83,870,169 C. Total Required $ 3,850,865 $ 4,294,696 $ 5,545,938 $ 6,218,245

Pension Funding Information. The staff actuaries at CalPERS prepare annually an actuarial valuation which covers a Fiscal Year ending approximately 15 months before the actuarial valuation is delivered (thus, the actuarial valuation delivered to the City in October 2015 (the “2015 CalPERS

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Report”) covered CalPERS’ Fiscal Year ended June 30, 2014). The actuarial valuations express the City’s required contribution rates in percentages of covered payroll, which percentages the City must contribute in the Fiscal Year immediately following the Fiscal Year in which the actuarial valuation is prepared (thus, the City’s contribution rate derived from the actuarial valuation as of June 30, 2014, that was delivered in October 2015, will affect the City’s Fiscal Year 2016-17 required contribution rate). CalPERS rules require the City to implement the actuary’s recommended rates.

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

The actuarial funding method used is the Entry Age Normal Cost Method. Under this method, projected benefits are determined for all members and the associated liabilities are spread in a manner that produces level annual cost as a percent of pay in each year from the age of hire (entry age) to the assumed retirement age. The cost allocated to the current fiscal year is called the normal cost.

The actuarial accrued liability for active members is then calculated as the portion of the total cost of the plan allocated to prior years. The actuarial accrued liability for members currently receiving benefits, for active members beyond the assumed retirement age, and for members entitled to deferred benefits, is equal to the present value of the benefits expected to be paid. No normal costs are applicable for these participants.

The excess of the total actuarial accrued liability over the actuarial value of plan assets is called the unfunded actuarial accrued liability. Funding requirements are determined by adding the normal cost and an amortization of the unfunded liability as a level percentage of assumed future payrolls. Commencing with the June 30, 2013 valuation all new gains or losses are tracked and amortized over a fixed 30-year period with a 5 year ramp up at the beginning and a 5 year ramp down at the end of the amortization period. All changes in liability due to plan amendments (other than golden handshakes), changes in actuarial assumptions, or changes in actuarial methodology are amortized separately over a 20-year period with a 5 year ramp up at the beginning and a 5 year ramp down at the end of the amortization period. Changes in unfunded accrued liability due to a Golden Handshake will be amortized over a period of 5 years. If a plan’s accrued liability exceeds the market value of assets, the annual contribution with respect to the total unfunded liability may not be less than the amount produced by a 30-year amortization of the unfunded liability. An exception has been made for the change in asset value from actuarial to market value in this valuation. The CalPERS Board approved a 30-year amortization with a 5-year ramp-up/ramp-down for only this change in method.

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Additional contributions will be required for any plan or pool if their cash flows hamper adequate funding progress by preventing the expected funded status on a market value of assets basis to either:

• Increase by at least 15% by June 30, 2043; or

• Reach a level of 75% funded by June 30, 2043

The necessary additional contribution will be obtained by changing the amortization period of the gains and losses, except for those occurring in the fiscal years 2008-09, 2009-10, and 2010-11 to a period, which will result in the satisfaction of the above criteria. CalPERS actuaries will reassess the criteria above when performing each future valuation to determine whether or not additional contributions are necessary.

An exception to the funding rules above is used whenever the application of such rules results in inconsistencies. In these cases, a “fresh start” approach is used. This simply means that the current unfunded actuarial liability is projected and amortized over a set number of years. As mentioned above, if the annual contribution on the total unfunded liability was less than the amount produced by a 30-year amortization of the unfunded liability, the plan actuary would implement a 30-year fresh start. However, in the case of a 30-year fresh start, just the unfunded liability not already in the (gain)/loss base (which is already amortized over 30 years), will go into the new fresh start base. In addition, a fresh start is needed in the following situations:

1) When a positive payment would be required on a negative unfunded actuarial liability (or conversely a negative payment on a positive unfunded actuarial liability); or

2) When there are excess assets, rather than an unfunded liability. In this situation, a 30-year fresh start is used, unless a longer fresh start is needed to avoid a negative total rate.

It should be noted that the actuary may choose to use a fresh start under other circumstances. In all cases, the fresh start period is set by the actuary at what is deemed appropriate; however, the period will not be less than five years, nor greater than 30 years.

In each actuarial valuation, the CalPERS actuary estimates the actuarial value of the assets (the “Actuarial Value”) of the CalPERS Plans at the end of the Fiscal Year (which assumes, among other things, that the rate of return during that Fiscal Year equaled the assumed rate of return of 7.75%). The CalPERS actuary uses a smoothing technique to determine Actuarial Value that is calculated based on certain policies. As described below, these policies changed significantly in recent years.

On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change the CalPERS amortization and rate smoothing policies. Beginning with the June 30, 2013 valuations that set the 2015-16 rates, CalPERS will employ an amortization and smoothing policy that will pay for all gains and losses over a fixed 30-year period with the increases or decreases in the rate spread directly over a 5-year period.

On January 1, 2013, PEPRA took effect. The impact of the PEPRA changes are included in the rates and the benefit provision listings of the June 30, 2013 valuation for the 2015-16 rates. On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change the CalPERS amortization and rate smoothing policies. Beginning with the June 30, 2013 valuations that set the 2015-16 rates, CalPERS will no longer use an actuarial value of assets and will employ an amortization and smoothing policy that will pay for all gains and losses over a fixed 30-year period with the increases or decreases in the rate spread directly over a 5-year period.

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In 2014 CalPERS completed a 2-year asset liability management study incorporating actuarial assumptions and strategic asset allocation. On February 19, 2014 the CalPERS Board of Administration adopted relatively modest changes to the current asset allocation that is expected to reduce the expected volatility of returns. The adopted asset allocation is expected to have a long- term blended return that continues to support a discount rate assumption of 7.5%. The newly adopted asset allocation has a lower expected investment volatility which will result in better risk characteristics than an equivalent margin for adverse deviation. The previous asset allocation had an expected standard deviation of 12.45% while the current asset allocation has a lower expected standard deviation of 11.76%.

The investment return for Fiscal Year 2014-15 was announced July 13, 2015 at 2.4% before administrative expenses. For Fiscal Year 2014-15 there was be no adjustment for real estate and private equities. For purposes of projecting future employer rates, CalPERS is assuming a 2.4% investment return for Fiscal Year 2014-15.

The investment return realized during a fiscal year first affects the contribution rate for the fiscal year two years later. Specifically, the investment return for 2014-15 will first be reflected in the June 30, 2015 actuarial valuation that will be used to set the 2017-18 employer contribution rates. The 2015-16 investment return will first be reflected in the June 30, 2016 actuarial valuation that will be used to set the 2018-19 employer contribution rates and so forth.

Based on a 2.4% investment return for Fiscal Year 2014-15, the April 17, 2013 CalPERS Board-approved amortization and rate smoothing method change, the February 18, 2014 new demographic assumptions including 20-year mortality improvement using Scale BB and assuming that all other actuarial assumptions will be realized, and that no further changes to assumptions, contributions, benefits, or funding will occur between now and the beginning of the Fiscal Year 2017-18, the effect on the 2017-18 Employer Rate is as follows.

Projected Future Employer Contribution Rates. The projected future employer contribution rates for the City are as set forth in the table below. The estimated rate for 2017-18 is based on a projection of the most recent information available to CalPERS, including an estimated 2.4% investment return for Fiscal Year 2014-15.

The table below shows projected employer contribution rates (before cost sharing) for the next five fiscal years, assuming CalPERS earns 2.4% for Fiscal Year 2014-15 and 7.5% every fiscal year thereafter, and assuming that all other actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. The projected contribution rates do not reflect that the plan’s normal cost will decline over time as new employees are hired into PEPRA and other lower cost benefit tiers.

Projected Future Employer Contribution Rates*

Fiscal Year Miscellaneous Police 2016-17 21.586% 49.280% 2017-18 23.6 54.0 2018-19 25.6 58.8 2019-20 27.6 63.6 2020-21 27.8 65.0 2021-22 28.5 66.1

____________________ * CalPERS projected. Source: City of Pomona Finance Department and 2015 CalPERS Report.

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See also “Notes to Financial Statements” in APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015.”

Funding History. The City’s Pension Plan includes separate valuations for Miscellaneous Members and Safety Members. The funded status of the Plan for each of these member groups for the actuarial valuations performed as of June 30, 2009 through 2014 are set forth in the tables below. Underfunded liability is primarily the result of a significant decline in the value of the plan assets, less than anticipated investment returns by CalPERS and an increase in benefits for Miscellaneous and Public Safety employees. As described below, the City has addressed the underfunded liability through significant changes to its compensation structure including annual incremental increases to public safety employee pension contributions and a second tier of reduced retirement benefits for new miscellaneous employees. The City cannot predict the level of future contributions to CalPERS which may be required by CalPERS but such amounts may increase significantly over current levels.

The funding history below shows the recent history of the actuarial accrued liability, actuarial value of assets, market value of assets, funded ratios and covered payroll, separately for Miscellaneous Members and Safety Members.

Miscellaneous Members

Valuation Date

(June 30)

Entry Age Normal Accrued Liability

Actuarial Value of Assets

Market Value of Assets

Underfunded Liability (UAAL)

Actuarial Funded Ratio

Market Value

Funded Ratio

Annual Covered Payroll

UAAL as a Percentage of Payroll

2009 $208,855,695 $137,596,384 $137,596,384 $71,259,311 65.9% 65.9% $29,964,633 42% 2010 213,632,193 151,890,461 151,890,461 61,741,732 71.1 71.1 25,564,336 41 2011 224,309,938 177,419,801 177,419,801 46,890,137 79.1 79.1 23,667,462 50 2012 231,289,438 170,187,344 170,187,344 61,102,094 73.6 73.6 23,046,877 38 2013 235,600,974 183,795,478 183,795,478 51,805,496 78.0 78.0 21,207,342 41 2014 251,305,918 207,630,193 207,630,193 43,675,725 82.6 82.6 21,134,245 48

Safety Members

Valuation Date

(June 30)

Entry Age Normal Accrued Liability

Actuarial Value of Assets

Market Value of Assets

Underfunded Liability (UAAL)

Actuarial Funded Ratio

Market Value

Funded Ratio


UAAL as a Percentage of Payroll

2009 $266,712,188 $173,182,322 $173,182,322 $93,529,866 64.9% 64.9% $17,681,848 19% 2010 273,268,426 189,013,611 189,013,611 84,254,815 69.2 69.2 16,452,595 37 2011 284,367,753 217,953,586 217,953,586 66,414,167 76.6 76.6 14,355,116 22 2012 289,143,930 205,273,761 205,273,761 83,870,169 71.0 71.0 14,559,931 17 2013 296,565,370 219,262,450 219,262,450 77,302,920 73.9 73.9 14,740,505 19 2014 322,254,438 246,247,191 246,247,191 76,007,247 76.4 76.4 15,076,035 20

____________________ * Beginning with the June 30, 2013 CalPERS valuation, Actuarial Value of Assets as reported by CalPERS equals Market Value of Assets as

a result of CalPERS Direct Rate Smoothing Policy. Source: City of Pomona Finance Department and 2015 CalPERS Report.

The City plans to continue to prepay its contributions to CalPERS as it has done at the beginning of each year since Fiscal Year 2007-08, and to set aside the discount received from such prepayments for future pension costs or further pay downs of unfunded liability. Despite these mitigating steps taken by the City, CalPERS has made a number of changes to actuarial demographic assumptions that have increased contribution rates. It is important for the City to continue to work with its employees to identify measures that will ensure that increases in ongoing compensation costs do not outstrip those of revenue

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growth. The passage of PEPRA in September 2012 is working to further control cost increases in the future, as new employees are receiving reduced retirement benefits and cities will be encouraged to increase employees’ share of contribution costs.

Other Post Employment Benefits

In addition to providing pension benefits through CalPERS, the City, in accordance with agreements with various bargaining units and groups, provides medical insurance benefits that are considered other postemployment benefits (OPEB) to certain retired employees under a single employer benefit plan. The City’s OPEB cost is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance within the parameters of GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The ARC represents a level of funding that if paid on an ongoing basis is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years utilizing the level percentage of projected payroll method. The amortization period is open.

The City has funded OPEB on a pay-as-you-go basis. The City’s annual required contribution for Fiscal Year 2014-15 was 13.6% of payroll. The following table shows the components of the City’s annual OPEB cost for the year, the amount contributed to the plan, and changes in the City’s OPEB obligation to the plan.

The following is the City’s net OPEB Obligation and Annual OPEB Cost:

Annual required contribution $ 5,508,998 Interest on net OPEB obligation 749,061 Adjustment to annual required contribution (778,913) Annual OPEB cost (expense) 5,479,146 Contributions made 3,345,170 Increase in net OPEB obligation 2,133,976 Net OPEB obligation - beginning of the year 17,668,252 Net OPEB obligation - end of the year $19,802,228

The City has funded the OPEB on a pay-as-you-go basis. While the annual required contribution in Fiscal Year 2014-15 was $5,508,998, the City paid $3,345,170, which represents the value of the current year’s retiree payments. The annual OPEB cost is reported as expenses in the non-departmental governmental activities program.

Five-year trend information is disclosed below:

Fiscal Year

Annual OPEB Cost (AOC) (Employer

Contribution) Actual

Contribution

Percentage of AOC

Contributed Net OPEB

Obligation (Asset) 2012-13 $5,743,900 $3,229,187 56.2% $15,523,781 2013-14 5,252,076 3,107,605 59.2 17,668,252 2014-15 5,479,146 3,345,170 61.1 19,802,228

___________________________ Source: City of Pomona Finance Department.

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Collateral Benefits Plan

The Collateral Benefits Plan provides a supplemental retirement benefit to City employees upon resigning from the City and concurrently retiring with CalPERS. The supplemental benefit is a monthly benefit of $100 from the first of the month following retirement from the City until the age of 65 for Tier 1 and Tier 2 employees. Tier 1 employees include Mid-Management and Confidential, Police Officers’ Association, City Employees’ Association, and Management Group B employees, and are required to have at least 20 years of City service upon retiring after July 1, 1987. Tier 2 employees include Executive Management Group A employees and are required to have at least one year of City service upon retiring after July 1, 1991. Employees hired after July 1, 2011, are not eligible for this plan.

There are 88 participants receiving collateral benefits at June 30, 2015. The City’s funding policy is to contribute the annual required contribution. The annual required contribution equals the sum of: normal cost, and amortization of the unfunded actuarial accrued liability.

For the year ending June 30, 2015, the City’s annual pension cost for the Collateral Benefits Plan of $110,032 was equal to the actuarial required contribution.

See Note 12 in APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015.”

Public Employees’ Medical and Hospital Care Program (PEMHCA) Plan

Employees of the City who retire through CalPERS, their spouses, and eligible dependents, may receive health plan coverage through the Public Employees’ Medical and Hospital Care Program (PEMHCA) Plan (Plan). The Plan is a single employer defined benefit plan which provides the retirees a monthly medical contribution that is not to exceed the cost of the plan selected, with the maximum contribution limited for individual retirees based on bargaining groups. There are 489 employees eligible to receive or are receiving post-employment benefits at June 30, 2015.

The required contribution of the City is based on a pay-as-you-go financing requirement. For fiscal year 2015, the City contributed $3,345,170 to the retiree health plan.

See Note 12 in APPENDIX B – CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015.”

Long-Term Debt

The City may issue general obligation bonds for the acquisition and improvement of real property, subject to the approval of two-thirds of the voters voting on the bond proposition. A tax on all real property within the City to pay principal of and interest on general obligation bonds is levied by the City and collected by the County on the secured and unsecured property tax bills.

The City has no general obligation bonds outstanding. By law, general obligation bonded indebtedness to 15.0% of the total assessed valuation of property within the City.

The City may, with the approval of the City Council, enter into certain long-term lease obligations without first obtaining voter approval. The City has entered into various lease arrangements under which the City is obligated to make annual payments. Securities have been issued which certificate or are payable from these lease arrangements. As of June 30, 2015, there were $11,336,191 in non-voter approved bonded or certificated City lease obligations outstanding, $44,333,953 in pension obligation

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bonds outstanding, and $31,133,440 in revenue bonds outstanding, each payable primarily from the General Fund. A summary of long-term revenue bonds and lease obligations outstanding as of June 30, 2014 and June 30, 2015 and payable primarily from the General Fund is as follows:


Long-Term General Fund Obligations (As of June 30, 2015)

Governmental Activities Balance at

June 30, 2014 Balance at

June 30, 2015 Pollution remediation obligations $ 1,580,363 $ 960,809 Obligation under capital leases 879,285 586,295 Notes payable 875,000 655,000 Revenue bonds 32,851,409 31,133,440 Pension obligation refunding bonds 44,414,040 44,333,953 Certificates of participation 11,681,813 11,336,191

Total $92,281,910 $89,005,688 _______________________ Source: City of Pomona Audited Financial Statements for the Fiscal Year Ended June 30, 2015.

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Overlapping Debt

Contained within the City are overlapping local agencies providing public services which have issued general obligation bonds and other types of indebtedness. A table setting forth the overlapping debt of the City as of May 1, 2016 is provided below:


Statement of Overlapping Debt as of May 1, 2016

2015-16 Assessed Valuation: $9,840,105,629

OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 5/1/16 Los Angeles County Flood Control District 0.788% $ 99,524 Metropolitan Water District 0.401 372,389 Citrus Community College District 1.229 1,216,065 Mount San Antonio Community College District 12.042 44,428,158 Bonita Unified School District 0.254 326,351 Claremont Unified School District 6.077 1,766,584 Pomona Unified School District 75.758 167,547,766 City of Pomona 1915 Act Bonds 100.000 3,003,000 Los Angeles County Regional Park and Open Space Assessment District 0.772 390,709

TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $219,150,546

DIRECT AND OVERLAPPING GENERAL FUND DEBT: Los Angeles County General Fund Obligations 0.772% $15,736,724 Los Angeles County Superintendent of Schools Certificates of Participation 0.772 61,330 Los Angeles County Sanitation District No. 21 Authority 20.793 2,114,962 Bonita Unified School District General Fund Obligations 0.254 1,855 Claremont Unified School District General Fund Obligations 6.077 349,124 Pomona Unified School District Certificates of Participation 75.758 13,757,653 City of Pomona General Fund Obligations 100.000 42,455,000(1)

City of Pomona Pension Obligation Bonds 100.000 40,653,864 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $115,130,512

OVERLAPPING TAX INCREMENT DEBT (Successor Agency): 100.000% $156,215,000

COMBINED TOTAL DEBT $490,496,058(2)

_______________________ (1) Excludes issue to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Qualified

Zone Academy Bonds are included based on principal due at maturity.

Ratios to 2015-16 Assessed Valuation: Total Overlapping Tax and Assessment Debt ...................... 2.23% Total Direct Debt ($83,108,864) ........................................ 0.84%Combined Total Debt ........................................................... 4.98%

Ratios to Redevelopment Successor Agency Incremental Valuation ($3,478,018,970): Total Overlapping Tax Increment Debt ............................... 4.49%

________________________ Source: California Municipal Statistics, Inc.

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Future Borrowing

The City has no current plans to enter into addition long-term obligations payable from the General Fund for capital purposes. The City is considering the issuance of lease revenue bonds for refunding purposes only. These decisions are subject to future review and approval by the City Council.

RISK FACTORS

The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating purchase of the Series 2016 Bonds. However, they do not purport to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the Series 2016 Bonds. In addition, the order in which the following factors are presented is not intended to reflect the relative importance of any such risks.

Limited Obligations

The Series 2016 Bonds are limited obligations of the Authority payable solely from Revenues, consisting primarily of Base Rental Payments to be made by the City and amounts on deposit in certain funds and accounts held under the Trust Agreement. The Series 2016 Bonds do not constitute a debt or liability of the State or of any political subdivision thereof (including any member of the Authority). The Authority shall be obligated to pay the principal of the Series 2016 Bonds, and the interest thereon, only from the Revenues, and neither the faith and credit nor the taxing power of the State or of any political subdivision thereof (including any member of the Authority) is pledged to the payment of the principal of or the interest on the Series 2016 Bonds. The issuance of the Series 2016 Bonds shall not directly, indirectly, or contingently obligate the State or any political subdivision thereof (including any member of the Authority) to levy or pledge any form of taxation. The Authority has no taxing power.

The obligation of the City to make the Base Rental Payments does not constitute a debt of the City, the County or of the State or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City, the County or the State is obligated to levy or pledge any form of taxation or for which the City, the County or the State has levied or pledged any form of taxation.

Although the Sublease does not create a pledge, lien or encumbrance upon the funds of the City, the City is obligated under the Sublease to pay the Base Rental Payments and Additional Rental Payments from any source of legally available funds and the City has covenanted in the Sublease that it will take such action as may be necessary to include all Base Rental Payments and Additional Rental Payments due under the Sublease as a separate line item in its annual budgets and to make necessary annual appropriations for all such Base Rental Payments. The City is currently liable and may become liable on other obligations payable from general revenues, some of which may have a priority over the Base Rental Payments.

The City has the capacity to enter into other obligations which may constitute additional charges against its revenues. To the extent that additional obligations are incurred by the City, the funds available to make Base Rental Payments may be decreased. In the event the City’s revenue sources are less than its total obligations, the City could choose to fund other activities before making Base Rental Payments and other payments due under the Sublease. The same result could occur if, because of California Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues. However, the City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB of the California Constitution. See “CONSTITUTIONAL AND STATUTORY

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LIMITATIONS ON TAXES AND APPROPRIATIONS – Article XIIIB of the California Constitution” herein.

No Limit on Additional General Fund Obligations

The City has the ability to enter into other obligations which may constitute additional charges against its general revenues. To the extent that such additional obligations are incurred by the City, the funds available to make Base Rental Payments may be decreased.

Abatement

In the event of substantial interference with the City’s right to use and occupy any portion of the Facilities by reason of damage to, or destruction or condemnation of the Facilities, or any defects in title to the Facilities, Base Rental Payments will be subject to abatement. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Abatement” herein. In the event that such portion of the Facilities, if damaged or destroyed by an insured casualty, could not be replaced during the period of time in which proceeds of the City’s rental interruption insurance will be available in lieu of Base Rental Payments or in the event that casualty insurance proceeds are insufficient to provide for complete repair or replacement of such portion of the Facilities or redemption of the Series 2016 Bonds, there could be insufficient funds to make payments to Owners in full.

It is not possible to predict the circumstances under which such an abatement of rental may occur. In addition, there is no statute, case or other law specifying how such an abatement of rental should be measured. For example, it is not clear whether fair rental value is established as of commencement of the lease or at the time of the abatement. If the latter, it may be that the value of the Facilities is substantially higher or lower than its value at the time of the execution and delivery of the Series 2016 Bonds. Abatement, therefore, could have an uncertain and material adverse effect on the security for and payment of the Series 2016 Bonds.

If damage, destruction, title defect or eminent domain proceedings with respect to the Facilities results in abatement of the Base Rental Payments related to such Facilities and if such abated Base Rental Payments, if any, together with moneys from rental interruption or use and occupancy insurance (in the event of any insured loss due to damage or destruction) and eminent domain proceeds, if any, are insufficient to make all payments of principal of and interest on Bonds during the period that the Facilities is being replaced, repaired or reconstructed, then all or a portion of such payments of principal of and interest on the Series 2016 Bonds may not be made. Under the Sublease and the Trust Agreement, no remedy is available to the Bondholders for nonpayment under such circumstances. To the extent that Net Proceeds of rental interruption insurance are available for the payment of Base Rental Payments due under the Sublease, Base Rental Payments shall not be abated as provided above but, rather, will be payable by the City as a special obligation payable solely from such Net Proceeds.

In the event of any such substantial interference, the Sublease continues in full force and effect, and the City waives any right to terminate the Sublease by virtue of such substantial interference. The Trustee cannot terminate the Sublease in the event of such substantial interference. Abatement of Base Rental Payments and Additional Payments is not an event of default under the Sublease and the Trustee is not permitted in such event to take any action or avail itself of any remedy against the City. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – Sublease – Rental Abatement.”

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Availability of Moneys for Base Rental Payments

Although the Sublease does not create a pledge, lien or encumbrance upon the funds of the City, the City is obligated under the Sublease to pay the Base Rental Payments and Additional Payments from any source of legally available funds and the City has covenanted in the Sublease that it will take such action as may be necessary to include all rental payments due under the Sublease in its annual budgets and to make necessary annual appropriations for all such rental payments. The City is currently liable and will become liable on other obligations payable from General Fund revenues, some of which may have a priority over payments to be made under the Sublease.

The City has the capacity to enter into other obligations which may constitute additional charges against its revenues. To the extent that additional obligations are incurred by the City, the funds available to make Base Rental Payments may be decreased. In the event the City’s revenue sources are less than its total obligations, the City could choose to fund other activities before making Base Rental Payments and other payments due under the Sublease.

See also “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Article XIIIB of the California Constitution: Limits on Appropriations” and APPENDIX B – “APPENDIX B CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015.”

Limited Recourse on Default

If the City defaults on its obligations to make Base Rental Payments with respect to the Facilities, the Trustee has the right to re-enter and re-let the Facilities. In the event such re-letting occurs, the City would be liable for any deficiency in Base Rental Payments that results therefrom. Alternatively, the Trustee may terminate the Sublease with respect to the Facilities and proceed against the City to recover damages pursuant to the Sublease. See “RISK FACTORS – Abatement” below. See also APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – Sublease.”

Due to the governmental purpose of the Facilities, the Lease, and the Sublease, it is uncertain whether a court would permit the exercise of the remedies of repossession and re-letting of the Facilities, and no assurance can be given that the Trustee would be able to re-let the Facilities so as to provide rental income sufficient to make payments of principal of and interest on the Series 2016 Bonds in a timely manner. In addition, the Trustee is not empowered to sell the fee interest in the Facilities for the benefit of the Bondholders. Any suit for money damages would be subject to limitations on legal remedies against cities in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. Moreover, there can be no assurance that such re-letting, if successful, would not adversely affect the exclusion of any interest on the Series 2016 Bonds from federal or state income taxation.

If the City defaults on its obligation to make Base Rental Payments, there is no available remedy of acceleration of the total Base Rental Payments due over the term of the Sublease. The City will only be liable for Base Rental Payments on an annual basis, and the Trustee would be required to seek a separate judgment in each fiscal year for that fiscal year’s rental payments.

Earthquake or Other Natural Disasters

The financial stability of the City can be adversely affected by a variety of factors, particularly those which may affect infrastructure and other public improvements and private improvements and the continued habitability and enjoyment of such improvements. Such additional factors include, without

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limitation, geologic conditions (such as earthquakes), topographic conditions (such as earth movements, wildfires and floods) and climatic conditions (such as droughts and tornadoes).

The area encompassed by the City, like that in much of California, may be subject to unpredictable seismic activity. The City is located within a regional network of several active and potentially active faults. The San Jacinto Fault, the Glen Helen Fault and the Lytle Creek Fault are all located within the vicinity of the City. Although the City believes that no active or inactive fault lines pass through, or near, the City, if there were to be an occurrence of severe seismic activity in the City, there could be significant damage to both property and infrastructure in the City, which could impact the ability of the City to make Base Rental Payments when due. Building codes require that some of these factors be taken into account, to a limited extent, in the design of improvements. Some of these factors may also be taken into account, to a limited extent, in the design of other infrastructure and public improvements neither designed nor subject to design approval by the City. Design criteria in any of these circumstances are established upon the basis of a variety of considerations and may change, leaving previously-designed improvements unaffected by more stringent subsequently established criteria. In general, design criteria reflect a balance at the time of protection and the future costs of lack of protection, based in part upon a present perception of the probability that the condition will occur and the seriousness of the condition should it occur. Conditions may occur and may result in damage to improvements of varying seriousness, such that the damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances, the actual value of public and private improvements within the City in general may well depreciate or disappear, notwithstanding the establishment of design criteria for any such condition.

In the event of a severe earthquake, fire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the City, which could impact the ability of the City to make Base Rental Payments when due and, accordingly, could have an adverse effect on the Authority’s ability to make timely payments of principal of and interest on Bonds. The City is not required under the Sublease to maintain earthquake or flood insurance on the Facilities. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Insurance” herein.

Substitution and Removal of Facilities

The Authority and the City may amend the Sublease to substitute alternate real property for any portion of the Facilities or to release a portion of the Facilities from the Sublease, upon compliance with all of the conditions set forth in the Sublease and summarized below. After a substitution or release, the portion of the Facilities for which the substitution or release has been effected shall be released from the leasehold encumbrance of the Sublease. See “SECURITY FOR AND SOURCES OF PAYMENT FOR THE BONDS – Substitution and Removal of Facilities” herein.

Although the Sublease requires, among other things, that the Facilities after such addition, substitution or withdrawal will be at least equal to 100% of the maximum amount of Base Rental Payments becoming due in the then current fiscal year or in any subsequent fiscal year, or in the alternative, in the event of a substitution only, that the annual fair rental value of the new Facility is at least equal to that of the substituted Facility. See APPENDIX C – “DEFINITIONS AND SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS – The Sublease – Substitution or Release of the Facilities.”

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Limited Recourse on Default; No Acceleration of Base Rental Payments

Failure by the City to make Base Rental Payments or other payments required to be made under the Sublease, or failure to observe and perform any other terms, covenants or conditions contained in the Sublease or in the Trust Agreement for a period of 30 days after written notice of such failure and request that it be remedied has been given to the City by the Authority or the Trustee, constitute events of default under the Sublease and permit the Trustee or the Authority to pursue any and all remedies available. In the event of a default, notwithstanding anything in the Sublease or in the Trust Agreement to the contrary, there shall be no right under any circumstances to accelerate the Base Rental Payments or otherwise declare any Base Rental Payments not then in default to be immediately due and payable, nor shall the Authority or the Trustee have any right to re-enter or re-let the Facilities except as described in the Sublease.

The enforcement of any remedies provided in the Sublease and the Trust Agreement could prove both expensive and time consuming. If the City defaults on its obligation to make Base Rental Payments with respect to the Facilities, the Trustee, as assignee of the Authority, may retain the Sublease and hold the City liable for all Base Rental Payments thereunder on an annual basis and enforce any other terms or provisions of the Sublease to be kept or performed by the City.

Alternatively, the Authority or the Trustee may terminate the Sublease, retake possession of the Facilities and proceed against the City to recover damages pursuant to the Sublease. Due to the specialized nature of the Facilities or any property substituted therefor pursuant to the Sublease, no assurance can be given that the Trustee will be able to re-let the Facilities so as to provide rental income sufficient to make all payments of principal of, and premium, if any, and interest on Bonds when due, and the Trustee is not empowered to sell the Facilities for the benefit of the Bondholders. Any suit for money damages would be subject to limitations on legal remedies against cities in California, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein and APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – The Sublease – Default.”

Possible Insufficiency of Insurance Proceeds

The Sublease obligates the City to keep in force various forms of insurance, subject to deductibles, for repair or replacement of the Facilities in the event of damage, destruction or title defects, subject to certain exceptions. The Authority and the City make no representation as to the ability of any insurer to fulfill its obligations under any insurance policy obtained pursuant to the Sublease and no assurance can be given as to the adequacy of any such insurance to fund necessary repair or replacement or to pay principal of and interest on the Series 2016 Bonds when due. In addition, certain risks, such as earthquakes and floods, are not covered by the insurance required under the Sublease. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Insurance” herein.

Limitations on Remedies

The rights of the Bondholders are subject to the limitations on legal remedies against cities in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. Additionally, enforceability of the rights and remedies of the Bondholders, and the obligations incurred by the City, may become subject to the federal bankruptcy code (Title 11, United States Code) (the “Bankruptcy Code”) and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect, equity principles which may limit the specific enforcement under State law of certain remedies, the exercise by the United States of America of the powers delegated to it by the U.S.

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Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose and the limitations on remedies against cities in the State. Bankruptcy proceedings, or the exercise of powers by the Federal or State government, if initiated, could subject the Bondholders to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation, or modification of their rights. Under Chapter 9 of the Bankruptcy Code, which governs the bankruptcy proceedings for public agencies such as the City, there are no involuntary petitions in bankruptcy. If the City were to file a petition under Chapter 9 of the Bankruptcy Code, the Bondholders, the Trustee and the Authority could be prohibited from taking any steps to enforce their rights under the Sublease, and from taking any steps to collect amounts due from the City under the Sublease.

Bankruptcy

In addition to the limitation on remedies contained in the Trust Agreement, the rights and remedies provided in the Trust Agreement and the Sublease may be limited by and are subject to the provisions of federal bankruptcy laws and to other laws or equitable principles that may affect the enforcement of creditors’ rights. Under Chapter 9 of the Bankruptcy Code (Title 11, United States Code), which governs the bankruptcy proceedings for public agencies such as the City, there are no involuntary petitions in bankruptcy. Bankruptcy proceedings, if initiated, could subject the Bondholders to judicial discretion and interpretation of their rights in bankruptcy proceedings or otherwise, and consequently may entail risks of delay, limitation or modification of their rights.

State Budget

The State of California is experiencing significant financial and budgetary stress due to national and statewide economic conditions and other factors over which the City has no control. The State’s financial condition and budget policies affect communities and local public agencies throughout California, including the City. To the extent that the State budget process results in reduced revenues to the City, the City will be required to make adjustments to its budget.

Certain information about the State budgeting process and the State Budget is available through several State of California sources. A convenient source of information is the State’s website, where recent official statements for State bonds are posted. The references to internet websites shown below are shown for reference and convenience only; the information contained within the websites has not been reviewed by the City or the Authority and is not incorporated in this Official Statement by reference.

The California State Treasurer’s Internet home page at www.treasurer.ca.gov, under the heading “Financial Information,” posts the State’s audited financial statements. In addition, the “Financial Information” section includes the State’s filings required by Rule 15c2-12(b)(5), as amended, adopted by the Securities and Exchange Commission in compliance with the Securities and Exchange of 1934 (the “Rule”) for State bond issues. The “Financial Information” section also includes the “Overview of the State Economy and Government, State Finances, State Indebtedness, Litigation” from the State’s most current Official Statement, which discusses the State budget and its impact on local governments.

The California Department of Finance’s Internet home page at www.dof.ca.gov, under the heading “California Budget,” includes the text of proposed and adopted State Budgets. The State Legislative Analyst’s Office the (“LAO”) prepares analyses of the proposed and adopted State budgets. The analyses are accessible on the Legislative Analyst’s Internet home page at www.lao.ca.gov under the heading “Products.”

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Secondary Market

There can be no guarantee that there will be a secondary market for the Series 2016 Bonds, or, if a secondary market exists, that the Series 2016 Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price.

Loss of Tax Exemption

As discussed under the heading “TAX MATTERS,” the interest on the Series 2016 Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of delivery of the Series 2016 Bonds, as a result of acts or omissions of the City in violation of its covenants in the Sublease or of the Authority in violation of its covenants in the Trust Agreement. Should such an event of taxability occur, the Series 2016 Bonds would not be subject to a special redemption and would remain outstanding until maturity or until redeemed under the redemption provisions contained in the Trust Agreement.

Audit by State and Federal Auditors and of IRS Audits of Tax-Exempt Bond Issues

The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Series 2016 Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the market value of the Series 2016 Bonds might be affected as a result of such an audit of the Series 2016 Bonds (or by an audit of similar bonds or securities).

The City is current the subject of an audit by the Internal Revenue Service in connection with the treatment as income of certain remunerations made to City Council members. The City is cooperating with the audit and will made adjustments and any amended filings as deemed appropriate.

The City is currently the subject of an audit by the State Controller’s office with respect to agreements between the City and the Fairplex, and between the Successor Agency and the Fairplex (LACFA). The audit was, in part, the result of an investigation by the LA Times following Live Nation’s HARD music festival at Fairplex in October 2015 and the drug overdose deaths of two attendees at the two-day event. The investigation by the Times questioned the festival being held on county property (LACFA is a 501(C)(5) and escalated to include published salaries of executive staff culminating in a County and State audit of the Fairplex. The audit as concerns the City and the Successor Agency has generally focused on City and Successor Agency practices to ensure that any grant or loan of public funds was predicated on sufficient financial and performance covenants and the monitoring of compliance thereafter. The City is cooperating with State Controller in responding to the audit requests.

The City through its Housing Authority is currently the subject of an audit by the United States Department of Housing and Urban Development. There, the Office of Inspector General questioned the City’s use of grants for low- and moderate-income housing. That audit is pending.

No Liability of Authority to the Owners

Except as expressly provided in the Trust Agreement, the Authority will not have any obligation or liability to the Bondholders with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the City of other agreements and covenants required to be

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performed by it contained in the Sublease or the Trust Agreement, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained in the Trust Agreement.

Economic, Political, Social, and Environmental Conditions

Prospective investors are encouraged to evaluate current and prospective economic, political, social, and environmental conditions as part of an informed investment decision. Changes in economic, political, social, or environmental conditions on a local, state, federal, or international level may adversely affect investment risk generally. Such conditional changes may include (but are not limited to) the reduction or elimination of previously available State of federal revenues, fluctuations in business production, consumer prices, or financial markets, unemployment rates, technological advancements, shortages or surpluses in natural resources or energy supplies, changes in law, social unrest, fluctuations in the crime rate, political conflict, acts of war or terrorism, environmental damage and natural disasters.

CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS

Article XIIIA of the California Constitution

Section 1(a) of Article XIIIA of the California Constitution limits the maximum ad valorem tax on real property to 1% of full cash value (as defined in Section 2 of Article XIIIA), to be collected by each county and apportioned among the county and other public agencies and funds according to law. Section 1(b) of Article XIIIA provides that the 1% limitation does not apply to ad valorem taxes to pay interest or redemption charges on (a) indebtedness approved by the voters prior to July 1, 1978, (b) any bonded 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 (c) bonded indebtedness incurred by a school district or a community college district for the construction, reconstruction, rehabilitation or replacement of school facilities or the acquisition or lease of real property for school facilities, approved by 55% of the voters of the district, but only if certain accountability measures are included in the proposition. Section 2 of Article XIIIA 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.” 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 reduced in the event of declining property values caused by substantial damage, destruction, or other factors. Legislation enacted by the State Legislature to implement Article XIIIA 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 described above.

In addition, legislation enacted by the California Legislature to implement Article XIIIA provides that all taxable property is shown at full assessed value as described above. Prior to Fiscal Year 1981-82, assessed valuations were reported at 25% of the full value of the property. In conformity with this procedure, all taxable property value included in this Official Statement (except as noted) is shown at 100% of assessed value and all general tax rates reflect the $1 per $100 of taxable value. Tax rates for voter approved bonded indebtedness and pension liability are also applied to 100% of assessed value.

On June 3, 1986, California voters approved an amendment to Article XIIIA, which added an additional exemption to the 1% tax limitation imposed by Article XIIIA. Under this amendment to Article XIIIA, local governments and school districts may increase the property tax rate above 1% for the period necessary to retire new general obligation bonds, if two-thirds of those voting in a local election approve

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the issuance of such bonds and the money raised through the sale of the bonds is used exclusively to purchase or improve real property.

In the June 1990 election, the voters of the State approved amendments to Article XIIIA permitting the State Legislature to extend the replacement dwelling provisions applicable to persons over 55 to severely disabled homeowners for a replacement dwelling purchased or newly constructed on or after June 5, 1990, and to exclude from the definition of “new construction” triggering reassessment improvements to certain dwellings for the purpose of making the dwelling more accessible to severely disabled persons. In the November 1990 election, the voters of the State approved an amendment of Article XIIIA to permit the State Legislature to exclude from the definition of “new construction” seismic retrofitting improvements or improvements utilizing earthquake hazard mitigation technologies constructed or installed in existing buildings after November 6, 1990. Since 1990, the voters have approved several other minor exemptions from the reassessment provisions of Article XIIIA.

Future assessed valuation growth allowed under Article XIIIA (new construction, change of ownership, 2% annual value growth) will be allocated on the basis of “situs” among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and school districts will share the growth of “base” revenue from the tax rate area. Each year’s growth allocation becomes part of each Agency’s allocation the following year. Article XIIIA effectively prohibits the levying of any other ad valorem property tax above the 1% limit except for taxes to support indebtedness approved by the voters as described above.

In a Minute Order issued on November 2, 2001 in County of Orange v. Orange County Assessment Appeals Board No. 3, case no. 00CC03385, the Orange County Superior Court held that where a home’s taxable value did not increase for two years, due to a flat real estate market, the Orange County assessor violated the two percent inflation adjustment provision of Article XIIIA, when the assessor tried to “recapture” the tax value of the property by increasing its assessed value by 4% in a single year. The assessors in most California counties, including Los Angeles County, use a similar methodology in raising the taxable values of property beyond 2% in a single year. The State Board of Equalization has approved this methodology for increasing assessed values. The Orange County Superior Court has not ruled on a motion to restate the complaint as a class action, which could have the effect of extending this ruling to other similar cases.

The City is unable to predict at this time the outcome of this litigation and what effect, if any, it might have on assessed values in the City or the availability of revenue sources which may be provided by the State to replace lost property tax revenues.

Article XIIIB of the California Constitution

On November 6, 1979, California voters approved Proposition 4, which added Article XIII B to the California Constitution. In June 1990, Article XIII B was amended by the voters through their approval of Proposition 111. Article XIII B of the California Constitution limits the annual appropriations of the State and any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted annually for changes in the cost of living, population and services rendered by the governmental entity. The “base year” for establishing such appropriation limit is the 1978-79 fiscal year. Increases in appropriations by a governmental entity are also permitted (i) if financial responsibility for providing services is transferred to the governmental entity, or (ii) for emergencies so long as the appropriations limits for the three years following the emergency are reduced to prevent any aggregate increase above the California Constitution limit. Decreases are required where responsibility for providing services is transferred from the governmental entity.

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Appropriations subject to Article XIII B include generally any authorization to expend during the fiscal year the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance and disability insurance funds. Appropriations subject to limitation pursuant to Article XIII B do not include debt service on indebtedness existing or legally authorized as of January 1, 1979, on bonded indebtedness thereafter approved according to law by a vote of the electors of the issuing entity voting in an election for such purpose, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified outlay projects, and appropriations by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990 levels. “Proceeds of taxes” include, but are not limited to, all tax revenues and the proceeds to any entity of government from (i) regulatory licenses, user charges, and user fees to the extent such proceeds exceed the cost of providing the service or regulation, (ii) the investment of tax revenues, and (iii) certain State subventions received by local governments. Article XIII B includes a requirement that if an entity’s revenues in any year exceed the amount permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two fiscal years.

As amended in June 1990, the appropriations limit for the City in each year is based on the limit for the prior year, adjusted annually for changes in the costs of living and changes in population, and adjusted, where applicable, for transfer of financial responsibility of providing services to or from another unit of government. The change in the cost of living is, at the City’s option, either (i) the percentage change in California per capita personal income, or (ii) the percentage change in the local assessment roll for the jurisdiction due to the addition of nonresidential new construction. The measurement of change in population is a blended average of statewide overall population growth, and change in attendance at local school and community college (“K-14”) districts.

As amended by Proposition 111, the appropriations limit is tested over consecutive two-year periods. Any excess of the aggregate “proceeds of taxes” received by the City over such two-year period above the combined appropriations limits for those two years is to be returned to taxpayers by reductions in tax rates or fee schedules over the subsequent two years.

Article XIII B permits any government entity to change the appropriations limit by vote of the electorate in conformity with statutory and Constitutional voting requirements, but any such voter-approved change can only be effective for a maximum of four years.

When preparing the Fiscal Year 2015-16 budget, the City calculated its appropriations limit at $209,271,122, with appropriations subject to the limit estimated at $74,302,938 for Fiscal Year 2015-16. The City’s appropriations have never exceeded the limitation on appropriations under Article XIIIB of the California Constitution. The impact of the appropriations limit on the City’s financial needs in the future is unknown.

Articles XIIIC and XIIID of the California Constitution

On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the California Constitution, which contain a number of provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges. The interpretation and application of certain provisions of Proposition 218 will ultimately be determined by the courts with respect to some of the matters discussed below. It is not possible at this time to predict with certainty the future impact of such interpretations. The provisions of Proposition 218, as so interpreted and applied, may affect the City’s ability to meet certain obligations.

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Proposition 218 (Article XIIIC) requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City require a majority vote and taxes for specific purposes, even if deposited in the City’s General Fund, require a two-thirds vote. Further, any general purpose tax which the City imposed, extended or increased, without voter approval, after December 31, 1994 may continue to be imposed only if approved by a majority vote in an election which must be held within two years of November 5, 1996. The City has not so imposed, extended or increased any such taxes which are currently in effect.

Article XIIIC also expressly extends the initiative power to give voters the power to reduce or repeal local taxes, assessments, fees and charges, regardless of the date such taxes, assessments, fees and charges were imposed. Article XIIIC expands the initiative power to include reducing or repealing assessments, fees, and charges, which had previously been considered administrative rather than legislative matters and therefore beyond the initiative power. This extension of the initiative power is not limited by the terms of Article XIIIC to fees imposed after November 6, 1996 and absent other legal authority could result in the retroactive reduction in any existing taxes, assessments, or fees and charges. No assurance can be given that the voters of the City will not, in the future, approve initiatives which reduce or repeal, or prohibit the future imposition or increase of, local taxes, assessments, fees or charges.

The voter approval requirements of Proposition 218 reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase such taxes in the future to meet increased expenditure needs.

Proposition 218 (Article XIIID) also added several new provisions relating to how local agencies may levy and maintain “assessments” for municipal services and programs. These provisions include, among other things, (i) a prohibition against assessments which exceed the reasonable cost of the proportional special benefit conferred on a parcel, (ii) a requirement that the assessment must confer a “special benefit,” as defined in Article XIIID, over and above any general benefits conferred, and (iii) a majority protest procedure which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party. “Assessment” in Article XIIID is defined to mean any levy or charge upon real property for a special benefit conferred upon the real property. While this definition applies to landscape and maintenance assessments for open space areas, street medians, street lights and parks, the City currently has no landscape and maintenance assessments for open space areas, street medians, street lights and parks.

In addition, Proposition 218 (Article XIIID) added several provisions affecting “fees” and “charges,” defined for purposes of Article XIIID 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 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) are for a service not actually used by, or immediately available to, the owner of the property in question, or (iv) 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. Depending on the interpretation of what constitutes a “property related fee” under Article XIIID, there could be future restrictions on the ability of the City’s General Fund to charge its enterprise funds for various services provided. 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 of land affected by such fee or charge. The City 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 City

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may not impose or increase the fee or charge. Moreover, except for fees or charges for wastewater, water and refuse collection services, or fees for electrical and gas service, which are not treated as “property related” for purposes of Article XIIID, 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.

Proposition 218 (Article XIIIC) also removes many of the limitations on the initiative power in matters of reducing or repealing any local tax, assessment, fee or charge. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund. “Assessments,” “fees” and “charges” are not defined in Article XIIIC, and it is unclear whether these terms are intended to have the same meanings for purposes of Article XIIIC as for Article XIIID described above. If not, the scope of the initiative power under Article XIIIC potentially could include any General Fund local tax, assessment, or fee not received from or imposed by the federal or State government or derived from investment income.

The City does not levy any property related “fees” or “charges” which it considers subject to challenge under Proposition 218 (Article XIIIC). The City believes that all current fees, taxes and assessments are in compliance with Proposition 218. However, the City’s position is unclear regarding the extent to which Proposition 218 is impacted by a 1995 California Supreme Court ruling (the Guardino case) that upheld the voter approval requirements of a previously enacted state initiative (Proposition 62), particularly with regard to taxes imposed, extended or increased between November 5, 1986 and December 11, 1995.

Proposition 218 also extends the initiative power to reducing or repealing any local taxes, assessments, fees and charges. This extension of the initiative power is not limited to taxes imposed on or after November 6, 1996, the effective date of Proposition 218, and could result in retroactive repeal or reduction in any existing taxes, assessments, fees or charges.

While the City is unable to predict how Proposition 218 will be interpreted or whether and to what extent Proposition 218 may be held valid under the California and United States Constitutions, or to what extent this measure will affect the revenues in the City’s General Fund, and while no assurances can be given regarding the impact of the application of Proposition 218, the City does not expect Proposition 218 to materially adversely affect its ability to pay the Base Rental Payments when due.

Proposition 1A

The California Constitution and existing statutes give the State Legislature authority over property taxes, sales taxes, and the vehicle license fee (the “VLF”). The State Legislature has authority to change tax rates, the items subject to taxation, and the distribution of tax revenues among local governments, schools, and community college districts. The State has used this authority for many purposes, including increasing funding for local services, reducing State costs, reducing taxation, addressing concerns regarding funding for particular local governments, and restructuring local finance.

The California Constitution generally requires the State to reimburse the local governments when the State mandates a new local program or higher level of service. Due to the ongoing financial difficulties of the State in recent years, it has not provided reimbursements for many mandated costs. In other cases, the State has suspended mandates, eliminating both responsibility of the local governments for complying with the mandate and the need for State reimbursements.

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On November 3, 2004, the voters of the State approved Proposition 1A (“Proposition 1A”), which amended the California Constitution to, among other things, reduce the State Legislature’s authority over local government revenue sources by placing restrictions on the State’s access to local government’s property, sales and VLF revenues. Proposition 1A generally prohibits the shift of property tax revenues from cities, counties and special districts, except to address a “severe state financial hardship,” which must be approved by a two-thirds vote of both houses of the Legislature, and only then if, among other things, such amounts were agreed to be repaid with interest within three years. The measure also (a) protects the property tax backfill of sales tax revenues diverted to pay the State’s economic recovery bonds, and the reinstatement of the sales tax revenues once such bonds are repaid, and (b) protects local agency VLF revenue (or a comparable amount of backfill payments from the State). The State may also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Further, Proposition 1A 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.

In general, Proposition 1A’s effect on State finances could be the opposite of its effect on local finances. Specifically, Proposition 1A could result in decreased resources being available for State programs than otherwise could be the case. This reduction, in turn, would affect State spending or taxes, some of which could be adverse to the City.

If the State reduces the VLF rate below its current level of 0.65% of the vehicle value, Proposition 1A requires the State to provide local governments with equal replacement revenues. Proposition 1A provides two significant exceptions to the above restrictions regarding sales and property taxes. First, the State may shift to schools and community colleges up to 8% of local government property tax revenues if the Governor proclaims that the shift is needed due to a severe State financial hardship, the legislature approves the shift with a two-thirds vote of both houses and certain other conditions are met. The State must repay local governments for the diversion of their property tax revenues, with interest, within three years. Second, Proposition 1A allows the State to approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county.

Proposition 1A amends the California Constitution to require the State to suspend certain State laws creating mandates in any year that the State does not fully reimburse local governments for their costs to comply with the mandates. If the State does not provide funding for the activity that has been determined to be mandated, the requirement on cities, counties or special districts to abide by the mandate would be suspended. In addition, Proposition 1A expands the definition of what constitutes a mandate to encompass State action that transfers to cities, counties and special districts financial responsibility for a required program for which the State previously had complete or partial financial responsibility. This provision does not apply to mandates relating to schools or community colleges, or to those mandates relating to employee rights.

Proposition 1A restricts the State’s authority to reallocate local tax revenues to address concerns regarding funding for specific local governments or to restructure local government finance. For example the State could not enact measures that changed how local sales tax revenues are allocated to cities and counties. In addition, measures that reallocated property taxes among local governments in a county would require approval by two-thirds of the members of each house of the legislature (rather than a majority vote). As a result, Proposition 1A could result in fewer changes to local government revenues than otherwise would have been the case.

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Proposition 22

In November 2010, California voters adopted Proposition 22 (“Proposition 22”), which prohibits the State, even during a period of severe fiscal hardship, from delaying the distribution of tax revenues for transportation, redevelopment, or local government projects and services and prohibits fuel tax revenues from being loaned for cash–flow or budget balancing purposes to the State General Fund or any other State fund. The City is unable to predict how Proposition 22 will be interpreted, or to what extent the measure will affect the revenues in the general fund of local agencies, although it could eventually provide greater stability in local agency revenues.

Proposition 26

On November 2, 2010, the voters of the State approved Proposition 26 (“Proposition 26”), which revises certain provisions of Articles XIIIA and XIIIC of the California Constitution. Proposition 26 re-categorizes many State and local fees as taxes, requires local governments to obtain two–thirds voter approval for taxes levied by local governments, and requires the State to obtain the approval of two–thirds of both houses of the State Legislature to approve State laws that increase taxes. Furthermore, pursuant to Proposition 26, any increase in a fee beyond the amount needed to provide the specific service or benefit is deemed to be a tax and the approval thereof will require a two-thirds vote. In addition, for State-imposed charges, any tax or fee adopted after January 1, 2010, with a majority vote which would have required a two-thirds vote if Proposition 26 were effective at the time of such adoption is repealed as of November 2011 absent the re-adoption by the requisite two-thirds vote.

Proposition 26 amends Article XIIIC of the State Constitution to state that a “tax” means a levy, charge or exaction of any kind imposed by a local government, except: (1) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (2) a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (3) a charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof; (4) a charge imposed for entrance to or use of local government property or the purchase, rental, or lease of local government property; (5) a fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government as a result of a violation of law, including late payment fees, fees imposed under administrative citation ordinances, parking violations, etc.; (6) a charge imposed as a condition of property development; or (7) assessments and property related fees imposed in accordance with the provisions of Article XIIID. Fees, charges and payments that are made pursuant to a voluntary contract that are not “imposed by a local government” are not considered taxes and are not covered by Proposition 26.

Proposition 26 applies to any levy, charge or exaction imposed, increased, or extended by local government on or after November 3, 2010. Accordingly, fees adopted prior to that date are not subject to the measure until they are increased or extended or if it is determined that an exemption applies.

If the local government specifies how the funds from a proposed local tax are to be used, the approval will be subject to a two–thirds voter requirement. If the local government does not specify how the funds from a proposed local tax are to be used, the approval will be subject to a 50% voter requirement. Proposed local government fees that are not subject to Proposition 26 are subject to the approval of a majority of the governing body. In general, proposed property charges will be subject to a

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majority vote of approval by the governing body although certain proposed property charges will also require approval by a majority of property owners.

Proposition 62

A statutory initiative (“Proposition 62”) was adopted by the voters of the State at the November 4, 1986 General Election which (a) requires that any tax for general governmental purposes imposed by local governmental entities be approved by resolution or ordinance adopted by two-thirds vote of the governmental agency’s legislative body and by a majority of the electorate of the governmental entity, (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 within the jurisdiction, (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax is imposed, (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA, (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities and (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 electorate within two years of the adoption of the initiative or be terminated by November 15, 1988. The requirements imposed by Proposition 62 were upheld by the California Supreme Court in Santa Clara County Local Transportation Authority v. Guardino, 11 Cal.4th 220; 45 Cal.Rptr.2d 207 (1995).

Proposition 62 applies to the imposition of any taxes or the effecting of any tax increases after its enactment in 1986, but the requirements of Proposition 62 are subsumed by the requirements of Proposition 218 for the imposition of any taxes or the effecting of any tax increases after November 5, 1996. See “– Articles XIIIC and XIIID of the California Constitution” above.

In the opinion of the City Attorney, the provisions of Proposition 62 do not apply to charter cities, although this position is being challenged by various groups, and may be the subject of future litigation. If ultimately found valid and applicable to charter cities, however, Proposition 62 could affect the ability of the City to continue the imposition of certain taxes, such as utility user’s taxes, sales taxes and transient occupancy taxes, and may further restrict the City’s ability to raise revenue.

Future Initiatives

The laws and Constitutional provisions described above were each adopted as measures that qualified for the ballot pursuant to California’s constitutional initiative process. From time to time other initiative measures could be adopted, affecting the ability of the City to increase revenues and to increase appropriations.

TAX MATTERS

In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority (“Bond Counsel”), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2016 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”) and is exempt from State of California personal income taxes. Series 2016 Bond Counsel is of the further opinion that interest on the Series 2016 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX F hereto.

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To the extent the issue price of any maturity of the Series 2016 Bonds is less than the amount to be paid at maturity of such Series 2016 Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2016 Bonds), the difference constitutes “original issue discount,” the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the Series 2016 Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Series 2016 Bonds is the first price at which a substantial amount of such maturity of the Series 2016 Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Series 2016 Bonds accrues daily over the term to maturity of such Series 2016 Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Series 2016 Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Series 2016 Bonds. Beneficial Owners of the Series 2016 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series 2016 Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such Series 2016 Bonds in the original offering to the public at the first price at which a substantial amount of such Series 2016 Bonds is sold to the public.

Series 2016 Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) (“Premium Bonds”) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner’s basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.

The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series 2016 Bonds. The Authority and the City have made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Series 2016 Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Series 2016 Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Series 2016 Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring), or any other matters coming to Bond Counsel’s attention after the date of issuance of the Series 2016 Bonds may adversely affect the value of, or the tax status of interest on, the Series 2016 Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.

Although Bond Counsel is of the opinion that interest on the Series 2016 Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Series 2016 Bonds may otherwise affect a Beneficial Owner’s federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner’s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.

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Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Series 2016 Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. For example, the Obama Administration’s budget proposals in recent years have proposed legislation that would limit the exclusion from gross income of interest on the Series 2016 Bonds to some extent for high-income individuals. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Series 2016 Bonds. Prospective purchasers of the Series 2016 Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel is expected to express no opinion.

The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel’s judgment as to the proper treatment of the Series 2016 Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (“IRS”) or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Authority or the City, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Authority and the City have covenanted, however, to comply with the requirements of the Code.

Bond Counsel’s engagement with respect to the Series 2016 Bonds ends with the issuance of the Series 2016 Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Authority, the City or the Beneficial Owners regarding the tax-exempt status of the Series 2016 Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the Authority, the City and their appointed counsel, including the Beneficial Owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the Authority or the City legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Series 2016 Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues, may affect the market price for, or the marketability of, the Series 2016 Bonds, and may cause the Authority, the City or the Beneficial Owners to incur significant expense.

CERTAIN LEGAL MATTERS

The validity of the Series 2016 Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority. A complete copy of the proposed form of Bond Counsel opinion is contained in APPENDIX F hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Orrick, Herrington & Sutcliffe LLP, as Disclosure Counsel, will provide certain other legal services for the Authority. Certain legal matters will be passed upon for the Authority and the City by Alvarez-Glasman & Colvin, City Attorney, and for the Underwriter by its counsel, Fox Rothschild LLP, Los Angeles, California. Orrick, Herrington & Sutcliffe LLP will receive compensation from the City contingent upon the sale and delivery of the Series 2016 Bonds.

MUNICIPAL ADVISOR

Urban Futures, Inc., Orange, California (the “Municipal Advisor”) has assisted the Authority and the City in matters relating to the planning, structuring, and sale of the Series 2016 Bonds and the preparation of this Official Statement, and has provided general financial advisory services to the Authority and the City with respect to the sale of the Series 2016 Bonds. The Municipal Advisor

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provides financial advisory services only and does not engage in the underwriting, marketing, or trading of municipal securities or other negotiable instruments. The payment of fees of the Municipal Advisor is contingent upon the closing and delivery of the Series 2016 Bonds.

FINANCIAL STATEMENTS

The City prepares financial statements annually in conformity with generally accepted accounting principles for governmental entities, which are audited by an independent certified public accountant. The City’s most recent financial statements, for the Fiscal Year ended June 30, 2015, were audited by Lance, Soll & Lunghard, LLP (the “Independent Auditor”), independent certified public accountants, as stated in their report. See APPENDIX B – “CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE YEAR ENDED JUNE 30, 2015.”

Accompanying the Independent Auditor’s Report in Appendix B is the City Management Discussion and Analysis, which is not audited, but is supplementary information required by the Government Accounting Standards Board. The Management Discussion and Analysis presents a summary and overview of the City’s financial condition. Investors are encouraged to read the entire Official Statement including such financial statements in order to obtain information essential to the making of an informed investment decision.

The Independent Auditor did not review this Official Statement. The City did not request the consent of the independent auditors to append the City’s financial statements to this Official Statement. Accordingly, the independent auditors did not perform any procedures relating to any of the information in this Official Statement.

LITIGATION

As of the date of this Official Statement, there is no litigation pending against the City or the Authority or, to the knowledge of its respective executive officers, threatened, seeking to restrain or enjoin the issuance, sale, execution, or delivery of the Series 2016 Bonds or in any way contesting or affecting the validity of the Series 2016 Bonds or the authorizations or any proceedings of the City or the Authority taken with respect to the issuance or sale thereof, or the pledge or application of any moneys or security provided for the payment of the Series 2016 Bonds or the use of the proceeds of the Series 2016 Bonds. There are no pending lawsuits that, in the opinion of the City Attorney, challenge the corporate existence of the City or the Authority, or the title of the executive officers thereof to their respective offices.

In the opinion of the City and the City Attorney, there are no lawsuits or claims pending against the City which will materially affect the City’s finances so as to impair its ability to pay Base Rental Payments when due.

VERIFICATION

Grant Thornton LLP will deliver its report verifying the accuracy of the mathematical computation concerning the adequacy of the maturing principal amounts of and interest earned on the investments, if any, together with other available moneys, to be placed in the Escrow Fund to pay when due, pursuant to a call for redemption, the principal of and interest on the Refunded Bonds. The report of Grant Thornton LLP will include the statement that the scope of their engagement was limited to verifying the mathematical accuracy of the computations contained in such schedules provided to them and that they have no obligation to update their report because of events occurring, or data or information coming to their attention, subsequent to the date of their report.

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RATINGS

S&P Global Ratings (“S&P”) is expected to assign the Insured Bonds its municipal bond rating of “AA” (stable outlook) with the understanding that the Policy insuring the payment when due of the principal of and interest on the Insured Bonds will be issued by AGM concurrently with the delivery of the Insured Bonds. S&P has assigned to the Series 2016 Bonds an underlying rating of “A+” (stable outlook). Such ratings reflect only the views of such rating agency, and an explanation of the significance of the ratings may be obtained by contacting them at: S&P Global Ratings, 55 Water Street, New York, New York 10041. Such ratings are not a recommendation to buy, sell or hold the Series 2016 Bonds. There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Series 2016 Bonds. Neither the City nor the Authority undertakes any obligation to oppose any downward revision, suspension or withdrawal.

UNDERWRITING

The Series 2016 Bonds are being purchased by B.C. Ziegler and Company (the “Underwriter”) pursuant to a Bond Purchase Agreement (the “Purchase Agreement”), by and among the Authority, the City and the Underwriter. The Underwriter has agreed, subject to certain conditions, to purchase the Series 2016 Bonds at a purchase price of $28,730,822.65 (equal to the original principal amount thereof, plus a net original issue premium of $2,239,031.40, less an underwriter’s discount of $153,208.75). The Underwriter is committed to purchase all of the Series 2016 Bonds if any are purchased. The Purchase Agreement provides that the Underwriter will purchase all of the Series 2016 Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in the Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions.

The initial public offering prices stated on the inside front cover page of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Series 2016 Bonds to certain dealers (including dealers depositing bonds into investment trusts), dealer banks, banks acting as agents and others at prices lower than said public offering prices.

The Underwriter and its affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage services. The Underwriter and its affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for the Authority and the City, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the Underwriter and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities, which may include credit default swaps) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Authority and/or the City.

CONTINUING DISCLOSURE

Pursuant to the Continuing Disclosure Certificate of the City (the “Disclosure Certificate”), the City has agreed to provide, or cause to be provided, to the Municipal Securities Rulemaking Board in the manner prescribed by the SEC certain annual financial information and operating data and notice of

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certain Notice Events (as described in the Continuing Disclosure Certificate). The form of the Disclosure Certificate is attached hereto as APPENDIX E – “FORM OF CONTINUING DISCLOSURE CERTIFICATE. The annual report to be filed by the City is to be filed not later than 270 days following the end of the City’s Fiscal Year (which currently would be June 30), commencing with the report for the Fiscal Year ended June 30, 2016 (the “Annual Report”), and is to include audited financial statements of the City. The City’s covenants in the Continuing Disclosure Certificate have been made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of 1934 (the “Rule”). A failure by the City to comply with any of the covenants therein is not an event of default under the Sublease or the Trust Agreement.

In the past five years, the City once filed its annual report five days late, on March 31, 2012, as concerned the City’s AU/AV and AN/AP Bonds and once failed to provide notice of a ratings downgrade. The City has procedures in place designed to ensure timely and complete compliance with its current undertakings under the Rule.

MISCELLANEOUS

This Official Statement has been duly approved, executed and delivered by the Authority and the City.

There are appended to this Official Statement a summary of certain provisions of the principal and legal documents, the proposed form of opinion of Bond Counsel, and a general description of the City and a description of the Book-Entry Only System. The Appendices are integral parts of this Official Statement and must be read together with all other parts of this Official Statement.

This Official Statement is not to be construed as a contract or agreement between the Authority or the City and the purchasers or holders of any of the Series 2016 Bonds. Any statements made in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended merely as an opinion and not as representations of fact. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the financial condition, results of operations, or any other affairs of the City or the Authority since the date hereof.

POMONA PUBLIC FINANCING AUTHORITY

By: /s/ Linda Lowry Chairperson, Board of Directors

CITY OF POMONA

By: /s/ Linda Lowry City Manager

(THIS PAGE INTENTIONALLY LEFT BLANK)

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APPENDIX A

GENERAL DEMOGRAPHIC INFORMATION REGARDING THE CITY OF POMONA

The information herein is subject to change without notice, and neither delivery of this Official Statement nor any sale thereafter of the Series 2016 Bonds shall under any circumstances imply that there has not been any change in the affairs of the City or in any other information contained herein since the date of the Official Statement. The Series 2016 Bonds are payable solely from Base Rental Payments to be made by the City of Pomona. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS”. The taxing power of the City of Pomona, the County of Los Angeles, the State of California or any political subdivision thereof is not pledged to the payment of the Series 2016 Bonds.

General

The City of Pomona was incorporated in January 1888, and became a charter city in 1911. The City now encompasses approximately 22.9 square miles, and currently has an estimated 2016 population of 155,604 (as estimated by the State Department of Finance). The City is located approximately 30 miles east of downtown Los Angeles, in the eastern portion of the County of Los Angeles (the “County”), adjacent to Orange and San Bernardino counties.

The City Charter provides for a council-manager form of government, with an elected council of seven members including a mayor. City Councilmembers are elected by district for overlapping four-year terms. The Mayor is the presiding officer of the Council and is elected at large for a four-year term. The City Manager appoints department heads on the basis of specialized knowledge, experience and education in their area of responsibility.

The coming election includes contests for a majority of the City Council seats and Mayor.

Budgeted authorized City full-time employees number 546 for Fiscal Year 2015-16, of which 163 sworn officers and 107 civilian personnel are assigned to the Police Department.

Climate

The City of Pomona has a dry subtropical climate with temperatures averaging 73 degrees and humidity of about 43%. Air quality is similar to that in the rest of the Los Angeles Basin, with seasonally fluctuating levels of secondary air pollutants.

Services and Facilities

The City provides police protection, sewer maintenance, street sweeping, park maintenance, building inspection, library, water, and sanitation services. The City’s Police Department is responsible for the protection of life and property and traffic enforcement within the City, and currently employs 163 sworn employees. The City transferred the responsibility for fire safety services to the Consolidated Fire Protection District of Los Angeles County, which currently employs 31.7 full-time equivalent (29 fire suppression and 2.7 fire prevention) sworn fire personnel in the City. The City cooperates with Los Angeles County in the provision of flood control protection. Numerous hospitals and health care facilities are located in and near Pomona.

Cultural and recreational facilities within the City include numerous churches, 27 parks, 14 community centers, four museums, one performing arts center, one public library, and one golf course. Additional outdoor recreational opportunities are available at the San Gabriel Mountains and the Angeles

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National Forest. Also, Pomona’s proximity to the San Bernardino and Pomona Freeways brings the cultural and recreational advantages of Los Angeles, San Bernardino and Orange counties within convenient driving distance.

The City is home to the Los Angeles County Fair, which takes place in a 487-acre facility known as the Fairplex. The Los Angeles County Fair attracts over one million people annually.

City Employees

The following table presents the number of authorized full-time City employees for Fiscal Years 2006-07 through 2015-16.

City of Pomona Authorized Full-Time City Employees (Fiscal Years 2006-07 through 2015-16)

Fiscal Year

Number of Authorized Full-Time Employees

2006-07 760 2007-08 771 2008-09 741 2009-10 666 2010-11 580 2011-12 567 2012-13 539 2013-14 539 2014-15 538 2015-16 546

____________________ Source: City of Pomona Finance Department.

Labor Relations

In accordance with the Meyers-Milias-Brown Act, the City has adopted an Ordinance, which establishes the procedures for the administration of employer-employee relations. This includes the procedure by which the City meets and confers with representatives of recognized employee organizations (i.e., unions and associations) regarding matters within the scope of representation, including wages, hours and other terms and conditions of employment within the appropriate unit.

Approximately 94.5% of regular City employees are represented by the following four employee organizations: the Pomona Police Officers’ Association, the Pomona Police Managers’ Association, the Pomona City Employees’ Association and the Pomona Mid-Management City Employees Association. These employee organizations are designated representatives under the Meyers-Millias-Brown Act (Sections 3510 et seq. of the California Government Code).

The City’s labor relations have historically been amicable, although the City is currently in negotiation with all four of the organizations. The City has experienced no major strikes, work stoppages or other related incidents. The following table provides a list of employee bargaining units in the City and

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the number of employees they represent as of June 2016. In addition, the Management Executive Group, which is not a bargaining unit, includes 28 employees.

City of Pomona Bargaining Units

Bargaining Unit

Number of

Employees Term From To

Pomona Police Officers Association 149 July 1, 2014 June 30, 2016 Pomona Police Management Assoc. 9 July 1, 2014 June 30, 2016 Pomona City Employees Assoc. 268 July 1, 2014 June 30, 2016 Pomona Mid-Management City Employees Assoc. 64 July 1, 2014 June 30, 2016

____________________ Source: City of Pomona.Note: All MOUs are valid until superseded by new MOU.

Population

The following table sets forth population data for the City of Pomona.

City of Pomona Population

Year Population 1970 87,384 1980 92,742 1990 130,100 2000 148,725 2005 152,106 2006 152,166 2007 150,513 2008 150,865 2009 149,935 2010 149,311 2011 149,959 2012 151,672 2013 153,410 2014 154,140 2015 154,712 2016 155,604

____________________ Source: 1970-2000 data from US Census Bureau; 2001-2016 data from State of California Department of Finance.

