Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
SS2 - Debt Policy Review - Handout
Issuance & Closing Memorandum/ Pricing Recap CITY OF NEWPORT BEACH r �Ro��,� Certificates of Participation $20,085,000 2010A (Tax Exempt) (Civic Center Project/ Central Library Refunding) October 10, 2017 Agenda Item No. SS2 $106,575,000 2010B (Federally Taxable Direct Pay Build America Bonds) (Civic Center Project) December 7, 2010 STON E &, YOUNGBERG 4350 La Jolla Village Drive, Suite 140 • San Diego, California 92122 • (858) 795-8700 STONE & YO U N G B E RG 4350 La Jolla Village Drive, Suite 140 San Diego, California 92122 (858) 795-8700 TO: Tracy McCraner & Dan Matusiewicz — City of Newport Beach Paul Pender, Robert Porr & Tom DeMars — Fieldman, Rolapp & Associates FROM: Bill Huck — Stone & Youngberg LLC Ken Holman — Stone & Youngberg LLC CC: Carla Campodonico — Stone & Youngberg LLC Peggy Hickey — Stone & Youngberg LLC DATE: December 7, 2010 RE: $126,660,000 CITY OF NEWPORT BEACH Certificates of Participation $20,085,000 2010A Civic Center Project/Central Library Refunding (Tax Exempt) $106,575,000 201 OB Civic Center Project (Federally Taxable Direct Pay Build America Bonds) The purpose of this booklet is to memorialize the pricing and closing of the aforementioned issue and offer general commentary about the market, both prior to and after the pricing & closing, which occurred on November 30, 2010. On Wednesay, November 17, 2010, Stone & Youngberg priced the City of Newport Beach Certificates of Participation, Series 2010A and 2010B (the "Certificates"). The bond purchase agreement was signed the same day. This document provides a summary of the pricing and underwriting data which was used to complete the closing documents circulated by Bond Counsel, Stradling Yocca Carlson & Rauth. Please refer any future inquiries or needs to Bill Huck or Ken Holman at (858) 795-8701 or -8703. Tab A: Final Numbers: -Sources & Uses of Funds -Pricing -Summary Statistics -Payment Breakdown -Net Payment Breakdown -Summary of Refunding Results -Savings -Summary of Cetificates Refunded -Escrow Sufficiency -Costs of Issuance -Form 8038 Statistics -Proof of Arbitrage Yield Page 1 City of Newport Beach 2010A & 2010B Certificates of Participation (Civic Center Project/Central Library Refunding) Tab B: Pricing Information -S&P, Moody's & Fitch Rating Reports -Comparable Market Interest Rate Scales -Settlement Memorandum (Previously Sent to Finance Team) -Comparison Between All Tax -Exempt vs. Actual BAB Hybrid Pricing -Fixed Income Market Update (November 17, 20 10) Tab Q Miscellaneous Information -Interested Parties List I. Marketing, Distribution & Pricing Background.- On ackground: On February 26, 2010, Stone & Youngberg was engaged by the City of Newport Beach to assist its finance team with developing a financing plan for the City's Civic Center Project ("Project"). Many face to face/conference call meetings, preliminary analysis and two earlier financing efforts related to the Project and potential other projects have been periodically discussed and worked on with the City and its finance team since April of 2005. The Project consists of the design, construction and development of various public buildings and spaces on two raw parcels of land inland of the Newport Beach Central Library (which will also be expanded as a part of the Project), as outlined on page 7 of the final official statement. In addition to assisting to procure proceeds to complete the Project, the financing also refunded (to achieve annual payment savings) the outstanding Series 1998 Certificates of Participation ("COPs") that were dated August 12, 1998. An amount of $3,990,000 of the 1998 COPS (callable on a current basis on interest payment dates only, the next one being 12/1/10 at 100%) remained outstanding via two term bonds maturing on June 6, 2016 and 2019 with associated rates of 5.05% and 5.15%, respectively. The City had already begun grading the Project site with funds it had on -hand and planned to reimburse itself from proceeds raised via the financing according to the reimbursement resolution previously authorized by the City Council earlier in 2010. Vertical construction of the Project was expected to commence in January 2011 with completion anticipated in late 2012. After the finance team contemplated the benefits/costs/pros/cons of a variety of financing mechanisms, issuers and structure, Certificates of Participation were chosen with the issuer to be the City itself vs. another related affiliate —the City's good/positive name of which the finance team decided was important to keep in the title of the financing to assist with marketing efforts. Three of the fundamental financing objectives to help achieve financing efficiencies included: 1) Utilize a lease -leaseback structure and pledge other City property assets ("Leased Premises") to forgo the need to fund capitalized interest during the construction risk period (and in 2012 or 2013, provide the legal abilty to have the completed Project (the land of which is included within the asset list) replace (automatically and w/out an appraisal) all other Leased Premises in the lease —thus releasing the liens from all other City projects except the Civic Center/Library site itself; Page 2 City of Newport Beach 2010A & 2010B Certificates of Participation (Civic Center Project/Central Library Refunding) 2) Through the demonstration of a strong general fund City credit, strive for the highest possible rating from all 3 -rating agencies and propose the use of no reserve fund; 3) If deemed appropriate and achieves annual savings vs. traditional tax-exempt COPS, utilize taxable Build America Bonds within the financing where economical. The Leased Premises are described on Page 5 of the official statement and consist of nine separate City properties including the Newport Coast Community Center, OASIS Senior Center, Central Library, Mariners Library, Fire Stations 3, 4 & 7, Police Station and the Civic Center Site. The estimated aggregate value is $128.9 million via an appraisal completed by William R. Hansen and Gary L. Vogt. (The appraisal was dated September 20, 2010 from the office of William R. Hansen, 3334 E. Coast Highway, Suite 295, Corona Del Mar, CA 92625-2328, (949) 675-7600) A total of 18 City properties were evaluated to provide the capability to add/subtract the value of various properties in an effort to approximately match the appraised value total to the COP par value while keeping the pledged assets to a minium. City representtives and members of its finance team presented to Standard & Poor's, Moody's and Fitch in the San Francisco headquarters of Stone & Youngberg on Oceober 1, 2010 —very efficiently and all in one day. By October 19, 2010, ratings of AA+/Aa2/AA+ with stable outlooks were assigned to the COPs by the three aformetnioned rating agencies, respectively. The City was assigned the highest possible issuer credit rating of AAA/Aaa/AAA from all three rating agencies, one of only 4 other cities to receive the hightest ratings from all three agencies (namely, Beverly Hills, Santa Monica, Manhattan Beach & San Jose). The rating reports are included within Tab B. Timing Constraints: Given the general election that occurred on Tuesday, November 7, there was some sensitivity to delaying any Council consideration of the COP issuance until after the election results were finalized. Therefore, the earliest the Council could consider the various legal documents and preliminary official statement was on the following Tuesday, October 9, 2010. In order to meet the timing to refund the outstanding 1998 COPS and avoid the anticipated last minute market rush of Build America Bond issuance before the possible expiration of December 31, 2010 (coined `BABalanche' by the industry), pricing had to occur a week later on November 17 and closing was constrained to a date on or before November 30. Market Conditions: As early as February 26, 2010, the City and its finance team discussed the potential BAB oversupply (and thus potential tougher pricing conditions) in the market before BABs were set to expire on December 31, 2010. For over two months, the City and its finance team also monitored rates, watched and deliberated on whether or not changing the pricing date of November 17, 2010 was an option as several very large State issuances (highlighted below) hit the pricing calendar. Given the timing constratins highlighted above, the City and its finance team were not in an optional pricing situation. While interest rates remained at near historical lows up to, during and after the pricing, there were a number of market challenges in the week prior to, during and after the pricing. As it turned out, the following elements were present: 1. Very volatile Treasury market with up to 20 basis point swings from one day to the next; 2. Heavy primary market supply (especially related to $10,000,000,000 State of California RANs and $2,000,000,000 State of California Various Purpose General Obligation Bonds BABs) which effectively caused an `investors market', as investors could almost name their price or walk away and shop for another traunch of bonds that met their portfolio criteria; 3. Unexpected secondary market supply coming from bond funds facing redemption and therefore needing to engage in fire sale selling. Page 3 City of Newport Beach 2010A & 2010B Certificates of Participation (Civic Center Project/Central Library Refunding) Municipal Market Supply: With the State of California out of the market for more than six months pending completion of its FY 20 10-1 1 budget and with many traditional tax-exempt issuers seeking to take advantage of the BAB program before it expired, the tax-exempt market had been edging toward record low historic interest rate levels in September and October 2010. Demand far outweighed supply; even 16 30 -Day Visual Supply non -rated bond issues were finding homes at 14 rates below 6%. However, as expected and 12 discussed with the City, this supply -demand 10 dynamic began to change in late October as m $ the typical year-end issuance began to appear. 6 New issue volume increased dramatically, 4 I evidenced by 30 -day visual supply increasing 2 from about $7 billion in mid-September to C - ° N N LO co I N N close to $15.5 billion in mid-November. (See m N Q >1 C p, d U > a a a (n O z adjacent visual supply data chart) In addition, the State passed its budget in October and was waiting until after the November 2 election to bring to market its RANs and BABs. Largely due to 30 -Year MMD Trend this supply, the municipal market began 4.7% weakening across the curve for both high 4.5% grade and non -rated bonds. At the same 4.3% time, inflows into municipal mutual funds had 4.1% begun to taper off. The market conditions 3.9% indicated that the buy -side was hesitant to 3.7% lock -in investments. Nearly every deal that 3.5% priced required some re -pricing to higher 0, 5eQ S 1 41 41�` o�` oma` oma` �o° \o� \o ��' levels. The adjacent chart shows the `AAA' 30 -year MMD from September I to November 19. Treasury Market: Similar to municipals, the Treasury market touched rates not seen in decades in September and October, with the 10 -year closing below 2.50% and the 30 -year below 3.85% in mid-October. Also like municipals, however, this all began to change at the end of October. The week of pricing of the Bonds started with an unexpected end of the day sell-off on Monday, November 15, that pushed Treasury yields sharply higher. For example, the 10 10 -Year and 30 -Year UST Trend s.o% year UST was off -I'/2 points in price and the 4.5 X10 -Year UST 30 -Year UST yield jumped almost +20 basis points to 2.96%. 4.0% The causes are varied, including increasingly 3.5 widespread beliefs that the U.S. economy was 3.0 finally gaining traction as evidenced by the pick-up, + 1.2%, in October retail sales. In 2.5% addition, a report from Moody's warned that a 2.0% permanent extension of the Bush tax cuts, \01 W "YSeQ see J0 o`` oc' �10, , ,�10, now under consideration in the Congressional lame duck session, would render the level of US debt unsustainable and would have negative implications for the US sovereign debt rating. Added to this Page 4 City of Newport Beach 2010A & 2010B Certificates of Participation (Civic Center Project/Central Library Refunding) was a lot of foreign consternation over the Fed's QE2 program. This "perfect storm" led to a volatile Treasury market as evidenced in the chart above and further demonstrated with the charts to follow. Secondary Market Pressure: Finally, adding insult to injury, in the week of pricing, Moody's downgraded all 2005 and 2006 Tobacco Securities as junk bonds. Funds were forced to sell all types of bonds at "fire sale" prices to raise cash to meet bond redemptions. Municipal bonds gapped to higher yields during the the first half of the week with an especially large jump in the intermediate and long portions of the yield curve amid illiquidity and secondary selling pressure. Pricing. Series 2010A (Tax -Exempt : On the preliminary pricing call of November 16, Stone & Youngberg's underwriter proposed a scale with serial maturities from 2011 thru 2019. The serials had yields ranging from 0.65% in 2011 to 3.44%. The interest rates on the term bonds were 2% in 201 1, 3% in 2012-2014 and 4% in 2015-2019. The True Interest Cost (TIC) of that scale was 2.32% with a total Project Fund deposit of $17,688,243.56 and a Refunding Escrow deposit of $4,091,512.50. Series 2010B (Taxable BAB.): On the preliminary pricing call of November 16, Stone & Youngberg's underwriter proposed a scale with serial maturities from 2018 thru 2025 and two term bonds maturing in 2030 and 2040. The serials had yields ranging from 4.34% in 2018 (+150 to the 10 -yr treasury) to 6.19% in 2025 (+335 to the 10 -yr treasury). The coupons on the term bonds were +265 and +280 to the 30 -yr treasury, at 6.91 % and 7.06%, respectively, for the 2030 and 2040 maturities. The TIC of that scale was 4.44% with a total Project Fund deposit of $105,390,000. The Project Fund combined deposit for 2010A and 201013 totaled $123,000,000. When the order period opened on November 17, the order flow for Series 2010A was extremely positive w/all maturities either oversubscribed or left with light balances. (Tabular summary below) Due to the conditions and factors stated above, the order flow on November 17 for Series 2010B was sluggish with only 3 standing orders from the syndicate (consisting of Stone & Youngberg as lead manager and BofA Merrill Lynch, EJ De La Rosa and Raymond James as co -managers) in the maturities of 2021, 2030 and 2040. Maturity Amount Total Priority Retail Total PriorityHon-Retail Total Priority Total Member Retail Total Member Non -Retail Total Member Total balance P.9aturiTy Amount (5l15900'.1 (S000'sl 15000'.1 15000'.1 15009'.1 15000'.1 I5000's1 I5000's1 0?r01 21C1 _..» 0 0 0 2.2» 1.'-� -.010 1.010 0 07 01-2012 2,.-13 0 0 0 8,670 5,430 14,100 L4,100 -__.__7 07'01:2013 2.8CC 0C C 0 6.200 2.800 9.000 9.000 3,063 07.10112014 2,883 0 C 0 1,995 55 2,050 2,050 835 07:01:201 2.570 0 C 0 -3 330 =.823 =.823 -=.,,33 070112016 3,090 0 0 0 2,020 0 2,020 2,020 1,070 0701:2017 3.2-C 0 C 0 1.-2 0 1.-2, 1.-2, 1.-8� 0710112018 -10 0 0 0 390 -10 1,000 L, 000 -3e_ 07101:2019 - C C C 32C - 9-3 9-3 ---- TOTAL: 20,260 C 0 0 28,450 11,225 39,675 39,675 3,390 Due to the conditions and factors stated above, the order flow on November 17 for Series 2010B was sluggish with only 3 standing orders from the syndicate (consisting of Stone & Youngberg as lead manager and BofA Merrill Lynch, EJ De La Rosa and Raymond James as co -managers) in the maturities of 2021, 2030 and 2040. Maturity Amount Total Priority Retail Total Priority Non -Retail Total Priority Total Member Retail Total Ma niber Non -Retail Total Member Total balance (S000's) (5000'.) (S000'sl (S000's1 (5000'.) (5000'.) (S000'sj (5000'.) 23CC C 2,800 2.8CC CC C -CC 23CC 0 110 112 0 19 !�q 2,980 0 2,980 2,980 0 0 0 2,980 i]?:i]1;202i]!�q 3. C63 C 3,063 3.063 C C C 3. C63 0710112021 3;163 30 3.013 3,063 1;L00 230 1;330 .-13 0 :0112022 3.2'3 C 3.2-3 3.2.5 C C C _.e.5 0 7:0112022! 3;390 93 3 -;8-0 30 0 30 890 07101120201 :BCC 2:. CC 18.923 2_.C2_ _.,_ 90 _C.000 .C._„_ 3_.2_C 0?01:2040 !� '0.000 0 -3.230 -3.230 13.000 13.000 8.230 -__.