General Fund

The City General Fund finances the legally authorized activities of the City not provided for in other restricted funds. General Fund revenues are derived from such sources as taxes; licenses and

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permits, fines, forfeits and penalties; use of money and property; aid from other governmental agencies; charges for current services; and other revenue. General Fund expenditures and encumbrances are classified by the functions of public safety, public works, community development, and general government.

Budgetary Process

The City operates on an annual budget cycle. The one-year operating budget is adopted each June and becomes effective July 1. The City Council reviews and revises the Five-Year Capital Improvement Program annually. This approach to financial planning gives the City Council the opportunity to set policy and provide direction for operational and capital budgets in an efficient and productive manner.

Sections 1002 through 1011 of the Pomona City Charter sets forth the legal requirements for the preparation and adoption of the City budget and Capital Improvement Program. The Charter requires that the City Manager submit to the City Council a proposed budget at least 45 days prior to the beginning of the fiscal year. It further requires that the Council set a time for a public hearing and that a notice of such hearing be published in a local newspaper no less than ten days prior to the hearing date. In the event the budget is not adopted prior to the first day of the fiscal year (July 1) the amounts appropriated for current operations for the prior fiscal year will be deemed adopted for the current fiscal year on a month-to-month basis, until such time as the new budget is adopted.

The City Manager is additionally required to submit to the City Council the Five-Year Capital Improvement Program at the same time or prior to submission of the operating budget.

The City uses a combined program and line-item budget format. This is designed to provide for a comprehensive management control and fiscal planning system and is aimed at achieving goals and objectives at operational levels which are consistent with the needs and wants of the community. The budgeting process is generally an incremental one which starts with a historical base budget. Requests for more or fewer appropriations are made at the departmental level. Throughout the entire budget process, staff continues to remain cognizant of public safety and legal requirements, as well as providing the most efficient and economical service levels possible.

Altogether, budget preparation takes approximately nine months. Work typically begins in November (in the year prior to the first fiscal year of the budget) when the City Council adopts the Budget Calendar and culminates in August with the publication of the adopted budget document. The following schedule outlines the major steps and dates involved in preparing and processing the annual budget and covers one complete budget cycle.

November – City Council adopts the Budget Calendar for the upcoming fiscal year.

December – The Budget Manual and related material are distributed and reviewed in a training session. The budget team establishes program goals and objectives.

January – Preliminary revenue estimates are projected and departments submit preliminary expenditure budget requests to the Finance Department.

February & March – Budget requests are analyzed by the Finance Department and preliminary revenue estimates are reviewed and adjusted as appropriate. Finance staff and the City Manager meet with each department to review budget estimates. Revenues are compared with expenditures to determine the budget planning direction. Under the direction of the City Manager, the Executive Budget Team and

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Finance staff prepare the proposed budget. Department directors are then briefed on the Proposed Budget. The Five-Year Capital Improvement Program Budget is also prepared during this same period.

April – The Proposed Budget is printed and distributed to the Mayor, Council, and City departments. City Council study sessions are held.

May – The City Council makes final recommendations to the City Manager. Revisions are made to the final budget document per City Council direction.

June – The public hearing notice for the proposed budget is posted in the newspaper. The final proposed budget documents are prepared and submitted to the Council.

The public hearing of the budget is conducted and the budget is adopted. The GANN calculation is prepared and submitted to the City Council for adoption.

August – The final Adopted Budget is published and distributed.

Once the budget is adopted by the City Council, the responsibility of implementing each departmental budget lies with each department head, with ultimate responsibility resting with the City Manager. Department directors are expected to operate their departments within the appropriations established in the budget. Budget transfers or budget amendments should be the exception rather than the rule and are discouraged. In certain cases, however, requests are considered where unforeseen events have occurred. In such cases, the department head and Finance Director may approve transfers within the same division and expenditure category. Transfers moving funds from one division or department to another or one category to another requires the approval of the department head, Finance Director, and City Manager. To amend or supplement the budget by the transfer of all or any part of unused and unencumbered balances appropriated for one purpose to another purpose, to appropriate available funds not included in the budget, or to cancel in whole or in part any appropriation not expended or encumbered requires an affirmative vote of the City Council.

Amending the Capital Improvement Program budget requires City Council action which is usually sought at time of bid award for the new or revised capital project.

City Enterprise Operations

The City provides, and accounts for separately from the General Fund, municipal services for water, sewer and refuse collection and curbside collection of recycling materials.

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Industry and Employment

The major employers within the City boundaries and the number of persons employed by each organization are shown below:

City of Pomona Major Employers

As of June 30, 2015

2015

Number of Employees Rank

Percentage of Total City Employment Employer

Pomona Valley Hospital 3,078 1 4.9% Pomona Unified School District 2,902 2 4.6% California State Polytechnic University 2,612 3 4.2% Fairplex 954 4 1.5% Casa Colina Rehabilitation Center 817 5 1.3% City of Pomona 689 6 1.1% Verizon 596 7 1.0% County of Los Angeles Department of Social Services 400 8 0.6% First Transit 348 9 0.6% Inland Valley Care & Rehab 339 10 0.5% Kittrich Corporation 250 11 0.4% Torn & Glasser Inc. 250 12 0.4% Hayward Industries Inc. 230 13 0.4% Walmart Stores Inc. 218 14 0.3% Anheuser Busch Sales Pomona 212 15 0.3%

____________________ Source: City of Pomona Comprehensive Annual Financial Report as of June 30, 2015. Total Employment: Department, Labor Market Information Division

The following chart provides a comparison, for the years indicated, of the average annual unemployment rates in the City of Pomona, the City of Los Angeles, the County of Los Angeles, the State of California and the United States. The City’s monthly unemployment rate for March 2016 was 5.6%.

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City of Pomona Annual Average Unemployment Rates

For Years 2006 through 2015

Year City of

Pomona City of

Los Angeles County of

Los Angeles State of

California United States 2006 4.8% 5.5% 4.8% 4.9% 4.6% 2007 5.8 8.0 5.1 5.4 4.6 2008 5.8 12.8 7.6 7.3 5.8 2009 8.4 13.7 11.6 11.2 9.3 2010 12.9 13.2 12.5 12.2 9.6 2011 13.5 12.9 12.2 11.7 8.9 2012 12.1 11.5 10.9 10.4 8.1 2013 10.8 10.3 9.7 8.9 7.4 2014 9.2 8.7 8.2 7.5 6.2 2015 7.5 7.1 6.7 6.2 5.3

____________________ Source: State of California, Employment Development Department, Labor Market Information Division and U.S. Department of Labor, Bureau of Labor Statistics.

Per Capita Income

Pomona is situated on the eastern border of the Los Angeles-Long Beach Labor Market Area, and is immediately adjacent to the Los Angeles-San Bernardino-Ontario Labor Market Area, which encompasses Los Angeles and San Bernardino Counties. The following table summarizes per capita personal income for the Los Angeles-Long Beach-Anaheim Metropolitan Statistical Area, California and the United States for the years 2005 through 2015:

Year

Los Angeles-Long Beach-Anaheim

Metropolitan Statistical Area California United States

2005 $39,314 $39,046 $35,904 2006 42,549 41,693 38,144 2007 44,073 43,182 39,821 2008 45,194 43,786 41,082 2009 42,932 41,588 39,376 2010 43,824 42,411 40,277 2011 46,023 44,852 42,453 2012 49,056 47,614 44,266 2013 48,895 48,125 44,438 2014 50,751 49,985 46,049 2015 -(1) 52,651 47,669

____________________ (1) Data not available.

Source: U.S. Department of Commerce, Bureau of Economic Analysis.

Effective Buying Income

“Effective buying income” (“EBI”) is a classification developed exclusively by Sales & Marketing Management magazine to distinguish it from other sources reporting income statistics. EBI is

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defined as “money income” less personal tax and nontax payments - a number often referred to as “disposable” or “after-tax” income. Money income is the aggregate of wages and salaries, net farm and nonfarm self-employment income, interest, dividends, net rental and royalty income, Social Security and railroad retirement income, other retirement and disability income, public assistance income, unemployment compensation, Veterans Administration payments, alimony and child support, military family allotments, net winnings from gambling and other periodic income. Money income does not include money received from the sale of property (unless the recipient is engaged in the business of selling property); the value of “in-kind” income such as food stamps, public housing subsidies, medical care, employer contributions for persons, etc.; withdrawal of bank deposits; money borrowed; tax refunds; exchange of money between relatives living in the same household; gifts and lump-sum inheritances, insurance payments, and other types of lump-sum receipts. EBI is computed by deducting from money income all personal income taxes (federal, state and local), personal contributions to social insurance (Social Security and federal retirement payroll deductions), and taxes on owner-occupied nonbusiness real estate.

The following table presents the latest available total effective buying income and median household effective buying income for the City, the State of California and the nation for the calendar years 2012 through 2016.

Employment

Pomona is situated on the eastern border of the Los Angeles-Long Beach Labor Market Area, and is immediately adjacent to the Los Angeles-San Bernardino-Ontario Labor Market Area, which encompasses Los Angeles and San Bernardino Counties. The following table summarizes the labor force, employment and unemployment figures from 2012 through March of 2016 for Los Angeles County, and compares the unemployment rate for the County with that of the State.

Los Angeles County Employment, Unemployment and Labor Force

Averages for each of the Calendar Years 2012-2016(1)

(Not Seasonally Adjusted)

2012 2013 2014 2015 2016(1)

Employed 4,385,300 4,494,400 4,611,500 4,674,800 4,756,400 Unemployed 536,500 484,600 414,300 336,900 251,000 Total(2) 4,921,800 4,979,000 5,025,900 5,011,700 5,007,500 Unemployment Rate 10.9% 9.7% 8.2% 6.7% 5.0% State Unemployment Rate 10.4% 8.9% 7.5% 6.2% 5.6% ____________________ (1) As of March 2016. (2) Total, Civilian Labor Force. Source: State Employment Development Department.

Assessed Valuation

The assessed valuation of property in the City is established by the Los Angeles County Assessor, except for public utility property, which is assessed by the State Board of Equalization. Assessed valuations are reported at 100% of the full cash value of the property, as defined in Article XIIIA of the California Constitution.

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Fiscal Year Ended

June 30 Residential Property

Commercial Property

Industrial Property Other

Unitary Values

Unsecured Property

2006 $4,871,752 $ 753,876 $ 875,823 $ 548,455 $ 7,077 $383,6272007 5,555,560 850,046 927,732 619,284 5,880 376,1782008 6,175,439 946,442 1,012,035 690,821 790 372,7912009 6,486,480 1,019,941 1,104,778 754,630 790 384,0812010 5,759,284 1,039,418 1,197,842 830,321 788 381,3972011 5,441,493 1,034,597 1,244,142 885,973 788 352,4032012 5,571,482 998,040 1,226,077 905,772 655 360,7772013 5,679,812 1,019,770 1,178,211 884,418 655 350,8962014 5,932,623 1,059,762 1,233,924 869,787 374 372,6212015 6,396,012 1,070,267 1,261,918 942,134 -- 379,640

_____________________ Prior Year values have been restated for consistency and compliance with GASB No. 44 guidelines (1) Exemptions are exclusive of home owner exemptions. (2) Total direct tax rate is the voter approved taxes over and above the 1% Proposition 13 tax for TRA 007-790. (3) Estimated Actual Value is derived from a series of calculations comparing median assessed values from 1940 to current

median sale prices. Based on these calculations a multiplier value was extrapolated and applied to current assessed values. Source: Los Angeles County Assessor data, MuniServices, LLC.

Education

The Pomona Unified School District is composed of 25 elementary, 4 junior high and 8 high schools, including continuing education programs; in addition, several parochial and private schools are located within a five-mile radius of Pomona. Historical total enrollment within the Pomona Unified School District is shown below.

Pomona Unified School District Total Enrollment

(Fiscal Years 2010-11 through 2014-15)

Fiscal Year Total

Enrollment Average Daily

Attendance 2010-11 28,295 26,625 2011-12 27,732 26,405 2012-13 27,186 25,828 2013-14 26,264 24,753 2014-15 25,311 23,901

____________________ Source: Pomona Unified School District.

Colleges and universities within a five-mile radius of the City include the 6 Claremont Colleges, California State Polytechnic University at Pomona, De Vry Institute of Technology, the University of La Verne, Westech College and the Western University of Health Services.

Culture and Recreation

The City established its Cultural Arts Commission in 1972. The Pomona Arts Colony was founded in 1994 and established its Second Saturday Art Walks in 1998. Currently, Second Saturdays draw about 5000 visitors each month. An estimated 500,000 people annually participate in the nightlife of downtown Pomona; the Arts Colony is one of the primary draws.

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In addition to its downtown arts scene, Pomona also boasts 27 city parks, six historic sites, four museums, two universities, 200 places of worship, the Pomona Youth Orchestra, the Pomona Concert Band and the Repertory Opera Company. The Cultural Alliance of Pomona was established in 1999 and has brought professional musical performances to the City. The Aztlan Cultural Art Exhibit, an annual exhibition of Latino arts and culture, has in seven years become nationally recognized. Residents and visitors also participate in numerous cultural festivals, among them the Chalk Festival, the Christmas Parade, the Tet Festival, Cinco de Mayo, Juneteenth and the Smogdance Film Festival.

In 2010, the City of Pomona was selected to join four other municipalities throughout Los Angeles County to receive support from the Los Angeles County Arts Commission and the National Endowment for the Arts to develop a Cultural Plan for the City. This plan articulates the vision, a series of goals, objectives and strategies for the future of arts and culture in the City.

Utilities

Southern California Gas Company and Southern California Edison Company (“SCE”) provide gas and electricity service within the City, respectively. Over 100 telecommunications companies provide long-distance and wireless service. The City provides water and wastewater service.

APPENDIX B

CITY OF POMONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015

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CITY OF POMONA, CALIFORNIA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2015

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FISCAL YEAR ENDED JUNE 30, 2015

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COMPREHENSIVEANNUAL FINANCIAL

REPORTYear Ended June 30, 2015

Elliott Rothman Mayor

John Nolte Councilmember, District 1

Adriana Robledo Councilmember, District 2

Cristina Carrizosa Councilmember, District 3

Paula Lantz Councilmember, District 4

Ginna E. Escobar Councilmember, District 5

Debra Martin Councilmember, District 6

Prepared by the City of Pomona Finance DepartmentPaula Chamberlain, Finance Director

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CITY OF POMONA


JUNE 30, 2015 TABLE OF CONTENTS

Page Number INTRODUCTORY SECTION Letter of Transmittal ............................................................................................................................... i Certificate of Achievement for Excellence in Financial Reporting ....................................................... vii Organizational Chart ........................................................................................................................... viii Directory of City Officials ...................................................................................................................... ix FINANCIAL SECTION INDEPENDENT AUDITORS’ REPORT ................................................................................................ 1 MANAGEMENT DISCUSSION AND ANALYSIS.................................................................................. 5 BASIC FINANCIAL STATEMENTS

Government-Wide Financial Statements: Statement of Net Position ...................................................................................................... 19 Statement of Activities ........................................................................................................... 20

Governmental Fund Financial Statements: Balance Sheet - Governmental Funds ................................................................................... 26

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ............................................................................................ 29

Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds ........................................................................................... 30

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ............................................................................................................ 32

Proprietary Fund Financial Statements:

Statement of Net Position – Proprietary Funds ..................................................................... 34

Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds ................................................................................................. 38

Statement of Cash Flows – Proprietary Funds ...................................................................... 40

Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Position – Fiduciary Funds ......................................................... 47 Statement of Changes in Fiduciary Net Position – Fiduciary Funds ..................................... 48

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CITY OF POMONA


JUNE 30, 2015TABLE OF CONTENTS

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FINANCIAL SECTION (CONTINUED)

Index to Notes to Financial Statements..........................................................................................51

Notes to Financial Statements........................................................................................................55

REQUIRED SUPPLEMENTARY INFORMATION

Budgetary Information ...................................................................................................................133Budgetary Comparison Schedule – General Fund .................................................................134Budgetary Comparison Schedule – Housing Authority...........................................................135Budgetary Comparison Schedule – Miscellaneous Grants ....................................................136

Schedule of Changes in Net Pension Liability and Related RatiosMiscellaneous Plan ............................................................................................................... 137Safety Plan ............................................................................................................................ 138

Schedule of Plan Contributions ................................................................................................... 139

COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES

Combining Balance Sheet – Nonmajor Governmental Funds.......................................................144

Combining Statement of Revenues, Expenditures, andChanges in Fund Balances – Nonmajor Governmental Funds .....................................................148

Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual:General Debt Service..............................................................................................................152Public Financing Authority Debt Service.................................................................................153Community Development Block Grant ....................................................................................154State Gas Tax .........................................................................................................................155Proposition A ...........................................................................................................................156Proposition C...........................................................................................................................157Vehicle Parking District ...........................................................................................................158Air Quality Improvement..........................................................................................................159Landscape Maintenance District .............................................................................................160Asset Forfeiture .......................................................................................................................161Traffic Offender .......................................................................................................................162Measure R...............................................................................................................................163General Sanitation Fees Operations.......................................................................................164Capital Outlay..........................................................................................................................165

CITY OF POMONA


JUNE 30, 2015TABLE OF CONTENTS

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COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES (CONTINUED)

Internal Service Funds:Combining Statement of Net Position – Internal Service Funds.............................................168

Combining Statement of Revenues, Expenses, and Changes inin Net Position – Internal Service Funds.................................................................................170

Combining Statement of Cash Flows – Internal Service Funds .............................................172

Fiduciary Funds:Combining Balance Sheet – Agency Funds ...........................................................................176

Combining Statement of Changes in Assets and Liabilities –Agency Funds .........................................................................................................................178

STATISTICAL SECTIONNet Position by Component ...........................................................................................................182Changes in Net Position ................................................................................................................184Fund Balances - Governmental Funds..........................................................................................188Changes in Fund Balances - Governmental Funds ......................................................................190Governmental Activities Tax Revenue by Source .........................................................................193Assessed Value and Estimated Actual Value of Taxable Property ...............................................194Property Tax Rates - Direct and Overlapping Governments.........................................................196Principal Property Taxpayers.........................................................................................................197Top 25 Sales Tax Generators........................................................................................................198Property Tax Levies and Collections .............................................................................................199Ratios of Outstanding Debt by Type..............................................................................................200Ratios of General Bonded Debt Outstanding ................................................................................202Direct and Overlapping Debt .........................................................................................................203Legal Debt Margin Information ......................................................................................................204Pledged Revenue Coverage - Water.............................................................................................206Pledged Revenue Coverage - Sewer ............................................................................................207Demographic and Economic Statistics ..........................................................................................208Principal Employers .......................................................................................................................209Authorized Full-Time City Employees by Function........................................................................211Taxable Sales by Category............................................................................................................212Operating Indicators by Function...................................................................................................214Capital Asset Statistics by Function ..............................................................................................215

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7 December 16, 2015 Honorable Mayor and City Council and Citizens of the City of Pomona Pomona, California The audited Comprehensive Annual Financial Report (CAFR) of the City of Pomona, California (City) for the fiscal year ended June 30, 2015 is hereby submitted. An independent certified public accounting firm audits the basic financial statements. The purpose of the audit is to ensure that the basic financial statements present fairly, in all material respects, the financial position and the results of operations of the City. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the City. Lance, Soll & Lunghard, LLP, Certified Public Accountants, have issued an unmodified opinion of the City of Pomona’s financial statements for the year ended June 30, 2015. The financial statements have been prepared in accordance with generally accepted accounting principles in the United States. This means that the statements have been prepared using guidelines designed to fairly set forth the financial position and results of operations of the City as measured by the financial activity of its various funds. The independent auditor’s report is located on page 1 of the Financial Section. All disclosures necessary to enable the reader to gain the maximum understanding of the City’s financial activities have been included.

Generally accepted accounting principles require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors. In addition to the comprehensive audit, the City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1996 as amended and U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations. Information related to this single audit, including a schedule of federal financial assistance, findings and recommendations and auditor’s report on the internal control structure and compliance with applicable laws and regulations, is provided in a separate single audit report. REPORTING ENTITY The primary unit of the government is the City, and includes component units all of which are described below: The Primary Government The City was founded on January 6, 1888 and became a charter city in 1911. The City operates under a Council-Manager form of municipal government. The accompanying Comprehensive Annual Financial Report includes the activities of the City, the primary government, and its component units, which are the Pomona Public Financing Authority, the City of Pomona Housing Authority, and the Canon Water Company. Financial information for the City and these component units is accounted for in the accompanying financial statements in accordance with principles

PAULA CHAMBERLAIN Finance Director

THE CITY OF

POMONA Finance Department

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defining the reporting entity adopted by the Governmental Accounting Standards Board. The City Council serves as the governing board of the Housing Authority. The City Manager, City Attorney, Finance Director/City Treasurer, Senior Accountant, and the Deputy City Manager serve as the governing board for the Pomona Public Financing Authority. The Public Works Director, Deputy Public Works Director, Water/Wastewater Manager, Supervising Water Resources Engineer, and Water Treatment and Quality Supervisor for the City serve as the governing board of the Canon Water Company. All of these component units are presented on a blended basis.

The former Redevelopment Agency, now Successor Agency, is a separate legal entity, which was formed to hold the assets of the former Redevelopment Agency pursuant to City Council action taken on January 9, 2012 with members of the City Council, sitting as the Successor Agency to the Redevelopment Agency. The activity of the Successor Agency is overseen by an Oversight Board which is comprised of individuals appointed by various government agencies including the City of Pomona.

The Pomona Public Financing Authority (the Authority) is a joint exercise of powers agreement organized under Section 6500 of the California Government Code on October 27, 1988 between the City, the Redevelopment Agency, and the Redevelopment Agency of the City of West Covina. The purpose of the Authority is to act as a vehicle for various financing activities of the City and the Agency. The funds of the Authority have been included in the governmental activities in the financial statements. Separate audited statements are also issued for the Authority and are available for review in the Pomona Public Library.

The Housing Authority of the City of Pomona (the Housing Authority) was organized pursuant to the State of California Health and Safety Code, Section 34242. The Authority exists pursuant to adopted resolution No. 93-114 adopted June 7, 1993. Its purpose is to prepare and carry out plans to ensure sanitary and safe housing exists in the City of Pomona and that such housing is available to persons of low income at affordable rental rates. The City provides management assistance to the Housing Authority, and the members of the City Council also act as the governing body of the Housing Authority. The Housing Authority’s financial data and transactions are blended with the major governmental funds.Separate audited statements are also issued for the Housing Authority and are available for review in the Pomona Public Library.

This report includes all funds of the City of Pomona, California, and each of its component units. Component units are legally separate entities for which the primary government is financially accountable. The City provides full services to its residents including public safety, land use planning and zoning, housing and economic development, building and safety regulation and inspection, water, sewer and refuse services, maintenance of parks, streets and related infrastructure, recreational activities and library services.

THE CITY OF POMONA

The City is located at the southeast end of Los Angeles County and borders San Bernardino County’s western boundary and is just five miles north of Orange County. The City has a population of 152,419and covers an area of approximately 23 square miles. The City is a charter city and is governed by a mayor and six council members. Council members are elected by district with the mayor elected from the City at large. Each member of the Council is elected to a term of four years.

LOCAL ECONOMY

The City of Pomona continues to enjoy a broadly based diverse economy, albeit one with an emphasis upon government, healthcare, and other service-oriented industries. Among Pomona’s large employers are the school district (Pomona USD), the City of Pomona itself, California State Polytechnic University, and the Department of Social Services. Notable private sector employers include Anheuser Busch, Consolidated Foundries, First Transit, Hayward Industries, Inland Valley Care and Rehab, Kittich Corporation, Verizon, Walmart, Los Angeles County Fair Association (Fairplex) and the newly opened

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Target store. As a regional healthcare hub, Pomona boasts a premier facility in the Pomona Valley Hospital Medical Center and the non-profit Casa Colina Centers for Rehabilitation.

Per 2015 estimates published by the Labor Market Information Division of the California Employment Development Department (the most recent such data available), the City’s employed civilian labor force presently stands at approximately 62,700 workers.

Retail Sales and Use Tax remains an extremely significant source of revenue, and activity now is still on the rebound from levels depressed by the so-called “Great Recession,” with annual taxable retail sales of more than $1.57 billion dollars during Fiscal Year 2014-15 based on actual revenues received. The City of Pomona remains central to the region’s building and construction industry, while other business-to-business sales represent a notable share of local sales tax receipts.

Current assessed valuation for the City of Pomona including redevelopment areas is $9,840,105,629according to the Office of the Los Angeles County Auditor-Controller. Based on the City assessed valuation (excluding redevelopment areas) of $5,539,772,104, overall property tax receipts (secured, unsecured, transfer tax, in-lieu, etc.) were 31.5% of the 2014-15 General Fund revenues, while sales tax and related line items were 20.4% of that same total.

LONG-TERM FINANCIAL PLANNING

Pomona’s vigilant ongoing review and control over expenditure growth has been, and will continue as, a critical factor in maintaining and improving the City’s overall financial health. To ensure its fiscal health, on May 2, 2011, the City Council adopted resolution number 2011-49 approving the City’s Fiscal Sustainability Policy. This policy established guidelines for the City’s overall fiscal planning and management and is intended to foster and support continued financial strength and stability of the City. The policy is quite comprehensive and covers areas of Budget, Economic Development, Risk Management, Accounting-Auditing-Financial Reporting, Cash Management and Investments, and Debt Management. The policy also required a separate Fund Balance Policy to ensure fiscal health of the City. Part of the Fund Balance Policy adopted by the City Council on June 20, 2011, requires the General Fund to have a ‘Committed Fund Balance’ of 17% of operating expenditures by June 30, 2020. The policy provides a scale for reaching the 17% starting with 8% as of June 2012 and ending with the 17% in 2020. Based on 2014-15 General Fund expenditure and fund balance numbers, the General Fund has already exceeded the final goal of 17%.

OUTLOOK FOR THE FUTURE

As the City looks ahead to 2015-16, staff is encouraged by indicators that a modest recovery is finally underway. How long the recovery will last is unknown, but the City appears to have turned the corner for now, and prospects for the future are much improved. All tax categories, as well as construction related categories, are reflecting a recovering economy. The adopted 2015-16 General Fund budget is balanced and reflects estimated revenues of $91.3 million which is a 3.2% increase from the previous fiscal yearreceipts.

FINANCIAL INFORMATION

Management of the City is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management.

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Single Audit. As a recipient of federal and state financial assistance, the City is also responsible for ensuring that an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is subject to periodic evaluation by management and the staff of the City. The City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act as amended in 1996 and the United States Office of Management and Budget Circular A-133. The results of the City’s single audit for the fiscal year ended June 30, 2015 are published under separate cover.

Budgetary Controls. The City maintains budgetary controls to ensure compliance with legal provisions embodied in the annual adopted budget approved by the City’s governing body. The legal level of budgetary control (that is, the level at which expenditures cannot exceed the appropriated amount) is at the department level in the General Fund and by fund total for all other funds. For budgeting purposes, the General Fund is composed of several departments while all other budgeted funds are each considered to be a single department. The City maintains an encumbrance accounting system as one technique of accomplishing budgetary control, however all operating encumbrances lapse at year-end unless specifically approved by City Council resolution per the City Charter.

OTHER INFORMATION

Risk Management. The City maintains a self-insurance program to provide for the general liability, workers compensation and unemployment benefits claims.

Independent Audit. The accounting firm of Lance, Soll & Lunghard, LLP was selected to perform the annual independent audit. The annual audit is designed to meet the requirements of generally accepted auditing standards in the United States, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the Federal Single Audit Act of 1996, as amended and related OMB Circular A-133. The auditors’ report on the basic financial statements is included in the financial section of this report. The auditors’ report related specifically to the single audit is included in a separate Single Audit Report.

Certificate of Achievement. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Pomona for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2014. The City of Pomona has received a Certificate of Achievement for the last twenty-two consecutive years (1993-2014). The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports.

In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. The CAFR must satisfy both generally accepted accounting principles in the United States and applicable legal requirements.

The Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to GFOA for consideration.

Additional Information. For additional information, please refer to the Management’s Discussion and Analysis in the Introductory Section of this report. This discussion and analysis of the City’s financial performance provides an overview of the City’s financial activities for the fiscal year ended June 30, 2015. Please read it in conjunction with the basic financial statements and the accompanying notes to the basic financial statements.

Acknowledgments. The preparation of this report on a timely basis could not have been accomplished without the efficient and dedicated services of the entire Finance Department staff. Special recognition is given to all the Accounting division staff and the City’s audit firm for their services in the coordination and

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assistance in the preparation of this year’s report.

In closing, without the leadership and support of the City Council, preparation of this report would not have been possible.

Respectfully submitted,

Paula ChamberlainFinance Director

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CITY OF POMONA

Certificate of Achievement

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Pomona for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2014. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of a state and local government financial reports.

In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. The CAFR must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. The City of Pomona has received a Certificate of Achievement for the last twenty-twoconsecutive years (fiscal years ended 1993-2014).

We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to GFOA for consideration.

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CITY OF POMONA

Organizational Chart

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CITY OF POMONA

DIRECTORY OF CITY OFFICIALS at June 30, 2015

CITY COUNCIL

Elliott Rothman

Mayor

John Nolte Councilmember

District 1

Paula Lantz Councilmember

District 4

Adriana Robledo Councilmember

District 2

Ginna E. Escobar Councilmember

District 5

Cristina Carrizosa Councilmember

District 3

Debra Martin Councilmember

District 6

APPOINTED ADMINISTRATIVE OFFICIALS

City Manager ......................................................................Linda Lowry City Attorney .................................................. Arnold Alvarez-Glasman City Clerk ......................................................................... Eva M. Buice City Treasurer ........................................................... Paula Chamberlain

DEPARTMENT DIRECTORS

Finance ...................................................................... Paula Chamberlain Fire Chief (Los Angeles County) ......................................Daryl L. Osby Human Resources ........................................................ Linda Matthews Information Technology .................................................... John DePolis Library ................................................................................. Mark Gluba Community Development/Community Services .......... Mark Lazzaretto Police Chief ........................................................................ Paul Capraro Public Works .......................................................................... Rene Salas Water/Wastewater (effective 7/1/15) ............................. Darron Poulsen

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INDEPENDENT AUDITORS’ REPORT

To the Honorable Mayor and Members of the City CouncilCity of Pomona, California

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Pomona, California, (the City) as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

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To the Honorable Mayor and Members of the City Council City of Pomona, California Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Pomona, California, as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As discussed in Note 1 to the financial statements, in 2015 the City adopted new accounting guidance, GASB Statement No. 68, Accounting and Financial Reporting for Pensions – An Amendment of GASB Statement No. 27 as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the budgetary comparison schedules for the General Fund, Housing Authority and Miscellaneous Grant Fund, the schedules of changes in net pension liability and related ratios, and the schedules of plan contributions be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules are fairly stated in all material respects in relation to the basic financial statements as a whole.

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To the Honorable Mayor and Members of the City Council City of Pomona, California The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2015 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Brea California December 16, 2015

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MANAGEMENT’S DISCUSSION AND ANALYSIS

Fiscal Year Ended June 30, 2015

The following Management’s Discussion and Analysis (MD&A) of the City of Pomona’s financial performance provides an introduction and overview to the financial activities of the City for the fiscal year ended June 30, 2015. This narrative discussion and analysis focuses on the fiscal year 2014-15 activities, resulting changes and current known facts; therefore, the information presented here should be considered in conjunction with additional information furnished in the transmittal letter and the accompanying basic financial statements.

FINANCIAL HIGHLIGHTS

! The assets of the City exceeded its liabilities at the close of the fiscal year by $202 million. ! As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund

balances of $95.8 million.! At the end of the current fiscal year, committed fund balance for fiscal sustainability in the General Fund

was $14.5 million, which is 17% of total general fund expenditures, including transfers out.

OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis portion of the annual financial report is intended to serve as an introduction to, and provide the reader with a fundamental understanding of, the Comprehensive Annual Financial Report (CAFR) for the City of Pomona. The CAFR is divided into four main sections. First is the Introductory Section which provides the letter of transmittal, an organizational chart, and a list of City officials. The Introductory Section is followed by the Financial Section, which contains the independent auditor’s report, the management’s discussion and analysis, and finally the basic financial statements. These statements contain the “core” financial information for the City of Pomona. The basic financial statements include the government-wide financial statements, followed by the fund financial statements, and finally, the notes to the financial statements. The Financial Section is followed by the Supplemental Data portion of the report, which provides individual fund and combining information that rolls up into the amounts shown in the basic financial statements. The final portion of the CAFR is the Statistical Section. This section presents selected financial and demographic information, generally presented on a multi-year basis.

Government-wide financial statements. The government-wide financial statements are designed to provide the reader with a broad overview of the City of Pomona’s finances, in a manner similar to a private sector business. Information contained within the government-wide statements includes the entire City government (except fiduciary funds) and the City’s component units. These statements use the accrual basis of accounting with the measurement focus on that of economic resources. All assets and liabilities, both financial and capital, short-term and long-term, are included. All revenues and expenses during the year, regardless of when cash is received or disbursed, are reported. The government-wide financial statements include the Statement of Net Position and the Statement of Activities.

The Statement of Net Position presents information on all of the City of Pomona’s assets and liabilities, with the difference between the two reported as “net position”. Increases or decreases in net position may serve as a useful indicator as to whether the financial condition of the City of Pomona is improving or deteriorating over time.

The Statement of Activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event causing the change occurs, regardless of when cash is actually received or disbursed. This means that revenues and expenses in

PAULA CHAMBERLAINFinance Director

THE CITY OF

POMONAFinance Department

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CITY OF POMONA

Management’s Discussion and Analysis, ContinuedYear Ended June 30, 2015

this statement are recorded when earned or a liability is incurred. Thus, items such as the value of earned but unused vacation leave will be recorded as an expense of the current period, even though the actual use of the vacation time may not be until subsequent periods.

Both of the government-wide statements distinguish between functions of the City of Pomona that are principally supported by taxes or intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Pomona include general government, public safety, urban development, neighborhood services, and interest and fiscal charges. The business-type activities of the City of Pomona include water, sewer, refuse and Canon Water Company operations.

Fund financial statements. A “fund” is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Pomona, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. The fund financial statements provide more detailed information about the City’s most significant funds, not the City as a whole. All of the funds of the City of Pomona can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental funds include activities of the City that are not proprietary or fiduciary. These funds are used to account for, essentially, the same functions reported as “governmental activities” in the government-wide financial statements. Unlike the government-wide financial statements, however, governmental fund financial statements use the modified accrual basis of accounting and focus on near-term inflows and outflows of spendable resources, as well as the balances of spendable resources available at the end of the fiscal year. Only assets expected to be used and liabilities that come due during the year or soon thereafter are reported on the Balance Sheet. No capital assets are included. Revenues for which cash is received during or soon after the end of the year, and expenditures for goods and services that have actually been received during the year, are included within the Statement of Revenues, Expenditures, and Changes in Fund Balance.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds in the fund financial statements with similar information presented for “governmental activities” in the government-wide financial statements. By doing so, the reader may better understand the long-term impact of the City’s near-term financing decisions. Both the Governmental Fund Balance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund Balance provide a reconciliation to facilitate this comparison.

The City of Pomona maintains 20 individual governmental funds. Individual fund information is presented for the “major” funds in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance. The major funds presented include the General Fund, the Housing Authority Fund, the Miscellaneous Grants Fund, the General Debt Service Fund, and the Public Financing Authority Debt Service Fund. Information for the remaining governmental funds is combined into a single “other governmental funds” column on the face of the financial statements. Individual fund data for each of these non-major governmental funds is provided in the form of “combining statements” presented in the Supplemental Data portion of the report.

Proprietary funds are used to report two types of funds: enterprise funds and internal service funds. Enterprise funds report the same functions presented as “business-type” activities in the government-wide financial statements. These include activities that the City operates similar to a private business. The City of Pomona uses enterprise funds to account for the operations of the City and Canon Water Company all of which are considered “major” funds. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City of Pomona uses internal service funds to account for its self-insurance activities, equipment maintenance activities, information technology activities, and printing/mail service activities. Because these four services predominately benefit governmental rather than business-type functions, the activity has have been included within “governmental activities” in the government-wide financial statements. All internal service funds are combined into a single aggregated column presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements presented in the Supplemental Data portion of the report.

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CITY OF POMONA Management’s Discussion and Analysis, Continued Year Ended June 30, 2015

Proprietary funds use the accrual basis of accounting and focus on the accumulation and use of economic resources. Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses, and Changes in Net Position, and a Statement of Cash Flows. All assets and liabilities, both financial and capital, short and long-term are included within these statements. All revenues earned and expenses incurred during the year are also included, regardless of when cash is actually received or paid. Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reflected in the government-wide financial statements because the funds are custodial in nature, and therefore, these resources are not available to fund the City of Pomona programs. Notes to the financial statements. The notes to the financial statements provide additional information that is essential to a full understanding of the information contained in the government-wide and fund financial statements. The combining statements referred to earlier in connection with non-major governmental funds and internal service funds are presented immediately following the notes to the financial statements. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net position. As mentioned earlier, net position may serve over time as a useful indicator of a government’s financial position. Total net position has decreased when compared to the prior year. Below is a summary schedule showing the components that make up the City’s net position (in millions) at June 30, 2015 and 2014.

2015 2014 2015 2014 2015 2014Current and other assets 117.4$ 137.6$ 88.2$ 89.3$ 205.6$ 226.9$ Capital assets 273.5 277.8 156.5 155.8 430.0 433.6

Total assets 390.9 415.4 244.7 245.1 635.6 660.5

Deferred outflows of resourcesDeferred charge 0.1 0.1 1.7 1.8 1.8 1.9 Deferred pension related items 7.9 - 1.1 - 9.0 -

Total deferred outflows of resources 8.0 0.1 2.8 1.8 10.8 1.9

Current and other liabilities 7.4 9.6 6.8 8.4 14.2 18.0 Long-term liabilities outstanding 248.6 141.4 150.0 138.8 398.6 280.2

Total liabilities 256.0 151.0 156.8 147.2 412.8 298.2

Deferred inflows of resourcesDeferred pension related items 27.3 - 4.2 - 31.5 -

Total deferred inflows of resources 27.3 - 4.2 - 31.5 -

Net Position:

Net Investment in capital assets 236.5 239.9 42.1 43.8 278.6 283.7 Restricted 102.5 91.1 28.9 32.7 131.4 123.8 Unrestricted (223.4) (66.5) 15.6 23.2 (207.8) (43.3)

Total net position 115.6$ 264.5$ 86.6$ 99.7$ 202.2$ 364.2$

Governmental Business-TypeActivities Activities Total

For the City of Pomona, total assets exceeded total liabilities by $202 million at June 30, 2015. As the table above shows, an amount of $274.3 million is reported as net investment in capital assets. This amount represents those capital assets (land, buildings, improvements, equipment, and work in progress), some of which have been acquired over time and financed by the issuance of long-term debt. The City of Pomona uses these capital assets to provide services to the citizens of the City, and the assets are therefore not available for meeting current financial obligations. Although net investment in capital assets is reported net of related debt, it

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should be noted that the resources needed to repay the debt must come from other operating sources, since the capital assets themselves cannot be used to make debt service payments. An additional portion of net position, in the amount of $131.4 million, reported as restricted net position represents resources that are subject to external restrictions on how it may be used. Restrictions include assets that are legally set aside for future capital development, capital projects, housing-related activities, debt service reserves, and other legally restricted amounts. The remaining balance is unrestricted net position of $(207.8 million). Changes in net position. The statement of net position provides a snapshot at a given point in time of the assets and liabilities of the City. The other citywide statement provided is the Statement of Activities. This statement provides the reader with information regarding the revenues, expenses, and changes in net position over the fiscal year. Generally, all changes to the City’s net position from one fiscal year to the next flow through the statement of activities. The City’s programs for governmental activities include legislative and support services, Police, Fire, Public Works, Urban Development, Community Services, and Library. The programs for the business-type activities include water utilities, sewer, and residential refuse operations. The following is a summary schedule showing the components that make up the City’s changes in net position (in millions) for the years ended June 30, 2015 and 2014.

2015 2014 2015 2014 2015 2014Revenues:Program Revenues:

Charges for services 14.3$ 13.5$ 14.3$ 13.5$ Water - - 29.9$ 31.6$ 29.9 31.6 Sewer - - 4.7 4.7 4.7 4.7 Refuse - - 9.6 9.6 9.6 9.6

Operating contributions and grants 17.6 19.5 - - 17.6 19.5 Capital contributions and grants 12.6 12.8 - - 12.6 12.8

General Revenues:Taxes:

Property taxes 36.4 33.6 - - 36.4 33.6 Sales taxes 13.5 12.0 - - 13.5 12.0 Motor vehicle licenses 0.1 - - - 0.1 - Transient occupancy taxes 1.6 1.6 - - 1.6 1.6 Property transfer taxes 1.6 1.4 - - 1.6 1.4 Franchises taxes 6.5 6.0 - - 6.5 6.0 Utility users taxes 17.5 17.3 - - 17.5 17.3 Business licenses (nonregulatory) 3.3 3.2 - - 3.3 3.2 Other taxes 0.1 - - - 0.1 -

Interest and rentals 2.1 2.3 0.1 0.1 2.2 2.4 Miscellaneous 3.5 2.9 0.1 0.1 3.6 3.0 Gain on sale of capital assets - - - - - - Extraordinary gain (loss) on RDA dissolution 0.8 - - - 0.8 -

Total revenues 131.5$ 126.1$ 44.4$ 46.1$ 175.9$ 172.2$


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CITY OF POMONA


Expenses:General government 5.6$ 5.6$ -$ -$ 5.6$ 5.6$ Public safety 67.6 66.6 - - 67.6 66.6 Urban development 42.1 47.9 - - 42.1 47.9 Community services 6.2 6.2 - - 6.2 6.2 Interest on long-term debt 5.2 5.4 - - 5.2 5.4 Water - - 27.1 29.5 27.1 29.5 Sewer - - 3.9 4.1 3.9 4.1 Refuse - - 8.5 8.6 8.5 8.6 Canon Water Company - - - - - - Total expenses 126.7 131.7 39.5 42.2 166.2 173.9

Increase in net position before transfers 4.9 (5.6) 4.9 3.9 9.8 (1.7) Transfers 1.0 0.5 (1.0) (0.5) - - Increase (decrease) in net position 5.9 (5.1) 3.9 3.4 9.8 (1.7) Net position at beginning of year 264.5 269.6 99.7 96.3 364.2 365.9 Restatement of Net Position (154.8) - (17.0) (171.8) - Net position at end of year 115.6$ 264.5$ 86.6$ 99.7$ 202.2$ 364.2$

Governmental Activities - The City had a $5.9 million increase in net position from governmental activities (see Financial Analysis of the City’s Funds – General Fund for explanation) in 2014-15. The cost of all governmental activities this year was $126.7 million. However, as shown above in the changes in net position, the amount taxpayers ultimately financed for these activities was $82.2 million since some of the cost was paid by those who directly benefited from the programs ($14.3 million), or by other governments and organizations that subsidized certain programs with operating contributions and grants ($17.6 million), and capital contributions and grants ($12.6 million). Overall, the City’s program revenues were $44.5 million. The City paid for the remaining “public benefit” portion of governmental activities with $80.6 million in taxes (some of which is restricted for certain programs).

Business Type Activities - The cost of all business-type activities in 2014-15 was $39.5 million. As shown above in the changes in net position, the amount of revenue received was $44.4 million. Total resources available during the year to finance business-type activities were $127.1 million consisting of Net Position at July 1, 2014of $82.7 million, after a restatement of $(17 million) due to implementation of GASB 68, revenues of $44.4 million, expenditures of $39.5 million and consideration of $(1 million) in transfers; thus net position increased by $3.9 million. The increase was primarily due to the reduction in expenses in the Water Fundprimarily due to the decrease in purchase of water when compared to the prior year. The City and its residents made a conscious effort to reduce water usage due to the drought and imposed water restrictions.

FINANCIAL ANALYSIS OF THE CITY’S FUNDS

The City uses governmental fund accounting to ensure compliance with budgetary allocations and to maintain control over resources that are legally, or otherwise, restricted for specific purposes. Following is a discussion of the individual “major” funds as shown on the Balance Sheet for Governmental Funds in the basic financial statements.

General Fund - The General Fund is used to account for the general operations of the City. It is used to account for all financial resources, except those required to be accounted for in another fund. The General Fund is always reported as a “major fund”. The General Fund reported $90.0 million in revenues and $80.5 million in expenditures resulting in revenues over expenditures in the amount of $9.5 million before accounting for net other financing uses of $4.6 million, resulting in the General Fund fund balance to increase by $4.9 million for the fiscal year. Total fund balance at June 30, 2015 was $17.3 million, composed of $22.5 million in assets combined with $2.9 million in liabilities and $2.3 million in deferred inflows and resources. Total fund balance includes $0.1 million in nonspendable fund balance, which represents that portion of fund balance that is not available for appropriation. Committed fund balance totals $14.5 million for fiscal sustainability. The City has a

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CITY OF POMONA


fiscal sustainability policy that was adopted by resolution 2011-49 for the purpose of guiding the City’s financial planning to meet financial obligations while providing high quality services. The policy states that 17% of the general fund operating expenditures including transfers out is to be committed for fiscal sustainability. The committed portion of fund balance can only be used for specific purposes pursuant to constraints imposed by formal action of the City Council, and remains in-place unless removed in the same manner. The remaining portion of fund balance is considered unassigned. General fund revenues increased $5.2 million in the fiscal year when compared to the prior year which was due to an increase in tax revenues. All tax revenues increased across the board due to the economic upturn during the fiscal year. General fund expenditures increased by $4.2 million mainly due to the City ending employee furloughs which increased personnel costs.

Housing Authority Fund – The Housing Authority Fund accounts for grant revenues for housing assistance program payments and acquisition, rehabilitation, and administration of properties used to provide affordable rental housing. The Housing Authority fund has historically been a “major” fund based on criterion set forth by GASB 34. For the fiscal year the Housing Authority reported $9.9 million in revenues and $13.1 million in expenditures, resulting in a net change in fund balance in the amount of $(3.1 million). Although the net change in fund balance was negative, the fund balance for the fiscal year increased to $27.3 million due to an $8 million dollar restatement. The restatement was due to the implementation of GASB 65. The Housing Authority fund is made up of $28.9 million in assets, combined with $0.2 million in liabilities and $1.4 million in deferred inflows and resources resulting in $27.3 million in fund balance. Of the $27.3 million in fund balance, $19.7 million is nonspendable relating to prepaid cost, land held for resale, notes and loans and advances. The remaining portion of fund balance is restricted for Urban Development. Housing Authority fund revenues decreased by $2.6 million in the fiscal year when compared to the prior year due to decreased funding from the Department of Housing and Urban Development. Housing Authority expenditures decreased 2% when compared to the prior year.

Miscellaneous Grants Fund – The Miscellaneous Grants fund accounts for the revenues received and expenditures made for federal, state and or county approved programs and projects. The Miscellaneous Grants fund has historically been a “major” fund based on criterion set forth by GASB 34. For the fiscal year, the Miscellaneous Grants fund reported $6.8 million in revenues and $6.9 in expenditures resulting in a deficiency of revenues under expenditures of $0.1 million. After a total other financing sources of $0.2 million, the resulting net change in fund balance totals $0.1 million. The fund is made up of $22 million in assets combined with $0.7 million in liabilities and $2.9 million in deferred inflows and resources resulting in $18.4 million in fund balance. The nonspendable portion of fund balance amounts to $19.3 million which offsets the notes and loans receivables with the remaining portion being negative unassigned fund balance. Miscellaneous Grants revenue and expenditures decreased 9% and 10% respectively.

Non-Major Funds - The Non-Major Governmental Funds show a net increase of $0.4 million in fund balance which was the result of a restatement increasing fund balance of $1.9 million due to the requirement of reclassing unavailable revenue to fund balance (see footnote 16) and a decrease in fund balance of $1.5 due to revenues being less than expenditures. The primary reason for the decrease in fund balance was due to the increased level of construction costs relating to citywide Major Street Rehabilitation project funded by the Proposition C fund.

The following funds were reported as “major” funds on the Statement of Net Position for Proprietary Funds in the basic financial statements:

Water Fund – The Water Fund is used to account for all activities associated with the distribution and transmission of potable water as well as reclaimed water to users. The Water Fund reported $29 million in operating revenues and operating expenses of $22.3 million resulting in operating income of $6.7 million. After consideration of non-operating revenues, expenses and transfers the total change in net position is $1.8 million with total revenues in excess of expenses. The beginning net position was $75.4 million but there was a restatement in the amount of $(12.4 million) due to the implementation of GASB 68 which recognized the unfunded pension liability thus decreasing the beginning net position to $63 million. The Water Fund is made up of $58.8 million in current assets, $128.9 in non-current assets, $1.9 million in deferred outflows of resources, $8.2 million in current liabilities, $113.6 in non-current liabilities and $3 million in deferred inflow of resources resulting in net position of $64.8 million.

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CITY OF POMONA


Sewer Fund – The Sewer Fund is used to account for the operation and maintenance of the City’s sewer network. The Sewer Fund reported $4.8 million in operating revenues and operating expenses of $2.8 million resulting in operating income of $2 million. After consideration of non-operating revenues, non-operatingexpenses and transfers the total change in net position is $0.4 million with total revenues in excess of expenses. The beginning net position of $18 million was restated to $16.1 due to the implementation of GASB 68 which recognized the unfunded pension liability thus decreasing the beginning net position. The Sewer Fund is made up of $17.1 million in current assets, $28.3 in non-current assets, $0.7 million in deferred outflows of resources, $0.7 million in current liabilities, $28.4 in non-current liabilities and $0.5 million in deferred inflow of resources resulting in net position of $16.5 million.

Refuse Fund – The Refuse Fund is used to account for all activities associated with residential refuse collection, and curbside collection of recycling materials. The Refuse Fund reported $9.6 million in operating revenues and operating expenses of $8.5 million resulting in operating income of $1 million. After consideration of non-operating revenues, non-operating expenses and transfers the total change in net position is $1 million with total revenues in excess of expenses. The beginning net position of $5.5 million was restated to $2.8 million due to the implementation of GASB 68 which recognized the unfunded pension liability thus decreasing the beginning net position. The Refuse Fund is made up of $6.1 million in current assets, $4.1 in non-current assets, $0.2 million in deferred outflows of resources, $1.2 million in current liabilities, $4.6 in non-current liabilities and $0.7 million in deferred inflow of resources resulting in net position of $3.9 million.

Canon Water Company – The Canon Water Company Fund is used to account for the activities of the Canon Water Company. The Canon Water Company was elected as a major fund by the City. The fund reported $0.07 million in operating revenues and operating expenses of $0.03 million resulting in operating income of $0.04 million. After consideration of non-operating revenues the total change in net position is $0.04 million with total revenues in excess of expenses. The Canon Water Company Fund is made up of $0.35 million in current assets and $0.03 in non-current assets resulting in net position of $0.38 million.

GENERAL FUND BUDGETARY INFORMATION

The originally adopted General Fund budget contained $86.2 million in appropriations to fund operations andservices. This amount increased to $88.6 million by the end of the fiscal year through City Council approved budget amendments. This increase in the amount of $2.4 million consisted primarily of:

! $1.745 million for increased personnel costs due to changes in Memorandums of Understanding (MOU’s).

! $330,245 for providing police services for the LA County Fair Association “Hard Day of the Dead 14 event”.

General Fund expenditures were under budget at the completion of the fiscal year. All General Fund revenue budget category estimates were exceeded by the actual revenues except for License and Permits, Charges for services, and miscellaneous revenues.

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DEBT ADMINISTRATION At the end of the fiscal year, the City and its component units (Pomona Public Financing Authority and Pomona Housing Authority) had total long-term debt outstanding of $398.6 million.


Pollution remediation obligations 960,809$ -$ 960,809$ Obligations under capital leases 586,295 3,004,393 3,590,688 Notes payable 655,000 - 655,000 Revenue bonds 39,564,000 132,086,644 171,650,644 Pension obligation refunding bonds 44,333,953 - 44,333,953 Certificates of participation 11,336,191 - 11,336,191 Compensated absences 7,118,226 1,302,207 8,420,433 Claims payable 12,101,548 - 12,101,548 Net pension liability 112,127,525 13,618,760 125,746,285 OPEB obligations 19,802,228 - 19,802,228

Total 248,585,775$ 150,012,004$ 398,597,779$

Additional information on the City’s long-term debt may be found in Note 9 in the Notes to the Basic Financial Statements. CASH MANAGEMENT To obtain flexibility in cash management, the City employs a pooled cash system (Reference Note 2 in the Notes to the Basic Financial Statements). Under the pooled cash concept, the City invests the cash of all funds with maturities planned to coincide with cash needs. Idle cash is invested in certain eligible securities as constrained by law and further limited by the City’s Investment Policy. The goals of the City’s Investment Policy are safety, liquidity and yield. CAPITAL ASSETS The capital assets of the City are those assets, which are used in the performance of the City’s functions including infrastructure assets. At June 30, 2015, net capital assets of the governmental activities totaled $273.6 million and the net capital assets of the business-type activities totaled $156.5 million. Depreciation on capital assets is recognized in the government-wide financial statements.

Original Accumulated BookDescription Cost Depreciation Value

Capital Assets - Governmental ActivitiesLand 81,168,660$ -$ 81,168,660$ Construction in progress 22,682,709 - 22,682,709 Buildings and improvements 14,941,552 11,968,419 2,973,133 Improvements other than buildings 60,003,395 24,683,385 35,320,010 Machinery and equipment 20,754,160 16,466,672 4,287,488 Furniture and fixtures 1,014,456 812,785 201,671 Autos and trucks 10,756,126 8,283,866 2,472,260 Equipment under capital leases 1,037,970 288,588 749,382 Infrastructure 380,805,974 257,167,573 123,638,401

Total 593,165,002$ 319,671,288$ 273,493,714$

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CITY OF POMONA


Original Accumulated BookDescription Cost Depreciation Value

Capital Assets - Business -Type ActivitiesLand 9,089,782$ -$ 9,089,782$ Construction in progress 19,965,564 - 19,965,564 Buildings and improvements 3,482,783 3,291,986 190,797 Improvements other than buildings 286,638 119,452 167,186 Machinery and equipment 200,002,139 77,715,074 122,287,065 Furniture and fixtures 5,105 5,105 - Autos and trucks 4,510,802 3,165,780 1,345,022 Equipment under capital leases 4,257,381 851,476 3,405,905

Total 241,600,194$ 85,148,873$ 156,451,321$

Additional information on the City of Pomona’s capital assets may be found in Note 7 in the Notes to the Basic Financial Statements.

ECONOMIC FACTORS

The City of Pomona’s total Fiscal Year 2014-15 General Fund revenues grew by $5.2 million (approximately6.09%) versus prior year actuals. That being said, there were both increases and decreases across all revenues, with several in particular worth noting. All property tax related revenue grew by $1.99 million as a reflection of continued improvement in the local real estate market. Sales and Use Tax increased $1.6 million also as a reflection of the continued improvement of the local economy in the City. Business License receipts – which partially reflect retail activity – increased slightly. Finally, healthy across-the-board growth in construction related receipts (Building Permits, Job Fees, New Construction Tax, et al) point to a firm foundation for future economic growth.

CONTACTING THE CITY’S FINANCIAL MANAGEMENT

This financial report is designed to provide Pomona residents, taxpayers, customers, investors and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. Questions about this report, separate reports of the City’s component units, or need any additional financial information, should be directed to the City of Pomona Finance Department at 505 S. Garey Avenue (P.O. Box 660), Pomona, California, 91769.

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14

BASIC FINANCIAL STATEMENTS

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16

GOVERNMENT-WIDEFINANCIAL STATEMENTS

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18

CITY OF POMONA

STATEMENT OF NET POSITION


Assets:Cash and investments 51,716,498$ 43,045,107$ 94,761,605$ Receivables (net):

Accounts 4,029,051 10,114,942 14,143,993 Notes and loans 32,519,927 - 32,519,927 Interest 44,598 15,251 59,849

Internal balances (5,953,677) 5,953,677 - Prepaid costs 45,100 15,025 60,125 Due from other governments 6,852,944 - 6,852,944 Inventories 470,309 218,824 689,133 Land held for resale 4,503,277 - 4,503,277 Advances to Successor Agency 4,000,000 - 4,000,000 Restricted assets:

Cash 18,587,051 28,900,238 47,487,289 Other investments 600,000 9,000 609,000 Capital assets, not being depreciated 103,851,369 29,055,346 132,906,715 Capital assets, net of depreciation 169,642,345 127,395,975 297,038,320

Total Assets 390,908,792 244,723,385 635,632,177

Deferred Outflows of Resources:Deferred charge on refunding 126,560 1,654,520 1,781,080 Deferred pension related items 7,869,167 1,105,399 8,974,566

Total Deferred Outflows of Resources 7,995,727 2,759,919 10,755,646

Liabilities:Accounts payable 3,371,786 1,833,842 5,205,628 Payroll payable 1,579,337 311,094 1,890,431 Accrued liabilities 220,170 99,888 320,058 Interest payable 1,762,319 992,143 2,754,462 Unearned revenues 405,556 - 405,556 Deposits payable 24,301 3,502,810 3,527,111 Due to other governments 115 - 115 Noncurrent liabilities: Due within one year 10,214,550 3,353,408 13,567,958 Due in more than one year 106,441,472 133,039,836 239,481,308 Net pension liability 112,127,525 13,618,760 125,746,285 Other post employment benefits liability 19,802,228 - 19,802,228

Total Liabilities 255,949,359 156,751,781 412,701,140

Deferred Inflows of Resources:Deferred pension related items 27,318,103 4,179,097 31,497,200

Total Deferred Inflows of Resources 27,318,103 4,179,097 31,497,200

Net Position:Net investment in capital assets 236,554,708 42,085,623 278,640,331 Restricted for: Community development projects 35,830,906 - 35,830,906 Special projects 3,697,200 - 3,697,200 Capital projects 15,102,380 19,071,352 34,173,732 Debt service 47,845,352 9,828,886 57,674,238 Unrestricted (223,393,489) 15,566,565 (207,826,924)

Total Net Position 115,637,057$ 86,552,426$ 202,189,483$

JUNE 30, 2015

Primary Government

See Notes to Financial Statements 19

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CITY OF POMONA

STATEMENT OF ACTIVITIESYEAR ENDED JUNE 30, 2015

Operating CapitalCharges for Contributions Contributions

Expenses Services and Grants and GrantsFunctions/ProgramsPrimary Government:Governmental Activities:

General government 5,555,565$ 1,825,171$ 51,581$ -$ Public safety 67,614,849 4,124,878 1,873,236 - Urban development 42,139,207 7,830,415 15,375,775 12,627,464 Neighborhood services 6,151,817 712,551 264,214 - Interest on long-term debt 5,252,517 - - -

Total Governmental Activities 126,713,955 14,493,015 17,564,806 12,627,464

Business-Type Activities:Water 27,125,628 29,888,243 - -

Sewer 3,962,091 4,733,661 - - Refuse 8,467,884 9,523,134 42,052 - Canon Water Company - February 28, 2015 26,747 64,221 - -

Total Business-Type Activities 39,582,350 44,209,259 42,052 -

Total Primary Government 166,296,305$ 58,702,274$ 17,606,858$ 12,627,464$

General Revenues:Taxes: Property taxes Sales taxes Motor vehicle licenses Transient occupancy taxes Property transfer taxes Franchise taxes Utility users taxes Business licenses (nonregulatory) Other taxesInterest and rentalsMiscellaneousGain on sale of capital assets

Extraordinary gain/(loss) on dissolution of Redevelopment Agency

Transfers Total General Revenues, Extraordinary Items and Transfers

Change in Net Position

Net Position, Beginning of Year

Restatement of Net Position

Net Position, End of Year

Program Revenues


Primary Government


(3,678,813)$ -$ (3,678,813)$ (61,616,735) - (61,616,735)

(6,305,553) - (6,305,553) (5,175,052) - (5,175,052) (5,252,517) - (5,252,517)

(82,028,670) - (82,028,670)

- 2,762,615 2,762,615 - 771,570 771,570 - 1,097,302 1,097,302 - 37,474 37,474

- 4,668,961 4,668,961

(82,028,670) 4,668,961 (77,359,709)

36,408,806 - 36,408,806 13,544,946 - 13,544,946

67,079 - 67,079 1,568,387 - 1,568,387 1,581,039 - 1,581,039 6,563,245 - 6,563,245

17,465,816 - 17,465,816 3,346,851 - 3,346,851

59,221 - 59,221 2,109,735 92,349 2,202,084 3,461,354 121,408 3,582,762

- 1,965 1,965

808,340 - 808,340 1,011,800 (1,011,800) -

87,996,619 (796,078) 87,200,541

5,967,949 3,872,883 9,840,832

264,487,631 99,695,060 364,182,691

(154,818,523) (17,015,517) (171,834,040)

115,637,057$ 86,552,426$ 202,189,483$

Net (Expenses) Revenues and Changes in Net Position


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22

Governmental Fund Financial StatementsProprietary Fund Financial StatementsFiduciary Fund Financial Statements

FUND FINANCIAL STATEMENTS

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24

GOVERNMENTAL FUND FINANCIAL STATEMENTS

The General Fund is the City's primary operating fund. It accounts for all financial resources of the generalgovernment, except those required to be accounted for in another fund.

The General Debt Service Fund accounts for the payment of interest and principal on debt incurred by the City.

The Public Financing Authority Debt Service Fund accounts for the payment of interest and principal on the localagency revenue bonds, notes payable and other debt of the Public Financing Authority.

The City has determined the following funds to be major funds:

The Housing Authority Fund accounts for grant revenues for acquisition, rehabilitation, and administration ofproperties used to provide affordable rental housing.

The Miscellaneous Grants Fund accounts for revenues received and expenditures made for Federal and/or Stateapproved programs/projects.

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CITY OF POMONA

BALANCE SHEETGOVERNMENTAL FUNDS JUNE 30, 2015

Debt Service Fund

GeneralAssets:Cash and investments 12,482,973$ 2,014,616$ 1,937,878$ 1,419,204$ Receivables (net):

Accounts 3,446,859 - 30,936 - Notes and loans - 11,237,230 19,260,274 - Interest 14,649 2,371 1,760 1,416

Prepaid costs 16,089 640 - - Due from other governments 4,710,463 217,393 780,778 - Due from other funds 1,736,087 - - - Advances to other funds - - - - Advances to Successor Agency - 4,000,000 - - Inventories 86,191 - - - Land held for resale - 4,503,277 - - Other investments - 600,000 - - Restricted assets:

Cash 41,258 6,337,683 - 4,507,465

Total Assets 22,534,569$ 28,913,210$ 22,011,626$ 5,928,085$

Liabilities, Deferred Inflow ofResources, and Fund Balances:Liabilities:Accounts payable 1,323,928$ 23,931$ 208,822$ 7,400$ Payroll payable 1,254,742 40,575 42,621 - Accrued liabilities 12,915 145,715 - - Unearned revenues - - 405,556 - Deposits payable - 10,000 - - Due to other governments - - - - Due to other funds - - - 1,664,620 Interest payable - - - 1,294,255 Advances from other funds 304,435 - - 43,045,000

Total Liabilities 2,896,020 220,221 656,999 46,011,275 Deferred Inflows of Resources:Unavailable revenues 2,350,446 1,367,626 2,908,450 -

Total Deferred Inflows of Resources 2,350,446 1,367,626 2,908,450 -

Fund Balances: Nonspendable Inventories 86,191 - - - Prepaid costs 16,089 640 - - Land held for resale - 4,503,277 - - Notes and loans - 11,237,230 19,260,274 - Advances to other funds - - - - Advances to Successor Agency - 4,000,000 - - Restricted Urban development - 7,584,216 1,921,664 - Public safety - - 244,524 - Neighborhood services - - - - Capital projects - - - - Assessment district improvement - - - - Debt service - - - - Committed Fiscal sustainability 14,467,914 - - - Unassigned 2,717,909 - (2,980,285) (40,083,190)

Total Fund Balances 17,288,103 27,325,363 18,446,177 (40,083,190)

Total Liabilities, Deferred Inflow of Resources and Fund Balances 22,534,569$ 28,913,210$ 22,011,626$ 5,928,085$

Special Revenue Funds

General Debt Service

Housing Authority

Miscellaneous Grants


CITY OF POMONA

BALANCE SHEETGOVERNMENTAL FUNDSJUNE 30, 2015

Assets:Cash and investmentsReceivables (net):

AccountsNotes and loansInterest

Prepaid costsDue from other governmentsDue from other fundsAdvances to other fundsAdvances to Successor AgencyInventoriesLand held for resaleOther investmentsRestricted assets:

Cash

Total Assets

Liabilities, Deferred Inflow ofResources, and Fund Balances:Liabilities:Accounts payablePayroll payableAccrued liabilitiesUnearned revenuesDeposits payableDue to other governmentsDue to other fundsInterest payableAdvances from other funds

Total LiabilitiesDeferred Inflows of Resources:Unavailable revenues

Total Deferred Inflows of Resources

Fund Balances: Nonspendable Inventories Prepaid costs Land held for resale Notes and loans Advances to other funds Advances to Successor Agency Restricted Urban development Public safety Neighborhood services Capital projects Assessment district improvement Debt service Committed Fiscal sustainability Unassigned

Total Fund Balances

Total Liabilities, Deferred Inflow of Resources and Fund Balances

Debt Service Fund

97,366$ 20,182,328$ 38,134,365$

- 551,165 4,028,960 - 2,022,423 32,519,927

82 17,757 38,035 - 23,891 40,620 - 1,144,310 6,852,944 - - 1,736,087

43,045,000 304,435 43,349,435 - - 4,000,000 - - 86,191 - - 4,503,277 - - 600,000

4,627,120 3,073,525 18,587,051

47,769,568$ 27,319,834$ 154,476,892$

-$ 1,426,662$ 2,990,743$ 1,057 162,019 1,501,014

- 61,540 220,170 - - 405,556 - 14,301 24,301 - 115 115 - 67,980 1,732,600 - - 1,294,255 - - 43,349,435

1,057 1,732,617 51,518,189

- 496,407 7,122,929

- 496,407 7,122,929

- - 86,191 - 23,891 40,620 - - 4,503,277 - 2,022,423 32,519,927

43,045,000 304,435 43,349,435 - - 4,000,000

- 15,471,932 24,977,812 - 2,533,164 2,777,688 - 1,075,440 1,075,440 - 3,402,033 3,402,033 - 257,492 257,492

4,723,511 - 4,723,511

- - 14,467,914 - - (40,345,566)

47,768,511 25,090,810 95,835,774

47,769,568$ 27,319,834$ 154,476,892$

Total Governmental

Funds

Public Financing

Authority Debt Service

Non-Major Governmental

Funds


B-24


28

CITY OF POMONA

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDSTO THE STATEMENT OF NET POSITIONJUNE 30, 2015

Fund Balances of Governmental Funds 95,835,774$

Amounts reported for governmental activities in the statement of net position are different because:

Capital assets net of depreciation have not been included as financial resources. Therefore, they are not reported in governmental funds. 273,106,225

Deferred outflows related to pension related items are not included in the governmental fund activity:

Contributions made after the measurement date 7,869,167

Deferred inflows related to pension related items are not included in the governmental fund activity:

Difference between projected and actual earnings on pension plans investments (27,318,103)

Long-term debt and compensated absences that have not been included in the governmental fund activity:

Pollution remediation (960,809)$ Obligation under capital leases (586,295) Notes payable (655,000) Revenue bonds (39,564,000) Deferred charges on refunding 126,560 Pension obligation refunding bonds (44,333,953) Certificates of participation (11,336,191) Compensated absences (6,886,111) Net pension liability (112,127,525) (216,323,324)

Governmental funds report all OPEB contributions as expenditures, however, in the statement of net position any excess or deficiencies in contributions in relation to the Annual Required Contribution (ARC) are recorded as an asset or liability. (19,802,228)

Accrued interest payable for the current portion of interest due on bonds has not been reported in the governmental funds. (468,064)

Revenues reported as unavailable in the governmental funds and recognized in the statement of activities. These are included in the intergovernmental revenues in the governmental fund activity. 7,122,929

Internal service funds are used by management to charge the costs of certain activities, such as equipment management and self-insurance, to individual funds. The assets and liabilities of the internal service funds must be added to the statement of net position. (4,385,319)

Net Position of Governmental Activities 115,637,057$


B-25

CITY OF POMONA

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015

Debt Service Fund

General Revenues:Taxes 78,607,713$ -$ -$ 642,854$ Special assessments - - - - Licenses and permits 4,566,429 - - - Intergovernmental 352,160 9,387,818 6,174,869 - Charges for services 3,246,764 43,580 50,952 - Interest and rentals 447,838 429,594 229,564 2,758 Fines and forfeitures 2,051,647 - - - Contributions 51,581 - - - Miscellaneous 663,195 124,948 361,890 335,448

Total Revenues 89,987,327 9,985,940 6,817,275 981,060

Expenditures:Current: General government 3,978,320 - - 38,352 Public safety 65,116,912 - 1,378,650 - Urban development 7,809,025 13,106,038 4,966,659 - Neighborhood services 3,160,848 - 336,929 -

Capital outlay 105,557 18,182 246,813 - Debt service: Principal retirement 292,945 - - 881,000 Interest and fiscal charges 20,136 - - 4,641,092

Total Expenditures 80,483,743 13,124,220 6,929,051 5,560,444 Excess (Deficiency) of Revenues

Over (Under) Expenditures 9,503,584 (3,138,280) (111,776) (4,579,384)

Other Financing Sources (Uses):Transfers in 80 - 284,123 5,631,162 Transfers out (4,621,636) - (80) - Proceeds from sale of capital assets 32,830 - - -

Total Other Financing Sources(Uses) (4,588,726) - 284,043 5,631,162

Net Change in Fund Balances 4,914,858$ (3,138,280)$ 172,267$ 1,051,778$

Fund Balances:Beginning of year, as originally reported 12,373,245$ 22,425,665$ 1,836,888$ (41,134,968)$

Restatements - 8,037,978 16,437,022 -

Beginning of year, as restated 12,373,245 30,463,643 18,273,910 (41,134,968) Net change in fund balances 4,914,858 (3,138,280) 172,267 1,051,778

End of Year 17,288,103$ 27,325,363$ 18,446,177$ (40,083,190)$



Housing Authority

Miscellaneous Grants


CITY OF POMONA

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015

Revenues:TaxesSpecial assessmentsLicenses and permitsIntergovernmentalCharges for servicesInterest and rentalsFines and forfeituresContributionsMiscellaneous

Total Revenues

Expenditures:Current: General government Public safety Urban development Neighborhood services

Capital outlayDebt service: Principal retirement Interest and fiscal charges

Total Expenditures

Excess (Deficiency) of RevenuesOver (Under) Expenditures

Other Financing Sources (Uses):Transfers inTransfers outProceeds from sale of capital assets

Total Other Financing Sources(Uses)

Net Change in Fund Balances

Fund Balances:Beginning of year, as originally reported

Restatements

Beginning of year, as restatedNet change in fund balances

End of Year

Debt Service Fund

Non-Major TotalGovernmental Governmental

Funds Funds

-$ 74,651$ 79,325,218$ - 1,213,093 1,213,093 - 2,003,018 6,569,447 - 14,372,902 30,287,749 - 668,330 4,009,626

314,326 675,036 2,099,116 - 11,770 2,063,417 - - 51,581

8,628 1,680,937 3,175,046

322,954 20,699,737 128,794,293

8,055 12,725 4,037,452 - 1,904,872 68,400,434 - 15,172,966 41,054,688 - 1,205,018 4,702,795 - 3,427,012 3,797,564

1,500,000 220,045 2,893,990 202,289 13,704 4,877,221

1,710,344 21,956,342 129,764,144

(1,387,390) (1,256,605) (969,851)

- 3,484,886 9,400,251 - (3,766,735) (8,388,451) - 2,700 35,530

- (279,149) 1,047,330

(1,387,390)$ (1,535,754)$ 77,479$

49,155,901$ 24,697,718$ 69,354,449$ - 1,928,846 26,403,846

49,155,901 26,626,564 95,758,295 (1,387,390) (1,535,754) 77,479

47,768,511$ 25,090,810$ 95,835,774$

Public Financing

Authority Debt Service


B-26

CITY OF POMONA

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSTO THE STATEMENT OF ACTIVITIESYEAR ENDED JUNE 30, 2015

Net Change in Fund Balances - Total Governmental Funds 77,479$

Amounts reported for governmental activities in the statement of activities aredifferent because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period.

Capital outlay 7,820,754$ Depreciation (12,932,510) Disposition of capital assets (217,613) (5,329,369)

Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position.

Principal repayments Pollution remediation 619,554 Obligation under capital leases 292,990 Notes payable 220,000 Revenue bonds 1,538,969 Pension obligation refunding bonds 520,000 Certificates of participation 345,622 Accreted interest on pension obligation bonds (439,913) 3,097,222

Accrued interest for long-term liabilities. This is the net change in accrued interest for the current period. 41,353

Compensated absences expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (104,997)

Governmental funds report all contributions in relation to the annual required contribution (ARC) for OPEB as expenditures, however, in the statement of activities only the ARC is an expense. (2,133,976)

Pension obligation expenses is an expenditure in the governmental funds, but reduce the Net Pension Liability in the statement of net position. (301,968)

Revenues reported as unavailable revenue in the governmental funds and recognized in the statement of activities. These are included in the intergovernmental revenues in the governmental fund activity. 2,056,852

Internal service funds are used by management to charge the costs of certain activities, such as equipment management and self-insurance, to individual funds. The net revenues (expenses) of the internal service funds is reported with governmental activities. 7,757,013

Extraordinary gains and losses relating to land transferred to the Successor Agency are reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported in the governmental funds.

Land 808,340

Change in Net Position of Governmental Activities 5,967,949$


PROPRIETARY FUNDFINANCIAL STATEMENTS

The Water Utility Enterprise Fund accounts for activities associated with the distribution and transmission ofpotable water to users.

The Sewer Enterprise Fund accounts for the operation and maintenance of the City's sewer network.

The Refuse Enterprise Fund accounts for activities associated with refuse collection, and curbside collection ofrecycling materials.

The Canon Water Company Enterprise Fund accounts for the activities of the Canon Water Company.

The City has determined the following funds to be major funds:

33

B-27

CITY OF POMONA

STATEMENT OF NET POSITIONPROPRIETARY FUNDS JUNE 30, 2015

Assets:Current:

Cash and investments 30,665,542$ 8,328,451$ 3,772,365$ Receivables (net):

Accounts 6,601,690 1,129,785 2,319,246 Interest 4,577 7,567 3,107

Prepaid costs 11,355 - - Inventories 218,824 - -

Restricted:Cash 21,258,852 7,641,386 -

Total Current Assets 58,760,840 17,107,189 6,094,718 Noncurrent:

Advances to other funds 5,000,000 - - Other Investments 9,000 - - Capital assets, not being depreciated 27,223,490 1,831,856 - Capital assets, net of depreciation 96,735,496 26,491,941 4,142,494

Total Noncurrent Assets 128,967,986 28,323,797 4,142,494

Total Assets 187,728,826 45,430,986 10,237,212 Deferred Outflows of Resources:Deferred charges on refunding 1,101,665 552,855 - Deferred pension related items 803,686 123,385 178,328

Total Deferred Outflows of Resources 1,905,351 676,240 178,328

Total Assets and DeferredOutflows of Resources 189,634,177$ 46,107,226$ 10,415,540$

Water Sewer Refuse

Business-Type ActivitiesEnterprise Funds


CITY OF POMONA

STATEMENT OF NET POSITIONPROPRIETARY FUNDSJUNE 30, 2015

Assets:Current:

Cash and investmentsReceivables (net):

AccountsInterest

Prepaid costsInventories

Restricted:Cash

Total Current AssetsNoncurrent:

Advances to other fundsOther InvestmentsCapital assets, not being depreciatedCapital assets, net of depreciation

Total Noncurrent Assets

Total AssetsDeferred Outflows of Resources:Deferred charges on refundingDeferred pension related items

Total Deferred Outflows of Resources

Total Assets and DeferredOutflows of Resources

GovernmentalActivities

Total

278,749$ 43,045,107$ 13,582,133$

64,221 10,114,942 91 - 15,251 6,563

3,670 15,025 4,480 - 218,824 384,118

- 28,900,238 -

346,640 82,309,387 13,977,385

- 5,000,000 - - 9,000 - - 29,055,346 -

26,044 127,395,975 387,489

26,044 161,460,321 387,489

372,684 243,769,708 14,364,874

- 1,654,520 - - 1,105,399 201,452

- 2,759,919 201,452

372,684$ 246,529,627$ 14,566,326$

Internal Service Funds

Canon Water Company -

February 28, 2015



B-28

CITY OF POMONA

STATEMENT OF NET POSITIONPROPRIETARY FUNDS JUNE 30, 2015

Water Sewer Refuse


Liabilities, Deferred Inflowsof Resources and Net Position:

Liabilities:Current:

Accounts payable 1,485,238$ 23,503$ 325,101$ Payroll payable 226,441 31,264 53,389 Accrued liabilities 99,888 - - Interest payable 827,345 101,622 63,176 Deposits payable 3,502,810 - - Due to other funds - - - Compensated absences 749,000 118,000 163,000 Claims and judgments - - - Bonds, notes, and capital leases 1,350,000 400,000 573,408

Total Current Liabilities 8,240,722 674,389 1,178,074

Noncurrent:Advances from other funds - - - Compensated absences 208,559 12,665 50,983 Claims and judgments - - - Net pension liability 9,901,595 1,520,127 2,197,038 Bonds, notes, and capital leases 103,476,644 26,860,000 2,430,985

Total Noncurrent Liabilities 113,586,798 28,392,792 4,679,006

Total Liabilities 121,827,520 29,067,181 5,857,080

Deferred Inflows of Resources:Deferred pension related items 3,038,436 466,471 674,190

Total Deferred Inflows of Resources 3,038,436 466,471 674,190

Net Position:Net Investment in capital assets 34,561,369 6,360,109 1,138,101 Restricted for capital projects 14,327,814 4,743,538 - Restricted for debt service 6,931,038 2,897,848 - Unrestricted 8,948,000 2,572,079 2,746,169

Total Net Position 64,768,221 16,573,574 3,884,270

Total Liabilities, Deferred Inflowsof Resources and Net Position 189,634,177$ 46,107,226$ 10,415,540$


CITY OF POMONA

STATEMENT OF NET POSITIONPROPRIETARY FUNDSJUNE 30, 2015

Liabilities, Deferred Inflowsof Resources and Net Position:


Accounts payablePayroll payableAccrued liabilitiesInterest payableDeposits payableDue to other fundsCompensated absencesClaims and judgmentsBonds, notes, and capital leases

Total Current Liabilities

Noncurrent:Advances from other fundsCompensated absencesClaims and judgmentsNet pension liabilityBonds, notes, and capital leases

Total Noncurrent Liabilities

Total Liabilities

Deferred Inflows of Resources:Deferred pension related items


Net Position:Net Investment in capital assetsRestricted for capital projectsRestricted for debt serviceUnrestricted

Total Net Position

Total Liabilities, Deferred Inflowsof Resources and Net Position

Reconciliation of Net Position to the Statement of Net PositionNet Position per Statement of Net Position - Proprietary FundsPrior years' accumulated adjustment to reflect the consolidation of internal service funds activities related to the enterprise fundsCurrent years' adjustments to reflect the consolidation of internal service activities related to enterprise fundsNet Position per Statement of Net Position


Total Internal

Service Funds


February 28, 2015


-$ 1,833,842$ 381,043$ - 311,094 78,323 - 99,888 - - 992,143 - - 3,502,810 - - - 3,487 - 1,030,000 115,000 - - 1,805,000 - 2,323,408 -

- 10,093,185 2,382,853

- - 5,000,000 - 272,207 117,115 - - 10,296,548 - 13,618,760 2,481,935 - 132,767,629 -

- 146,658,596 17,895,598

- 156,751,781 20,278,451

- 4,179,097 761,614

- 4,179,097 761,614

26,044 42,085,623 387,489 - 19,071,352 - - 9,828,886 -

346,640 14,612,888 (6,861,228)

372,684 85,598,749 (6,473,739)

372,684$ 246,529,627$ 14,566,326$

85,598,749$

413,774

539,903 86,552,426$


B-29

CITY OF POMONA

STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET POSITIONPROPRIETARY FUNDSYEAR ENDED JUNE 30, 2015

Operating Revenues:Charges for services 29,076,093$ 4,733,661$ 9,522,122$ Miscellaneous - 54,558 67,862

Total Operating Revenues 29,076,093 4,788,219 9,589,984

Operating Expenses:Personnel services 7,151,904 1,067,952 1,817,744 Operations 12,241,670 1,051,538 5,459,960 Claims expense 16,297 50,442 157,154 Insurance 216,658 33,686 62,477 Amortization of deferred loss on refunding 78,691 58,195 - Franchise Fees - - 478,528 Depreciation 2,605,803 580,345 565,974

Total Operating Expenses 22,311,023 2,842,158 8,541,837

Operating Income (Loss) 6,765,070 1,946,061 1,048,147

Nonoperating Revenues (Expenses):Intergovernmental - - 42,052 Interest revenue 37,258 50,097 4,987 Interest expense (4,888,375) (1,246,550) (79,859) Sale of surplus water 812,150 - - Gain (loss) on disposal of capital assets (99,548) (84,691) 500

Total Nonoperating Revenues (Expenses) (4,138,515) (1,281,144) (32,320)

Income (Loss) Before Transfers 2,626,555 664,917 1,015,827

Transfers in 37,455 231,526 85,000 Transfers out (917,530) (448,251) -

Changes in Net Position 1,746,480$ 448,192$ 1,100,827$

Net Position:Beginning of year, as originally reported 75,392,966$ 18,024,656$ 5,528,461$ Restatements (12,371,225) (1,899,274) (2,745,018)

Beginning of year, as restated 63,021,741 16,125,382 2,783,443 Changes in Net Position 1,746,480 448,192 1,100,827

End of Year 64,768,221$ 16,573,574$ 3,884,270$

Water Sewer Refuse



CITY OF POMONA

STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET POSITIONPROPRIETARY FUNDSYEAR ENDED JUNE 30, 2015

Operating Revenues:Charges for servicesMiscellaneous

Total Operating Revenues

Operating Expenses:Personnel servicesOperationsClaims expenseInsuranceAmortization of deferred loss on refundingFranchise FeesDepreciation

Total Operating Expenses

Operating Income (Loss)

Nonoperating Revenues (Expenses):IntergovernmentalInterest revenueInterest expenseSale of surplus waterGain (loss) on disposal of capital assets

Total Nonoperating Revenues (Expenses)

Income (Loss) Before Transfers

Transfers inTransfers out

Changes in Net Position

Net Position:Beginning of year, as originally reportedRestatements

Beginning of year, as restatedChanges in Net Position

End of Year

Reconciliation of Changes in Net Position to the Statement of Activities:

Changes in Net Position, per the Statement of Revenues,Expenses and Changes in Net Position - Proprietary Funds

Adjustment to reflect the consolidation of current fiscal yearinternal service funds activities related to enterprise funds

Changes in Net Position of Business-Type Activities per Statement of Activities


Total

64,221$ 43,396,097$ 10,178,573$ - 122,420 3,641,013

64,221 43,518,517 13,819,586

- 10,037,600 1,531,947 24,076 18,777,244 3,318,752

- 223,893 619,061 - 312,821 40,476 - 136,886 - - 478,528 -

2,671 3,754,793 23,053

26,747 33,721,765 5,533,289

37,474 9,796,752 8,286,297

- 42,052 - 7 92,349 10,619 - (6,214,784) - - 812,150 - - (183,739) -

7 (5,451,972) 10,619

37,481 4,344,780 8,296,916

- 353,981 - - (1,365,781) -

37,481$ 3,332,980$ 8,296,916$

335,203$ 99,281,286$ (11,669,683)$ - (17,015,517) (3,100,972)

335,203 82,265,769 (14,770,655) 37,481 3,332,980 8,296,916

372,684$ 85,598,749$ (6,473,739)$

3,332,980$

539,903

3,872,883$

Business-Type Activities Enterprise Funds

Internal Service Funds


February 28, 2015


B-30

CITY OF POMONA

STATEMENT OF CASH FLOWSPROPRIETARY FUNDS YEAR ENDED JUNE 30, 2015

Cash Flows from Operating Activities:Cash received from customers and users 30,309,096$ 4,820,278$ 9,594,998$ Cash received from/(paid for) other - 54,558 67,862 Cash paid to suppliers for goods and services (13,121,422) (1,820,942) (6,079,912) Cash paid for general and administrative expenses (7,615,262) (1,117,751) (1,911,138)

Net Cash Provided (Used) by Operating Activities 9,572,412 1,936,143 1,671,810

Cash Flows from Non-CapitalFinancing Activities:

Cash transfers in 37,455 231,526 85,000 Cash transfers out (917,530) (448,251) - Amounts received from other funds - - - Proceeds from sale of surplus water 812,150 - - Grant subsidy - - 81,626

Net Cash Provided (Used) by Non-Capital Financing Activities (67,925) (216,725) 166,626

Cash Flows from Capital and Related Financing Activities:

Acquisition and construction of capital assets (3,644,869) (986,420) - Principal paid on capital debt (1,295,000) (385,000) (560,296) Interest paid on capital debt (5,046,289) (1,247,876) (83,414)Proceeds from sales of capital assets - - 500

Net Cash Provided (Used) by Capital and Related Financing Activities (9,986,158) (2,619,296) (643,210)

Cash Flows from Investing Activities:Interest received 58,236 48,908 3,886

Net Cash Provided (Used) byInvesting Activities 58,236 48,908 3,886

Net Increase (Decrease) in Cashand Cash Equivalents (423,435) (850,970) 1,199,112

Cash and Cash Equivalents, Beginning of Year 52,347,829 16,820,807 2,573,253

Cash and Cash Equivalents, End of Year 51,924,394$ 15,969,837$ 3,772,365$


Water Sewer Refuse


CITY OF POMONA

STATEMENT OF CASH FLOWSPROPRIETARY FUNDS YEAR ENDED JUNE 30, 2015


Water Sewer Refuse

Reconciliation of Operating Income to Net CashProvided (Used) by Operating Activities:Operating income (loss) 6,765,070$ 1,946,061$ 1,048,147$ Adjustments to reconcile operating income (loss) net cash provided (used) by operating activities:

Depreciation 2,605,803 580,345 565,974 Amortization 78,691 58,195 - (Increase) decrease in accounts receivable 1,233,003 86,617 72,876 (Increase) decrease in prepaid expense (2,355) - - (Increase) decrease in inventory 86,841 - - (Increase) decrease in deferred outflows (159,496) (24,487) (35,390) Increase (decrease) in accounts payable (953,856) (690,947) 15,730 Increase (decrease) in payroll payable 51,992 4,945 12,239 Increase (decrease) in accrued liabilities (52,116) (28,015) - Increase (decrease) in deposits payable 58,031 - - Increase (decrease) in compensated absences (63,812) 15,003 8,962 Increase (decrease) in claims and judgments - - - Increase (decrease) in net pension liability (3,113,820) (478,045) (690,918) Increase (decrease) in deferred inflows 3,038,436 466,471 674,190

Total Adjustments 2,807,342 (9,918) 623,663 Net Cash Provided (Used) by Operating Activities 9,572,412$ 1,936,143$ 1,671,810$

Non-Cash Investing, Capital, and Financing Activities:Amortization of bond premium/discount 148,782$ -$ -$ Amortization of deferred charges on refunding 78,692 58,195 - Loss (Gain) on disposal of capital assets 99,547 84,691 -


B-31

CITY OF POMONA

STATEMENT OF CASH FLOWSPROPRIETARY FUNDSYEAR ENDED JUNE 30, 2015

Cash Flows from Operating Activities:Cash received from customers and usersCash received from/(paid for) otherCash paid to suppliers for goods and servicesCash paid for general and administrative expenses

Net Cash Provided (Used) by Operating Activities


Cash transfers inCash transfers outAmounts received from other fundsProceeds from sale of surplus waterGrant subsidy

Net Cash Provided (Used) by Non-Capital Financing Activities


Acquisition and construction of capital assetsPrincipal paid on capital debtInterest paid on capital debtProceeds from sales of capital assets

Net Cash Provided (Used) by Capital and Related Financing Activities

Cash Flows from Investing Activities:Interest received

Net Cash Provided (Used) byInvesting Activities

Net Increase (Decrease) in Cashand Cash Equivalents

Cash and Cash Equivalents, Beginning of Year

Cash and Cash Equivalents, End of Year


Total Internal

Service Funds

64,221$ 44,788,593$ 10,178,482$ - 122,420 3,641,013

(30,038) (21,052,314) (9,501,917) - (10,644,151) (1,538,595)

34,183 13,214,548 2,778,983

- 353,981 - - (1,365,781) - - - 3,487 - 812,150 - - 81,626 -

- (118,024) 3,487

- (4,631,289) (263,265) - (2,240,296) - - (6,377,579) - - 500 -

- (13,248,664) (263,265)

8 111,038 8,353

8 111,038 8,353

34,191 (41,102) 2,527,558

244,558 71,986,447 11,054,575

278,749$ 71,945,345$ 13,582,133$


February 28, 2015



CITY OF POMONA

STATEMENT OF CASH FLOWSPROPRIETARY FUNDSYEAR ENDED JUNE 30, 2015

Reconciliation of Operating Income to Net CashProvided (Used) by Operating Activities:Operating income (loss)Adjustments to reconcile operating income (loss) net cash provided (used) by operating activities:

DepreciationAmortization(Increase) decrease in accounts receivable(Increase) decrease in prepaid expense(Increase) decrease in inventory(Increase) decrease in deferred outflowsIncrease (decrease) in accounts payableIncrease (decrease) in payroll payableIncrease (decrease) in accrued liabilitiesIncrease (decrease) in deposits payableIncrease (decrease) in compensated absencesIncrease (decrease) in claims and judgmentsIncrease (decrease) in net pension liabilityIncrease (decrease) in deferred inflows

Total AdjustmentsNet Cash Provided (Used) by Operating Activities

Non-Cash Investing, Capital, and Financing Activities:Amortization of bond premium/discountAmortization of deferred charges on refundingLoss (Gain) on disposal of capital assets


Total Internal

Service Funds


February 28, 2015


37,474$ 9,796,752$ 8,286,297$

2,671 3,754,793 23,053 - 136,886 - - 1,392,496 (91)

(3,670) (6,025) (4,480) - 86,841 (24,425) - (219,373) (39,980)

(2,292) (1,631,365) (1,417,580) - 69,176 34,324 - (80,131) - - 58,031 - - (39,847) 18,656 - - (4,077,896) - (4,282,783) (780,509) - 4,179,097 761,614

(3,291) 3,417,796 (5,507,314)

34,183$ 13,214,548$ 2,778,983$

-$ 148,782$ -$ - 136,887 - - 184,238 -


B-32


44

FIDUCIARY FUNDFINANCIAL STATEMENTSThe City’s fiduciary funds consist of agency funds and one private purpose trust fund. Fiduciary fund types areaccounted for according to the nature of the fund.

Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of results ofoperations.

Private-Purpose Trust Fund is used by the City to account for the assets and liabilities of the formerRedevelopment Agency and the receipt of funds to make estimated installment payments of enforceable obligationsuntil the obligations of the former Redevelopment Agency are paid in full and assets have been liquidated.

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STATEMENT OF FIDUCIARY NET POSITIONFIDUCIARY FUNDSJUNE 30, 2015

AgencyFunds

Assets:Cash and investments 4,296,285$ 10,397,238$ Receivables (net):

Accounts 10,037 695,163 Notes and loans - 9,099,660 Interest 515 4,531

Deposits - 600 Due from other governments 41,223 - Land held for resale - 19,648,669 Restricted assets:

Cash - 52,764,660 Capital assets:

Capital assets, not being depreciated - 125,423 Capital assets, net of depreciation - 73,077

Total Assets 4,348,060$ 92,809,021

Deferred Outflows of Resources:Deferred charge on refunding 850,063

Total Deferred Outflows of Resources 850,063

Liabilities:Accounts payable 1,922,980$ 149,044 Payroll payable - 6,963 Interest payable - 3,438,206 Deposits payable 2,201,435 190,040 Due to external parties/other agencies 223,645 - Long-term liabilities:

Due within one year - 8,373,163 Due in more than one year - 211,959,912

Total Liabilities 4,348,060$ 224,117,328

Net Position:Held in trust for other purposes (130,458,244)

Total Net Position (130,458,244)$

Private-Purpose Trust

Fund Successor

Agency of the Former RDA


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STATEMENT OF CHANGES IN FIDUCIARY NET POSITIONFIDUCIARY FUNDSYEAR ENDED JUNE 30, 2015

Additions:Taxes 16,537,691$ Intergovernmental 336,999 Interest and rentals 887,039 Miscellaneous 363,831 Gain on sale of capital assets 20,000

Total Additions 18,145,560

Deductions:Personnel services 406,004 Operations 3,222,671 Interest and fiscal charges 11,805,698 Contributions to other governments 6,280

Total Deductions 15,440,653

Extraordinary (loss) on dissolution of Redevelopment Agency (808,340)

Changes in Net Position 1,896,567$

Net Position:Beginning of year, as originally reported (136,406,471)$

Restatement 4,051,660

Beginning of year, as restated (132,354,811) Changes in Net Position 1,896,567

End of year (130,458,244)$

Private-Purpose Trust Fund Successor

Agency of the Former RDA


NOTES TO FINANCIAL STATEMENTS

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CITY OF POMONA

INDEX TO NOTES TO FINANCIAL STATEMENTSJUNE 30, 2015

PageNumber

Note 1 – Summary of Significant Accounting Policies .................................................................. 55Financial Reporting Entity.............................................................................................................. 55

City of Pomona Housing Authority .......................................................................................... 55City of Pomona Public Financing Authority............................................................................. 56Canon Water Company........................................................................................................... 56

Basis of Accounting and Measurement Focus .............................................................................. 56Government-Wide and Fund Financial Statements ................................................................... 56Governmental Fund Financial Statements ................................................................................. 57Proprietary Fund Financial Statements ...................................................................................... 58Fiduciary Fund Financial Statements ......................................................................................... 59

Assets, Liabilities and Net Position or Equity ................................................................................ 60Cash, Cash Equivalents and Investments.................................................................................. 60Interfund Transactions................................................................................................................ 60Inventories and Prepaid Items.................................................................................................... 61Capital Assets............................................................................................................................. 61Land Held for Resale.................................................................................................................. 62Long-Term Debt ......................................................................................................................... 62Compensated Absences ............................................................................................................ 62Claims Payable........................................................................................................................... 62Unearned and Unavailable Revenue ......................................................................................... 63Deferred Outflows/Inflows of Resources .................................................................................... 63Net Pension Liability ................................................................................................................... 63Net Position ................................................................................................................................ 64Fund Balances............................................................................................................................ 64Property Taxes ........................................................................................................................... 65Use of Estimates ........................................................................................................................ 65Effect of New Accounting Standards.......................................................................................... 66

Note 2 – Cash and Investments ........................................................................................................ 66Summary of Cash and Investments .............................................................................................. 66Deposits ......................................................................................................................................... 67Investments.................................................................................................................................... 67Investment in Local Agency Investment Funds ............................................................................. 68Interest Rate Risk .......................................................................................................................... 68Credit Risk ..................................................................................................................................... 69Custodial Credit Risk ..................................................................................................................... 69Concentration of Credit Risk.......................................................................................................... 69Investment in Bonds ...................................................................................................................... 70

Note 3 – Loans Receivable (Net)....................................................................................................... 70

Note 4 – Interfund Transactions ....................................................................................................... 70Government-Wide Financial Statements

Internal Balances..................................................................................................................... 70Transfers ................................................................................................................................. 71

Fund Financial StatementsDue To/Due From ................................................................................................................... 71Long-Term Advances.............................................................................................................. 71Transfers ................................................................................................................................. 72

Note 5 – Due from Other Governments............................................................................................ 72

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CITY OF POMONA INDEX TO NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015 �

Page Number Note 6 – Land Held for Resale ........................................................................................................... 72 Note 7 – Capital Assets ...................................................................................................................... 73

Government-Wide Financial Statements ........................................................................................ 73 Governmental Activities .................................................................................................................. 74 Business-Type Activities ................................................................................................................. 75

Note 8 – Other Investments................................................................................................................ 75

Note 9 – Long-Term Debt ................................................................................................................... 76 Governmental Activities Long-Term Debt ...................................................................................... 76

Pollution Remediation Obligations .............................................................................................. 76 Obligations under Capital Leases ............................................................................................... 76 Notes Payable ............................................................................................................................. 77 Revenue Bonds ........................................................................................................................... 78 Pension Obligation Refunding Bonds ......................................................................................... 82 Certificates of Participation .......................................................................................................... 83 Compensated Absences ............................................................................................................. 84 Claims Payable ........................................................................................................................... 85

Business-Type Activities ................................................................................................................. 85 Obligations under Capital Leases ............................................................................................... 85 Revenue Bonds ........................................................................................................................... 86 Compensated Absences ............................................................................................................. 90

Pledged Revenue ........................................................................................................................... 90 Outstanding Principal on Capital-Related Debt .............................................................................. 91

Governmental Activities ............................................................................................................... 91 Business-Type Activities ............................................................................................................. 91

Note 10 – Non-City Obligations ......................................................................................................... 92 Note 11 – Defined Benefits Pension Plan Obligations .................................................................... 92

General Information about the Pension Plan ................................................................................. 92 Plan Description .......................................................................................................................... 92 Benefits Provided ........................................................................................................................ 92 Employees Covered .................................................................................................................... 93 Contribution Description .............................................................................................................. 94 Net Pension Liability ....................................................................................................................... 94 Actuarial Methods and Assumptions used to Determine Total Pension Liabilities ..................... 94 Discount Rate .............................................................................................................................. 95 Changes in Net Pension Liabilities ................................................................................................. 96 Sensitivity of Net Pension Liability to Changes in the Discount Rate ......................................... 97 Pension Plan Fiduciary Net Position ........................................................................................... 97 Pension Expense and deferred Outflows and Deferred Inflows of Resources Related to Pensions ................................................................................................................ 98

Note 12 – Other Post Employment Benefits

Collateral Benefits Plan .................................................................................................................. 99 Plan Description .......................................................................................................................... 99 Eligibility ....................................................................................................................................... 99 Funding Policy ............................................................................................................................. 99 Annual Pension Cost ................................................................................................................... 99 Funded Status and Funding Progress ...................................................................................... 100

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INDEX TO NOTES TO FINANCIAL STATEMENTS (CONTINUED)JUNE 30, 2015

PageNumber

Note 12 – Other Post Employment Benefits (Continued) .............................................................. 101Public Employees’ Medical and Hospital Care Program (PEMHCA) Plan.................................. 101

Plan Description ....................................................................................................................... 101Eligibility.................................................................................................................................... 101Funding Policy .......................................................................................................................... 101Annual OPEB Cost and Net OPEB Obligation......................................................................... 101Funded Status and Funding Progress...................................................................................... 102Actuarial Methods and Assumptions ........................................................................................ 103

Note 13 – Joint Powers Agreements .............................................................................................. 103Alameda Corridor-East Construction Authority............................................................................ 103CSAC – Excess Insurance Authority ........................................................................................... 104Foothill Air Support Team............................................................................................................ 104Foothill Transit ............................................................................................................................. 104Gold Line Phase II Construction Authority................................................................................... 105Interagency Communications Interoperability System ................................................................ 105Los Angeles County Disaster Management Area D.................................................................... 105Los Angeles Interagency Metropolitan Police Apprehensive Crime Task Force ........................ 105Pomona Valley Transportation Authority ..................................................................................... 106Pomona-Walnut-Rowland (PWR) Joint Water Line Commission................................................ 106San Gabriel Valley Council of Governments ............................................................................... 107Tri-City Mental Health Center ...................................................................................................... 108

Note 14 – Risk Management............................................................................................................ 108

Note 15 – Commitments and Contingencies ................................................................................. 109Agency Participation Agreement ................................................................................................. 109Contractual Commitments ........................................................................................................... 109Lawsuits ....................................................................................................................................... 110

Note 16 – Net Position and Fund Balance ..................................................................................... 110Government-Wide Financial Statements..................................................................................... 110

Net Investment in Capital Assets ............................................................................................. 110Unrestricted Net Position.......................................................................................................... 110

Fund Financial Statements .......................................................................................................... 110Net Investment in Capital Assets ............................................................................................. 110Deficit Fund Balance ................................................................................................................ 111

Net Position and Fund Balances Restatement............................................................................ 111

Note 17 – Successor Agency Trust for Assets of Former Redevelopment Agency ................. 112Cash and Investments ................................................................................................................. 113Loans Receivable (Net) ............................................................................................................... 113Land Held for Resale ................................................................................................................... 113Capital Assets .............................................................................................................................. 114

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CITY OF POMONA

INDEX TO NOTES TO FINANCIAL STATEMENTS (CONTINUED)JUNE 30, 2015

PageNumber

Note 17 – Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)............................................................................. 114

Long-Term Debt........................................................................................................................... 114Pollution Remediation Obligations ........................................................................................... 115County Deferred Tax Loans ..................................................................................................... 115ERAF Loan ............................................................................................................................... 115Notes Payable .......................................................................................................................... 116Tax Allocation Bonds................................................................................................................ 117Advances from the Public Financing Authority......................................................................... 119Advances from the Housing Authority ...................................................................................... 125Compensated Absences .......................................................................................................... 125

Pledged Tax Revenues ............................................................................................................... 126Insurance ..................................................................................................................................... 126Commitments and Contingencies................................................................................................ 127

Agreement for Allocation of Tax Increment Funds................................................................ 127

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CITY OF POMONA

NOTES TO FINANCIAL STATEMENTSJUNE 30, 2015

Note 1: Summary of Significant Accounting Policies

The basic financial statements of the City of Pomona, California (City), have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below.

Financial Reporting Entity

The City was incorporated in 1888 and became a “Charter Law” City in 1911 under the laws of the State of California. The City operates under the Council-Manager form of governments. The City principally provides general administrative services, public safety services, library, recreational services, street, highway and bridge repairs and maintenance, and water and sanitation services.

As required by GAAP, these basic financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The following blended component units, although legally separate entities are, in substance, part of the City’s operations and data from these units are combined with the data of the City. They are reported as blended for the following reasons: (1) the governing board is substantively the same as the primary government and there is a financial benefit or burden relationship between the primary government and the component unit; (2) the component unit provides services entirely, or almost entirely, to the primary government or otherwise exclusively, or almost exclusively, benefits the primary government even though it does not provide services directly to it; and (3) the component unit’s total debt outstanding, including leases, is expected to be repaid entirely or almost entirely with the resources of the primary government.

Management determined that the following component units should be blended based on the criteria above:

! City of Pomona Housing Authority! City of Pomona Public Financing Authority! Canon Water Company

These component units are included in the primary government because of the significance of their financial or operational relationship. Each of the blended component units in the accompanying basic financial statements of the City are described below:

City of Pomona Housing Authority

The City of Pomona Housing Authority (Housing Authority) was organized in 1993 under the California Health and Safety Code. The objectives of the Housing Authority are to aid low-income families in obtaining decent, safe and sanitary housing through Federal assistance programs and low/moderate income housing programs. The Housing Authority was included within the scope of the reporting entity of the City because its governing body is composed in its entirety of City Council members of the City.

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NOTES TO FINANCIAL STATEMENTS (CONTINUED)JUNE 30, 2015

Note 1: Summary of Significant Accounting Policies (Continued)

City of Pomona Public Financing Authority

The City of Pomona Public Financing Authority (Authority) is a joint exercise of powers authority created by a joint powers agreement between the City, the former Redevelopment Agency of the City of Pomona (Agency) and the former Redevelopment Agency of the City of West Covina, dated October 27, 1988. The purpose of the Authority is to provide, through the issuance of debt, financing necessary for the construction of public improvements. The Authority is not subject to federal or state income taxes. The Authority was included within the scope of the reporting entity of the City because its governing body is composed in its entirety of City staff.

Canon Water Company

The Canon Water Company of Pomona (Company) was incorporated on August 6, 1897. The Company owns and maintains a pipeline which transports water to the City. The Company was included within the scope of the reporting entity of the City because it provides services almost entirely to the City and its governing body is composed of City staff.

All component units had a fiscal year ended June 30, 2015, except for Canon Water Company, which had a fiscal year ended February 28, 2015.

Since the governing boards for these entities were composed of either City Council members or City employees, they are considered blended component units. Blended component units, although legally separate entities, are in substance, part of the City’s operations and so data from these units are reported with the interfund data of the primary government. The component units listed above issue separate financial statements which can be obtained at City Hall and on line at www.ci.pomona.us.

Basis of Accounting and Measurement Focus

The accounting policies of the City conform to accounting principles generally accepted in the United States of America for local governmental units. The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, fund balance, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purpose of which they are to be spent and means by which spending activities are controlled.

Government – Wide and Fund Financial Statements

The City’s government-wide financial statements include a Statement of Net Position and a Statement of Activities and Changes in Net Position. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements.

These basic financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Economic resources measurement focus considers all of the assets available for the purpose of providing goods and services and reports all inflows, outflows, and balances affecting or reflecting an entity’s net position. Accordingly, all of the City’s assets and liabilities, including capital assets, as well as infrastructure assets and long-term liabilities, are included in the

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accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned and expenses are recognized in the period in which the liability is incurred.

Certain types of transactions are reported as program revenues for the City in three categories:

! Charges for services! Operating grants and contributions! Capital grants and contributions

Certain eliminations have been made in regard to interfund activities. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column, if any. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated:

! Due to and from other funds! Advances to and from other funds! Transfers in and out

Governmental Fund Financial Statements

Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in fund balance as presented in these statements to the net position presented in the government-wide financial statements. The City has presented all major funds that met the applicable criteria.

The City reports the following major governmental funds:

! The General Fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

! The Housing Authority Fund accounts for grant revenues received for the acquisition, rehabilitation and administration of properties used to provide affordable rental housing and the low and moderate income housing functions of the former Redevelopment Agency.

! The Miscellaneous Grants Fund accounts for revenues received and expenditures made for Federal and/or State approved programs/projects.

! The General Debt Service Fund accounts for the payment of interest and principal on debt incurred by the City.

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! The Public Financing Authority Debt Service Fund accounts for the payment of interest and principal on the local agency revenue bonds and other debt of the Authority.

All governmental funds are accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the balance sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period.

Revenues are considered to be available when it is collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if it is collected within 60 days of the end of the current fiscal period except for grant revenue where the government considers revenue to be available if collected within 120 days of the end of current fiscal year. The primary revenue sources, which have been treated as susceptible to accrual by the City, are real and personal property tax, other local taxes, franchise fees, forfeitures and penalties, rents and concessions, interest revenue, and state and federal grants. Expenditures are recorded in the accounting period in which the related fund liability is incurred.

Unavailable revenue arises when potential revenues do not meet both the “measurable” and “available” criteria for recognition in the current period. Unearned revenue arises when the government receives resources before it has a legal claim to it, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are met or when the government has a legal claim to the resources, the unavailable revenue and unearned revenue are removed from the balance sheet and revenue is recognized.

The reconciliations of the Fund Financial Statements to the Government-Wide Financial Statements are provided to explain the differences created by the integrated approach of GASB Statement No. 34.

Proprietary Fund Financial Statements

Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses and Changes in Net Position, and a Statement of Cash Flows for all proprietary funds.

The City reports the following major proprietary funds:

! The Water Utility Enterprise Fund accounts for activities associated with the distribution and transmission of potable water to users and recycled water.

! The Sewer Enterprise Fund accounts for the operation and maintenance of the City's sewer network.

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! The Refuse Enterprise Fund accounts for activities associated with residential refuse collection, curbside collection of recycling materials, and various related programs.

! The Canon Water Company Enterprise Fund accounts for the activities of the Canon Water Company.

The Internal Service Funds account for the maintenance and repair of City vehicles and equipment, risk management (general liability, workers’ compensation and unemployment), information technology and printing/mail service provided to other departments or agencies of the City. Internal service balances and activities have been combined with the governmental activities in the government-wide financial statements.

Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Net Position presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.

Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as nonoperating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses.

Fiduciary Fund Financial Statements

Fiduciary fund financial statements include a Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position. The City’s fiduciary funds consist of agency funds and one private purpose trust fund. Fiduciary fund types are accounted for according to the nature of the fund.

Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The Agency Funds account for assets held by the City for governments or individuals. These funds include receipts and disbursements of funds for the debt service activity of the 1911 Act assessment districts, cash deposits collected for street and sidewalk encroachment permits, debt services activity, cash guarantees (deposits) collected by the City for various construction improvement projects, payment of various employee benefits and deductions, including, but not limited to, health and dental insurance premiums, federal and state withholding taxes, life insurance and other withholdings from regular compensation.

The Private-purpose trust fund is accounted for using the “economic resources”measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized in the period in which the revenue is earned, while expenses are recognized in the period in which the liability is incurred. The City uses its private-purpose trust fund to account for the assets and liabilities of the former Redevelopment Agency and the receipt of funds to make installment payments of enforceable obligations until the obligations of the former Redevelopment Agency are paid in full and assets have been liquidated.

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Assets, Liabilities and Net Position or Equity

Cash, Cash Equivalents and Investments

The City pools its available cash for investment purposes. The City’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. Cash and cash equivalents are combined with investments and displayed as Cash and Investments.

Highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Market value is used as fair value for those securities which approximated fair value for which market quotations are readily available.

The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF) which has invested a portion of the pool funds in structured notes and asset-backed securities. LAIF’s investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these structured notes and asset-backed securities are subject to market risk as to changes in interest rates.

In accordance with GASB Statement No. 40, Deposit and Investment Risk Disclosures (an amendment of GASB No. 3), certain disclosure requirements, if applicable, are provided for deposit and investment risk in the following areas:

! Interest Rate Risk! Credit Risk

! Overall! Custodial Credit Risk! Concentration of Credit Risk

! Foreign Currency Risk

For purposes of the statement of cash flows of the proprietary fund types, cash and cash equivalents include all investments, as the City operates an internal cash management pool which maintains the general characteristics of a demand deposit account.

Interfund Transactions

Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due to/from other funds” (i.e., current portion of interfund loans) or “advances to/from other funds” (i.e., noncurrent portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the governmental-wide financial statements as “internal balances.”

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Inventories and Prepaid Items

Inventories within the various fund types consist of materials and supplies which are valued at cost on a first-in, first-out basis. Reported expenditures reflecting the purchase of supplies have been restated to reflect the consumption method of recognizing inventory-related expenditures.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.

Capital Assets

Capital assets, which include land, construction in progress, buildings and improvements, improvements other than buildings, machinery and equipment, autos and trucks, equipment under capitalized lease and infrastructure assets (e.g. roads, bridges, traffic signals, and similar items), are reported in the applicable governmental or business-type activities in the Government-Wide Financial Statements. City policy has set the capitalization threshold for reporting capital assets at $5,000 and capital projects at $250,000.

Capital assets are valued at historical cost or estimated historical cost if actual historical cost was not available. Donated assets are valued at its estimated fair market value on the date donated.

Depreciation is recorded on a straight-line basis over estimated useful lives of the assets as follows:

Assets YearsBuildings and building improvements 10-50Improvements other than buildings 10-75Machinery and equipment 5-100Furniture and fixtures 5-10Autos and trucks 5-10Equipment under capitalized lease 5-15Infrastructure 25-75

For infrastructure systems, the City elected to use the “Basic Approach” as defined by GASB Statement No. 34 for infrastructure reporting.

The City defines infrastructure as the basic physical assets that allow the City to function. The assets include streets, bridges, sidewalks, drainage systems, and lighting systems, etc. Each major infrastructure system can be divided into subsystems. For example, the street system can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, landscaping and land. These subsystems were not delineated in the basic financial statements. The appropriate operating department maintains information regarding the subsystems.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest on construction-related debt incurred during the period of construction is capitalized as a cost of the constructed assets.

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The long-term principal portion of debt on non-proprietary capital assets acquired through lease purchase contracts is accounted for in the government-wide financial statements as “capital lease obligations”. Capital assets acquired under capital leases are capitalized at the net present value of the total lease payments in the government-wide financial statements.

Land Held for Resale

Land purchased for resale is capitalized as inventory at acquisition costs.

Long-Term Debt

In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method.

Bonds payable are reported net of the applicable bond premium or discount. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenses when incurred.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

Compensated Absences

In governmental funds, compensated absences are recorded as expenditures in the years paid, as it is the City’s policy to liquidate any unpaid compensated absences at June 30 from future resources, rather than currently available financial resources. In proprietary funds, compensated absences are expensed to the various funds in the period they are earned, and such fund’s share of the unpaid liability is recorded as a long-term liability of the fund. Vested or accumulated compensated absences in proprietary funds are recorded as an expense and liability of those funds as the benefits accrue to employees. The compensated absences liability will be liquidated through the General Fund for governmental activities and through the proprietary funds for the business-type activities.

Claims Payable

The City records a liability to reflect an actuarial estimate of ultimate uninsured losses for both general liability claims (including property damage claims) and workers’ compensation claims. The estimated liability for workers’ compensation claims and general liability claims includes “incurred but not reported” (IBNR) claims. There is no fixed payment schedule to pay these liabilities.

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CITY OF POMONA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015��Note 1: Summary of Significant Accounting Policies (Continued)

Unearned and Unavailable Revenue

Unearned revenue is recognized for transactions for which revenue has not yet been earned. Unearned revenue includes monies received in advance from the fiscal agents on the amounts deposited in the reserve funds for various bonds and prepaid charges for services. Unavailable revenue represents money received during the current or previous years that has not been earned or is not considered available to finance expenditures of the current period.

Deferred Outflows/Inflows of Resources In addition to assets, the Statement of Financial Position and the Governmental Fund Balance Sheet report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government reports deferred outflows of resources for pension contributions made after the actuarial measurement date. The government also reports deferred outflows for charges on debt refunding. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. In addition to liabilities, the Statement of Financial Position and Governmental Fund Balance Sheet report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The government has one item, which arises only under the modified accrual basis of accounting that qualifies for reporting in this category. The item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from two sources: taxes and grant revenues. These amounts are deferred and recognized as an inflow of resources in the period when the amounts become available. In addition, the government has deferred inflows of resources relating to the net pension obligation reported in the government-wide statement of net position and the proprietary funds. These deferred inflows of resources are the result of the net difference between projected and actual earnings on pension plan investments. These amounts are deferred and amortized over a five year period on a straight-line basis.

Net Pension Liability

For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense, information about the fiduciary net position and additions to/deductions from the fiduciary net position have been determined on the same basis as they are reported by the CalPERS Financial Office. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

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Net Position

In the government-wide financial statements, net position is classified in the following:

Net Investment in Capital Assets – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that is attributed to the acquisition, construction, or improvement of the assets.Restricted Net Position – This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments.

Unrestricted Net Position – This amount is all net position that does not meet the definition of “net investment in capital assets” or “restricted net position.”

Net position flow assumption

Sometimes the government will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted – net position and unrestricted – net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government’s policy to consider restricted – net position to have been depleted before unrestricted – net position is applied.

Fund Balances

In the fund financial statements, government funds report the following fund balance classification:

Non-spendable Fund Balance – This includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.

Restricted Fund Balance – This includes amounts that are constrained on the use of resources by either (a) external creditors, grantors, contributors, or laws of regulations of other governments or (b) by law through constitutional provisions or enabling legislation.

Committed Fund Balance – This includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest authority.

Assigned Fund Balance – This includes amounts that are constrained by the government’s intent to be used for specific purposes, but are neither restricted nor committed. The governing board by Resolution No. 2011-63A gave the authority to assign amounts for specific purposes to the Finance Director.

Unassigned Fund Balance – This is the residual amounts that have not been restricted, committed, or assigned to specific purposes. Only the General Fund can report positive unassigned fund balance. All other funds fund balance have been restricted, committed or assigned for the purpose of that particular fund.

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The City Council, as the City's highest level of decision-making authority, may commit fund balance for specific purposes pursuant to constraints imposed by resolution. These committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use through the same type of formal action taken to establish the commitment. City Council action to commit fund balance needs to occur within the fiscal reporting period; however the amount can be determined subsequently.

Fund balance flow assumptions

Sometimes the government will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied.

An individual governmental fund could include non-spendable resources and amounts that are restricted or unrestricted (committed, assigned, or unassigned) or any combination of those classifications. Restricted amounts are to be considered spent when an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available and committed, assigned, then unassigned amounts are considered to have been spent when an expenditure is incurred for purposes for which amounts in any of those unrestricted fund balance classifications can be used.

Property Taxes

Property taxes attach a legal enforceable lien on property as of January 1. Taxes are levied on July 1 and are payable in two installments on December 10 and April 10. The County of Los Angeles (County) bills and collects the property taxes and remits itto the City in installments during the year. The City’s property tax revenues are recognized when an enforceable legal lien is attached to the property. The County is permitted by State Law (Proposition 13) to levy taxes at 1% of full market value (at time of purchase) and can increase the property tax base not more than 2% per year. The City receives a share of this basic levy proportionate to the amount received prior to the passage of Proposition 13 in 1978.

Use of Estimates

The preparation of the basic financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the disclosure of contingent assets and liabilities at the date of the basic financial statements and the related reported amounts of revenues and expenses, if applicable, during the reporting period. Actual results could differ from those estimates.

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CITY OF POMONA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2015��


Effect of New Accounting Standards

During the fiscal year ended June 30, 2015, the City implemented the following Governmental Accounting Standards Board (GASB) standards: GASB Statement No. 68 – Accounting and Financial Reporting for Pensions—an Amendment of GASB Statement No. 27 improve the decision-usefulness of information in local government employer entity financial reports and enhance its value for assessing accountability and inter-period equity by requiring recognition of the entire net pension liability and a more comprehensive measure of pension expense. Decision-usefulness and accountability are also enhanced through new note disclosures and required supplementary information. The requirements of this statement are effective for financial statements for periods beginning after June 15, 2014. GASB Statement No. 71 – Pension Transition for Contributions Made Subsequent to the Measurement Date – an Amendment of GASB Statement No. 68. The objective of this Statement is to address an issue regarding application of the transition provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a local government employer contributing entity to a defined benefit pension plan after the measurement date of the government's beginning net pension liability. The provisions of GASB Statement No. 71 are effective for financial statements beginning after June 15, 2014.

Note 2: Cash and Investments The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds. This pooled cash is invested by the City Treasurer to enhance earnings. The pooled interest earned is allocated to the funds based on average quarter-end cash balances of the various funds.

Summary of Cash and Investments

The following is a summary of cash and investments at June 30, 2015:

Governmental Activities

Business-Type Activities

Fiduciary Funds Total

Cash and investments 51,716,498$ 43,045,107$ 14,693,523$ 109,455,128$ Restricted cash 18,587,051 28,900,238 52,764,660 100,251,949

Total 70,303,549$ 71,945,345$ 67,458,183$ 209,707,077$

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Note 2: Cash and Investments (Continued)

Cash and investments is comprised of the following at June 30, 2015:

Cash and cash equivalents:Petty cash and change funds 8,679$ Demand deposit 2,535,853

Total cash and cash equivalents 2,544,532 Investments:

Local Agency Investment Fund 98,857,825 US Government Securities 8,052,771

Total investments 106,910,596

109,455,128$

Deposits

The carrying amounts of the City’s cash deposits were $2,544,532 at June 30, 2015. Bank balances at June 30, 2015, were $3,522,628 which were fully insured or collateralized with securities held by the pledging financial institutions in the City’s name as discussed below. The $978,096 difference represents outstanding checks and other reconciling items.

The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateralfor cash deposits is considered to be held in the City's name. The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). The City has waived the collateralization requirements.

The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the quarter-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund.

Investments

Under the provisions of the City’s investment policy, and in accordance with California Government Code Section 53601, the City is authorized to invest or deposit in the following:

! Securities issued or guaranteed by the federal government or its agencies! Bankers’ acceptances that are eligible for purchase by the Federal Reserve

System! Commercial paper, rated A-1/P-1, secured by an irrevocable line of credit or

government securities

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! Certificates of deposits with national and state licensed or chartered banks, federal or state savings and loans associations

! Medium-term corporate notes, rated AAA or AA! Money market funds! Local Agency Investment Fund (LAIF)

In accordance with GASB Statement No, 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, investments are stated at fair value at the year end.

Investment in Local Agency Investment Funds

The City is a participant in LAIF which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City’sinvestments with LAIF at June 30, 2015, included a portion of the pool funds invested in Structured Notes and Asset-Backed Securities:

Structured Notes: debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options.

Asset-Backed Securities: generally mortgage-backed securities that entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (for example, Collateralized Mortgage Obligations) or credit card receivables.

As of June 30, 2015, the City had $98,857,825 invested in LAIF, which had invested 2.08% of the pool investment funds in Structured Notes and Asset-Backed Securities. The LAIF fair value factor of 1.000375979 was used to calculate the fair value of the investments in LAIF. LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in accordance with State statute.

Interest Rate Risk

As a means of limiting its exposure to fair value losses arising from rising interest rates, the City’s investment policy (Policy) limits investments to a maximum maturity of five years. The weighted average days to maturity of the total portfolio shall not exceed the City’s anticipated liquidity needs for the next six (6) months. The City is in compliance with this provision of the Policy.

At June 30, 2015, the City had the following investment maturities:

1 Year or Less

1 to 3 Years

3 to 5 Years Total

InvestmentsLocal Agency Investment Fund 98,857,825$ -$ -$ 98,857,825$ Federal Home Loan Bank - 2,054,544 5,998,227 8,052,771

98,857,825$ 2,054,544$ 5,998,227$ 106,910,596$

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Note 2: Cash and Investments (Continued) Credit Risk

The City’s Policy limits investments in commercial paper to the highest grade of stand alone or enhanced (prime) commercial paper as rated by Moody’s Investor Service, Standard & Poor’s Corporation, or Fitch Financial Services and requires that the management company of mutual funds must have attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. Investments in U.S. Treasury securities are not considered to have credit risk; therefore, their credit quality is not disclosed. As of June 30, 2015, the City's investments in external investment pools and money market mutual funds are unrated.

Moody'sStandard &

Poor's

Local Agency Investment Fund Not Rated Not RatedFederal Home Loan Bank Aaa AA+

Custodial Credit Risk For deposits, custodial credit risk is the risk that, in the event of the failure of a deposit financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City’s investment policy does not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the provision for deposits stated in the California Government Code. Bank balances of $3,272,628 net of FDIC insurance, which was in excess of federal depository insurance limits, was held in collateralized accounts. Of the City’s investments held by trustees and fiscal agents, $100,251,949 of securities was held by the counterparty’s trust department, the trustee for the bonds, not in the name of the City as of June 30, 2015.

Concentration of Credit Risk

The City’s Policy states that not more than 20% of the portfolio shall be invested in any one entity or any one instrument to protect the City from concentration of credit risk, with the following exceptions: U.S. Treasury Obligations, governmental agencies (i.e. GNMA, FFCB, FHLB, FHLMC, FNMA, etc.), and investment pools (LAIF). In addition, purchases of commercial paper from U.S. corporations must not exceed 15% of the value of the portfolio at any time and single issuer holdings to no more than 10 percent per issuer. The City is in compliance with these provisions of the Policy.��In accordance with GASB Statement No. 40, if the City has invested more than 5% of its investments in any one issuer, it is exposed to credit risk. As of June 30, 2015, none of the City’s deposits or investments was exposed to credit risk. Investments guaranteed by the U.S. government and investments in mutual funds and external investment pools are excluded from this requirement.

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Investment in Bonds

On February 1, 2005, the Public Financing Authority issued $11,370,000 2005 Revenue Bonds, Series AL, to purchase the City’s 2005 Reassessment and Refunding Revenue Bonds, Series AM (Series AM Bonds). The Authority holds the Series AM Bonds in the amount of $3,389,000 as an investment at June 30, 2015. The investment is held by the fiscal agent.

Note 3: Loans Receivable (Net)

At June 30, 2015, the City’s net loans receivable consisted of the following:

Balance July 1, 2014 Additions Deletions

Balance June 30, 2015

575,000$ -$ 135,000$ 440,000$ 8,040,772 - 177,416 7,863,356 1,203,892 28,423 - 1,232,315

62,628 - 62,628 - 483,955 7,538 - 491,493 942,145 - - 942,145 360,378 - 7,638 352,740

4,424,827 111,450 36,854 4,499,423 2,113,801 49,980 25,000 2,138,781

994,741 462,914 16,518 1,441,137 5,343,892 1,143,975 68,373 6,419,494 3,141,085 64,038 194,734 3,010,389

Owner Participation Agreement (OPA) 278,244 80,000 181,528 176,716 52,450 - - 52,450

720,000 - - 720,000 Holt Ave. Housing Partners LP Loans - 1,906,142 - 1,906,142

796,581 36,765 - 833,346

Total 29,534,391$ 3,891,225$ 905,689$ 32,519,927$

Section 108 LoansDeferred Home Improvement LoansPrototype LoansADDI LoansRental Rehabilitation LoansCHDOHOPE 3 LoansShield of Faith

Telacu

Manufactured Housing Rehabilitation LoansOccupied Rehabilitation LoansMAP Loans, netNIP Loans

First Time Home Buyer ProgramMulti-Family

Note 4: Interfund Transactions

Government-Wide Financial Statements

Internal Balances - At June 30, 2015, the City had the following internal receivable and payable.

Internal Receivable

Internal PayableBusiness-Type

Activities

Governmental Activities 5,953,677$

The purpose of the internal balance was a $5.0 million advance to the Internal Service Fund to establish the Self-Insurance Fund and the accumulation of $953,677 to consolidate the internal service funds activities related to the enterprise funds.

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Note 4: Interfund Transactions (Continued)

Transfers - At June 30, 2015, the City had the following transfers. The purpose of the transfers was for debt service payments and to reimburse a construction project.

Transfers Out

Transfers InBusiness-Type

Activities

Governmental Activities 1,011,800$

Fund Financial Statements

Due To/Due From - At June 30, 2015, the City had the following short-term interfund receivables and payables.


Non Major Governmental

FundsInternal Service

Funds Total

1,664,620$ 67,980$ 3,487$ 1,736,087$ General Fund

Due from Other FundsGovernmental Funds:

Due to Other Funds

Due from other funds to the General Fund was for Series AR debt service payment in the General Debt Service Fund.

Due to the General Fund from the Non-Major Funds was to cover negative cash deficit at the end of the fiscal year.

Long-Term Advances - At June 30, 2015, the City had the following interfund long-term advances:

Proprietary

General Fund


Internal Service Funds Total

-$ 43,045,000$ -$ 43,045,000$ Non-Major Governmental Funds 304,435 - - 304,435

- - 5,000,000 5,000,000 304,435$ 43,045,000$ 5,000,000$ 48,349,435$

Public Financing Authority

Total

Advance from Other FundsGovernmental Funds

Advances to Other FundsGovernmental Funds:

Proprietary Funds:Water

Long-term advances between the Public Financing Authority and the General Debt Service Fund are loan proceeds used to fund projects.

The Water Utility advanced $5,000,000 to the Internal Service Fund to establish the Self-Insurance Fund in 2010.

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Note 4: Interfund Transactions (Continued)

Transfers - At June 30, 2015, the City had the following transfers:

Non-MajorGeneral Miscellaneous General debt Governmental

Fund Grants Service Funds Water Sewer Refuse TotalGovernmental Fund

General Fund -$ 72,714$ 4,396,786$ 152,136$ -$ -$ -$ 4,621,636$Miscellaneous Grants 80 - - - - - - 80 Non-Major Governmental Funds - 211,409 217,376 3,015,220 6,204 231,526 85,000 3,766,735

Total Governmental Funds 80 284,123 4,614,162 3,167,356 6,204 231,526 85,000 8,388,451

Proprietary FundsWater - - 600,000 317,530 - - - 917,530 Sewer - - 417,000 - 31,251 - - 448,251

Total Proprietary Funds - - 1,017,000 317,530 31,251 - - 1,365,781

Total 80$ 284,123$ 5,631,162$ 3,484,886$ 37,455$ 231,526$ 85,000$ 9,754,232$

Transfer InGovernmental Funds Proprietary Funds

The transfer of $4,396,786 between the General Fund and the General Debt Service Fund was for Series AG, AN / AP, AU / AV, and AR debt service payments.

All other General Fund transfers were in the normal course of the City’s business.

Note 5: Due from Other Governments

At June 30, 2015, the City’s due from other governments consisted of the following:


1,268,647$ 4,298,861 1,186,492

98,944 Total 6,852,944$

Federal governmentState of California

Local government entitiesCounty of Los Angeles

Note 6: Land Held for Resale

At June 30, 2015, land held for resale in the amount of $4,503,277 is recorded at cost in the Housing Authority Fund.

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Note 7: Capital Assets

Government-Wide Financial Statements

At June 30, 2015, the City’s capital assets consisted of the following:


Business-Type Activities Total

81,168,660$ 9,089,782$ 90,258,442$ 22,682,709 19,965,564 42,648,273

Total non-depreciable assets 103,851,369 29,055,346 132,906,715

14,941,552 3,482,783 18,424,335 60,003,395 286,638 60,290,033 20,754,160 200,002,139 220,756,299 1,014,456 5,105 1,019,561

10,756,126 4,510,802 15,266,928 1,037,970 4,257,381 5,295,351

380,805,974 - 380,805,974 Total depreciable assets, at cost 489,313,633 212,544,848 701,858,481

11,968,419 3,291,986 15,260,405 24,683,385 119,452 24,802,837 16,466,672 77,715,074 94,181,746

812,785 5,105 817,890 8,283,866 3,165,780 11,449,646

288,588 851,476 1,140,064 257,167,573 - 257,167,573

Total accumulated depreciation 319,671,288 85,148,873 404,820,161

Total depreciable assets, net 169,642,345 127,395,975 297,038,320

Total capital assets 273,493,714$ 156,451,321$ 429,945,035$

Machinery and equipmentFurniture and fixturesAutos and trucks

Non-depreciable assetsLandConstruction in process

Depreciable assets:Buildings and building improvementsImprovements other than buildings

Equipment under capitalized leasesInfrastructure

Infrastructure

Buildings and building improvementsImprovements other than buildingsMachinery and equipmentFurniture and fixturesAutos and trucksEquipment under capitalized leases

Less accumulated depreciation:

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Note 7: Capital Assets (Continued)

The following is a summary of capital assets for governmental activities:

Balance July 1, 2014 Additions Deletions Transfers


80,360,320$ 808,340$ -$ -$ 81,168,660$ 19,004,938 6,799,860 147,541 (2,974,548) 22,682,709

Total non-depreciable assets 99,365,258 7,608,200 147,541 (2,974,548) 103,851,369

14,941,552 - - - 14,941,552 60,003,395 - - - 60,003,395 20,020,840 721,070 - 12,250 20,754,160

1,014,456 - - - 1,014,456 10,894,922 563,089 701,885 - 10,756,126

1,037,970 - - - 1,037,970 379,331,983 - 1,488,307 2,962,298 380,805,974

Total depreciable assets, at cost 487,245,118 1,284,159 2,190,192 2,974,548 489,313,633

11,642,514 325,905 - - 11,968,419 23,130,649 1,552,736 - - 24,683,385 15,235,202 1,231,470 - - 16,466,672

764,827 47,958 - - 812,785 8,448,734 537,017 701,885 - 8,283,866

107,056 181,532 - - 288,588 249,506,863 9,078,945 1,418,235 - 257,167,573

Total accumulated depreciation 308,835,845 12,955,563 2,120,120 - 319,671,288 Total depreciable assets, net 178,409,273 (11,671,404) 70,072 2,974,548 169,642,345

Total capital assets 277,774,531$ (4,063,204)$ 217,613$ -$ 273,493,714$

Less accumulated depreciation:Buildings and building improvements

Non-depreciable assets:LandConstruction in process

Depreciable assets:Buildings and building improvementsImprovements other than buildings

Equipment under capitalized leases


Infrastructure

Infrastructure

Improvements other than buildingsMachinery and equipmentFurniture and fixturesAutos and trucksEquipment under capitalized leases

Depreciation expense for capital assets of the governmental activities for the year ended June 30, 2015, is as follows:

General Government 212,024$ Public safety 1,815,313 Urban development 9,744,894 Community Services 1,160,279 Internal service funds 23,053

Total 12,955,563$

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Note 7: Capital Assets (Continued)

The following is a summary of capital assets for business-type activities:

Balance July 1, 2014 Additions Deletions Transfers


9,089,782$ -$ -$ -$ 9,089,782$ 18,241,815 4,583,427 - (2,859,678) 19,965,564

Total non-depreciable assets 27,331,597 4,583,427 - (2,859,678) 29,055,346

3,482,783 - - - 3,482,783 286,638 - - - 286,638

197,417,808 49,942 325,289 2,859,678 200,002,139 5,105 - - - 5,105

4,554,565 - 43,763 - 4,510,802 4,257,381 - - - 4,257,381

Total depreciable assets, at cost 210,004,280 49,942 369,052 2,859,678 212,544,848

3,282,309 9,677 - - 3,291,986 108,742 10,710 - - 119,452

74,764,708 3,089,336 138,970 - 77,715,074 5,105 - - - 5,105

2,990,211 219,332 43,763 - 3,165,780 425,738 425,738 - - 851,476

Total accumulated depreciation 81,576,813 3,754,793 182,733 - 85,148,873 Total depreciable assets, net 128,427,467 (3,704,851) 186,319 2,859,678 127,395,975

Total capital assets 155,759,064$ 878,576$ 186,319$ -$ 156,451,321$

Equipment under capitalized lease

Equipment under capitalized leases

Less accumulated depreciation:Buildings and building improvementsImprovements other than buildings

Furniture and fixturesAutos and trucks

Non-depreciable assets:LandConstruction in process

Depreciable assets:Buildings and building improvements

Machinery and equipment


Improvements other than buildings

Depreciation expense for capital assets of the business-type activities for the year ended June 30, 2015, is as follows:

2,605,803$ 580,345 565,974

2,671 Total 3,754,793$

WaterSewerRefuseCanon Water Company

Note 8: Other Investments

In November 2006, the Housing Authority of the City Pomona acquired a 29.846% membership interest in Mission Promenade I from a member interest holder for a purchase price of $600,000.

Other investments in the Water Enterprise fund represent one-quarter of share of the San Antonio Water Company for a cost of $9,000.

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Note 9: Long-Term Debt

The following is a summary of long-term debt for the year ended June 30, 2015:

Accreted/Balance Accrued Balance Due Within

July 1, 2014 Interest Additions Deletions June 30, 2015 One YearGovernmental Activities

Pollution remediation obligations 1,580,363$ -$ -$ 619,554$ 960,809$ 960,809$ Obligation under capital leases 879,285 - - 292,990 586,295 215,741 Notes payable 875,000 - - 220,000 655,000 220,000 Revenue bonds 41,110,000 - - 1,546,000 39,564,000 1,626,000 Pension obligation refunding bonds 44,414,040 439,913 - 520,000 44,333,953 615,000 Certificates of participation 11,681,813 - - 345,622 11,336,191 335,000

Subtotal 100,540,501 439,913 - 3,544,166 97,436,248 3,972,550

Compensated absences 6,994,573 - 4,437,032 4,313,379 7,118,226 4,437,000 Claims payable 16,179,444 - 2,029,341 6,107,237 12,101,548 1,805,000 Total governmental activities 123,714,518$ 439,913$ 6,466,373$ 13,964,782$ 116,656,022$ 10,214,550$

Business-Type ActivitiesObligations under capital leases 3,564,689$ -$ -$ 560,296$ 3,004,393$ 573,408$ Revenue bonds 133,915,426 - - 1,828,782 132,086,644 1,750,000

Subtotal 137,480,115 - - 2,389,078 135,091,037 2,323,408 -

Compensated absences 1,342,054 - 1,029,412 1,069,259 1,302,207 1,030,000 Total business-type activities 138,822,169$ -$ 1,029,412$ 3,458,337$ 136,393,244$ 3,353,408$

Governmental Activities Long-Term Debt

Pollution Remediation Obligations

The City acquired properties which were determined to have soil and groundwater contamination. The City is responsible for the investigation, characterization and remediation of the soil and groundwater from the contamination. The City had a remediation study performed to determine any potential harm to the surrounding areas. The pollution remediation costs were estimated at $1,781,262. During the current fiscal year, the City spent $619,554 on clean-up cost. The remaining outstanding cost to complete the clean-up is estimated at $960,809 at June 30, 2015.

Obligations under Capital Leases

At June 30, 2015, obligations under capital leases consisted of the following:



Due Within One Year

230,718$ -$ 75,045$ 155,673$ 76,891$ 83,584 - 83,584 - -

564,983 - 134,361 430,622 138,850 Total 879,285$ -$ 292,990$ 586,295$ 215,741$

PPF #2HCC #2

PPF #1

The City has entered into numerous equipment lease-purchase agreements with a leasing company whereby the lessor acquired certain equipment and leased it to the City with an option to purchase. The related assets have been capitalized as capital assets.

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Note 9: Long-Term Debt (Continued) The total leased assets by major asset class consisted of the following:

June 30, 2015

260,616$ 777,354

Equipment under capitalized leases, at cost 1,037,970 (288,588)

Equipment under capitalized leases, net 749,382$

Machinery and equipmentAutos and trucks

Accumulated depreciation

The depreciation expense for equipment under capitalized leases was $181,533 for the year ended June 30, 2015.

The rates of interest on the lease purchase agreements range from 2.19% to 3.30% per annum. The annual debt service requirement outstanding at June 30, 2015, is as follows:

Principal Interest Total

2015-2016 215,741$ 16,334$ 232,075$ 2016-2017 222,272 9,803 232,075 2017-2018 148,282 3,071 151,353

Total 586,295$ 29,208$ 615,503$

Notes Payable At June 30, 2015, notes payable consisted of the following:



Due Within One Year

575,000$ -$ 145,000$ 430,000$ 145,000$ 300,000 - 75,000 225,000 75,000

875,000$ -$ 220,000$ 655,000$ 220,000$

City of ClaremontHUD Section 108 Loan

HUD Section 108 Loan

The City has three notes guaranteed by the United States Department of Housing and Urban Development (HUD) under Section 108 of the Community Development Act and are payable from future Community Development Block Grant (CDBG) entitlements. The notes were made to Casa Herrera ($2,375,000) on February 1, 1998; Village Car Wash ($100,000) on September 17, 2012; and Freddie’s Auto Repair ($100,000) on August 20, 2012. On June 30, 2010, the balance of the original loan for Casa Herrera was defeased to refinance the loan at a lower interest rate. The new interest rate for Casa Herrera ranges from 4.96% to 5.77%, with new loan terms beginning on February 1, 2011 and maturing August 1, 2016. The interest rate for both Village Car Wash and Freddie’s Auto Repair is variable and equal to 20 basis points (0.2%) above the applicable London Interbank Offered Rates (LIBOR), currently at 2.5%, with loan terms beginning on

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Note 9: Long-Term Debt (Continued)

July 1, 2013 and maturing on August 1, 2023. Casa Herrera is responsible for the principal payment on its note and the City is responsible for the interest payment. Village Car Wash and Freddie’s Auto Repair are responsible for principal and interest payments on its notes. Again, all notes are guaranteed by CDBG funds; thus, in the event of default, the City’s CDBG entitlement funds may be used to cover any outstanding debt.

The annual debt service requirement at June 30, 2015, is as follows:

Principal Interest Total2015-2016 145,000$ 9,200$ 154,200$ 2016-2017 145,000 5,663 150,663 2017-2018 20,000 3,500 23,500 2018-2019 20,000 3,000 23,000 2019-2020 20,000 3,000 23,000 2020-2024 80,000 6,000 86,000

Total 430,000$ 30,363$ 460,363$

City of Claremont

On July 2, 2013, the City entered into a loan agreement with the City of Claremont for $300,000 to improve storm drain facilities within the City of Pomona. The loan requires repayment with 2% interest over a period of four (4) years.