=7= TOTAL: 106,575 2,245 112,055 114,300 1,435 25,250 26,685 140,985 Page 5 City of Newport Beach 2010A & 2010B Certificates of Participation (Civic Center Project/Central Library Refunding) After consulting with all three co -managers, Stone & Youngberg's underwriter suggested that if possible, the syndicate should work to put the deal away the same day, as the market tone was not positive and did not look to be getting any better on the following day, Thursday, which was the scheduled final allocation of the BABs. The tax-exempt Series 2010A was underwritten that morning with just a slight 5 basis point increase to the 2012 yield (from 0.95% to 1.0%). No other changes were made from the preliminary pricing. The taxable Series 2010B was more of a challenge. After quite a few inquiries and conversations with various institutional funds, by 10:30am, Stone & Youngberg's underwriter was able to procure some positive interest via two relatively aggressive bids (given the market tone) for the two term BABs if the 2030 term could be sized to total any amount over $15,000,000 and the 2040 term could reach a minimum of $70,000,000. The bids were firm at a spread to 30 -yr Treasury of 10 basis points greater than the preliminary pricing for the two terms —from +265 to +275 for the 2030 term and from +280 to +290 for the 2040 term. Because the market was rapidly moving away, the BAB bid offers above came with a fill or kill order deadline of 11:55am. This unfortunately did not leave a significant amount of time to evaluate the options or look for additional buyers while keeping the existing orders on -hand. To meet the minimum order amounts, the serials of 2024 and 2025 were rolled into the 2030 term. The 2040 term sinking fund was extended from 2031-2040 to 2024-2040. Fearing a continuing market degradation and keeping in mind the financing timing constraints previously mentioned, the City accepted the revised structure and pricing deadline and while the underwriting syndicate did not have orders for all the BAB serials of 2018-2023, they were underwritten with an increased spread to I 0 -yr Treasury of 10 basis points beyond that of the preliminary pricing. The revised BAB serial yields ranged from 4.451 % in 2018 (+160 to the 10 -year Treasury) to 7.168% (+300 to the 10 -year) in 2023. The term BAB yields of 2030 and 2040 were 7.018% (+275 to the 30 -yr) and 7.168% (+290 to the 30-ry). The TIC of the resultant scale was 4.55%, an incrase of just over 10 basis points from the preliminary pricing. The treasury rates were grabbed and set at 11:55am, PST, November 17, 2010 and revealed in the above Bloomberg screen shot for record keeping purposes. Page 6 City of Newport Beach 2010A & 2010B Certificates of Participation (Civic Center Project/Central Library Refunding) Pricing Comparables On Pricing Day: The only other true comparable with the City of Newport Beach COP credit was the City of Padadena's Lease Revenue Bond (Rose Bowl Project) pricing on the same day with a rating of AA+/AA+. The City of Pasadena's bonds were structured with $25,200,000 tax-exempt serials from 2020 to 2026 and $106,660,000 taxable term BABs in 2034 and 2043). For the tax-exempt series, there were no common maturities between Pasdadena and Newport Beach. The 2019 maturity of Newport Beach and 2020 of Pasadena both had 4% coupons, with yields of 3.44% and 4%, respectively. With respect to the BABs, the term maturing in 2034 priced at 6.998% (+275 to the 30 -yr treasury) and the term maturing in 2043 priced at 7.148% (+290 to the 30 -yr treasury). Newport Beach's 2040 term maturity also priced at +290. Riverside County Transportation Commission BABs (Aa I /AA+/AA) also priced on Wednesday, November 17. A par amount of $112,370,000 was structured as a single term maturing in 2039 with a yield of 6.807 (+250 to the 30 -yr Treasury), however, that issue price was quickly cut by 60 basis points (7.407% yield and 24 basis points higher than Newport Beach) and those bonds were still being offered by the end of that day. (i.e., those BABs show significant trading and price changes after pricing) 10 -Yr & 30 -Yr Treasury Trends After Preliminary Pricing & Closing (Thru Friday. 12/7/ 10): The two graphs and insets below both demonstrate three aspects: 1. Spanning from December 1977, the 10 & 30 -Yr Treasuries remain at near historical lows; 2. While both the 10 & 30 -Yr Treasury remain at near historial lows, both also increased by —40-50 basis points since early October 2010 leading up to the City's pricing (see inset); 3. Compared to the yields on November 16/17 th , both the 10 & 30 -Yr Treasury have not dipped below those levels and have continued to trend slightly higher through December 7, 2010 (see inset). 10 -Year U.S. Treasury Note1 16.0 14.0 12.0 10.0 8.0 6.0 Max = 15.84% Min = 2.08 4.0 Current = 3.15% 2.0 Aeerage = 6.88% 10/l/10-12/7/10 4.0 3.5 (11/16) Newport Beach =2.851 (%) 3.0 2.5 Average - 2.69% 2.0 — 0 0 0 0 0 0 0 0 0 0 N — I I I I I I I �� °r' m m Nm m ro T� ro m ib T rn rn T rn rn rn rn T rn o 0 0 0 0 0 0 0 0 0 A b o b b o A b o b b A b d A b d b b A b o A b d A b b b A b d A ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ (1) Source: Federal Reserve & Bloomberg. As of 12/7/2010. Page 7 City of Newport Beach 2010A & 2010B Certificates of Participation (Civic Center Project/Central Library Refunding) 30 -Year U.S.Treasuryl 16.0 14.0 12.0 10.0n} (/) — 1 8.0 6.0 Min = 2.b3"/o 4.0 2.0 L Average = 7.49 10/1/10-12/7/10 5.0 4.5 (11/16) Newport Beach =4.268% 4.0 (%) 3.5 3.0 Average = 4.21 2.5 2.0 W N a A N a W N M I W O ON M 7� W r W M O N M 7� W r W a O N M 7 W W f W M O r r r W W W W W W W W W Wc� c� c� c� c� c� c� 0 0 0 0 0 0 0 0 0 0 0 0 U U U U U U U U U U U U U U U U U U U U U U U U U U U U U U U U U U N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N (1) Source: Federal Reserve & Bloomberg. As of 12/7/2010 CUSIP Numbers Base CUSIP Number: 651779 201 OA 2019 Maturing 7/1 2020 Maturity CUSIP 2011 BI -12 2012 BJ8 2013 BKS 2014 BL3 2015 BMI 2016 BN9 2017 BP4 2018 BQ2 2019 BRO 201 OB Maturing 7/1 2018 CA6 2019 C B4 2020 BS8 2021 BT6 2022 BU3 2023 BVI 2030 BY5 2040 BZ2 Page 8 Tab A Final Numbers YouHu��au SOURCES AND USES OF FUNDS CITY OF NEWPORT BEACH Certificates of Participation Civic Center Project/Central Library Refunding 2010A (Tax Exempt) 2010B (Federally Taxable Direct Pay Build America Bonds) Final November 17, 2010 Dated Date 11/30/2010 Delivery Date 11/30/2010 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 1 2010A 2010B (Taxable Sources: (Tax -Exempt) BABs) Total Bond Proceeds: Par Amount 20,085,000.00 106,575,000.00 126,660,000.00 Premium 1,155,299.55 1,155,299.55 21,240,299.55 106,575,000.00 127,815,299.55 Other Sources of Funds: 1998 COP Reserve Fund 565,655.00 565,655.00 21,805,954.55 106,575,000.00 128,3 80,954.55 2010A 2010B (Taxable Uses: (Tax -Exempt) BABs) Total Project Fund Deposits: Project Fund 17,509,969.90 105,490,030.10 123,000,000.00 Refunding Escrow Deposits: Cash Deposit 4,091,512.50 4,091,512.50 Delivery Date Expenses: Cost of Issuance 94,004.65 498,807.40 592,812.05 Underwriter's Discount 110,467.50 586,162.50 696,630.00 204,472.15 1,084,969.90 1,289,442.05 21,805,954.55 106,575,000.00 128,3 80,954.55 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 1 SroNr & Y°°H°• a° BOND PRICING CITY OF NEWPORT BEACH Certificates of Participation Civic Center Project/Central Library Refunding 2010A (Tax Exempt) 2010B (Federally Taxable Direct Pay Build America Bonds) Final November 17, 2010 Maturity Bond Component Date Amount Rate Yield Price Premium (-Discount) Tax -Exempt Serial Bonds: 7.168% 100.000 07/01/2025 1,095,000 7.168% 07/01/2011 1,740,000 2.000% 0.650% 100.788 13,711.20 07/01/2012 2,690,000 3.000% 0.950% 103.219 86,591.10 07/01/2013 2,775,000 3.000% 1.270% 104.386 121,711.50 07/01/2014 2,860,000 3.000% 1.670% 104.609 131,817.40 07/01/2015 2,940,000 4.000% 2.000% 108.721 256,397.40 07/01/2016 3,060,000 4.000% 2.350% 108.588 262,792.80 07/01/2017 3,185,000 4.000% 2.740% 107.543 240,244.55 07/01/2018 410,000 4.000% 3.110% 105.971 24,481.10 07/01/2019 425,000 4.000% 3.440% 104.130 17,552.50 7.168% 20,085,000 100.000 07/01/2037 6,320,000 1,155,299.55 Taxable BAB Serials (MW Call): 100.000 07/01/2038 6,615,000 7.168% 7.168% 07/01/2018 2,900,000 4.451% 4.451% 100.000 100.000 07/01/2019 2,980,000 4.751% 4.751% 100.000 07/01/2020 3,065,000 5.051% 5.051% 100.000 07/01/2021 3,165,000 5.351% 5.351% 100.000 07/01/2022 3,275,000 5.601% 5.601% 100.000 07/01/2023 3,390,000 5.851% 5.851% 100.000 18,775,000 Taxable BAB Tenn Bond Maturing 2030 (MW Call): 07/01/2024 2,620,000 7.018% 7.018% 100.000 07/01/2025 2,580,000 7.018% 7.018% 100.000 07/01/2026 2,555,000 7.018% 7.018% 100.000 07/01/2027 2,530,000 7.018% 7.018% 100.000 07/01/2028 2,510,000 7.018% 7.018% 100.000 07/01/2029 2,505,000 7.018% 7.018% 100.000 07/01/2030 2,500,000 7.018% 7.018% 100.000 17,800,000 Taxable BAB Tenn Bond Maturing 2040 (MW Call): 11/30/2010 Delivery Date 07/01/2024 890,000 7.168% 7.168% 100.000 07/01/2025 1,095,000 7.168% 7.168% 100.000 07/01/2026 1,295,000 7.168% 7.168% 100.000 07/01/2027 1,495,000 7.168% 7.168% 100.000 07/01/2028 1,700,000 7.168% 7.168% 100.000 07/01/2029 1,900,000 7.168% 7.168% 100.000 07/01/2030 2,100,000 7.168% 7.168% 100.000 07/01/2031 4,810,000 7.168% 7.168% 100.000 07/01/2032 5,035,000 7.168% 7.168% 100.000 07/01/2033 5,265,000 7.168% 7.168% 100.000 07/01/2034 5,510,000 7.168% 7.168% 100.000 07/01/2035 5,770,000 7.168% 7.168% 100.000 07/01/2036 6,035,000 7.168% 7.168% 100.000 07/01/2037 6,320,000 7.168% 7.168% 100.000 07/01/2038 6,615,000 7.168% 7.168% 100.000 07/01/2039 6,920,000 7.168% 7.168% 100.000 07/01/2040 7,245,000 7.168% 7.168% 100.000 70,000,000 126,660,000 1,155,299.55 Dated Date 11/30/2010 Delivery Date 11/30/2010 First Coupon 01/01/2011 Par Amount 126,660,000.00 Premium 1,155,299.55 Production 127,815,299.55 100.912127% Underwriter's Discount (696,630.00) (0.550000) Purchase Price 127,118,669.55 100.362127% Accrued Interest Net Proceeds 127,118,669.55 Notes: Note: 2010A maturities of 18 & 19 work to complete 1998 COP refunding BAB efficiency switcb was in 2018, but cannot be utilized for refunding component Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 2 BOND SUMMARY STATISTICS CITY OF NEWPORT BEACH Certificates of Participation Civic Center Project/Central Library Refunding 2010A (Tax Exempt) 2010B (Federally Taxable Direct Pay Build America Bonds) Final November 17, 2010 Dated Date 11/30/2010 Delivery Date 11/30/2010 Last Maturity 07/01/2040 Arbitrage Yield 2.185672% True Interest Cost (TIC) 4.437243% Net Interest Cost (NIC) 6.844853% All -In TIC 4.477720% Average Coupon 6.865133% Average Life (years) 17.857 Duration of Issue (years) 14.322 Par Amount 126,660,000.00 Bond Proceeds 127,815,299.55 Total Interest 155,269,177.59 Net Interest 154,810,508.04 Total Debt Service 281,929,177.59 Maximum Annual Debt Service 10,590,016.76 Average Annual Debt Service 9,529,105.62 Par Average Average Bond Component Value Price Coupon Life Tax -Exempt Serial Bonds 20,085,000.00 105.752 3.707% 4.034 Taxable BAB Serials (MW Call) 18,775,000.00 100.000 5.282% 10.178 Taxable BAB Term Bond Maturing 2030 (MW Call) 17,800,000.00 100.000 7.018% 16.555 Taxable BAB Term Bond Maturing 2040 (MW Call) 70,000,000.00 100.000 7.168% 24.213 126,660,000.00 17.857 All -In Arbitrage TIC TIC Yield Par Value + Accrued Interest + Premium (Discount) - Underwriter's Discount - Cost of Issuance Expense - Other Amounts Target Value Target Date Yield 126,660,000.00 126,660,000.00 20,085,000.00 1,155,299.55 1,155,299.55 1,155,299.55 (696,630.00) (696,630.00) (592,812.05) 127,118,669.55 11/30/2010 4.437243% 126,525,857.50 11/30/2010 4.477720% 21,240,299.55 11/30/2010 2.185672% Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 3 BOND DEBT SERVICE BREAKDOWN CITY OF NEWPORT BEACH Certificates of Participation Civic Center Project/Central Library Refunding 2010A (Tax Exempt) 2010B (Federally Taxable Direct Pay Build America Bonds) Final November 17, 2010 Period Ending 2010A (Tax -Exempt) 2010B (Taxable BABs) Total 07/01/2011 2,141,691.25 4,245,447.04 6,387,138.29 07/01/2012 3,340,550.00 7,243,416.76 10,583,966.76 07/01/2013 3,344,850.00 7,243,416.76 10,588,266.76 07/01/2014 3,346,600.00 7,243,416.76 10,590,016.76 07/01/2015 3,340,800.00 7,243,416.76 10,584,216.76 07/01/2016 3,343,200.00 7,243,416.76 10,586,616.76 07/01/2017 3,345,800.00 7,243,416.76 10,589,216.76 07/01/2018 443,400.00 10,143,416.76 10,586,816.76 07/01/2019 442,000.00 10,094,337.76 10,536,337.76 07/01/2020 10,037,757.96 10,037,757.96 07/01/2021 9,982,944.80 9,982,944.80 07/01/2022 9,923,585.66 9,923,585.66 07/01/2023 9,855,152.90 9,855,152.90 07/01/2024 9,776,804.00 9,776,804.00 07/01/2025 9,694,137.20 9,694,137.20 07/01/2026 9,609,583.20 9,609,583.20 07/01/2027 9,512,447.70 9,512,447.70 07/01/2028 9,412,730.70 9,412,730.70 07/01/2029 9,309,722.90 9,309,722.90 07/01/2030 9,192,730.00 9,192,730.00 07/01/2031 9,076,752.00 9,076,752.00 07/01/2032 8,956,971.20 8,956,971.20 07/01/2033 8,826,062.40 8,826,062.40 07/01/2034 8,693,667.20 8,693,667.20 07/01/2035 8,558,710.40 8,558,710.40 07/01/2036 8,410,116.80 8,410,116.80 07/01/2037 8,262,528.00 8,262,528.00 07/01/2038 8,104,510.40 8,104,510.40 07/01/2039 7,935,347.20 7,935,347.20 07/01/2040 7,764,321.60 7,764,321.60 23,088,891.25 258,840,286.34 281,929,177.59 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 4 5'rON[ & yo..6 _ BOND DEBT SERVICE BREAKDOWN CITY OF NEWPORT BEACH Certificates of Participation Civic Center Project/Central Library Refunding 2010A (Tax Exempt) 2010B (Federally Taxable Direct Pay Build America Bonds) Final November 17, 2010 Period Ending 2010A (Tax -Exempt) 2010B (Taxable BABs) Total Annual Total 01/01/2011 59,016.25 623,738.66 682,754.91 07/01/2011 2,082,675.00 3,621,708.38 5,704,383.38 6,387,138.29 01/01/2012 325,275.00 3,621,708.38 3,946,983.38 07/01/2012 3,015,275.00 3,621,708.38 6,636,983.38 10,583,966.76 01/01/2013 284,925.00 3,621,708.38 3,906,633.38 07/01/2013 3,059,925.00 3,621,708.38 6,681,633.38 10,588,266.76 01/01/2014 243,300.00 3,621,708.38 3,865,008.38 07/01/2014 3,103,300.00 3,621,708.38 6,725,008.38 10,590,016.76 01/01/2015 200,400.00 3,621,708.38 3,822,108.38 07/01/2015 3,140,400.00 3,621,708.38 6,762,108.38 10,584,216.76 01/01/2016 141,600.00 3,621,708.38 3,763,308.38 07/01/2016 3,201,600.00 3,621,708.38 6,823,308.38 10,586,616.76 01/01/2017 80,400.00 3,621,708.38 3,702,108.38 07/01/2017 3,265,400.00 3,621,708.38 6,887,108.38 10,589,216.76 01/01/2018 16,700.00 3,621,708.38 3,638,408.38 07/01/2018 426,700.00 6,521,708.38 6,948,408.38 10,586,816.76 01/01/2019 8,500.00 3,557,168.88 3,565,668.88 07/01/2019 433,500.00 6,537,168.88 6,970,668.88 10,536,337.76 01/01/2020 3,486,378.98 3,486,378.98 07/01/2020 6,551,378.98 6,551,378.98 10,037,757.96 01/01/2021 3,408,972.40 3,408,972.40 07/01/2021 6,573,972.40 6,573,972.40 9,982,944.80 01/01/2022 3,324,292.83 3,324,292.83 07/01/2022 6,599,292.83 6,599,292.83 9,923,585.66 01/01/2023 3,232,576.45 3,232,576.45 07/01/2023 6,622,576.45 6,622,576.45 9,855,152.90 01/01/2024 3,133,402.00 3,133,402.00 07/01/2024 6,643,402.00 6,643,402.00 9,776,804.00 01/01/2025 3,009,568.60 3,009,568.60 07/01/2025 6,684,568.60 6,684,568.60 9,694,137.20 01/01/2026 2,879,791.60 2,879,791.60 07/01/2026 6,729,791.60 6,729,791.60 9,609,583.20 01/01/2027 2,743,723.85 2,743,723.85 07/01/2027 6,768,723.85 6,768,723.85 9,512,447.70 01/01/2028 2,601,365.35 2,601,365.35 07/01/2028 6,811,365.35 6,811,365.35 9,412,730.70 01/01/2029 2,452,361.45 2,452,361.45 07/01/2029 6,857,361.45 6,857,361.45 9,309,722.90 01/01/2030 2,296,365.00 2,296,365.00 07/01/2030 6,896,365.00 6,896,365.00 9,192,730.00 01/01/2031 2,133,376.00 2,133,376.00 07/01/2031 6,943,376.00 6,943,376.00 9,076,752.00 01/01/2032 1,960,985.60 1,960,985.60 07/01/2032 6,995,985.60 6,995,985.60 8,956,971.20 01/01/2033 1,780,531.20 1,780,531.20 07/01/2033 7,045,531.20 7,045,531.20 8,826,062.40 01/01/2034 1,591,833.60 1,591,833.60 07/01/2034 7,101,833.60 7,101,833.60 8,693,667.20 01/01/2035 1,394,355.20 1,394,355.20 07/01/2035 7,164,355.20 7,164,355.20 8,558,710.40 01/01/2036 1,187,558.40 1,187,558.40 07/01/2036 7,222,558.40 7,222,558.40 8,410,116.80 01/01/2037 971,264.00 971,264.00 07/01/2037 7,291,264.00 7,291,264.00 8,262,528.00 01/01/2038 744,755.20 744,755.20 07/01/2038 7,359,755.20 7,359,755.20 8,104,510.40 01/01/2039 507,673.60 507,673.60 07/01/2039 7,427,673.60 7,427,673.60 7,935,347.20 01/01/2040 259,660.80 259,660.80 07/01/2040 7,504,660.80 7,504,660.80 7,764,321.60 23,088,891.25 258,840,286.34 281,929,177.59 281,929,177.59 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 5 YouHu��au NET DEBT SERVICE BREAKDOWN CITY OF NEWPORT BEACH Certificates of Participation Civic Center Project/Central Library Refunding 2010A (Tax Exempt) 2010B (Federally Taxable Direct Pay Build America Bonds) Final November 17, 2010 Period 2010A 2010B (Taxable Ending (Tax -Exempt) BABs) Total 07/01/2011 2,141,691.25 2,759,540.58 4,901,231.83 07/01/2012 3,340,550.00 4,708,220.90 8,048,770.90 07/01/2013 3,344,850.00 4,708,220.90 8,053,070.90 07/01/2014 3,346,600.00 4,708,220.90 8,054,820.90 07/01/2015 3,340,800.00 4,708,220.90 8,049,020.90 07/01/2016 3,343,200.00 4,708,220.90 8,051,420.90 07/01/2017 3,345,800.00 4,708,220.90 8,054,020.90 07/01/2018 443,400.00 7,608,220.90 8,051,620.90 07/01/2019 442,000.00 7,604,319.54 8,046,319.54 07/01/2020 7,597,292.68 7,597,292.68 07/01/2021 7,596,664.12 7,596,664.12 07/01/2022 7,596,580.68 7,596,580.68 07/01/2023 7,592,349.38 7,592,349.38 07/01/2024 7,583,422.60 7,583,422.60 07/01/2025 7,587,439.18 7,587,439.18 07/01/2026 7,593,729.08 7,593,729.08 07/01/2027 7,591,841.00 7,591,841.00 07/01/2028 7,591,774.96 7,591,774.96 07/01/2029 7,593,069.88 7,593,069.88 07/01/2030 7,585,274.50 7,585,274.50 07/01/2031 7,583,388.80 7,583,388.80 07/01/2032 7,584,281.28 7,584,281.28 07/01/2033 7,579,690.56 7,579,690.56 07/01/2034 7,579,383.68 7,579,383.68 07/01/2035 7,582,661.76 7,582,661.76 07/01/2036 7,578,825.92 7,578,825.92 07/01/2037 7,582,643.20 7,582,643.20 07/01/2038 7,583,181.76 7,583,181.76 07/01/2039 7,579,975.68 7,579,975.68 07/01/2040 7,582,559.04 7,582,559.04 23,088,891.25 205,547,436.16 228,636,327.41 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 6 STON[ & NET DEBT SERVICE BREAKDOWN CITY OF NEWPORT BEACH Certificates of Participation Civic Center Project/Central Library Refunding 2010A (Tax Exempt) 2010B (Federally Taxable Direct Pay Build America Bonds) Final November 17, 2010 Period Ending 2010A (Tax -Exempt) 2010B (Taxable BABs) Total Annual Total 01/01/2011 59,016.25 405,430.13 