The annual debt service requirement at June 30, 2015, is as follows:

Principal Interest Total2015-2016 75,000$ 3,750$ 78,750$ 2016-2017 75,000 3,750 78,750 2017-2018 75,000 3,750 78,750

Total 225,000$ 11,250$ 236,250$

Revenue Bonds

At June 30, 2015, revenue bonds consisted of the following:Balance

July 1, 2014 Additions DeletionsBalance

June 30, 2015Due Within One Year

4,375,000$ -$ 460,000$ 3,915,000$ 480,000$ 3,750,000 - 361,000 3,389,000 386,000

19,485,000 - 65,000 19,420,000 65,000 1,025,000 - 500,000 525,000 525,000 2,340,000 - 30,000 2,310,000 35,000

10,135,000 - 130,000 10,005,000 135,000 Total 41,110,000$ -$ 1,546,000$ 39,564,000$ 1,626,000$

(133,591)$ -$ (7,031)$ (126,560)$ 2006 Taxable Lease Revenue Bonds, Series AVUnamortized Deferred Loss on Refunding

2006 Taxable Lease Revenue Bonds, Series AV

2005 Taxable Lease Revenue Bonds, Series AP2006 Lease Revenue Bonds, Series AU

2005 Subordinate Revenue Bonds, Series AL2005 Reassessment and Refunding Bonds, Series AM2005 Lease Revenue Bonds, Series AN

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2005 Subordinate Revenue Bonds, Series AL – Original Issuance $11,370,000

On February 1, 2005, the Public Financing Authority issued $11,370,000 in 2005 Subordinate Revenue Bonds, Series AL to purchase the 2005 Reassessment and Refunding Revenue Bonds, Series AM, to finance certain capital improvements in the City and to fund a reserve account for the Bonds.

Interest on the bonds is payable semiannually on each September 2 and March 2, commencing September 2, 2005. The rates of interest range from 2.50% to 5.10% per annum. Principal on the subordinate revenue bonds is payable in annual installments ranging from $275,000 to $955,000.

During 2008, the bonds in the amount of $1,975,000 were called.

The annual debt service requirement for the 2005 Subordinate Revenue Bonds, Series AL outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 480,000$ 180,659$ 660,659$ 2016-2017 505,000 157,385 662,385 2017-2018 530,000 132,672 662,672 2018-2019 555,000 106,424 661,424 2019-2020 585,000 78,270 663,270 2020-2022 1,260,000 64,718 1,324,718

Total 3,915,000$ 720,128$ 4,635,128$

2005 Reassessment and Refunding Revenue Bonds, Series AM – Original Issuance $9,524,000

On February 1, 2005, the City issued $9,524,000 in 2005 Reassessment and Refunding Revenue Bonds, Series AM, to provide funds to refund the refunding Improvement Bonds, Assessment District No. 294. Interest on the bonds is payable semiannually on each September 2 and March 2. The rate of interest is 7.22% per annum.

During 2008, the bonds in the amount of $1,920,000 were called.

The annual debt service requirement for the 2005 Reassessment and RefundingRevenue Bonds, Series AM outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 386,000$ 230,751$ 616,751$ 2016-2017 415,000 201,835 616,835 2017-2018 449,000 170,645 619,645 2018-2019 482,000 137,036 619,036 2019-2020 516,000 101,008 617,008 2020-2022 1,141,000 83,933 1,224,933

Total 3,389,000$ 925,208$ 4,314,208$

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2005 Lease Revenue Bonds, Series AN – Original Issuance $19,910,000

On May 1, 2005, the Public Financing Authority issued $19,910,000 in 2005 Lease Revenue Bonds, Series AN, to refinance certain obligations of the City in connection with the Authority’s 1995 Lease Revenue Bonds, Series P (now retired) and finance certain public improvements of the City.

Interest on the bonds is payable semiannually on each October 1 and April 1. The rates of interest range from 3.00% to 4.375% per annum. Principal is payable in annual installments ranging from $45,000 to $1,460,000. The bonds are secured by certain revenues consisting of certain Lease Payments with respect to the leased property by the City.

The annual debt service requirement for the 2005 Lease Revenue Bonds, Series AN outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 65,000$ 906,800$ 971,800$ 2016-2017 625,000 893,723 1,518,723 2017-2018 650,000 869,173 1,519,173 2018-2019 675,000 842,998 1,517,998 2019-2020 700,000 815,060 1,515,060 2020-2025 3,980,000 3,613,849 7,593,849 2025-2030 4,950,000 2,583,438 7,533,438 2030-2035 6,315,000 1,185,625 7,500,625 2035-2036 1,460,000 36,500 1,496,500

Total 19,420,000$ 11,747,166$ 31,167,166$

2005 Taxable Lease Revenue Bonds, Series AP – Original Issuance $4,385,000

On May 1, 2005, the Public Financing Authority issued $4,385,000 in 2005 Taxable Lease Revenue Bonds, Series AP, to refinance certain obligations of the City in connection with the Authority’s 1995 Lease Revenue Bonds, Series P (now retired) and finance certain public improvements of the City.

Interest on the bonds is payable semiannually on each October 1 and April 1. The rates of interest range from 4.120% to 4.300% per annum. Principal is payable in annual installments ranging from $370,000 to $525,000. The bonds are secured bycertain revenues consisting of certain Lease Payments with respect to the leased property by the City.

The annual debt service requirement for the 2005 Taxable Lease Revenue Bonds, Series AP outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 525,000$ 12,797$ 537,797$

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2006 Lease Revenue Bonds, Series AU – Original Issuance $2,540,000

On December 6, 2006, the Public Financing Authority issued $2,540,000 in 2006 Lease Revenue Bonds, Series AU to finance certain public improvements of the City.

Interest on the bonds is payable semiannually on each June 1 and December 1. The rates of interest range from 3.250% to 4.375% per annum. Principal is payable in annual installments ranging from $25,000 to $310,000. The bonds are secured by certain revenues consisting of certain Lease Payments with respect to the leased property by the City.

The annual debt service requirement for the 2006 Lease Revenue Bonds, Series AU outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 35,000$ 98,340$ 133,340$ 2016-2017 30,000 97,115 127,115 2017-2018 35,000 96,035 131,035 2018-2019 35,000 94,740 129,740 2019-2020 35,000 93,410 128,410 2020-2025 215,000 443,379 658,379 2025-2030 255,000 396,195 651,195 2030-2035 385,000 332,468 717,468 2035-2040 495,000 239,688 734,688 2040-2045 790,000 121,107 911,107

Total 2,310,000$ 2,012,477$ 4,322,477$

2006 Taxable Lease Revenue Bonds, Series AV – Original Issuance $10,790,000

On December 6, 2006, the Public Financing Authority issued $10,790,000 in 2006 Taxable Lease Revenue Bonds, Series AV, to refinance certain obligations of the City in connection with the City’s Certificates of Participation, 2002 Series AE (Mission Promenade Project) and finance certain public improvements of the City.

Interest on the bonds is payable semiannually on each June 1 and December 1. The rates of interest range from 5.00% to 5.70% per annum. Principal is payable inannual installments ranging from $95,000 to $665,000. The bonds are secured by certain revenues consisting of certain Lease Payments with respect to the leased property by the City.

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The annual debt service requirement for the 2006 Taxable Lease Revenue Bonds, Series AV outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 135,000$ 564,920$ 699,920$ 2016-2017 145,000 558,170 703,170 2017-2018 150,000 550,920 700,920 2018-2019 160,000 542,520 702,520 2019-2020 170,000 533,560 703,560 2020-2025 990,000 2,515,760 3,505,760 2025-2030 1,305,000 2,204,680 3,509,680 2030-2035 1,710,000 1,795,400 3,505,400 2035-2040 2,260,000 1,250,010 3,510,010 2040-2045 2,980,000 528,960 3,508,960

Total 10,005,000$ 11,044,900$ 21,049,900$

The following is a summary of unamortized deferred loss on refunding outstanding at June 30, 2015:



(133,591)$ -$ (7,031)$ (126,560)$

Amortization expense was $7,031 for June 30, 2015.

Pension Obligation Refunding Bonds

Balance July 1, 2014

Accreted Interest Deletions


Due Within One Year

2006 Pension Obligation Bonds, Series AR 44,414,040$ 439,913$ 520,000$ 44,333,953$ 615,000$

The City is a member of the California Public Employees’ Retirement System (PERS), a public employees’ defined benefits retirement program. In 2004, the City issued $32,300,000 and $5,700,000 in Pension Obligation Bonds, in order to fund the City’s unamortized, unfunded actuarial accrued liability and fund the current year general fund contribution with PERS (see Note 10 for more information on the PERS pension plan). In 2006, the City issued $42,280,684 in Pension Obligation Refunding Bonds, Series AR to refinance the City’s outstanding Pension Obligation Refunding Bonds, Series 2004 AJ and Series 2004 AK. The refunding achieved net present value savings of $868,932, or 2.3% of refunded par and changed the debt structure from variable rate to fixed rate.

2006 Pension Obligation Refunding Bonds, Series AR – Original Issuance $42,280,684

On February 1, 2006, the City issued $42,280,684 Pension Obligations Refunding Bonds, Series 2006 AR (Bonds) to refinance the City’s outstanding Pension Obligation Refunding Bonds, Series 2004 AJ and its Pension Obligation Refunding Bonds, Series 2004 AK, to capitalize certain interest on the Bonds and to pay the costs of issuing the Bonds. The Bonds were issued as current interest bonds in the

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Note 9: Long-Term Debt (Continued) principal amount of $36,205,000 and as capital appreciation bonds in the original issuance amount of $6,075,684. Interest on the current interest bonds is payable semiannually on each January 1 and July 1. The rates of interest vary and range from 5.24% to 5.832% per annum. Principal is payable in annual installments ranging from $71,302 to $5,140,000. The capital appreciation bonds are payable only at maturity and will not bear interest on a current basis. The accreted value of each capital appreciation bond is equal to its accreted value upon the maturity thereof, being comprised of its initial purchase price and the accreted interest between the delivery date and its respective maturity date. The obligation of the City to make payments with respect to the Bonds is an absolute and unconditional obligation of the City imposed upon the City by the Retirement Law and is not limited to any special source of funds. The City’s obligation for the Bonds is any money available in the City’s General Fund. The Bonds are not secured or limited as to payment by any special source of funds of the City. The current interest bonds are subject to redemption prior to maturity. The capital appreciation bonds are not subject to redemption prior to maturity. The annual debt service requirement outstanding at June 30, 2015, is as follows:

Principal InterestAccreted Interest Total

2015-2016 615,000$ 2,099,240$ -$ 2,714,240$ 2016-2017 695,721 2,089,629 19,279 2,804,629 2017-2018 790,996 2,068,759 44,005 2,903,760 2018-2019 888,650 2,044,732 76,350 3,009,732 2019-2020 987,475 2,017,272 112,525 3,117,272 2020-2025 6,466,380 9,521,325 1,318,620 17,306,325 2025-2030 9,284,731 8,116,181 3,140,267 20,541,179 2030-2035 19,465,000 4,559,603 - 24,024,603 2035-2036 5,140,000 149,882 - 5,289,882

Total 44,333,953$ 32,666,623$ 4,711,046$ 81,711,622$

Certificates of Participation


BalanceJune 30, 2015

Due Within One Year

11,100,000$ -$ 315,000$ 10,785,000$ 335,000$ 581,813 - 30,622 551,191 -

Total 11,681,813$ -$ 345,622$ 11,336,191$ 335,000$

2003 Certificate of Participation, Series AGUnamortized Bond Premium

2003 Certificates of Participation, Series AG – Original Issuance $13,985,000

On July 1, 2003, the City issued $13,985,000 Certificates of Participation, 2003 Series AG, to provide funds to finance certain public improvements, including street improvements throughout the City. Principal payments are made once a year on June 1. The bonds are set to mature on June 1, 2034. The Authority realized an

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original premium of approximately $918,655 and incurred cost of issuance of approximately $725,000.

Interest on the bonds is payable semiannually on each June 1 and December 1. The rates of interest range from 2.800% to 10.000% per annum. Principal is payable in annual installments ranging from $210,000 to $880,000.

The annual debt service requirement outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 335,000$ 593,175$ 928,175$ 2016-2017 355,000 574,750 929,750 2017-2018 375,000 555,225 930,225 2018-2019 395,000 534,600 929,600 2019-2020 415,000 512,875 927,875 2020-2025 2,450,000 2,195,325 4,645,325 2025-2030 3,205,000 1,442,650 4,647,650 2030-2034 3,255,000 459,525 3,714,525

Total 10,785,000$ 6,868,125$ 17,653,125$

The following is a summary of the 2003 Certificate of Participation, Series AG unamortized premium outstanding at June 30, 2015:



581,813$ -$ 30,622$ 551,191$


The following is a summary of compensated absences outstanding as of June 30, 2015:



Due Within One Year

6,994,573$ 4,437,032$ 4,313,379$ 7,118,226$ 4,437,000$

For the governmental activities, the majority of the liability will be paid by the General Fund.

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Claims Payable

The following is a summary of the claims payable outstanding as of June 30, 2015:



Due Within One Year

16,179,444$ 2,029,341$ 6,107,237$ 12,101,548$ 1,805,000$

Claims payable will be liquidated from the Self-Insurance Fund.

Business-Type Activities

Obligations under Capital Leases



Due Within One Year

HCC #1 3,564,689$ -$ 560,297$ 3,004,392$ 573,408$

The City has entered into numerous equipment lease-purchase agreements with a leasing company whereby the lessor acquired certain equipment and leased it to the City with an option to purchase. The related assets have been capitalized in the capital assets account.

The total leased assets by major asset class consisted of the following:

June 30, 2015

4,257,381$ Equipment under capitalized lease, at cost 4,257,381

(851,476) Equipment under capitalized lease, net 3,405,905$

Equipment

Accumulated depreciation

The depreciation expense for equipment under capitalized leases was $425,738 for the year ended June 30, 2015.


Principal Interest Total

2015-2016 573,408$ 70,303$ 643,711$ 2016-2017 586,826 56,886 643,712 2017-2018 600,558 43,154 643,712 2018-2019 614,610 29,100 643,710 2019-2020 628,990 14,717 643,707

Total 3,004,392$ 214,160$ 3,218,552$

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Revenue Bonds



Due Within One Year

12,765,000$ -$ 220,000$ 12,545,000$ 225,000$ 95,615,000 - 1,035,000 94,580,000 1,075,000

4,835,426 - 148,782 4,686,644 - 5,820,000 - 260,000 5,560,000 275,000

14,880,000 - 165,000 14,715,000 175,000

Total 133,915,426$ -$ 1,828,782$ 132,086,644$ 1,750,000$

(611,050)$ -$ (58,195)$ (552,855)$ 2007 Revenue Bonds, Series AY (1,180,357) - (78,692) (1,101,665)

Total (1,791,407)$ -$ (136,887)$ (1,654,520)$

2002 Refunding Revenue Bonds, Series AF

2007 Revenue Bonds, Series BA

2002 Refunding Revenue Bonds, Series AF2007 Revenue Bonds, Series AY Unamortized Bond Premium

Unamortized Deferred Loss on Refunding

2007 Taxable Revenue Refunding Bonds, Series AZ

2002 Refunding Revenue Bonds, Series AF – Original Issuance $15,205,000

On October 1, 2002, the Public Financing Authority issued $15,205,000 in 2002 Sewer Refunding Revenue Bonds, Series AF, for the purpose of making an advance to the City’s Sewer Fund for refunding the 1996 Revenue Bonds, Series Q, as well as provide funds to refinance certain sewer obligations of the City of Pomona and to finance certain improvements to the City’s sewer enterprise project.

Interest is payable on June 1 and December 1 of each year. Interest rates range from 2.0% to 4.2% on serial bonds of $3,900,000. Principal is payable in annual installments ranging from $165,000 to $790,000 through December 2043. Term bonds of $1,210,000, $1,075,000, $2,620,000, $2,815,000 and $3,585,000 mature on December 1, 2023, 2026, 2032, 2037, and December 1, 2042, respectively.


Principal Interest Total2015-2016 $ 225,000 $ 585,988 $ 810,988 2016-2017 240,000 577,175 817,175 2017-2018 245,000 567,625 812,625 2018-2019 260,000 557,395 817,395 2019-2020 270,000 546,395 816,395 2020-2025 1,550,000 2,536,000 4,086,000 2025-2030 1,960,000 2,141,800 4,101,800 2030-2035 2,440,000 1,644,338 4,084,338 2035-2040 3,100,000 966,250 4,066,250 2040-2043 2,255,000 172,875 2,427,875

Total $ 12,545,000 $ 10,295,841 $ 22,840,841

This advance refunding has increased the aggregate debt service payments that were required for the Refunded Bonds by approximately $1,588,000 and provided an economic loss (difference between the present value of the new and old debt service payments) of approximately $1,500,000.

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The following is a summary of unamortized deferred loss on refunding outstanding at June 30, 2015:



(611,050)$ -$ (58,195)$ (552,855)$


2007 Revenue Bonds, Series AY – Original Issuance $99,370,000

On January 1, 2007, the Public Financing Authority issued $99,370,000 in 2007 Revenue Bonds, Series AY, to provide funds to partially refund the Authority’s 1999 Refunding Revenue Bonds, Series AA and the 1999 Revenue Bonds, Series AC, and to finance the acquisition and construction of certain improvements to the Water Enterprise of the City.

Interest on the bonds is payable semiannually on each November 1 and May 1. The rates of interest range from 4.00% to 5.00% per annum. Principal is payable in annual installments ranging from $885,000 to $6,040,000. The bonds are secured by an Installment Sale Agreement, dated as of January 1, 2007 between the City and the Authority. The Installment Payments are a special limited obligation of the City,payable from and secured by a pledge of and first lien on all Net Revenues, subject to the parity lien, if any, of any additional obligations as provided for in the Installment Sale Agreement, in the Utility Fund of the City in trust under the Installment Sale Agreement.


Principal Interest Total2015-2016 $ 1,075,000 $ 4,679,200 $ 5,754,200 2016-2017 1,130,000 4,625,450 5,755,450 2017-2018 1,175,000 4,580,250 5,755,250 2018-2019 1,235,000 4,521,500 5,756,500 2019-2020 1,280,000 4,472,100 5,752,100 2020-2025 7,315,000 21,460,400 28,775,400 2025-2030 9,900,000 19,456,500 29,356,500 2030-2035 15,290,000 16,413,500 31,703,500 2035-2040 19,500,000 12,190,000 31,690,000 2040-2045 24,890,000 6,802,250 31,692,250 2045-2047 11,790,000 891,500 12,681,500

Total $ 94,580,000 $ 100,092,650 $ 194,672,650

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The following is a summary of the 2007 Revenue Bonds, Series AY unamortized premium outstanding at June 30, 2015:



4,835,426$ -$ 148,782$ 4,686,644$


The advance refunding resulted in a difference between the reacquisition price (Series AY & AZ) and the net carrying amount of the bonds (Series AA & AC) of $1,809,884. This difference is considered to be a deferred loss on refunding. The deferred loss on refunding, reported in the basic financial statements as a deduction from long-term debt, is amortized on a straight-line method over 23 years. The following is a summary of unamortized deferred loss on refunding outstanding at June 30, 2015:



(1,180,357)$ -$ (78,692)$ (1,101,665)$


2007 Taxable Revenue Refunding Bonds, Series AZ – Original Issuance $6,930,000

On January 1, 2007, the Public Financing Authority issued $6,930,000 in 2007 Taxable Revenue Refunding Bonds, Series AZ, to provide funds to partially refund the Authority’s 1999 Refunding Revenue Bonds, Series AA (now retired) and 1999 Revenue Bonds, Series AC (now retired), and to finance the acquisition and construction of certain improvements to the Water Enterprise of the City.

Interest on the bonds is payable semiannually on each November 1 and May 1. The rates of interest range from 5.267% to 5.650% per annum. Principal is payable in annual installments ranging from $200,000 to $555,000. The bonds are secured by an Installment Sale Agreement, dated as of January 1, 2007 between the City and the Authority. The Installment Payments are a special limited obligation of the City, payable from and secured by a pledge of and first lien on all Net Revenues, subject to the parity lien, if any, of any additional obligations as provided for in the Installment Sale Agreement, in the Water Enterprise Fund of the City in trust under the Installment Sale Agreement.

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Principal Interest Total2015-2016 275,000$ 311,996$ 586,996$ 2016-2017 285,000 297,510 582,510 2017-2018 300,000 282,500 582,500 2018-2019 320,000 265,550 585,550 2019-2020 340,000 247,470 587,470 2020-2025 1,995,000 928,578 2,923,578 2025-2029 2,045,000 296,908 2,341,908

Total 5,560,000$ 2,630,512$ 8,190,512$

2007 Revenue Bonds, Series BA – Original Issuance $15,575,000

On January 1, 2007, the Public Financing Authority issued $15,575,000 in 2007 Revenue Bonds, Series BA, to provide funds to finance certain improvements to the City’s Sewer Enterprise. Interest on the bonds is payable semiannually on each June 1 and December 1. The rates of interest range from 3.625% to 5.000% per annum. Principal is payable in annual installments ranging from $110,000 to $1,595,000. The bonds are secured by an Installment Sale Agreement, dated as of January 1, 2007 between the City and the Authority. The Installment Payments are a special limited obligation of the City, payable from and secured by a pledge of and first lien on all Net Revenues, subject to the parity lien securing the Authority’s 2002 Refunding Revenue Bonds, Series AF, and of any additional obligations as provided for in the Installment Sale Agreement, in the Sewer Enterprise Fund held by the City in trust under the Installment Sale Agreement.


Principal Interest Total2015-2016 175,000$ 649,734$ 824,734$ 2016-2017 175,000 642,148 817,148 2017-2018 185,000 365,296 550,296 2018-2019 190,000 628,483 818,483 2019-2020 195,000 621,260 816,260 2020-2025 1,100,000 2,983,204 4,083,204 2025-2030 1,345,000 2,736,020 4,081,020 2030-2035 1,700,000 2,406,656 4,106,656 2035-2040 2,135,000 1,986,975 4,121,975 2040-2045 4,395,000 1,410,019 5,805,019 2045-2047 3,120,000 228,544 3,348,544

Total 14,715,000$ 14,658,339$ 29,373,339$

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In the enterprise funds, the liability for vested and unpaid compensated absences (accrued vacation, sick pay, executive leave, and comp time) is reported in the fund as the benefits are earned and vest. The compensated absences accrued in the enterprise funds amounted to $1,302,208 at June 30, 2015.



Due Within One Year

1,342,054$ 1,029,413$ 1,069,260$ 1,302,207$ 1,030,000$

For the business-type activities, the liabilities will be paid in future years from the propriety funds.

Pledged Revenue

The City has pledged certain tax revenue to the repayment of its Water and Sewer Enterprise Fund bonds through final maturity on May 1, 2047, or earlier. These bonds were issued to refinance Series Q, Series AA/AC and finance certain public improvements of the City. All net available revenues are irrevocably pledged by the City to the repayment of the bond’s debt services. In 2015, the Water and Sewer Enterprise Funds have net available revenues of $9,156,656 and total debt service paid was $7,974,164. The bonds required 87% of net revenue. Annual principal and interest payments on the bonds are expected to require roughly 92% of future net revenue. The total principal and interest remaining to be paid at June 30, 2015, on the Bonds is as follows:

Debt Issue Remaining Balance

2002 Series AF Bonds 22,840,841$ 2007 Series AY Bonds 194,672,650 2007 Series AZ Bonds 8,190,512 2007 Series BA Bonds 29,373,339

Total 255,077,342$

Revenue2014-2015Revenue

Net available revenues;excluding debt service 9,156,656$

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Outstanding Principal on Capital-Related Debt The City has acquired capital assets through the issuance of bonds and capital lease obligations. Following is the outstanding balance at June 30, 2015, of capital assets related debt. Governmental Activities:

Outstanding Principal on Capital Related

Debt

11,201,659$ 18,146,779

525,000 2,112,496 4,366,777

Capital Lease Obligations 586,295

Total 36,939,006$

2003 Certificates of Participation, Series AG2005 Lease Revenue Bonds, Series AN2005 Taxable Lease Revenue Bonds, Series AP2006 Lease Revenue Bonds, Series AU2006 Taxable Lease Revenue Bonds, Series AV

Business-Type Activities:

Outstanding Principal on Capital Related

Debt

Water2007 Revenue Bonds, Series AY 84,939,283$ 2007 Taxable Revenue Refunding Bonds, Series AZ 4,458,334

Subtotal 89,397,617 Sewer

2002 Refunding Revenue Bonds. Series AF 10,001,177 2007 Revenue Bonds, Series BA 11,962,511

Subtotal 21,963,688 Refuse

Capital Lease Obligation 3,004,393

Total 114,365,698$

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Note 10: Non-City Obligations

The following bond issues are not reflected as City long-term debt because these debts are solely payable from and secured by specific revenue sources described in the official statements of the respective issues. Neither the faith and credit nor the taxing power of the City, the Successor Agency, the State of California or any political subdivision thereof, is pledged for payment of these bonds. Accordingly, since this debt does not constitute an obligation of the City, it is not reflected as long-term debt in the accompanying basic financial statements. The City is acting only as an agent.

Mortgage Revenue Bonds

Single family and multifamily housing revenue bonds were issued to provide construction and permanent financing to developers of multifamily residential rental projects located in the City to be partially occupied by persons of low and moderate income. These bonds are secured by first trust deeds and private mortgage insurance. The bonds, together with interest thereon, are payable solely from bond proceeds, revenues and other amounts derived solely from home mortgage and developer loans secured by first deeds of trust, irrevocable letters of credit and irrevocable surety bonds. The mortgage revenue bonds outstanding at June 30, 2015, is as follows:

BalanceMortage Revenue Bonds June 30, 2015

Single Family, Series 1983 A (Southwest Project Bonds) 700,000$ Single Family Mortgage Refunding Bonds 90A 29,305,000 Single Family Mortgage Refunding Bonds 90B 12,745,000

42,750,000$

Note 11: Defined Benefit Pension Plan Obligations

General Information about the Pension Plan

Plan Description

The City contributes to the California Public Employees Retirement System (PERS), an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by State statute and City ordinance. Copies of PERS’ annual financial report may be obtained from its Executive Office located at 400 P Street, Sacramento, California 95814.

Benefits Provided

CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

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Note 11: Defined Benefit Pension Plan Obligations (Continued)

Tier 1 * Tier 2* PEPRA

Hire date Prior to August 14, 2011

On or after August 14, 2011 but prior to January 1,

2013

On or after January 1, 2013

Benefit formula 2.0% @ 55 2.0% @ 60 2.0% @ 62Benefit vesting schedule 5 years service 5 years service 5 years serviceBenefit payments monthly for life monthly for life monthly for lifeRetirement age minimum 50 yrs minimum 50 yrs minimum 52 yrs

Monthly benefits, as a % of eligible compensation

1.426% - 2.418%, 50 yrs - 63+ yrs,

respectively

1.092% - 2.418%, 50 yrs - 63+ yrs,

respectively

1.000% - 2.500%, 52 yrs - 67+ yrs,

respectively

Required employee contribution rates 7.000% 7.000% 6.250%

Required employer contribution rates 17.053% 17.053% 17.053%

Miscellaneous Plan

* Plan is closed to new entrants

Tier 1 * Tier 2 * PEPRA

Hire date Prior to November 21, 2010

On or after November 21, 2010 but prior to January

1, 2013

On or after January 1, 2013

Benefit formula 3.0% @ 50 3.0% @ 55 2.7% @ 57Benefit vesting schedule 5 years service 5 years service 5 years serviceBenefit payments monthly for life monthly for life monthly for lifeRetirement age minimum 50 yrs minimum 50 yrs minimum 50 yrs

Monthly benefits, as a % of eligible compensation 3.000%, 50+ yrs

2.400% - 3.000%, 50 yrs - 55+ yrs,

respectively

2.000% - 2.700%, 50 yrs - 57+ yrs,

respectively

Required employee contribution rates 9.000% 9.000% 12.750%

Required employer contribution rates 40.523% 40.523% 40.523%

Safety Plan

* Plan is closed to new entrants

Employees Covered

At June 30, 2014, the following employees were covered by the benefit terms of the plan:

Description Miscellaneous Safety PlanActive members 351 153 Transferred members 319 22 Terminated members 195 15 Retired members and beneficiaries 805 377

Total 1,670 567

Number of members

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Contribution Description Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the year ended June 30, 2015, the employer contributions recognized as a reduction to the net pension liability for all the Miscellaneous Plan and Safety Plan were $2,691,762 and $6,210,220 respectively.

Net Pension Liability

The City’s net pension liability is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2014, using an annual actuarial valuation as of June 30, 2013 rolled forward to June 30, 2014 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

Actuarial Methods and Assumptions Used to Determine Total Pension Liability

For the measurement period ended June 30, 2014 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2013 total pension liability. The June 30, 2013 and the June 30, 2014 total pension liabilities were based on the following actuarial methods and assumptions:

Miscellaneous Plan Safety Plan

Actuarial Cost Method Entry Age Normal in accordance with the requirements of GASB Statement No. 68

Entry Age Normal in accordance with the requirements of GASB Statement No. 68

Discount Rate 7.50% 7.50%Inflation 2.75% 2.75%Salary Increases Varies by Entry Age and Service Varies by Entry Age and Service Investment Rate of Return 7.50% Net of Pension Plan Investment and

Administrative Expenses; includes Inflation 7.50% Net of Pension Plan Investment and Administrative Expenses; includes Inflation

Mortality Rate Table (1) Derived using CalPERS’ Membership Data for all Funds

Derived using CalPERS’ Membership Data for all Funds

Post Retirement Benefit Increase Contract COLA up to 2.75% until Purchasing

Power Protection Allowance Floor on Purchasing Power applies, 2.75% thereafter

Contract COLA up to 2.75% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.75% thereafter

Actuarial Assumptions

(1) The mortality table used was developed based on CalPERS’ specific data. The table includes 20 years of mortality improvements using Society of Actuaries Scale BB. For more details on this table, please refer to the 2014 experience study report.

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All other actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period from 1997 to 2011, including updates to salary increase, mortality and retirement rates. The Experience Study report can be obtained at CalPERS’ website under Forms and Publications.

Discount Rate

The discount rate used to measure the total pension liability was 7.50 percent. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate.

Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.50 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long-term expected discount rate of 7.50 percent is applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB 68 section.

According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without reduction for pension plan administrative expense. The 7.50 percent investment return assumption used in this accounting valuation is net of administrative expenses. Administrative expenses are assumed to be 15 basis points. An investment return excluding administrative expenses would have been 7.65 percent. Using this lower discount rate has resulted in a slightly higher total pension liability and net pension liability. CalPERS determined this difference was deemed immaterial to the Agent Multiple-Employer Defined Benefit Pension Plan. More information can be found on the CalPERS website.

CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management review cycle that is scheduled to be completed in February 2018. Any changes to the discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a discount rate net of administrative expenses for GASB 67 and 68 calculations through at least the 2017-18 fiscal year. CalPERS will continue to check the materiality of the difference in calculation until such time as they have changed their methodology.

The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was

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calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.

The table below reflects long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These geometric rates of return are net of administrative expenses.

New Startegic Real Return Real ReturnAssets Class Allocation Years 1 - 10 (1) Years 11+ (2)Global Equity 47.00% 5.25% 5.71%Global Fixed Income 19.00 0.99 2.43Inflation Sensitive 6.00 0.45 3.36Private Eqauity 12.00 6.83 6.95Real Estate 11.00 4.50 5.13Infrastructure and Forestland 3.00 4.50 5.09Liquidity 2.00 (0.55) (1.05)

(1) An expected inflation of 2.5% used for this period(2) An expected inflation of 3.0% used for this period

Changes in the Net Pension Liability

The following table shows the changes in net pension liability recognized over the measurement period.

Total Pension Liability

(a)

Plan Fiduciary Net Position

(b)

Net Pension Liability/(Assets)

(c)=(a)-(b)Balance at: 6/30/2013 (Valuation Date) (1) 245,736,775$ 184,143,961$ 61,592,814$ Changes Recognized for the Measurement Period:

Service Cost 3,310,829 - 3,310,829 Interest on the Total Pension Liability 18,086,982 - 18,086,982 Changes of Benefit Terms - - -

Difference between Expected and Actual Experience - - - Changes of Assumptions - - - Contribution from the Employer - 3,048,502 (3,048,502) Contributions from Employees - 1,640,223 (1,640,223) Net Investment Income (2) - 31,444,609 (31,444,609) Benefit Payments including Refunds of Employee Contributions (12,464,852) (12,464,852) -

Net Changes During 2013-14 8,932,959 23,668,482 (14,735,523) Balance at: 6/30/2014 (Measurement Date) (1) 254,669,734$ 207,812,443$ 46,857,291$

Increase (Decrease)

Miscellaneous Plan

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Total Pension Liability

(a)

Plan Fiduciary Net Position

(b)

Net Pension Liability/(Assets)

(c)=(a)-(b)

Balance at: 6/30/2013 (Valuation Date) (1) 313,905,458$ 219,628,065$ 94,277,393$ Changes Recognized for the Measurement Period:

Service Cost 4,880,486 - 4,880,486 Interest on the Total Pension Liability 23,069,282 - 23,069,282 Changes of Benefit Terms - - - Difference between Expected and Actual Experience - - - Changes of Assumptions - - - Contribution from the Employer - 4,480,201 (4,480,201) Contributions from Employees - 1,402,077 (1,402,077) Net Investment Income (2) - 37,455,889 (37,455,889) Benefit Payments including Refunds of Employee Contributions (17,510,572) (17,510,572) -

Net Changes During 2013-14 10,439,196 25,827,595 (15,388,399) Balance at: 6/30/2014 (Measurement Date) (1) 324,344,654$ 245,455,660$ 78,888,994$

Increase (Decrease)

Safety Plan

(1) The fiduciary net position includes receivables for employee service buybacks,

deficiency reserves, fiduciary self-insurance and OPEB expense. This may differ from the plan assets reported in the funding actuarial valuation report.

(2) Net of administrative expenses.

Sensitivity of the Net Pension Liability to Changes in the Discount Rate

The following presents the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 7.50 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (6.50 percent) or 1 percentage-point higher (8.50 percent) than the current rate:

Discount Rate - 1% (6.50%)

Current Discount Rate (7.5%)

Discount Rate +1%(8.5%)

Miscellaneous Plan's Net Pension Liability/(Assets) 79,162,664$ 46,857,291$ 19,798,294$

Safety Plan's Net Pension Liability/(Assets) 118,234,605 78,888,994 44,111,975

Total Plans 197,397,269$ 125,746,285$ 63,910,269$

Pension Plan Fiduciary Net Position

The plan fiduciary net position disclosed in the GASB 68 accounting valuation report may differ from the plan assets reported in the funding actuarial valuation report due to several reasons. First, for the accounting valuations, CalPERS must keep items such as deficiency reserves, fiduciary self-insurance and OPEB expense included as assets. These amounts are excluded for rate setting purposes in the funding actuarial valuation. In addition, differences may result from early Comprehensive Annual Financial Report closing and final reconciled reserves.

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Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions

As of the start of the measurement period (July 1, 2013), the net pension liability was $155,870,207. For the measurement period ending June 30, 2014 (the measurement date), the City incurred a pension expense/(income) of $8,901,982 for both the Miscellaneous Plan and Safety Plan.

Note that no adjustments have been made for contributions subsequent to the measurement date. Adequate treatment of any contributions made after the measurement date is the responsibility of the employer.

As of June 30, 2015, the City has deferred outflows and deferred inflows of resources related to pensions as follows:

Deferred Outflows of Resources

Deferred Inflows of Resources

Current year contributions that occurred after the measurement date of June 30, 2014 8,974,566$ -$ Net Difference between Projected and Actual Earnings on Pension Plan Investments - (31,497,200) Total 8,974,566$ (31,497,200)$

$8,974,566 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows or deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Measurement DeferredPeriod Ended Outflows/(Inflows)

June 30: of Resources2015 (7,874,300)$ 2016 (7,874,300) 2017 (7,874,300) 2018 (7,874,300)

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Note 12: Other Post Employment Benefits

Collateral Benefits Plan

Plan Description

The Collateral Benefits Plan provides a supplemental retirement benefit to City employees upon resigning from the City and concurrently retiring with CalPERS. The supplemental benefit is a monthly benefit of $100 from the first of the month following retirement from the City until the age of 65 for Tier 1 and Tier 2 employees. Tier 1 employees include Mid-Management and Confidential, Police Officers’ Association, City Employees’ Association, and Management Group B employees, and are required to have at least 20 years of City service upon retiring after July 1, 1987. Tier 2 employees include Executive Management Group A employees and are required to have at least one year of City service upon retiring after July 1, 1991. Employees hired after July 1, 2011, are not eligible for this plan.

Eligibility

Bargaining Group City ServiceExecutive Management Group B, Mid-Management/Confidential Employees' Association, City Employees' Association, Police Officers' Association 20 YearsExecutive Management Group A 1 YearPolice Management Not Eligible

There are 88 participants receiving collateral benefits at June 30, 2015.

Funding Policy

The City’s funding policy is to contribute the annual required contribution. The annual required contribution equals the sum of:

! normal cost, and! amortization of the unfunded actuarial accrued liability.

Government Accounting Standards Board Statement No. 27 (Statement 27) requires that the City determine the plan’s annual pension cost based on the most recent actuarial valuation. The annual pension cost equals the plan’s annual required contribution, adjusted for historical differences between the annual required contribution and amounts contributed. The actuary has determined the City’s annual required contribution equal to the sum of (a) normal cost, and (b) amortization of the unfunded actuarial accrued liability.

Annual Pension Cost

For the year ending June 30, 2015, the City’s annual pension cost for the Collateral Benefits Plan of $110,032 was equal to the actuarial required contribution.

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Note 12: Other Post Employment Benefits (Continued)

The summary of principal assumptions and methods used to determine the annual required contribution is shown below:

Valuation Date July 1, 2012Actuarial Cost Method Entry Age Normal Cost MethodAmortization Method Level DollarAverage Remaining Period Closed-12.5 Years as of July 1, 2013Asset Valuation Method Market Value on Date of ValuationActuarial Assumptions

Investment Rate of Return 7.00%Inflation 3.00%Salary Increases n/aCost of Living Adjustment None

The following table provides 3 years of historical information of the Annual Pension Cost for the Collateral Benefits Plan:

Year Ending

Annual Pension

Cost(APC)Percentage of

APC Contributed

Net Pension Obligation

(Asset)

6/30/2013 92,391$ 100% -$ 6/30/2014 110,032 100% - 6/30/2015 110,032 100% -

Funded Status and Funding Progress

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The table below shows an analysis of the actuarial value of assets as a percentage of the actuarial accrued liability and the unfunded actuarial accrued liability as a percentage of the annual covered payroll.

UnfundedActuarial Actuarial Actuarial Actuarial UAAL as a %Valuation Value of Accrued Accrued Funded Covered of Covered

Date Assets Liability Liability Ratio Payroll Payroll1/1/2006 -$ 1,172,743$ (1,172,743)$ 0.0% n/a n/a7/1/2009 179,275 954,779 (775,504) 18.8% n/a n/a7/1/2012 220,801 976,744 (755,943) 22.6% n/a n/a

Collateral Benfits Plan

Actuarial valuation is performed every three years. As of the date of this report, this is the latest information available.

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Public Employees’ Medical and Hospital Care Program (PEMHCA) Plan

Plan Description

Employees of the City who retire through CalPERS, their spouses, and eligible dependents, may receive health plan coverage through the Public Employees’ Medical and Hospital Care Program (PEMHCA) Plan (Plan). The Plan is a single employer defined benefit plan which provides the retirees a monthly medical contribution that is not to exceed the cost of the plan selected, with the maximum contribution limited for individual retirees based on bargaining groups as listed below:

Bargaining Group BenefitPomona City Council Members 700$ Pomona Executive Management Group 700 Pomona Mid-Management/Confidential Employees' Association 700 Pomona City Employees' Association 700 Pomona Police Managers' Association 700 Pomona Police Officers' Association 700 Firefighters (Pre-Merger with Los Angeles County Fire District) 465

Police Management retirees with at least 22 years of service as a Police Officerreceive up to 90% contribution towards the most expensive 2-party CalPERS planpremium. This benefit terminates once the retiree is eligible for Medicare (age 65). This provision has been eliminated for employees hired or promoted to the unit after July 1, 2011.

Eligibility

There are 489 employees eligible to receive or are receiving post-employment benefits at June 30, 2015.

Funding Policy

The required contribution of the City is based on a pay-as-you-go financing requirement. For fiscal year 2015, the City contributed $3,345,170 to the retiree health plan.

Annual OPEB Cost and Net OPEB Obligation

The City’s annual Other Postemployment Benefit (OPEB) cost (expense) is calculated based on the Annual Required Contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excesses) over a period not to exceed 30 years.

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The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s net OPEB Obligation to the Plan:

Total

$ 5,508,998 749,061

(778,913) Annual OPEB cost (expense) 5,479,146

3,345,170

Increase in net OPEB obligation 2,133,976 17,668,252

19,802,228$ Net OPEB obligation - end of year

Annual required contributionInterest on net OPEB obligationAdjustment to annual required contribution

Contributions made

Net OPEB obligation - beginning of year

The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2015 is as follows:

Fiscal Year Ended

Annual OPEB Cost

Annual Contribution

% of Annual OPEB Cost Contributed

Net OPEB Obligation

6/30/2013 5,743,900$ 3,229,187$ 56.2% 15,523,781$ 6/30/2014 5,252,076 3,107,605 59.2% 17,668,252 6/30/2015 5,479,146 3,345,170 61.1% 19,802,228

Funded Status and Funding Progress

As of January 1, 2014, the most recent actuarial valuation date, the plan was zero percent funded. The Actuarial Accrued Liability (AAL) for benefits was $76,618,515 and the actuarial value of assets was $0 resulting in an Unfunded Actuarial Accrued Liability (UAAL) of $76,618,515. The covered payroll (annual payroll of active employees covered by the plan) was $40,318,000 and the ratio of UAAL to the covered payroll was 190%.

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future.

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The table below shows an analysis of the actuarial value of assets as a percentage of the actuarial accrued liability and the unfunded actuarial accrued liability as a percentage of the annual covered payroll.

Actuarial Valuation

Date

Actuarial Value of Assets (AVA)

Entry Age Actuarial Accrued Liability

Unfunded Actuarial

Accrued LiabilityFunded Ratio


UAAL as Percentage of Covered

Payroll

1/1/2010 -$ 73,291,000$ (73,291,000)$ 0.0% 38,805,000$ 188.9%1/1/2012 - 77,168,916 (77,168,916) 0.0% 36,101,000 213.8%1/1/2014 - 76,618,515 (76,618,515) 0.0% 40,318,000 190.0%

Public Employees' Medical and Hospital Care Program PlanSchedule of Funding Progress

Actuarial valuation is performed every two years.

Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the January 1, 2014, actuarial valuation, the entry age normal (EAN) cost method was used. The EAN normal cost equals the level annual amount of contribution from the employee’s date of hire (entry date) to their retirement date that is sufficient to fund the projected benefit. The actuarial assumptions include a 4.25% investment rate of return which is based on the expected return on funds invested by CalPERS, and an annual healthcare cost trend rate of 7.5% and 7.0% for PPO and HMO respectively and reduced to an ultimate rate of 5.0% thereafter. The actuarial assumption for inflation was 2.75%. As of the valuation date, there are no eligible plan assets. The UAAL is being amortized over an initial 30 years using the level percentage-of-pay method on a closed basis. The remaining amortization period at June 30, 2015, was 23 years. As of the actuarial valuation date of January 1, 2014, the City had 502 active eligible participants and 657 eligible retired participants and beneficiaries.

Note 13: Joint Powers Agreements

Alameda Corridor-East Construction Authority

The City approved and adopted a Joint Exercise of Powers Agreement in November 2012. The Alameda Corridor East Construction Authority (ACE) is a single purpose construction authority created by the San Gabriel Council of Governments in 1998 to mitigate the impacts of significant increases in rail traffic over 70 miles of mainline railroad in the San Gabriel Valley. The ACE Project consists of multiple construction projects to improve safety at various rail crossings as well as at various grade separations in the San Gabriel Valley.

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Note 13: Joint Powers Agreements (Continued)

CSAC – Excess Insurance Authority

The City became a member of CSAC Excess Insurance Authority (Authority) in July 2008. The Authority is a risk sharing pool of California public agencies dedicated to controlling losses and providing effective risk management solutions. Membership is currently comprised of various member counties and various public entity organizations. The governing board consists of one representative from each member county and seven members elected by the public entity membership.

Foothill Air Support Team

The City joined the Foothill Air Support Team (FAST) in January 2011. FAST was developed in 1999 creating a joint helicopter patrol operation that could enhance member agencies ability to deter criminal activity and apprehend offenders. The governing board consists of one representative from each of the seven member agencies.

Foothill Transit

The City is a member of the Foothill Transit Joint Powers Agreement. The JPA is comprised of 20 cities and the County of Los Angeles. The purpose of the authority is to provide a more efficient and cost effective local transportation service for the area. Each member city has one representative and three members are appointed by the Board of Supervisors.

Below are the most currently available condensed audited financial statements of the JPA as of June 30, 2015. Separate financial statements of Foothill Transit are available from its offices located in West Covina, CA.

Total

Assets 317,825,782$ Liabilities 86,538,577 Net Position 231,287,205$

Revenues 20,070,304$ Expenses 96,020,736 Operating income (75,950,432) Nonoperating revenue (expenses) 56,182,236 Net income (19,768,196) Capital contributions 43,067,156 Net Position - July 1, 2014 207,988,245 Net Position - June 30, 2015 231,287,205$

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Gold Line Phase II Construction Authority

The City participates in the Gold Line Phase II Construction Authority (GLCA) joint venture, which became effective September 3, 2003. The GLCA oversees the planning, funding, designing and construction contracts for the completion of the Los Angeles-Pasadena Metro Blue Line light rail project. The GLCA’s governing Board is comprised of an appointed representative from each of the affected cities and agencies, including the cities of Azusa, Claremont, Duarte, Glendora, Arcadia, La Verne, Ontario, Montclair, Irwindale, Pomona, San Dimas, Monrovia, Pasadena, and South Pasadena,and the San Bernardino Associated Governments (SANBAG). Los Angeles County Metropolitan Transportation Agency (LACMTA) will have the responsibility to operate and maintain the rail after its completion. Member agencies will be paid for attending meetings, not to exceed $1,800 per year, per member agency, plus direct expenses. Member agencies are not allowed to withdraw from the GLCA and each member agency is required to pay $31,445 in initial dues (first payments were due October 1, 2003) and each member will be held liable for its share of operating costs.

The City paid the joint venture $0 during the year ended June 30, 2015. Assets are divided based on the proportionate equity share at the time the joint venture dissolves, which is currently not significant to the City.

Interagency Communications Interoperability System

The City participates in the Interagency Communications Interoperability System (ICIS) joint powers authority which became effective September 2003. The intent of ICIS is to provide public safety agencies with a formalized governance structure through which the participants may share resources to construct and manage a system for wide-areacommunications interoperability. The governing board is comprised of one member from each of the seven member agencies. The City paid $43,000 in annual dues for the fiscal year ending June 30, 2015.

Los Angeles County Disaster Management Area D

The City has participated in the Disaster Management Area D joint powers agreement (JPA) since 1958. The JPA is intended to promote the coordination of disaster management, training and preparedness of the Area D member cities under the direction of the Disaster Management Area Board. The governing board includes one representative from each of the 23 member cities. Annual dues at the rate of $0.05 per capita are paid and totaled $7,498 for the fiscal year ending June 30, 2015.

Los Angeles Interagency Metropolitan Police Apprehensive Crime Task Force

The City joined the Los Angeles Interagency Metropolitan Police Apprehensive Crime Task Force (LA Impact) in March 2011. It is a compilation of numerous federal, state, and local law enforcement agencies in Los Angeles County, whose primary purpose is to investigate major crimes, with an emphasis on dismantling mid-to-major level drug trafficking organizations. Since its inception, LA Impact has grown to 80 Officers from 35 different Los Angeles County law enforcement agencies. The City is solely responsible for the salary and benefits of one (1) Police Sergeant position, currently assigned to this program, which is fully funded within the Police Department’s General Fund budget.

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Pomona Valley Transportation Authority

The City is a member of the Pomona Valley Transportation Authority (PVTA). The PVTA is comprised of four cities and is organized under a Joint Powers Agreement pursuant to the California Government Code. The purpose of the PVTA is to study, implement and provide for public transportation that will best serve transit-dependent persons, including handicapped and senior adults residing in the Pomona Valley.

Each member city has two representatives on the Board of Directors. Officers of the PVTA are elected annually by the Board of Directors.

The City does not have an equity interest in the PVTA. However, the City does have an ongoing financial interest. Because the City also has an ongoing financial responsibility for continued funding of the PVTA, the City is able to influence operations. As a result, the PVTA uses its resources on behalf of the City.

Following are the most currently available condensed audited financial statements of the PVTA as of June 30, 2015. Separate financial statements of the PVTA are available from its offices located in La Verne, California.

TotalAssets 3,168,365$

Liabilities 1,689,898$ Contributed capital 411,448 Retained earnings 1,067,019 Total liabilities and fund equity 3,168,365$

Operating revenues 283,727$ Operating expenses 4,428,926 Operating (income) (4,145,199) Non-operating revenue 4,092,296 Net income (52,903) Retained earnings - July 1, 2014 1,119,922 Retained earnings - June 30, 2015 1,067,019$

Pomona-Walnut-Rowland (PWR) Joint Water Line Commission

The City participates in the Pomona-Walnut-Rowland (PWR) Joint Water Line Commission (Commission) joint venture, which provides for the acquisition, construction, maintenance, repair and operation of a water transmission pipeline for the benefit of member agencies. The Pomona-Walnut-Rowland Joint Water Line Commission’s governing board is comprised of an appointed representative from each of three member agencies – the City, Walnut Valley Water District, and Rowland Water District.

The cost of providing water to the member agencies is financed though user charges. The Commission purchases water for resale to the member agencies at a price sufficient to provide reserve funds for emergencies. In addition, the member agencies are billed forthe costs of maintenance and operation of the pipeline. The City paid the joint venture $3,757,541 during the year ended June 30, 2015, which is comprised of $3,489,570 for

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water use and $267,941 for capacity charges and other charges. Assets are divided based on the proportionate equity share at the time the joint venture dissolves. The City’s share in the equity of the Commission at June 30, 2015, was $672,618.

As of June 30, 2015, the three participants had the following approximate ownership equity interest:

Agreement Balance

City of Pomona 28% $ 672,618 Walnut Valley Water District 43% 1,032,949 Rowland Water District 28% 672,618 Unallocated 1% 24,022

Total 100% $ 2,402,207

Member Percentages

The Commission’s basic financial statements for the fiscal year ended June 30, 2015,reflect the implementation of GASB 34 and include the following:

Total Assets 5,239,818$ Total Liabilities 2,837,610

Net Position 2,402,208$

The Commission does not recognize income or loss. Net operating expenditures in excess of users’ assessments are treated as accounts receivable on the Commission’s books and charged to each user’s account in the following year. Conversely, user’s assessments in excess of net operating expenditures are treated as a liability and credited against each user’s account, also in the following year. Under this basis, operating expenses for the Commission totaled $17,134,901 compared to total operating revenues of $17,122,934 in fiscal year 2015. Complete financial statements can be obtained from the Pomona-Walnut-Rowland Joint Water Line Commission, P.O. Box 8460, Rowland Heights, CA 91748.

San Gabriel Valley Council of Governments

The City is a member of the San Gabriel Valley Council of Governments (Council) which became effective March 1994. The Council provides member agencies a vehicle to voluntarily engage in regional and cooperative planning and coordination of government services and responsibilities to assist member agencies in the conduct of their affairs. The goal and intent of the Council is one of voluntary cooperation among members for the collective benefit of cities and unincorporated areas in the San Gabriel Valley. The governing board is comprised of one member from each of 31 member cities and the San Gabriel Valley Water Districts, except the County of Los Angeles. The County has three members who represent the unincorporated communities of Supervisor Districts 1, 4, and 5. All member agencies pay dues. The City paid $30,000 in annual dues for the fiscal year ending June 30, 2015.

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Tri-City Mental Health Center

The City is a member of the Tri City Mental Health Center (Center). The Center is a jointly governed organization comprised of three cities and is organized under a Joint Powers Agreement pursuant to the California Government Code. The purpose of the Center is to develop mental health services and facilities to serve persons residing in the three member cities. The City’s contribution to the Center was $43,675 for the year ended June 30, 2015.

The Board of Directors is composed of seven members, two councilmembers from Pomona, one councilmember each from the cities of Claremont and La Verne, and one non-elected member from each of the three cities.

Below are the most currently available condensed audited financial statements of the Center as of June 30, 2015. Separate financial statements of the Center are available from its offices located in Pomona, California.

Total

Assets 34,430,939$ Deferred outflows of resources 976,390 Liabilities 16,126,863 Deferred inflows of resources 9,719,890 Net Position 9,560,576$

Revenues 5,988,257$ Expenses 15,491,200 Operating income (9,502,943) Non-operating revenue (expenses) 13,442,888 Net income 3,939,945 Special items 683,816 Net Position - July 1, 2014 (as restated) 4,936,815 Net Position - June 30, 2015 9,560,576$

Note 14: Risk Management

The Self-Insurance Internal Service Fund is part of the City’s self-insurance program for general liability, workers compensation, and unemployment insurance. The City is a member of the California State Association of Counties Excess Insurance Authority (CSAC-EIA). Through CSAC-EIA, the City has a program limit of $25 million dollars with a self-insured retention of $1 million for its excess liability program and its worker’s compensation program. Additionally, the City purchases catastrophic excess liability coverage that provides an additional $25 million in coverage.

CSAC-EIA is a governmental joint powers authority created by certain California counties and cities to provide a pooled approach to the members’ liability and excess workers’ compensation coverage as allowed under the California Government Code. The authority manages various types of pooled coverage programs for participating members.

As of June 30, 2015, estimated claims payable amounted to $12,101,548.

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Note 14: Risk Management (Continued)

The estimated claims payable reported at June 30, 2015, is based on the requirements of GASB Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. The following is a summary of changes in claims liabilities over the past three fiscal years:

Beginning Balance

Expenses and Changes in Estimates

Claims Payments Ending Balance

2011-2012 19,657,917$ 3,775,783$ 4,402,134$ 19,031,566$ 2013-2014 19,031,566 2,024,844 4,876,966 16,179,444 2014-2015 16,179,444 2,029,341 6,107,237 12,101,548

Claims Payable

Note 15: Commitments and Contingencies

Agency Participation Agreement On April 5, 2004, the City entered into a reclaimed water agreement with the Los Angeles County Sanitation District (LACSD). The agreement is for 20 years, beginning on July 1, 2003, and requires the City to sell its interest in the Northside Recycled Water Line, a 20” non-reinforced concrete gravity reclaimed water pipeline to the LACSD for $441,730. Additionally, the contract provides the City with up to 2/3 of the supply of water from the plant which can then be sold by the City to other customers. The City receives discounted rates on water during the first 12 years of the agreement.

Contractual Commitments The following schedule summarizes the major capital project contractual commitments of the City as of June 30, 2015:

TBU Inc. 1,367,554$ Vasilj, Inc. 966,075 General Pump Co. 595,557 E2 Managetech, Inc. 468,223 Gentry Bros 373,220 A&B Electric 350,198 Tetra Tech 256,748 Civil Source Consulting 208,330 RBF Consulting 175,692 VA Consulting 120,494 All other commitments 167,873

Total 5,049,964$

Major Commitments and Contracts for Professional Services:

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Note 15: Commitments and Contingencies (Continued) Lawsuits

The City is a defendant in certain other legal actions arising in the normal course of operations. As of June 30, 2015, in the opinion of City management, there were no additional outstanding matters that would have a significant effect on the financial position of the funds of the City.

Note 16: Net Position and Fund Balance

Government-Wide Financial Statements Net Investment in Capital Assets The following is a calculation of net the investment in capital assets at June 30, 2015:


Capital assets, net of accumulated depreciation 273,493,714$ 156,451,321$ 429,945,035$ Less: Outstanding principal on capital related debt (36,939,006) (114,365,698) (151,304,704)

Net investment in capital assets 236,554,708$ 42,085,623$ 278,640,331$

Primary Government

Unrestricted Net Position The unrestricted net position for governmental activities has a deficit balance of $223,563,692 at June 30, 2015.

Fund Financial Statements Net Investment in Capital Assets The following is a calculation of net investment in capital assets, for the Proprietary Funds at June 30, 2015:

Canon Internal ServiceWater Sewer Refuse Water Total Funds

Capital assets, net of accumulated depreciation 123,958,986$ 28,323,797$ 4,142,494$ 26,044$ 156,451,321$ 387,489$ Less: outstanding principal on capital related debt (89,397,617) (21,963,688) (3,004,393) - (114,365,698) -

34,561,369$ 6,360,109$ 1,138,101$ 26,044$ 42,085,623$ 387,489$

Enterprise Funds

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Note 16: Net Position and Fund Balance (Continued)

Deficit Fund Balance

At June 30, 2015, the following funds had fund balance deficits:

Fund Fund Type DeficitGeneral Debt Service Major Governmental Fund (40,083,190)$ Self-Insurance Funds Internal Service Fund (5,177,085) Equipment Maintenance Internal Service Fund (934,018) Information Technology Internal Service Fund (362,636)

The General Debt Service Fund deficit is the result of the issuance of bonds and the Self-Insurance Fund deficit is due to unfunded outstanding claim liabilities. The Equipment Maintenance Fund and the Information Technology Fund deficits are due to the implementation of GASB 68. The City will eliminate these deficits with future revenue.

Net Position and Fund Balances Restatement

Beginning net position and fund balances haves been restated as follows:

Governmental ActivitiesGASB 68 Implementation (154,818,523)$

Business Type ActivitiesGASB 68 Implementation (17,015,517)$

Governmental FundsHousing Authority FundTo reclassify unavailable revenue for prior year principal balance on notes/loans receivable. 8,037,978$ Miscellaneous Grants FundTo reclassify unavailable revenue for prior year principal balance on notes/loans receivable. 16,437,022

CDBG FundTo reclassify unavailable revenue for prior year principal balance on notes/loans receivable. 1,928,846

Total Governmental Funds 26,403,846$

Enterprise FundsWater Fund GASB 68 Implementation (12,371,225)$

Sewer Fund GASB 68 Implementation (1,899,274)

Refuse Fund GASB 68 Implementation (2,745,018)

Total Enterprise Funds (17,015,517)$ Internal Service Fund

Self-Insurance Fund GASB 68 Implementation (595,441)$

Equipment Maintenance Fund GASB 68 Implementation (1,954,076)

Information Technology Fund GASB 68 Implementation (551,455)

Total Internal Service Funds (3,100,972)$

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Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency

On June 28, 2011, Governor Jerry Brown signed into law two bills that amended California Community Redevelopment Law in order to address the state’s ongoing budget deficit.ABx1 26 (”the Bill”) dissolved all California redevelopment agencies (RDAs) effectiveOctober 1, 2011. This legislation prevented RDAs from engaging in new activities and outlined a process for winding down the RDA’s financial affairs. It also set forth a process fordistributing funds from the former RDAs to other local taxing entities. A companion bill, ABx1 27, was also passed, which allowed individual RDAs to avoid dissolution if they agreed to make substantial annual payments into a Special District Allocation Fund and Educational Revenue Augmentation Fund.

In response, the California Redevelopment Association, the League of California Cities and other parties filed petitions with the California Supreme Court challenging the constitutionality of both ABx1 26 and ABx1 27. On December 29, 2011, the California Supreme Court upheld the constitutionality of ABX1 26, while striking down ABx1 27 as unconstitutional. The ruling in California Redevelopment Association v. Matosantos also extended some of the deadlines stipulated in ABx1 26 due to delays caused by the litigation. As a result, approximately 400 RDAs were dissolved on February 1, 2012, with the assets and liabilities transferred to Successor Agencies and Successor Housing Agencies pursuant to ABx1 26. The California State Legislature made additional changes to the dissolution process when Governor Jerry Brown signed AB 1484 into law on June 27, 2012. This legislation made a variety of substantive amendments to the original Dissolution Act. These actions impacted the reporting entity of the City of Pomona that previously had reported a redevelopment agency within the report entity of the City as a blended component unit.

The Bill provide that upon dissolution of a redevelopment agency, either the city or another unit of local government would agree to serve as the “successor agency” to hold the assets until the assets were distributed to other units of state and local government. On January 9, 2012, the City Council adopted resolution number 2012-8 electing to assume the responsibility of Successor Agency for the former Pomona Redevelopment Agency.

After enactment of the law, redevelopment agencies in the State of California could not enter into new projects, obligations or commitments. Subject to the control of an established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution.

Subsequent to the dissolution, Successor Agencies are only allocated revenue up to the amount necessary to pay the estimated annual installment payments on enforceable obligation of the former redevelopment agency until all enforceable obligations have been paid in full and all assets have been liquidated.

The Bill directed the State Controller of the State of California to review the propriety of any transfers of assets between Redevelopment Agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers was not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller was required to order the available assets to be transferred to the public body designated as the successor agency by the Bill. The State completed its required audit and provided the Successor Agency its report on November 26, 2014.

Management believes, in consultation with legal counsel, that the obligations of the former Redevelopment Agency due to the City are valid enforceable obligations payable by the Successor Agency trust under the requirements of the Bill. The City’s position on this issue is not a position of settled law and there is considerable legal uncertainty regarding this issue. It is reasonably possible that a legal determination may be made at a later date by an appropriate judicial authority that would resolve this issue unfavorably to the City.

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Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued)

In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012.

Cash and Investments

The following is a summary of cash and investments of the Successor Agency at June 30, 2015:

Cash and investments 10,397,238$ Restricted cash 52,764,660

Total 63,161,898$

The Successor Agency’s cash and investments are pooled with the City’s cash and investment in order to generate optimum interest income. The share of the pooled cash account is separately accounted for, and investment income is allocated to all participating funds based on the relationship of average quarterly cash balances to the total of the pooled cash and investments. Information regarding the authorized types of deposits and investments, the type of risks (i.e. credit, interest rate, custodial, etc.) and other disclosures associated with the City's pooled cash and investments is reported in Note 2.

Loans Receivable (Net)

At June 30, 2015, the Successor Agency’s net loans receivable consisted of the following:



1,402,000$ 48,000$ -$ 1,450,000$ 210,600 - - 210,600

1,289,060 - - 1,289,060 1,150,000 - - 1,150,000

Garey Village Complex 5,000,000 - - 5,000,000

Total 9,051,660$ 48,000$ -$ 9,099,660$

Business Assistance LoansGuadalajara MarketPomona Fox TheaterPomona Fox Theater

Land Held for Resale

At June 30, 2015, land held for resale in the amount of $19,648,669 is recorded at cost in the Successor Agency Trust Fund.

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Capital Assets

The following is a summary of capital assets for the Successor Agency as of June 30, 2015:

Balance BalanceJuly 1, 2014 Additions Deletions June 30, 2015

Non-depreciable assets:Land 125,423$ -$ -$ 125,423$

Total non-depreciable assets 125,423 - - 125,423

Depreciable assets:Buildings and building improvements 63,126 - - 63,126 Inprovements other than buildings 148,995 - - 148,995 Machinery and equipment 429,179 - - 429,179 Furniture and fixtures 8,361 - - 8,361 Autos and trucks 19,513 - - 19,513

Total depreciable assets, at cost 669,174 - - 669,174

Less accumulated depreciationBuildings and building improvements 12,626 1,263 - 13,889 Inprovements other than buildings 119,197 5,960 - 125,157 Machinery and equipment 429,178 - - 429,178 Furniture and fixtures 8,360 - - 8,360 Autos and trucks 19,513 - - 19,513

Total accumulated depreciation 588,874 7,223 - 596,097

Total depreciable assets, net 80,300 (7,223) - 73,077

Total capital assets 205,723$ (7,223)$ -$ 198,500$

Long-Term Debt

The following summary of debts of the Successor Agency as of June 30, 2015, follows:


Accreted/Accrued Interest Additions Deletions


Due Within One Year

Pollution remediation obligations -$ -$ 1,700,000$ -$ 1,700,000$ 1,700,000$ County deferred tax loans 44,979,071 3,172,125 336,998 - 48,488,194 - ERAF loan 180,000 - - 180,000 - - Notes payable 3,359,351 - - 28,985 3,330,366 138,163 Tax allocation bonds 7,990,000 - - 535,000 7,455,000 570,000 Advances from the Public Financing Authority 160,935,000 - - 5,680,000 155,255,000 5,925,000 Advance from the Housing Authority - SERAF loan 4,000,000 - - - 4,000,000 - Compensated absences 103,948 - 39,211 38,644 104,515 40,000 Total $ 221,547,370 $ 3,172,125 $ 2,076,209 $ 6,462,629 $ 220,333,075 $ 8,373,163

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Pollution Remediation Obligations

The dissolution law that eliminated all redevelopment agencies in the State requires that all assets of the former Redevelopment Agency be sold, following State approval of the Long Range Property Management Plan (LRPMP). On October 7, 2014, the Successor Agency received State approval for the sale of a property. The property was the location of a former landfill and is subject to remedial action. As of June 30, 2015, the remediation cost is estimated at $1,700,000. Sale of the property is contingent upon the completion of the remediation.

County Deferred Tax Loans

At June 30, 2015, the County deferred tax loans consisted of the following:


Accrued Interest Additions Deletions


Southwest Pomona Project Area 38,411,344$ 2,688,794$ -$ -$ 41,100,138$ South Garey/Freeway Corridor Project Area 6,567,727 483,331 336,998 - 7,388,056

Total 44,979,071$ 3,172,125$ 336,998$ -$ 48,488,194$

The former Redevelopment Agency entered into agreements with the County of Los Angeles whereby a portion of the County’s share of tax increment revenues from the Southwest Pomona Project Area and South Garey/Freeway Corridor Project Area are loaned annually to the Successor Agency. Interest on both loans accrue at 7% per year, compounded annually. The Successor Agency will commence repayment of the loans when excess funds become available.

ERAF Loan



Due Within One Year

ERAF loan 180,000$ -$ 180,000$ -$ -$

In April 2005, the former Redevelopment Agency financed its portion of the state ERAF payment through a bond offering with other former redevelopment agencies. The former Redevelopment Agency’s portion of the bonds was $1,455,000. Interest and principal are payable semi-annually on February 1 and August 1 at rates varying from 3.87% to 5.01% per annum. However, the payments of both principal and interest are due to the fiscal agent on November 1 and March 1 annually. Therefore, the outstanding balance of the loan was paid in full to the fiscal agent before June 30, 2015.

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Notes Payable



Due Within One Year

2,378,080$ -$ -$ 2,378,080$ -$ 167,129 - - 167,129 108,634 814,142 - 28,985 785,157 29,529

Total 3,359,351$ -$ 28,985$ 3,330,366$ 138,163$

Mission Promenade, LLCPVEF NoteUS Bank Loans

Mission Promenade, LLC

In December 2008, the former Redevelopment Agency partially financed the purchase of the Mission Promenade project (MP 1) with a promissory unsecured note bearing 0% interest for the first 5 years. After the maturity date of 5 years, the Note is to bear interest at the LIBOR rate +1% or 6%, whichever is greater. The note may be prepaid at any time. The Successor Agency may sell the retail and office condominium project at any time in whole or in part. Once the $9 million threshold is received by the Successor Agency, the excess cash flow from the property operations (rental income minus operating expenses) is to be paid to Mission Promenade, LLC to reduce the Note amount. The outstanding balance on the note, which includes the brokerage obligation, at June 30, 2015, is $2,378,080. Due to insufficient Successor Agency funds available and thus the inability to pay the note, the Successor Agency will not report a due within one year.

Pomona Valley Education Foundation Note (PVEF Note)

In March 2008, the former Redevelopment Agency partially financed the purchase of properties from the Pomona Valley Education Foundation (PVEF) with a promissory note of $167,129. The note is secured by a Second Trust Deed on the properties. In five years after closing, the Note is to accrue interest at a rate of 5% with the unpaid balance all due and payable in ten years. Due to insufficient Successor Agency funds available and thus the inability to pay the note, the Successor Agency will not report a due within one year.

The annual debt service requirements outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 108,634$ 27,161$ 135,795$ 2016-2017 33,426 8,357 41,783 2017-2018 25,069 6,264 31,333

Total 167,129$ 41,782$ 208,911$

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US Bank Loans

In March 2008, the former Redevelopment Agency partially financed the purchase of properties from the Pomona Valley Education Foundation by assuming existing loans on the properties totaling $988,730 bearing an adjustable interest rate not to exceed 12.250% from U.S. Bank.

The annual debt service requirements at June 30, 2015, is as follows:

Principal * Interest Total2015-2016 29,529$ 24,536$ 54,065$ 2016-2017 30,452 23,613 54,065 2017-2018 31,403 22,662 54,065 2018-2019 32,385 21,680 54,065 2019-2020 33,397 20,668 54,065 2020-2025 183,305 87,020 270,325 2025-2030 213,794 56,531 270,325 2030-2035 230,892 20,972 251,864

Total 785,157$ 277,682$ 1,062,839$

* Interest rate is adjustable and was calculated using two separate interest rates 3.125% as of June 30, 2015.

Tax Allocation Bonds



Due Within One Year

1,460,000$ -$ 315,000$ 1,145,000$ 335,000$ 6,530,000 - 220,000 6,310,000 235,000

Total 7,990,000$ -$ 535,000$ 7,455,000$ 570,000$

1998 Tax Allocation Bonds, Series X1998 Tax Allocation Bonds, Series Y

1998 Tax Allocation Refunding Bonds, Series X – Original Issuance $5,055,000

On October 1, 1998, the former Redevelopment Agency issued $5,055,000 in 1998 Tax Allocation Refunding Bonds, Series X, for the Mountain Meadows Redevelopment Project to refund $4,360,000 of the loan between the former Redevelopment Agency and the Public Financing Authority related to the Public Financing Authority’s 1993 Refunding Revenue Bonds, Series N.

Interest is payable semiannually on June 1 and December 1 at rates varying from 3.0% to 5.1% per annum. $3,595,000 of bond principal is payable in annual installments ranging from $95,000 to $300,000 through December 1, 2013. Term bonds of $1,000,000 and $460,000 mature on December 1, 2016 and December 1, 2024, respectively, and are subject to mandatory redemption from a sinking fund account in amounts ranging from $45,000 to $350,000, as outlined in the bonds’ official statement. A municipal bond insurance policy has been issued that insures the payment of the principal and interest on the bonds when due. During 2007, the bonds in the amount of $790,000 were refunded by the 2006 Taxable Revenue Bonds, series AT.

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Principal Interest Total2015-2016 335,000$ 52,527$ 387,527$ 2016-2017 350,000 34,203 384,203 2017-2018 45,000 23,625 68,625 2018-2019 50,000 21,060 71,060 2019-2020 50,000 18,360 68,360 2020-2025 315,000 44,415 359,415

Total 1,145,000$ 194,190$ 1,339,190$

1998 Tax Allocation Refunding Bonds, Series Y – Original Issuance $8,980,000

On October 1, 1998, the former Redevelopment Agency issued $8,980,000 in 1998 Tax Allocation Refunding Bonds, Series Y, for the West Holt Avenue Redevelopment Project to refund $7,130,000 of the loan between the former Redevelopment Agency and Public Financing Authority related to the Public Financing Authority’s 1993 Refunding Revenue Bonds, Series N, and to finance certain redevelopment activities within the West Holt Avenue Project Area.

Interest on the bonds is payable semiannually on November 1 and May 1 at rates varying from 3.0% to 5.0% per annum. $1,770,000 of bond principal is payable in annual installments ranging from $115,000 to $180,000 through May 1, 2011. Terms bonds of $390,000, $2,360,000 and $4,380,000 mature on May 1, 2013, May 1, 2022, and May 1, 2032, respectively, and are subject to mandatory redemption from a sinking fund account in amounts ranging from $190,000 to $550,000 as outlined in the bonds’ official statements. Bonds maturing on May 1, 2009 through May 1, 2011 are subject to redemption prior to maturity, as a whole or in part, at the option of the Agency on any date on or after May 1, 2008 at redemption prices ranging from 100% to 101% of principal. A municipal bond insurance policy has been issued that insures the payment of the principal and interest on the bonds when due. During 2007, the bonds in the amount of $645,000 were refunded by the 2006 Taxable Revenue Bonds, Series AT.


Principal Interest Total2015-2016 235,000$ 346,085$ 581,085$ 2016-2017 245,000 333,278 578,278 2017-2018 260,000 319,925 579,925 2018-2019 275,000 305,755 580,755 2019-2020 290,000 290,768 580,768 2020-2025 1,705,000 1,198,803 2,903,803 2025-2030 2,230,000 675,400 2,905,400 2030-2032 1,070,000 89,100 1,159,100

Total 6,310,000$ 3,559,114$ 9,869,114$

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Advances from the Public Financing Authority

The Public Financing Authority issued various debt instruments and advanced the proceeds to the former Redevelopment Agency, subsequently the Successor Agency, for the purposes described below for each debt issued. The Successor Agency is responsible for installment payments to the Public Financing Authority in amounts equal to the debt service requirement. The following is a summary of changes for the year ended June 30, 2015, of the long-term debts issued through the Public FinancingAuthority with proceeds advanced to the Successor Agency:



Due Within One Year

36,205,000$ -$ 425,000$ 35,780,000$ 450,000$ 32,320,000 - 2,020,000 30,300,000 2,110,000 19,870,000 - 1,325,000 18,545,000 1,380,000

8,285,000 - 295,000 7,990,000 310,000 25,955,000 - 80,000 25,875,000 70,000

7,275,000 - 400,000 6,875,000 420,000 7,640,000 - 260,000 7,380,000 275,000

23,385,000 - 875,000 22,510,000 910,000

160,935,000$ -$ 5,680,000$ 155,255,000$ 5,925,000$

2007 Subordinate Revenue Bonds, Series AW2006 Subordinate Revenue Bonds, Series AX

1998 Revenue Refunding Bonds, Series W2001 Revenue Refunding Bonds, Series AD2003 Revenue Refunding Bonds, Series AH2005 Taxable Housing Tax Revenue Bonds, Series AQ2006 Revenue Bonds, Series AS2006 Taxable Revenue Bonds, Series AT

1998 Revenue Refunding Bonds, Series W – Original Issuance $52,335,000

On March 1, 1998, the Public Financing Authority issued $52,335,000 in 1998 Revenue Refunding Bonds, Series W for the purpose of making an advance to the former Redevelopment Agency for refinancing the 1983 Refunding Southwest Pomona RDA Tax Allocation Bonds, refinancing in whole the 1994 variable Rate Demand Refunding Revenue Bonds, Series M Bonds, and refinancing a portion of the 1993 Local Agency Revenue Bonds, Series L. The prior bonds, now retired, were issued to finance or refinance certain improvements in the Southwest Pomona Redevelopment Area.

Interest on the bonds is payable semiannually on each August 1 and February 1. The rates of interest range from 3.8% to 5% per annum. Principal is payable in annual installments ranging from $30,000 to $4,105,000. Term bonds of $3,005,000, $16,690,000 and $29,285,000 mature on February 1, 2018, February 1, 2024 and February 1, 2030, respectively, and are subject to mandatory redemption from a sinking fund account in amounts ranging from $545,000 to $5,495,000, as outlined in the bond’s official statement. MBIA has issued a municipal bond insurance policy that insures the payment of the principal and interest on the bonds when due. During 2007, the bonds in the amount of $13,305,000 were refunded by the 2006 Revenue Bonds, Series AS, 2006 Taxable Revenue Bonds, Series AT, and 2006 Subordinate Revenue Bonds, Series AX.

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The annual debt service requirements for the 1998 Revenue Bonds, Refunding Series W outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 450,000$ 1,789,000$ 2,239,000$ 2016-2017 470,000 1,766,500 2,236,500 2017-2018 495,000 1,743,000 2,238,000 2018-2019 520,000 1,718,250 2,238,250 2019-2020 545,000 1,692,250 2,237,250 2020-2025 14,630,000 6,933,750 21,563,750 2025-2030 18,670,000 2,891,500 21,561,500

Total 35,780,000$ 18,534,250$ 54,314,250$

2001 Revenue Refunding Bonds, Series AD – Original Issuance $39,165,000

On April 1, 2001, the Public Financing Authority issued $39,165,000 in 2001 Revenue Bonds, Series AD for the purpose of making an advance to the former Redevelopment Agency to refinance certain prior bonds and to make an additional advance to the former Redevelopment Agency to provide financing for certain improvements in the merged project area. Tax Allocation Bonds defeased include the 1997 Refunding RDA Series S, the 1997 Refunding Series T, the 1998 Refunding Series U, the 1998 Refunding Subordinate Series V and the 1998 Refunding Series Z; the 1993 Refunding Series L Revenue Bonds were partially defeased.

Interest on the bonds is payable semiannually on each August 1 and February 1. The rates of interest range from 3.50% to 5.39% per annum. Principal is payable in annual installments ranging from $95,000 to $2,470,000. Term bonds of $10,550,000, $10,115,000 and $7,525,000 mature on February 1, 2021, February 1, 2027 and February 1, 2033, respectively, and are subject to mandatory redemption from a sinking fund account in amounts ranging from $445,000 to $2,470,000, as outlined in the bond’s official statement.

The annual debt service requirements for the 2001 Revenue Bonds, Series AD outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 2,110,000$ 1,516,250$ 3,626,250$ 2016-2017 2,120,000 1,409,500 3,529,500 2017-2018 2,350,000 1,303,500 3,653,500 2018-2019 2,470,000 1,186,000 3,656,000 2019-2020 2,175,000 1,062,500 3,237,500 2020-2025 7,900,000 4,016,500 11,916,500 2025-2030 8,715,000 1,979,500 10,694,500 2030-2033 2,460,000 212,750 2,672,750

Total 30,300,000$ 12,686,500$ 42,986,500$

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2003 Revenue Refunding Bonds, Series AH – Original Issuance $46,650,000

On November 1, 2003, the Public Financing Authority issued $46,650,000 in 2003 Revenue Bonds, Series AH, to provide funds for a loan to the former Redevelopment Agency for certain improvements and to refinance certain former Redevelopment Agency obligations to the Public Financing Authority, including defeasance of 1993 Series L.

Interest on the bonds is payable semiannually on each August 1 and February 1. The rates of interest range from 3.70% to 5.25% per annum. Principal is payable in annual installments ranging from $370,000 to $4,870,000. Term bonds of $2,410,000 and $10,145,000 mature on February 28, 2028 and 2034, respectively.

During 2007, the bonds in the amount of $17,110,000 were refunded by the 2006 Revenue Bonds, Series AS, 2006 Taxable Revenue Bonds, Series AT, and 2006 Subordinate Revenue Bonds, Series AX.

The annual debt service requirements for the 2003 Revenue Bonds, Series AH outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 1,380,000$ 900,178$ 2,280,178$ 2016-2017 1,440,000 844,978 2,284,978 2017-2018 1,520,000 785,938 2,305,938 2018-2019 1,540,000 706,138 2,246,138 2019-2020 1,805,000 625,288 2,430,288 2020-2025 2,000,000 2,481,125 4,481,125 2025-2030 2,560,000 1,946,425 4,506,425 2030-2034 6,300,000 444,263 6,744,263

Total 18,545,000$ 8,734,333$ 27,279,333$

2005 Taxable Housing Tax Revenue Bonds, Series AQ – Original Issuance $10,065,000

On December 1, 2005, the Public Financing Authority issued $10,065,000 in 2005 Taxable Housing Tax Revenue Bonds, Series AQ, to provide funds to make a loan to the former Redevelopment Agency for the purpose of financing redevelopment activities with respect to the Merged Redevelopment Project Area.

Interest on the bonds is payable semiannually on each August 1 and February 1. The rates of interest range from 5.23% to 6.25% per annum. Principal is payable in annual installments ranging from $100,000 to $750,000. The bonds are secured by monies in the Redevelopment Property Tax Trust Fund (RPTTF) monies for the Recognized Obligation Payment Schedules (ROPS).

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The annual debt service requirements for the 2005 Taxable Housing Tax Revenue Bonds, Series AQ outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 310,000$ 487,826$ 797,826$ 2016-2017 325,000 471,613 796,613 2017-2018 345,000 451,300 796,300 2018-2019 365,000 429,738 794,738 2019-2020 390,000 406,925 796,925 2020-2025 2,340,000 1,637,438 3,977,438 2025-2030 3,165,000 818,600 3,983,600 2030-2031 750,000 45,000 795,000

Total 7,990,000$ 4,748,440$ 12,738,440$

2006 Revenue Bonds, Series AS – Original Issuance $26,305,000

On December 1, 2006, the Public Financing Authority issued $26,305,000 in 2006 Revenue Bonds, Series AS, to make a loan to the former Redevelopment Agency for the purpose of refinancing a portion of the Public Financing Authority’s 1998 Refunding Revenue Bonds, Series W, 2003 Revenue Bonds, Series AH, and 2003 Subordinate Revenue Bonds, Series AI.

Interest on the bonds is payable semiannually on each August 1 and February 1. The rates of interest range from 3.50% to 5.00% per annum. Principal is payable in annual installments ranging from $65,000 to $5,400,000. The bonds are secured by certain revenues on the Series AS Loan pursuant to a Loan Agreement, dated as of December 1, 2006, between the Public Financing Authority and the former Redevelopment Agency. The loan payments are limited obligations of the Successor Agency payable solely from and secured by the pledged tax revenues to be derived from the Successor Agency’s project area remaining after payment of the Senior Obligations.

The annual debt service requirements for the 2006 Revenue Bonds, Series AS outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 70,000$ 1,246,210$ 1,316,210$ 2016-2017 65,000 1,243,723 1,308,723 2017-2018 105,000 1,240,469 1,345,469 2018-2019 165,000 1,235,218 1,400,218 2019-2020 235,000 1,227,300 1,462,300 2020-2025 1,640,000 5,925,344 7,565,344 2025-2030 4,840,000 5,362,562 10,202,562 2030-2035 13,220,000 2,631,750 15,851,750 2035-2040 4,895,000 709,225 5,604,225 2040-2041 640,000 14,400 654,400

Total 25,875,000$ 20,836,201$ 46,711,201$

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2006 Taxable Revenue Bonds, Series AT – Original Issuance $8,355,000

On December 1, 2006, the Public Financing Authority issued $8,355,000 in 2006 Taxable Revenue Bonds, Series AT, to make a loan to the former Redevelopment Agency for the purpose of refinancing a portion of the Public Financing Authority’s 1998 Refunding Revenue Bonds, Series W, 2003 Revenue Bonds, Series AH, 1998 Tax Allocation Refunding Bonds, Series X (now retired), and 1998 Tax Allocation Refunding Bonds, Series Y (now retired).

Interest on the bonds is payable semiannually on each August 1 and February 1. The rates of interest range from 5.289% to 5.718% per annum. Principal is payable in annual installments ranging from $340,000 to $760,000. The bonds are secured by certain revenues on the Series AT Loan pursuant to a Loan Agreement, dated as of December 1, 2006 between the Public Financing Authority and the formerRedevelopment Agency. The loan payments are limited obligations of the Successor Agency payable solely from and secured by the pledged tax revenues to be derived from the Successor Agency’s project area remaining after payment of the Senior Obligations.

The annual debt service requirements for the 2006 Taxable Revenue Bonds, Series AT outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 420,000$ 378,316$ 798,316$ 2016-2017 440,000 355,574 795,574 2017-2018 465,000 330,643 795,643 2018-2019 490,000 303,340 793,340 2019-2020 520,000 274,464 794,464 2020-2025 3,060,000 879,714 3,939,714 2025-2027 1,480,000 85,770 1,565,770

Total 6,875,000$ 2,607,821$ 9,482,821$

2007 Subordinate Revenue Bonds, Series AW – Original Issuance $8,375,000

On July 1, 2007, the Public Financing Authority issued $8,375,000 in 2007 Subordinate Revenue Bonds, Series AW, to provide funds for a loan to the former Redevelopment Agency for certain improvements, funding a reserve account for the Bonds and paying costs of issuing the Bonds.

Interest on the Bonds is payable semiannually on each February 1 and August 1. The rates of interest range from 4.25% to 5.125% per annum. Principal on $1,348,000 of the subordinate bonds is payable in annual installments ranging from $230,000 to $285,000. Term bonds of $625,000, $1,910,000 and $4,285,000 mature on February 1, 2019, February 1, 2024, and February 1, 2033, respectively.

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The annual debt service requirements for the 2007 Subordinate Revenue Bonds, Series AW outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 275,000$ 363,806$ 638,806$ 2016-2017 285,000 351,206 636,206 2017-2018 305,000 337,550 642,550 2018-2019 320,000 322,706 642,706 2019-2020 335,000 306,731 641,731 2020-2025 1,940,000 1,254,053 3,194,053 2025-2030 2,415,000 707,378 3,122,378 2030-2033 1,505,000 103,397 1,608,397

Total 7,380,000$ 3,746,827$ 11,126,827$

2006 Subordinate Revenue Bonds, Series AX – Original Issuance $25,865,000

On December 1, 2006, the Public Financing Authority issued $25,865,000 in 2006 Subordinate Revenue Bonds, Series AX, to make a loan to the former Redevelopment Agency for the purpose of refinancing a portion of the Public Financing Authority’s 1998 Refunding Revenue Bonds, Series W, 2003 Revenue Bonds, Series AH, and 2003 Subordinate Revenue Bonds, Series AI (now retired), and financing certain improvements in the former Redevelopment Agency’s Merged Redevelopment Project.

Interest on the bonds is payable semiannually on each August 1 and February 1. The rates of interest range from 4.00% to 5.00% per annum. Principal is payable in annual installments ranging from $145,000 to $1,515,000. The bonds are secured by certain revenues on the Series AX Loan pursuant to a Loan Agreement, dated as of December 1, 2006, between the Public Financing Authority and the former Redevelopment Agency. The loan payments are limited obligations of the Successor Agency payable solely from and secured by the Subordinate Tax Revenues to be derived from the Successor Agency’s project area remaining after payment of the Senior/ Subordinate Obligations.

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The annual debt service requirements for the 2006 Subordinate Revenue Bonds, Series AX outstanding at June 30, 2015, is as follows:

Principal Interest Total2015-2016 910,000$ 1,063,155$ 1,973,155$ 2016-2017 920,000 1,024,265 1,944,265 2017-2018 925,000 984,598 1,909,598 2018-2019 970,000 943,370 1,913,370 2019-2020 975,000 900,580 1,875,580 2020-2025 5,380,000 3,785,065 9,165,065 2025-2030 6,645,000 2,307,875 8,952,875 2030-2035 4,540,000 698,250 5,238,250 2035-2040 1,100,000 176,500 1,276,500 2040-2041 145,000 3,625 148,625

Total 22,510,000$ 11,887,283$ 34,397,283$

Advances from the Housing Authority



Due Within One Year

SERAF loan 4,000,000$ -$ -$ 4,000,000$ -$

On July 24, 2009, Assembly Bill AB4-26 that shifts former Redevelopment Agency funds and established a Supplemental Educational Revenue Augmentation Fund (SERAF) was passed. It was a “budget trailer bill” that was part of the State’s legislation to balance itsbudget. The former Redevelopment Agency of the City of Pomona’s share of SERAF obligation was $8,264,547 in Fiscal Year 2009-10 and $1.7 million in Fiscal Year 2010-11. Health and Safety Code Section 33690(c) provides that a redevelopment agency, which made a finding that insufficient monies were available to fund its SERAF obligation in Fiscal Years 2009-10 or 2010-11, may borrow funds from its Low and Moderate Income Housing Fund to make the full SERAF payment. On May 3, 2010, the Redevelopment Agency Board authorized a loan of $5,000,000 from the Low-Mod Fund to provide partial funding for the balance of the SERAF payment due. The Successor Agency’s outstanding balance on the note as of June 30, 2015, is $4,000,000.


The following is a summary of compensated absences outstanding as of June 30, 2015:



Due Within One Year

103,948$ 39,211$ 38,644$ 104,515$ 40,000$

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Pledged Tax Revenues

The City has pledged, as security for bonds issued, either directly or through the Pomona Public Financing Authority, certain tax revenues to the repayment of certain Successor Agency debts (bonds, loans and advances) through final maturity of bonded debt on February 1, 2047, or earlier retirement, whichever occurs first.

Tax revenues consist of tax increment revenues allocated to the Successor Agency to various project areas pursuant to Section 33670 of the Redevelopment Law. Such Law excludes a portion of tax increment revenues required to be paid under Tax-Sharing Agreements unless the payment of such amounts has been subordinated to the payment of debt service on the Bonds. Assembly Bill 1X 26 provided that upon dissolution of the Redevelopment Agency, property taxes allocated to redevelopment agencies no longer are deemed tax increment but rather property tax revenues and will be allocated first to local agency and school entity pursuant to any pass through agreement, then second to successor agencies to make payments on the indebtedness incurred by the dissolved redevelopment agency. For the current year, the total property tax revenue recognized by the City was $16,537,691 and the debt service obligation on the bonds was $14,875,126.

Remaining balance on the debt at June 30, 2015, is as follows:

Debt Issue Remaining BalanceCounty of LA Agreement 48,488,194$ 1998 Series W Bonds 54,314,250 1998 Series X Bonds 1,339,190 1998 Series Y Bonds 9,869,114 2001 Series AD Bonds 42,862,500 2003 Series AH Bonds 27,279,333 2005 Series AQ Bonds 12,738,440 2006 Series AS Bonds 46,711,201 2006 Series AT Bonds 9,482,821 2007 Series AW Bonds 11,126,827 2006 Series AX Bonds 34,397,283

Total 298,609,153$

Insurance

The Successor Agency is covered under the City of Pomona’s insurance policies. Therefore, the limitation and self-insured retentions applicable to the City also apply to the Successor Agency. Additional information as to coverage and self-insured retentions can be found in Note 14.

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Note 17: Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) Commitments and Contingencies

Agreement for Allocation of Tax Increment Funds

On December 5, 1988, the former Redevelopment Agency entered into an agreement with the County whereby the County has agreed to provide sufficient allocation of tax increment to allow the Successor Agency to meet its debt service agreements on debt it has incurred in connection with the Southwest Pomona Project Area. Beginning in fiscal year 1988-89, and thereafter for the life of the project, the County will provide a grant to the Successor Agency for any “deficiencies” of tax increment revenues allocated to the Successor Agency as described in the agreement. In accordance with the agreement, during the fiscal year 2014-15, the Successor Agency received a grant in the amount of $336,999, which was recorded as intergovernmental revenue.

Net Position Restatement Beginning net position was restated by $4,051,660 to reclassify unavailable revenue for prior year principal balance on notes/loans receivable.

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BUDGETARY INFORMATIONJUNE 30, 2015

Budgetary Information

Annual budgets are adopted on a basis consistent with generally accepted accounting principles in the United States for all governmental funds, except that encumbrances are shown in the year incurred for budgetary purposes. All annual appropriations lapse at fiscal year end.

On or before the last day in January of each year, all operational units submit requests for appropriations to the City Manager for budget preparation purposes. The City Council holds public hearings and a final budget must be adopted no later than June 30.

The appropriated budget is prepared by fund, function, and department. The City’s department directors, with approval of the Finance Director and City Manager, may make transfers of appropriations within a department and between departments within a fund. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the fund level. The City Council made several supplemental budgetary appropriations throughout the year. The supplementary budgetary appropriations made in the various governmental funds are not detailed in the required supplementary information.

Under encumbrance accounting, purchase orders, contracts and other commitments for expenditures are recorded to reserve that portion of the applicable appropriation. Encumbrance accounting is employed as an extension of formal budgetary accounting. Unexpended appropriations lapse at year-end regardless of encumbrances. Following are the budget comparison schedules for the General Fund and all major special revenue funds.

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BUDGETARY COMPARISON SCHEDULEGENERAL FUNDYEAR ENDED JUNE 30, 2015

Variance with Final Budget

Budget Amounts Actual PositiveOriginal Final Amounts (Negative)

Budgetary Fund Balance, July 1 12,373,245$ 12,373,245$ 12,373,245$ -$ Resources (Inflows):Taxes 76,043,616 77,093,616 78,607,713 1,514,097 Licenses and permits 5,286,760 5,385,160 4,566,429 (818,731) Intergovernmental 120,000 120,000 352,160 232,160 Charges for services 2,799,070 3,281,101 3,246,764 (34,337) Interest and rentals 286,408 286,408 447,838 161,430 Fines and forfeitures 1,802,200 1,660,700 2,051,647 390,947 Contributions - 50,000 51,581 1,581 Miscellaneous 730,900 733,400 663,195 (70,205) Transfers in - - 80 80 Proceeds from sale of capital assets - - 32,830 32,830

Amounts Available for Appropriations 99,442,199 100,983,630 102,393,482 1,409,852

Charges to Appropriations (Outflows):General government 4,331,721 4,441,648 3,978,320 463,328 Public safety 65,146,011 66,703,040 65,116,912 1,586,128 Urban development 8,369,560 8,922,490 7,809,025 1,113,465 Neighborhood services 3,455,322 3,483,882 3,160,848 323,034 Capital outlay 52,600 142,317 105,557 36,760 Debt service: Principal retirement 217,944 217,944 292,945 (75,001) Interest and fiscal charges 18,824 18,824 20,136 (1,312) Transfers out 4,599,781 4,621,636 4,621,636 -

Total Charges to Appropriations 86,191,763 88,551,781 85,105,379 3,446,402

Budgetary Fund Balance, June 30 13,250,436$ 12,431,849$ 17,288,103$ 4,856,254$

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BUDGETARY COMPARISON SCHEDULEHOUSING AUTHORITYYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1, as restated 30,463,643$ 30,463,643$ 30,463,643$ -$ Resources (Inflows):Intergovernmental 12,137,571 12,137,571 9,387,818 (2,749,753) Charges for services 30,000 30,000 43,580 13,580 Interest and rentals 397,263 397,263 429,594 32,331 Miscellaneous 13,055 13,055 124,948 111,893

Amounts Available for Appropriations 43,041,532 43,041,532 40,449,583 (2,591,949)

Charges to Appropriations (Outflows):Urban development 13,173,921 13,389,997 13,106,038 283,959 Capital outlay 22,400 22,400 18,182 4,218

Total Charges to Appropriations 13,196,321 13,412,397 13,124,220 288,177

Budgetary Fund Balance, June 30 29,845,211$ 29,629,135$ 27,325,363$ (2,303,772)$

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BUDGETARY COMPARISON SCHEDULEMISCELLANEOUS GRANTSYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1, as restated 18,273,910$ 18,273,910$ 18,273,910$ -$ Resources (Inflows):Intergovernmental 6,140,880 11,423,268 6,174,869 (5,248,399) Charges for services 95,000 218,693 50,952 (167,741) Interest and rentals - - 229,564 229,564 Miscellaneous 105,000 352,817 361,890 9,073 Transfers in 71,245 71,245 284,123 212,878


Charges to Appropriations (Outflows):Public safety 1,034,470 1,637,667 1,378,650 259,017 Urban development 5,429,184 9,878,938 4,966,659 4,912,279 Neighborhood services 371,369 387,826 336,929 50,897 Capital outlay 134,000 342,111 246,813 95,298 Transfers out 60,000 60,000 80 59,920


Budgetary Fund Balance, June 30 17,657,012$ 18,033,391$ 18,446,177$ 412,786$

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SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS

AS OF JUNE 30, FOR THE LAST TEN FISCAL YEARS (1)

MEASUREMENT PERIOD 2015

TOTAL PENSION LIABILITYService Cost 3,310,829$ Interest 18,086,982 Benefit Payments, Including Refunds of employee Contributions (12,464,852) Net Change in Total Pension Liability 8,932,959$ Total Pension Liability - Beginning 245,736,775 Total Pension Liability - Ending (a) 254,669,734$

PLAN FIDUCIARY NET POSITIONContribution - Employer 3,048,502$ Contribution - Employee 1,640,223 Net Investment Income 31,444,609 Benefit Payments, Including Refunds of Employee Contributions (12,464,852) Net Change in Fiduciary Net Position 23,668,482$ Plan Fiduciary Net Position - Beginning 184,143,961 Plan Fiduciary Net Position - Ending (b) 207,812,443$

Plan Net Pension Liability/(Assets) - Ending (a) - (b) 46,857,291$

81.60%

Covered-Employee Payroll 21,843,562$

214.51%


Notes to Schedule:

Changes of Assumptions: There were no changes in assumptions.

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability

Plan Net Pension Liability/(Asset) as a Percentage of Covered-Employee Payroll

Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2013. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).

(1) Historical information is required only for measurement for which GASB 68 is applicable. Fiscal Year 2015 was the first year of implementation, therefore only one year is shown.

MISCELLANEOUS PLAN - AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PLAN

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SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS

AS OF JUNE 30, FOR THE LAST TEN FISCAL YEARS (1)

MEASUREMENT PERIOD 2015

TOTAL PENSION LIABILITYService Cost 4,880,486$ Interest 23,069,282 Benefit Payments, Including Refunds of employee Contributions (17,510,572) Net Change in Total Pension Liability 10,439,196$ Total Pension Liability - Beginning 313,905,458 Total Pension Liability - Ending (a) 324,344,654$

PLAN FIDUCIARY NET POSITIONContribution - Employer 4,480,201$ Contribution - Employee 1,402,077 Net Investment Income 37,455,889 Benefit Payments, Including Refunds of Employee Contributions (17,510,572) Net Change in Fiduciary Net Position 25,827,595$ Plan Fiduciary Net Position - Beginning 219,628,065 Plan Fiduciary Net Position - Ending (b) 245,455,660$

Plan Net Pension Liability/(Assets) - Ending (a) - (b) 78,888,994$

75.68%

Covered-Employee Payroll 15,182,720$

519.60%


Notes to Schedule:

Changes of Assumptions: There were no changes in assumptions.

(1) Historical information is required only for measurement for which GASB 68 is applicable. Fiscal Year 2015 was the first year

Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2013. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).

SAFETY PLAN - AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PLAN

Plan Fiduciary Net Position as a Percentage of the Total

Plan Net Pension Liability/(Asset) as a Percentage of Covered-

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SCHEDULE OF PLAN CONTRIBUTIONSAS OF JUNE 30, FOR THE LAST TEN FISCAL YEARS (1)

2015

Miscellaneous PlanActuarially Determined Contribution 3,803,283$ Contribution in Relation to the Actuarially Determined Contribution (3,803,283) Contribution Deficiency (Excess) -$

Covered-Employee Payroll (3) (4) 21,843,562$

Contributions as a Percentage of Covered-Employee Payroll (3) 17.41%

Safety PlanActuarially Determined Contribution 5,171,283$ Contribution in Relation to the Actuarially Determined Contribution (5,171,283) Contribution Deficiency (Excess) -$

Covered-Employee Payroll (3) (4) 15,182,720$

Contributions as a Percentage of Covered-Employee Payroll (3) 34.06%

Note to Schedule:

Valuation Date: June 30, 2012

Methods and assumptions used to determine contribution rates:Actuarial cost method Entry age normalAmortization method For details, see June 30, 2011 Funding Valuation Report.Remaining amortization period For details, see June 30, 2011 Funding Valuation Report.Assets valuation method Actuarial Value of AssetsInflation 2.75%Salary Increases Varies by Entry Age and ServiceInvestment rate of return

Retirement age

Mortality

The probabilities of retirement are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007.

The probabilities of mortality are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007. Pre-retirement and post-retirement mortality rates include 5 years of projected mortality improvement using Scale AA published by the Society of Actuaries.

(1) Historical information is required only for measurement for which GASB 68 is applicable. Fiscal Year 2015 was the first year of implementation, therefore only one year is shown.

7.50% net of pension investment and administrative expenses; includes inflation.

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COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES

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NON-MAJORGOVERNMENTAL FUNDSThe Community Development Block Grant Fund develops viable urban communities by providing decent housing and asuitable environment and expand economic opportunity for persons of low and moderate income.

The Landscape Maintenance District Fund accounts for revenues received and expenditures made for landscape andlighting maintenance in various areas of the City. Revenues consist of assessments received from property owners.

The Traffic Congestion Relief Fund accounts for revenues received and expenditures made for either street pavement,rehabilitation and reconstruction of associated facilities such as drainage and traffic control devices.

The Proposition "A" Fund accounts for the receipt and disbursement of funds derived from the one-half cent sales taximposed by the Proposition "A" ordinance of the Los Angeles County Transportation Commission. The funds are used tofinance public transportation projects.

The Vehicle Parking District Fund accounts for the operation, maintenance, capital improvements, and administration ofparking lots in the downtown business area. Revenues are received from parking fees.

The State Gas Tax Fund accounts for revenues received and expenditures made for general street improvement andmaintenance. The revenues consist of the City's share of state gasoline taxes collected under Sections 2105, 2106, 2107.5 ofthe Street and Highway Code.

The Proposition "C' Fund accounts for receipt and disbursement of funds derived from a 1990-91 increase in County salestax. The funds are used to finance transit or transit-related projects.

The Air Quality Improvement Fund accounts for the revenues and expenditures made for air quality improvement projects.The revenues consist of funds received from the South Coast Air Quality Management District (SCAQMD) in accordance withAB2766.

The Capital Outlay Fund accounts for the accumulation of the cost of capital projects.

The Special Fees Fund accounts for fee analysis rate review and Public Arts fees.

The Traffic Offender Fund accounts for the fees collected for the impoundment of vehicles and expenditures shall be for theenforcement, education and prosecution of drivers with a suspended or revoked license as well as unlicensed drivers operatinga motor vehicle.

The Assessment District Improvement Fund accounts for capital improvements through special charges levied against theproperties benefited.

The Asset Forfeiture Fund accounts for the City's share of assets seized by law enforcement agencies. The monies are usedfor law enforcement purposes.

The Measure "R" Fund accounts for street maintenance, traffic signal, street light maintenance, traffic paint and sign serviceswhich are funded with 1/2-cent sales tax revenues.

The General Sanitation Fees Operations Fund accounts for street sweeping services, graffiti abatement, storm watercompliance, landscape median maintenance, and right-of-way clean-ups.

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COMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2015

Assets:Cash and investments 61,568$ 2,071,775$ 1,819,877$ 5,893,671$ Receivables (net):

Accounts - 26,980 37,000 60,000 Notes and loans 2,022,423 - - - Interest - 1,738 1,429 5,245

Prepaid costs - - - - Due from other governments 535,008 50,045 449,078 - Advances to other funds - - - - Restricted assets:

Cash - - - -

Total Assets 2,618,999$ 2,150,538$ 2,307,384$ 5,958,916$

Liabilities, Deferred Inflows ofResources, and Fund Balances:Liabilities:Accounts payable 95,347$ 183,119$ 183,156$ 13,076$ Payroll payable 30,867 30,081 3,235 1,796 Accrued liabilities - 41,540 - 20,000 Deposits payable - - - - Due to other governments - - - - Due to other funds - - - -

Total Liabilities 126,214 254,740 186,391 34,872

Deferred inflows of resources:Unavailable revenues - - 439,007 -

Total Deferred inflows of Resources - - 439,007 -

Fund Balances: Nonspendable Prepaid costs - - - - Notes and loans 2,022,423 - - - Advances to other funds - - - - Restricted Urban development 470,362 1,895,798 1,681,986 5,924,044 Public safety - - - - Neighborhood services - - - - Capital projects - - - - Assessment district improvement - - - -

Total Fund Balances 2,492,785 1,895,798 1,681,986 5,924,044

Total Liabilities, Deferred Inflows of Resources, and Fund Balances 2,618,999$ 2,150,538$ 2,307,384$ 5,958,916$


Community Development Block Grant State Gas Tax Proposition A Proposition C

144

CITY OF POMONA

COMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDSJUNE 30, 2015



Prepaid costsDue from other governmentsAdvances to other fundsRestricted assets:

Cash

Total Assets

Liabilities, Deferred Inflows ofResources, and Fund Balances:Liabilities:Accounts payablePayroll payableAccrued liabilitiesDeposits payableDue to other governmentsDue to other funds

Total Liabilities

Deferred inflows of resources:Unavailable revenues

Total Deferred inflows of Resources

Fund Balances: Nonspendable Prepaid costs Notes and loans Advances to other funds Restricted Urban development Public safety Neighborhood services Capital projects Assessment district improvement

Total Fund Balances

Total Liabilities, Deferred Inflows of Resources, and Fund Balances

(CONTINUED)

2,760,273$ 506,638$ -$ 658,522$

92,120 - - - - - - -

2,388 459 - 576 - - - -

372 49,392 - 22,292 304,435 - - -

- - - -

3,159,588$ 556,489$ -$ 681,390$

20,288$ 16,973$ -$ 88,154$ 7,260 1,218 - 4,619

- - - - 2,334 - - -

115 - - - - - - -

29,997 18,191 - 92,773

57,400 - - -

57,400 - - -

- - - - - - - -

304,435 - - -

2,767,756 538,298 - - - - - - - - - 588,617 - - - - - - - -

3,072,191 538,298 - 588,617

3,159,588$ 556,489$ -$ 681,390$


Vehicle Parking District

Air Quality Improvement

Traffic Congestion

Relief

Landscape Maintenance

District

145

B-83

CITY OF POMONA





Cash

Total Assets


Total Liabilities




Total Fund Balances


2,108,099$ 613,320$ 2,325,232$ -$

- - - 330,412 - - - -

1,968 527 1,917 - 23,891 - - -

- - - - - - - -

- - - -

2,133,958$ 613,847$ 2,327,149$ 330,412$

162,910$ 211$ 125,606$ 230,581$ 20,027 7,602 17,580 22,126

- - - - - - - - - - - - - - - 67,980

182,937 7,813 143,186 320,687

- - - -

- - - -

23,891 - - - - - - - - - - -

- - 2,183,963 9,725 1,927,130 606,034 - -

- - - - - - - - - - - -

1,951,021 606,034 2,183,963 9,725

2,133,958$ 613,847$ 2,327,149$ 330,412$


Asset Forfeiture

Traffic Offender Measure R

General Sanitation

Fees Operations

146

CITY OF POMONA





Cash

Total Assets


Total Liabilities




Total Fund Balances


486,823$ 822,842$ 53,688$ 20,182,328$

- 4,653 - 551,165 - - - 2,022,423 - 1,429 81 17,757 - - - 23,891 - 38,123 - 1,144,310 - - - 304,435

- 2,869,423 204,102 3,073,525

486,823$ 3,736,470$ 257,871$ 27,319,834$

-$ 307,241$ -$ 1,426,662$ - 15,229 379 162,019 - - - 61,540 - 11,967 - 14,301 - - - 115 - - - 67,980

- 334,437 379 1,732,617

- - - 496,407

- - - 496,407

- - - 23,891 - - - 2,022,423 - - - 304,435

- - - 15,471,932 - - - 2,533,164

486,823 - - 1,075,440 - 3,402,033 - 3,402,033 - - 257,492 257,492

486,823 3,402,033 257,492 25,090,810

486,823$ 3,736,470$ 257,871$ 27,319,834$

Capital Projects Funds Special

Revenue Fund

Special Fees Fund Capital Outlay

Assessment District

Improvement

Total Non-Major Governmental

Funds

147

B-84

CITY OF POMONA

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESNONMAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015

Revenues:Taxes -$ -$ -$ -$ Special assessments - - - - Licenses and permits - - - - Intergovernmental 2,745,146 4,675,105 2,704,452 2,280,079 Charges for services 48,701 - - - Interest and rentals 109,538 2,537 2,409 9,019 Fines and forfeitures - - - - Miscellaneous 1,652 33,585 14,000 -

Total Revenues 2,905,037 4,711,227 2,720,861 2,289,098

Expenditures:Current: General government - - - - Public safety 123,181 - - - Urban development 1,785,654 3,868,451 2,245,782 3,124,512 Neighborhood services - - - - Capital outlay - 7,653 - - Debt service: Principal retirement 145,000 - - - Interest and fiscal charges 8,029 - - -

Total Expenditures 2,061,864 3,876,104 2,245,782 3,124,512

Excess (Deficiency) of RevenuesOver (Under) Expenditures 843,173 835,123 475,079 (835,414)

Other Financing Sources (Uses):Transfers in 27,224 131,750 - 321,721 Transfers out (1,081,683) (951,324) - (651,241) Proceeds from sale of capital assets - - - -

Total Other Financing Sources(Uses) (1,054,459) (819,574) - (329,520)

Net Change in Fund Balances (211,286)$ 15,549$ 475,079$ (1,164,934)$

Fund Balances:Beginning of year, as originally reported 775,225$ 1,880,249$ 1,206,907$ 7,088,978$

Restatements 1,928,846 - - -

Beginning of year, as restated 2,704,071 1,880,249 1,206,907 7,088,978 Net change in fund balances (211,286) 15,549 475,079 (1,164,934)

End of Year 2,492,785$ 1,895,798$ 1,681,986$ 5,924,044$


Community Development Block Grant State Gas Tax Proposition A Proposition C

148

CITY OF POMONA


Revenues:TaxesSpecial assessmentsLicenses and permitsIntergovernmentalCharges for servicesInterest and rentalsFines and forfeituresMiscellaneous

Total Revenues

Expenditures:Current: General government Public safety Urban development Neighborhood services Capital outlayDebt service: Principal retirement Interest and fiscal charges

Total Expenditures






Restatements


End of Year

(CONTINUED)

15,430$ -$ -$ -$ - - - 1,213,093 - - - - - 188,233 - -

158,442 - - - 533,845 686 - 767

16 - - - - - - -

707,733 188,919 - 1,213,860

- - - - - - - -

781,676 65,966 - - - - - 1,205,018

30,651 - - -

75,045 - - - 5,675 - - -

893,047 65,966 - 1,205,018

(185,314) 122,953 - 8,842

- - - - - (135,490) (1,819) - - - - -

- (135,490) (1,819) -

(185,314)$ (12,537)$ (1,819)$ 8,842$

3,257,505$ 550,835$ 1,819$ 579,775$ - - - -

3,257,505 550,835 1,819 579,775 (185,314) (12,537) (1,819) 8,842

3,072,191$ 538,298$ -$ 588,617$


Landscape Maintenance

District

Vehicle Parking District

Air Quality Improvement

Traffic Congestion

Relief

149

B-85

CITY OF POMONA



Total Revenues


Total Expenditures






Restatements


End of Year

-$ -$ -$ -$ - - - - - - - 1,390,269 - - 1,661,057 -

79,743 366,726 - - 3,343 888 3,146 -

- - - 11,754 1,621,893 - - 3,528

1,704,979 367,614 1,664,203 1,405,551

- - - - 1,581,131 200,560 - -

- - 1,030,524 2,270,401 - - - -

548,919 - 32,913 -

- - - - - - - -

2,130,050 200,560 1,063,437 2,270,401

(425,071) 167,054 600,766 (864,850)

- - 179,718 864,850 - - (442,512) -

2,700 - - -

2,700 - (262,794) 864,850

(422,371)$ 167,054$ 337,972$ -$

2,373,392$ 438,980$ 1,845,991$ 9,725$ - - - -

2,373,392 438,980 1,845,991 9,725 (422,371) 167,054 337,972 -

1,951,021$ 606,034$ 2,183,963$ 9,725$


Asset Forfeiture

Traffic Offender Measure R

General Sanitation

Fees Operations

150

CITY OF POMONA



Total Revenues


Total Expenditures






Restatements


End of Year

-$ 59,221$ -$ 74,651$ - - - 1,213,093

299,889 312,860 - 2,003,018 - 118,830 - 14,372,902 - 14,718 - 668,330 - 8,699 159 675,036 - - - 11,770 - 6,279 - 1,680,937

299,889 520,607 159 20,699,737

- 12,725 - 12,725 - - - 1,904,872 - - - 15,172,966 - - - 1,205,018 - 2,802,639 4,237 3,427,012

- - - 220,045 - - - 13,704

- 2,815,364 4,237 21,956,342

299,889 (2,294,757) (4,078) (1,256,605)

- 1,959,623 - 3,484,886 - (502,666) - (3,766,735) - - - 2,700

- 1,456,957 - (279,149)

299,889$ (837,800)$ (4,078)$ (1,535,754)$

186,934$ 4,239,833$ 261,570$ 24,697,718$ - - - 1,928,846

186,934 4,239,833 261,570 26,626,564 299,889 (837,800) (4,078) (1,535,754)

486,823$ 3,402,033$ 257,492$ 25,090,810$

Capital Outlay

Assessment District

Improvement Special Fees

Fund

Total Non-Major Governmental

Funds

Capital Projects Funds Special

Revenue Fund

151

B-86

CITY OF POMONA

BUDGETARY COMPARISON SCHEDULEGENERAL DEBT SERVICEYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1 (41,134,968)$ (41,134,968)$ (41,134,968)$ -$ Resources (Inflows):Taxes 668,677 668,677 642,854 (25,823) Interest and rentals 930 930 2,758 1,828 Miscellaneous 335,448 335,448 335,448 - Transfers in 3,632,882 5,632,882 5,631,162 (1,720)

Amounts Available for Appropriations (36,497,031) (34,497,031) (34,522,746) (25,715)

Charges to Appropriation (Outflows):General government 33,962 33,962 38,352 (4,390) Debt service: Principal retirement 692,328 692,328 881,000 (188,672) Interest and fiscal charges 4,829,764 4,829,764 4,641,092 188,672 Transfers out 1,040,000 1,040,000 - 1,040,000


Budgetary Fund Balance, June 30 (43,093,085)$ (41,093,085)$ (40,083,190)$ 1,009,895$

152

CITY OF POMONA

BUDGETARY COMPARISON SCHEDULEPUBLIC FINANCING AUTHORITY DEBT SERVICEYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1 49,155,901$ 49,155,901$ 49,155,901$ -$ Resources (Inflows):Interest and rentals 305,489 305,489 314,326 8,837 Miscellaneous - - 8,628 8,628 Transfers in 1,040,000 1,040,000 - (1,040,000)


Charges to Appropriation (Outflows):General government 4,200 4,200 8,055 (3,855) Debt service: Principal retirement 1,500,000 1,500,000 1,500,000 - Interest and fiscal charges 202,289 202,289 202,289 -

Total Charges to Appropriations 1,706,489 1,706,489 1,710,344 (3,855)

Budgetary Fund Balance, June 30 48,794,901$ 48,794,901$ 47,768,511$ (1,026,390)$

153

B-87

CITY OF POMONA

BUDGETARY COMPARISON SCHEDULECOMMUNITY DEVELOPMENT BLOCK GRANTYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1, as restated 2,704,071$ 2,704,071$ 2,704,071$ -$ Resources (Inflows):Intergovernmental 2,342,780 2,598,051 2,745,146 147,095 Charges for services 125 48,148 48,701 553 Interest and rentals - - 109,538 109,538 Miscellaneous 136,000 136,000 1,652 (134,348) Transfers in - - 27,224 27,224

Amounts Available for Appropriations 5,182,976 5,486,270 5,636,332 150,062

Charges to Appropriations (Outflows):Public safety 123,181 123,181 123,181 - Urban development 1,484,708 1,928,460 1,785,654 142,806 Debt service: Principal retirement 146,000 145,000 145,000 - Interest and fiscal charges 7,200 8,200 8,029 171 Transfers out 717,816 717,816 1,081,683 (363,867)


Budgetary Fund Balance, June 30 2,704,071$ 2,563,613$ 2,492,785$ (70,828)$

154

CITY OF POMONA

BUDGETARY COMPARISON SCHEDULESTATE GAS TAXYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1 1,880,249$ 1,880,249$ 1,880,249$ -$ Resources (Inflows):Intergovernmental 4,090,431 4,090,431 4,675,105 584,674 Interest and rentals 1,870 1,870 2,537 667 Miscellaneous - - 33,585 33,585 Transfers in 131,750 131,750 131,750 -


Charges to Appropriations (Outflows):Urban development 3,198,070 3,215,239 3,868,451 (653,212) Capital outlay - (60,299) 7,653 (67,952) Transfers out 1,060,861 1,095,109 951,324 143,785



155

B-88

CITY OF POMONA

BUDGETARY COMPARISON SCHEDULEPROPOSITION AYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1 1,206,907$ 1,206,907$ 1,206,907$ -$ Resources (Inflows):Intergovernmental 2,355,530 2,355,530 2,704,452 348,922 Interest and rentals 1,592 1,592 2,409 817 Miscellaneous 10,000 10,000 14,000 4,000


Charges to Appropriations (Outflows):Urban development 2,213,976 2,222,890 2,245,782 (22,892) Capital outlay 205,000 205,000 - 205,000 Transfers out 100,000 100,000 - 100,000



156

CITY OF POMONA

BUDGETARY COMPARISON SCHEDULEPROPOSITION CYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1 7,088,978$ 7,088,978$ 7,088,978$ -$ Resources (Inflows):Intergovernmental 1,924,820 1,924,820 2,280,079 355,259 Interest and rentals 4,603 4,603 9,019 4,416 Transfers in - - 321,721 321,721


Charges to Appropriations (Outflows):Urban development 108,607 109,681 3,124,512 (3,014,831) Capital outlay 250,000 250,000 - 250,000 Transfers out 2,740,000 2,740,000 651,241 2,088,759



157

B-89

CITY OF POMONA

BUDGETARY COMPARISON SCHEDULEVEHICLE PARKING DISTRICTYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1 3,257,505$ 3,257,505$ 3,257,505$ -$ Resources (Inflows):Taxes 12,164 12,164 15,430 3,266 Charges for services 115,000 115,000 158,442 43,442 Interest and rentals 672,325 672,325 533,845 (138,480) Fines and forfeitures - - 16 16

Amounts Available for Appropriations 4,056,994 4,056,994 3,965,238 (91,756)

Charges to Appropriations (Outflows):Urban development 785,430 788,913 781,676 7,237 Capital outlay t 612,000 615,500 30,651 584,849 Debt service: Principal retirement 75,045 75,045 75,045 - Interest and fiscal charges 5,675 5,675 5,675 -

Total Charges to Appropriations 1,478,150 1,485,133 893,047 592,086


158

CITY OF POMONA

BUDGETARY COMPARISON SCHEDULEAIR QUALITY IMPROVEMENTYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1 550,835$ 550,835$ 550,835$ -$ Resources (Inflows):Intergovernmental 189,900 189,900 188,233 (1,667) Interest and rentals - - 686 686

Amounts Available for Appropriations 740,735 740,735 739,754 (981)

Charges to Appropriations (Outflows):Urban development 200,023 47,102 65,966 (18,864) Transfers out - 85,000 135,490 (50,490)

Total Charges to Appropriations 200,023 132,102 201,456 (69,354)

Budgetary Fund Balance, June 30 540,712$ 608,633$ 538,298$ (70,335)$

159

B-90

CITY OF POMONA

BUDGETARY COMPARISON SCHEDULELANDSCAPE MAINTENANCE DISTRICTYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1 579,775$ 579,775$ 579,775$ -$ Resources (Inflows):Special assessments 1,212,231 1,212,231 1,213,093 862 Interest and rentals 694 694 767 73

Amounts Available for Appropriations 1,792,700 1,792,700 1,793,635 935

Charges to Appropriations (Outflows):Neighborhood services 1,242,539 1,360,869 1,205,018 155,851


Budgetary Fund Balance, June 30 550,161$ 431,831$ 588,617$ 156,786$

160

CITY OF POMONA

BUDGETARY COMPARISON SCHEDULEASSET FORFEITUREYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1 2,373,392$ 2,373,392$ 2,373,392$ -$ Resources (Inflows):Charges for services - - 79,743 79,743 Interest and rentals - - 3,343 3,343 Miscellaneous 1,721,400 1,721,400 1,621,893 (99,507) Proceeds from sale of capital assets - - 2,700 2,700


Charges to Appropriations (Outflows):Public safety 2,561,994 1,922,574 1,581,131 341,443 Capital outlay - 666,943 548,919 118,024



161

B-91

CITY OF POMONA

BUDGETARY COMPARISON SCHEDULETRAFFIC OFFENDERYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1 438,980$ 438,980$ 438,980$ -$ Resources (Inflows):Charges for services 350,000 350,000 366,726 16,726 Interest and rentals - - 888 888

Amounts Available for Appropriations 788,980 788,980 806,594 17,614

Charges to Appropriations (Outflows):Public safety 211,155 211,155 200,560 10,595 Capital outlay 120,000 120,000 - 120,000

Total Charges to Appropriations 331,155 331,155 200,560 130,595

Budgetary Fund Balance, June 30 457,825$ 457,825$ 606,034$ 148,209$

162

CITY OF POMONA

BUDGETARY COMPARISON SCHEDULEMEASURE RYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1 1,845,991$ 1,845,991$ 1,845,991$ -$ Resources (Inflows):Intergovernmental 1,443,000 1,443,000 1,661,057 218,057 Interest and rentals - - 3,146 3,146 Transfers in 30,000 30,000 179,718 149,718


Charges to Appropriations (Outflows):Urban development 967,735 938,159 1,030,524 (92,365) Capital outlay 30,000 72,119 32,913 39,206 Transfers out 1,038,094 1,741,594 442,512 1,299,082


Budgetary Fund Balance, June 30 1,283,162$ 567,119$ 2,183,963$ 1,616,844$

163

B-92

CITY OF POMONA

BUDGETARY COMPARISON SCHEDULEGENERAL SANITATION FEES OPERATIONSYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1 9,725$ 9,725$ 9,725$ -$ Resources (Inflows):Licenses and permits 1,401,801 1,401,801 1,390,269 (11,532) Fines and forfeitures 12,093 12,093 11,754 (339) Miscellaneous 800 800 3,528 2,728 Transfers in 1,010,861 1,049,716 864,850 (184,866)


Charges to Appropriations (Outflows):Urban development 2,433,479 2,487,377 2,270,401 216,976


Budgetary Fund Balance, June 30 1,801$ (13,242)$ 9,725$ 22,967$

164

CITY OF POMONA

BUDGETARY COMPARISON SCHEDULECAPITAL OUTLAYYEAR ENDED JUNE 30, 2015



Budgetary Fund Balance, July 1 4,239,833$ 4,239,833$ 4,239,833$ -$ Resources (Inflows):Taxes - - 59,221 59,221 Licenses and permits - - 312,860 312,860 Intergovernmental - 1,001,764 118,830 (882,934) Charges for services - - 14,718 14,718 Interest and rentals - - 8,699 8,699 Miscellaneous - - 6,279 6,279 Transfers in 4,849,910 5,950,658 1,959,623 (3,991,035)


Charges to Appropriation (Outflows):General government 170,000 170,000 12,725 157,275 Urban development - - - - Capital outlay 4,849,910 7,703,241 2,802,639 4,900,602 Transfers out 393,096 502,096 502,666 (570)



165

B-93


166

INTERNAL SERVICE FUNDS

The Internal Service Funds account for the maintenance and repair of City vehicles and equipment, riskmanagement, general liability, workers' compensation, information technology, and printing and mail servicesprovided to other departments or agencies of the City.

167

B-94

CITY OF POMONA

COMBINING STATEMENT OF NET POSITIONINTERNAL SERVICE FUNDSJUNE 30, 2015

Assets:Current:

Cash and investments 12,583,421$ 856,812$ 141,879$ 21$ Receivables (net):

Accounts - 91 - - Interest 6,563 - - -

Prepaid costs - - - 4,480 Inventories - 384,118 - -

Total Current Assets 12,589,984 1,241,021 141,879 4,501 Noncurrent:

Capital assets, net of depreciation - 163,093 224,396 -

Total Noncurrent Assets - 163,093 224,396 -

Total Assets 12,589,984 1,404,114 366,275 4,501 Deferred Outflows of Resources:

Deferred pension related items 38,682 126,945 35,825 -

Total Deferred Outflows of Resources 38,682 126,945 35,825 -

Total Assets and DeferredOutflows of Resources 12,628,666$ 1,531,059$ 402,100$ 4,501$


Accounts payable 69,467$ 133,177$ 177,550$ 849$ Payroll payable 11,918 55,864 10,376 165 Due to other funds - - - 3,487 Compensated absences - 115,000 - - Claims and judgments 1,805,000 - - -

Total Current Liabilities 1,886,385 304,041 187,926 4,501

Noncurrent:Advances from other funds 5,000,000 - - - Compensated absences - 117,115 - - Claims and judgments 10,296,548 - - - Net pension liability 476,575 1,563,990 441,370

Total Noncurrent Liabilities 15,773,123 1,681,105 441,370 -

Total Liabilities 17,659,508 1,985,146 629,296 4,501

Deferred Inflows of Resources:Deferred pension related items 146,243 479,931 135,440 -

Total Deferred Inflows of Resources 146,243 479,931 135,440 -

Net Position:Net investment in capital assets - 163,093 224,396 - Unrestricted (5,177,085) (1,097,111) (587,032) -

Total Net Position (5,177,085) (934,018) (362,636) -

Total Liabilities, Deferred Inflowsof Resources and Net Position 12,628,666$ 1,531,059$ 402,100$ 4,501$

Self-Insurance Funds

Equipment Maintenance

Information Technology

Printing/Mail Services

168

CITY OF POMONA

COMBINING STATEMENT OF NET POSITIONINTERNAL SERVICE FUNDSJUNE 30, 2015

Assets:Current:

Cash and investmentsReceivables (net):

AccountsInterest

Prepaid costsInventories

Total Current AssetsNoncurrent:

Capital assets, net of depreciation

Total Noncurrent Assets

Total AssetsDeferred Outflows of Resources:

Deferred pension related items

Total Deferred Outflows of Resources

Total Assets and DeferredOutflows of Resources


Accounts payablePayroll payableDue to other fundsCompensated absencesClaims and judgments

Total Current Liabilities

Noncurrent:Advances from other fundsCompensated absencesClaims and judgmentsNet pension liability

Total Noncurrent Liabilities

Total Liabilities

Deferred Inflows of Resources:Deferred pension related items


Net Position:Net investment in capital assetsUnrestricted

Total Net Position

Total Liabilities, Deferred Inflowsof Resources and Net Position

Total

13,582,133$

91 6,563 4,480

384,118

13,977,385

387,489

387,489

14,364,874

201,452

201,452

14,566,326$

381,043$ 78,323

3,487 115,000

1,805,000

2,382,853

5,000,000 117,115

10,296,548 2,481,935

17,895,598

20,278,451

761,614

761,614

387,489 (6,861,228)

(6,473,739)

14,566,326$

169

B-95

CITY OF POMONA

COMBINING STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET POSITIONINTERNAL SERVICE FUNDSYEAR ENDED JUNE 30, 2015

Operating Revenues:Charges for services 4,633,643$ 3,851,396$ 1,675,437$ 18,097$ Miscellaneous 3,641,013 - - -

Total Operating Revenues 8,274,656 3,851,396 1,675,437 18,097

Operating Expenses:Personnel services - 1,223,571 308,376 - Operations - 2,128,281 1,172,374 18,097 Claims expense 389,061 230,000 - - Insurance - 34,608 5,868 - Depreciation - 23,053 - -

Total Operating Expenses 389,061 3,639,513 1,486,618 18,097

Operating Income (Loss) 7,885,595 211,883 188,819 -

Nonoperating Revenues (Expenses):Interest revenue 10,619 - - -

Total Nonoperating Revenues (Expenses) 10,619 - - -

Income (Loss) Before Transfers 7,896,214$ 211,883$ 188,819$ -$

Net Position:Beginning of Year, as originally reported (12,477,858)$ 808,175$ -$ -$

Restatements (595,441) (1,954,076) (551,455) - Beginning of Fiscal Year, as restated (13,073,299) (1,145,901) (551,455) -

Changes in Net Position 7,896,214 211,883 188,819 -

End of Year (5,177,085)$ (934,018)$ (362,636)$ -$

Self-Insurance

Funds Equipment

Maintenance Information Technology


170

CITY OF POMONA

COMBINING STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET POSITIONINTERNAL SERVICE FUNDSYEAR ENDED JUNE 30, 2015

Operating Revenues:Charges for servicesMiscellaneous

Total Operating Revenues

Operating Expenses:Personnel servicesOperationsClaims expenseInsuranceDepreciation

Total Operating Expenses

Operating Income (Loss)

Nonoperating Revenues (Expenses):Interest revenue

Total Nonoperating Revenues (Expenses)

Income (Loss) Before Transfers

Net Position:Beginning of Year, as originally reported

RestatementsBeginning of Fiscal Year, as restated

Changes in Net Position

End of Year

Total

10,178,573$ 3,641,013

13,819,586

1,531,947 3,318,752

619,061 40,476 23,053

5,533,289

8,286,297

10,619

10,619

8,296,916$

(11,669,683)$ (3,100,972)

(14,770,655) 8,296,916

(6,473,739)$

171

B-96

CITY OF POMONA

COMBINING STATEMENT OF CASH FLOWSINTERNAL SERVICE FUNDSYEAR ENDED JUNE 30, 2015

Cash Flows from Operating Activities:Cash received from customers and users 4,633,643$ 3,851,305$ 1,675,437$ 18,097$ Cash received from (paid for) other 3,641,013 - - - Cash paid to suppliers for goods and services (5,930,514) (2,525,736) (1,022,085) (23,582) Cash paid for general and administrative expenses (11,305) (1,213,176) (314,114) -

Net Cash Provided (Used) by Operating Activities 2,332,837 112,393 339,238 (5,485)


Amounts received from other funds - - - 3,487

Net Cash Provided (Used) by Non-Capital Financing Activities - - - 3,487


Acquisition and construction of capital assets - (38,869) (224,396) -

Net Cash Provided (Used) by Capital and Related Financing Activities - (38,869) (224,396) -

Cash Flows from Investing Activities:Interest received 8,353 - - -

Net Cash Provided (Used) byInvesting Activities 8,353 - - -

Net Increase (Decrease) in Cashand Cash Equivalents 2,341,190 73,524 114,842 (1,998)

Cash and Cash Equivalents, Beginning of Year 10,242,231 783,288 27,037 2,019

Cash and Cash Equivalents, End of Year 12,583,421$ 856,812$ 141,879$ 21$

Reconciliation of Operating Income to Net CashProvided (Used) by Operating Activities:Operating income (loss) 7,885,595$ 211,883$ 188,819$ -$ Adjustments to reconcile operating income (loss) net cash provided (used) by operating activities:

Depreciation - 23,053 - - (Increase) decrease in accounts receivable - (91) - - (Increase) decrease in prepaid expense - - - (4,480) (Increase) decrease in inventories - (24,425) - - (Increase) decrease in deferred outflows (7,677) (25,193) (7,110) - Increase (decrease) in deferred inflows 146,243 479,931 135,440 - Increase (decrease) in accounts payable (1,464,145) (108,422) 156,157 (1,170) Increase (decrease) in payroll payable 588 28,839 4,732 165 Increase (decrease) in claims and judgments (4,077,896) - - - Increase (decrease) in net pension liability (149,871) (491,838) (138,800) Increase (decrease) in compensated absences - 18,656 - -

Total Adjustments (5,552,758) (99,490) 150,419 (5,485) Net Cash Provided (Used) by Operating Activities 2,332,837$ 112,393$ 339,238$ (5,485)$

Non-Cash Investing, Capital, and Financing Activities:

Self-Insurance

Funds Equipment

Maintenance Information Technology


During fiscal year 2014-2015, there was no non-cash investing, capital and financing activities.

172

CITY OF POMONA

COMBINING STATEMENT OF CASH FLOWSINTERNAL SERVICE FUNDSYEAR ENDED JUNE 30, 2015

Cash Flows from Operating Activities:Cash received from customers and usersCash received from (paid for) otherCash paid to suppliers for goods and servicesCash paid for general and administrative expenses

Net Cash Provided (Used) by Operating Activities


Amounts received from other funds

Net Cash Provided (Used) by Non-Capital Financing Activities


Acquisition and construction of capital assets

Net Cash Provided (Used) by Capital and Related Financing Activities

Cash Flows from Investing Activities:Interest received

Net Cash Provided (Used) byInvesting Activities

Net Increase (Decrease) in Cashand Cash Equivalents

Cash and Cash Equivalents, Beginning of Year

Cash and Cash Equivalents, End of Year

Reconciliation of Operating Income to Net CashProvided (Used) by Operating Activities:Operating income (loss)Adjustments to reconcile operating income (loss) net cash provided (used) by operating activities:

Depreciation(Increase) decrease in accounts receivable(Increase) decrease in prepaid expense(Increase) decrease in inventories(Increase) decrease in deferred outflowsIncrease (decrease) in deferred inflowsIncrease (decrease) in accounts payableIncrease (decrease) in payroll payableIncrease (decrease) in claims and judgmentsIncrease (decrease) in net pension liabilityIncrease (decrease) in compensated absences

Total AdjustmentsNet Cash Provided (Used) by Operating Activities

Non-Cash Investing, Capital, and Financing Activities:During fiscal year 2014-2015, there was no non-cash

investing, capital and financing activities.

Total

10,178,482$ 3,641,013

(9,501,917) (1,538,595)

2,778,983

3,487

3,487

(263,265)

(263,265)

8,353

8,353

2,527,558 11,054,575

13,582,133$

8,286,297$

23,053 (91)

(4,480) (24,425) (39,980) 761,614

(1,417,580) 34,324

(4,077,896) (780,509)

18,656

(5,507,314)

2,778,983$

173

B-97


174

The Agency Funds account for assets held by the City for other funds, governments or individuals. These fundsinclude receipts and disbursements of funds for the debt service activity of the 1911 Act assessment districts, cashdeposits collected for street and sidewalk encroachment permits, debt services activity related to debt withoutgovernment commitment for various assessment district improvements, cash guarantees (deposits) collected by theCity for various construction improvement projects, deposits of miscellaneous, self-supporting City projects, paymentof various employee benefits and deductions, including, but not limited to, health and dental insurance premiums,federal and state withholding taxes, life insurance and other withholdings from regular compensation.

FIDUCIARY FUNDS

175

B-98

CITY OF POMONA

COMBINING BALANCE SHEETAGENCY FUNDSJUNE 30, 2015

Assets:Cash and investments 223,449$ 570,868$ 920,014$ 901,655$ Receivables:

Accounts - - - 10,037 Interest 196 319 - -

Due from other governments 37,389 - - 3,834

Total Assets 261,034$ 571,187$ 920,014$ 915,526$

Liabilities:Accounts payable -$ -$ 4,409$ 238,272$ Deposits payable 37,389 571,187 915,605 677,254 Due to external parties/other agencies 223,645 - - -

Total Liabilities 261,034 $ 571,187 $ 920,014 $ 915,526 $

Assessment Districts

Engineers' Revolving

Construction Guarantee

Municipal Revolving

176

CITY OF POMONA

COMBINING BALANCE SHEETAGENCY FUNDSJUNE 30, 2015

Assets:Cash and investmentsReceivables:

AccountsInterest

Due from other governments

Total Assets

Liabilities:Accounts payableDeposits payableDue to external parties/other agencies

Total Liabilities

Total

1,680,299$ -$ 4,296,285$

- - 10,037 - - 515 - - 41,223

1,680,299$ -$ 4,348,060$

1,680,299$ -$ 1,922,980$ - - 2,201,435 - - 223,645

1,680,299 $ - $ 4,348,060 $

Employee Benefits/

DeductionsSettlement

SBOE

177

B-99

CITY OF POMONA

COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIESAGENCY FUNDSYEAR ENDED JUNE 30, 2015

Balance Balance7/1/2014 Additions Deductions 6/30/2015

Assessment Districts

Assets:Cash and investments 223,032$ 417$ -$ 223,449$ Receivables:

Interest 180 196 180 196 Due from other governments 10,044 37,389 10,044 37,389

Total Assets 233,256$ 38,002$ 10,224$ 261,034$

Liabilities:Deposits payable 10,044$ 37,389$ 10,044$ 37,389$ Due to external parties/other agencies 223,212 433 - 223,645

Total Liabilities 233,256$ 37,822$ 10,044$ 261,034$

Engineers' Revolving

Assets:Cash and investments 567,509$ 3,359$ -$ 570,868$ Receivables:

Interest 294 319 294 319 Total Assets 567,803$ 3,678$ 294$ 571,187$

Liabilities:Deposits payable 567,803$ 3,384$ -$ 571,187$

Total Liabilities 567,803$ 3,384$ -$ 571,187$

Construction Guarantee

Assets:Cash and investments 860,960$ 229,886$ 170,832$ 920,014$

Total Assets 860,960$ 229,886$ 170,832$ 920,014$

Liabilities:Accounts payable 15,828$ 98,802$ 110,221$ 4,409$ Deposits payable 845,132 78,927 8,454 915,605

Total Liabilities 860,960$ 177,729$ 118,675$ 920,014$

Municipal Revolving

Assets:Cash and investments 936,043$ 1,269,688$ 1,304,076$ 901,655$ Receivables:

Accounts 11,072 40,011 41,046 10,037 Due from other governments 2,449 3,834 2,449 3,834

Total Assets 949,564$ 1,313,533$ 1,347,571$ 915,526$

Liabilities:Accounts payable 70,834$ 1,275,849$ 1,108,411$ 238,272$ Deposits payable 878,730 7,667 209,143 677,254

Total Liabilities 949,564$ 1,283,516$ 1,317,554$ 915,526$

178

CITY OF POMONA

COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIESAGENCY FUNDSYEAR ENDED JUNE 30, 2015

Balance Balance7/1/2014 Additions Deductions 6/30/2015

Employee Benefits/Deductions

Assets:Cash and investments 1,432,904$ 34,468,485$ 34,221,090$ 1,680,299$

Total Assets 1,432,904$ 34,468,485$ 34,221,090$ 1,680,299$

Liabilities:Accounts payable 1,432,904$ 34,468,485$ 34,221,090$ 1,680,299$

Total Liabilities 1,432,904$ 34,468,485$ 34,221,090$ 1,680,299$

Settlement SBOE

Assets:Pooled cash and investments 376,919$ 1,606,298$ 1,983,217$ -$

Total Assets 376,919$ 1,606,298$ 1,983,217$ -$

Liabilities:Accounts payable 376,919$ 753,838$ 1,130,757$ -$

Total Liabilities 376,919$ 753,838 $ 1,130,757$ -$

Total - All Agency Funds

Assets:Cash and investments 4,397,367$ 37,578,133$ 37,679,215$ 4,296,285$ Receivables:

Accounts 11,072 40,011 41,046 10,037 Interest 474 515 474 515

Due from other governments 12,493 41,223 12,493 41,223 Total Assets 4,421,406$ 37,659,882$ 37,733,228$ 4,348,060$

Liabilities:Accounts payable 1,896,485$ 36,596,974$ 36,570,479$ 1,922,980$ Deposits payable 2,301,709 127,367 227,641 2,201,435 Due to external parties/other agencies 223,212 433 - 223,645

Total Liabilities 4,421,406$ 36,724,774$ 36,798,120$ 4,348,060$

179

B-100


180

This part of the City of Pomona's comprehensive annual financial report presents detailed informationas a context for understanding what the information in the financial statements, note disclosures, andrequired supplementary information says about the City's overall financial health.

Contents Page

Financial Trends - These schedules contain information to help the reader to understandhow the City's financial performance and well-being have changed over time.

1 Net Position by Component 1822 Changes in Net Position 1843 Fund Balances - Governmental Funds 1884 Changes in Fund Balances - Governmental Funds 1905 Governmental Activities Tax Revenues by Source 193

Revenue Capacity - These schedules contain information to help the reader assess theCity's most significant own-source revenue.

6 Assessed Value and Estimated Actual Value of Taxable Property 1947 Property Tax Rates - Direct and Overlapping Governments 1968 Principal Property Taxpayers 1979 Top 25 Sales Tax Generators 19810 Property Tax Levies and Collections 199

Debt Capacity - These schedules present information to help the reader assess the affordability of theCity's current levels of outstanding debt and the City's ability to issue additional debt in the future.

11 Ratios of Outstanding Debt by Type 20012 Ratios of General Bonded Debt Outstanding 20213 Direct and Overlapping Debt 20314 Legal Debt Margin Information 20415 Pledged Revenue Coverage - Water 20616 Pledged Revenue Coverage - Sewer 207

Demographic and Economic Information - These schedules offer demographic and economicindicators to help the reader understand the environment within which the City's financial activities take place.