464,446.38 07/01/2011 2,082,675.00 2,354,110.45 4,436,785.45 4,901,231.83 01/01/2012 325,275.00 2,354,110.45 2,679,385.45 07/01/2012 3,015,275.00 2,354,110.45 5,369,385.45 8,048,770.90 01/01/2013 284,925.00 2,354,110.45 2,639,035.45 07/01/2013 3,059,925.00 2,354,110.45 5,414,035.45 8,053,070.90 01/01/2014 243,300.00 2,354,110.45 2,597,410.45 07/01/2014 3,103,300.00 2,354,110.45 5,457,410.45 8,054,820.90 01/01/2015 200,400.00 2,354,110.45 2,554,510.45 07/01/2015 3,140,400.00 2,354,110.45 5,494,510.45 8,049,020.90 01/01/2016 141,600.00 2,354,110.45 2,495,710.45 07/01/2016 3,201,600.00 2,354,110.45 5,555,710.45 8,051,420.90 01/01/2017 80,400.00 2,354,110.45 2,434,510.45 07/01/2017 3,265,400.00 2,354,110.45 5,619,510.45 8,054,020.90 01/01/2018 16,700.00 2,354,110.45 2,370,810.45 07/01/2018 426,700.00 5,254,110.45 5,680,810.45 8,051,620.90 01/01/2019 8,500.00 2,312,159.77 2,320,659.77 07/01/2019 433,500.00 5,292,159.77 5,725,659.77 8,046,319.54 01/01/2020 2,266,146.34 2,266,146.34 07/01/2020 5,331,146.34 5,331,146.34 7,597,292.68 01/01/2021 2,215,832.06 2,215,832.06 07/01/2021 5,380,832.06 5,380,832.06 7,596,664.12 01/01/2022 2,160,790.34 2,160,790.34 07/01/2022 5,435,790.34 5,435,790.34 7,596,580.68 01/01/2023 2,101,174.69 2,101,174.69 07/01/2023 5,491,174.69 5,491,174.69 7,592,349.38 01/01/2024 2,036,711.30 2,036,711.30 07/01/2024 5,546,711.30 5,546,711.30 7,583,422.60 01/01/2025 1,956,219.59 1,956,219.59 07/01/2025 5,631,219.59 5,631,219.59 7,587,439.18 01/01/2026 1,871,864.54 1,871,864.54 07/01/2026 5,721,864.54 5,721,864.54 7,593,729.08 01/01/2027 1,783,420.50 1,783,420.50 07/01/2027 5,808,420.50 5,808,420.50 7,591,841.00 01/01/2028 1,690,887.48 1,690,887.48 07/01/2028 5,900,887.48 5,900,887.48 7,591,774.96 01/01/2029 1,594,034.94 1,594,034.94 07/01/2029 5,999,034.94 5,999,034.94 7,593,069.88 01/01/2030 1,492,637.25 1,492,637.25 07/01/2030 6,092,637.25 6,092,637.25 7,585,274.50 01/01/2031 1,386,694.40 1,386,694.40 07/01/2031 6,196,694.40 6,196,694.40 7,583,388.80 01/01/2032 1,274,640.64 1,274,640.64 07/01/2032 6,309,640.64 6,309,640.64 7,584,281.28 01/01/2033 1,157,345.28 1,157,345.28 07/01/2033 6,422,345.28 6,422,345.28 7,579,690.56 01/01/2034 1,034,691.84 1,034,691.84 07/01/2034 6,544,691.84 6,544,691.84 7,579,383.68 01/01/2035 906,330.88 906,330.88 07/01/2035 6,676,330.88 6,676,330.88 7,582,661.76 01/01/2036 771,912.96 771,912.96 07/01/2036 6,806,912.96 6,806,912.96 7,578,825.92 01/01/2037 631,321.60 631,321.60 07/01/2037 6,951,321.60 6,951,321.60 7,582,643.20 01/01/2038 484,090.88 484,090.88 07/01/2038 7,099,090.88 7,099,090.88 7,583,181.76 01/01/2039 329,987.84 329,987.84 07/01/2039 7,249,987.84 7,249,987.84 7,579,975.68 01/01/2040 168,779.52 168,779.52 07/01/2040 7,413,779.52 7,413,779.52 7,582,559.04 23,088,891.25 205,547,436.16 228,636,327.41 228,636,327.41 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 7 M STGN[ & vnuNcf,. NET DEBT SERVICE CITY OF NEWPORT BEACH Certificates of Participation Civic Center Project/Central Library Refunding 2010A (Tax Exempt) 2010B (Federally Taxable Direct Pay Build America Bonds) Final November 17, 2010 Period Ending Principal Interest Total Debt Service Subsidy Net Debt Service 07/01/2011 1,740,000 4,647,138.29 6,387,138.29 (1,485,906.46) 4,901,231.83 07/01/2012 2,690,000 7,893,966.76 10,583,966.76 (2,535,195.86) 8,048,770.90 07/01/2013 2,775,000 7,813,266.76 10,588,266.76 (2,535,195.86) 8,053,070.90 07/01/2014 2,860,000 7,730,016.76 10,590,016.76 (2,535,195.86) 8,054,820.90 07/01/2015 2,940,000 7,644,216.76 10,584,216.76 (2,535,195.86) 8,049,020.90 07/01/2016 3,060,000 7,526,616.76 10,586,616.76 (2,535,195.86) 8,051,420.90 07/01/2017 3,185,000 7,404,216.76 10,589,216.76 (2,535,195.86) 8,054,020.90 07/01/2018 3,310,000 7,276,816.76 10,586,816.76 (2,535,195.86) 8,051,620.90 07/01/2019 3,405,000 7,131,337.76 10,536,337.76 (2,490,018.22) 8,046,319.54 07/01/2020 3,065,000 6,972,757.96 10,037,757.96 (2,440,465.28) 7,597,292.68 07/01/2021 3,165,000 6,817,944.80 9,982,944.80 (2,386,280.68) 7,596,664.12 07/01/2022 3,275,000 6,648,585.66 9,923,585.66 (2,327,004.98) 7,596,580.68 07/01/2023 3,390,000 6,465,152.90 9,855,152.90 (2,262,803.52) 7,592,349.38 07/01/2024 3,510,000 6,266,804.00 9,776,804.00 (2,193,381.40) 7,583,422.60 07/01/2025 3,675,000 6,019,137.20 9,694,137.20 (2,106,698.02) 7,587,439.18 07/01/2026 3,850,000 5,759,583.20 9,609,583.20 (2,015,854.12) 7,593,729.08 07/01/2027 4,025,000 5,487,447.70 9,512,447.70 (1,920,606.70) 7,591,841.00 07/01/2028 4,210,000 5,202,730.70 9,412,730.70 (1,820,955.74) 7,591,774.96 07/01/2029 4,405,000 4,904,722.90 9,309,722.90 (1,716,653.02) 7,593,069.88 07/01/2030 4,600,000 4,592,730.00 9,192,730.00 (1,607,455.50) 7,585,274.50 07/01/2031 4,810,000 4,266,752.00 9,076,752.00 (1,493,363.20) 7,583,388.80 07/01/2032 5,035,000 3,921,971.20 8,956,971.20 (1,372,689.92) 7,584,281.28 07/01/2033 5,265,000 3,561,062.40 8,826,062.40 (1,246,371.84) 7,579,690.56 07/01/2034 5,510,000 3,183,667.20 8,693,667.20 (1,114,283.52) 7,579,383.68 07/01/2035 5,770,000 2,788,710.40 8,558,710.40 (976,048.64) 7,582,661.76 07/01/2036 6,035,000 2,375,116.80 8,410,116.80 (831,290.88) 7,578,825.92 07/01/2037 6,320,000 1,942,528.00 8,262,528.00 (679,884.80) 7,582,643.20 07/01/2038 6,615,000 1,489,510.40 8,104,510.40 (521,328.64) 7,583,181.76 07/01/2039 6,920,000 1,015,347.20 7,935,347.20 (355,371.52) 7,579,975.68 07/01/2040 7,245,000 519,321.60 7,764,321.60 (181,762.56) 7,582,559.04 126,660,000 155,269,177.59 281,929,177.59 (53,292,850.18) 228,636,327.41 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 8 51'ONl & Y"°" _ NET DEBT SERVICE CITY OF NEWPORT BEACH Certificates of Participation Civic Center Project/Central Library Refunding 2010A (Tax Exempt) 2010B (Federally Taxable Direct Pay Build America Bonds) Final November 17, 2010 Period Ending Principal Interest Total Debt Service Subsidy Net Debt Service Annual Net D/S 01/01/2011 682,754.91 682,754.91 (218,308.53) 464,446.38 07/01/2011 1,740,000 3,964,383.38 5,704,383.38 (1,267,597.93) 4,436,785.45 4,901,231.83 01/01/2012 3,946,983.38 3,946,983.38 (1,267,597.93) 2,679,385.45 07/01/2012 2,690,000 3,946,983.38 6,636,983.38 (1,267,597.93) 5,369,385.45 8,048,770.90 01/01/2013 3,906,633.38 3,906,633.38 (1,267,597.93) 2,639,035.45 07/01/2013 2,775,000 3,906,633.38 6,681,633.38 (1,267,597.93) 5,414,035.45 8,053,070.90 01/01/2014 3,865,008.38 3,865,008.38 (1,267,597.93) 2,597,410.45 07/01/2014 2,860,000 3,865,008.38 6,725,008.38 (1,267,597.93) 5,457,410.45 8,054,820.90 01/01/2015 3,822,108.38 3,822,108.38 (1,267,597.93) 2,554,510.45 07/01/2015 2,940,000 3,822,108.38 6,762,108.38 (1,267,597.93) 5,494,510.45 8,049,020.90 01/01/2016 3,763,308.38 3,763,308.38 (1,267,597.93) 2,495,710.45 07/01/2016 3,060,000 3,763,308.38 6,823,308.38 (1,267,597.93) 5,555,710.45 8,051,420.90 01/01/2017 3,702,108.38 3,702,108.38 (1,267,597.93) 2,434,510.45 07/01/2017 3,185,000 3,702,108.38 6,887,108.38 (1,267,597.93) 5,619,510.45 8,054,020.90 01/01/2018 3,638,408.38 3,638,408.38 (1,267,597.93) 2,370,810.45 07/01/2018 3,310,000 3,638,408.38 6,948,408.38 (1,267,597.93) 5,680,810.45 8,051,620.90 01/01/2019 3,565,668.88 3,565,668.88 (1,245,009.11) 2,320,659.77 07/01/2019 3,405,000 3,565,668.88 6,970,668.88 (1,245,009.11) 5,725,659.77 8,046,319.54 01/01/2020 3,486,378.98 3,486,378.98 (1,220,232.64) 2,266,146.34 07/01/2020 3,065,000 3,486,378.98 6,551,378.98 (1,220,232.64) 5,331,146.34 7,597,292.68 01/01/2021 3,408,972.40 3,408,972.40 (1,193,140.34) 2,215,832.06 07/01/2021 3,165,000 3,408,972.40 6,573,972.40 (1,193,140.34) 5,380,832.06 7,596,664.12 01/01/2022 3,324,292.83 3,324,292.83 (1,163,502.49) 2,160,790.34 07/01/2022 3,275,000 3,324,292.83 6,599,292.83 (1,163,502.49) 5,435,790.34 7,596,580.68 01/01/2023 3,232,576.45 3,232,576.45 (1,131,401.76) 2,101,174.69 07/01/2023 3,390,000 3,232,576.45 6,622,576.45 (1,131,401.76) 5,491,174.69 7,592,349.38 01/01/2024 3,133,402.00 3,133,402.00 (1,096,690.70) 2,036,711.30 07/01/2024 3,510,000 3,133,402.00 6,643,402.00 (1,096,690.70) 5,546,711.30 7,583,422.60 01/01/2025 3,009,568.60 3,009,568.60 (1,053,349.01) 1,956,219.59 07/01/2025 3,675,000 3,009,568.60 6,684,568.60 (1,053,349.01) 5,631,219.59 7,587,439.18 01/01/2026 2,879,791.60 2,879,791.60 (1,007,927.06) 1,871,864.54 07/01/2026 3,850,000 2,879,791.60 6,729,791.60 (1,007,927.06) 5,721,864.54 7,593,729.08 01/01/2027 2,743,723.85 2,743,723.85 (960,303.35) 1,783,420.50 07/01/2027 4,025,000 2,743,723.85 6,768,723.85 (960,303.35) 5,808,420.50 7,591,841.00 01/01/2028 2,601,365.35 2,601,365.35 (910,477.87) 1,690,887.48 07/01/2028 4,210,000 2,601,365.35 6,811,365.35 (910,477.87) 5,900,887.48 7,591,774.96 01/01/2029 2,452,361.45 2,452,361.45 (858,326.51) 1,594,034.94 07/01/2029 4,405,000 2,452,361.45 6,857,361.45 (858,326.51) 5,999,034.94 7,593,069.88 01/01/2030 2,296,365.00 2,296,365.00 (803,727.75) 1,492,637.25 07/01/2030 4,600,000 2,296,365.00 6,896,365.00 (803,727.75) 6,092,637.25 7,585,274.50 01/01/2031 2,133,376.00 2,133,376.00 (746,681.60) 1,386,694.40 07/01/2031 4,810,000 2,133,376.00 6,943,376.00 (746,681.60) 6,196,694.40 7,583,388.80 01/01/2032 1,960,985.60 1,960,985.60 (686,344.96) 1,274,640.64 07/01/2032 5,035,000 1,960,985.60 6,995,985.60 (686,344.96) 6,309,640.64 7,584,281.28 01/01/2033 1,780,531.20 1,780,531.20 (623,185.92) 1,157,345.28 07/01/2033 5,265,000 1,780,531.20 7,045,531.20 (623,185.92) 6,422,345.28 7,579,690.56 01/01/2034 1,591,833.60 1,591,833.60 (557,141.76) 1,034,691.84 07/01/2034 5,510,000 1,591,833.60 7,101,833.60 (557,141.76) 6,544,691.84 7,579,383.68 01/01/2035 1,394,355.20 1,394,355.20 (488,024.32) 906,330.88 07/01/2035 5,770,000 1,394,355.20 7,164,355.20 (488,024.32) 6,676,330.88 7,582,661.76 01/01/2036 1,187,558.40 1,187,558.40 (415,645.44) 771,912.96 07/01/2036 6,035,000 1,187,558.40 7,222,558.40 (415,645.44) 6,806,912.96 7,578,825.92 01/01/2037 971,264.00 971,264.00 (339,942.40) 631,321.60 07/01/2037 6,320,000 971,264.00 7,291,264.00 (339,942.40) 6,951,321.60 7,582,643.20 01/01/2038 744,755.20 744,755.20 (260,664.32) 484,090.88 07/01/2038 6,615,000 744,755.20 7,359,755.20 (260,664.32) 7,099,090.88 7,583,181.76 01/01/2039 507,673.60 507,673.60 (177,685.76) 329,987.84 07/01/2039 6,920,000 507,673.60 7,427,673.60 (177,685.76) 7,249,987.84 7,579,975.68 01/01/2040 259,660.80 259,660.80 (90,881.28) 168,779.52 07/01/2040 7,245,000 259,660.80 7,504,660.80 (90,881.28) 7,413,779.52 7,582,559.04 126,660,000 155,269,177.59 281,929,177.59 (53,292,850.18) 228,636,327.41 228,636,327.41 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 9 ® yo.. & STGNt.e SUMMARY OF REFUNDING RESULTS CITY OF NEWPORT BEACH 2010A (Tax -Exempt) Dated Date 11/30/2010 Delivery Date 11/30/2010 Arbitrage yield 2.185672% Escrow yield Bond Par Amount 3,380,000.00 True Interest Cost 2.690155% Net Interest Cost 2.792120% Average Coupon 3.805286% Average Life 4.753 Par amount of refunded bonds 3,990,000.00 Average coupon of refunded bonds 5.109842% Average life of refunded bonds 4.829 PV of prior debt to 11/30/2010 @ 2.185672% 4,615,176.30 Net PV Savings 429,499.10 Percentage savings of refunded bonds 10.764388% Percentage savings of refunding bonds 12.707074% Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 10 ® yo.. & STGNt & .e SAVINGS Savings Summary PV of savings from cash flow CITY OF NEWPORT BEACH Less: Prior funds on hand (565,655.00) Plus: Refunding funds on hand 2010A (Tax -Exempt) Net PV Savings 429,499.10 Present Value Prior Refunding to 11/30/2010 Date Debt Service Debt Service Savings @ 2.1856716% 07/01/2011 563,025.00 443,809.44 119,215.56 119,702.43 07/01/2012 564,845.00 439,900.00 124,945.00 122,097.27 07/01/2013 565,655.00 445,000.00 120,655.00 115,369.48 07/01/2014 565,455.00 444,650.00 120,805.00 112,977.07 07/01/2015 564,245.00 444,000.00 120,245.00 109,986.39 07/01/2016 562,025.00 444,400.00 117,625.00 105,260.25 07/01/2017 563,795.00 444,200.00 119,595.00 104,668.55 07/01/2018 563,817.50 443,400.00 120,417.50 103,072.56 07/01/2019 562,552.50 442,000.00 120,552.50 100,921.30 5,075,415.00 3,991,359.44 1,084,055.56 994,055.30 Savings Summary PV of savings from cash flow 994,055.30 Less: Prior funds on hand (565,655.00) Plus: Refunding funds on hand 1,098.80 Net PV Savings 429,499.10 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 11 ® yo.. & STGNt & .e SUMMARY OF BONDS REFUNDED CITY OF NEWPORT BEACH 2010A (Tax -Exempt) Maturity Interest Bond Date Rate Par Call Call Amount Date Price Central Library Building Project: Term Bond 2016 06/01/2016 5.050% 2,460,000.00 12/01/2010 100.000 Term Bond 2019 06/01/2019 5.150% 1,530,000.00 12/01/2010 100.000 3,990,000.00 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 12 ® .. & yo vrGNt & RC ESCROW SUFFICIENCY CITY OF NEWPORT BEACH 2010A (Tax -Exempt Refunding Component) Current Refunding Escrow Net Escrow Excess Date Requirement Receipts Receipts Excess Balance 11/30/2010 4,091,512.50 4,091,512.50 4,091,512.50 12/01/2010 4,091,512.50 (4,091,512.50) 4,091,512.50 4,091,512.50 0.00 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 13 ® yo.. & STGNt.e NET DEBT SERVICE CITY OF NEWPORT BEACH 2010A (Tax -Exempt) Period Ending Principal Interest Total Debt Service Net Debt Service 07/01/2011 1,740,000 401,691.25 2,141,691.25 2,141,691.25 07/01/2012 2,690,000 650,550.00 3,340,550.00 3,340,550.00 07/01/2013 2,775,000 569,850.00 3,344,850.00 3,344,850.00 07/01/2014 2,860,000 486,600.00 3,346,600.00 3,346,600.00 07/01/2015 2,940,000 400,800.00 3,340,800.00 3,340,800.00 07/01/2016 3,060,000 283,200.00 3,343,200.00 3,343,200.00 07/01/2017 3,185,000 160,800.00 3,345,800.00 3,345,800.00 07/01/2018 410,000 33,400.00 443,400.00 443,400.00 07/01/2019 425,000 17,000.00 442,000.00 442,000.00 20,085,000 3,003,891.25 23,088,891.25 23,088,891.25 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 14 M STONI & ya—dalkc NET DEBT SERVICE Period Ending Principal CITY OF NEWPORT BEACH 2010A (Tax -Exempt) Total Interest Debt Service Net Debt Service Annual Net D/S 01/01/2011 59,016.25 59,016.25 59,016.25 07/01/2011 1,740,000 342,675.00 2,082,675.00 2,082,675.00 2,141,691.25 01/01/2012 325,275.00 325,275.00 325,275.00 07/01/2012 2,690,000 325,275.00 3,015,275.00 3,015,275.00 3,340,550.00 01/01/2013 284,925.00 284,925.00 284,925.00 07/01/2013 2,775,000 284,925.00 3,059,925.00 3,059,925.00 3,344,850.00 01/01/2014 243,300.00 243,300.00 243,300.00 07/01/2014 2,860,000 243,300.00 3,103,300.00 3,103,300.00 3,346,600.00 01/01/2015 200,400.00 200,400.00 200,400.00 07/01/2015 2,940,000 200,400.00 3,140,400.00 3,140,400.00 3,340,800.00 01/01/2016 141,600.00 141,600.00 141,600.00 07/01/2016 3,060,000 141,600.00 3,201,600.00 3,201,600.00 3,343,200.00 01/01/2017 80,400.00 80,400.00 80,400.00 07/01/2017 3,185,000 80,400.00 3,265,400.00 3,265,400.00 3,345,800.00 01/01/2018 16,700.00 16,700.00 16,700.00 07/01/2018 410,000 16,700.00 426,700.00 426,700.00 443,400.00 01/01/2019 8,500.00 8,500.00 8,500.00 07/01/2019 425,000 8,500.00 433,500.00 433,500.00 442,000.00 20,085,000 3,003,891.25 23,088,891.25 23,088,891.25 23,088,891.25 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 15 ® .. & yo vrONt & RC COST OF ISSUANCE CITY OF NEWPORT BEACH 2010A (Tax -Exempt) Cost of Issuance S/1000 Amount Special Counsel (Stradling Yocca Carlson 0.13619 2,735.28 Disclosure Counsel (Hawkins Delafield & 0.08238 1,654.51 Financial Advisor (Fieldman, Rolapp & As 0.13818 2,775.30 Rating Agency (S&P) 0.05447 1,094.11 Rating Agency (Fitch) 0.07307 1,467.71 Rating Agency (Moody's) 0.07972 1,601.14 Printer (Imagemaster) 0.00465 93.40 Appraisal Services (William Hansen/ Gary 0.08105 1,627.82 CLTA Title Insurance (principal) (Fideli 0.08304 1,667.85 Rental Interruption Insurance (24 mo) (T 0.01993 400.28 Trustee (BNY Mellon) 0.00531 106.74 Contingency 0.02964 595.41 Special Counsel (Stradling Yocca Carlson 0.67307 13,518.57 Disclosure Counsel (Hawkins Delafield & 0.40712 8,177.09 Financial Advisor (Fieldman, Rolapp & As 0.68292 13,716.41 Rating Agency (S&P) 0.26923 5,407.43 Rating Agency (Fitch) 0.36116 7,253.87 Rating Agency (Moody's) 0.39399 7,913.31 Printer (Imagemaster) 0.02298 461.61 Appraisal Services (William Hansen/ Gary 0.40056 8,045.20 CLTA Title Insurance (principal) (Fideli 0.41041 8,243.03 Rental Interruption Insurance (24 mo) (T 0.09850 1,978.33 Trustee (BNY Mellon) 0.02627 527.55 Contingency 0.14651 2,942.70 4.68034 94,004.65 Notes: On the 2010A TE COI breakout, duplicate line items show b/c the series contains two background components; the background components relate to the 1998 COP refunding and the TE new money components. Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 16 ® .. & yo vrGNt & RC Bond Component Date FORM 8038 STATISTICS CITY OF NEWPORT BEACH 2010A (Tax -Exempt) Dated Date 11/30/2010 Delivery Date 11/30/2010 Redemption Principal Coupon Price Issue Price at Maturity Tax -Exempt Serial Bonds: Stated Weighted Maturity Interest Issue Redemption Average 07/01/2011 1,740,000.00 2.000% 100.788 1,753,711.20 1,740,000.00 07/01/2012 2,690,000.00 3.000% 103.219 2,776,591.10 2,690,000.00 07/01/2013 2,775,000.00 3.000% 104.386 2,896,711.50 2,775,000.00 07/01/2014 2,860,000.00 3.000% 104.609 2,991,817.40 2,860,000.00 07/01/2015 2,940,000.00 4.000% 108.721 3,196,397.40 2,940,000.00 07/01/2016 3,060,000.00 4.000% 108.588 3,322,792.80 3,060,000.00 07/01/2017 3,185,000.00 4.000% 107.543 3,425,244.55 3,185,000.00 07/01/2018 410,000.00 4.000% 105.971 434,481.10 410,000.00 07/01/2019 425,000.00 4.000% 104.130 442,552.50 425,000.00 20,085,000.00 21,240,299.55 20,085,000.00 Proceeds used for accrued interest Proceeds used for bond issuance costs (including underwriters' discount) Proceeds used for credit enhancement Proceeds allocated to reasonably required reserve or replacement fund Proceeds used to currently refund prior issues Proceeds used to advance refund prior issues Remaining weighted average maturity of the bonds to be currently refunded Remaining weighted average maturity of the bonds to be advance refunded 0.00 204,472.15 0.00 0.00 4,091,512.50 0.00 4.8286 0.0000 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 17 Stated Weighted Maturity Interest Issue Redemption Average Date Rate Price at Maturity Maturity Yield Final Maturity 07/01/2019 4.000% 442,552.50 425,000.00 Entire Issue 21,240,299.55 20,085,000.00 4.0737 2.1857% Proceeds used for accrued interest Proceeds used for bond issuance costs (including underwriters' discount) Proceeds used for credit enhancement Proceeds allocated to reasonably required reserve or replacement fund Proceeds used to currently refund prior issues Proceeds used to advance refund prior issues Remaining weighted average maturity of the bonds to be currently refunded Remaining weighted average maturity of the bonds to be advance refunded 0.00 204,472.15 0.00 0.00 4,091,512.50 0.00 4.8286 0.0000 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 17 ® yo.. & STGNt & .e FORM 8038 STATISTICS CITY OF NEWPORT BEACH 2010A (Tax -Exempt) Refunded Bonds Bond Component Date Principal Coupon Price Issue Price Central Library Building Project: TERM2016 06/01/2011 360,000.00 5.050% 100.000 360,000.00 TERM2016 06/01/2012 380,000.00 5.050% 100.000 380,000.00 TERM2016 06/01/2013 400,000.00 5.050% 100.000 400,000.00 TERM2016 06/01/2014 420,000.00 5.050% 100.000 420,000.00 TERM2016 06/01/2015 440,000.00 5.050% 100.000 440,000.00 TERM2016 06/01/2016 460,000.00 5.050% 100.000 460,000.00 TERM2019 06/01/2017 485,000.00 5.150% 100.000 485,000.00 TERM2019 06/01/2018 510,000.00 5.150% 100.000 510,000.00 TERM2019 06/01/2019 535,000.00 5.150% 100.000 535,000.00 3,990,000.00 3,990,000.00 Remaining Last Weighted Call Issue Average Date Date Maturity Central Library Building Project 12/01/2010 08/12/1998 4.8286 All Refunded Issues 12/01/2010 4.8286 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 18 ® .. & yo vrGNt & RC PROOF OF ARBITRAGE YIELD Date CITY OF NEWPORT BEACH 2010A (Tax -Exempt) PV Debt Service Factor Present Value to 11/30/2010 @ 2.1856716% 01/01/2011 59,016.25 0.998129855 58,905.88 07/01/2011 2,082,675.00 0.987339851 2,056,308.02 01/01/2012 325,275.00 0.976666490 317,685.19 07/01/2012 3,015,275.00 0.966108510 2,913,082.84 01/01/2013 284,925.00 0.955664665 272,292.75 07/01/2013 3,059,925.00 0.945333719 2,892,650.28 01/01/2014 243,300.00 0.935114454 227,513.35 07/01/2014 3,103,300.00 0.925005661 2,870,570.07 01/01/2015 200,400.00 0.915006146 183,367.23 07/01/2015 3,140,400.00 0.905114728 2,842,422.29 01/01/2016 141,600.00 0.895330239 126,778.76 07/01/2016 3,201,600.00 0.885651522 2,835,501.91 01/01/2017 80,400.00 0.876077434 70,436.63 07/01/2017 3,265,400.00 0.866606844 2,829,817.99 01/01/2018 16,700.00 0.857238633 14,315.89 07/01/2018 426,700.00 0.847971695 361,829.52 01/01/2019 8,500.00 0.838804934 7,129.84 07/01/2019 433,500.00 0.829737268 359,691.11 23,088,891.25 21,240,299.55 Proceeds Summary Delivery date Par Value Premium (Discount) Target for yield calculation Note: Column labeled'Expenses' = Annual Federal Subsidy on BABs. 11/30/2010 20,085,000.00 1,155,299.55 21,240,299.55 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 19 M STONI & ya—dalkc NET DEBT SERVICE CITY OF NEWPORT BEACH 2010B (Taxable BABs) Period Ending Principal Interest Total Debt Service Subsidy Net Debt Service 07/01/2011 4,245,447.04 4,245,447.04 (1,485,906.46) 2,759,540.58 07/01/2012 7,243,416.76 7,243,416.76 (2,535,195.86) 4,708,220.90 07/01/2013 7,243,416.76 7,243,416.76 (2,535,195.86) 4,708,220.90 07/01/2014 7,243,416.76 7,243,416.76 (2,535,195.86) 4,708,220.90 07/01/2015 7,243,416.76 7,243,416.76 (2,535,195.86) 4,708,220.90 07/01/2016 7,243,416.76 7,243,416.76 (2,535,195.86) 4,708,220.90 07/01/2017 7,243,416.76 7,243,416.76 (2,535,195.86) 4,708,220.90 07/01/2018 2,900,000 7,243,416.76 10,143,416.76 (2,535,195.86) 7,608,220.90 07/01/2019 2,980,000 7,114,337.76 10,094,337.76 (2,490,018.22) 7,604,319.54 07/01/2020 3,065,000 6,972,757.96 10,037,757.96 (2,440,465.28) 7,597,292.68 07/01/2021 3,165,000 6,817,944.80 9,982,944.80 (2,386,280.68) 7,596,664.12 07/01/2022 3,275,000 6,648,585.66 9,923,585.66 (2,327,004.98) 7,596,580.68 07/01/2023 3,390,000 6,465,152.90 9,855,152.90 (2,262,803.52) 7,592,349.38 07/01/2024 3,510,000 6,266,804.00 9,776,804.00 (2,193,381.40) 7,583,422.60 07/01/2025 3,675,000 6,019,137.20 9,694,137.20 (2,106,698.02) 7,587,439.18 07/01/2026 3,850,000 5,759,583.20 9,609,583.20 (2,015,854.12) 7,593,729.08 07/01/2027 4,025,000 5,487,447.70 9,512,447.70 (1,920,606.70) 7,591,841.00 07/01/2028 4,210,000 5,202,730.70 9,412,730.70 (1,820,955.74) 7,591,774.96 07/01/2029 4,405,000 4,904,722.90 9,309,722.90 (1,716,653.02) 7,593,069.88 07/01/2030 4,600,000 4,592,730.00 9,192,730.00 (1,607,455.50) 7,585,274.50 07/01/2031 4,810,000 4,266,752.00 9,076,752.00 (1,493,363.20) 7,583,388.80 07/01/2032 5,035,000 3,921,971.20 8,956,971.20 (1,372,689.92) 7,584,281.28 07/01/2033 5,265,000 3,561,062.40 8,826,062.40 (1,246,371.84) 7,579,690.56 07/01/2034 5,510,000 3,183,667.20 8,693,667.20 (1,114,283.52) 7,579,383.68 07/01/2035 5,770,000 2,788,710.40 8,558,710.40 (976,048.64) 7,582,661.76 07/01/2036 6,035,000 2,375,116.80 8,410,116.80 (831,290.88) 7,578,825.92 07/01/2037 6,320,000 1,942,528.00 8,262,528.00 (679,884.80) 7,582,643.20 07/01/2038 6,615,000 1,489,510.40 8,104,510.40 (521,328.64) 7,583,181.76 07/01/2039 6,920,000 1,015,347.20 7,935,347.20 (355,371.52) 7,579,975.68 07/01/2040 7,245,000 519,321.60 7,764,321.60 (181,762.56) 7,582,559.04 106,575,000 152,265,286.34 258,840,286.34 (53,292,850.18) 205,547,436.16 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 20 ® yo.. & STGNt & .e NET DEBT SERVICE Period Ending Principal CITY OF NEWPORT BEACH 2010B (Taxable BABs) Total Interest Debt Service Subsidy Net Debt Service Annual Net D/S 01/01/2011 623,738.66 623,738.66 (218,308.53) 405,430.13 07/01/2011 3,621,708.38 3,621,708.38 (1,267,597.93) 2,354,110.45 2,759,540.58 01/01/2012 3,621,708.38 3,621,708.38 (1,267,597.93) 2,354,110.45 07/01/2012 3,621,708.38 3,621,708.38 (1,267,597.93) 2,354,110.45 4,708,220.90 01/01/2013 3,621,708.38 3,621,708.38 (1,267,597.93) 2,354,110.45 07/01/2013 3,621,708.38 3,621,708.38 (1,267,597.93) 2,354,110.45 4,708,220.90 01/01/2014 3,621,708.38 3,621,708.38 (1,267,597.93) 2,354,110.45 07/01/2014 3,621,708.38 3,621,708.38 (1,267,597.93) 2,354,110.45 4,708,220.90 01/01/2015 3,621,708.38 3,621,708.38 (1,267,597.93) 2,354,110.45 07/01/2015 3,621,708.38 3,621,708.38 (1,267,597.93) 2,354,110.45 4,708,220.90 01/01/2016 3,621,708.38 3,621,708.38 (1,267,597.93) 2,354,110.45 07/01/2016 3,621,708.38 3,621,708.38 (1,267,597.93) 2,354,110.45 4,708,220.90 01/01/2017 3,621,708.38 3,621,708.38 (1,267,597.93) 2,354,110.45 07/01/2017 3,621,708.38 3,621,708.38 (1,267,597.93) 2,354,110.45 4,708,220.90 01/01/2018 3,621,708.38 3,621,708.38 (1,267,597.93) 2,354,110.45 07/01/2018 2,900,000 3,621,708.38 6,521,708.38 (1,267,597.93) 5,254,110.45 7,608,220.90 01/01/2019 3,557,168.88 3,557,168.88 (1,245,009.11) 2,312,159.77 07/01/2019 2,980,000 3,557,168.88 6,537,168.88 (1,245,009.11) 5,292,159.77 7,604,319.54 01/01/2020 3,486,378.98 3,486,378.98 (1,220,232.64) 2,266,146.34 07/01/2020 3,065,000 3,486,378.98 6,551,378.98 (1,220,232.64) 5,331,146.34 7,597,292.68 01/01/2021 3,408,972.40 3,408,972.40 (1,193,140.34) 2,215,832.06 07/01/2021 3,165,000 3,408,972.40 6,573,972.40 (1,193,140.34) 5,380,832.06 7,596,664.12 01/01/2022 3,324,292.83 3,324,292.83 (1,163,502.49) 2,160,790.34 07/01/2022 3,275,000 3,324,292.83 6,599,292.83 (1,163,502.49) 5,435,790.34 7,596,580.68 01/01/2023 3,232,576.45 3,232,576.45 (1,131,401.76) 2,101,174.69 07/01/2023 3,390,000 3,232,576.45 6,622,576.45 (1,131,401.76) 5,491,174.69 7,592,349.38 01/01/2024 3,133,402.00 3,133,402.00 (1,096,690.70) 2,036,711.30 07/01/2024 3,510,000 3,133,402.00 6,643,402.00 (1,096,690.70) 5,546,711.30 7,583,422.60 01/01/2025 3,009,568.60 3,009,568.60 (1,053,349.01) 1,956,219.59 07/01/2025 3,675,000 3,009,568.60 6,684,568.60 (1,053,349.01) 5,631,219.59 7,587,439.18 01/01/2026 2,879,791.60 2,879,791.60 (1,007,927.06) 1,871,864.54 07/01/2026 3,850,000 2,879,791.60 6,729,791.60 (1,007,927.06) 5,721,864.54 7,593,729.08 01/01/2027 2,743,723.85 2,743,723.85 (960,303.35) 1,783,420.50 07/01/2027 4,025,000 2,743,723.85 6,768,723.85 (960,303.35) 5,808,420.50 7,591,841.00 01/01/2028 2,601,365.35 2,601,365.35 (910,477.87) 1,690,887.48 07/01/2028 4,210,000 2,601,365.35 6,811,365.35 (910,477.87) 5,900,887.48 7,591,774.96 01/01/2029 2,452,361.45 2,452,361.45 (858,326.51) 1,594,034.94 07/01/2029 4,405,000 2,452,361.45 6,857,361.45 (858,326.51) 5,999,034.94 7,593,069.88 01/01/2030 2,296,365.00 2,296,365.00 (803,727.75) 1,492,637.25 07/01/2030 4,600,000 2,296,365.00 6,896,365.00 (803,727.75) 6,092,637.25 7,585,274.50 01/01/2031 2,133,376.00 2,133,376.00 (746,681.60) 1,386,694.40 07/01/2031 4,810,000 2,133,376.00 6,943,376.00 (746,681.60) 6,196,694.40 7,583,388.80 01/01/2032 1,960,985.60 1,960,985.60 (686,344.96) 1,274,640.64 07/01/2032 5,035,000 1,960,985.60 6,995,985.60 (686,344.96) 6,309,640.64 7,584,281.28 01/01/2033 1,780,531.20 1,780,531.20 (623,185.92) 1,157,345.28 07/01/2033 5,265,000 1,780,531.20 7,045,531.20 (623,185.92) 6,422,345.28 7,579,690.56 01/01/2034 1,591,833.60 1,591,833.60 (557,141.76) 1,034,691.84 07/01/2034 5,510,000 1,591,833.60 7,101,833.60 (557,141.76) 6,544,691.84 7,579,383.68 01/01/2035 1,394,355.20 1,394,355.20 (488,024.32) 906,330.88 07/01/2035 5,770,000 1,394,355.20 7,164,355.20 (488,024.32) 6,676,330.88 7,582,661.76 01/01/2036 1,187,558.40 1,187,558.40 (415,645.44) 771,912.96 07/01/2036 6,035,000 1,187,558.40 7,222,558.40 (415,645.44) 6,806,912.96 7,578,825.92 01/01/2037 971,264.00 971,264.00 (339,942.40) 631,321.60 07/01/2037 6,320,000 971,264.00 7,291,264.00 (339,942.40) 6,951,321.60 7,582,643.20 01/01/2038 744,755.20 744,755.20 (260,664.32) 484,090.88 07/01/2038 6,615,000 744,755.20 7,359,755.20 (260,664.32) 7,099,090.88 7,583,181.76 01/01/2039 507,673.60 507,673.60 (177,685.76) 329,987.84 07/01/2039 6,920,000 507,673.60 7,427,673.60 (177,685.76) 7,249,987.84 7,579,975.68 01/01/2040 259,660.80 259,660.80 (90,881.28) 168,779.52 07/01/2040 7,245,000 259,660.80 7,504,660.80 (90,881.28) 7,413,779.52 7,582,559.04 106,575,000 152,265,286.34 258,840,286.34 (53,292,850.18) 205,547,436.16 205,547,436.16 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 21 ® .. & yo vrGNt & RC COST OF ISSUANCE CITY OF NEWPORT BEACH 2010B (Taxable BABs) Cost of Issuance S/1000 Amount Special Counsel (Stradling Yocca Carlson 0.80925 86,246.15 Disclosure Counsel (Hawkins Delafield & 0.48950 52,168.40 Financial Advisor (Fieldman, Rolapp & As 0.82110 87,508.29 Rating Agency (S&P) 0.32370 34,498.46 Rating Agency (Fitch) 0.43423 46,278.42 Rating Agency (Moody's) 0.47371 50,485.55 Printer (Imagemaster) 0.02763 2,944.99 Appraisal Services (William Hansen/ Gary 0.48160 51,326.98 CLTA Title Insurance (principal) (Fideli 0.49345 52,589.12 Rental Interruption Insurance (24 mo) (T 0.11843 12,621.39 Trustee (BNY Mellon) 0.03158 3,365.71 Contingency 0.17616 18,773.94 4.68034 498,807.40 Notes: On the 2010A TE COI breakout, duplicate line items show b/c the series contains two background components; the background components relate to the 1998 COP refunding and the TE new money components. Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 22 ® yo.. & STGNt.e FORM 8038 STATISTICS CITY OF NEWPORT BEACH 2010B (Taxable BABs) Dated Date 11/30/2010 Delivery Date 11/30/2010 Redemption Bond Component Date Principal Coupon Price Issue Price at Maturity Taxable BAB Serials (MW Call): 07/01/2018 2,900,000.00 4.451% 100.000 2,900,000.00 2,900,000.00 07/01/2019 2,980,000.00 4.751% 100.000 2,980,000.00 2,980,000.00 07/01/2020 3,065,000.00 5.051% 100.000 3,065,000.00 3,065,000.00 07/01/2021 3,165,000.00 5.351% 100.000 3,165,000.00 3,165,000.00 07/01/2022 3,275,000.00 5.601% 100.000 3,275,000.00 3,275,000.00 07/01/2023 3,390,000.00 5.851% 100.000 3,390,000.00 3,390,000.00 Taxable BAB Term Bond Maturing 2030 (MW Call): 2,100,000.00 7.168% 100.000 2,100,000.00 07/01/2024 2,620,000.00 7.018% 100.000 2,620,000.00 2,620,000.00 07/01/2025 2,580,000.00 7.018% 100.000 2,580,000.00 2,580,000.00 07/01/2026 2,555,000.00 7.018% 100.000 2,555,000.00 2,555,000.00 07/01/2027 2,530,000.00 7.018% 100.000 2,530,000.00 2,530,000.00 07/01/2028 2,510,000.00 7.018% 100.000 2,510,000.00 2,510,000.00 07/01/2029 2,505,000.00 7.018% 100.000 2,505,000.00 2,505,000.00 07/01/2030 2,500,000.00 7.018% 100.000 2,500,000.00 2,500,000.00 Taxable BAB Term Bond Maturing 2040 (MW Call): 07/01/2024 890,000.00 7.168% 100.000 890,000.00 890,000.00 07/01/2025 1,095,000.00 7.168% 100.000 1,095,000.00 1,095,000.00 07/01/2026 1,295,000.00 7.168% 100.000 1,295,000.00 1,295,000.00 07/01/2027 1,495,000.00 7.168% 100.000 1,495,000.00 1,495,000.00 07/01/2028 1,700,000.00 7.168% 100.000 1,700,000.00 1,700,000.00 07/01/2029 1,900,000.00 7.168% 100.000 1,900,000.00 1,900,000.00 07/01/2030 2,100,000.00 7.168% 100.000 2,100,000.00 2,100,000.00 07/01/2031 4,810,000.00 7.168% 100.000 4,810,000.00 4,810,000.00 07/01/2032 5,035,000.00 7.168% 100.000 5,035,000.00 5,035,000.00 07/01/2033 5,265,000.00 7.168% 100.000 5,265,000.00 5,265,000.00 07/01/2034 5,510,000.00 7.168% 100.000 5,510,000.00 5,510,000.00 07/01/2035 5,770,000.00 7.168% 100.000 5,770,000.00 5,770,000.00 07/01/2036 6,035,000.00 7.168% 100.000 6,035,000.00 6,035,000.00 07/01/2037 6,320,000.00 7.168% 100.000 6,320,000.00 6,320,000.00 07/01/2038 6,615,000.00 7.168% 100.000 6,615,000.00 6,615,000.00 07/01/2039 6,920,000.00 7.168% 100.000 6,920,000.00 6,920,000.00 07/01/2040 7,245,000.00 7.168% 100.000 7,245,000.00 7,245,000.00 106,575,000.00 106,575,000.00 106,575,000.00 Stated Weighted Maturity Interest Issue Redemption Average Date Rate Price at Maturity Maturity Yield Final Maturity 07/01/2040 7.168% 7,245,000.00 7,245,000.00 Entire Issue 106,575,000.00 106,575,000.00 20.4614 4.5088% Proceeds used for accrued interest 0.00 Proceeds used for bond issuance costs (including underwriters' discount) 1,084,969.90 Proceeds used for credit enhancement 0.00 Proceeds allocated to reasonably required reserve or replacement fund 0.00 Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 23 ETON[ & Date Debt Service PROOF OF ARBITRAGE YIELD CITY OF NEWPORT BEACH 2010B (Taxable BABs) Expenses Total PV Factor Present Value to 11/30/2010 @ 4.5087605% 01/01/2011 623,738.66 (218,308.53) 405,430.13 0.996167934 403,876.50 07/01/2011 3,621,708.38 (1,267,597.93) 2,354,110.45 0.974205635 2,293,387.66 01/01/2012 3,621,708.38 (1,267,597.93) 2,354,110.45 0.952727533 2,242,825.84 07/01/2012 3,621,708.38 (1,267,597.93) 2,354,110.45 0.931722954 2,193,378.74 01/01/2013 3,621,708.38 (1,267,597.93) 2,354,110.45 0.911181459 2,145,021.80 07/01/2013 3,621,708.38 (1,267,597.93) 2,354,110.45 0.891092838 2,097,730.96 01/01/2014 3,621,708.38 (1,267,597.93) 2,354,110.45 0.871447107 2,051,482.74 07/01/2014 3,621,708.38 (1,267,597.93) 2,354,110.45 0.852234500 2,006,254.14 01/01/2015 3,621,708.38 (1,267,597.93) 2,354,110.45 0.833445470 1,962,022.69 07/01/2015 3,621,708.38 (1,267,597.93) 2,354,110.45 0.815070677 1,918,766.40 01/01/2016 3,621,708.38 (1,267,597.93) 2,354,110.45 0.797100990 1,876,463.77 07/01/2016 3,621,708.38 (1,267,597.93) 2,354,110.45 0.779527476 1,835,093.78 01/01/2017 3,621,708.38 (1,267,597.93) 2,354,110.45 0.762341402 1,794,635.86 07/01/2017 3,621,708.38 (1,267,597.93) 2,354,110.45 0.745534225 1,755,069.91 01/01/2018 3,621,708.38 (1,267,597.93) 2,354,110.45 0.729097593 1,716,376.26 07/01/2018 6,521,708.38 (1,267,597.93) 5,254,110.45 0.713023336 3,746,303.36 01/01/2019 3,557,168.88 (1,245,009.11) 2,312,159.77 0.697303464 1,612,277.02 07/01/2019 6,537,168.88 (1,245,009.11) 5,292,159.77 0.681930165 3,608,883.38 01/01/2020 3,486,378.98 (1,220,232.64) 2,266,146.34 0.666895797 1,511,283.47 07/01/2020 6,551,378.98 (1,220,232.64) 5,331,146.34 0.652192890 3,476,935.74 01/01/2021 3,408,972.40 (1,193,140.34) 2,215,832.06 0.637814134 1,413,289.01 07/01/2021 6,573,972.40 (1,193,140.34) 5,380,832.06 0.623752383 3,356,306.82 01/01/2022 3,324,292.83 (1,163,502.49) 2,160,790.34 0.610000649 1,318,083.51 07/01/2022 6,599,292.83 (1,163,502.49) 5,435,790.34 0.596552096 3,242,732.12 01/01/2023 3,232,576.45 (1,131,401.76) 2,101,174.69 0.583400040 1,225,825.40 07/01/2023 6,622,576.45 (1,131,401.76) 5,491,174.69 0.570537945 3,132,923.53 01/01/2024 3,133,402.00 (1,096,690.70) 2,036,711.30 0.557959418 1,136,402.25 07/01/2024 6,643,402.00 (1,096,690.70) 5,546,711.30 0.545658207 3,026,608.54 01/01/2025 3,009,568.60 (1,053,349.01) 1,956,219.59 0.533628199 1,043,893.94 07/01/2025 6,684,568.60 (1,053,349.01) 5,631,219.59 0.521863413 2,938,727.47 01/01/2026 2,879,791.60 (1,007,927.06) 1,871,864.54 0.510358003 955,321.05 07/01/2026 6,729,791.60 (1,007,927.06) 5,721,864.54 0.499106250 2,855,818.35 01/01/2027 2,743,723.85 (960,303.35) 1,783,420.50 0.488102562 870,492.11 07/01/2027 6,768,723.85 (960,303.35) 5,808,420.50 0.477341470 2,772,599.98 01/01/2028 2,601,365.35 (910,477.87) 1,690,887.48 0.466817625 789,336.08 07/01/2028 6,811,365.35 (910,477.87) 5,900,887.48 0.456525798 2,693,907.37 01/01/2029 2,452,361.45 (858,326.51) 1,594,034.94 0.446460872 