17 Demographic and Economic Statistics 20818 Principal Employers 209

Operating Information - These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides andthe activities it performs.

19 Authorized Full-Time City Employees by Function 21120 Taxable Sales by Category 21221 Operating Indicators by Function 21422 Capital Asset Statistics by Function 215

Statistical Section (Unaudited)

181

B-101

City of PomonaNet Position by ComponentLast Ten Fiscal Years

2006 2007 2008 2009 2010

Governmental activities:Net investment in

capital assets 271,540,388$ 283,153,069$ 266,292,700$ 266,710,638$ 259,501,244$ Restricted 113,101,903 121,330,491 126,440,546 130,746,703 134,747,514 Unrestricted (179,150,706) (182,279,410) (188,834,296) (213,456,367) (227,480,138)

Total governmental activates net position 205,491,585$ 222,204,150$ 203,898,950$ 184,000,974$ 166,768,620$

Business-type activities:Net investment in

capital assets 54,100,219$ 52,018,893$ 58,437,024$ 68,860,850$ 62,252,632$ Restricted 2,986,079 4,049,389 3,015,084 2,940,659 2,225,388 Unrestricted 27,474,990 28,867,217 32,851,495 32,957,936 34,455,240

Total business-type activities net position 84,561,288$ 84,935,499$ 94,303,603$ 104,759,445$ 98,933,260$

Primary government:Net investment in

capital assets 325,640,607$ 335,171,962$ 324,729,724$ 335,571,488$ 321,753,876$ Restricted 116,087,982 125,379,880 129,455,630 133,687,362 136,972,902 Unrestricted (151,675,716) (153,412,193) (155,982,801) (180,498,431) (193,024,898)

Total primary government net position 290,052,873$ 307,139,649$ 298,202,553$ 288,760,419$ 265,701,880$

Fiscal Year

182

City of PomonaNet Position by ComponentLast Ten Fiscal Years

Governmental activities:Net investment in

capital assetsRestrictedUnrestricted

Total governmental activates net position

Business-type activities:Net investment in


Total business-type activities net position

Primary government:Net investment in


Total primary government net position

Schedule 1

2011 2012 2013 2014 2015

257,218,882$ 272,949,495$ 266,340,326$ 239,862,742$ 236,554,708$ 138,810,197 94,261,171 94,797,810 91,110,197 102,475,838

(232,125,172) (99,699,617) (88,955,872) (66,485,308) (223,393,489)

163,903,907$ 267,511,049$ 272,182,264$ 264,487,631$ 115,637,057$

53,012,960$ 46,811,318$ 40,774,712$ 43,825,224$ 42,085,623$ 7,660,879 13,544,047 14,805,693 32,725,153 28,900,238

36,095,478 39,600,817 42,671,686 23,144,683 15,566,565

96,769,317$ 99,956,182$ 98,252,091$ 99,695,060$ 86,552,426$

310,231,842$ 319,760,813$ 307,115,038$ 283,687,966$ 278,640,331$ 146,471,076 107,805,218 109,603,503 123,835,350 131,376,076

(196,029,694) (60,098,800) (46,284,186) (43,340,625) (207,826,924)

260,673,224$ 367,467,231$ 370,434,355$ 364,182,691$ 202,189,483$

Fiscal Year

183

B-102

City of PomonaChanges in Net PositionLast Ten Fiscal Years

2006 2007 2008 2009 2010

ExpensesGovernmental activities:

General government 4,566,737$ 5,374,997$ 7,799,411$ 11,325,897$ 6,492,505$ Public safety 62,314,546 66,368,961 71,782,018 76,866,332 71,238,620 Urban development 68,802,603 70,071,752 58,907,290 68,405,205 87,717,680 Neighborhood services 14,817,177 12,761,215 21,517,903 10,418,491 8,228,099 Interest on long-term debt 25,274,237 25,372,308 30,865,822 27,731,312 29,442,106

Total governmental activities 175,775,300 179,949,233 190,872,444 194,747,237 203,119,010

Business-type activities:Water 19,172,107 23,845,899 22,807,789 18,980,506 27,457,755 Sewer 2,458,616 3,915,545 2,920,219 2,963,196 3,838,426 Refuse 8,488,309 8,921,093 8,837,471 9,805,894 8,598,275 Canon Water Company 52,345 17,472 96,255 16,681 11,787

Total business-type activities 30,171,377 36,700,009 34,661,734 31,766,277 39,906,243

Total primary government expenses 205,946,677$ 216,649,242$ 225,534,178$ 226,513,514$ 243,025,253$

Program RevenuesGovernmental activities:

Charges for services:Police revenues 2,423,540$ 1,723,534$ 2,126,363$ 3,046,908$ 2,691,660$ Plan check fees 988,874 543,317 924,010 410,451 297,073 Building permits 1,336,527 927,771 1,287,216 730,510 599,818 Graffiti abatement 609,228 530,399 560,006 566,197 561,363 Street sweeping fees 512,819 423,356 471,387 476,351 468,575 Maintenance assessment fees 1,227,281 1,208,338 1,172,825 1,242,240 1,214,568 All other 9,849,392 9,357,921 6,331,014 11,442,772 14,816,018

Operating contributions and grants 22,656,450 27,319,477 24,171,583 17,838,374 30,034,337 Capital contributions and grants 6,718,223 7,154,035 12,395,251 12,020,471 16,368,968

Total governmental activities program revenues 46,322,334 49,188,148 49,439,655 47,774,274 67,052,380

Business-type activities:Charges for services:

Water 22,689,164 26,210,565 27,155,086 27,857,381 27,084,809 Sewer 2,853,610 3,384,966 4,008,291 4,189,672 4,271,176 Refuse 7,395,141 7,326,324 7,733,411 8,661,142 9,883,142 Canon Water Company - - - - -

Operating contributions and grants 68,966 145,820 126,471 64,841 65,721 Capital contributions and grants 23,100 97,420 4,004,312 850 -

Total business-type activities program revenues 33,029,981 37,165,095 43,027,571 40,773,886 41,304,848

Total primary government program revenues 79,352,315$ 86,353,243$ 92,467,226$ 88,548,160$ 108,357,228$

Fiscal Year

184

City of Pomona Schedule 2Changes in Net Position, ContinuedLast Ten Fiscal Years

2006 2007 2008 2009 2010

Net (Expense)/RevenueGovernmental activities (129,452,966)$ (130,761,085)$ (141,432,789)$ (146,972,963)$ (136,066,630)$ Business-type activities 2,858,604 465,086 8,365,837 9,007,609 1,398,605

Total primary government net expense (126,594,362)$ (130,295,999)$ (133,066,952)$ (137,965,354)$ (134,668,025)$

General Revenues and Other Changes in Net PositionGovernmental activities:

Taxes:Property taxes 53,239,617$ 51,952,231$ 56,246,496$ 65,303,064$ 60,772,676$ Sales taxes 14,710,345 19,072,975 17,200,015 10,628,900 11,224,835 Motor vehicle licenses 1,109,390 874,237 718,936 555,277 479,477 Transient occupancy taxes 1,865,001 1,727,097 1,718,607 1,450,270 1,300,209 Property transfer taxes - 2,152,388 1,189,405 1,020,258 1,114,825 Franchise taxes 5,397,384 5,871,860 5,776,052 6,861,266 6,094,548 Utility users taxes 17,576,969 18,290,416 18,154,259 17,732,063 17,165,968 Business licenses - 2,844,503 2,977,865 3,051,371 2,890,920 Other taxes 678,897 2,459,714 1,973,674 17,579 10,356

Investment earnings/(expenses) 17,819,663 19,509,780 19,956,964 17,219,062 14,542,222 Miscellaneous 5,832,425 2,240,671 2,568,179 3,246,127 2,193,630 Extraordinary gain/(loss) on

disollution of Redevelopment Agency - - - - - Transfers 1,743,417 716,025 (1,753,920) (10,250) 1,044,610

Total governmental activities 119,973,108 127,711,897 126,726,532 127,074,987 118,834,276

Business-type activities:Investment earnings/(expenses) (1,991,603) 108,433 (1,696,056) (563,393) (6,192,697) Miscellaneous 334,034 516,717 944,403 2,001,376 12,517 Income (loss) on

sale of capital assets - - - - - Transfers (1,743,417) (716,025) 1,753,920 10,250 (1,044,610)

Total business-type activities (3,400,986) (90,875) 1,002,267 1,448,233 (7,224,790) Total primary government 116,572,122$ 127,621,022$ 127,728,799$ 128,523,220$ 111,609,486$

Changes in Net PositionGovernmental activities (9,479,858)$ (3,049,188)$ (14,706,257)$ (19,897,976)$ (17,232,354)$ Business-type activities (542,382) 374,211 9,368,104 10,455,842 (5,826,185)

Total primary government (10,022,240)$ (2,674,977)$ (5,338,153)$ (9,442,134)$ (23,058,539)$

Fiscal Year

185

B-103

City of PomonaChanges in Net PositionLast Ten Fiscal Years

ExpensesGovernmental activities:

General governmentPublic safetyUrban developmentNeighborhood servicesInterest on long-term debt

Total governmental activities

Business-type activities:WaterSewerRefuseCanon Water Company

Total business-type activities

Total primary government expenses

Program RevenuesGovernmental activities:

Charges for services:Police revenuesPlan check feesBuilding permitsGraffiti abatementStreet sweeping feesMaintenance assessment feesAll other

Operating contributions and grantsCapital contributions and grants

Total governmental activities program revenues

Business-type activities:Charges for services:

WaterSewerRefuseCanon Water Company

Operating contributions and grantsCapital contributions and grants

Total business-type activities program revenues

Total primary government program revenues

Schedule 2

2011 2012 2013 2014 2015

6,064,138$ 5,248,291$ 7,499,578$ 5,583,709$ 5,555,565$ 63,110,539 63,470,704 62,632,820 66,570,974 67,614,849 77,538,633 94,480,470 36,407,420 47,913,493 42,139,207

7,082,135 6,771,751 14,858,140 6,181,264 6,151,817 29,390,035 21,834,146 7,997,227 5,364,960 5,252,517

183,185,480 191,805,362 129,395,185 131,614,400 126,713,955

29,408,125 25,909,880 28,242,875 29,585,491 27,125,628 5,733,464 5,192,272 8,544,029 4,164,990 3,962,091 8,762,936 8,732,864 8,403,397 8,562,818 8,467,884

13,927 13,219 25,163 18,154 26,747

43,918,452 39,848,235 45,215,464 42,331,453 39,582,350

227,103,932$ 231,653,597$ 174,610,649$ 173,945,853$ 166,296,305$

2,053,307$ 2,493,299$ 3,066,121$ 3,316,768$ 3,488,416$ 354,575 408,563 1,017,684 816,046 778,349 466,567 687,783 937,070 1,107,049 1,093,143 564,531 563,935 552,417 567,499 566,547 473,614 472,717 462,461 475,665 474,722

1,214,829 1,229,707 1,229,659 1,193,066 1,213,094 7,249,221 731,866 9,066,076 6,014,243 6,878,744

23,115,271 18,896,518 20,548,119 19,501,511 17,564,806 24,908,628 18,512,640 15,442,436 12,758,089 12,627,464

60,400,543 43,997,028 52,322,043 45,749,936 44,685,285

27,898,709 29,405,992 30,633,205 31,611,142 29,888,243 4,342,682 4,528,346 4,461,575 4,684,934 4,733,661 9,046,619 9,273,301 9,107,603 9,561,681 9,523,134

- - 64,221 64,221 64,221 109,165 880 46,588 42,833 42,052

- 388,000 - - -

41,397,175 43,596,519 44,313,192 45,964,811 44,251,311

101,797,718$ 87,593,547$ 96,635,235$ 91,714,747$ 88,936,596$

Fiscal Year

186

City of PomonaChanges in Net Position, ContinuedLast Ten Fiscal Years

Net (Expense)/RevenueGovernmental activitiesBusiness-type activities

Total primary government net expense

General Revenues and Other Changes in Net PositionGovernmental activities:

Taxes:Property taxesSales taxesMotor vehicle licensesTransient occupancy taxesProperty transfer taxesFranchise taxesUtility users taxesBusiness licenses Other taxes

Investment earnings/(expenses)MiscellaneousExtraordinary gain/(loss) on

disollution of Redevelopment AgencyTransfers

Total governmental activities

Business-type activities:Investment earnings/(expenses)MiscellaneousIncome (loss) on

sale of capital assetsTransfers

Total business-type activitiesTotal primary government

Changes in Net PositionGovernmental activitiesBusiness-type activities

Total primary government

Schedule 2

(Continued)

2011 2012 2013 2014 2015

(122,784,937)$ (147,808,334)$ (77,073,142)$ (85,864,464)$ (82,028,670)$ (2,521,277) 3,748,284 (902,272) 3,633,358 4,668,961

(125,306,214)$ (144,060,050)$ (77,975,414)$ (82,231,106)$ (77,359,709)$

58,116,765$ 41,754,679$ 32,143,878$ 33,630,550$ 36,408,806$ 9,507,105 10,804,554 12,354,719 12,040,357 13,544,946

829,147 83,907 69,443 - 67,079 1,266,721 1,359,064 1,473,662 1,560,682 1,568,387

987,363 1,111,530 1,475,856 1,430,195 1,581,039 5,910,791 5,961,105 5,671,708 6,029,371 6,563,245

17,718,623 17,374,682 16,941,444 17,311,594 17,465,816 2,730,397 3,065,405 3,123,120 3,171,919 3,346,851

4,008 69,575 20,966 12,963 59,221 23,775,050 13,432,247 4,363,428 2,304,604 2,109,735

2,547,071 6,703,775 2,347,387 2,900,772 3,461,354

- 149,004,835 804,048 (144,397) 808,340 (220,346) 690,118 954,698 538,371 1,011,800

123,172,695 251,415,476 81,744,357 80,786,981 87,996,619

133,255 126,449 41,890 125,696 92,349 3,733 2,250 31,677 117,000 121,408

- - 79,312 9,205 1,965 220,346 (690,118) (954,698) (538,371) (1,011,800)

357,334 (561,419) (801,819) (286,470) (796,078) 123,530,029$ 250,854,057$ 80,942,538$ 80,500,511$ 87,200,541$

387,758$ 103,607,142$ 4,671,215$ (5,077,483)$ 5,967,949$ (2,163,943) 3,186,865 (1,704,091) 3,346,888 3,872,883 (1,776,185)$ 106,794,007$ 2,967,124$ (1,730,595)$ 9,840,832$

Fiscal Year

187

B-104

City of PomonaFund Balances - Governmental FundsLast Ten Years

2006 2007 2008 2009 2010

General Fund: Reserved 7,907,817$ 6,888,120$ 4,459,873$ 4,365,820$ 4,270,613$ Unreserved 10,914,430 13,903,948 10,809,579 4,430,794 2,265,028 Non-spendable - - - - - Restricted - - - - - Committed - - - - - Assigned - - - - - Unassigned - - - - -

Total General Fund 18,822,247$ 20,792,068$ 15,269,452$ 8,796,614$ 6,535,641$

All Other Governmental Funds: Reserved 279,513,977$ 329,767,481$ 293,334,925$ 305,411,945$ 289,165,426$ Unreserved, designated 6,877,406 2,570,640 - - - Unreserved, reported in: Special revenue funds 18,048,054 21,518,821 12,653,645 5,729,977 18,753,085 Debt service funds (182,032,654) (182,023,917) (198,469,799) (155,935,490) (160,398,749) Capital projects funds 54,561,328 1,421,840 60,383,675 2,288,382 (1,497,507) Non-spendable - - - - - Restricted - - - - - Committed - - - - - Assigned - - - - - Unassigned - - - - -

Total All OtherGovernmental Funds 176,968,111$ 173,254,865$ 167,902,446$ 157,494,814$ 146,022,255$

Fiscal Year

188

City of PomonaFund Balances - Governmental FundsLast Ten Years

General Fund: Reserved Unreserved Non-spendable Restricted Committed Assigned Unassigned

Total General Fund

All Other Governmental Funds: Reserved Unreserved, designated Unreserved, reported in: Special revenue funds Debt service funds Capital projects funds Non-spendable Restricted Committed Assigned Unassigned

Total All OtherGovernmental Funds

Schedule 3

2011 2012 2013 2014 2015

-$ -$ -$ -$ -$ - - - - -

126,089 140,834 109,949 112,436 102,280 - - - - -

5,563,011 2,007,185 7,316,769 12,260,809 14,467,914 - - - - - - - - - 2,717,909

5,689,100$ 2,148,019$ 7,426,718$ 12,373,245$ 17,288,103$

-$ -$ -$ -$ -$ - - - - -

- - - - - - - - - - - - - - -

259,577,717 60,310,838 13,880,356 11,996,916 84,397,170 81,339,275 41,875,382 88,633,395 86,119,256 37,213,976

- - - - - - - - - -

(202,261,861) (43,208,211) (41,655,762) (41,134,968) (43,063,475)

138,655,131$ 58,978,009$ 60,857,989$ 56,981,204$ 78,547,671$

189

B-105

City of PomonaChanges in Fund Balances - Governmental FundsLast Ten Fiscal Years

2006 2007 2008 2009 2010Revenues:

Taxes 94,577,603$ 105,245,421$ 113,490,746$ 109,044,092$ 98,510,896$ Special assessments 1,197,805 1,166,719 1,172,826 1,220,222 1,214,569 Licenses and permits 8,440,517 6,690,241 6,261,842 7,350,264 4,297,116 Intergovernmental 29,364,673 34,431,013 27,091,322 25,673,807 48,689,417 Charges for services 1,989,303 2,296,395 2,755,212 2,080,651 8,855,789 Interest and rentals 17,815,895 19,509,672 19,954,480 17,115,029 14,542,222 Fines and forfeitures 3,280,587 2,647,955 3,364,372 4,108,850 2,065,041 Loans repaid 2,039,449 912,428 235,265 253,064 46,814 Contributions and donations - 3,344,179 257,000 - - Miscellaneous 5,832,425 2,240,671 2,629,419 4,888,034 3,401,802

Total Revenues 164,538,257 178,484,694 177,212,484 171,734,013 181,623,666

Expenditures:General government 4,323,332 5,000,827 5,054,617 4,104,160 4,046,274 Public safety 61,675,869 64,735,812 70,637,275 72,729,944 67,888,838 Urban development 59,638,945 58,373,543 59,624,349 69,119,619 88,899,216 Neighborhood services 13,122,353 12,120,611 20,816,615 8,823,294 7,121,480 Capital outlay 1,055,369 19,944,715 2,246,951 5,462,154 2,969,473 Debt service: Principal retirement 3,357,630 9,251,232 8,078,448 4,127,225 4,338,517 Interest and fiscal charges 22,819,282 27,328,302 27,092,737 26,855,452 27,311,933 Debt issuance costs 2,447,589 1,253,413 241,350 - -

Total Expenditures 168,440,369 198,008,455 193,792,342 191,221,848 202,575,731

Excess (Deficiency) of RevenuesOver (Under) Expenditures (3,902,112) (19,523,761) (16,579,858) (19,487,835) (20,952,065)

Other Financing Sources (Uses):Notes and loans issued 76,825,100 74,207,460 8,805,595 533,765 533,765 Bond premium - 1,087,257 57,600 - - Payments to escrow agent (53,255,000) (59,750,000) - - - Proceeds from capital leases 1,343,850 1,714,407 304,646 2,048,956 - Proceeds from sale of capital assets 36,037 110,148 980,368 34,894 5,640,158 Gain/Loss - sale of land held for resale - (654,961) (101,238) - - Transfers in 47,308,301 71,510,464 35,568,008 29,592,084 21,194,695 Transfers out (47,422,755) (70,794,439) (39,460,156) (29,602,334) (20,150,085)

Total Other Financing Sources (Uses) 24,835,533 17,430,336 6,154,823 2,607,365 7,218,533 Extraordinary gain/(loss) on dissolution

of Redevelopment Agency - - - - - Net Change in Fund Balances 20,933,421$ (2,093,425)$ (10,425,035)$ (16,880,470)$ (13,733,532)$

Debt service as a percentage of noncapital expenditures 17.10% 21.25% 18.49% 16.68% 15.86%

Fiscal Year

190

City of PomonaChanges in Fund Balances - GovernmentalLast Ten Fiscal Years

Revenues:TaxesSpecial assessmentsLicenses and permitsIntergovernmentalCharges for servicesInterest and rentalsFines and forfeituresLoans repaidContributions and donationsMiscellaneous

Total Revenues

Expenditures:General governmentPublic safetyUrban developmentNeighborhood servicesCapital outlayDebt service: Principal retirement Interest and fiscal charges Debt issuance costs

Total Expenditures


Other Financing Sources (Uses):Notes and loans issuedBond premiumPayments to escrow agentProceeds from capital leasesProceeds from sale of capital assetsGain/Loss - sale of land held for resaleTransfers in Transfers out

Total Other Financing Sources (Uses)Extraordinary gain/(loss) on dissolution

of Redevelopment AgencyNet Change in Fund Balances

Debt service as a percentage of noncapital expenditures

Schedule 4

2011 2012 2013 2014 2015

95,691,191$ 79,677,392$ 72,063,654$ 74,894,452$ 79,325,218$ 1,214,829 1,229,707 1,229,658 1,193,067 1,213,093 3,333,417 4,234,901 5,770,483 6,637,168 6,569,523

50,654,510 38,432,208 35,229,918 32,189,819 30,287,748 3,625,992 3,637,583 4,619,080 4,145,014 4,009,626

15,732,587 13,417,141 4,364,959 2,294,343 2,098,902 1,784,123 1,820,973 1,960,621 2,119,972 2,063,417

- - - - - - - - - 51,581

4,663,782 5,223,877 5,040,269 2,329,091 3,175,185 176,700,431 147,673,782 130,278,642 125,802,926 128,794,293

3,073,323 2,385,778 4,388,871 3,569,806 4,037,452 61,574,218 61,362,969 62,362,342 65,349,307 68,400,434 83,925,250 59,708,273 45,707,873 43,679,402 43,859,126

5,889,207 5,577,913 5,007,798 4,748,939 4,702,795 2,644,383 1,835,062 2,040,791 1,660,811 993,126

5,480,210 8,123,605 2,437,533 2,817,951 2,916,051 26,522,841 25,243,568 7,358,464 4,974,045 4,855,160

- - - - - 189,109,432 164,237,168 129,303,672 126,800,261 129,764,144

(12,409,001) (16,563,386) 974,970 (997,335) (969,851)

649,425 - 200,000 300,000 - - - - - - - - - - - - 620,860 695,000 - -

1,764,196 271,938 4,529,370 1,047,249 35,530 - - - - -

25,487,284 15,766,850 16,654,519 8,628,509 9,379,865 (29,524,748) (15,076,732) (15,699,821) (7,764,284) (8,368,065)

(1,623,843) 1,582,916 6,379,068 2,211,474 1,047,330

- (68,237,733) (195,359) - - (14,032,844)$ (83,218,203)$ 7,158,679$ 1,214,139$ 77,479$

17.16% 20.55% 7.70% 6.23% 6.03%

191

B-106


192

City of Pomona Schedule 5Governmental Activities Tax Revenue by SourceLast Fiscal Ten Years (in thousands of dollars)

Fiscal Year Motor Property UtilityEnded Property Sales Vehicle Transient Transfer Users Business

June 30 Tax Tax License Occupancy Tax Franchise Tax Licenses Other Total

2006 53,240$ 14,710$ 1,109$ 1,865$ -$ 5,397$ 17,577$ 2,625$ 679$ 97,202$ 2007 51,952 19,073 874 1,727 2,152 5,872 18,290 2,845 2,460 105,245 2008 56,246 17,200 719 1,719 1,189 5,776 18,154 2,978 1,974 105,955 2009 65,303 10,629 555 1,450 1,020 6,861 17,732 3,051 19 106,620 2010 60,773 11,225 479 1,300 1,115 6,095 17,166 2,891 10 101,054 2011 58,117 9,507 829 1,267 987 5,911 17,719 2,730 4 97,071 2012 41,755 10,805 84 1,359 1,112 5,961 17,375 3,065 70 81,586 2013 32,144 12,355 69 1,474 1,476 5,672 16,941 3,123 20 73,274 2014 33,631 12,040 - 1,561 1,430 6,029 17,312 3,172 13 75,188 2015 36,409 13,545 68 1,568 1,581 6,563 17,466 3,347 59 80,606

193

B-107

City of PomonaAssessed Value and Estimated Actual Value of Taxable PropertyLast Ten Fiscal Years (in thousands of dollars)

Fiscal YearEnded Residential Commercial Industrial Unitary Unsecured

June 30 Property Property Property Other Values Property

2006 4,871,752$ 753,876$ 875,823$ 548,455$ 7,077$ 383,627$ 2007 5,555,560 850,046 927,732 619,284 5,880 376,178 2008 6,175,439 946,442 1,012,035 690,821 790 372,791 2009 6,486,480 1,019,941 1,104,778 754,630 790 384,081 2010 5,759,284 1,039,418 1,197,842 830,321 788 381,397 2011 5,441,493 1,034,597 1,244,142 885,973 788 352,403 2012 5,571,482 998,040 1,226,077 905,772 655 360,777 2013 5,679,812 1,019,770 1,178,211 884,418 655 350,896 2014 5,932,623 1,059,762 1,233,924 869,787 374 372,621 2015 6,396,012 1,070,267 1,261,918 942,134 - 379,640

Source: Los Angeles County Assessor data, MuniServices, LLCPrior Year values have been restated for consistency and compliance with GASB No. 44 guidelines(1) Exemptions are exclusive of home owner exemptions.(2) Total direct tax rate is the voter approved taxes over and above the 1% Proposition 13 tax for TRA 007-790.(3) Estimated Actual Value is derived from a series of calculations comparing median assessed values from 1940 to current median sale prices. Based on these calculations a multiplier value was extrapolated and applied to current assessed values.

194

Schedule 6

Estimated Factor ofLess: Total Taxable Total Actual Taxable

Tax Exempt Assessed Direct Tax Taxable AssessedProperty (1) Value Rate (2) Value (3) Value (3)

359,681$ 7,080,929$ 1.15134 -$ -$ 274,419 8,060,261 1.15214 - - 429,662 8,768,656 1.13719 - - 447,378 9,303,322 0.14340 8,726,237 0.937970 459,461 8,749,589 0.17547 8,691,272 1.004839 538,120 8,421,276 0.20728 8,288,686 0.984255 652,301 8,410,502 0.20375 8,637,468 1.026986 678,279 8,435,483 0.21734 9,148,296 1.084502 647,264 8,821,827 0.18781 11,575,340 1.312125 814,565 9,235,406 0.19079 12,340,257 1.336190

195

B-108

City of Pomona Schedule 7Property Tax Rates - Direct and Overlapping Governments(Rate per $100 of assessed value)Last Ten Fiscal Years

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Basic City and County Levy:City of Pomona 0.233504 0.233504 0.233504 0.233504 0.310821 0.233504 0.233504 0.233504 0.233504 0.233504Other taxing agencies 0.766496 0.766496 0.766496 0.766496 0.689179 0.766496 0.766496 0.766496 0.766496 0.766496

Total 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000

Override Assessments:County 0.000790 0.000660 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000Unified Schools 0.124880 0.124010 0.113790 0.115771 0.145455 0.177212 0.173636 0.184882 0.164074 0.165993Community College 0.021220 0.021840 0.017500 0.023326 0.025710 0.026363 0.026415 0.028957 0.020231 0.021294Flood Control 0.000050 0.000050 0.001400 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000Metro Water District 0.005200 0.004700 0.004500 0.004300 0.004300 0.003700 0.003700 0.003500 0.003500 0.003500

Total 0.152140 0.151260 0.137190 0.143397 0.175465 0.207275 0.203751 0.217339 0.187805 0.190787

Total Tax Rate 1.152140 1.151260 1.137190 1.143397 1.175465 1.207275 1.203751 1.217339 1.187805 1.190787

Source: Los Angeles County Auditor/Controller data, MuniServices, LLC2007-08 and prior: prior year CAFR reportsFor presentation purposes, TRA 007-790 is represented

196

City of Pomona Schedule 8Principal Property TaxpayersCurrent Fiscal Year and Nine Years Ago

Percent of Percent ofTotal City Total City

Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed

Taxpayer Valuation Rank Value Valuation Rank ValueCrest Financing LP 81,991,804$ 1 8.88%Ktr Pomona LLC 36,279,846 2 3.93% 27,611,833$ 5 0.40%Lba Realty Fund III Co VII LLC 30,065,606 3 3.26%Fairplex 29,462,358 4 3.19%CMC Dragon LP 28,541,954 5 3.09%Pomona II LLC 28,293,217 6 3.06%Ripon Cogeneration LLC 27,662,890 7 3.00%Rexford Indurstrial Realty LP 27,200,000 8 2.95%Pine Club Apts LLC 24,150,049 9 2.62%F D S Mfg.. Co 22,972,086 10 2.49%Udr Crest Lp 60,656,659 1 0.29%1675 Mission Assoc LLC 31,365,000 2 0.97%Los Angeles County Fair Assoc 31,330,120 3 0.50%Rockwell Collins Inc. 28,119,139 4 0.41%Casa Colina Hospital 24,529,939 6 0.40%Realty Associates 24,162,234 7 0.36%Coca Cola Co 23,532,741 8 0.34%Topanga Owensmouth 7 LLC 22,661,900 9 0.34%Ch Realty Iiii Pomona Lp 21,420,000 10 0.32%

Source: Los Angeles County Assessor data, MuniServices, LLC

20062015

197

B-109

City of Pomona Schedule 9Top 25 Sales Tax Generatorsin Alphabetical OrderCurrent Fiscal Year and Nine Years Ago

2015 2006Alstar Kia Arco AM/PM Mini MartsArco AM/PM Mini Marts Barretts Equine SalesBastian Material Handling Car Pros KiaCardenas Market Chevron Service StationsChevron Service Stations Circuit CityConstruction Hardware Contractors WarhouseCornucopia Foods Ferguson EnterprisesDD's Discounts GTE Communication Systems CorpFerguson Enterprises Home DepotGiant RV Center Huntington HardwareGlobal Rental Company Mike Thompson's RecreationalGraybar Electric Company Myers Tire SupplyHD Supply Repair & Remodel Puma OilHome Depot Rancho Valley Chevrolet/GeoHuntington Hardware Redhill Forest Products IncMar-Co Equipment Company Rio Rancho Buick/Pontiac/GMCMike Thompson's Recreational Rio Rancho Chrysler Jeep & DodPhenix Enterprises Rohr SteelRalph's Grocery Company Shell Service StationsRohr Steel Siemens Energy & AutomationSheraton Hotel Sylvania Lighting ServicesSuperior Duct Fabrication Texaco Service StationsTarget Stores Toys R UsUSA Service Stations Wal Mart StoresWal Mart Stores West Coast RV's

Source: MuniServices, LLC

198

City of Pomona Schedule 10Property Tax Levies and CollectionsLast Ten Fiscal Years

FiscalYear Taxes Levied Delinquent

Ended for the Percentage Tax PercentageJune 30 Fiscal Year Amount of Levy Collections Amount of Levy

2006 10,222,688$ 9,994,413$ 97.8% 1,369,939$ 11,364,352$ 111.2%2007 11,542,995 11,208,880 97.1% 1,627,684 12,836,564 111.2%2008 12,434,540 12,278,199 98.7% 1,355,970 13,634,169 109.6%2009 13,488,955 12,976,085 96.2% 977,302 13,953,387 103.4%2010 12,344,605 12,099,841 98.0% 608,391 12,708,232 102.9%2011 11,962,439 11,830,918 98.9% 697,738 12,528,656 104.7%2012 12,329,907 12,113,998 98.2% 377,392 12,491,390 101.3%2013 12,528,234 12,434,130 99.2% 349,337 12,783,467 102.0%2014 13,596,705 13,442,112 98.9% 637,832 14,079,944 103.6%2015 14,612,641 14,510,121 99.3% 613,771 15,123,892 103.5%

Source: Los Angeles County Auditor/Controller, City of Pomona Finance Department

Collected within theFiscal Year of the Levy Total Collections to Date

199

B-110

City of PomonaRatios of Outstanding Debt by TypeLast Ten Fiscal Years

Fiscal Year Tax Pension Certificates TotalEnded Allocation Revenue Obligation of Governmental

June 30 Bonds Bonds Ref Bonds Participation Other Activities

2006 11,510,000$ 216,256,435$ 42,280,684$ 18,621,789$ 37,549,889$ 326,218,797$ 2007 9,815,000 227,448,178 42,280,684 13,801,167 32,120,626 325,465,655 2008 9,730,000 229,692,274 42,280,684 13,520,545 33,021,439 328,244,942 2009 9,645,000 227,390,370 42,280,684 13,234,923 36,000,684 328,551,661 2010 9,555,000 224,932,467 42,209,382 12,944,301 37,228,313 326,869,463 2011 9,460,000 222,313,564 44,114,118 12,643,679 43,497,491 332,028,852 2012 - 43,836,347 44,299,214 12,333,057 2,379,277 102,847,895 2013 - 42,446,378 44,400,752 12,012,435 1,864,337 100,723,902 2014 - 41,110,000 44,414,040 11,681,813 1,754,285 98,960,138 2015 - 39,564,000 44,333,953 11,336,191 1,241,295 96,475,439

Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements.(1) These ratios are calculated using personal income and population for the prior year.


200

Schedule 11

Total Total Percentage DebtRevenue Business-type Primary of Personal per

Bonds Other Activities Government Income (1) Capita (1)

62,285,000$ 3,581,475$ 65,866,475$ 392,085,272$ n/a 2,423$ 140,135,710 2,219,551 142,355,261 467,820,916 n/a 2,885 139,885,619 1,744,955 141,630,574 469,875,516 n/a 2,876 139,635,527 1,286,361 140,921,888 469,473,549 n/a 2,873 139,070,435 844,741 139,915,176 466,784,639 n/a 2,857 137,580,343 515,674 138,096,017 470,124,869 n/a 2,877 136,030,252 174,904 136,205,156 239,053,051 n/a 1,468 135,674,210 4,112,175 139,786,385 240,510,287 n/a 1,593 133,915,426 3,564,689 137,480,115 236,440,253 n/a 1,558 132,086,642 3,004,392 135,091,034 231,566,473 n/a 1,519

Business-type Activities

201

B-111

City of Pomona Schedule 12Ratios of General Bonded Debt OutstandingLast Ten Fiscal Years (dollars in thousands, except per capita)

PercentageFiscal Year Tax Pension Certificates Restricted of Actual

Ended Revenue Allocation Obligation of for Net Bonded Value PerJune 30 Bonds Bonds Ref Bonds Participation Total Debt Service * Debt of Property (1) Capita (2)

2006 216,256$ 11,510$ 42,281$ 18,622$ 288,669$ 2$ 288,667$ 4.1% 1,783$ 2007 227,448 9,815 42,281 13,802 293,346 7,031 286,315 3.9% 1,809 2008 229,692 9,730 42,281 13,521 295,224 14,073 281,151 3.6% 1,807 2009 227,390 9,645 42,281 13,235 292,551 13,233 279,318 3.1% 1,790 2010 224,932 9,555 42,209 12,944 289,640 17,589 272,051 3.3% 1,779 2011 222,313 9,460 44,114 12,644 288,531 29,115 259,416 3.4% 1,933 2012 43,836 - 44,299 12,333 100,468 51,855 48,613 1.2% 670 2013 42,446 - 44,401 12,012 98,859 50,439 48,420 1.2% 655 2014 41,110 - 44,414 11,682 97,206 49,229 47,977 1.1% 640 2015 39,564 - 44,334 11,336 95,234 47,845 47,389 1.0% 625

* Includes bond reserves and unspent bond proceeds.

Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

(1) See Schedule 6 for property value data.(2) Population data can be found in Schedule 17.

General Bonded Debt Outstanding

202

City of Pomona Schedule 13Direct and Overlapping DebtCurrent Year and Nine Years Ago

Total Debt City’s Share ofOVERLAPPING DEBT 06/30/2015: 6/30/2015 % Applicable (1) Debt 06/30/2015

Los Angeles County Flood Control District 15,105,000$ 0.817% 123,408$ Metropolitan Water District 110,420,000 0.403% 444,993 Citrus Community College District 99,862,553 1.238% 1,236,298 Mount San Antonio Community College District 359,178,346 11.994% 43,079,851 Bonita Unified School District 127,572,395 0.285% 363,581 Claremont Unified School District 30,700,000 6.061% 1,860,727 Pomona Unified School District 233,126,050 75.468% 175,935,567 Los Angeles County Regional Park and Open Space Assessment District 82,880,000 0.777% 643,978

Total Overlapping Debt 1,058,844,344 223,688,403 City of Pomona 1915 Act Bonds 3,915,000 100.000% 3,915,000 Obligations Under Capital Leases 586,295 100.000% 586,295 Notes Payable 655,000 100.000% 655,000 Revenue Bonds 39,564,000 100.000% 39,564,000 Pension Obligation Refunding Bonds 44,333,953 100.000% 44,333,953 Certificates of Participation 11,336,191 100.000% 11,336,191

Total Direct Debt 100,390,439 100,390,439 TOTAL DIRECT AND OVERLAPPING DEBT 1,159,234,783$ 324,078,842$

Total Debt City’s Share ofOVERLAPPING DEBT 06/30/2006: 6/30/2006 % Applicable (1) Debt 06/30/2006

Los Angeles County 8,511,014$ 0.651% 55,407$ Los Angeles County Flood Control District 129,773,949 0.661% 857,806 Metropolitan Water District 389,564,775 0.333% 1,297,251 Citrus Community College District 19,424,904 1.558% 302,640 Mount San Antonio Community College District 110,757,175 10.768% 11,926,333 Bonita Unified School District 27,868,627 0.204% 56,852 Claremont Unified School District 44,601,329 6.578% 2,933,875 Pomona Unified School District 145,294,475 70.857% 102,951,306 Los Angeles County Regional Park & Open Space Assessment District 330,212,888 0.651% 2,149,686

Total Overlapping Debt 1,206,009,136 122,531,156 City of Pomona 1915 Act Bonds 9,481,000 100.000% 9,481,000 Participation Agreement 436,076 100.000% 436,076 County Deferred Tax Loan 23,456,729 100.000% 23,456,729 Obligations Under Capital Leases 3,830,417 100.000% 3,830,417 Notes Payable 2,725,000 100.000% 2,725,000 Revenue Bonds 216,256,435 100.000% 216,256,435 Tax Allocation Bonds 11,510,000 100.000% 11,510,000 Pension Obligation Refunding Bonds 42,280,684 100.000% 42,280,684 Certificates of Participation 18,621,789 100.000% 18,621,789

Total Direct Debt 328,598,130 328,598,130 TOTAL DIRECT AND OVERLAPPING DEBT 1,534,607,266$ 451,129,286$

Source: MuniServices, LLC and prior year CAFR1) Percentage of overlapping agency's assessed valuation located within the boundaries of the city.

203

B-112

City of PomonaLegal Debt Margin InformationLast Ten Fiscal Years (in thousands of dollars)

2006 2007 2008 2009 2010Assessed valuation 7,080,929$ 8,060,261$ 8,768,656$ 9,303,322$ 8,749,589$ Debt limit percentage 15.00% 15.00% 15.00% 15.00% 15.00%Debt limit 1,062,139$ 1,209,039$ 1,315,298$ 1,395,498$ 1,312,438$ Amount of debt applicable to debt limit - - - - -

Legal debt margin 1,062,139$ 1,209,039$ 1,315,298$ 1,395,498$ 1,312,438$

Total debt applicable to the limit as a percentage of debt limit 0.00% 0.00% 0.00% 0.00% 0.00%

Legal Debt Margin Calculation for Fiscal Year 2015

Assessed Value 9,235,406$ Debt Limit 15% 1,385,311 Debt applicable to debt limit -

Legal Debt Margin 1,385,311$

Notes: Under State Finance Law, the City's outstanding general obligation debt should not exceed 15percent of the total assessed property value. By law, the general obligation debt subject to the limitationmay be offset by amounts set aside for repaying general obligation bonds.

204

Schedule 14

2011 2012 2013 2014 20158,421,276$ 8,410,502$ 8,435,483$ 8,821,827$ 9,235,406$

15.00% 15.00% 15.00% 15.00% 15.00%1,263,191$ 1,261,575$ 1,265,322$ 1,323,274$ 1,385,311$

- - - - -

1,263,191$ 1,261,575$ 1,265,322$ 1,323,274$ 1,385,311$

0.00% 0.00% 0.00% 0.00% 0.00%

205

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City of Pomona Schedule 15Pledged Revenue Coverage - WaterLast Ten Fiscal Years

Fiscal Year Less NetEnded Water Operating Available

June 30 Revenue Expenses Revenue Principal Interest Total Coverage

2006 22,704,347$ 18,684,358$ 4,019,989$ 1,125,000$ 2,305,960$ 3,430,960$ 1.22007 32,745,372 30,868,171 1,877,201 - 616,981 616,981 3.02008 26,282,806 21,557,482 4,725,324 - - - N/A2009 27,750,167 22,229,863 5,520,304 - 5,106,170 5,106,170 1.12010 27,071,134 20,970,174 6,100,960 200,000 5,099,665 5,299,665 1.22011 27,087,846 19,041,122 8,046,724 1,095,000 5,087,935 6,182,935 1.32012 27,735,841 18,961,467 8,774,374 1,140,000 5,041,155 6,181,155 1.42013 28,794,435 20,836,902 7,957,533 1,190,000 4,992,405 6,182,405 1.32014 29,734,402 22,343,608 7,390,794 1,240,000 4,941,475 6,181,475 1.22015 29,076,093 20,837,368 8,238,725 1,295,000 4,888,376 6,183,376 1.3

Notes: Details regarding the City's Water Fund outstanding debt can be found in the notes to the financial statements.

Prior Year information has been restated for consistency and compliance with GASB No. 44 guidelines.

No ratio calculation for 2008 due to bond refunding.

Water Revenue Bonds

Debt Service

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City of Pomona Schedule 16Pledged Revenue Coverage - SewerLast Ten Fiscal Years

Fiscal Year Less NetEnded Sewer Operating Available

June 30 Revenue Expenses Revenue Principal Interest Total Coverage

2006 3,007,259$ 2,189,272$ 817,987$ 165,000$ 637,757$ 802,757$ 1.02007 3,745,389 2,671,343 1,074,046 175,000 827,787 1,002,787 1.12008 4,368,532 2,356,508 2,012,024 180,000 1,295,540 1,475,540 1.42009 4,424,826 2,426,368 1,998,458 180,000 1,302,305 1,482,305 1.32010 4,348,448 2,530,093 1,818,355 295,000 1,310,465 1,605,465 1.12011 4,400,436 2,444,519 1,955,917 325,000 1,301,753 1,626,753 1.22012 4,570,662 2,445,349 2,125,313 340,000 1,290,216 1,630,216 1.32013 4,497,533 2,511,043 1,986,490 355,000 1,277,020 1,632,020 1.22014 4,736,852 2,800,219 1,936,633 370,000 1,262,289 1,632,289 1.22015 4,783,591 2,777,759 2,005,832 385,000 1,247,875 1,632,875 1.2

Notes: Details regarding the City's Sewer Fund outstanding debt can be found in the notes to the financial statements.

Prior Year information has been restated for consistency and compliance with GASB No. 44 guidelines.

Sewer Revenue Bonds

Debt Service

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City of Pomona Schedule 17Demographic and Economic StatisticsLast Ten Fiscal Years

PerPersonal Capita

Fiscal Income (2) Personal Median Public School UnemploymentYear Population (1) (in thousands) Income (2) Age Enrollment (3) Rate (4)

2006 161,850 n/a n/a 26.5 33,294 4.8%2007 162,140 2,398,683$ 14,794$ 26.5 33,683 5.8%2008 163,405 2,398,683 14,679 26.5 33,683 5.8%2009 163,408 2,747,869 16,816 28.7 30,032 8.4%2010 162,817 2,728,162 16,756 28.7 31,864 12.9%2011 149,243 2,651,969 17,769 28.6 28,298 14.7%2012 149,950 2,533,677 16,897 28.1 27,737 13.2%2013 150,942 2,593,902 17,185 29.5 27,186 12.2%2014 151,713 2,392,059 15,767 30.2 26,264 11.0%2015 152,419 2,659,712 17,450 29.9 25,311 7.9%

Source: 2008-09, 2009-10, 2011-12, 2012-13, 2013-14, and 2014-15: MuniServices, LLCSource: 2010-11, 2008-09 and prior: prior year previous CAFR reports.(1) Population Projections are provided by California Department of Finance Projections.(2) Income Data is provided by the United States Census Data and is adjusted for inflation.(3) Public School Enrollment reflects the total number of students enrolled in Pomona Unified School District only, per school district data.(4) Unemployment rates are provided by the Employment Development Department, Bureau of Labor and Statistics Department.

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City of Pomona Schedule 18Principal EmployersCurrent Year and Nine Years Ago

Percentage PercentageNumber of of Total City Number of of Total City

Employer Employees Rank Employment Employees Rank Employment

Pomona Valley Hospital 3,078 1 4.9% 3,089 2 4.7%Pomona Unified School District 2,902 2 4.6% 3,406 1 5.1%California State Polytechnic University 2,612 3 4.2%Fairplex 954 4 1.5%Casa Colina Rehabilitation Center 817 5 1.3% 600 6 0.9%City of Pomona 689 6 1.1% 870 4 1.3%Verizon 596 7 1.0% 596 7 0.9%County of Los Angeles Department of Social Services 400 8 0.6% 378 9 0.6%First Transit 348 9 0.6% 311 11 0.5%Inland Valley Care & Rehab 339 10 0.5% 270 15 0.4%Kittrich Corporation 250 11 0.4%Torn & Glasser Inc. 250 12 0.4%Hayward Industries Inc 230 13 0.4% 351 10 0.5%Walmart Stores Inc 218 14 0.3% 284 13 0.4%Anheuser Busch Sales Pomona 212 15 0.3%Lanterman Developmental Center 1,780 3 2.7%California Acrylic Industries 650 5 1.0%Royal Cabinets 450 8 0.7%Interstate Brands West Corp 300 12 0.5%Pioneer Electronics 280 14 0.4%

Source: City of Pomona business license data and Businesses; 2006 CAFRTotal Employment Source: www.labormarketinfo.edd.ca.gov

20062015

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City of Pomona Schedule 19Authorized Full-Time City Employees by FunctionLast Ten Fiscal Years

Function 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015General Government 37 36 36 29 26 24 20 19 19 19Support Services 45 46 52 44 36 33 32 32 32 31Police 332 345 348 342 335 271 270 269 270 268Public Works 87 88 87 81 199 184 184 170 169 168Community Development 40 40 40 40 38 47 40 38 40 40Utility Services 126 127 128 127 0 0 0 0 0 0Community Services and

Library 76 78 80 78 32 21 21 11 9 9

Total 743 760 771 741 666 580 567 539 539 535

Various departments were consolidated in 2009-2010

Source: City of Pomona Finance Department

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City of PomonaTaxable Sales by CategoryLast Ten Calendar Years (in thousands of dollars)

2006 2007 2008 2009 2010

Apparel Stores 6,277$ 7,929$ 9,884$ 8,210$ 12,239$ General Merchandise 50,144 49,839 49,203 48,733 43,655 Food Stores 69,894 71,838 72,852 70,991 71,379 Eating and Drinking Places 117,108 121,796 124,146 119,631 117,873 Building Materials 306,092 283,287 234,707 189,624 160,244 Auto Dealers and Supplies 251,894 217,924 178,694 91,100 77,879 Service Stations 185,542 194,850 207,178 161,684 158,016 Other Retail Stores 136,855 130,933 148,426 115,747 115,538 All Other Outlets 509,377 544,522 343,162 284,376 263,940 Drug Stores - - - - - Home Furnishing - - - - - Packaged Liquor Store - - - - -

Total 1,633,183$ 1,622,918$ 1,368,252$ 1,090,096$ 1,020,763$

Source: MuniServices, LLC

212

Schedule 20

2011 2012 2013 2014 2015

12,339$ 12,581$ 13,953$ 15,277$ 22,874$ 42,089 41,037 43,478 52,726 62,148 66,041 63,376 65,447 68,432 74,104

115,634 121,730 128,363 135,882 149,074 146,146 163,013 185,123 207,681 242,612 58,177 67,975 75,686 78,793 78,672

196,602 216,063 201,642 195,460 180,021 132,188 137,444 165,937 127,969 142,246 279,060 301,495 316,419 308,980 360,476

- - - 14,704 14,696 - - - 16,848 13,418 - - - 7,321 7,677

1,048,276$ 1,124,714$ 1,196,048$ 1,230,073$ 1,348,018$

213

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City of Pomona Schedule 21Operating Indicators by FunctionLast Ten Fiscal Years

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*Police: Felony Arrests 4,276 4,234 3,686 3,584 3,150 2,825 2,713 3,145 3,105 2,726 Misdemeanor Arrests 8,591 8,886 8,042 7,824 6,686 5,557 5,780 5,821 5,876 6,424 Parking Citations 13,000 14,670 24,293 26,223 24,305 22,685 21,462 36,718 30,145 30,788 Moving Citations 5,774 18,663 18,470 25,305 18,412 11,554 10,452 9,179 9,791 9,153

Fire: Incidents 12,892 12,557 12,393 12,171 12,317 12,239 11,807 12,447 13,675 15,289

Urban development: Residential building permits iss 3,174 3,039 2,111 1,372 1,314 655 720 622 722 925 Inspections 14,585 20,877 23,235 17,278 6,918 5,378 5,645 4,054 6,050 5,536 Asphalt repaired (square feet) 19,500 16,600 31,862 23,911 26,489 38,842 9,222 19,400 36,068 84,879 Sidewalk repaired (square feet) 26,000 16,859 14,977 6,328 12,508 18,700 12,415 7,285 1,500 1,750

Community services: Community Center participants 556,000 919,153 899,611 409,595 335,931 502,674 572,270 520,157 501,727 - Senior Program participants 110,240 185,285 244,000 145,851 101,104 120,095 121,165 108,086 100,703 44,768 Youth program participants 280,000 286,925 234,648 263,744 254,827 381,280 403,617 362,217 337,180 56,728 Other program participants 66,200 70,329 72,345 47,043 64,574 36,296 42,343 49,854 66,743 32,480 Sports participants 450,300 376,614 348,618 206,853 314,405 254,989 311,201 309,795 366,978 168,034 Facility rentals 466 424 273 220 248 310 547 635 687 2,090

Library: Program attendance (all progra 17,650 11,514 10,711 12,350 10,855 8,857 8,568 1,770 2,578 2,940 Literacy instruction (hours) 1,500 762 639 871 968 709 749 - - -

Water: New connections 166 47 152 23 10 5 7 17 9 12 Average daily consumption 19,990 23,028 22,086 20,693 18,487 17,719 17,865 18,670 19,615 17,905 (thousands of gallons)

Refuse: Curbside Collection (in tons) 42,000 42,884 41,638 39,407 37,436 38,068 36,472 37,246 36,593 35,474 Recycle Collection (in tons) 9,500 9,380 8,871 8,003 7,512 7,108 6,801 6,896 6,907 7,218 Greenwaste Collection (in tons) n/a 14,687 13,259 13,267 13,975 14,280 13,234 12,510 11,934 11,904

Source: Various City Departments* Due to staffing changes in Community Services, the methodology for counting service delivery was changed beginning 2015.

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City of Pomona Schedule 22Capital Asset Statistics by FunctionLast Ten Fiscal Years

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Police: Stations 1 1 1 1 1 1 1 1 1 1 Patrol Units 45 45 45 44 44 44 42 58 51 51

Fire: Fire stations 8 8 8 8 8 8 8 8 8 8

Public works: Streets (miles) 296 297 388 388 388 388 388 388 388 388 Streetlights 9933 9,939 7,645 7,645 7,645 7,645 7,645 7,701 7,721 7,725 Traffic signals n/a 175 175 176 180 180 161 162 164 164

Community services: Parks 25 25 26 26 26 26 26 26 26 26 Park Acreage 210 210 210 221 221 221 221 221 221 221 Baseball fields 14 14 14 14 14 14 14 14 14 14 Soccer fields 11 11 13 17 17 17 17 17 17 17 Basketball courts 17 18 22 22 22 22 22 22 22 22 Tennis courts 9 9 9 9 9 9 9 9 9 9 Community centers 7 12 13 13 13 14 14 14 14 14 Libraries 1 1 1 1 1 1 1 1 1 1

Water: Water mains (miles) 435 436 439 439 439 467 457 457 457 457

Sewer: Sanitary sewers (miles) 313 313 313 313 313 357 305 305 305 305 Storm drains (miles) 120 120 120 120 120 120 120 120 120 120

Source: Various City Departments

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APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS

The following summary discussion of selected features of the Lease, the Sublease and the Trust Agreement, are made subject to all of the provisions of such documents and to the discussions of such documents contained elsewhere in this Official Statement. This summary discussion does not purport to be a complete statement of said provisions and prospective purchasers of the Bonds are referred to the complete text of said documents, copies of which are available upon request from the Trustee or the City.

CERTAIN DEFINITIONS

The following are definitions of certain of the terms used in the Facilities Lease, the Facilities Sublease or the Trust Agreement, to which reference is hereby made. The following definitions are equally applicable to both the singular and plural forms of any of the terms defined herein:

The term “Acquisition and Construction Fund” means the fund by that name established pursuant to the Trust Agreement.

The term “Act” means the Joint Exercise of Powers Act (being Chapter 5 of Division 7 of Title 1 of the Government Code of the State, as amended) and all laws amendatory thereof or supplemental thereto.

The term “Additional Payments” means all amounts payable to the Authority or the Trustee or any other person from the City as Additional Payments pursuant to the Facilities Sublease.

The term “Additional Projects” means public capital improvements, including equipment, located within the City and financed in whole or in part with the proceeds of Additional Bonds.

The term “AGM” means Assured Guaranty Municipal Corp., a New York stock insurance company, or any successor thereto or assignee thereof.

The term “Authority” means the Pomona Public Financing Authority created pursuant to the Act and its successors and assigns in accordance herewith.

The term “Base Rental Payments” means all amounts payable to the Authority from the City as Base Rental Payments pursuant to the Facilities Sublease.

The term “Base Rental Payment Schedule” means the schedule of Base Rental Payments payable to the Authority from the City pursuant to Facilities Sublease and attached thereto.

The term “Bonds” means the Series 2016 Bonds and all Additional Bonds. The term “Series 2016 Bonds” means all bonds of the Authority authorized by and at any time Outstanding pursuant to the Trust Agreement and executed, issued and delivered in accordance with the Trust Agreement. The term “Additional Bonds” means all bonds of the Authority authorized by and at any time Outstanding pursuant to the Trust Agreement and executed, issued and delivered in accordance therewith. The term “Serial Bonds” means Bonds for which no sinking fund payments are provided. The term “Term Bonds” means Bonds which are payable on or before their specified maturity dates from sinking fund payments established for that purpose and calculated to retire such Bonds on or before their specified maturity dates.

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The term “Bond Insurance Policy” means the municipal bond insurance policy issued by the Bond Insurer, if any, insuring the payment when due of principal of and interest on a Series of Bonds as provided therein.

The term “Bond Insurer” means the issuer or issuers, if any, of a policy or policies of municipal bond insurance obtained by the City to insure the payment of the principal of or interest on a Series of Bonds issued under the Trust Agreement, when due otherwise than by acceleration, and which, in fact, are at any time insuring such Series of Bonds. The Bond Insurer with respect to the Series 2016 Bonds is AGM.

The term “Business Day” means a day that is not a Saturday, Sunday or legal holiday on which banking institutions in the State of New York or California are authorized to remain closed, or a day on which the Federal Reserve System is closed.

The term “Certificate of the Authority” means an instrument in writing signed by the Chairperson, Vice Chairperson, Member at Large or Secretary of the Authority, or by any other person (whether or not an officer of the Authority) who is specifically authorized by resolution of the Authority for that purpose.

The term “Certificate of the City” means an instrument in writing signed by the Mayor, City Manager, Finance Director/City Treasurer or Clerk of the City, or by any such officials’ duly appointed designee, or by any other officer or employee of the City duly authorized by the City Council of the City for that purpose.

The term “City” means the City of Pomona, a city organized and validly existing under the Constitution and general laws of the State.

The term “Code” means the Internal Revenue Code of 1986, as amended.

The term “Common Reserve Account” means the account of that name established in the Reserve Fund pursuant to the Trust Agreement to secure the Common Reserve Bonds.

The term “Common Reserve Bonds” means the Series 2016 Bonds and any Series of Additional Bonds secured by the Common Reserve Account as provided in the Supplemental Trust Agreement providing for the issuance of each such Series of Additional Bonds.

The term “Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate executed by the City and the Trustee attached as APPENDIX E hereto.

The term “Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the City or the Authority and related to the authorization, execution and delivery of the Facilities Lease, the Facilities Sublease, the Trust Agreement and the issuance and sale of the Bonds, including, but not limited to, costs of preparation and reproduction of documents, costs of rating agencies and costs to provide information required by rating agencies, filing and recording fees, fees and charges of the Trustee, legal fees and charges, fees and disbursements of consultants and professionals, fees and charges for preparation, execution and safekeeping of the Bonds, fees of the Authority and any other authorized cost, charge or fee in connection with the issuance of the Bonds.

The term “Costs of Issuance Fund” means the fund by that name established pursuant to the Trust Agreement.

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The term “Debt Service” means, for any Fiscal Year or other period, the sum of (1) the interest accruing during such Fiscal Year or other period on all Outstanding Bonds, assuming that all Outstanding Serial Bonds are retired as scheduled and that all Outstanding Term Bonds are redeemed or paid from sinking fund payments as scheduled (except to the extent that such interest is to be paid from the proceeds of sale of any Bonds so long as such funded interest is in an amount equal to the gross amount necessary to pay such interest on the Bonds and is invested in direct obligations of the United States which mature no later than the related Interest Payment Date), (2) the principal amount of all Outstanding Serial Bonds maturing during such Fiscal Year or other period, and (3) the principal amount of all Outstanding Term Bonds required to be redeemed or paid (together with the redemption premiums, if any, thereon) during such Fiscal Year or other period.

The term “DTC” means The Depository Trust Company, New York, New York.

The term “Escrow Account AG” means the escrow account established pursuant to Irrevocable Refunding Instructions (Series AG).

The term “Escrow Account AN” means the escrow account established pursuant to Irrevocable Refunding Instructions (Series AN).

The term “Event of Default” for purposes of the Facilities Sublease is defined herein under “FACILITIES SUBLEASE—Defaults and Remedies”. The term “Event of Default” for purposes of the Trust Agreement is defined herein under “TRUST AGREEMENT—Events of Default; Remedies of Bondholders”.

The term “Facilities” means the buildings, other improvements and facilities described in Exhibit A to the Facilities Sublease, including all real property on which such buildings, other improvements and facilities are located, or any portion thereof, or any City buildings, other improvements and facilities added thereto or substituted therefor, or any portion thereof, in accordance with the Facilities Sublease and the Trust Agreement; subject, however, to any conditions, reservations and easements of record known to the City.

The term “Facilities Lease” means that certain lease, entitled “Master Facilities Lease”, between the City and the Authority, dated as of September 1, 2016, as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions of the Trust Agreement and thereof.

The term “Facilities Sublease” means that certain lease, entitled “Master Facilities Sublease”, between the Authority and the City, dated as of September 1, 2016, as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions of the Trust Agreement and thereof.

The term “Financial Newspaper” means The Wall Street Journal or The Bond Buyer, or any other newspaper or journal printed in the English language, publishing financial news, and selected by the Authority.

The term “Fiscal Year” means the twelve (12) month period terminating on June 30 of each year, or any other annual accounting period selected and designated by the Authority as its Fiscal Year in accordance with applicable law.

The term “Government Securities” means United States of America Treasury bills, notes, bonds or certificates of indebtedness, or obligations the timely payment of which is guaranteed directly by the United States of America, including evidences of direct ownership of proportionate interests in future

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interest or principal payments of such obligations; provided that investments in such proportionate interests must be limited to circumstances wherein (a) a bank or trust company acts as custodian and holds the underlying United States obligations; (b) the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor of the underlying United States obligations; (c) the underlying obligations are not redeemable prior to maturity; and (d) the underlying United States obligations are held in a special account, segregated from the custodian’s general assets, and are not available to satisfy any claim of the custodian, any person claiming through the custodian, or any person to whom the custodian may be obligated.

The term “Independent Certified Public Accountant” means any certified public accountant or firm of such accountants duly licensed and entitled to practice and practicing as such under the laws of the State or a comparable successor, appointed and paid by the Authority, and who, or each of whom--

(1) is in fact independent according to the Statement of Auditing Standards No. 1 and not under the domination of the Authority or the City;

(2) does not have a substantial financial interest, direct or indirect, in the operations of the Authority or the City; and

(3) is not connected with the Authority or the City as a member, officer or employee of the Authority or the City, but who may be regularly retained to audit the accounting records of and make reports thereon to the Authority or the City.

The term “Information Services” means the Electronic Municipal Market Access System of the Municipal Rulemaking Board; and in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds, or such services as the Authority may designate in a Certificate of the Authority delivered to the Trustee.

The term “Insurance Consultant” means an individual or firm employed by the City that has experienced personnel in the field of risk management.

The term “Insured Bonds” means the Series 2016 bonds maturing on June 1, 2023 through 2029 (inclusive), June 1, 2031, June 1, 2036 (CUSIP No. 73208MCT3) and June 1, 2036 (CUSIP No. 73208MCU0).

The term “Interest Payment Date” means June 1 and December 1 in each year, commencing December 1, 2016.

The term “Irrevocable Refunding Instructions (Series AG)” means the Irrevocable Refunding Instructions, dated August 17, 2016, given by the City and the Authority to the Prior Trustee pertaining to the refunding of the Series 2003AG Certificates.

The term “Irrevocable Refunding Instructions (Series AN)” means the Irrevocable Refunding Instructions, dated August 17, 2016, given by the City and the Authority to the Prior Trustee pertaining to the refunding of the Series 2005AN Bonds.

The term “Joint Powers Agreement” means the Joint Exercise of Powers Agreement by and among the City, the former Redevelopment Agency of the City of Pomona and the former Redevelopment Agency of the City of West Covina, dated October 27, 1988, as originally executed and as it may from time to time be amended or supplemented pursuant to the provisions of the Trust Agreement and thereof.

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The term “Lease” means that lease, entitled “Master Facilities Lease,” dated as of September 1, 2016, between the City, as lessor, and the Authority, as lessee, as originally executed and recorded concurrently herewith or as it may from time to time be supplemented, modified or amended pursuant to the provisions thereof and of the Trust Agreement.

The term “Mandatory Sinking Account Payment” means the principal amount of any Bond required to be paid on each Mandatory Sinking Account Payment Date pursuant to the terms of the Trust Agreement or any Supplemental Trust Agreement.

The term “Mandatory Sinking Account Payment Date,” if applicable, means June 1 of each year set forth in the Trust Agreement and in any Supplemental Trust Agreement.

The term “Moody’s” means Moody’s Investors Service, Inc. a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the City.

The term “Opinion of Counsel” means a written opinion of counsel of recognized national standing in the field of law relating to municipal bonds, appointed by the Authority.

The term “Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of the Trust Agreement) all Bonds except

(1) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation;

(2) Bonds paid or deemed to have been paid within the meaning of the defeasance provisions of the Trust Agreement; and

(3) Bonds in lieu of or in substitution for which other Bonds shall have been executed, issued and delivered by the Authority pursuant to the Trust Agreement.

The term “Permitted Encumbrances” means (1) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to the Facilities Sublease, permit to remain unpaid; (2) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the date of recordation of the Facilities Sublease in the office of the County Recorder of the County of Los Angeles and which the City certifies in writing will not materially impair the use of the Facilities; (3) the Facilities Lease, as it may be amended from time to time; (4) the Facilities Sublease, as it may be amended from time to time; (5) the Trust Agreement, as it may be amended from time to time; (6) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (7) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions to which the Authority and the City consent in writing and certify to the Trustee will not materially impair the leasehold interests of the Authority or use of the Facilities by the City; and (8) subleases and assignments of the City which will not adversely affect the exclusion from gross income of interest on the Bonds.

The term “Permitted Investments” means any of the following, if and to the extent each is permissible for investment of funds of the Authority, as stated in its current investment policy and pursuant to applicable laws:

1. Government Securities;

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2. Any obligations which are then legal investments for moneys of the City under the laws of the State of California; provided that such investments shall be rated in the highest short-term or one of the three highest long-term Rating Categories by the Rating Agencies or deposits which are fully insured by the FDIC;

3. Debentures of the Federal Housing Administration; or obligations of the following agencies which are not guaranteed by the United States of America: (i) participation certificates or debt obligations of the Federal Home Loan Mortgage Corporation; (ii) consolidated system-wide bonds and notes of the Farm Credit Banks (consisting of Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives); (iii) consolidated debt obligations or letter of credit-backed issues of the Federal Home Loan Banks; (iv) mortgage-backed securities (excluding stripped mortgage securities which are valued greater than par on the portion of unpaid principal or debt obligations of the Federal National Mortgage Association; or (v) letter of credit-backed issues or debt obligations of the Student Loan Marketing Association;

4. Money markets or mutual funds which are rated by S&P “AAAm-G” or “AAAm” or higher and, if rated by Moody’s, are rated “Aaa” or higher, which funds may include funds for which the Trustee, its affiliates or subsidiaries provide investment advisory or other management services;

5. Any investment agreement with, or guaranteed by, a financial institution the long-term unsecured obligations or the claims paying ability of which are rated in any of the three highest Rating Categories by the Rating Agencies at the time of initial investment, by the terms of which all amounts invested thereunder are required to be withdrawn and paid to the Trustee in the event such rating at any time falls below any of the three highest Rating Categories of the Rating Agencies; provided that any such investment agreement shall have been provided to the Rating Agencies;

6. The Local Agency Investment Fund of the State of California; and

7. Any other investment selected by the Authority which does not adversely affect the then-current rating on the Bonds.

The Trustee may conclusively rely on the written instructions of the Authority and the City that such investment is a Permitted Investment.

The term “Principal Payment Date” means any date on which principal of the Bonds is required to be paid (whether by reason of maturity or redemption).

The term “Prior Trustee” means The Bank of New York Mellon Trust Company, N.A., serving as trustee in connection with the Series 2005 AN Bonds and the Series 2003 AG Certificates.

The term “Project Costs” means all costs of acquisition and construction of the Project and of expenses incident thereto (or for making reimbursements to the Authority or the City or any other person, firm or corporation for such costs theretofore paid by him or it), including, but not limited to, architectural and engineering fees and expenses, interest during construction, furnishings and equipment, tests and inspection, surveys, land acquisition, insurance premiums, losses during construction not insured against because of deductible amounts, costs related to the Trustee during construction, costs of accounting, feasibility, environmental and other reports, inspection costs, permit fees, filing and recording costs, printing costs, reproduction and binding costs.

The term “Projects” means the Series 2016 Refunding Project and all Additional Projects.

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The term “Rating Category” means one of the general long-term (or short-term, if so specifically provided) rating categories of either Moody’s or S&P, without regard to any refinement or gradation of such rating category by a numerical modifier or otherwise.

The term “Rebate Fund” means the fund by that name established in accordance with the Trust Agreement.

The term “Refunded Bonds” means all of the outstanding principal amount of (i) the City’s Certificates of Participation 2003 Series AG (General Fund Lease Financing) (the “2003 AG Certificates”) and (ii) the Pomona Public Financing Authority 2005 Lease Revenue Bonds, Series AN (the “Series 2005 AN Bonds”).

The term “Related Document” means the related Document or documents as defined in the Trust Agreement.

The term “Rental Payment Period” means the twelve month period commencing December 2 of each year and ending the following December 1.

The term “Reserve Account” means either the Common Reserve Account or any other reserve account established pursuant to the Trust Agreement, which account may secure one or more Series of Additional Bonds as provided in the Supplemental Trust Agreement providing for the establishment thereof.

The term “Reserve Fund” means the fund by that name established in accordance with the Trust Agreement.

The term “Reserve Fund Credit Facility” shall mean a letter of credit, line of credit, surety bond, insurance policy or similar facility deposited in a Reserve Account in lieu of or in partial substitution for cash or securities on deposit therein.

The term “Reserve Fund Requirement” means (a) with respect to Common Reserve Bonds an amount equal to the lesser of (i) Maximum Annual Debt Service attributable to the Outstanding Common Reserve Bonds or (ii) 125% of Average Annual Debt Service attributable to the Outstanding Common Reserve Bonds; provided however, that the Reserve Fund Requirement when issuing a new Series of Common Reserve Bonds shall be the lesser of (i) or (ii) above, but limited to the addition to the Reserve Fund of no more than 10% of the proceeds from the sale of such Series of Bonds and (b) with respect to any Series of Bonds that are not Common Reserve Bonds, such amount, if any, as shall be specified in the Supplemental Trust Agreement authorizing the issuance of such Series of Additional Bonds; and (c) provided however, that the Reserve Fund Requirement shall in no event exceed an amount permitted by the Code.

The term “Responsible Officer” means any officer of the Trustee assigned to administer its duties under the Trust Agreement.

The term “Revenue Fund” means the fund by that name established in accordance with the Trust Agreement.

The term “Revenues” means (i) all Base Rental Payments and other payments paid by the City and received by the Authority pursuant to the Facilities Sublease (but not Additional Payments), and (ii) all interest or other income from any investment, pursuant to the Trust Agreement, of any money in any fund or account (other than the Rebate Fund) established pursuant to the Trust Agreement or the Facilities Sublease.

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The term “Securities Depositories” means: The Depository Trust Company, or such other securities depositories as the Authority may designate to the Trustee.

The term “Series,” whenever used in the Trust Agreement with respect to Bonds, means all of the Bonds designated as being of the same series, authenticated and delivered in a simultaneous transaction, regardless of variations in maturity, interest rate, redemption and other provisions, and any Bonds thereafter authenticated and delivered upon transfer or exchange of or in lieu of or in substitution for (but not to refund) such Bonds as provided in the Trust Agreement.

The term “Series 2016 Bond Reserve Fund Requirement” means (a) with respect to the Series 2016 Bonds an amount equal to the lesser of (i) Maximum Annual Debt Service on the Outstanding Series 2016 Bonds or (ii) 125% of Average Annual Debt Service on the Outstanding Series 2016 Bonds; provided however, that the Series 2016 Bond Reserve Fund Requirement shall in no event exceed an amount permitted by the Code.

The term “Series 2016 Refunding Project” means the refunding of the Refunded Bonds.

The term “Sinking Account Payment Date,” if applicable, means June 1 of each year set forth in the Trust Agreement and in any Supplemental Trust Agreement.

The term “S&P” means S&P Global Ratings, its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term S&P shall be deemed to refer to any other nationally recognized securities rating agency selected by the City.

The term “State” means the State of California.

The term “Supplemental Trust Agreement” means any trust agreement then in full force and effect which has been duly executed and delivered by the Authority and the Trustee amendatory thereof or supplemental thereto; but only if and to the extent that such Supplemental Trust Agreement is executed and delivered pursuant to the provisions of the Trust Agreement.

The term “Tax Certificate” means the Tax Certificate delivered by the Authority at the time of the issuance and delivery of a Series of Bonds, as the same may be amended or supplemented in accordance with its terms.

The term “Treasurer” means the Officer of the Authority so designated pursuant to the Joint Powers Agreement.

The term “Trust Agreement” means the Master Trust Agreement, dated as of September 1, 2016, between the Authority and the Trustee, as originally executed and as it may from time to time be amended or supplemented by all Supplemental Trust Agreements executed pursuant to the provisions of the Trust Agreement.

The term “Trustee” means Zions Bank, a division of ZB, National Association, or any other association or corporation which may at any time be substituted in its place as provided in the Trust Agreement.

The term “Written Request of the Authority” means an instrument in writing signed by or on behalf of the Authority by its Chairperson, Vice Chairperson, Member at Large or Secretary or by any other person (whether or not an officer of the Authority) who is specifically authorized by resolution of the Authority for that purpose.

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The term “Written Request of the City” means an instrument in writing to the Trustee signed by the Mayor, City Manager, the Finance Director or the Clerk of the City, or by any such officer’s duly appointed designee, or by any other officer or employee of the City duly authorized by the City for that purpose.

FACILITIES LEASE

The City and the Authority will enter into the Facilities Lease providing for the lease of the Facilities from the City to the Authority. The term of the Facilities Lease will commence on the date of recordation of the Facilities Lease in the office of the County Recorder of Los Angeles County, State of California, or on September 1, 2016, whichever is earlier, and shall end on June 1, 2036, unless such term is extended, following an abatement of rental or in connection with the issuance of additional Bonds, or sooner terminated, upon prepayment of all amounts due under the Trust Agreement. The term of the Facilities Lease shall in no event be extended beyond June 1, 2046 (or such later date established in connection with the issuance of additional Bonds).

The City covenants that it is the owner in fee of the Facilities, as described in the Facilities Lease. The City further covenants and agrees that if for any reason this covenant proves to be incorrect, the City will either institute eminent domain proceedings to condemn the property or institute a quiet title action to clarify the City’s title, and will diligently pursue such action to completion.

The Authority and the City may at any time agree to the amendment or termination of the Facilities Lease; provided, however, that the Authority and the City agree and recognize that the Facilities Lease is entered into in accordance with the terms of the Trust Agreement, and accordingly, that any such amendment or termination shall only be made or effected in accordance with and subject to the terms of the Trust Agreement.

FACILITIES SUBLEASE

The Authority and the City will enter into the Facilities Sublease providing for the lease of the Facilities to the City.

Term

The term of the Facilities Sublease shall commence on the date of recordation of the Facilities Sublease in the office of the County Recorder of the County of Los Angeles, or on September 1, 2016, whichever is earlier, and shall end on June 1, 2036, unless such term is extended, following an abatement of rental or in connection with the issuance of Additional Bonds, or sooner terminated, upon prepayment of all amounts due under the Trust Agreement. The term of the Facilities Lease shall in no event be extended beyond June 1, 2046 (or such later date established in connection with the issuance of Additional Bonds).

Substitution; Release; Addition of Property

The City and the Authority may add, substitute or release real property for all or part of, or may release part of, the Facilities for purposes of the Facilities Lease and the Facilities Sublease, but only after the City has filed with the Authority and the Trustee, with copies to each rating agency then providing a rating for the Bonds, all of the following:

1. Executed copies of the Facilities Lease and the Facilities Sublease or amendments thereto containing the amended description of the Facilities, including the legal description of any real property component of the Facilities as modified, if necessary.

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2. A Written Certificate of the City, certifying that the annual fair rental value (which may be based on, but not limited to, the construction or acquisition cost or replacement cost of such facility to the City) of the Facilities that will constitute the Facilities after such addition, substitution or withdrawal will be at least equal to 100% of the maximum amount of Base Rental Payments becoming due in the then current fiscal year or in any subsequent fiscal year. At the sole discretion of the City, in the alternative, in the event of a substitution only, the Written Certificate of the City will certify that the annual fair rental value of the new Facility is at least equal to that of the substituted Facility.

3. With respect to an addition or substitution of property, a leasehold owner’s title insurance policy or policies or a commitment for such policy or policies or an amendment or endorsement to an existing title insurance policy or policies resulting in title insurance with respect to the Facilities after such addition or substitution in an amount at least equal to the aggregate principal amount of Bonds Outstanding; each such insurance instrument, when issued, shall name the Trustee as the insured, and shall insure the leasehold estate of the Authority in such property subject only to such exceptions as do not substantially interfere with the City’s right to use and occupy such property and as will not result in an abatement of Base Rental Payments payable by the City under the Facilities Sublease.

4. A Written Certificate of the City stating that such addition, substitution or withdrawal, as applicable, does not adversely affect the City’s use and occupancy of the Facilities.

5. With respect to the substitution of property, a Written Certificate of the City stating that the useful life of the property to be substituted is at least equal to the useful life of the property being released.

6. An opinion of bond counsel stating that any amendment executed in connection with such addition, substitution or withdrawal, as the case may be, (i) is authorized or permitted under the Facilities Sublease; (ii) will, upon the execution and delivery thereof, be valid and binding upon the Authority and the City; and (iii) will not cause the interest on any tax-exempt Bonds to be included in gross income for federal income tax purposes.

7. The prior written consent of AGM, which consent shall not be unreasonably withheld.

The Facilities or portion thereof for which other real property is substituted, pursuant to the Facilities Sublease, shall be released from the Facilities Lease and the Facilities Sublease, and shall no longer be encumbered thereby or by the Trust Agreement at such time as the City shall have caused said substitution.

Base Rental Payments

Base Rental Payments. The City will pay to the Authority, as Base Rental Payments for the use and occupancy of the Facilities (subject to the provisions of the Facilities Sublease), annual rental payments, all in accordance with the Base Rental Payment Schedule attached to the Facilities Sublease. The Base Rental Payments shall be due and payable on November 25 and May 25 in the amounts in each year set forth in the Facilities Sublease and shall be for the use and occupancy of the Facilities during the one-year period ending on the 1st day of each December.

If the term of the Facilities Sublease has been extended pursuant to the provisions thereof, Base Rental Payment installments shall continue to be due on November 25 and May 25 in each year, and payable as described above, continuing to and including the date of termination of the Facilities Sublease,

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in an amount equal to the amount of Base Rental payable for the twelve-month period commencing June 2, 2035 (or such later date established in connection with the issuance of Additional Bonds).

All Base Rental Payments for the Facilities shall be paid by the City from lawfully available funds of the City.

Additional Payments. The City shall also pay such amounts as shall be required by the Authority for the payment of all amounts, costs and expenses incurred by the Authority in connection with the execution, performance or enforcement of the Facilities Sublease or any assignment thereof, the Trust Agreement, including amounts to be used to replenish the Series 2016 Bond Reserve Account, the Authority’s interest in the Facilities and the lease of the Facilities to the City, including but not limited to payment of all fees, costs and expenses and all administrative costs of the Authority related to the Bonds, the Facilities, including, without limiting the generality of the foregoing, salaries and wages of employees, all expenses, compensation and indemnification payable by the Authority to the Trustee under the Trust Agreement, fees of auditors, accountants, attorneys or architects, and all other necessary administrative costs of the Authority or charges required to be paid by it in order to maintain its existence or to comply with the terms of the Bonds or of the Trust Agreement; but not including in such Additional Payments amounts required to pay the principal of or interest on the Bonds. The City will also pay as Additional Payments (i) interest on Insurer Advances (as defined in the Trust Agreement, (ii) Policy Costs (as defined in the Trust Agreement) and (iii) amounts to reimburse AGM as more fully described in the Facilities Sublease.

Such Additional Payments shall be billed to the City by the Authority or the Trustee from time to time, together with a statement certifying that the amount billed has been paid by the Authority or by the Trustee on behalf of the Authority, for one or more of the items above described, or that such amount is then payable by the Authority or the Trustee for such items. Amounts so billed shall be paid by the City within sixty (60) days after receipt of the bill by the City.

The Authority may in the future issue bonds to finance facilities, and may in the future enter into leases with respect to other than the Facilities. The administrative costs of the Authority shall be allocated among such other facilities and the Facilities as provided in the Facilities Sublease.

Payments to be Unconditional

Each Base Rental Payment installment or Additional Payment payable under the Facilities Sublease shall be paid in lawful money of the United States of America to or upon the order of the Authority at the corporate trust office of the Trustee or such other place as the Authority shall designate. Any such Base Rental Payment installment or Additional Payment accruing under the Facilities Sublease which shall not be paid when due and payable under the terms of the Facilities Sublease shall bear interest at the rate of 12% per annum, or such lesser rate of interest as may be the maximum rate permitted by law, from the date when the same is due under the Facilities Sublease until the same shall be paid (provided that the foregoing shall not apply to payments following an abatement). Notwithstanding any dispute between the Authority and the City, the City shall make all Base Rental Payments, Additional Payments and other payments when due without deduction or offset of any kind and shall not withhold any rental or other payments pending the final resolution of such dispute. In the event of a determination that the City was not liable for said payments or any portion thereof, said payments or excess of payments, as the case may be, shall be credited against subsequent payments due under the Facilities Sublease or refunded at the time of such determination. Amounts required to be deposited by the City with the Trustee pursuant to the Facilities Sublease for payment of Base Rental Payments on any date shall be reduced to the extent of amounts on deposit in the Revenue Fund and available therefor.

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Appropriations Covenant; Lease Obligation Not a Debt

The City covenants to take such action as may be necessary to include all such Base Rental Payments and Additional Payments due under the Facilities Sublease in its annual budgets, and to make necessary annual appropriations for all such Base Rental Payments and Additional Payments. The City will deliver to the Authority copies of the portion of each annual City budget relating to the payment of Base Rental Payments and Additional Payments under the Facilities Sublease within 30 days after the filing or adoption thereof.

The Authority and the City understand and intend that the obligation of the City to pay Base Rental Payments and Additional Payments under the Facilities Sublease shall constitute a current expense of the City and shall not in any way be construed to be a debt of the City in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by the City, nor shall anything contained in the Facilities Sublease constitute a pledge of the general tax revenues, funds or monies of the City, Base Rental Payments and Additional Payments due under the Facilities Sublease shall be payable only from current funds which are budgeted and appropriated or otherwise legally available for the purpose of paying Base Rental Payments and Additional Payments or other payments due under the Facilities Sublease as consideration for the use of the Facilities. The City has not pledged the full faith and credit of the City, the State or any agency or department thereof to the payment of the Base Rental Payments and Additional Payments or any other payments due under the Facilities Sublease.

Rental Abatement

The Base Rental Payments and Additional Payments shall be abated proportionately, during any period in which by reason of any material damage or destruction (other than by condemnation) there is substantial interference with the use and occupancy of the Facilities by the City, in the proportion in which the cost of that portion of the Facilities rendered unusable bears to the cost of the whole of the Facilities. 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 Facilities Sublease shall continue in full force and effect and the City waives the benefits of California Civil Code Section 1932(2) and 1933(4) and of Title 11 of the United States Code, Section 365(h) and any and all other rights to terminate the Facilities Sublease by virtue of any such damage or destruction or interference.

Insurer Provisions and Covenants

So long as any Series 2016 Bonds remain outstanding and the Bond Insurer shall not have defaulted under the Bond Insurance Policy (or any amounts are owed to the Insurer), the City covenants as follows:

(1) The City shall pay or reimburse AGM, as Additional Payments, any and all charges, fees, costs and expenses that AGM may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in any Related Document; (ii) the pursuit of any remedies under the Facility Sublease or any other Related Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, the Facility Sublease or any other Related Document whether or not executed or completed, or (iv) any litigation or other dispute in connection with the Facility Sublease or any other Related Document or the transactions contemplated thereby, other than costs resulting from the failure of AGM to honor its obligations under the Bond Insurance Policy. AGM reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the Facility Sublease or any other Related Document.

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(2) The City agrees to pay to AGM, as Additional Payments or Base Rental Payments, as appropriate (i) a sum equal to the total of all amounts paid by AGM under the Bond Insurance Policy and/or the Series 2016 Bond Reserve Credit Facility (the “Insurer Advances”); and (ii) interest on such Insurer Advances from the date paid by AGM until payment thereof in full, payable to AGM at the Late Payment Rate per annum and (iii) Policy Costs (as defined in and more fully described in the Trust Agreement).

(3) The City covenants and agrees, to the extent it may lawfully do so, that so long as any of the Series 2016 Bonds remain outstanding and unpaid, the City will not exercise the power of condemnation with respect to the Facilities. The City further covenants and agrees, to the extent it may lawfully do so, that if for any reason the foregoing covenant is determined to be unenforceable or if the City should fail or refuse to abide by such covenant and condemns the real property subject to the Facility Sublease, the appraised value of the real property subject to the Facility Sublease shall not be less that the greater of (i) if such Series 2016 Bonds are then subject to redemption, the principal and interest components of the Series 2016 Bonds outstanding through the date of their redemption, or (ii) if such Series 2016 Bonds are not then subject to redemption, the amount necessary to defease such Series 2016 Bonds to the first available redemption date in accordance with the Trust Agreement.

(4) AGM shall have the exclusive right to deliver its vote or consent with respect to the Series 2016 Bonds in connection with the exercise of any remedies or other matters for which voting or consent is required for defaults and non-appropriation under both the Facility Sublease and Trust Agreement.

(5) Any sale, substitution, release, transfer, lease, assignment, mortgage or encumbrance with respect to the Facilities subsequent to the Closing Date shall be subject to the prior written consent of AGM, which consent shall not be unreasonably withheld.

(6) The lessee (under the Facilities Sublease) and the lessor (under the Facilities Lease) shall not have the right to terminate those agreements for default by the respective counterparties.

(7) The City shall provide the Bond Insurer with annual audited financial statements by March 15 each year after the end of the City’s fiscal year (together with a certification of the City that it is not aware of any default or Event of Default under the Facility Sublease), and the City’s annual budget within 30 days after the approval thereof together with such other information, data or reports as the Insurer shall reasonably request from time to time.

(8) The City will permit the Insurer to discuss the affairs, finances and accounts of the City or any information the Insurer may reasonably request regarding the security for the Bonds with appropriate officers of the City and will use commercially reasonable efforts to enable the Bond Insurer to have access to the facilities, books and records of the City on any business day upon reasonable prior notice.

Fire and Extended Coverage; Use of Insurance Proceeds

The City shall procure or cause to be procured and maintain or cause to be maintained, throughout the term of the Facilities Sublease, insurance against loss or damage to any structures constituting any part of the Facilities by fire and lightning, with extended coverage insurance, vandalism and malicious mischief insurance and sprinkler system leakage insurance. 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 replacement cost (without deduction for depreciation) of all structures constituting any part of the Facilities, excluding the cost of excavations, of grading and filling,

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and of the land, or, in the alternative, shall be in an amount and in a form sufficient, in the event of total or partial loss, to enable all Bonds then Outstanding to be redeemed.

As an alternative to providing the insurance required above, or any portion thereof, the City may provide a self-insurance method or plan of protection if and to the extent such self-insurance method or plan of protection shall afford reasonable protection to the Authority, the Holders and the Trustee, in light of all circumstances, giving consideration to cost, availability and similar plans or methods of protection adopted by public entities in the State other than the City. Before such other method or plan may be provided by the City, and annually thereafter so long as such method or plan is being provided to satisfy the requirements of the Facilities Sublease, there shall be filed with the Trustee a certificate of an Insurance Consultant or other qualified person, stating that, in the opinion of the signer, the substitute method or plan of protection is in accordance with the requirements of the above paragraph and, when effective, would afford reasonable protection to the Authority, its members, directors, officers, agents and employees and the Trustee against loss and damage from the hazards and risks covered thereby. There shall also be filed a certificate of the City setting forth the details of such substitute method or plan.

In the event of any damage to or destruction of any part of the Facilities caused by the perils covered by such insurance, the Authority, except as provided in the Facilities Sublease, shall cause the proceeds of such insurance to be used for the repair, reconstruction or replacement of the damaged or destroyed portion of the Facilities, and the Trustee shall hold said proceeds separate and apart from all other funds in a special fund to be designated the “Insurance and Condemnation Fund,” to the end that such proceeds shall be applied to the repair, reconstruction or replacement of the Facilities to at least the same good order, repair and condition as it was in prior to the damage or destruction, insofar as the same may be accomplished by the use of said proceeds. The Trustee shall withdraw said proceeds from time to time upon receiving the Written Request of the Authority, stating that the Authority has expended monies or incurred liabilities in an amount equal to the amount therein requested to be paid over to it for the purpose of repair, reconstruction or replacement, and specifying the items for which such monies were expended, or such liabilities were incurred, and containing the additional information required to be included in a Written Request of the Authority prepared pursuant to the Trust Agreement. Any balance of said proceeds not required for such repair, reconstruction or replacement shall be transferred to the Trustee and treated by the Trustee as Base Rental Payments and applied in the manner provided by the Trust Agreement. Alternatively, if the proceeds of such insurance, together with any other monies then available for the purpose, are at least sufficient to redeem an aggregate principal amount of Outstanding Bonds equal to the amount of Outstanding Bonds attributable to the portion of the Facilities so destroyed or damaged, the City may elect not to repair, reconstruct or replace the damaged or destroyed portion of the Facilities and thereupon shall cause said proceeds to be used for the redemption of Outstanding Bonds pursuant to the provisions of the Trust Agreement.

The Authority and the City shall promptly apply for federal disaster aid or State disaster aid for which either may be eligible in the event that the Facilities are damaged or destroyed as a result of an earthquake or other declared disaster occurring at any time. Any proceeds received as a result of such disaster aid shall be used to repair, reconstruct, restore or replace the damaged or destroyed portions of the Facilities, or to redeem Outstanding Bonds if such use of such disaster aid is permitted.

Liability Insurance

Except as otherwise provided in the Facilities Sublease, the City shall procure or cause to be procured and maintain or cause to be maintained, throughout the term of the Facilities Sublease, a standard comprehensive general liability insurance policy or policies in protection of the City and its members, directors, officers, agents and employees and the Trustee, indemnifying said parties against all direct or contingent loss or liability for damages for personal injury, death or property damage occasioned by reason of the operation of the Facilities, with minimum liability limits of $1,000,000 for personal

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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 $200,000 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 carried by the City.

As an alternative to providing liability insurance, or any portion thereof, the City may provide a self-insurance method or plan of protection if and to the extent such self-insurance method or plan of protection shall afford reasonable protection to the City, its members, directors, officers, agents and employees and the Trustee, in light of all circumstances, giving consideration to cost, availability and similar plans or methods of protection adopted by public entities in the State other than the City. Before such other method or plan may be provided by the City, and annually thereafter so long as such method or plan is being provided to satisfy the requirements of the Facilities Sublease, there shall be filed with the Trustee a certificate of an Insurance Consultant or other qualified person, stating that, in the opinion of the signer, the substitute method or plan of protection is in accordance with the requirements of the Facilities Sublease and, when effective, would afford reasonable protection to the City, its members, directors, officers, agents and employees and the Trustee against loss and damage from the hazards and risks covered thereby. There shall also be filed a certificate of the City setting forth the details of such substitute method or plan.

Rental Interruption or Use and Occupancy Insurance

The City shall procure or cause to be procured and maintain or cause to be maintained throughout the term of the Facilities Sublease, rental interruption or use and occupancy insurance to cover loss, total or partial, of the rental income from or the use of the Facilities as the result of any of the hazards covered by fire and extended coverage insurance, in an amount sufficient to pay the maximum annual Base Rental Payments for any two year period except that such insurance may be subject to a deductible clause as set forth in Facilities Sublease. Any proceeds of such insurance shall be used by the Trustee to reimburse to the City any rental theretofore paid by the City under the Facilities Sublease attributable to such structure for a period of time during which the payment of rental under the Facilities Sublease is abated, and any proceeds of such insurance not so used shall be applied as provided in the Facilities Sublease (to the extent required for the payment of Base Rental Payments and for the payment of Additional Payments).

Eminent Domain

If the whole of the Facilities or so much thereof as to render the remainder unusable for the purposes for which it was used by the City shall be taken under the power or threat of eminent domain, the term of the Facilities Sublease shall cease as of the day that possession shall be so taken. If less than the whole of the Facilities shall be taken under the power or threat of eminent domain and the remainder is usable for the purposes for which it was used by the City at the time of such taking, then the Facilities Sublease shall continue in full force and effect as to such remainder, and the parties waive the benefits of any law to the contrary, and in such event there shall be a partial abatement of the rental due in an amount equivalent to the amount by which the annual payments of principal of and interest on the Bonds then Outstanding will be reduced by the application of the award in eminent domain to the redemption of Outstanding Bonds. So long as any of the Bonds shall be Outstanding, any award made in eminent domain proceedings for taking the Facilities or any portion thereof shall be paid to the Trustee and applied to the prepayment of the Base Rental Payments as provided in the Facilities Sublease. Any such award made after all of the Base Rental Payments and Additional Payments have been fully paid, or provision therefor made, shall be paid to the City.

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Defaults and Remedies

(A) If the City shall fail to pay any Base Rental Payment, Additional Payment or other amount payable under the Facilities Sublease when the same becomes due and payable, time being expressly declared to be of the essence of the Facilities Sublease, or the City shall fail to keep, observe or perform any other term, covenant or condition contained in the Facilities Sublease or in the Trust Agreement to be kept or performed by the City for a period of 30 days after notice of the same has been given to the City by the Authority or the Trustee or for such additional time as is reasonably required, in the discretion of the Trustee, to correct the same, or upon the happening of any of the events specified in paragraph (B), below (any such case above being an “Event of Default”), the City shall be deemed to be in default under the Facilities Sublease and it shall be lawful for the Authority to exercise any and all remedies available pursuant to law or granted pursuant to the Facilities Sublease. Upon any such default, the Authority, in addition to all other rights and remedies it may have at law, may do any of the following:

(1) To terminate the Facilities Sublease in the manner provided therein on account of default by the City, notwithstanding any re-entry or re-letting of the Facilities as provided for in subparagraph (2) below, and to re-enter the Facilities and remove all persons in possession thereof and all personal property whatsoever situated upon the Facilities and place such personal property in storage in any warehouse or other suitable place located within the City. In the event of such termination, the City agrees to surrender immediately possession of the Facilities without let or hindrance, and to pay the Authority all damages recoverable at law that the Authority may incur by reason of default by the City, including, without limitation, any costs, loss or damage whatsoever arising out of, in connection with, or incident to any such re-entry upon the Facilities and removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions contained in the Facilities Sublease. Neither notice to pay rent or to deliver up possession of the Facilities given pursuant to law nor any entry or re-entry by the Authority nor any proceeding in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Facilities nor the appointment of a receiver upon initiative of the Authority to protect the Authority’s interest under the Facilities Sublease shall of itself operate to terminate the Facilities Sublease, and no termination of the Facilities Sublease on account of default by the City shall be or become effective by operation of law or acts of the parties to the Facilities Sublease, or otherwise, unless and until the Authority shall have given written notice to the City of the election on the part of the Authority to terminate the Facilities Sublease. The City covenants and agrees that no surrender of the Facilities or of the remainder of the term of the Facilities Sublease or any termination of the Facilities Sublease shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by such written notice.

(2) Without terminating the Facilities Sublease, (i) to collect each Base Rental Payment installment and other amounts as they become due and enforce any other terms or provision of the Facilities Sublease to be kept or performed by the City, regardless of whether or not the City has abandoned the Facilities, or (ii) to exercise any and all rights of re-entry upon the Facilities. In the event the Authority does not elect to terminate the Facilities Sublease in the manner provided for in subparagraph (1) immediately above, the City shall remain liable and agrees to keep or perform all covenants and conditions contained in the Facilities Sublease to be kept or performed by the City and, if the Facilities are not re-let, to pay the full amount of the Base Rental Payments, Additional Payments and other amounts to the end of the term of the Facilities Sublease or, in the event that the Facilities are re-let, to pay any deficiency in rent and other amounts that result therefrom; and further agrees to pay said rent and other amounts and/or deficiency rent and other amounts punctually at the same time and in the same manner as provided above for the payment of Base Rental Payments, Additional Payments and other amounts under the Facilities Sublease (without acceleration), notwithstanding the fact that the Authority may have received in previous years or may receive thereafter in subsequent years rental or other amounts in excess of the rental or other amounts specified in the Facilities Sublease, and notwithstanding any entry

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or re-entry by the Authority or suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such entry or re-entry or obtaining possession of the Facilities. Should the Authority elect to enter or re-enter as provided in the Facilities Sublease, the City agrees to irrevocably appoint the Authority as the agent and attorney-in-fact of the City to re-let the Facilities or any part thereof, from time to time, either in the Authority’s name or otherwise, upon such terms and conditions and for such use and period as the Authority may deem advisable, and to remove all persons in possession thereof and all personal property whatsoever situated upon the Facilities and to place such personal property in storage in any warehouse or other suitable place located in the City, for the account of and at the expense of the City, and the City agrees to exempt and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising out of, in connection with, or incident to any such re-entry upon and re-letting of the Facilities and removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions contained in the Facilities Sublease. The City agrees that the terms of the Facilities Sublease constitute full and sufficient notice of the right of the Authority to re-let the Facilities and to do all other acts to maintain or preserve the Facilities as the Authority deems necessary or desirable in the event of such re-entry without effecting a surrender of the Facilities Sublease, and further agrees that no acts of the Authority in effecting such re-letting shall constitute a surrender or termination of the Facilities Sublease irrespective of the use or the term for which such re-letting is made or the terms and conditions of such re-letting, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate the Facilities Sublease shall vest in the Authority to be effected in the sole and exclusive manner provided for in sub-paragraph (1) immediately above. The City further waives the right to any Base Rental Payment or other amounts obtained by the Authority in excess of such rental and other amounts specified in the Facilities Sublease and agrees to convey and release such excess to the Authority as compensation to the Authority for its services in re-letting the Facilities or any part thereof.

The City agrees to waive any and all claims for damages caused or which may be caused by the Authority in re-entering and taking possession of the Facilities as provided in the Facilities Sublease and all claims for damages that may result from the destruction of the Facilities and all claims for damages to or loss of any property belonging to the City, or any other person, that may be in or upon the Facilities.

(B) If (1) the City’s interest in the Facilities Sublease or any part thereof be assigned or transferred, either voluntarily or by operation of law or otherwise, as provided for in the Facilities Sublease, or (2) the City or any assignee shall file any petition or institute any proceeding under any act or acts, State or federal, dealing with or relating to the subject or subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or whereby the City asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of the City’s debts or obligations, or offers to the City’s creditors to effect a composition or extension of time to pay the City’s debts or asks, seeks or prays for reorganization or to effect a plan of reorganization, or for a readjustment of the City’s debts, or for any other similar relief, or if any such petition or any such proceedings of the same or similar kind or character be filed or be instituted or taken against the City, or if a receiver of the business or of the property or assets of the City shall be appointed by any court, except a receiver appointed at the instance or request of the Authority, or if the City shall make a general or any assignment for the benefit of the City’s creditors, or if (3) the City shall abandon or vacate the Facilities, then the City shall be deemed to be in default under the Facilities Sublease.

(C) The Authority shall in no event be in default in the performance of any of its obligations under the Facilities Sublease or imposed by any statute or rule of law unless and until the Authority shall have failed to perform such obligations within thirty (30) days or such additional time as is reasonably required to correct any such default after notice by the City to the Authority properly specifying wherein the Authority has failed to perform any such obligation. In the event of default by the Authority, the City shall be entitled to pursue any remedy provided by law.

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In addition to the other remedies set forth in the Facilities Sublease, upon the occurrence of an event of default as described therein, the Authority, shall proceed to protect and enforce the rights vested in the Authority by the Facilities Sublease or by law. The provisions of the Facilities Sublease and the duties of the City and of its trustees, officers or employees shall be enforceable by the Authority by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction. Without limiting the generality of the foregoing, the Authority may bring the following actions:

1. Accounting. By action or suit in equity to require the City and its trustees, officers and employees and its assigns to account as the trustee of an express trust.

2. Injunction. By action or suit in equity to enjoin any acts or things which may be unlawful or in violation of the rights of the Authority.

3. Mandamus. By mandamus or other suit, action or proceeding at law or in equity to enforce the Authority’s rights against the City (and its council, officers and employees) and to compel the City to perform and carry out its duties and obligations under the law and its covenants and agreements with the Authority as provided in the Facilities Sublease.

The exercise of any rights or remedies under the Facilities Sublease shall not permit acceleration of Base Rental Payments.

Each and all of the remedies given to the Authority under the Facilities Sublease or by any law are cumulative and the single or partial exercise of any right, power or privilege under the Facilities Sublease shall not impair the right of the Authority to other or further exercise thereof or the exercise of any or all other rights, powers or privileges. The term “re-let” or “re-letting” shall include, but not be limited to, re-letting by means of the operation by the Authority of the Facilities. If any statute or rule of law validly shall limit the remedies given to the Authority under the Facilities Sublease, the Authority nevertheless shall be entitled to whatever remedies are allowable under any statute or rule of law.

Prepayment

(A) The City shall prepay on any date from insurance and eminent domain proceeds, to the extent provided in the Facilities Sublease (provided, however, that in the event of partial damage to or destruction of the Facilities caused by perils covered by insurance, if in the judgment of the Authority the insurance proceeds are sufficient to repair, reconstruct or replace the damaged or destroyed portion of the Facilities, such proceeds shall be held by the Trustee and used to repair, reconstruct or replace the damaged or destroyed portion of the Facilities, pursuant to the procedure set forth in the Facilities Sublease for proceeds of insurance), all or any part (in an integral multiple of $5,000 principal component) of Base Rental Payments then unpaid so that the aggregate annual amounts of Base Rental Payments which shall be payable after such prepayment date shall be as nearly proportional as practicable to the aggregate annual amounts of Base Rental Payments unpaid prior to the prepayment date, at a prepayment amount equal to the principal of and interest on the Bonds to the date of redemption of the Bonds.

(B) The City may prepay, from any source of available funds, all or any portion of Base Rental Payments by (i) depositing with the Trustee moneys or securities as provided in the Trust Agreement sufficient to retire or redeem Bonds corresponding to such Base Rental Payments when due or redeemable, and (ii) satisfying the other requirements of the Trust Agreement. The City agrees that if following such prepayment the Facilities are damaged or destroyed or taken by eminent domain, it is not entitled to, and by such prepayment waives the right of, abatement of such prepaid Base Rental Payments and shall not be entitled to any reimbursement of such Base Rental Payments.

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(C) Before making any prepayment pursuant to the Facilities Sublease, the City shall, within 5 days following the event creating such right or obligation to prepay, give written notice to the Authority and the Trustee describing such event and specifying the date on which the prepayment will be made, which date shall be not less than 60 days from the date such notice is given.

(D) When (1) there shall have been deposited with the Trustee in trust for the benefit of the Owners of the Bonds moneys or securities as described in the Trust Agreement sufficient to pay all principal of and interest on the Bonds to the due date thereof or date when the City may exercise its option to purchase the Facilities, and sufficient to pay in full all other amounts due under the Facilities Sublease or under the Trust Agreement; (2) all of the requirements set forth in of the Trust Agreement have been satisfied; and (3) an agreement shall have been entered into with the Trustee for the payment of its fees and expenses so long as any of the Bonds shall remain unpaid; then and in that event the right, title and interest of the Authority in the Facilities Sublease and the obligations of the City under the Facilities Sublease shall thereupon cease, terminate, become void and be completely discharged and satisfied (except for the right of the Authority and the obligation of the City to have such moneys and such Permitted Investments applied to the payment of the Base Rental Payments or option price) and the Authority’s interest in and title to the Facilities or applicable portion or item thereof shall be transferred and conveyed to the City. In such event, the Authority shall cause an accounting for such period or periods as may be requested by the City to be prepared and filed with the Authority (and accompanied by a verification report of a certified public accountant) and evidence such discharge and satisfaction, and the Authority shall pay over to the City as an overpayment of Base Rental Payments all such moneys or Permitted Investments held by it pursuant to the Facilities Sublease other than such moneys and such Permitted Investments as are required for the payment or prepayment of the Base Rental Payments or the option price and the fees and expenses of the Trustee, which moneys and Permitted Investments shall continue to be held by the Trustee in trust for the payment of Base Rental Payments or the option price and the fees and expenses of the Trustee, and shall be applied by the Authority to the payment and redemption of the Bonds and the fees and expenses of the Trustee.

Option to Purchase; Sale of Personal Property

The City shall have the option to purchase the Authority’s interest in any part of the Facilities upon payment of an option price consisting of moneys or Government Securities (not callable by the issuer thereof prior to maturity) in an amount sufficient (together with the earnings and interest on such securities) to provide funds to pay the aggregate amount for the entire remaining term of the Facilities Sublease of the part of the total rent under the Facilities Sublease attributable to such part of the Facilities (determined by reference to the proportion which the cost of such part of the Facilities bears to the cost of all of the Facilities). Any such payment shall be made to the Trustee and shall be treated as Base Rental Payments and shall be applied by the Trustee to pay the principal of and interest on the Bonds and to redeem Bonds if such Bonds are subject to redemption pursuant to the terms of the Trust Agreement. Upon the making of such payment to the Trustee and the satisfaction of all requirements set forth in the Trust Agreement, (a) the Base Rental Payments thereafter payable under the Facilities Sublease shall be reduced by the amount thereof attributable to such part of the Facilities and paid in purchase of the Authority’s interest therein; (b) the rental abatement provisions shall not thereafter be applicable to such part of the Facilities; (c) the insurance required by the Facilities Sublease need not be maintained as to such part of the Facilities; and (d) title to such part of the Facilities shall vest in the City and the term of the Facilities Sublease shall end as to such part of the Facilities.

The City, in its discretion may request the Authority to sell or exchange any personal property which may at any time constitute a part of the Facilities, and to release said personal property from the Facilities Sublease, if (a) in the opinion of the City the property so sold or exchanged is no longer required or useful in connection with the operation of the Facilities; (b) the consideration to be received from the property is of a value substantially equal to the value of the property to be released; and (c) if the

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value of any such property shall, in the opinion of the Authority, exceed the amount of $25,000, the Authority shall have been furnished a certificate of an independent engineer or other qualified independent professional consultant (satisfactory to the Authority) certifying the value thereof and further certifying that such property is no longer required or useful in connection with the operation of the Facilities. In the event of any such sale, the full amount of the money or consideration received for the personal property so sold and released shall be paid to the Authority. Any money so paid to the Authority may, so long as the City is not in default under any of the provisions of the Facilities Sublease, be used upon the Written Request of the City to purchase personal property, which property shall become a part of the Facilities leased under the Facilities Sublease. The Authority may require such opinions, certificates and other documents as it may deem necessary before permitting any sale or exchange of personal property subject to the Facilities Sublease or before releasing for the purchase of new personal property money received by it for personal property so sold.

Liens

In the event the City shall at any time during the term of the Facilities Sublease cause any changes, alterations, additions, improvements or other work to be done or performed or materials to be supplied, in or upon the Facilities, the City shall pay, when due, all sums of money that may become due for, or purporting to be for, any labor, services, materials, supplies or equipment furnished or alleged to have been furnished to or for the City in, upon or about the Facilities and shall keep the Facilities free of any and all mechanics’ or materialmen’s liens or other liens against the Facilities or the Authority’s interest therein. In the event any such lien attaches to or is filed against the Facilities or the Authority’s interest therein, the City shall cause each such lien to be fully discharged and released at the time the performance of any obligation secured by any such lien matures or becomes due, except that if the City desires to contest any such lien it may do so in good faith. If any such lien shall be reduced to final judgment and such judgment or such process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the City shall forthwith pay and discharge said judgment. The City agrees to and shall, to the maximum extent permitted by law, indemnify and hold the Authority and the Trustee and their respective members, directors, agents, successors and assigns, harmless from and against, and defend each of them against, any claim, demand, loss, damage, liability or expense (including attorney’s fees) as a result of any such lien or claim of lien against the Facilities or the Authority’s interest therein.

Authority Not Liable

The Authority and its members, directors, officers, agents, employees and assignees shall not be liable to the City or to any other party whomsoever for any death, injury or damage that may result to any person or property by or from any cause whatsoever in, on or about the Facilities.

The City, to the extent permitted by law, shall indemnify and hold the Authority and its members, directors, officers, agents, employees and assignees, harmless from, and defend each of them against, any and all claims, liens and judgments arising from (i) the construction or operation of the Facilities, including, without limitation, death of or injury to any person or damage to property whatsoever occurring in, on or about the Facilities regardless of responsibility for negligence, but excepting the active negligence of the person or entity seeking indemnity, and (ii) the issuance of the Bonds and any other action of the Authority taken pursuant to the Trust Agreement including, but not limited to, any liability of the Authority incurred pursuant to the Trust Agreement.

Assignment and Subleasing

Neither the Facilities Sublease or any interest of the City thereunder may be mortgaged, pledged, assigned, sublet or transferred by the City without the prior written consent of the Authority and the Bond

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Insurer, and provided that such subletting shall not cause interest on the Bonds to be included in gross income for federal income tax purposes. No such mortgage, pledge, assignment, sublease or transfer shall in any event affect or reduce the obligation of the City to make the Base Rental Payments and Additional Payments.

Title to Facilities

During the term of the Facilities Sublease, the Authority shall hold leasehold title to the Facilities and any and all additions which comprise fixtures, repairs, replacements or modifications thereof, except for those fixtures, repairs, replacements or modifications which are added thereto by the City and which may be removed without damaging the Facilities, and except for any items added to the Facilities by the City pursuant to the Facilities Sublease. This provision shall not operate to the benefit of any insurance company if there is a rental interruption covered by insurance pursuant to the Facilities Sublease. During the term of the Facilities Sublease, the Authority shall have a leasehold interest in the Facilities pursuant to the Facilities Lease.

Upon the termination or expiration of the Facilities Sublease (other than as an Event of Default or a governmental taking), title to the Facilities shall vest in the City pursuant to the Facilities Lease. Upon any such termination or expiration, the Authority shall execute such conveyances, deeds and other documents as may be necessary to effect such vesting of record.

Taxes

The City shall pay or cause to be paid all taxes and assessments of any type or nature charged to the Authority or affecting the Facilities or the respective interests or estates therein. The City shall also pay directly such amounts, if any, in each year as shall be required by the Authority for the payment of all license and registration fees and all taxes (including, without limitation, income, excise, license, franchise, capital stock, recording, sales, use, value-added, property, occupational, excess profits and stamp taxes), levies, imposts, duties, charges, withholdings, assessments and governmental charges of any nature whatsoever, together with any additions to tax, penalties, fines or interest thereon, including, without limitation, penalties, fines or interest arising out of any delay or failure by the City to pay any of the foregoing or failure to file or furnish to the Authority or the Trustee for filing in a timely manner any returns, levied or imposed against the Authority or the Facilities, the rentals and other payments required under the Facilities Sublease, or any parts thereof or interests of the City or the Authority or the Trustee therein by any governmental authority.

Purpose of Lease

The City covenants that during the term of the Facilities Sublease, (a) it will use, or cause the use of, the Facilities for public purposes and for the purposes for which the Facilities are customarily used, (b) it will not vacate or abandon the Facilities or any part thereof, and (c) it will not make any use of the Facilities which would jeopardize in any way the insurance coverage required to be maintained pursuant to the Facilities Sublease.

Continuing Disclosure Certificate

The City covenants that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Although failure of the City to comply with the Continuing Disclosure Certificate shall not be considered an Event of Default under the lease; the Trustee may (and, at the request of any Participating Underwriter (as defined in the Continuing Disclosure Certificate) or the Holders of at least 25% aggregate principal amount in Outstanding Bonds, shall) or any Bondholder or Beneficial Owner (as defined in the Continuing Disclosure Certificate; see APPENDIX E hereto) may take such actions as may

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be necessary and appropriate, including seeking specific performance by court order, to cause the City to comply with its obligations.

Net-Net-Net Lease

The Facilities Sublease shall be deemed and construed to be a “net-net-net lease” and the City agrees that the rentals and other payments provided for in the Facilities Sublease shall be an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever.

Use of the Facilities

The City will not install, use, operate or maintain the Facilities improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by the Facilities Sublease. The City shall provide all permits and licenses, if any, necessary for the installation and operation of the Facilities. In addition, the City agrees to comply in all respects (including, without limitation, with respect to the use, maintenance and operation of the Facilities) with all laws of the jurisdictions in which its operations may extend and any legislative, executive, administrative or judicial body exercising any power or jurisdiction over the Facilities; provided, however, that the City may contest in good faith the validity or application of any such law or rule in any reasonable manner which does not adversely affect the estate of the Authority in and to the Facilities or its interest or rights under the Facilities Sublease.

Amendment or Termination

The Authority and the City, with the prior written consent of the Bond Insurer, may at any time agree to the amendment or termination of the Facilities Sublease; provided, however, that the Authority and the City agree and recognize that the Facilities Sublease is entered into in accordance with the terms of the Trust Agreement, and accordingly, that any such amendment or termination shall only be made or effected in accordance with and subject to the terms of the Trust Agreement.

TRUST AGREEMENT

Certain provisions of the Trust Agreement setting forth the terms of the Bonds, the redemption provisions thereof and the use of the proceeds of the Bonds are set forth elsewhere in this Official Statement. See “DESCRIPTION OF THE SERIES 2016 BONDS,” and “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein.

The Trustee

Zions Bank, a division of ZB, National Association has been appointed by the Authority as Trustee. The Trustee will receive all of the Bond proceeds and the Revenues for disbursement in conformity with the Trust Agreement. In addition, the Trustee will act as registrar of the Bonds. Payments of principal of, interest or redemption premiums, if any, on the Bonds will be made through the principal corporate trust office of the Trustee.

Assignment

The Authority assigns to the Trustee all of the Authority’s right, title and interest in the Facilities Sublease and the Facilities Lease as security for payment of the Bonds.

Pledge of Revenues

All Revenues, any other amounts (including proceeds of the sale of the Bonds) held by the Trustee in any fund or account established under the Trust Agreement (other than amounts on deposit in

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the Rebate Fund created pursuant to the Trust Agreement) are irrevocably pledged to the payment of the interest and premium, if any, on and principal of the Bonds as provided in the Trust Agreement, and the Revenues and other amounts pledged under the Trust Agreement shall not be used for any other purpose while any of the Bonds remain Outstanding; provided, however, that out of the Revenues and other moneys there may be applied such sums for such purposes as are permitted under the Trust Agreement. This pledge shall constitute a pledge of and charge and first lien upon the Revenues, all other amounts pledged under the Trust Agreement and all other moneys on deposit in the funds and accounts established under the Trust Agreement (excluding amounts on deposit in the Rebate Fund created pursuant to the Trust Agreement) for the payment of the interest on and principal of the Bonds in accordance with the terms thereof and of the Trust Agreement.

Establishment of Funds and Accounts; Flow of Funds

The Trust Agreement provides for the establishment of the following special accounts or funds, among others: the Revenue Fund (within which the Interest Account and the Principal Account will be established and maintained), the Costs of Issuance Fund, the Acquisition and Construction Fund and the Rebate Fund. The Trustee will hold all funds in the Costs of Issuance Fund, the Revenue Fund and the Rebate Fund; the City will hold all funds in the Acquisition and Construction Fund; and all other funds will be held by the Treasurer of the Authority. All money in the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it becomes due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity). All money in the Principal Account will be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds as it becomes due and payable, whether at maturity or redemption. All money in the Costs of Issuance Fund will be used to pay the Costs of Issuance of the Bonds upon receipt by the Treasurer of a Written Request of the Authority. All moneys in the Acquisition and Construction Fund shall be applied by the City to the payment of Project Costs and of expenses incident thereto (or for making reimbursements to the Authority or the City or any other person, firm or corporation for such costs theretofore or thereafter paid by him or it), or shall be transferred to the Trustee for the payment of debt service on the Bonds. Moneys in the Rebate Fund will be used to make rebate payments to the United States of America, if required.

On each Principal Payment Date, following payment of principal of and interest on the Bonds, any excess amount on deposit in the Revenue Fund shall be returned to the City as an excess of Base Rental Payments.

Revenue Fund

Moneys in the Revenue Fund will be transferred to and deposited in the following respective accounts in the following order of priority:

(1) Interest Account. On or before each Interest Payment Date, the Trustee shall transfer from the Revenue Fund to each Interest Account an amount equal to the interest on the related Series of Bonds coming due on such Interest Payment Date; provided, however, that if and to the extent that such amount is available for such Series of Bonds in any capitalized interest subaccount established pursuant to a Supplemental Trust Agreement on such Interest Payment Date, the Trustee shall, instead, transfer such amount from such capitalized interest subaccount to the related Interest Account on such Interest Payment Date. On or before each redemption date, the Trustee shall transfer from the Revenue Fund to the applicable Interest Account, the interest due with respect to the Bonds to be redeemed on such redemption date. Moneys in each Interest Account shall be withdrawn and used by the Trustee for the purpose of paying interest on the related Series of Bonds as and when due and payable.

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No deposit need be made in an Interest Account if the amount contained therein and available to pay interest on the related Series of Bonds is at least equal to the aggregate amount of interest becoming due and payable on such Interest Payment Date.

(2) Principal Account. On or before each Principal Payment Date and Sinking Account Payment Date, the Trustee shall transfer from the Revenue Fund to each Principal Account and Sinking Account an amount equal to the principal of the related Series of Bonds, including principal due and payable by reason of a sinking account payment coming due on such date. Moneys in each Principal Account shall be withdrawn and used by the Trustee for the purpose of paying principal of the related Series of Bonds, including principal due and payable by reason of a mandatory sinking account payment, as and when due and payable.

No deposit need be made in the Principal Account if the amount contained therein and available to pay principal of the Bonds is at least equal to the aggregate amount of the principal of all Outstanding Serial Bonds maturing by their terms on such June 1 plus the aggregate amount of all sinking fund payments required to be made on such June 1 for all Outstanding Term Bonds.

Reserve Fund

(a) There is established in trust a special fund designated as the “Reserve Fund” which shall be held by the Trustee and which shall be kept separate and apart from all other funds held by the Trustee. Within the Reserve Fund, the Trustee shall establish and maintain a separate account designated the “Common Reserve Account” and may establish and maintain one or more additional Reserve Accounts, each of which may secure one or more Series of Bonds pursuant to the Trust Agreement and to any Supplemental Trust Agreement authorizing the issuance thereof. Within the Reserve Fund, the Trustee shall establish and maintain a separate account designated the “Series 2016 Bond Reserve Account,” which Series 2016 Bond Reserve Account shall be solely available to make up insufficiencies in the amounts required to be deposited in the Series 2016 Principal Account and the 2016 Interest Account established pursuant to the Trust Agreement. In connection with the issuance of Additional Bonds, there shall additionally be deposited in the Common Reserve Account or any other Reserve Account established and/or maintained for such Additional Bonds, as applicable, the amount required to be deposited therein under the Supplemental Trust Agreement pursuant to which such Additional Bonds are issued. Moneys in the Reserve Fund shall be used and withdrawn by the Trustee solely for the purposes described in this section.

(i) In the event that, on any date on which the Trustee is to transfer money from the Revenue Fund to the Interest Accounts or to the Principal Accounts pursuant to the Trust Agreement, amounts in the Revenue Fund are insufficient for such purpose, the Trustee shall withdraw from each Reserve Account, to the extent of any funds therein, the amount of the insufficiency of the related Series of Bonds, and shall transfer any amounts so withdrawn first to the related Interest Account and then to the related Principal Account. If the amount on deposit in any Reserve Account is not sufficient to make such transfer, the Trustee shall make a claim under any available Reserve Fund Credit Facility, in accordance with the provisions thereof, in order to obtain an amount sufficient to allow the Trustee to make such transfer as and when required.

(ii) Monies on deposit in each Reserve Account shall be withdrawn and transferred by the Trustee to be applied for the final payment on the related Series of Bonds.

In the event of any withdrawal or transfer from a Reserve Account, the Trustee shall, within five days thereafter, provide written notice to the City of the amount and the date of such transfer. If at any time the balance in any Reserve Account shall be reduced below the Reserve Fund Requirement, the first of Base Rental Payments thereafter payable by the City under the Facilities Sublease and not needed to

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pay the interest and principal components of Base Rental Payments payable by the City under the Facilities Sublease to the Owners on the next Interest Payment Date, Principal Payment Date or Mandatory Sinking Account Payment Date shall be used to increase the balance in such Reserve Account to the Reserve Fund Requirement; provided, however, that such Base Rental Payments shall be allocated among all Reserve Accounts ratably without preference or priority of any kind, according to each Reserve Account’s percentage share of the total deficiencies in all Reserve Accounts. If after the payment of principal and interest on any Interest Payment Date the balance in the any Reserve Account shall be in excess of the Reserve Fund Requirement the Trustee shall, upon Written Request of the City, transfer such excess first to the Rebate Fund to the extent the amount on deposit therein is less than the Rebate Requirement, and thereafter to the Revenue Fund. At the termination of the Facilities Sublease in accordance with its respective terms, any balance remaining in any Reserve Account shall be released and may be transferred to such other fund or account of the City, or otherwise used by the City for any other lawful purposes, as the City may direct in writing. For purposes of determining the amount on deposit in each Reserve Account, all investments shall be valued annually at the amortized cost thereof (exclusive of accrued but unpaid interest, but inclusive of commissions). Investments in each Reserve Account shall mature, or be subject to tender, redemption or withdrawal at the option of the holder thereof, not later than five years from the date of investment.

(b) At the option of the City, one or more Reserve Fund Credit Facilities may be substituted for the funds held by the Trustee in any Reserve Account such that the amount available to be drawn under such Reserve Fund Credit Facilities together with funds remaining in such Reserve Account satisfies the Reserve Fund Requirement.

If the City exercises its option to substitute a Reserve Fund Credit Facility for all or a portion of the moneys held by the Trustee in a Reserve Account, then such moneys, on or after the date that the Reserve Fund Credit Facility becomes effective, at the option of the City, shall be used to redeem the related Series of Bonds or transferred to a construction fund to be held by the City and used for capital projects of the City in accordance with the Tax Certificate. Neither the City nor the Trustee may invest such amounts transferred so as to produce a yield greater than the yield permitted under the Tax Certificate. In the event any Reserve Fund Credit Facility is scheduled to terminate prior to the final maturity date of the Bonds and such Reserve Fund Credit Facility is not extended, renewed or replaced with another Reserve Fund Credit Facility or with cash or Permitted Investments in the amount of such Reserve Fund Credit Facility, the Trustee shall draw on or make a claim under such Reserve Fund Credit Facility ten days prior to the date of such expiration in an amount equal to the lesser of (i) the maximum amount available thereunder or (ii) the Reserve Fund Requirement, in either case for deposit into the related Reserve Account.

In the event a Reserve Fund Credit Facility is substituted for all or a portion of the moneys held by the Trustee in a Reserve Account pursuant to the terms of the Trust Agreement, then, notwithstanding any other provision of the Trust Agreement, (1) the Trustee shall draw upon the Reserve Fund Credit Facility for amounts which the terms of the Trust Agreement require to be transferred from the related Reserve Account; provided that the Trustee shall first draw upon any cash or Permitted Investments on deposit in the related Reserve Account before drawing upon any Reserve Fund Credit Facility, and thereafter shall draw upon all such Reserve Fund Credit Facilities on a pro rata basis, and (2) amounts required by the terms of the Trust Agreement to be deposited or transferred to a Reserve Account (a) in the event the Reserve Fund Credit Facility has been drawn upon, shall be first paid to the provider of such Reserve Fund Credit Facility if the City has an outstanding reimbursement obligation to such provider resulting from such draw, which payment shall result in an increase in the amount then available under the Reserve Fund Credit Facility equal to such payment and (b) to the extent all such draws on Reserve Fund Credit Facilities have been paid, then, second, shall be transferred or deposited to the related Reserve Account in amount such that after giving effect to the deposit the amount on deposit in such Reserve Account is equal to the Reserve Fund Requirement.

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The City shall be permitted to make use of a Reserve Fund Credit Facility pursuant to the Trust Agreement at any time.

For purposes of this section, the term “substitution” shall include such initial funding of the Reserve Fund Requirement by means of a Reserve Fund Credit Facility instead of by deposit of moneys, and shall not be read to mean that the City must first make an initial cash deposit in a Reserve Account before invoking this section and satisfying the Reserve Fund Requirement by securing and implementing a Reserve Fund Credit Facility.

Provisions Relating to Reserve Fund Credit Facility.

So long as any Series 2016 Bonds remain outstanding and AGM shall not have defaulted under the Bond Insurance Policy and the Series 2016 Bond Reserve Credit Facility (or AGM is owed any amounts in connection therewith), the provisions of this section shall govern with respect to the Series 2016 Bond Reserve Credit Facility, notwithstanding anything to the contrary set forth in the Trust Agreement.

(a) The Authority and the City shall (solely from Rental Payments) repay any draws under the Series 2016 Bond Reserve Credit Facility and pay all related reasonable expenses incurred by AGM and shall pay interest thereon from the date of payment by AGM at the Late Payment Rate. “Late Payment Rate” means the lesser of (x) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate (“Prime Rate”) (any change in such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank) plus 3%, and (ii) the then applicable highest rate of interest on the Series 2016 Bonds and (y) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the publicly announced prime or base lending rate of such national bank as AGM shall specify. If the interest provisions of this paragraph (a) shall result in an effective rate of interest which, for any period, exceeds the limit of the usury or any other laws applicable to the indebtedness created in the Trust Agreement, then all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice between or by any party hereto, be applied as additional interest for any later periods of time when amounts are outstanding under the Trust Agreement to the extent that interest otherwise due under the Trust Agreement for such periods plus such additional interest would not exceed the limit of the usury or such other laws, and any excess shall be applied upon principal immediately upon receipt of such moneys by AGM, with the same force and effect as if the Authority or the City had specifically designated such extra sums to be so applied and AGM had agreed to accept such extra payment(s) as additional interest for such later periods. In no event shall any agreed-to or actual exaction as consideration for the indebtedness created in the Trust Agreement exceed the limits imposed or provided by the law applicable to this transaction for the use or detention of money or for forbearance in seeking its collection.

Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate (collectively, “Policy Costs”) shall commence in the first month following each draw, and each such monthly payment shall be in an amount at least equal to 1/12 of the aggregate of Policy Costs related to such draw.

Amounts in respect of Policy Costs paid to AGM shall be credited first to interest due, then to the expenses due and then to principal due. As and to the extent that payments are made to AGM on account of principal due, the coverage under the Series 2016 Bond Reserve Credit Facility will be increased by a like amount, subject to the terms of the Series 2016 Bond Reserve Credit Facility. The obligation to pay

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Policy Costs shall be secured by a valid lien on all Revenues and other collateral pledged as security for the Bonds (subject only to the priority of payment provisions set forth under the Trust Agreement).

All cash and investments in the Series 2016 Bond Reserve Account shall be transferred to the Revenue Fund for payment of debt service on Series 2016 Bonds, before any drawing may be made on the Series 2016 Bond Reserve Credit Facility, and all cash and investments in the Series 2016 Bond Reserve Account shall be transferred to the Revenue Fund for payment of debt service on the Series 2016 Bonds, before any drawing may be made on any other credit facility credited to the Series 2016 Bond Reserve Account in lieu of cash (“Credit Facility”). Payment of any Policy Costs shall be made prior to replenishment of any such cash amounts. Draws on all Credit Facilities (including the Series 2016 Bond Reserve Credit Facility) on which there is available coverage shall be made on a pro rata basis (calculated by reference to the coverage then available thereunder) after applying all available cash and investments in the Reserve Fund. Payment of Policy Costs and reimbursement of amounts with respect to other Credit Facilities shall be made on a pro rata basis prior to replenishment of any cash drawn from the Reserve Fund. For the avoidance of doubt, “available coverage” means the coverage then available for disbursement pursuant to the terms of the applicable alternative credit instrument without regard to the legal or financial ability or willingness of the provider of such instrument to honor a claim or draw thereon or the failure of such provider to honor any such claim or draw.

(b) If the Authority and the City shall fail to pay any Policy Costs in accordance with the requirements of paragraph (a) above, AGM shall be entitled to exercise any and all legal and equitable remedies available to it, including those provided under the Trust Agreement other than (i) acceleration of the maturity of the Series 2016 Bonds or (ii) remedies which would adversely affect owners of the Series 2016 Bonds.

(c) The Trust Agreement shall not be discharged until all Policy Costs owing to AGM shall have been paid in full. The Authority’s obligation to pay such amounts shall expressly survive payment in full of the Bonds.

(d) The Trust Agreement shall require the Trustee to ascertain the necessity for a claim upon the Series 2016 Bond Reserve Credit Facility in accordance with the provisions of paragraph (a) above and to provide notice to AGM in accordance with the terms of the Series 2016 Bond Reserve Credit Facility at least five business days prior to each date upon which interest or principal is due on the Series 2016 Bonds. Where deposits are required to be made by the Authority with the Trustee to the Revenue Fund for the Series 2016 Bonds more often than semi-annually, the Trustee shall give notice to AGM of any failure of the Authority to make timely payment in full of such deposits within two business days of the date due.

(e) The prior written consent of AGM shall be a condition precedent to the deposit of any credit instrument provided in lieu of a cash deposit into the Series 2016 Bond Reserve Account. Notwithstanding anything to the contrary set forth in the Trust Agreement, amounts on deposit in the Series 2016 Bond Reserve Account shall be applied solely to the payment of debt service due on the Series 2016 Bonds.

Investments

Subject to the Trust Agreement, all money held by the Trustee and the Treasurer in any of the accounts or funds established pursuant to the Trust Agreement shall be invested in Permitted Investments at the Written Request of the City or, if no instructions are received, in money market funds described in paragraph 4 of the definition of Permitted Investments; provided, however, that any such investment shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a Written Request of the City specifying a specific money market fund and, if no such

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Written Request of the City is so received, the Trustee shall hold such moneys uninvested. Such investments shall, as nearly as practicable, mature on or before the dates on which such money is anticipated to be needed for disbursement under the Trust Agreement. For purposes of this restriction, Permitted Investments containing a withdrawal option, repurchase option or put option by the investor shall be treated as having a maturity of no longer than such option. Subject to the Trust Agreement, all interest or profits received on any money so invested shall be deposited in the Revenue Fund. The Trustee and its affiliates may act as principal, agent, sponsor or advisor with respect to any investments. The Trustee shall not be liable for any losses on investments made in accordance with the terms and provisions of the Trust Agreement.

Investments purchased with funds on deposit in the Revenue Fund shall mature not later than the payment date or redemption date, as appropriate, immediately succeeding the investment.

Investments in any and all funds and accounts may be commingled for purposes of making, holding and disposing of investments, notwithstanding provisions in the Trust Agreement for transfer to or holding in particular funds and accounts amounts received or held by the Trustee under the Trust Agreement, provided that the Trustee shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in the Trust Agreement.

Additional Bonds

The Authority may at any time issue Additional Bonds pursuant to a Supplemental Trust Agreement, payable from the Revenues as provided in the Trust Agreement and secured by a pledge of and charge and lien upon the Revenues as provided in the Trust Agreement equal to the pledge, charge and lien securing the Outstanding Bonds theretofore issued under the Trust Agreement, but only subject to the following specific conditions, which are made conditions precedent to the issuance of any such Additional Bonds:

1. The Authority shall be in compliance with all agreements and covenants contained in the Trust Agreement and no Event of Default shall have occurred and be continuing.

2. The Supplemental Trust Agreement shall require that the proceeds of the sale of such Additional Bonds shall be applied to finance or refinance Projects, or for the refunding or repayment of any Bonds then Outstanding, including the payment of costs and expenses of and incident to the authorization and sale of such Additional Bonds. The Supplemental Trust Agreement may also provide that a portion of such proceeds shall be applied to the payment of the interest due or to become due on said Additional Bonds.

3. The Supplemental Trust Agreement shall state whether such Additional Bonds shall (i) constitute Common Reserve Bonds secured by the Common Reserve Account, (ii) be secured by any other Reserve Account, or (iii) not be secured by any Reserve Account.

4. The aggregate principal amount of Bonds issued and at any time Outstanding under the Trust Agreement shall not exceed any limit imposed by law, by the Trust Agreement or by any Supplemental Trust Agreement.

5. The Facilities Sublease shall have been amended, if necessary, so that the Base Rental Payments payable by the City thereunder in each Fiscal Year shall at least equal Debt Service, including Debt Service on the Additional Bonds, in each Fiscal Year, and if Base Rental Payments are being increased, a Certificate of the City shall

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be delivered to the Trustee certifying that the annual fair rental value (which may be based on, but not limited to, the construction or acquisition cost or replacement cost of such facility to the City) will be at least equal to 100% of the maximum amount of Base Rental Payments becoming due in the then current fiscal year or in any subsequent fiscal year.

6. If additional facilities, if any, are to be leased and are not situated on property described in the Facilities Lease and Facilities Sublease, (1) the Facilities Lease shall have been amended so as to lease to the Authority such additional real property; and (2) the Facilities Sublease shall have been amended so as to lease to the City such additional real property.

Limitations on the Issuance of Obligations Payable from Revenues

The Authority will not, so long as any of the Bonds are Outstanding, issue any obligations or securities, however denominated, payable in whole or in part from Revenues except the following:

(a) Bonds of any Series authorized pursuant to the Trust Agreement;

(b) Obligations which are junior and subordinate to the payment of the principal, premium and interest on the Bonds and which subordinated obligations are payable as to principal, premium and interest only out of Revenues after the prior payment of all amounts then required to be paid under the Trust Agreement from Revenues for principal, premium and interest, as the same become due and payable and at the times and in the manner as required in the Trust Agreement.

Covenant Against Encumbrances

The Authority will not make any pledge or assignment of or place any charge or lien upon the Revenues except as provided in the Trust Agreement, and will not issue any bonds, notes or obligations payable from the Revenues or secured by a pledge of or charge or lien upon the Revenues except as provided in the Trust Agreement.

Tax Covenants

The Authority has covenanted to comply with all requirements of Sections 148 and 149(b) of the Code to the extent applicable to the Bonds, and to not use or permit the use of any proceeds of the Bonds or any funds of the Authority, directly or indirectly, in any manner, or to take or omit to take any action, that would cause any of the Bonds to be treated as an obligation not described in Section 103(a) of the Code. In the event that at any time the Authority is of the opinion that it is necessary to restrict or to limit the yield on the investment of any moneys held by the Trustee under the Trust Agreement, the Authority shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions.

The Authority and the Trustee (as directed by the Authority) specifically covenant to comply with the provisions and procedures of the Tax Certificate; provided that the Trustee shall not be bound by this covenant if an Event of Default has occurred and is continuing.

Application of Insurance Proceeds

In the event of any damage to or destruction of any part of the Facilities covered by insurance, the Authority shall cause the proceeds of such insurance to be utilized for the repair, reconstruction or

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replacement of the damaged or destroyed portion of the Facilities, and the Trustee shall hold said proceeds in a fund established by the Trustee for such purpose separate and apart from all other funds, to the end that such proceeds shall be applied to the repair, reconstruction or replacement of the Facilities to at least the same good order, repair and condition as it was in prior to the damage or destruction, insofar as the same may be accomplished by the use of said proceeds. The Trustee shall invest said proceeds in Permitted Investments pursuant to the Request of the City, as agent for the Authority under the Facilities Sublease, and withdrawals of said proceeds shall be made from time to time upon the filing with the Trustee of a Written Request of the City, stating that the City has expended moneys or incurred liabilities in an amount equal to the amount therein stated for the purpose of the repair, reconstruction or replacement of the Facilities, and specifying the items for which such moneys were expended, or such liabilities were incurred, in reasonable detail. The City shall file a Certificate of the City with the Trustee that sufficient funds from insurance proceeds or from any funds legally available to the City, or from any combination thereof, are available in the event it elects to repair, reconstruct or replace the Facilities. Any balance of such proceeds not required for such repair, reconstruction or replacement and the proceeds of use and occupancy insurance shall be paid to the Trustee as Base Rental Payments and applied in the manner provided by the Trust Agreement. Alternatively, the City, if the proceeds of such insurance together with any other moneys then available for such purpose are sufficient to prepay all, in case of damage or destruction in whole of the Facilities, or that portion, in the case of partial damage or destruction of the Facilities, of the Base Rental Payments and all other amounts relating to the damaged or destroyed portion of the Facilities, may elect not to repair, reconstruct or replace the damaged or destroyed portion of the Facilities and thereupon shall cause said proceeds to be used for the redemption of Outstanding Bonds pursuant to the applicable provisions of the Trust Agreement. The City shall not apply the proceeds of insurance as set forth in this paragraph to redeem the Bonds in part due to damage or destruction of a portion of the Facilities unless the Base Rental Payments on the undamaged portion of the Facilities will be sufficient to pay the initially scheduled principal and interest on the Bonds remaining unpaid after such redemption.

Events of Default and Action on Default

The following events shall be “Events of Default”:

(a) if default shall be made by the Authority in the due and punctual payment of the interest on any Bond when and as the same shall become due and payable;

(b) if default shall be made by the Authority in the due and punctual payment of the principal of or redemption premium, if any, on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed or by proceedings for redemption;

(c) if default shall be made by the Authority in the performance of any of the other agreements or covenants required in the Trust Agreement to be performed by the Authority, and such default shall have continued for a period of 30 days after the Authority shall have been given notice in writing of such default by the Trustee;

(d) if the Authority shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the Authority seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the Authority or of the whole or any substantial part of its property; or

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(e) if an Event of Default has occurred under the Facilities Sublease.

In each and every case during the continuance of an Event of Default, the Trustee or the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding (subject to the provisions of the Trust Agreement) shall be entitled, upon notice in writing to the City and the Authority to exercise any of the remedies granted to the City under the Facilities Lease, to the Authority under the Facilities Sublease, and in addition, to take whatever action at law or in equity may appear necessary or desirable to enforce its rights or to protect and enforce any of the rights vested in the Trustee or the Owners by the Trust Agreement or by the Bonds, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right, including any one or more of the remedies set forth in (a), (b) or (c) in the paragraph below.

Other Remedies of the Trustee. The Trustee shall have the right: (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the City, the Authority or any director, officer or employee thereof, and to compel the City or the Authority or any such director, officer or employee to perform or carry out its or his or her duties under law and the agreements and covenants required to be performed by it or him or her contained in the Trust Agreement; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee; or (c) by suit in equity upon the happening of any default under the Trust Agreement to require the City and the Authority to account as the trustee of an express trust.

Limitation on Bondholders’ Right to Sue. No Bondholder of any Bond issued under the Trust Agreement shall have the right to institute any suit, action or proceeding at law or equity, for any remedy under or upon the Trust Agreement, unless (a) such Bondholder shall have previously given to the Trustee written notice of the occurrence of an event of default pursuant to the Trust Agreement; (b) the Bondholders of at least a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers therein granted or to institute such suit, action or proceeding in its own name; (c) said Bondholders shall have tendered to the Trustee reasonable security or indemnity 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 (60) days after such request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.

Application of Funds After Default

Notwithstanding anything to the contrary contained in the Trust Agreement, after a default by the City, all funds and accounts held by the Trustee and all payments received by the Trustee with respect to the rental of the Facilities after a default by the City pursuant to the Facility Sublease, and all damages or other payments received by the Trustee for the enforcement of any rights and powers of the Trustee under the Facility Sublease, shall be deposited into the Revenue Fund and as soon as practicable thereafter applied:

First, to the payment of the reasonable fees, costs and expenses of the Trustee in providing for the declaration of such event of default and carrying out its duties under the Trust Agreement, including reasonable compensation to their accountants and counsel together with interest on any amounts advanced as provided in the Trust Agreement and thereafter to the payment of the reasonable costs and expenses of the Bondholders, if any, in carrying out the provisions of this section, including reasonable compensation to their accountants and counsel; and

Second, upon presentation of the several Bonds, and the stamping thereon of the amount of the payment if only partially paid or upon the surrender thereof if fully paid, to the payment of the whole

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amount then owing and unpaid upon the Bonds for interest and principal, with (to the extent permitted by law) interest on the overdue interest and principal at the rate borne by such Bonds, and in case such money shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and (to the extent permitted by law) interest on overdue interest and principal without preference or priority among such interest, principal and interest on overdue interest and principal ratably to the aggregate of such interest, principal and interest on overdue interest and principal.

Amendment of Documents

Trust Agreement. The Trust Agreement and the rights and obligations of the Authority and of the Bondholders may be amended at any time by a Supplemental Trust Agreement which shall become binding when the written consents of the Bond Insurer, if any Bondholders of a majority in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in the Trust Agreement, are filed with the Trustee; provided that if such modification or amendment will, by its terms, not take effect so long as any Bonds of any particular maturity or Series remain Outstanding, the consent of the Holders of such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Bonds Outstanding under the Trust Agreement. No such amendment shall (1) extend the maturity of or reduce the interest rate on or amount of interest on or principal of or redemption premium, if any, on any Bond without the express written consent of the Bondholder of such Bond and the Bond Insurer, if any, for such Bond, or (2) permit the creation by the Authority of any pledge of or charge or lien upon the Revenues as provided in the Trust Agreement superior to or on a parity with the pledge, charge and lien created thereby for the benefit of the Bonds without the prior written consent of the Bond Insurer, or (3) reduce the percentage of Bonds required for the written consent to any such amendment, or (4) modify any rights or obligations of the Trustee, the Authority, or the City without their prior written assent thereto, respectively. It shall not be necessary for the consent of the Bondholders to approve the particular form of any Supplemental Trust Agreement, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Authority and the Trustee of any Supplemental Trust Agreement pursuant to the Trust Agreement, the Trustee shall mail a notice on behalf of the Authority, setting forth in general terms the substance of such Supplemental Trust Agreement to the Bondholders at the addresses shown on the registration books maintained by the Trustee. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Trust Agreement.