711,674.23 07/01/2029 6,857,361.45 (858,326.51) 5,999,034.94 0.436617845 2,619,285.71 01/01/2030 2,296,365.00 (803,727.75) 1,492,637.25 0.426991826 637,343.90 07/01/2030 6,896,365.00 (803,727.75) 6,092,637.25 0.417578029 2,544,151.46 01/01/2031 2,133,376.00 (746,681.60) 1,386,694.40 0.408371776 566,286.86 07/01/2031 6,943,376.00 (746,681.60) 6,196,694.40 0.399368492 2,474,764.50 01/01/2032 1,960,985.60 (686,344.96) 1,274,640.64 0.390563701 497,828.37 07/01/2032 6,995,985.60 (686,344.96) 6,309,640.64 0.381953027 2,409,986.34 01/01/2033 1,780,531.20 (623,185.92) 1,157,345.28 0.373532191 432,305.72 07/01/2033 7,045,531.20 (623,185.92) 6,422,345.28 0.365297007 2,346,063.51 01/01/2034 1,591,833.60 (557,141.76) 1,034,691.84 0.357243383 369,636.81 07/01/2034 7,101,833.60 (557,141.76) 6,544,691.84 0.349367315 2,286,501.42 01/01/2035 1,394,355.20 (488,024.32) 906,330.88 0.341664889 309,661.44 07/01/2035 7,164,355.20 (488,024.32) 6,676,330.88 0.334132277 2,230,777.64 01/01/2036 1,187,558.40 (415,645.44) 771,912.96 0.326765735 252,234.71 07/01/2036 7,222,558.40 (415,645.44) 6,806,912.96 0.319561601 2,175,228.01 01/01/2037 971,264.00 (339,942.40) 631,321.60 0.312516296 197,298.29 07/01/2037 7,291,264.00 (339,942.40) 6,951,321.60 0.305626316 2,124,506.81 01/01/2038 744,755.20 (260,664.32) 484,090.88 0.298888239 144,689.07 07/01/2038 7,359,755.20 (260,664.32) 7,099,090.88 0.292298714 2,075,055.14 01/01/2039 507,673.60 (177,685.76) 329,987.84 0.285854467 94,328.50 07/01/2039 7,427,673.60 (177,685.76) 7,249,987.84 0.279552296 2,026,750.74 01/01/2040 259,660.80 (90,881.28) 168,779.52 0.273389066 46,142.48 07/01/2040 7,504,660.80 (90,881.28) 7,413,779.52 0.267361717 1,982,160.82 258,840,286.34 (53,292,850.18) 205,547,436.16 106,575,000.00 Proceeds Summary Delivery date 11/30/2010 Par Value 106,575,000.00 Target for yield calculation 106,575,000.00 Note: Column labeled'Expenses' = Annual Federal Subsidy on BABs. Nov 23, 2010 11:51 am Prepared by Stone & Youngberg LLC: SD/KH Page 24 Tab B Pricing Information • S&P, Moody's & Fitch Rating Reports • Comparable Market Interest Rate Scales ■ Settlement Memorandum (Previously Sent to Finance Team For Closing) ■ Comparison Between All Tax -Exempt vs. Actual BAB Hybrid Pricing ■ Fixed Income Market Update (November 17, 20 10) October 19, 2010 Newport Beach, California; Appropriations; General Obligation Primary Credit Analyst: Bea Chiem, San Francisco 1(415) 371-5070, bea_chiem@standardandpoors.com Secondary Credit Analyst: Paul Dyson, San Francisco (1) 415-371-5079, paul_dyson@standardandpoors.com Table Of Contents Rationale Financial Management Assessment: 'Good' Pension Obligation and Other Post Employment Benefits (OPEB) Outlook Related Criteria And Research www.standardandpoors.com/ratingsdirect Newport Beach, California; Appropriations; General Obligation US$94.13 mil certs of part (BABs) ser B due 07/01/2040 Long Term Rating AA+/Stable New US$28.67 mil certs of part ser Adue 07/01/2040 Long Term Rating AA+/Stable New ICR Long Term Rating AAA/Stable New Rationale Standard & Poor's Ratings Services assigned its 'AAA' issuer credit rating (ICR) to the City of Newport Beach, Calif. In addition, Standard & Poor's assigned its 'AA+' long-term rating to the city's series 2010A certificates of participation (COPS) and 2010B COPS. We understand that the series 2010B will be issued as federally taxable direct -pay Build America Bonds (BABs). The outlook on all ratings is stable. The ICR reflects our opinion of the city's: • Diverse economy located in Orange County; • Extremely strong wealth levels with a market value per capita of $446,254; • Track record of very strong general fund balances; and • Good financial management practices and policies. The COP ratings reflect our view of the city's: • General creditworthiness; Covenant to budget and appropriate lease payments; and Appropriation risk associated with appropriation -backed obligations. The COPS represent an interest in the city's base rental payments, which the city covenants to budget and appropriate. Payments on the COPS come from base rental payments made by the city, as lessee, to the Newport Beach Public Facilities Financing Corp., as lessor, for the use of the city's community center, senior center, two libraries, four fire stations, police station, and corporation yard. The leased assets are consistent with our seismic risk assessment during the life of the bonds. Under the lease agreement, the city covenants to annually budget and appropriate lease payments for the use of the leased properties. Base rental payments are subject to abatement for damage or destruction, which we believe is partially mitigated by the city's covenant to maintain business interruption insurance sufficient to cover rent for 24 months. We understand that the city intends to designate the series 2010B bonds as BABs and elect to receive a direct federal subsidy equal to 35% of interest on the BABs. We also understand that the city will appropriate for 100% of the interest on the BABs. Standard & Poor's I RatingsDirecton the Global Credit Portal I October 19, 2010 2 8267 98 1300976577 Newport Beach, California; Appropriations; General Obligation We understand that there will not be a debt service reserve requirement for these bonds. Management reports that it will use COP proceeds to refund roughly $4 million of the city's 1995 central library COPS and to fund a new civic center complex. The City of Newport Beach is located 45 miles southwest of Los Angeles and 15 miles south of Long Beach in Orange County (AA -/Stable). The city's population in 2010 was roughly 56,73 S and has grown steadily at an annualized rate of roughly 2% since 2000. The largest employment sectors in the city include professional services, health care, lodging/tourism, and government. Some of the city's largest employers include Hoag Memorial Hospital (4,001 employees), Conexant systems (1,650), Pacific Life Insurance Co. (1,513), and the city (940). As of August 2010, Newport Beach's unemployment rate (not seasonally adjusted) stood at 6.1 %, lower than the state's rate of 12.4%. Income levels are very strong in our opinion, with median household effective buying income (FBI) at 190% and per capita FBI at 2S2% of the national average. Market value per capita, an indicator of wealth, is in our view extremely strong at $446,254. Based on data provided by the city, median all owner -occupied housing value stood at slightly over $1 million in fiscal 2009. In our opinion, the city's assessed valuation (AV) has shown good growth, increasing by a 5% average annual rate over the past five years to $3 S.7 billion in fiscal 2011. Management does not expect AV to decline, because of the city's maturity and high home values. The tax base is diverse, in our view, with the top 10 taxpayers making up 7.5 % of fiscal 2011 AV and the largest taxpayer at approximately 4.S %. The city's general fund revenue sources are property taxes (47% of fiscal 2009 revenues), sales taxes (17%), transient occupancy tax (7.5%), and other taxes and revenues. The city has maintained what we consider to be very strong fund balances, and has been building reserves since fiscal 2001, reaching a peak unreserved fund balance of roughly 62% of operating expenditures in 2010 (unaudited). In fiscal 2009, the city's total revenues declined by roughly 5.4%, its sales tax by nearly 1S%, its transient and occupancy tax (TOT) tax by 12%, and investment earnings by nearly 54%, reflecting the weaker economy. Still, the city ended fiscal 2009 with an operating surplus of roughly $551,525 (net of transfers, including $20.3 million to its tidelands fund, which is ongoing) and an unreserved fund balance at what we consider a still very strong level of 57.S % of operating expenditures. Management's unaudited fiscal 2010 results reflect an operating surplus of about $2.5 million and what we consider a very strong unreserved fund balance of roughly 62% of operating expenditures. For fiscal 2010, management estimates that sales tax revenues declined by 6.6% and TOT taxes grew 2.1% because of the completion of a new hotel. To offset the fiscal 2010 revenue decline, management implemented $5 million in cost reductions, including an early retirement incentive program (generating savings of $3 million annually), midyear reductions, contracting -out of services, and requiring employees to pick up additional shares of their pension costs. The city's fiscal 2011 budget shows an operating deficit of roughly $1.5 million. This reflects the city's conservative budgeting of revenues and public safety expenses. Management expects at least a balanced budget for fiscal 2011 and that reserves will remain flat or grow slightly. Management has identified roughly $S.2 million in additional savings for fiscal 2011, and has already implemented roughly $6 million in cost reductions. We consider the city's financial practices to be "good" under our Financial Management Assessment (FMA) methodology. An FMA of "good" indicates our view that practices exist in most areas, although not all may be formalized or regularly monitored by governance officials. Including this debt issuance, overall debt levels are what we consider high on a per capita basis at $5,131 and low as www.standardandpoors.com/ratingsdirect 826798 1300976577 Newport Beach, California; Appropriations; General Obligation a percentage of market value at 1.S%. Roughly S2% of the city's debt is overlapping debt from school districts, the county, and water districts. Carrying charges are low, representing roughly 2% of government expenditures. City management does not plan on issuing new debt in the near term. Financial Management Assessment: 'Good' We consider the city's financial practices to be "good" under our FMA methodology. An FMA of "good" indicates our view that practices exist in most areas, although not all may be formalized or regularly monitored by governance officials. Highlights include multiyear financial forecasting, monthly finance committee meetings with quarterly updates to the budget, the maintenance of a rolling 30 -year master capital improvement plan with funding sources identified, and the maintenance of a formal investment management policy that is reviewed annually and that requires the submission of quarterly investment reports to city council. The city also has a formal reserve policy of maintaining a contingency reserve of at least 12% of annual general fund operating expenditures and an operating reserve funded by operating surpluses with no set target. The city does not have a comprehensive debt management policy, but has a policy that debt service and capital contributions cannot exceed 5 % of budget each year. Pension Obligation and Other Post Employment Benefits (OPEB) The city has a policy of 100% funding its annual required contribution to its public employees retirement fund (PERS) and has a pension rate stabilization fund of roughly $5 million to meet its policy. As of June 2005, the city's PERS unfunded accrued actuarial liability (UAAL) was roughly $93 million. Historically, the city has made the entire pension contribution of city safety employees on their behalf. Recently, management mandated that all of its safety employees contribute 3.5% of their base pay to offset the city's 9% contribution. Miscellaneous employees have contributed 3.4% to their pension costs since 2005. Due to the 24% investment loss experienced in fiscal 2009, PERS will implement a three-year phase in which it will increase the city's pension costs. To offset the expected additional contributions, management aims to have the remainder of its employees pick up additional shares of their pension costs and introduce a second tier of contribution rates for new miscellaneous employees. Management projects PERS costs to rise by roughly $2.9 million in fiscal 2013 and $5.9 million in fiscal 2014 if no adjustments are made. The city's total OPEB UAAL, consistent with Government Accounting Standards Board Statement 45, was roughly $43.5 million based on a 2009 estimated valuation. Management prefunds a portion of the liability associated with a previous plan over a 20 -year amortization. The remaining portion of the OPEB liability is paid on a pay-as-you-go basis. The implied subsidy UAAL was roughly 50% as of June 2009. Outlook The stable outlook reflects our view that the city will maintain very strong fund balances and consistent financial operations in the event of revenue challenges and rising pension costs. Our assessment of the city's very strong tax base, wealthy income levels, and good financial management practices further support our view of the stability of the credit. Standard & Poor's I RatingsDirecton the Global Credit Portal I October 19, 2010 8267 98 1300976577 Newport Beach, California; Appropriations; General Obligation Related Criteria And Research • USPF Criteria: GO Debt, Oct. 12, 2006 • USPF Criteria: Appropriation -Backed Obligations, June 13, 2007 • USPF Criteria: Financial Management Assessment, June 27, 2006 www.standardandpoors.com/ratingsdirect 826798 130097E577 Copyright© 2010 by Standard & Poor's Financial,<FONT COLOR=" BLUE'>Services LLC (S&P�</FONT>, a subsidiary of The McGraw-Hill Companies No content (including ratings, credit related analyses and data, model, software or other application or output therefrom or any part thereof (Content) maybe modified, reverse engineered, reproduced or distributed in anyform by any means, or stored in a database or retrieval system, without the priorwritten permission of S&P. The Content shall not be used for any unlawful or unauthorized purposes. S&P, its affiliates, and anythird-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions, regardless of the cause, forthe results obtained from the use of the Content, orforthe security or maintenance of any data input bythe user. The Content is provided on an "as is" basis. S&P PARTIES DISCLAIM ANYANDALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FORA PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT'S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be Iiableto any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special orconsequential damages, costs, expenses, legal fees, or losses ( including, without limitation, lost income or lost profits and opportunity costs in connection with any use of the Content even if advised of the possibility of such damages. Credit related analyses, including ratings, and statements in the Content are statements of opinion as of the datethey are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities orto make any investment decisions. S&P assumes no obligation to update the Content following publication in any form orformat. The Content should not be relied on and is not a substitute forthe skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P's opinions and analyses do not addressfhe suitability of any security. S&P does not act as afiduciary or an investment advisor. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. S&P keeps certain activities of its business units separate from each other in orderto preserve the independence and objectivity of their respective activities. Asa result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. S&P may receive compensation for its ratings and certain credit related analyses, normally from issuers or underwriters of securities orfrom obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www standardandpoorscom (free of charge, and wwwratingsdirectcom and www globalcreditportalcom (subscription, and maybe distributed through other means, including via S&P publications and thirdparty redistributors. Additional information about our ratings fees is available at www standardandpoorscom/usratingsfees. Standard & Poor's I RatingsDirecton the Global Credit Portal I October 19, 2010 OODY'S INVESTORS SERVICE New Issue: MOODY S ASSIGNS Aaa ISSUER RATING TO CITY OF NEWPORT BEACH; Aa2 RATING ASSIGNED TO THE CITY'S COPS Global Credit Research - 21 Oct 2010 APPROXIMATELY $122 MILLION IN DEBT AFFECTED INCLUDING CURRENT ISSUE Newport Beach (City of) CA Municipality CA Moodys Rating ISSUE RATING 2010ACivic Center Project/Central Library Refunding COPS Aa2 Sale Amount $25,200,000 Expected Sale Date 11/16/10 Rating Description Certificates of Participation 2010B Civic Center Project/Central Library Refunding COPS Aa2 Sale Amount $94,100,000 Expected Sale Date 11/16/10 Rating Description Certificates of Participation Opinion NEW YORK, Oct 21, 2010 -- Moody's Investors Service has assigned an Aaa Issuer Rating to the City of Newport Beach. We have also assigned an Aa2 rating to the city's 2010Aand 2010B Certificates of Participation (COPs). The two notch rating distinction between the current COP rating and the city's Issuer Rating represents Moody's standard notching for essential purpose, fixed asset leases relative to a California issuer's general obligation or Issuer Rating. Broadly speaking the two notches reflect the risk of abatement (and the related lack of seismic insurance coverage) and the narrower, general fund security pledge for leases compared to the unlimited property tax pledge securing general obligation bonds. RATINGS RATIONALE The rating assignments are determined by the city's exceptionally strong socioeconomic profile, which includes very high wealth levels, an economy that has weathered the recession well compared to other cities, and sound prospects for continued economic stability. The city's healthy fiscal position features notably ample reserves and a standard debt profile. The lease provisions are mostly typical with the exception of not having a reserve for the COPs. However, this is only a minor weakness in light of the city's overall credit strengths and was also factored into the rating. The Issuer Rating signals our expectation that despite the pressured statewide economy, the city will continue to perform significantly better than other California and national cities with respect to its local economy and fiscal operations. The COPs will be issued by the Newport Beach Public Facilities Financing Corporation, which will make debt service payments derived from lease payments received from the city. The city has covenanted to budget and appropriate lease payments for use and occupancy of the leased assets, which include several fire stations, a police station, and central library. EXCEPTIONALLY STRONG COASTAL SOUTHERN CALIFORNIA ECONOMY Newport Beach is a full service city of 87,000 people in Orange County located 45 miles south of the city of Los Angeles. The community is bounded to the west by coastline, which is a major draw for tourists and a significant contributor to the local economy. The city is approximately 90% built out and residential but has grown in recent years by annexing adjacent unincorporated areas. A major strength of the city's credit profile is the substantial wealth of the community and local economy. City residents earn per capita incomes that are almost three times greater than the national median and are second only to the City of Beverly Hills among Moody's-rated Aaa California cities. The median home price in the city is $1.3 million, which is also among the highest in the nation. The Newport Beach economy has been impacted by the economic recession as indicated by an increase in unemployment. However, the level of joblessness is still just 6% and, though well above the ten-year average of 3.1 %, it is still only half of the statewide mark. One factor helping to curb unemployment is the city's location, which provides residents with access to the diverse job centers of both greater Orange County and Los Angeles. The city's local economy maintains a sound level of diversity among its taxpayers and employment base. The city's principal employers represent a wide range of industries including healthcare, professional services, technology and hospitality. The top ten taxpayers combine to contribute just 7.5% of the total $38.7 billion assessed valuation. This level of valuation results in an impressive assessed valuation per capita of $446,000. The assessed valuation continued to grow in both 2010 and 2011, albeit by very modest rates, at a time when many other tax bases around the state were diminished as a result of the recession. The rise in unemployment and slowdown in assessed valuation clearly indicate that the city has not been immune to the effects of the recession. However, the rating incorporates our expectation that the city's economy and socioeconomic profile will continue to withstand the recession significantly more resiliently than other cities within the state and around the nation. VERY HEALTHY FISCAL POSITION HIGHLIGHTED BYAMPLE RESERVES The city has consistently maintained a very healthy fiscal position that has resulted in the accumulation of a considerable level of reserves and a strong cash position. The city's general fund balance has averaged 47.5% of total general fund revenues over the last six years including a very healthy 55.2% in 2010. These figures are consistent with the Aaa rating level within the state and well above the national median for the rating level. Including other unrestricted funds outside of the city's general fund, the total available reserves rise to 96% for fiscal 2010. The city's general fund cash position has also been consistently stout while averaging 46% since fiscal 2005. The city's fiscal 2010 general fund balance was preserved by mid -year budget cuts that reduced an $8 million budget gap. These reductions allowed the city to refrain from using reserves to address the budget and maintain structural balance. For fiscal 2011, the city anticipates balanced operations that will enable the maintenance of a healthy reserve position. The city plans to transfer $31 million from the general fund to the facilities financing special revenue fund. Despite the transfer, the monies will remain available for use in the general fund on an unrestricted basis, which will keep the total available fund balance at an unusually high level. As it has for more than a decade, the city will also transfer approximately $20 million to its Tidelands fund in recognition of the costs associated with providing primarily public safety service to the beaches and marina. This subsidy has been level and consistent and is not expected to change in the foreseeable future. The city's finances have remained robust through the economic downturn, in part, because the city has a below average reliance upon sales tax revenues, which have been particularly volatile during the recession. Sales tax revenues only comprise 14% of the city's total revenue base versus the 20% to 25% level more common in California cities. The city's sales tax base also benefitted from not having a single auto dealership close as opposed to other communities, which lost meaningful portions of sales tax revenues following a dealership loss. Though sales tax revenue did decline in both 2009 and 2010, the level of deterioration given the limited exposure to the revenue stream was not enough to significantly disrupt the city's fiscal operations. Here again the city benefits from the wealth of its citizenry who, despite the recession, retain well - above average purchasing power to help support sales tax revenue. So far for fiscal 2011, sales tax revenues are on pace to improve from the previous year with auto dealers, retail, and restaurants recognizing the biggest gains. Property tax revenues are typically half of the city's revenues and have continued to grow slowly over the last two years reflecting the general weakness in the housing market. The city is a well-established community that did not undergo rapid growth resulting from high volumes of new housing starts as was the case in other portions of the state. As a result, the city is also not undergoing as severe a home price correction and property tax revenues have remained stable. Moody's anticipates that the city will continue to effectively manage operations to retain its overall fiscal strength despite ongoing economic uncertainty that could pressure revenues and require swift expenditure adjustments. SOUND DEBT POSITION WITH NO FIRMADDITIONAL DEBT PLANS The current issue will be the city's only general fund debt obligation and will result in manageable annual lease payments of approximately 5% of total general fund revenues. Following the sale, the city will have direct and overall debt levels 0.3% and 1.8% respectively, which is typical for a Moody's-rated city. The new money proceeds from the sale will be used to finance construction of the city's new civic center including city hall, civic center park, parking structure, and library expansion. The city will also refund its 1998 Library COPs and receive level annual debt service savings with no extension of the maturity schedule. The leased assets have a combined appraised value of $140 million as established by a third -party appraisal firm. Once construction is complete, the city expects to substitute the new civic center as the leased asset. The city will also budget debt service for the Build America Bonds portion of the debt on a gross basis inclusive of expected subsidies. The city has no additional borrowing plans. MOSTLY STANDARD LEGAL STRUCTURE AND COVENANTS BUT NO RESERVE FUND FOR COPs The legal provisions of the sale are largely standard with the exception of there being no reserve for the COPS. This weakness is sufficiently offset by the city s available reserves and move to transfer general fund resources to the facility financing fund to support the debt (though these funds are not solely restricted for the COPs). Other elements of the legal provisions are more typical and include two -years of rental interruption insurance, title, liability, property and casualty insurance. The lease purchase agreement also allows the city to substitute leased assets in the event that it loses use and occupancy of all or a portion of one of the current leased assets. WHAT COULD CHANGE THE RATING -UP WA WHAT COULD CHANGE THE RATING- DOWN The rating could become pressured if the city's fiscal position materially deteriorates while the city's socioeconomic profile becomes significantly weaker. KEY STATISTICS Fiscal 2011 assessed valuation: $38.7 billion Assessed valuation per capita: $446,000 Fiscal 2010 general fund balance (unaudited actual): 55.2% Direct debt burden: 0.3% Overall debt burden: 1.8% The principal methodology used in rating Newport Beach Public Facilities Financing Corporation, CAwas The Fundamentals of Credit Analysis for Lease -Backed Municipal Obligations rating methodology published in October 2004. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found on Moody's website. REGULATORY DISCLOSURES Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, confidential and proprietary Moody's Investors Service's information, confidential and proprietary Moody's Analytics' information. Moody's Investors Service considers the quality of information available on the credit satisfactory for the purposes of assigning a credit rating. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third -party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history. The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information. Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery. Analysts Michael Wertz Analyst Public Finance Group Moody's Investors Service Dari Barzel Backup Analyst Public Finance Group Moody's Investors Service Contacts Journalists: (212) 553-0376 Research Clients: (212) 553-1653 Moody's Investors Service 250 Greenwich Street New York, NY 10007 USA MOODY'S INVESTORS SERVICE © 2010 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved. CREDIT RATINGS ARE MOODY S INVESTORS SERVICE, INC.'S ("MIS") CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT -LIKE SECURITIES. MIS DEFINES CREDIT RISKAS THE RISK THAT AN ENTITY MA(NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONSAS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOT CONSTITUTE INVESTMENT OR FINANCIALADVICE, AND CREDIT RATINGS ARE NOT RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDIT RATINGS DO NOT COMMENT ON THE SUITABILITY OFAN INVESTMENT FOR ANY PARTICULAR INVESTOR. MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BYANY MEANS WHATSOEVER, BYANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable, including, when appropriate, independent third -party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations — Corporate Governance — Director and Shareholder Affiliation Policy." Any publication into Australia of this document is by MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657, which holds Australian Financial Services License no. 336969. This document is intended to be provided only to "wholesale clients" within the meaning of section 761 G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761 G of the Corporations Act 2001. Notwithstanding the foregoing, credit ratings assigned on and after October 1, 2010 by Moody's Japan K.K. (" MJKK") are MJKK's current opinions of the relative future credit risk of entities, credit commitments, or debt or debt -like securities. In such a case, "MIS" in the foregoing statements shall be deemed to be replaced with "MJKK". MJKK is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. This credit rating is an opinion as to the creditworthiness or a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be dangerous for retail investors to make any investment decision based on this credit rating. IF in doubt you should contact your financial or other professional adviser. FitchRatings Public Finance Tax Supported Newport Beach, California New Issue Ratings Certificates of Participation, Series 2010A (Tax Exempt; Civic Center Project/Central Library Refunding) AA+ Certificates of Participation, Series 2010B (Federally Taxable Direct -Pay Build America Bonds; Civic Center Project) AA+ Implied General Obligation Rating AAA Rating Outlook Stable Analysts Scott Monroe +1 415 732-5618 scott.monroe@fitchratings.com Alan Gibson +1 415 732-7577 alan.gibson@fitchratings.com New Issue Details Sale Information: $28,670,000 Certificates of Participation, Series 2010A (Tax Exempt; Civic Center Project/Central Library Refunding), and $94,130,000 Certificates of Participation, Series 2010B (Federally Taxable Direct - Pay Build America Bonds; Civic Center Project), to sell on or about Nov. 18 via negotiation. Security: A standard lease -leaseback arrangement between the city and the Newport Beach Public Facilities Financing Corporation. Purpose: To fund a new civic center and refund existing certificates. Final Maturity: July 1, 2040. Related Research Applicable Criteria For information on Build America Bonds, visit www.fitchratings.com/BABs. Applicable Criteria • Tax -Supported Rating Criteria, Aug. 16, 2010 • U.S. Local Government Tax -Supported Rating Criteria, Oct. 8, 2010 Rating Rationale • The 'AA+' certificates of participation (COP) rating reflects a solid legal structure with essential leased assets and the city of Newport Beach's very strong financial operations, demonstrated by high fund balances, years of surplus operations, a productive relationship with labor, plans to mitigate likely increases to pension labor costs, and prudent management practices. • Economic characteristics are very strong, reflective of the area's low unemployment, very high wealth levels, stable housing market, and resilient tax base. • The debt profile is strong overall, reflecting low debt levels, progress toward pre - funding the city's other post -employment benefits (OPEB) liability, a pension rate stabilization fund, and manageable capital needs; however, debt amortization is slow due to a level debt service structure. Key Rating Drivers • The city's financial performance has been very strong and is expected to remain so in spite of a large, planned general fund balance transfer to a new capital projects fund. • Economic performance has been impressive, and Fitch Ratings believes it will likely remain so through the economic downturn. Credit Summary Newport Beach serves a population of about 87,000 along the Orange County coast. The economy benefits from the city's maturity, base of very wealthy residents, and strong shopping, festival, and tourism draw. The city's stable tax base is supported by home values that are among the highest in the U.S., despite recent price declines, and assessed valuation (AV) growth has remained positive through the recession, although recent growth has been subdued. Unemployment is low, and income levels are extremely high. www.fitchratings.com Considerations for Taxable/Build America Bonds Investors This sector credit profile is provided as background for investors new to the municipal market. Local Government Appropriation -Backed Bonds The unlimited taxing power of most local government general obligation pledges is the broadest security a U.S. local government can provide to the repayment of its long-term borrowing and, therefore, is the best indicator of its overall credit quality. Some debt repayment requires annual legislative appropriation, and this lesser long-term commitment to repayment is reflected in a lower rating than that of the general obligation rating, usually by one to two notches. The average local government general obligation rating is 'AA', with approximately 85% rated at or above 'AA—' and 1% rated 'BBB+' or below. The relatively high ratings reflect local governments' inherent strengths: the authority to levy property taxes, nonpayment of which can result in property foreclosures; additional taxing power that can include sales, utility, and income taxes; and essentiality of and lack of competition for services provided by local governments. Those with low investment-grade or below - investment -grade ratings generally have a combination of a limited or highly volatile economic base, high levels of long-term liabilities, including debt and post -employment benefits, and/or unusually limited financial flexibility. For additional information on these ratings, see "U.S. Local Government Tax -Supported Rating Criteria," dated Oct. 8, 2010, available on Fitch's Web site at www.fitchratings.com. October 25, 2010 FitchRatings Rating History —COPS Outstanding Debt Outlook/ Rating Action Watch Date AA, Assigned Stable 10/19/10 Rating History—Implied GO Outlook/ Rating Action Watch Date AAA Assigned Stable 10/19/10 Public Finance The city's financial profile is strong. The last three audited fiscal years and estimated actual results for fiscal 2010 all produced surplus general fund operations, resulting in the maintenance of high general fund balance levels. Financial management practices are impressive, and management has taken steps to deal with both its OPEB liability and pension costs that are likely to increase. Debt Proceeds from this issuance will predominantly fund the construction of a new civic center, which will include a city hall building, a 450 -space parking structure, a library expansion, and a park. A small portion of proceeds will refund outstanding COPS. The COPS are secured by a standard lease -leaseback arrangement between the city and the Newport Beach Public Financing Corporation for use of various essential assets, subject to abatement. Upon completion, the city may substitute the civic center for the current leased assets. The city covenants to budget and appropriate lease payments, and insurance provisions are standard, including 24 -month rental interruption insurance. However, there is no debt service reserve fund. Debt Statistics ($000) This Issue 122,800 Outstanding Debt 6,806 Refunding Portion (3,990) Total Direct Debt 125,616 Overlapping Debt 586,966 Total Overall Debt 712,582 Debt Ratios Direct Debt per Capita ($)a 1,448 As % of Assessed Value 0.3 Overall Debt per Capita ($)a 8,215 As % of Assessed Value 1.8 'Population: 86,738 (2007 estimate). bAssessed value: $38,707,165,000 (fiscal 2011). Note: Numbers may not add due to rounding. The city's debt profile is strong. Although net debt per capita is high at about $8,200, net debt as a percentage of assessed value is a low 1.8%, reflective of the strength of the property tax base. Capital needs are limited, but amortization is slow, with just 11% and 25% of debt maturing within five and 10 years, respectively, due to a level debt service structure. The city's OPEB plan is partially pre -funded, and costs are manageable. Management is exploring ways to deal with likely rising pension costs, including two-tiered systems, and has already had some success in negotiating increased employee contributions. The city prudently established a pension rate stabilization fund with a balance of $5 million. Pension costs are estimated to rise by approximately $10 million—$12 million annually over the next five to seven years without further action by management. Management sensibly developed a 30 -year general lifecycle replacement plan for its capital facilities. Its financing sources include capital reserves, developer fees, and general fund contributions of up to 5% of general fund expenditures. Finances The city's financial position is notably strong. Financial operations have produced surpluses in each of the past four fiscal years, some of them sizable, resulting in large and growing fund balances. Fiscal 2010 operations are estimated to have produced a $2.5 million general fund surplus, raising the total and unreserved general fund balances to $82 million (56.2% of expenditures and transfers out) and $76.6 million (52.4%), respectively. The city could also transfer up to $38.5 million to its general fund from workers compensation and vehicle replacement funds, if necessary, raising the city's total unreserved financial cushion to yet higher levels. Newport Beach, California October 25, 2010 FitchRatings Public Finance General Fund Financial Summary ($000, Audited Fiscal Years Ended June 30) Financial operations have benefited so far from stable and growing property tax revenues (49% of fiscal 2010 estimated revenues). However, sales tax revenues (12%) have been hit significantly by the economic downturn, falling 18% in fiscal 2009, with an estimated 7% decline in fiscal 2010. Management has prudently implemented expenditure reductions to mitigate falling sales tax revenues. Fiscal 2011 budgeted reductions amount to $18 million, of which $8.6 million is in operational reductions. These include early retirement incentive plan savings, increased employee contributions to pension plans, contracting out jobs, and salary freezes. The city is budgeting for a modest operational deficit in fiscal 2011; however, the city historically has outperformed its budgets. A transfer out of $31.5 million for a new capital reserve fund in fiscal 2011 will lower the total general fund balance to still strong levels, or approximately 24.4% of expenditures. There are no plans to use the transferred cash, and it could be transferred back to the general fund, if necessary. Financial management policies are impressive. They include a contingency reserve equal to 12% of the general fund operating budget, operational reserves, a stabilization reserve funded by operating surpluses, and a 15 -step fiscal sustainability plan adopted by the City Council this year. Although the operational reserve is designed Newport Beach, California October 25, 2010 2007 2008 2009 2010a Property Taxes 63,003 67,389 70,127 72,000 Sales Tax 21,088 21,855 17,926 16,742 Sales Tax in Lieu 7,348 8,018 7,503 4,540 Transient Occupancy Tax 12,059 12,752 11,171 11,401 Other Taxes 8,309 8,289 8,487 7,976 Intergovernmental 3,812 3,083 2,597 2,690 Licenses and Permits 3,109 4,994 4,396 2,607 Charges for Services 14,369 14,935 14,374 16,028 Fines and Forfeitures 3,706 3,958 3,711 3,840 Investment Income 3,176 3,655 1,697 1,415 Net Change in Value of Investments (546) 508 1,097 Property Income 6,471 6,604 6,553 6,080 Donations 1,324 1,202 261 145 Other 1,967 1,459 235 1,608 Total Revenue 149,195 158,702 150,134 147,072 General Government 13,624 14,426 15,478 15,027 Public Safety 50,425 53,650 57,286 56,051 Public Works 24,403 25,454 26,221 25,553 Community Development 7,223 7,770 8,302 8,070 Community Services 11,749 12,639 13,282 13,091 Capital Outlay 10,369 10,456 5,910 6,811 Debt Service 2,000 1,643 1,571 Total Expenditures 119,793 126,037 128,050 124,603 Operating Income/(Deficit) 29,402 32,664 22,084 22,469 Transfers In 1,027 5,521 690 1,519 Transfers Out (20,103) (29,040) (22,222) (21,513) Proceeds from Long -Term Debt 5,000 Net Income/(Deficit) 15,326 9,146 552 2,476 Total Fund Balance 69,913 79,059 79,611 82,087 As % of Expenditures and Transfers Out 50.0 51.0 53.0 56.2 Unreserved Fund Balance 62,426 72,252 73,704 76,593 As % of Expenditures and Transfers Out 44.6 46.6 49.0 52.4 'Fiscal 2010 results are estimated. Financial operations have benefited so far from stable and growing property tax revenues (49% of fiscal 2010 estimated revenues). However, sales tax revenues (12%) have been hit significantly by the economic downturn, falling 18% in fiscal 2009, with an estimated 7% decline in fiscal 2010. Management has prudently implemented expenditure reductions to mitigate falling sales tax revenues. Fiscal 2011 budgeted reductions amount to $18 million, of which $8.6 million is in operational reductions. These include early retirement incentive plan savings, increased employee contributions to pension plans, contracting out jobs, and salary freezes. The city is budgeting for a modest operational deficit in fiscal 2011; however, the city historically has outperformed its budgets. A transfer out of $31.5 million for a new capital reserve fund in fiscal 2011 will lower the total general fund balance to still strong levels, or approximately 24.4% of expenditures. There are no plans to use the transferred cash, and it could be transferred back to the general fund, if necessary. Financial management policies are impressive. They include a contingency reserve equal to 12% of the general fund operating budget, operational reserves, a stabilization reserve funded by operating surpluses, and a 15 -step fiscal sustainability plan adopted by the City Council this year. Although the operational reserve is designed Newport Beach, California October 25, 2010 FitchRatings Public Finance to be used in times of financial hardship, the council has decided not to use it in this economic downturn. Economy The city's economy is very strong. Compared with the prior year, the city's unemployment rose by a small 0.1% to 6.1% in August 2010 and is less than one-half the state and regional averages. The largest local employers include Hoag Memorial Hospital (4,001 employees) and Conexant (1,650), a semiconductor manufacturing firm. Other major local employers include Pacific Life, US Bank, and PIMCO. The city's income profile is extremely strong, with per capita income levels about three times higher than those of the region, state, and nation. Population growth has been very low for years and is expected to remain so given that most of the area is built -out. However, limited opportunities for new development exist in infill development and a small amount of vacant space that could be developed. AV benefits from a very strong housing market. Home prices are among the highest in the country, although median home prices fell from about $1.8 million in 2007 to $1.3 million in 2009. Despite price declines, AV rose 1.8% in fiscal 2010 and 0.2% in fiscal 2011. The property tax base is somewhat concentrated in the top payer, The Irvine Company, which makes up 4.8% of AV and is a major regional real estate investment company with multiple holdings within the city. AV stability is supported by a mature housing stock, ongoing infill development, and enhancements to existing homes. 4 Newport Beach, California October 25, 2010 FitchRatings Public Finance ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. Copyright © 2010 by Fitch, Inc., Fitch Ratings Ltd. and its subsidiaries. One State Street Plaza, NY, NY 10004.Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings, Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third -party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third -party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third -party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings should understand that neither an enhanced factual investigation nor any third -party verification can ensure that all of the information Fitch relies on in connection with a rating will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings can be affected by future events or conditions that were not anticipated at the time a rating was issued or affirmed. The information in this report is provided "as is" without any representation or warranty of any kind. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion is based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at anytime for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of Great Britain, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. Newport Beach, California October 25, 2010 CITY OF NEWPORT BEACH Certificates of Participation $20,085,0000 2010A (Tax Exempt) Civic Center Project/Central Library Refunding $106„575,000 2010B (Federally Taxable Direct Pay Build America Bonds) Civic Center Project SETTLEMENT MEMORANDUM November 23, 2010 Underwriter: Stone & Youngberg Certificates Dated: November 30, 2010 Date of Delivery: November 30, 2010 Sources of Funds: 2010A 20108 Par $20,085,000.00 $106,575,000.00 Premium 1,155,299.55 1998 COP Reserve 565,655.00 Less Underwriter's Discount (110,467.50) (586,162.50) Uses of Funds: Project Proceeds Costs of Issuance Escrow Deposit(l) Wire Total• Total Uses (Less 1998 COP Reserve) Total Wire Total $21,695,487.05 $105,988,837.50 2010A 20108 $17,509,969.90 $105,490,030.10 94,004.65 498,807.40 4,091,512.50 Total $21,695,487.05 $105,988,837.50 $21,695,487.05 $105,988,837.50 (565,655.00) $21,129,832.05 $105,988,837.50 Due At Closing: Wire Instructions: The Bank of New York Mellon ABA #021 000 018 Credit: GLA 111-565 Further Credit: Acct #183242 Newport Beach 2010 COPS Attention: Greg Chenail (213) 630-6229 Allocation of Proceeds Recap: Project Proceeds Costs of Issuance Escrow Fund(') Total Wire $17,509,969.90 94,004.65 3,525,857.50 $105,490,030.10 498,807.40 $21,129,832.05 $105,988,837.50 Total $126,660,000.00 1,155,299.55 565,655.00 (696,630.00) $127,684,324.55 Total $123,000,000.00 592,812.05 4,091,512.50 $127,684,324.55 $127,684,324.55 (565,655.00) $127,118,669.55 $127,1 18,669.55 $123,000,000.00 592,812.05 3,525,857.50 $127,118,669.55 (1) Delivered to The Bank of New York Mellon Trust Company, N.A., who will forward to US Bank - Escrow Agent for 1998 COPS. (Replaces City deposit that already defeased 1998 COPS) Prepared By: ®STONE & YOUNGBERG City of Newport Beach Certificates of Participation Civic Center Project/Central Library Refunding 2010A (Tax Exempt) Par Value $31,500,000 $28,000,000 $875,805,000 $48,140,000 $102,900,000 Issuer City of Newport Beach Pasadena PFA Department of Airports of City of LA University of California Regents Los Angeles County Issue 2010A Certificates of Participation Annual Lease Payments (COP) Lease Revenue Bonds Lease Revenue Bonds Lease Revenue Bonds State CA CA CA CA CA Callable 8/1/2020 @ 100 8/1/2020 @ 100 5/15/2020 @ 100 Non -Callable Non -Callable Und. Rtg. AA2/AA+/AA+ --/AA+/AA+ Aa3/AA/AA Aa2/AA-/-- Al/A+/A+ Insurance None None None None None Lead Mngr. Stone & Youngberg BMO/S&Y JP Morgan Barclays/S&Y BofA Merril Lynch Sale Date FINAL Wednesday, November 17,20 10 FINAL Thursday, November 18, 2010 FINAL Wednesday, November 10, 2010 F I N A L Tuesday, November 9, 2010 FINAL Tuesday, November 9, 2010 COUPON YIELD COUPON YIELD COUPON YIELD COUPON YIELD COUPON YIELD Maturity 2.000 0.400 2011 2.000 0.650 2012 3.000 0.950 3.000 0.900 3.000 0.640 2013 3.000 1.270 3.000 1.150 4.000 0.950 2014 3.000 1.670 4.000 1.450 4.000 1.280 2.00 / 4.00 / 5.00 1.800 2015 4.000 2.000 3.00/5.00 1.750 4.000 1.590 3.00/5.00 2.140 2016 4.000 2.350 3.00/5.00 2.100 4.00/5.00 5.00 1.940 2.00 / 4.00 / 5.00 2.520 2017 4.000 2.740 3.00/5.00 2.450 4.00 / 5.00 2.280 5.000 2.910 2018 4.000 3.110 3.00/5.00 2.780 5.000 2.510 3.25 / 4.00 / 5.00 3.180 2019 4.000 3.440 3.00/5.00 3.070 5.00/4.00 2.800 3.50/5.00 3.450 2020 3.00/5.00 3.310 3.00 / 5.00 / 4.00 3.010 2021 3.00/5.00 3.550 2022 4.500 4.017 5.000 3.780 2023 4.500 4.160 5.000 3.960 2024 4.500 4.303 5.000 4.140 2025 4.750 4.476 4.125 / 5.000 4.250 2026 4.750 4.578 5.250 4.370 2027 5.000 4.734 5.250 4.460 2028 5.250 4.540 2029 5.250 4.620 2030 4.50 / 5.50 / 5.00 4.70 / 4.55 / 4.70 2031 5.000 4.975 2032 2033 5.250 4.800 2034 2035 4.75/5.00 4.980 2036 2037 2038 2039 2040 _ 5.000 5.050 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 City of Newport Beach Certificates of Participation Civic Center Project 2010 B (Federally Taxable Direct Pay Build America Bonds) Par Value $106,575,000 $106,660,000 $469,730,000 $19,645,000 Issuer City of Newport Beach BAB Pasadena PPA BABS Santa Clara VTA BABS San Bernardino County RDA TAXABLE Issue 2010B Certificates of Participation Lease Revenue Bonds Sales Tax Revenue Bonds Tax Allocation Bonds State CA CA CA CA Callable Make Whole +40 bps Make Whole Make Whole +35 bps 9/1/2020 @ 100 Und. Rtg. AA2/AA+/AA+ --/AA+/AA+ Aa2/AA+/-- --BBB/-- Insurance None None None None Lead Mngr. Stone & Youngberg BMO/S&Y Barclays/S&Y Wedbush Securities Sale Date Wednesday, November 17,2010 Thursday, November 18, 2010 Wednesday, November 10, 2010 Wednesday, November 10, 2010 SPREAD SPREAD SPREAD SPREAD COUPON YIELD TO UST COUPON YIELD TO UST COUPON YIELD TO UST COUPON YIELD TO UST Maturi 2011 2012 2013 2014 2015 2016 2017 2018 4.451 4.451 +160 (10 yr) 2019 4.751 4.751 +190 (10 yr) 2020 5.051 5.051 +220 10 2021 5.351 5.351 +250 (10 yr) 4.649 4.649 +195 (10 yr) 7.135 7.135 +450 (10 yr) 2022 5.601 5.601 +275 (10 yr) 4.899 4.899 +220 (10 yr) 2023 5.851 5.851 +300 (10 yr) 5.099 5.099 +240 (10 yr) 2024 2025 2026 2027 2028 2029 2030 7.018 7.018 +275 30 8.450 8.680 +435 30 2031 2032 5.876 5.876 +160 (30 yr) 2033 2034 6.998 6.998 +275 (30 yr) 2035 8.375 8.780 +445 30 r 2036 2037 2038 2039 2040 7.168 7.168 +290 30 8.400 8.880 +455 30 r 041 042 043 j 91 7.148 +290 (30 yr) 044045 2046 2047 2048 2049 2050 2.851 1 2.900 2.699 2.635 10 -Yr. Treas. 30 -Yr. Treas. 4.268 4.248 4.276 4.330 Note that the 10 year and 30 -year Treasury rates could vary slightly on similar dares due to treasury -rate set timing on the same day. City of Newport Beach Certificates of Participation Civic Center Project 2010 B (Federally Taxable Direct Pay Build America Bonds) Par Value $709,175,000 $9,175,000 $18,170,000 $28,005,000 Issuer University of California Regents BA- University of California Regents TAXABLE LA Municipal Improvement Corp-RZEDB San Joaquin Regional Rail Commission RZEDR Issue Medical Center Pooled Revenue Bonds Medical Center Pooled Revenue Bonds Lease Revenue Bonds COPS State CA CA CA CA Callable Make Whole Make Whole N/C N/C Und. Rtg. Aa2/AA-/-- Aa2/AA-/-- Al/A+/A+ A2/ --/-- Insurance None None None None Lead Mngr. Barclays/S&Y Barclays/S&Y Siebert Brandford BofA Merrill Sale Date Tuesday, November 9, 2010 Tuesday, November 9, 2010 Tuesday, November 9, 2010 Thursday, November 4, 2010 SPREAD SPREAD SPREAD SPREAD COUPON YIELD TO UST COUPON YIELD TO UST COUPON YIELD TO UST COUPON YIELD TO UST Maturity 2011 1.647 1.647 +120 (1 yr) 2012 2.447 2.447 +200 (2 yr) 2013 3.185 3.185 +255 (3 yr) 2014 3.761 3.761 +250 (5 yr) 2015 2.875 2.875 +162.5 5 4.161 4.161 +290 (5 2016 4.647 4.647 +275 (7 yr) 2017 5.097 5.097 +320 (7 yr) 2018 5.565 5.565 +290 (10 yr) 2019 2020 4.800 4.800 +220 10 2021 5.035 5.035 +245 (10 yr) 2022 5.235 5.235 +265 (10 yr) 6.465 6.465 +380 (10 yr) 2023 5.435 5.435 +285 (10 yr) 2024 5.635 5.635 +305 (10 yr) 2025 5.785 5.785 +320 (10 ) 5.750 5.750 +315 (10 ) 2026 2027 2028 2029 -,64, _ 7.642 +340 (30 yr) 2030 7.643 7.643 +360 30 2031 6.398 6.398 +225 (30 yr) 2032 2033 2034 2035 _ 2036 2037 2038 2039 2040 7.842 7.842 +360 30 r 7.540 7.793 +375 30 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 6.548 6.548 +240 30 r) 2.600 2.665 10- Yr. Treas. 2.585 2.530 030 -Yr. Treas. 