The Trust Agreement and the rights and obligations of the Authority and of the Bondholders may also be amended at any time by a Supplemental Trust Agreement which shall become binding upon adoption without the consent of any Bondholders, but with the prior written consent of the Bond Insurer, for any purpose that will not materially adversely affect the interests of the Bondholders, including (without limitation) for any one or more of the following purposes: (i) to add to the agreements and covenants required in the Trust Agreement to be performed by the Authority other agreements and covenants thereafter to be performed by the Authority, or to surrender any right or power reserved in the Trust Agreement to or conferred therein on the Authority; (ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained in the Trust Agreement or in regard to questions arising under the Trust Agreement which the Authority may deem desirable or necessary; (iii) to provide for the issuance of any Additional Bonds and to provide the terms of such Additional Bonds, subject to the conditions and upon compliance with the procedure set forth in the Trust Agreement (which shall be deemed not to adversely affect Bondholders); or (iv) to add to the agreements and covenants required in the Trust Agreement, such agreements and covenants as may be necessary to qualify the Trust Agreement under the Trust Indenture Act of 1939.

Facilities Sublease or Facilities Lease. The Authority shall not supplement, amend, modify or terminate any of the terms of the Facilities Sublease or Facilities Lease, or consent to any such

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supplement, amendment, modification or termination, without the prior written consent of the Trustee and the Bond Insurer. The Trustee shall give such written consent if such supplement, amendment, modification or termination (a) will not materially adversely affect the interests of the Bondholders or result in any material impairment of the security given by the Trust Agreement for the payment of the Bonds (provided that such supplement, amendment or modification shall not be deemed to have such adverse effect or to cause such material impairment solely by reason of increasing the amount of Base Rental Payments to provide for the payment of Additional Bonds as required by the Trust Agreement or substitution, release or addition of real property pursuant to the Facilities Sublease), (b) is to add to the agreements, conditions, covenants and terms required to be observed or performed thereunder by any party thereto, or to surrender any right or power therein reserved to the Authority or the City, (c) is to cure, correct or supplement any ambiguous or defective provision contained therein, (d) is to accommodate any increase in the amount of Base Rental Payments to provide for the payment of Base Rental Payments as required by the Trust Agreement; or any addition, substitution or release of property in accordance with the Facilities Sublease, (e) is to modify the legal description of the Facilities to conform to the requirements of title insurance or otherwise to add or delete property descriptions to reflect accurately the description of the parcels intended or preferred to be included therein, or substituted for the Facilities pursuant to the provisions of the Facilities Sublease, or (f) if the Trustee first obtains the written consent of the Bondholders of a majority in principal amount of the Bonds then Outstanding to such supplement, amendment, modification or termination.

Discharge of Bonds

If the Authority shall pay or cause to be paid or there shall otherwise be paid to the Bondholders of all Outstanding Bonds the interest thereon and principal thereof and redemption premiums, if any, thereon at the times and in the manner stipulated in the Trust Agreement and therein, and the Authority shall pay in full all other amounts due under the Trust Agreement and under the Facilities Sublease, then the Bondholders of such Bonds shall cease to be entitled to the pledge of and charge and lien upon the Revenues as provided in the Trust Agreement, and all agreements, covenants and other obligations of the Authority to the Bondholders of such Bonds under the Trust Agreement shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Authority all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, the Trustee shall pay over or deliver to the Authority all money or securities held by it pursuant to the Trust Agreement which are not required for the payment of the interest on and principal of and redemption premiums, if any, on such Bonds and for the payment of all other amounts due under the Trust Agreement and under the Facilities Sublease.

Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in subparagraph (a) above if (1) in case any of such Bonds are to be redeemed on any date prior to their maturity date, the Authority shall have given to the Trustee in form satisfactory to it irrevocable instructions to provide notice in accordance with the Trust Agreement, (2) there shall have been deposited with the Trustee (A) money in an amount which shall be sufficient and/or (B) Government Securities, the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with the Trustee at the same time, shall be sufficient, in the opinion of an Independent Certified Public Accountant, to pay when due the interest to become due on such Bonds on and prior to the maturity date or redemption date thereof, as the case may be, and the principal of and redemption premiums, if any, on such Bonds, and (3) in the event such Bonds are not by their terms subject to redemption within the next succeeding 60 days, the Authority shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the Bondholders of such Bonds that the deposit required by clause (2) above has been made with the Trustee and that such Bonds are deemed to have been paid in accordance with the Trust Agreement and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and redemption premiums, if any, on such Bonds.

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Unclaimed Money

Anything contained in the Trust Agreement to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Bonds or interest thereon which remains unclaimed for two (2) years after the date when such Bonds or interest thereon have become due and payable, either at their stated maturity dates or by call for redemption prior to maturity, if such money was held by the Trustee at such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when such Bonds have become due and payable, shall at the Written Request of the Authority be repaid by the Trustee to the Authority as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Bondholders shall not look to the Trustee for the payment of such Bonds; provided, however, that before being required to make any such payment to the Authority, the Trustee may, and at the request of the Authority shall, at the expense of the Authority, cause to be published once a week for two (2) successive weeks in a Financial Newspaper of general circulation in Los Angeles and in San Francisco, California, and in the same or a similar Financial Newspaper of general circulation in New York, New York, a notice that such money remains unclaimed and that, after a date named in such notice, which date shall not be less than thirty (30) days after the date of the first publication of each such notice, the balance of such money then unclaimed will be returned to the Authority.

General Provisions Relating to Bond Insurance

So long as any Insured Bonds remain outstanding and AGM shall not have defaulted under the 2016 Bond Insurance Policy (or any amounts are owed to the AGM), the provisions of the Trust Agreement as described under the caption “GENERAL PROVISIONS RELATING TO BOND INSURANCE” shall govern, notwithstanding anything to the contrary set forth in the Trust Agreement, or individually in the appropriate sections:

(a) AGM shall be deemed to be the sole holder of the Insured Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the holders of the Insured Bonds are entitled to take pursuant to the Trust Agreement pertaining to (i) defaults and remedies and (ii) the duties and obligations of the Trustee. In furtherance thereof and as a term of the Trust Agreement and each Insured Bond, the Trustee (solely with respect to the Insured Bonds) and each Owner of an Insured Bond appoint AGM as their agent and attorney-in-fact and agree that AGM may at any time during the continuation of any proceeding by or against the Authority or the City under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an “Insolvency Proceeding”) direct all matters relating to such Insolvency Proceeding, including without limitation, (A) all matters relating to any claim or enforcement proceeding in connection with an Insolvency Proceeding (a “Claim”), (B) the direction of any appeal of any order relating to any Claim, (C) the posting of any surety, supersedeas or performance bond pending any such appeal, and (D) the right to vote to accept or reject any plan of adjustment. In addition, the Trustee (solely with respect to the Insured Bonds) and each Owner of an Insured Bond delegate and assign to AGM, to the fullest extent permitted by law, the rights of the Trustee and each Owner of an Insured Bond in the conduct of any Insolvency Proceeding, including, without limitation, all rights of any party to an adversary proceeding or action with respect to any court order issued in connection with any such Insolvency Proceeding. Remedies granted to the Owners shall expressly include mandamus.

(b) No grace period for a covenant default shall exceed 30 days or be extended for more than 60 days, without the prior written consent of AGM. No grace period shall be permitted for payment defaults.

(c) Upon the occurrence of an extraordinary redemption in part, the selection of Insured Bonds to be redeemed shall be subject to the approval of the Bond Insurer. The exercise of any provision

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of the Trust Agreement which permits the purchase of Insured Bonds in lieu of redemption shall require the prior written approval of the Bond Insurer if any Insured Bond so purchased is not cancelled upon purchase.

(d) Any amendment, supplement, modification to, or waiver of, the Trust Agreement, the Facility Lease, the Facility Sublease or any other transaction document, including any underlying security agreement (each a “Related Document”), shall be subject to the prior written consent of AGM.

(e) The rights granted to AGM under the Trust Agreement or any other Related Document to request, consent to or direct any action are rights granted to AGM in consideration of its issuance of the Series 2016 Insurance Policy. Any exercise by AGM of such rights is merely an exercise of AGM’s contractual rights and shall not be construed or deemed to be taken for the benefit, or on behalf, of the Owners and such action does not evidence any position of AGM, affirmative or negative, as to whether the consent of the Owners or any other person is required in addition to the consent of AGM.

(f) Only (1) cash, (2) non-callable direct obligations of the United States of America (“Treasuries”), (3) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (4) subject to the prior written consent of AGM, pre-refunded municipal obligations rated “AAA” and “Aaa” by S&P and Moody’s, respectively, or (5) subject to the prior written consent of the Bond Insurer Defeasance Securities as defined in the Trust Agreement provided such securities are eligible for defeasance under then existing criteria of S&P, shall be used to effect defeasance of the Series 2016 Bonds unless AGM otherwise approves.

(g) To accomplish defeasance, the Authority shall cause to be delivered to AGM (i) a report of an independent firm of nationally recognized certified public accountants or such other accountant as shall be acceptable to AGM (“Accountant”) verifying the sufficiency of the escrow established to pay the Insured Bonds in full on the maturity or redemption date (“Verification”), (ii) an escrow deposit agreement of instructions (which shall be acceptable in form and substance to AGM), (iii) an opinion of nationally recognized bond counsel to the effect that the Insured Bonds are no longer “Outstanding” under the Trust Agreement and (iv) a certificate of discharge of the Trustee with respect to the Insured Bonds; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the Authority, Trustee and AGM. AGM shall be provided drafts of the above-referenced documentation not less than five business days prior to the funding of the escrow.

(h) Insured Bonds shall be deemed “Outstanding” under the Trust Agreement unless and until they are in fact paid and retired or the above criteria are met.

(i) Amounts paid by AGM under the Insurance Policy shall not be deemed paid for purposes of the Trust Agreement and the Insured Bonds relating to such payments shall remain Outstanding and continue to be due and owing until paid by the Authority in accordance with the Trust Agreement. The Trust Agreement shall not be discharged unless all amounts due or to become due to AGM have been paid in full or duly provided for.

(j) Each of the Authority and Trustee covenant and agree to take such action as is necessary from time to time to preserve the priority of the pledge of Revenues under applicable law.

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Claims Upon the Insurance Policy and Payments by and to AGM

(a) 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 the Trustee, after making all transfers and deposits required under the Trust Agreement, moneys sufficient to pay the principal of and interest on the Insured Bonds due on such Payment Date, the Trustee shall give notice to AGM and to its designated agent (if any) (the “Insurer’s Fiscal Agent”) by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the second Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available to pay the principal of and interest on the Insured Bonds due on such Payment Date, the Trustee shall make a claim under the Insurance Policy and give notice to AGM and AGM’s Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay interest on the Insured Bonds and the amount required to pay principal of the Insured Bonds, confirmed in writing to AGM and AGM’s Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the Insurance Policy.

(b) The Trustee shall designate any portion of payment of principal on Insured Bonds paid by AGM, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Insured Bonds registered to the then current Owner of an Insured Bond, whether DTC or its nominee or otherwise, and shall issue a replacement bond to AGM, registered in the name of Assured Guaranty Municipal Corp., 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 Authority on any Insured Bond or the subrogation rights of AGM.

(c) The Trustee shall keep a complete and accurate record of all funds deposited by AGM into the Policy Payments Account (defined below) and the allocation of such funds to payment of interest on and principal of any Insured Bond. AGM shall have the right to inspect such records at reasonable times upon reasonable notice to the Trustee.

(d) Upon payment of a claim under the Insurance Policy, the Trustee shall establish a separate special purpose trust account for the benefit of Owners of Insured Bonds referred to in the Trust Agreement 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 the Insurance Policy in trust on behalf of Owners of Insured Bonds 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 of Insured Bonds in the same manner as principal and interest payments are to be made with respect to the Insured Bonds under the sections hereof regarding payment of Insured Bonds. 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. Notwithstanding anything in the Trust Agreement to the contrary, the Authority agrees to pay to AGM (i) a sum equal to the total of all amounts paid by AGM under the Insurance Policy (the “Insurer Advances”); and (ii) interest on such Insurer Advances from the date paid by AGM until payment thereof in full, payable to AGM at the Late Payment Rate per annum (collectively, the “Insurer Reimbursement Amounts”). “Late Payment Rate” means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in The City of New York, as its prime or base lending rate (any change in such rate of interest to be effective on the date such change is announced by JPMorgan Chase Bank) plus 3%, and (ii) the then applicable highest rate of interest on the Insured Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. The Authority

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hereby covenants and agrees that the Insurer Reimbursement Amounts are secured by a lien on and pledge of the Revenues and payable from such Revenues on a parity with debt service due on the Series 2016 Bonds.

(e) 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 an Interest Payment Date shall promptly be remitted to AGM.

(f) AGM shall, to the extent it makes any payment of principal of or interest on the Insured Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Insurance Policy (which subrogation rights shall also include the rights of any such recipients in connection with any insolvency proceeding). Each obligation of the Authority to AGM under the Related Documents shall survive discharge or termination of such Related Documents.

(g) The Authority or the City, as applicable, shall (solely from Base Rental Payments or Additional Rentals, as appropriate) pay or reimburse AGM any and all charges, fees, costs and expenses that AGM may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in any Related Document; (ii) the pursuit of any remedies under the Trust Agreement or any other Related Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, the Trust Agreement or any other Related Document whether or not executed or completed, or (iv) any litigation or other dispute in connection with the Trust Agreement or any other Related Document or the transactions contemplated thereby, other than costs resulting from the failure of AGM to honor its obligations under the Insurance Policy. AGM reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the Trust Agreement or any other Related Document.

(h) After payment of reasonable expenses of the Trustee, the application of funds realized upon default shall be applied to the payment of expenses of the Authority or rebate only after the payment of past due and current debt service on the Bonds and amounts required to restore the Reserve Funds to the applicable Reserve Fund Requirement.

(i) AGM shall be entitled to pay principal or interest on the Insured Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Authority (as such terms are defined in the Insurance Policy) and any amounts due on the Insured Bonds as a result of acceleration of the maturity thereof in accordance with the Trust Agreement, whether or not AGM has received a Notice of Nonpayment (as such terms are defined in the Insurance Policy) or a claim upon the Insurance Policy.

Provision of Information and Notice to the Insurer

So long as any Bonds remain outstanding and AGM shall not have defaulted under the 2016 Bond Insurance Policy, AGM shall be provided with the following information by the Authority or Trustee, as the case may be:

(a) Notice of any draw upon the Series 2016 Bond Reserve Account within two Business Days after knowledge thereof other than (i) withdrawals of amounts in excess of the 2016 Bond Reserve Requirement and (ii) withdrawals in connection with a refunding of Bonds.

(b) Notice of any default known to the Trustee or Authority within five Business Days after knowledge thereof.

(c) Prior notice of the advance refunding or redemption of any of the Insured Bonds, including the principal amount, maturities and CUSIP numbers thereof.

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(d) Notice of the resignation or removal of the Trustee and Bond Registrar and the appointment of, and acceptance of duties by, any successor thereto.

(e) Notice of the commencement of any proceeding by or against the Authority or the City commenced under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an “Insolvency Proceeding”).

(f) Notice of the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the Bonds.

(g) A full original transcript of all proceedings relating to the execution of any amendment, supplement, or waiver to the Related Documents.

(h) All reports, notices and correspondence to be delivered to Owners under the terms of the Related Documents.

(i) All information furnished pursuant to any continuing disclosure agreement, covenant or undertaking with respect to the Series 2016 Bonds shall also be provided to the Insurer, simultaneously with the furnishing of such information.

(j) AGM shall have the right to receive such additional information as it may reasonably request.

(k) The Trustee shall notify the Insurer of any failure of the Authority or the City to provide notices, certificates and other information under the transaction documents.

(l) Notwithstanding satisfaction of the other conditions to the issuance of Additional Bonds set forth in the Trust Agreement, no such issuance may occur (1) if an Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) exists unless such default shall be cured upon such issuance and (2) unless the 2016 Bond Reserve Account is fully funded at the 2016 Bond Reserve Account Requirement, in either case unless otherwise permitted by the AGM.

(m) In determining whether any amendment, consent, waiver or other action to be taken, or any failure to take action, under the Trust Agreement would adversely affect the security for the Bonds or the rights of the Bondholders, the Trustee shall consider the effect of any such amendment, consent, waiver, action or inaction as if there were no 2016 Bond Insurance Policy.

(n) No contract shall be entered into or any action taken by which the rights of the AGM or security for or sources of payment of the Bonds may be impaired or prejudiced in any material respect except upon obtaining the prior written consent of the AGM.

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APPENDIX D

BOOK-ENTRY-ONLY SYSTEM

The following description of DTC and its book-entry system has been provided by DTC and has not been verified for accuracy or completeness by the City or the Authority, and neither the City nor the Authority shall have any liability with respect thereto. Neither the City nor the Authority shall have any responsibility or liability for any aspects of the records maintained by DTC relating to or payments made on account of beneficial ownership, or for maintaining, supervising, or reviewing any records maintained by DTC relating to beneficial ownership, of interests in the Series 2016 Bonds.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Series 2016 Bonds. The Series 2016 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered bond will be issued for each issue of the Series 2016 Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com, provided that nothing contained in such website is incorporated into this Official Statement.

Purchases of Series 2016 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2016 Bonds on DTC’s records. The ownership interest of each actual purchaser of each 2016 Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2016 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in 2016 Bonds, except in the event that use of the book-entry system for the Series 2016 Bonds is discontinued.

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To facilitate subsequent transfers, all 2016 Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2016 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2016 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2016 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2016 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2016 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Sublease or the Trust Agreement. For example, Beneficial Owners of Series 2016 Bonds may wish to ascertain that the nominee holding the Series 2016 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Series 2016 Bonds 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 any other DTC nominee) will consent or vote with respect to 2016 Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority 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 2016 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Series 2016 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Authority or the Trustee, on payable dates in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name” and will be the responsibility of such Participant and not of DTC, the Trustee, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority 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 depository with respect to the Series 2016 Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, bonds are required to be printed and delivered. The Authority may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, bonds will be printed and delivered to DTC.

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The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Authority and the City believes to be reliable, but the Authority and the City takes no responsibility for the accuracy thereof.


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APPENDIX E

FORM OF CONTINUING DISCLOSURE CERTIFICATE

THIS CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”), dated as of September 1, 2016, is executed and delivered by the City of Pomona (the “City”).

WHEREAS, pursuant to the Master Trust Agreement, dated as of September 1, 2016 (the “Trust Agreement”), by and among the Pomona Public Financing Authority (the “Authority”), the City and Zions Bank, a division of ZB, National Association, as trustee (the “Trustee”), the Authority has issued $26,645,000 aggregate principal amount of the Pomona Public Financing Authority 2016 Lease Revenue Refunding Bonds, Series BC (the “Bonds”);

WHEREAS, the Bonds are payable from the base rental payments to be made by the City under the Master Facilities Sublease, dated as of September 1, 2016, by and between the City, as lessee, and the Authority, as lessor; and

WHEREAS, this Disclosure Certificate is being executed and delivered by the City for the benefit of the Owners (capitalized undefined terms used herein have the meanings ascribed thereto in Section 1 hereof) and Beneficial Owners of the Bonds, and in order to assist the Participating Underwriters in complying with the Rule;

NOW, THEREFORE, the City covenants as follows:

Section 1. 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, the following capitalized terms shall have the following meanings:

“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 2 and 3 hereof.

“Annual Report Date” means the date in each year that is nine months after the end of the City’s fiscal year, which date, as of the date of this Disclosure Certificate, is April 1.

“Beneficial Owner” means any person that has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries).

“Dissemination Agent” means the City, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.

“Listed Events” means any of the events listed in Section 4(a) or (b) hereof.

“MSRB” means the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.

“Official Statement” means the Official Statement, dated September 17, 2016 (including all exhibits or appendices thereto), relating to the offering and sale of Bonds.

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“Owner” means the person in whose name any Bond shall be registered.

“Participating Underwriters” means any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds.

“Rule” means 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.

Section 2. Provision of Annual Reports.

(a) The City shall, or shall cause the Dissemination Agent to provide to the MSRB an Annual Report which is consistent with the requirements of Section 3 hereof, not later than the Annual Report Date, commencing with the report for the 2015-16 fiscal year. The Annual Report may include by reference other information as provided in Section 3 hereof; provided, however, that the audited financial statements of the City 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 they are not available by that date. If the City’s fiscal year changes, it shall, or it shall instruct the Dissemination Agent to, give notice of such change in a filing with the MSRB.

(b) Not later than 15 Business Days prior to the date specified in subsection (a), the City shall provide the Annual Report to the Dissemination Agent, if any. The Dissemination Agent shall (i) file any Annual Report received by it with the MSRB, as provided herein, and (ii) file a report with the City certifying that the Annual Report has been filed with the MSRB pursuant to this Disclosure Certificate, stating the date it was so filed.

(c) If the City is unable to file, or cause the Dissemination Agent to file, an Annual Report with the MSRB by the date required in subsection (a) of this Section, the City shall, in a timely manner, file or cause to be filed with the MSRB, a notice in substantially the form attached as Exhibit A.

Section 3. Content of Annual Reports. The City’s Annual Report shall contain or include by reference the following:

(a) Audited financial statements of the City for the preceding fiscal year, prepared in accordance with the generally accepted auditing standards for municipalities in the State of California. If the City’s audited financial statements are not available by the time the Annual Report is required to be provided to the MSRB pursuant to Section 2(a) hereof, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be provided to the MSRB in the same manner as the Annual Report when they become available.

(b) To the extent not included in the audited financial statements of the City, the Annual Report shall also include the following:

(i) the principal amount of Bonds Outstanding as of the January 2 next preceding the Annual Report Date; and

(ii) annual sources revenues for all governmental funds, or General Fund only, in substantially the form of Table No. 1;

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(iii) assessed valuation of property in the City for the most recent Fiscal Year in substantially the form of Table No. 2;

(iv) a list of top ten property owners in the City for the most recent Fiscal Year available in substantially the form of Table No. 3;

(v) General Fund balance sheet for the most recent Fiscal Year in substantially the form of Table No. 5;

(vi) General Fund summary of revenues and expenditures for the most recent Fiscal Year in substantially the form of Table No. 6;

(vii) General Fund budget for the most recent Fiscal Year in substantially the form of Table No. 7;

(viii) Description of outstanding General Fund debt and lease obligations;

(ix) The balance in the Series 2016 Bond Reserve Account, and a statement of the Series 2016 Bond Reserve Fund Requirement, as of the January 2 next preceding the Annual Report Date;

(x) information under the captions “CITY OF POMONA FINANCES – Retirement System” and “– Other Post Employment Benefits”; and

(xi) Summary of City’s current fiscal year’s investments, including types and amounts of investments, return on investments, average yield of investments and market value of investments.

In addition to any of the information expressly required to be provided under paragraphs (a), (b) and (c), above, the City shall provide such further information, if any, as may be necessary to make the specifically required statements, in light of the circumstances under which they are made, not misleading.

Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been made available to the public on the MSRB website. The City shall clearly identify each such other document so included by reference.

Section 4. Reporting of Listed Events.

(a) Pursuant to the provisions of this Section, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not later than ten business days after the occurrence of the event:

(i) principal and interest payment delinquencies;

(ii) unscheduled draws on debt service reserves reflecting financial difficulties;

(iii) unscheduled draws on credit enhancements reflecting financial difficulties;

(iv) substitution of credit or liquidity providers or their failure to perform;

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(v) adverse tax opinions or issuance by the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB);

(vi) tender offers;

(vii) defeasances;

(viii) rating changes; or

(ix) bankruptcy, insolvency, receivership or similar event of the City.

For purposes of the event identified in paragraph (ix), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.

(b) Pursuant to the provisions of this Section, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material, in a timely manner not later than ten business days after the occurrence of the event:

(i) unless described in paragraph (v) of subsection (a) of this Section, other material notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds;

(ii) modifications to rights of Owners;

(iii) optional, unscheduled or contingent bond calls;

(iv) release, substitution or sale of property securing repayment of the Bonds;

(v) non-payment related defaults;

(vi) the consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; and

(vii) appointment of a successor or additional Paying Agent or the change of name of a Paying Agent.

(c) Whenever the City obtains knowledge of the occurrence of a Listed Event described in subsection (b) of this Section, the City shall determine if such event would be material under applicable Federal securities laws.

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(d) Whenever the City obtains knowledge of the occurrence of a Listed Event described in subsection (a) of this Section, or determines that knowledge of a Listed Event described in subsection (b) of this Section would be material under applicable Federal securities laws, the City shall file, or shall cause the Dissemination Agent to file, within ten business days of such occurrence, a notice of such occurrence with the MSRB. Notwithstanding the foregoing, notice of Listed Events described in paragraphs (vii) of subsection (a) of this Section and (iii) of subsection (b) of this Section need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant to the Trust Agreement.

Section 5. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB.

Section 6. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give, or cause the Dissemination to give, notice of such termination in a filing with the MSRB.

Section 7. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be the City. If at any time there is not any other designated Dissemination Agent, the City shall be the Dissemination Agent.

Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:

(a) if the amendment or waiver relates to the provisions of Section 2(a), Section 3 or Section 4(a) or (b) hereof, 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 Bonds, or the 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 Bonds, 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 the Owners in the same manner as provided in the Trust Agreement for amendments to the Trust Agreement with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds.

In the event of any amendment or waiver of a provision of this Disclosure Certificate, the City shall describe such amendment or waiver in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in

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preparing financial statements (i) notice of such change shall be given in a filing with the MSRB, and (ii) the Annual Report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice required to be filed pursuant to this Disclosure Certificate, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice required to be filed pursuant to this Disclosure Certificate.

Section 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate; provided, that any such action may be instituted only in Superior Court of the State of California in and for the County of Los Angeles or in U.S. District Court in or nearest to the County of Los Angeles. 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 City 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 City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

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Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriters and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

CITY OF POMONA

By: City Manager

ATTEST:

City Clerk

APPROVED AS TO FORM:

City Attorney

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EXHIBIT A

FORM OF NOTICE OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: Pomona Public Financing Authority

Name of Issue: Pomona Public Financing Authority 2016 Lease Revenue Refunding Bonds, Series BC

Date of Issuance: September 8, 2016

NOTICE IS HEREBY GIVEN that the City of Pomona (the “City”) has not provided an Annual Report with respect to the above-named Bonds as required by Section 2 of the Continuing Disclosure Certificate, dated as of September 1, 2016, executed and delivered by the City. [The City anticipates that the Annual Report will be filed by _____________.]

Dated: _______________ CITY OF POMONA

By: City Manager

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APPENDIX F

PROPOSED FORM OF OPINION OF BOND COUNSEL

Upon delivery of the Series 2016 Bonds, Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Bond Counsel, proposes to render its final approving opinion with respect to the Series 2016 Bonds in substantially the following form:

[Date of Delivery]

Pomona Public Financing Authority Pomona, California

Pomona Public Financing Authority 2016 Lease Revenue Refunding Bonds, Series BC

(Final Opinion)

Ladies and Gentlemen:

We have acted as bond counsel to the Pomona Public Financing Authority (the “Authority”) in connection with the issuance of $26,645,000 aggregate principal amount of Pomona Public Financing Authority 2016 Lease Revenue Refunding Bonds, Series BC (the “Series 2016 Bonds”), issued pursuant to a Master Trust Agreement, dated as of September 1, 2016 (the “Trust Agreement”), between the Authority and Zions Bank, a division of ZB, National Association, as trustee (the “Trustee”). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Trust Agreement.

In such connection, we have reviewed the Master Facilities Lease, dated as of September 1, 2016 (the “Facilities Lease”), between the City of Pomona (the “City”), as lessor, and the Authority, as lessee; the Master Facilities Sublease, dated as of September 1, 2016 (the “Facilities Sublease”), between the Authority, as lessor, and the City, as lessee; the Trust Agreement; the Tax Certificate and Agreement, dated the date hereof (the “Tax Certificate”), between the Authority and the City; opinions of counsel to the Authority, the City and the Trustee; certificates of the Authority, the City, the Trustee and others; and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein.

The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Accordingly, this letter speaks only as of its date and is not intended to, and may not, be relied upon or otherwise used in connection with any such actions, events or matters. Our engagement with respect to the Series 2016 Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Authority and the City. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to

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in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Facilities Lease, the Facilities Sublease, the Trust Agreement and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Series 2016 Bonds to be included in gross income for federal income tax purposes. We call attention to the fact that the rights and obligations under the Series 2016 Bonds, the Facilities Lease, the Facilities Sublease, the Trust Agreement and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases, and to the limitations on legal remedies against joint powers authorities and cities in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in the foregoing documents nor do we express any opinion with respect to the state or quality of title to or interest in any of the real or personal property described in or as subject to the lien of the Facilities Lease, the Facilities Sublease or the Trust Agreement or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such property. Our services did not include financial or other non-legal advice. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Series 2016 Bonds and express no opinion with respect thereto.

Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:

1. The Series 2016 Bonds constitute the valid and binding limited obligations of the Authority.

2. The Trust Agreement has been duly executed and delivered by, and constitutes the valid and binding obligation of, the Authority. The Trust Agreement creates a valid pledge, to secure the payment of the principal of and interest on the Series 2016 Bonds, of the Revenues and any other amounts held by the Trustee in any fund or account established pursuant to the Trust Agreement, except the Rebate Fund, subject to the provisions of the Trust Agreement permitting the application thereof for the purposes and on the terms and conditions set forth in the Trust Agreement.

3. The Facilities Lease and the Facilities Sublease have been duly executed and delivered by, and constitute the valid and binding obligations of, the Authority and the City.

4. Interest on the Series 2016 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Interest on the Series 2016 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although we observe that it is included in adjusted current earnings when calculating corporate alternative minimum taxable income. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Series 2016 Bonds.

Faithfully yours,

APPENDIX G

FORM OF CITY INVESTMENT POLICY


CITY OF POMONA2016 STATEMENT OF INVESTMENT POLICY

ADOPTED BY CITY COUNCILRESOLUTION NO. 2016-10

City of Pomona Investment Policy 2016

TABLE OF CONTENTS

I. MISSION STATEMENT ...................................................................................................................... 3

II. SCOPE A. Pooling of Funds ..................................................................................................................... 3 B. Funds Included in this Policy .................................................................................................. 3 C. Funds Excluded from this Policy............................................................................................. 3

III. GENERAL OBJECTIVES A. Safety...................................................................................................................................... 3 B. Liquidity ................................................................................................................................. 4 C. Yield (Return on Investment) ................................................................................................. 4

IV. STANDARDS OF CARE A. Prudence ................................................................................................................................ 4 B. Ethics and Conflicts of Interest .............................................................................................. 4 C. Delegation of Authority .......................................................................................................... 4 D. Internal Controls .................................................................................................................... 5 E. Review of Investment Portfolio ............................................................................................. 5

V. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS................................................................. 5

VI. SAFEKEEPING AND CUSTODY .......................................................................................................... 5

VII. SUITABLE AND AUTHORIZED INVESTMENTS .................................................................................. 6A. Investment Types ................................................................................................................... 6 B. Collateralization ..................................................................................................................... 9 C. Investments Not Approved .................................................................................................. 10 D. Exceptions to Prohibited and Restricted Investments ........................................................ 10

VIII. INVESTING PARAMETERS A. Diversification ...................................................................................................................... 10 B. Maximum Maturities ........................................................................................................... 11

IX. REPORTING A. Quarterly Reporting to City Council ..................................................................................... 11

X. PERFORMANCE STANDARDS A. Market Yield (Benchmark) ................................................................................................... 11 B. Marking to Market ............................................................................................................... 11

XI. INVESTMENT POLICY COMPLIANCE AND ADOPTION A. Policy Compliance and Changes ........................................................................................... 12 B. Annual Statement of Investment Policy .............................................................................. 12

APPENDIX: GLOSSARY OF INVESTMENT TERMS ...................................................................................... 13

City of Pomona Investment Policy 3 2015

I. MISSION STATEMENT It is the policy of the City of Pomona (“City”) to invest public funds in a manner that will provide maximum security, adequate liquidity and sufficient yield, while meeting the daily cash flow demands of the City and conforming to all statutes and regulations governing the investment of public funds.

II. SCOPE This investment policy applies to all the cash assets of City of Pomona, the Pomona Housing Authority, the Pomona Public Financing Authority, and the Successor Agency of the City of Pomona. These funds are accounted for in the City’s audited Annual Financial Report. If the City invests funds on behalf of another agency and, if that agency does not have its own policy, the City's investment policy shall govern the agency's investments.

A. Pooling of Funds Except for cash in certain restricted and special funds, the City shall consolidate cash balances from all funds to maximize investment earnings. Investment income shall be allocated to various funds in accordance with generally accepted accounting principles.

B. Funds Included in this Policy The funds subject to this policy are: General Fund; Special Revenue Funds; Capital Project Funds; Enterprise Funds; Internal Service Funds; Trust and Agency Funds; and any new fund that may be created unless specifically exempted.

C. Funds Excluded from this Policy 1. City’s Service Retirement System Fund. This fund is managed by the California Public

Employee’s Retirement System (CalPERS). 2. Deferred Compensation Funds. Both the regular deferred compensation plan and the

City’s Hourly/Part-time Employee Retirement Plan are invested in accordance with its trust fund agreement.

3. City’s Postemployment Benefits Plan. These funds are managed by PARS and are related to the collateral benefit program provided through employee MOUs.

3. Bond Proceeds. Investment of bond proceeds shall be subject to the conditions and restrictions of bond documents and are not governed by this policy.

III. GENERAL OBJECTIVES The primary objectives, in priority order, of the City’s investment activities are safety, liquidity and yield.

AA. Safety Preservation of principal is the foremost objective of the investment program. Investments of the City shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective shall be to mitigate credit risk and interest rate risk. To attain this objective, the City shall seek to diversify its investments by investing funds among several financial institutions and a variety of securities offering independent returns.

1. Credit Risk The City shall minimize credit risk, the risk of loss due to the failure of the security issuer or backer, by: � Limiting investments to the most creditworthy types of securities � Pre-qualifying the financial institutions, broker/dealers, intermediaries, and advisers

with which the City will do business � By diversifying the investment portfolio so that the potential failure of any one issue

or issuer will not place an undue financial burden on the City 2. Interest Rate Risk


To minimize the negative impact of material changes in the market value of securities in the portfolio, the City shall: � Structure the investment portfolio so that securities mature concurrent with cash

needs to meet anticipated demands, thereby avoiding the need to sell securities on the open market prior to maturity

� Invest operating funds primarily in shorter-term securities, money market mutual funds, and the State of California’s Local Agency Investment Fund (“LAIF”)

B. Liquidity The City’s investment portfolio shall remain sufficiently liquid to enable the City to meet all operating requirements that might be reasonably anticipated without requiring a sale of securities.

C. Yield (Return on Investment) The City’s investment portfolio shall be designed with the objective of attaining a benchmark rate of return throughout budgetary and economic cycles, commensurate with the City’s investment risk constraints and the liquidity characteristics of the portfolio. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. The core of investments is limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed.

IV. STANDARDS OF CARE A. Prudence

The standard of prudence to be used by City investment officials shall be the “prudent investor standard” (California Government Code Section 53600.3) in that a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the City, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of an enterprise of a like character and with like aims. This standard shall be applied in the context of managing the overall portfolio. City investment officers acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.

B. Ethics and Conflicts of Interest Officers and employees involved in the City investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or that could impair their ability to make impartial investment decisions. City employees and investment officials shall disclose any material financial interests in financial institutions that conduct business within their jurisdiction, and they shall further disclose any personal financial/investment positions that could be related to the performance of the City immediately to the Pomona City Treasurer and annually to the Fair Political Practices Commission. City employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the City.

C. Delegation of Authority Authority to manage the City’s investment program is derived from Sections 704 and 705 of the Charter of the City of Pomona. In accordance with Section 704 (City Treasurer) the City Council shall appoint the City Treasurer who has the authority to invest or to reinvest funds, or to sell or exchange securities. Upon appointment, the City Treasurer shall thereafter


assume full responsibility for those transactions until the delegation of authority is revoked or expires. By Charter (Sec 705), the Finance Director also has authority to receive and invest City funds.

Management responsibility for the investment program is delegated to the City Treasurer who shall establish a separate written investment procedures manual. The procedures should include reference to: authorized personnel, safekeeping, master repurchase agreements, wire transfer agreements, banking service contracts, collateral/depository agreements, and cash flow forecasting. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the City Treasurer. The operation of the investment program shall be consistent with this policy and the investment procedures manual.

D. Internal Controls The City Treasurer is responsible for establishing and maintaining a system of written internal controls. These controls shall be reviewed annually with an independent external auditor who will notify the City Council if there is a material non-compliance with its policies and procedures. The internal controls shall be designed to prevent losses of public funds arising from fraud, employee error, and misrepresentation by third parties, unanticipated changes in financial markets, or imprudent action by City employees and officers. The internal structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived, and (2) the valuation of costs and benefits requires estimates and judgments by management.

E. Review of Investment Portfolio The securities held by the City must be in compliance with Section VII Suitable and Authorized Investments at the time of purchase and at least quarterly. The City Treasurer shall establish procedures to report to the City Council, major and critical incidences of noncompliance identified through the review of the portfolio.

V. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The Treasurer shall transact business only with Registered Investment Advisors, national or state-chartered banks, savings and loans, and broker dealers. The dealers should be primary dealers regularly reporting to the New York Federal Reserve Bank, or approved regional or secondary market dealers that qualify under the Securities and Exchange Commission Rule 15C3-1 (uniform net capital rule). The Treasurer shall formally authorize investment broker-dealers to provide investment services to the City and shall maintain a list of financial institutions so authorized to provide investment services. Audited financials, proof of Financial Industry Regulatory Authority (FINRA) certification, State of California registration, and certification of having read and understanding the City’s Policy is required from approved advisors.

If a third party investment advisor is authorized to conduct investment transactions on the City’s behalf, the investment advisor may use its own list of broker/dealers and financial institutions. The investment advisor’s list must be available to the City upon request.

VI. SAFEKEEPING AND CUSTODY All security transactions, including collateral for repurchase agreements, entered into by the City shall be conducted on a delivery-versus-payment (DVP) basis which will ensure that securities are deposited in an eligible financial institution prior to the release of funds. Securities shall be held by a third-party


custodian or broker/dealer designated by the City Treasurer. The only exception to the foregoing shall be depository accounts and securities purchases made with: LAIF, time certificates of deposit and money market mutual funds, since the purchased securities are not deliverable. City Treasurer shall be bonded to protect the public against possible embezzlement and malfeasance.

VII. SUITABLE AND AUTHORIZED INVESTMENTS The City is governed by the California Government Code, Sections 53600 et seq. If the Code is amended to allow additional investments or is changed regarding the limits on certain categories of investments, the City is authorized to conform to the changes in the revised Code, provided that the changes are not specifically prohibited by the City's policy. The City shall be required to present those changes in the annual review of the policy and to incorporate the new legislation within the policy. Surplus funds are defined as funds not required for the immediate necessities of the City and include investments in individually managed portfolio(s), money market fund(s) and/or State LAIF, and all portfolio limitations and restrictions shall apply to this aggregate amount. For purposes of compliance with the California Government Code and the City’s Investment Policy, the credit rating requirement for medium-term notes, deposit notes, bank notes and commercial paper shall be based on the quality ratings at the time of purchase. If the quality rating of the issuer is downgraded, subsequent to purchase, by any of the Nationally Recognized Statistical-Rating Organizations below "A", or its equivalent, it shall be reported to the City Council with a recommendation, and ongoing information shall be provided if the bond is not sold. Percentage limitations of surplus funds invested are noted for the various investment instruments. Where there is a specified percentage limitation for a particular category of investments, that percentage is applicable only at the date of purchase. A later increase or decrease in a percentage resulting from a change in values or assets shall not constitute a violation of that restriction.

The City is empowered by statute to invest in the following types of securities:

A. Authorized Investment Summary Matrix

Investment Type Maximum Maturity

Maximum Specified % of

Portfolio

1 City of Pomona Bonds 5 Years No limit

2 U.S. Treasury Obligations 5 years No limit

3 U.S. Agency Obligations 5 years No limit

4 CA and Local Agency Obligations 5 years No limit

5 Medium-Term Notes 5 years 30%

6 Bankers’ Acceptances 180 days 40%

7 Commercial Paper 270 days 25%

8 Negotiable Certificates of Deposit 5 years 15%

9 Time Deposits 5 years 10%

10 Savings Accounts 5 years 10%

11 Money Market Mutual Funds n/a 15%

12 Repurchase Agreements 92 days 20%

13 Local Agency Investment Fund (LAIF) n/a No limit


Investment Types 1. Bonds issued by the City, including bonds payable solely out of the revenues from a

revenue producing property owned, controlled, or operated by the City or by a department, board, agency, or authority of the local agency.

2. United States Treasury notes, bonds, bills, or certificates of indebtedness, or those for which the full faith and credit of the United States are pledged for the payment of principal and interest.

3. Federal Agency or United States government-sponsored enterprise obligations (GSE), participations, or other instruments.

4. State of California and Local Agency Obligations. Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state; and bonds, notes, warrants, or other evidence of indebtedness of any local agency within this state including bonds payable solely out of the revenues from revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. Notes eligible for investment shall be rated in a category of "A" or its equivalent or better by two Nationally Recognized Statistical-Rating Organizations.

5. Medium-Term Notes, defined as all corporate and depository institution debt securities with a maximum remaining maturity of five (5) years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Purchases of medium-term notes may not exceed 30% of the City's surplus funds. Investments in medium-term notes for any one non-government issuer shall be limited to no more than of surplus funds. Notes eligible for investment shall be rated in a category of "A" or its equivalent or better by two Nationally Recognized Statistical-Rating Organizations.

6. Bankers Acceptances otherwise known as bills of exchange or time drafts, drawn on and accepted by a commercial bank, which are eligible for purchase by the Federal Reserve System. Purchased bankers acceptances may not exceed one hundred and eighty (180) days maturity or 40% of the City's surplus funds, and no more than 10% of the City's surplus funds may be invested in the banker’s acceptances of any one commercial bank.

7. Commercial Paper of “prime” quality of the highest ranking or the highest letter and number rating as provided for by a Nationally Recognized Statistical-Rating Organization. The entity that issues the commercial paper shall meet all of the following conditions in either paragraph (a) or paragraph (b):

a. The entity is organized and operating in the United States as a general corporation and has total assets in excess of five hundred million dollars ($500,000,000). In addition, its debt other than commercial paper, if any, must be rated “A” or higher by a Nationally Recognized Statistical-Rating Organization.

b. The entity is organized within the United States as a special purpose corporation, trust, or limited liability company and has a program-wide credit enhancement including, but not limited to, over-collateralization, letters of credit, or a surety bond. In addition, the entity has commercial paper that is rated “A-1” or higher, or the equivalent, by a Nationally Recognized Statistical-Rating Organization.


Eligible commercial paper shall have a maximum maturity of two hundred and seventy (270) days or less. The City may not invest more than 25% of its surplus funds in no more than 10% of the outstanding eligible commercial paper of any single issuer.

8. Negotiable Certificates of Deposit issued by a nationally or state-chartered bank or savings association or federal association or a state or federal credit union or by a state-licensed branch of a foreign bank. Purchases of negotiable certificates of deposit shall not exceed 15% of the City's surplus money invested and shall be limited to no more than 3% of any one issuer. Deposit notes and bank notes purchased through a broker or dealer shall be included with negotiable certificates of deposit in calculating allowable maximum percentages. Negotiable certificates of deposit, deposit notes and bank notes shall be rated in a category of "A" or its equivalent or better by two Nationally Recognized Statistical-Rating Organizations. Certificate of Deposit guaranteed by the Federal Deposit Insurance Corporation (FDIC) will be limited to $250,000 per issuer.

9. Time Deposits. The City may invest in non-negotiable Certificates of Deposit at commercial banks and savings and loan associations that are collateralized in accordance with the California Government Code. To be eligible to receive City funds, the depository institution shall have received an overall rating of not less than “satisfactory” in its most recent evaluation of its record of meeting the credit needs of California’s communities, including low and moderate-income neighborhoods. In selecting depositories, the credit worthiness of institutions shall be considered. Banks and savings and loan associations seeking to establish an investment relationship with the City shall submit an audited financial report that shall be reviewed for compliance with the City's investment standards. Any institution not providing an audited annual financial report shall be removed from the approved list and all funds maturing will be withdrawn. A list of eligible institutions shall be maintained. Qualification shall be determined by the following criteria:

a. Tangible capital must equal or exceed 1½%; core capital must equal or exceed 3%; and, risk-based capital must equal 8% of assets adjusted for assigned risk-weightings.

b. Return on assets of a minimum of a ½%; a return on equity of a minimum of 8%; an equity to assets ratio of a minimum of 5%; and, City investments shall be no greater than ½% of the total assets of the depository.

c. Independent auditor's statement must have a clean opinion.

10. Savings accounts. Savings accounts when used in conjunction with the City's checking accounts at a qualified bank where funds are collateralized in accordance with the California Government Code.

11. U. S. Government money market funds registered with the Securities and Exchange Commission and which comply with rule 2a7 of the Investment Company Act of 1940. The dollar weighted average maturity of the portfolio shall be less than ninety (90) days and the portfolio is managed to maintain a one dollar ($1.00) share price. Also, the fund shall meet either of the following criteria: (a) Attained the highest ranking or the highest letter and numerical rating provided by not less than two Nationally Recognized Statistical-Rating Organizations; (b) retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000).


12. Repurchase Agreements. Investments in repurchase agreements or reverse repurchase agreements or securities lending agreements of any securities authorized by the Code, so long as the proceeds of the repurchase agreement are invested solely to supplement the income normally received from these securities. The City shall adopt as a standard the Bond Market Association Master Repurchase Agreement and shall maintain a list of approved counterparts and limit counter parties to primary dealers rated "A" or better by two Nationally Recognized Statistical-Rating Organizations. Reverse repurchase agreements and securities lending agreements shall require City Council authorization separate from City Council approval of this policy. Securities lending agreements shall include the following safeguard measures: terms of lending agreements, indemnification provisions, reinvestment guidelines, liquidity provisions, credit risks and monitoring requirements. Additionally any securities lending agreement shall be reviewed by the City Attorney to ensure the City’s interests are properly protected.

a. Investments in repurchase agreements may be made, on any authorized investment, when the term of the agreement does not exceed one year.

b. Reverse repurchase agreements or securities lending agreements may be utilized when the security to be sold on the reverse repurchase agreement or securities lending agreement has been owned and fully paid for by the City for a minimum of thirty (30) days prior to sale; the total of all reverse repurchase agreements on investments owned by the City does not exceed 20% of the base value of the portfolio; and the agreement does not exceed a term of ninety two (92) days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between sale of a security using a reverse repurchase agreement and the final maturity date of the same security.

13. Local Agency Investment Fund (LAIF). The City may invest in The Local Agency Investment Fund (LAIF), a special fund in the California State Treasury created and governed pursuant to Government Code Sections 16429.1 et seq. This law permits the City with the consent of the Board of Directors, to remit money not required for the City’s immediate need, to the State City Treasurer for deposit in this special fund for the purpose of investment. LAIF currently limits investments to $50 million from any one public agency by State law; therefore, there is a fifty million dollar ($50,000,000) limit for the City of Pomona, fifty million dollar ($50,000,000) limit for the Pomona Housing Authority, and a fifty million dollar ($50,000,000) limit for the Pomona Public Financing Authority. The California Government Code states that monies placed for deposit in LAIF are in trust in the custody of the State City Treasurer and cannot be borrowed or be withheld from the City. Further, the right of the City to withdraw its deposited money from the LAIF upon demand may not be altered, impaired, or denied in any way by any state official or agency based upon the State’s failure to adopt a budget by July 1 of each new fiscal year.

B. Collateralization Collateralization shall be required on two types of investments: Certificates of deposit and repurchase (and reverse repurchase) agreements. A collateral agreement must be current and on file before any funds can be transferred for collateralized certificates of deposit. Collateral shall be held by an independent third party with whom the City has a current written custodial agreement. A clearly marked evidence of ownership (safekeeping receipt) must be supplied to the City and retained. The right of collateral substitution is granted in accordance with the following requirements:


1. Certificates of Deposit a. Government securities used as collateral require 102% of market value to

the face amount of the deposit

b. Promissory notes secured by first trust deeds used as collateral require 150% of market value to the face amount of the deposit

c. Irrevocable letters of Credit issued by the Federal Home Loan Bank of San Francisco require 105% of market value to the face amount of the deposit

2. Repurchase and Reverse Repurchase Agreements a. Only U.S. Treasury securities or federal agency securities are acceptable

collateral. All securities underlying repurchase agreements must be delivered to the City’s custodian bank versus payment or be handled under a properly executed tri-party repurchase agreement. The total market value of all collateral for each repurchase agreement must equal or exceed 102% of the total dollar value of the money invested by the City for the term of the investment. For any repurchase agreement with a term of more than one (1) day, the value of the underlying securities must be reviewed on an ongoing basis according to market conditions. Market value must be calculated each time there is a substitution of collateral.

b. The City or its trustee shall have a perfected first security interest under the Uniform Commercial Code in all securities subject to a repurchase agreement.

C. Investments Not Approved Any security type or structure not specifically approved by this policy is hereby prohibited. Security types, which are hereby prohibited include, but are not limited to: Collateralized mortgage obligations (CMO's), mortgage pass-through securities, reverse repurchase agreements used as a leveraging vehicle, "exotic" derivatives structures such as range notes, dual index notes, inverse floating-rate notes, leveraged or de-leveraged floating-rate notes, interest-only strips that are derived from a pool of mortgages and any security that could result in zero interest accrual if held to maturity, or any other complex variable or structured note with an unusually high degree of volatility or risk.

D. Exceptions to Prohibited and Restricted Investments The City shall not be required to sell securities prohibited or restricted in this policy, or any future policies, or prohibited or restricted by new State regulations, if purchased prior to their prohibition and/or restriction. Insofar as these securities provide no notable credit risk to the City, holding of these securities until maturity is approved. At maturity or liquidation, such monies shall be reinvested only as provided by this policy.

VIII. INVESTING PARAMETERS A. Diversification

The City shall diversify its investments by security type, issuer, maturity, and financial institutions. No percentage limitations are established for United States government, United States government agencies, United States government sponsored enterprises, and LAIF; however percentage limitations are established for other permitted investments, as noted in Section VII of this policy. The investments shall be diversified by limiting investments to avoid over-concentration in securities from a specific issuer or business sector (excluding U.S. Treasury, Federal Agency securities, and LAIF), limiting investment in securities that have higher credit risks, and investing in securities with varying maturities.


B. Maximum Maturities To the extent possible, the City will attempt to match its investments with anticipated cash flow requirements. Where there is no specified maturity limitation on an investment, no investment shall be made in any security, which, at the time of the investment, has a term remaining to maturity in excess of five (5) years, unless the City Council has granted express authority to make that investment no less than three months prior to the investment.

IX. REPORTING The City Treasurer shall submit investment reports to the City Council that provide a clear picture of the status of the current investment portfolio and shall contain sufficient information to permit an independent organization to evaluate the performance of the investment program.

A. Reporting to City Council In accordance with California Government Code Section 53646, the City Treasurer shall submit to City Council, within thirty (30) days following the end of the quarter, an investment report that summarizes all securities in the portfolio. The report shall include:

1. Investment type 2. Purchase date 3. Maturity date 4. Credit quality 5. Coupon and yield 6. Book value 7. Market value 8. Interest Earnings 9. Average days to maturity 10. Statement of the ability to meet expenditures for the next six months (or an

explanation as to why sufficient money shall, or may, not be available)

X. PERFORMANCE STANDARDS The investment portfolio shall be managed in accordance with the parameters specified within this policy and always within consistently safe and prudent treasury management procedures.

A. Market Yield (Benchmark) The City’s overall investment strategy is passive: Investments are generally held to maturity. If an investment advisory firm is retained by the City, the City portfolio shall be compared to a customized benchmark in order to determine whether market yields are being achieved. In addition, the quarter-to-date LAIF apportionment rate and the two-year U.S. Treasury Note shall also be considered useful benchmarks of the City’s portfolio performance.

B. Marking to Market The market value of the portfolio shall be calculated at least quarterly. This will ensure that review of the investment portfolio, in terms of value and price volatility, has been performed. In defining market value, consideration shall been given to pronouncements from the Government Accounting Standards Board (GASB) that address the reporting of investment assets and investment income for all investment portfolios held by governmental entities. The fair value of all securities reported in the City’s portfolio is based on currently quoted market prices.


XI. INVESTMENT POLICY COMPLIANCE AND ADOPTION A. Policy Compliance and Changes

Any deviation from the policy shall be reported to City Council at the next scheduled meeting. The City Treasurer shall promptly notify the City Council of any material change in the policy, and any modifications to the policy must be approved by the City Council.

B. Annual Statement of Investment Policy The City Treasurer shall render a written Investment Policy that shall be reviewed at least annually by the City Council to ensure its consistency with the overall objectives of preservation of principal, liquidity and return, and its relevance to current law and financial and economic trends. The City Council shall consider the annual Investment Policy and any changes therein at a public meeting. The Investment Policy shall be adopted by resolution of the City Council.


APPENDIX GLOSSARY OF INVESTMENT TERMS

AGENCY: A debt security issued by a federal or federally sponsored agency. Federal agencies are backed by the full faith and credit of the U.S. Government (i.e. Government National Mortgage Association). Federally sponsored agencies (FSA's) are backed by each particular agency with a market perception that there is an implicit government guarantee (i.e. Federal National Mortgage Association).

ASKED PRICE: The price at which securities are offered for sale, also known as offering price.

BENCHMARK: A comparative base for measuring the performance or risk tolerance of the investment portfolio. A benchmark should represent a close correlation to the level of risk and the average duration of the portfolio’s investments.

BID PRICE: The price offered by a buyer of securities. (When you are selling securities, you ask for a bid.)

BOND PROCEEDS: The money paid to the issuer by the purchaser or underwriter of a new issue of municipal securities. These moneys are used to finance the project or purpose for which the securities were issued and to pay certain costs of issuance as may be provided in the bond contract.

BOOK VALUE: The value at which a debt security is shown on the holder's balance sheet. Book value is often acquisition cost plus/minus amortization and accretion, which may differ significantly from the security’s current value in the market.

BROKER: Someone who brings buyers and sellers together and is compensated for his/her service.

CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Large denomination CDs are typically negotiable.

COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies.

CREDIT QUALITY: The measurement of the financial strength of a bond issuer. This measurement helps an investor to understand an issuer's ability to make timely interest payments and repay the loan principal upon maturity. Generally, the higher the credit quality of a bond issuer, the lower the interest rate paid by the issuer because the risk of default is lower. Credit quality ratings are provided by a Nationally Recognized Statistical-Rating Organization.

CREDIT RISK: The risk to an investor that an issuer will default in the payment of interest and/or principal on a security.

CUSTODIAN: A bank or other financial institution that keeps custody of stock certificates and other assets.

CURRENT YIELD (CURRENT RETURN): A yield calculation determined by dividing the annual interest received on a security by the current market price of that security.

DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, by buying and selling for his/her own account.

DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities.

DERIVATIVES: (1) financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging factor, or (2) financial contracts based upon notional amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities or commodities).


DIVERSIFICATION: Dividing investment funds among a variety of security types by sector, maturity and quality ratings offering independent returns.

DURATION: A measure of the timing of the cash flows, such as the interest payments and the principal repayment, to be received from a given fixed-income security. This calculation is based on three variables: term to maturity, coupon rate, and yield to maturity. The duration of a security is a useful indicator of its price volatility for given changes in interest rates.

FAIR VALUE: The amount at which an investment could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

FEDERAL CREDIT AGENCIES: Agencies of the Federal Government set up to supply credit to various classes of institutions and individuals, e.g., S&L’s, small-business firms, students, farmers, farm co-operatives, and exporters.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits currently up to $250,000 per deposit.

FEDERAL HOME LOAN BANKS (FHLB): Government sponsored wholesale banks (currently 12 regional banks) that lend funds and provide correspondent banks services to member commercial banks, thrift institutions, credit unions and insurance companies.

FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder-owned corporation. The corporation’s purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages.

FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means of influencing the volume of bank credit and money.

FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., twelve Regional Banks and about 5,700 commercial banks that are members of the system.

FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA): A self-regulatory organization (SRO) responsible for governing business between brokers, dealers and the investing public.

GOVERNMENT ACCOUNTING STANDARDS BOARD (GASB): A standard-setting body, associated with the Financial Accounting Foundation, which prescribes standard accounting practices for governmental units.

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions. Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by the FHA, VA, or FMHA mortgages. The term “pass-throughs” is often used to describe Ginnie Maes.

GOVERNMENT SECURITIES: An obligation of the U.S. government, backed by the full faith and credit of the government. These securities are regarded as the highest quality of investment securities available in the U.S. securities market. See "Treasury Bills, Notes, and Bonds."

INTEREST RATE RISK: The risk associated with declines or rises in interest rates which cause an investment in a fixed-income security to increase or decrease in value.

INTERNAL CONTROLS: An internal control structure designed to ensure that the assets of the entity are protected from loss, theft, or misuse. The internal control structure is designed to provide reasonable


assurance that these objectives are met. The concept of reasonable assurance recognizes that 1) the cost of a control should not exceed the benefits likely to be derived and 2) the valuation of costs and benefits requires estimates and judgments by management. Internal controls should address the following points:

o CONTROL OF COLLUSION – Collusion is a situation where two or more employees are working in conjunction to defraud their employer.

o Separation of transaction authority from accounting and record keeping – By separating the person who authorizes or performs the transaction from the people who record or otherwise account for the transaction, a separation of duties is achieved.

o Custodial safekeeping – Securities purchased from any bank or dealer including appropriate collateral (as defined by state law) shall be placed with an independent third party for custodial safekeeping.

o Avoidance of physical delivery securities – Book-entry securities are much easier to transfer and account for since actual delivery of a document never takes place. Delivered securities must be properly safeguarded against loss or destruction. The potential for fraud and loss increases with physically delivered securities.

o Clear delegation of authority to subordinate staff members – Subordinate staff members must have a clear understanding of their authority and responsibilities to avoid improper actions. Clear delegation of authority also preserves the internal control structure that is contingent on the various staff positions and their respective responsibilities.

o Written confirmation of transactions for investments and wire transfers – Due to the potential for error and improprieties arising from telephone and electronic transactions, all transactions should be supported by written communications and approved by the appropriate person. Written communications may be via fax if on letterhead and if the safekeeping institution has a list of authorized signatures.

o Development of a wire transfer agreement with the lead bank and third-party custodian – The designated official should ensure that an agreement will be entered into and will address the following points: controls, security provisions, and responsibilities of each party making and receiving wire transfers.

LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes.

LOCAL AGENCY INVESTMENT FUND (LAIF): Chapter 730, Statutes of 1976 of the State of California, established the Local Agency Investment Fund. This fund enables local governmental agencies to remit money not required for immediate needs to the State City Treasurer for the purpose of investment. In order to derive the maximum rate of return possible, the State City Treasurer has elected to invest these monies with State monies as a part of the Pooled Money Investment Account. Each local governmental unit has the exclusive determination of the length of time its money will be on deposit with the State City Treasurer. At the end of each calendar quarter, all earnings derived from investments are distributed by the State Controller to the participating government agencies in proportion to each agency's respective amounts deposited in the Fund and the length of time such amounts remained therein. Prior to the distribution, the State's costs of administering the program are deducted from the earnings.

MARK-TO-MARKET: The process whereby the book value or collateral value of a security is adjusted to reflect its current market value.

MARKET RISK: The risk that the value of a security will raise or decline as a result of changes in market conditions.


MARKET VALUE: The current price at which a security is trading and could presumably be purchased or sold at that particular point in time.

MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase-reverse repurchase agreements that establish each party’s rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller-borrower.

MATURITY: The date upon which the principal or stated value of a financial obligation is due and payable.

MONEY MARKET MUTUAL FUND: Mutual funds that invest solely in money market instruments (short-term debt instruments, such as Treasury bills, commercial paper, bankers' acceptances, repos and federal funds).

MUTUAL FUND: An investment company that pools money and can invest in a variety of securities, including fixed-income securities and money market instruments. Mutual funds are regulated by the Investment Company Act of 1940 and must abide by Securities and Exchange Commission (SEC) disclosure guidelines.

NATIONALLY RECOGNIZED STATISTICAL-RATING ORGANIZATION (NRSRO): Standard and Poor’s, Moody’s, and Fitch Financial Services are examples of such organizations.

OFFER: An indicated price at which market participants are willing to sell a security or commodity. Also referred to as the "Ask price."

PAR VALUE: The amount of principal that must be paid at maturity. Also referred to as the face amount of a bond, normally quoted in $1,000 increments per bond.

PORTFOLIO: Combined holding of more than one stock, bond, commodity, real estate investment, cash equivalent, or other asset. The purpose of a portfolio is to reduce risk by diversification.

PRINCIPAL: The face value or par value of a debt instrument, or the amount of capital invested in a given security.

PRIMARY DEALER: A group of government securities dealers who submit daily reports of market activity and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC) registered securities broker/dealers, banks and a few unregulated firms.

PRINCIPAL: (1) The face amount or par value of a debt instrument. (2) One who acts as a dealer buying and selling for his own account.

RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond or the current income return.

REINVESTMENT RISK: The risk that a fixed-income investor will be unable to reinvest income proceeds from a security holding at the same rate of return currently generated by that holding.

REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer" in effect lends the "seller" money for the period of the agreement, and the terms of the agreement are structured to compensate the buyer for this. Dealers use RP extensively to finance their positions. Exception: When the Fed is said to be doing RP, it is lending money that is increasing bank reserves.

REVERSE REPURCHASE AGREEMENT: An agreement of one party (for example, a financial institution) to purchase securities at a specified price from a second party (such as a public agency) and a simultaneous agreement by the first party to resell the securities at a specified price to the second party on demand or at a specific date.

RISK: Degree of uncertainty of return on an asset.

RULE 2A-7 OF THE INVESTMENT COMPANY ACT: Applies to all money market mutual funds and mandates


such funds to maintain certain standards, including a 13-month maturity limit and a 90-day average maturity on investments, to help maintain a constant net asset value of one dollar ($1.00).

SAFEKEEPING SERVICE: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank's vault for protection and security.

SECONDARY MARKET: A market is made for the purchase and sale of outstanding issues following the initial distribution.

SECURITIES LENDING: An agreement under which a local agency agrees to transfer securities to a borrower who, in turn, agrees to provide collateral to the local agency. During the term of the agreement, both the securities and the collateral are held by a third party. At the conclusion of the agreement, the securities are transferred back to the local agency in return for the collateral.

STRUCTURED NOTES: Notes issued by Government Sponsored Enterprises, (FHLB, FNMA, FHLMC, etc.), and Corporations that have imbedded options, (e.g., call features, step-up coupons, floating rate coupons, derivative-based returns), into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the yield curve.

SWAP: Trading one asset for another.

TOTAL RETURN: The sum of all investment income plus changes in the capital value of the portfolio.

TREASURY BILLS: Short-term U.S. government non-interest bearing discounted debt securities with maturities of no longer than one year and issued in minimum denominations of $10,000. Auctions of three- and six-month bills are weekly, while auctions of one-year bills are monthly. The yields on these bills are monitored closely in the money markets for signs of interest rate trends.

TREASURY BOND: A long-term coupon-bearing U.S. Treasury security issued as a direct obligation of the U.S. Government and having an initial maturity of more than 10 years and issued in minimum denominations of $1,000.

TREASURY NOTE: A medium-term coupon-bearing U.S. Treasury security issued as a direct obligation of the U.S. Government and having an initial maturity of from one to ten years and issued in denominations ranging from $1,000 to $1 million or more.

UNIFORM NET CAPITAL RULE: Securities and Exchange Commission (SEC) Rule 15C3-1 outlining requirements that member firms as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash.

VOLATILITY: A degree of fluctuation in the price and valuation of securities.

YIELD: The current rate of return on an investment security generally expressed as a percentage of the security’s current price. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond.


APPENDIX H

SPECIMEN MUNICIPAL BOND INSURANCE POLICY


MUNICIPAL BONDINSURANCE POLICY

ISSUER:

BONDS: $ in aggregate principal amount of

Policy No: -N

Effective Date:

Premium: $

ASSURED GUARANTY MUNICIPAL CORP. ("AGM"), for consideration received, herebyUNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the "Trustee") or paying agent (the"Paying Agent") (as set forth in the documentation providing for the issuance of and securing the Bonds) forthe Bonds, for the benefit of the Owners or, at the election of AGM, directly to each Owner, subject only tothe terms of this Policy (which includes each endorsement hereto), that portion of the principal of andinterest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment bythe Issuer.

On the later of the day on which such principal and interest becomes Due for Payment or theBusiness Day next following the Business Day on which AGM shall have received Notice of Nonpayment,AGM will disburse to or for the benefit of each Owner of a Bond the face amount of principal of and intereston the Bond that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, butonly upon receipt by AGM, in a form reasonably satisfactory to it, of (a) evidence of the Owner's right toreceive payment of the principal or interest then Due for Payment and (b) evidence, including anyappropriate instruments of assignment, that all of the Owner's rights with respect to payment of suchprincipal or interest that is Due for Payment shall thereupon vest in AGM. A Notice of Nonpayment will bedeemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on suchBusiness Day; otherwise, it will be deemed received on the next Business Day. If any Notice ofNonpayment received by AGM is incomplete, it shall be deemed not to have been received by AGM forpurposes of the preceding sentence and AGM shall promptly so advise the Trustee, Paying Agent orOwner, as appropriate, who may submit an amended Notice of Nonpayment. Upon disbursement inrespect of a Bond, AGM shall become the owner of the Bond, any appurtenant coupon to the Bond or rightto receipt of payment of principal of or interest on the Bond and shall be fully subrogated to the rights of theOwner, including the Owner's right to receive payments under the Bond, to the extent of any payment byAGM hereunder. Payment by AGM to the Trustee or Paying Agent for the benefit of the Owners shall, tothe extent thereof, discharge the obligation of AGM under this Policy.

Except to the extent expressly modified by an endorsement hereto, the following terms shall havethe meanings specified for all purposes of this Policy. "Business Day" means any day other than (a) aSaturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer'sFiscal Agent are authorized or required by law or executive order to remain closed. "Due for Payment"means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the dateon which the same shall have been duly called for mandatory sinking fund redemption and does not refer toany earlier date on which payment is due by reason of call for redemption (other than by mandatory sinkingfund redemption), acceleration or other advancement of maturity unless AGM shall elect, in its solediscretion, to pay such principal due upon such acceleration together with any accrued interest to the dateof acceleration and (b) when referring to interest on a Bond, payable on the stated date for payment ofinterest. "Nonpayment" means, in respect of a Bond, the failure of the Issuer to have provided sufficientfunds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal andinterest that is Due for Payment on such Bond. "Nonpayment" shall also include, in respect of a Bond, anypayment of principal or interest that is Due for Payment made to an Owner by or on behalf of the Issuerwhich has been recovered from such Owner pursuant to the

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United States Bankruptcy Code by a trustee in bankruptcy in accordance with a final, nonappealable orderof a court having competent jurisdiction. "Notice" means telephonic or telecopied notice, subsequentlyconfirmed in a signed writing, or written notice by registered or certified mail, from an Owner, the Trustee orthe Paying Agent to AGM which notice shall specify (a) the person or entity making the claim, (b) the PolicyNumber, (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 theterms of such Bond to payment thereof, except that "Owner" shall not include the Issuer or any person orentity whose direct or indirect obligation constitutes the underlying security for the Bonds.

AGM may appoint a fiscal agent (the "Insurer's Fiscal Agent") for purposes of this Policy bygiving written notice to the Trustee and the Paying Agent specifying the name and notice address of theInsurer's Fiscal Agent. From and after the date of receipt of such notice by the Trustee and the PayingAgent, (a) copies of all notices required to be delivered to AGM pursuant to this Policy shall besimultaneously delivered to the Insurer's Fiscal Agent and to AGM and shall not be deemed received untilreceived by both and (b) all payments required to be made by AGM under this Policy may be made directlyby AGM or by the Insurer's Fiscal Agent on behalf of AGM. The Insurer's Fiscal Agent is the agent of AGMonly and the Insurer's Fiscal Agent shall in no event be liable to any Owner for any act of the Insurer's FiscalAgent or any failure of AGM to deposit or cause to be deposited sufficient funds to make payments dueunder this Policy.

To the fullest extent permitted by applicable law, AGM agrees not to assert, and hereby waives,only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses(including, without limitation, the defense of fraud), whether acquired by subrogation, assignment orotherwise, to the extent that such rights and defenses may be available to AGM to avoid payment of itsobligations under this Policy in accordance with the express provisions of this Policy.

This Policy sets forth in full the undertaking of AGM, and shall not be modified, altered oraffected by any other agreement or instrument, including any modification or amendment thereto. Except tothe extent expressly modified by an endorsement hereto, (a) any premium paid in respect of this Policy isnonrefundable for any reason whatsoever, including payment, or provision being made for payment, of theBonds prior to maturity and (b) this Policy may not be canceled or revoked. THIS POLICY IS NOTCOVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76OF THE NEW YORK INSURANCE LAW.

In witness whereof, ASSURED GUARANTY MUNICIPAL CORP. has caused this Policy to beexecuted on its behalf by its Authorized Officer.

ASSURED GUARANTY MUNICIPAL CORP.

ByAuthorized Officer

A subsidiary of Assured Guaranty Municipal Holdings Inc.31 West 52nd Street, New York, N.Y. 10019(212) 974-0100

Form 500NY (5/90)

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