4.148 4.242 4.242 4.043 Note that the 10 year and 30 -year Treasury rates could vary slightly on similar dates due to treasury -rate set timing on the same day. City of Newport Beach Certificates of Participation Civic Center Project 2010 B (Federally Taxable Direct Pay Build America Bonds) Par Value $7,390,000 $59,065,000 $13,130,000 $20,700,000 Issuer Oakland Redevelopment Agency RZEDB Los Angeles Airport BABS Contra Costa Public Finance Authority BABS Contra Costa Public Finance Authority RZEDB Issue Revenue Bonds Revenue Bonds Lease Revenue Bonds Lease Revenue Bonds State CA CA CA CA Callable 9/1/2020 @ 100 Make Whole +45 bps 6/1/2020 @ 100 Make Whole +25 bps Und. Rtg. --/A-/-- Al/AA-/AA- Al/AA-/-- Al/AA-/-- Insurance None None None None Lead Mngr. De La Rosa Goldman Sachs Wedbush Securities Wedbush Securities Sale Date Tuesday, November 2, 2010 Thursda , October 28,2010 Thursda , October 28,2010 Thursda , October 28,2010 SPREAD SPREAD SPREAD SPREAD COUPON YIELD TO UST COUPON YIELD TO UST COUPON YIELD TO UST COUPON YIELD TO UST Maturi 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 5.750 6.120 +350 (10 yr) 2022 5.900 6.162 +355 (10 yr) 2023 6.000 6.262 +365 (10 yr) 2024 6.100 6.362 +375 (10 yr) 2025 6.250 6.462 +385 10 2026 6.500 6.572 +395 (10 yr) 2027 2028 2029 2030 7.200 7.492 +356 30 6.800 7.111 +305 30 2031 2032 2033 2034 2035 6.900 7.201 +315 (30 ) 2036 2037 2038 2039 2040 7.400 7.656 +372 30 7.053 7.053 +300 30 2000 7.301 +325 30 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2.630 2.622 2.690 10 -Yr. Treas. 2.622 30 -Yr. Treas. 3.936 4.053 4.061 4.051 Note that the 10 year and 30 -year Treasury rates could vary slightly on similar dates due to treasury -rate set timing on the same day. CITY OF NEWPORT BEACH v > n Comparison Between All Tax -Exempt vs. Actual BAB Hybrid Pricing of 11/17/10 _ x 10/17/2010 �cscawT'r Executive Overview: NPV of Payment Difference (@4.4%): 0 1 $11,684,127 Scale Comparison of 11/17/10: All Tax -Exempt Payment Hybrid Difference 2011 TE Equiv. Yield Final Pricing Difference 2012 All Tax -Exempt of 11/17/10 (Favor of Hybrid) Par: $127,135,000 $126,660,000 $475,000 True Interest Cost: 5.23% 4.44% 0.79% Avg. Annual Net Payment: $8,341,191 $7,621,211 $719,980 Total Scheduled Net Payment: $250,235,735 $228,636,327 $21,599,408 NPV of Payment Difference (@4.4%): 0 1 $11,684,127 Scale Comparison of 11/17/10: highlights scale utilzed for 2010 COP Pricing of 11/17/10 Annual Payment Summary: All Tax -Exempt Payment Tax -Exempt Difference 2011 TE Equiv. Yield $4,901,232 $419,353 2012 8,765,025 TE Yield 716,254 2013 8,765,775 8,053,071 712,704 TEEY 8,769,275 spread 714,454 2015 yield Year mmd coup Yield spread MW call taxable MW call ust rate MW call 2011 0.37 2.00 0.65 0.28 0.98 2011 1.25 10/11 0.3 1.51 2012 0.60 3.00 1.00 0.40 1.30 2012 1.50 2yr 0.5 2.00 2013 0.85 3.00 1.27 0.42 1.58 2013 1.65 3yr 0.8 2.43 2014 1.20 3.00 1.67 0.47 1.86 2014 1.40 5yr 1.5 2.86 2015 1.48 4.00 2.00 0.52 2.09 2015 1.75 5yr 1.5 3.21 2016 1.79 4.00 2.35 0.56 2.34 2016 1.50 7yr 2.1 3.60 2017 2.14 4.00 2.74 0.60 2.67 2017 2.00 7yr 2.1 4.10 2018 2.46 4.00 3.11 0.65 2.89 2018 1.60 10yr 2.8 4.451 2019 2.76 4.00 3.44 0.68 3.09 2019 1.90 10yr 2.8 4.751 2020 3.01 5.00 3.75 0.74 0 3.28 2020 2.20 10yr 2.8 5.051 2021 3.20 5.00 4.20 1.00 3.48 2021 2.50 10yr 2.8 5.351 2022 3.34 5.00 4.46 1.12 3.64 2022 2.75 10yr 2.8 5.601 2023 3.47 5.00 4.59 1.12 3.80 2023 3.00 10yr 2.8 5.851 2024 3.59 5.00 4.70 1.11 2025 3.69 5.00 4.80 1.11 2026 3.79 5.00 4.89 1.10 2027 3.89 5.00 4.98 1.09 2028 3.99 5.00 5.07 1.08 2029 4.07 5.00 5.15 1.08 2030 4.15 5.00 5.20 1.05 4.56 2030 2.75 30yr 4.3 7.018 2035 4.56 5.25 5.55 0.99 I 2040 4.62 5.50 5.62 1.00 4.66 2040 2.90 30yr 4.3 7.168 highlights scale utilzed for 2010 COP Pricing of 11/17/10 Annual Payment Summary: Prepared By: ® STONE & YOUNGBERG All Tax -Exempt Payment Hybrid (Net Payment) Difference 2011 $5,320,585 $4,901,232 $419,353 2012 8,765,025 8,048,771 716,254 2013 8,765,775 8,053,071 712,704 2014 8,769,275 8,054,821 714,454 2015 8,765,375 8,049,021 716,354 2016 8,767,175 8,051,421 715,754 2017 8,764,575 8,054,021 710,554 2018 8,767,575 8,051,621 715,954 2019 8,765,775 8,046,320 719,455 2020 8,324,175 7,597,293 726,882 2021 8,321,675 7,596,664 725,011 2022 8,322,175 7,596,581 725,594 2023 8,325,175 7,592,349 732,826 2024 8,325,175 7,583,423 741,752 2025 8,321,925 7,587,439 734,486 2026 8,320,175 7,593,729 726,446 2027 8,324,425 7,591,841 732,584 2028 8,323,925 7,591,775 732,150 2029 8,323,425 7,593,070 730,355 2030 8,322,425 7,585,275 737,151 2031 8,320,425 7,583,389 737,036 2032 8,322,575 7,584,281 738,294 2033 8,324,875 7,579,691 745,184 2034 8,321,500 7,579,384 742,116 2035 8,321,900 7,582,662 739,238 2036 8,324,975 7,578,826 746,149 2037 8,324,625 7,582,643 741,982 2038 8,325,025 7,583,182 741,843 2039 8,320,075 7,579,976 740,099 2040 8,323,950 7,582,559 741,391 $250,235,735 $228,636,327 $21,599,408 Prepared By: ® STONE & YOUNGBERG STONE Sc YOUNGBERG FIXED INCOME MARKET UPDATE WEDNESDAY, NOVEMBER 17, 2010 Treasuries Pare Gains to End Mixed on the Day: After rallying this morning on inflation data, the Treasury market ended mixed on the day as the market remains uncertain about the Fed's QE2 program. On the one hand, injecting $600+ billion in liquidity into the financial system suggests a new round of inflation is the inevitable result and that rates will rise. On the other hand, the fact that the Fed will be buying such a large volume of Treasuries increases overall demand and this will drive yields lower. 0.32 3 -Mo LIBOR 0.31 0.30 0.29 0.28 0.27 0.26 10/06 10/20 11/03 11/17 10 -Yr UST 2.95 2.80 2.65 2.50 2.35 2.20 10/06 10/20 11/03 11/17 TREASURIES AND AGENCIES GOLD $/oz. 1,440 1,410 1,380 1,350 1,320 1,290 1,260 10/06 10/20 11/03 11/17 CRUDE OIL $/bbl. 86 81 76 71 66 10/06 10/20 11103 11117 • Economic releases today showed inflation remains tame and the housing market weak. • The Consumer Price Index (CPI), a key measure of inflation, increased 1.2% over the past 12 months ending in October. The rate was well below the Federal Reserve's target of about 2% per year. On a month -over -month basis CPI rose 0.2% in October. • Excluding food and energy prices, core CPI was flat on the month. October was the third straight month that core CPI did not change. On an annual basis, core CPI rose 0.6%, the smallest annual price increase since the government started recording the data in 1957. • The CPI data raised bets the Fed will continue to support the economy, and that interest rates will remain low for the foreseeable future. • A separate report released today showed that housing starts fell 11.7% to an annual rate of 519,000 units in October, the lowest level in 18 months. Economists expected the data to show almost 600,000 starts in the month. In the past two years housing starts have fluctuated between the high -400,000s and the high -600,000s, a sharp decline from the 2 million peak reached during the housing boom. • Building permits for October were also released this morning. Permits rose an anemic 0.5% to an annual rate of 550,000 from an equally depressed level of 547,000 in September. • At the market close: UST 10 -yr down to yield 2.87%. UST 2 -yr up to yield 0.48%. Euro at $1.3518 vs. USD; USD at 83.285 vs. the Yen. Gold down to $1,335.40/ounce. Oil down to $80.44/barrel. MUNICIPAL BONDS Stone & Youngberg's Pricing Underlying New Issue Calendar This Week Date Rating(s) Amount CA IEDB Variable Rate Demand Rev Bonds (St. Margaret's Episcopal) 11/17 $25,000,000 Fontana PFA 2010 Lease Revenue Bonds (Taxable RZEDBs) (CA) 11/17 /A/ 5,420,000 Member FINRA/SIPC • The information contained herein is based on sources that Stone & Youngberg LLC ("S&Y") believes to be reliable, but it is neither all-inclusive nor guaranteed by S&Y, and it may be incomplete or condensed. The information and opinions herein, if any, are subject to change without notice, and S&Y does not undertake to advise the reader of changes in opinion or information. • Some of the securities S&Y follows are unrated or below investment-grade municipal bonds, or are high -yield corporate bonds, that typically involve a higher degree of risk and more volatility than rated or investment-grade municipal bonds, or investment-grade corporate bonds. Therefore, certain debt securities discussed in this update may be unsuitable for some investors, depending on their specific investment objectives, financial situations, and needs. This update is for informational purposes, and under no circumstances is it to be construed as a recommendation, an offer, or the solicitation of an offer to buy or sell any particular debt security in any amount or at all. • S&Y may make a market in or trade for its proprietary account the securities discussed in this update. Also, S&Y may have been a manager or co -manager of a public offering of municipal bonds or other debt securities within the last three years for issuers named herein. S&Y or its directors and employees individually, or their family members, may have either long or short positions in the securities mentioned, and may purchase or sell these securities from time to time in the open market or otherwise for their own accounts or the accounts of others. • This update is for public distribution. Additional information may be available on request. • Copyright ©2010 Stone & Youngberg LLC. All rights reserved. STONE & YOUNGBERG Newport Beach COPS (Civic Center Project/Central Library Refunding) 11/17 Aa2/AA+/AA+ $122,800,000 Pasadena PFA Lease Revenue Bonds (Rose Bowl Renovation Project) 11/17 /AA+/AA+ 163,000,000 Yavapai County VRDRB (Skanon Investments — Drake Cement Plant) (AZ) 11/17 MIG1 // 40,000,000 State of California 2010/11 Revenue Anticipation Notes 11/18 MIG1 /SP -1 /F2 10,000,000,000 NYC Transitional Finance Authority Building Aid Revenue Bonds 11/18 Aa3/AA-/AA- $350,000,000 State of California Various Purpose General Obligation Bonds BABs 11/19 Al /A -/A- 2,000,000,000 Preliminary Oficial Statements are available at wwm.ollc.com/Resources/POS-Library-New-Issues The State of California postponed the completion of its $10 billion short-term Revenue Anticipation Note offering until tomorrow, and pushed back the final pricing date of its $2 billion taxable general obligation bond (BAB) offering to Friday. Treasurer Bill Lockyer cited the need to amend offering documents to inform investors about a lawsuit filed yesterday against the state which attempts to block the planned sale of state office buildings. If the suit is successful and the state is unable to go through with the sales, the amended Preliminary Official Statement notes the state's 2010/11 revenues would be reduced by $1.2 billion. No date has been set for a hearing on the case. The rating agencies have reconfirmed their ratings on the planned offerings. The sell-off persisted today in the municipal bond market, though the losses were pared from yesterday's levels and there appears to be increased interest from retail accounts at these levels, which should provide some support to the market. In a report put out yesterday by Fitch titled U.S. State and Local Government Bond CreditQuality: More Sparks than Fire, the rating agency notes that despite the economic downturn and increased financial stress for state and local governments, munis remain a `strong' asset class and that `defaults will continue to be isolated situations'. In making the case Fitch points to several features of munis and municipalities including the relatively low debt service costs (generally below 10% of municipal spending), the legal requirement for most municipalities to balance their budgets (restraining deficit spending), and the fact that debt service costs are generally spaced out over time and level rather than being concentrated in bullet maturities. 5.20% 4.20% b 3.20% 2.20% 1.20% 0.20% Market Yield Curves National and CA Yield Curves November 17 2010 5 10 15 20 25 30 Maturity (years) - - - - G.O. California (Al/A-/A-) {Active U.S. Govts - USD Govt Agency (non -callable) Fixed Income Market Update 2 11/17/10 STONE & YOUNGBERG CORPORATE BONDS • Corporate bond issuance cooled this week and spreads have started to widen from the extremely tight levels they've been in over the past couple of weeks. • Investors have been increasingly concerned about Ireland's fiscal problems, and whether it signals a wider debt contagion in Europe. Irish Finance Minister Brian Lenihan said potential aid talks for the government's banks will start tomorrow. Current Yields* Fixed Income Market Update 3 11/17/10 SIFMA Municipal Short -Term Rate Trends U.S. Treasury LIBOR Swap Index 0.40% 3 MO 0.14% 1 Wk 0.25% 11/10 0.27% 6 MO 0.19% 1 Mo 0.25% 11/3 0.26% 0.35/ 2 YR 0.48% 3 Mo 0.28% 10/27 0.28% 5 YR 1.46% 6 Mo 0.44% 10/20 0.30% 0.301 10 YR 2.87% 12 Mo 0.76% ti 30 YR 4.28% 0.25% 0.20% 0.15% 0.10% 8/18 9/1 9/15 9/29 10/13 10/27 11/10 SIFMA Muni Swap Index - ' 1 -Mo LIBOR 3 -Mo T-Bffi Thi�Week�'SEC�onornic Indicators* Release Date EDT Indicator Period Survey Actual Prior Revised 11/15 8:30 Advance Retail Sales OCT 0.7% 1.2% 0.6% 0.7% 11/15 8:30 Retail Sales Less Autos OCT 0.4% 0.4% 0.4% 0.5% 11/15 8:30 Retail Sales Ex Auto & Gas OCT 0.2% 0.4% 0.4% -- 11/15 8:30 Empire Manufacturing NOV 14.00 -11.14 15.73 -- 11/15 10:00 Business Inventories SEP 0.8% 0.9% 0.6% 0.9% 11/16 8:30 Producer Price Index (MOM) OCT 0.8% 0.4% 0.4% - -- 11/16 11/16 8:30 PPI Ex Food & Energy (MoM) OCT 0.1% -0.6% 0.1% 11/16 8:30 Producer Price Index (YoY) OCT 4.6% 4.3% 4.0% -- 11/16 8:30 PPI Ex Food & Energy (YoY) OCT 2.1% 1.5% 1.6% -- 11/16 9:00 Total Net TIC Flows SEP -- $81.7B $38.9B $11.2B 11/16 9:00 Net Long-term TIC Flows SEP $62.5B $81.013 $128.7B -- 11/16 9:15 Industrial Production OCT 0.3% 0.0% -0.2% -- 11/16 9:15 Capacity Utilization OCT 74.9% 74.8% 74.7% 74.8% 11/16 10:00 NAHB Housing Market Index NOV 17 16 16 15 11/16 5:00 ABC Consumer Confidence NOV 14 -- -47 -46 -- 11/17 7:00 MBA Mortgage Applications NOV 12 -- -14.4% 5.8% -- 11/17 8:30 Consumer Price Index (MOM) OCT 0.3% 0.2% 0.1% -- Fixed Income Market Update 3 11/17/10 STONE & YOUNGBERG 11/17 8:30 CPI Ex Food & Energy (Mon OCT 0.1% 0.0% 0.0% -- 11/17 8:30 Consumer Price Index (YoY) OCT 1.3% 1.2% 1.1% -- 11/17 8:30 CPI Ex Food & Energy (YoY) OCT 0.7% 0.6% 0.8% -- 11/17 8:30 CPI Core Index SA OCT -- 221.765 221.781 -- 11/17 8:30 Consumer Price Index NSA OCT 218.854 218.711 218.439 -- 11/17 8:30 Housing Starts OCT 598K 519K 610K 588K 11/17 8:30 Building Permits OCT 568K 550K 539K 547K 11/17 8:30 Housing Starts MOM% OCT -2.0% -11.7% 0.3% -4.2% 11/17 8:30 Building Permits MOM% OCT 3.9% 0.5% -5.6% -4.2% 11/18 8:30 Initial Jobless Claims NOV 13 442K 435K 11/18 8:30 Continuing Claims NOV 6 4290K 4301K 11/18 10:00 Mortgage Delinquencies 3Q -- 9.85% 11/18 10:00 MBA Mortgage Foreclosures 3Q -- 4.57% 11/18 10:00 Leading Indicators OCT 0.5% 0.3% 11/18 10:00 Philadelphia Fed. NOV 5.0 1.0 11/18 4:00 RPX Composite 28dy YoY SEP -- -2.68% 11/18 4:00 RPX Composite 28dy Index SEP 30 -- 195.01 *Bloomberg data as of 1:00pm PDT today Questions? The Fixed Income Market Update is posted each weekday afternoon to Stone & Youngberg's web site, syllc.com. Also on the site is our daily in-house inventory of available securities and our weekly new issue calendar. For further information on Stone & Youngberg's fixed income product and/or to purchase securities, please call 800- 447-8663, or send an email to info@syllc.com. Daily electronic delivery of the Market Update also is available; request a free subscription at muniresearch@syllc.com. Stone & Youngberg Offices California: One Ferry Building, San Francisco, CA 94111, (415) 445-2300 515 South Figueroa St., Suite 1800, Los Angeles, CA 90071, (213) 443-5230 4350 La Jolla Village Dr., Suite 140, San Diego, CA 92122, (858) 795-8700 42605 Moonridge Rd., Big Bear Lake, CA 92315, (909) 584-4500 NewYork. 390 Park Avenue, New York, NY 10022, (212) 497-7100 677 Broadway, Suite 1202, Albany, NY, (518) 431-0900 Arizona: 2555 East Camelback Rd., Suite 280, Phoenix, AZ 85016, (602) 794-4000 Illinois: 155 North Wacker Drive, Suite 800, Chicago, IL 60606, (312) 660-2100 Virginia: 901 East Byrd Street, Suite 1150, Richmond, VA 23219 (804) 727-6760 (Sales), (804) 727-6764 (Public Finance) Maryland.• Quynn House, 18 West Street, Annapolis, MD 21401, (410) 280-9711 WEB SITE www.syllc.com Fixed Income Market Update 4 11/17/10 Miscellaneous ■ Interested Parties List FIELDMAN I RQLAPP & ASSOCIATES CITY OF NEWPORT BEACH 2010 Certificates of Participation INTERESTED PARTIES LIST Issuer City of Newport Beach 3300 Newport Blvd. Main 2: 949-644-3000 P.O. Box 1768 Fax: 949-644-3339 Newport Beach, CA 92658-8915 ❑ Dave Kiff, City Manager 2: 949-644-3000 e-mail: dkiff(&newportbeachca.gov ❑ Tracy McCraner, Director of Administrative Services 2: 949-644-3123 e-mail: tmccraner(kne)yportbeachca.goy ❑ Dan Matusiewicz, Deputy Director of Administrative 2: 949-644-3126 Services e-mail: dmatusie(&newportbeachca.goy ❑ Trevor Power, Debt Manager 2: 949-644-3125 e-mail: tjpower(&newportbeachca.gov ❑ Kyle E. Rowen, Deputy City Attorney 2: 949-644-3131 Fax: 949-644-3139 e-mail: krowen@newportbeachca.goy ❑ Leonie Mulvihill, Assistant City Attorney 2: 949-644-3131 Fax: 949-723-3519 e-mail: lmulvihill@newportbeachca. goy Public Works Department ❑ Steve Badum, Director of Public Works 9: 949-644-3311 e-mail: sbadumgnewportbeachca.goy Special Counsel Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, CA 92660-6401 ❑ David R. McEwen, Esq. 2: 949-725-4162 Fax: 949-823-5162 e-mail: dmcewen(&sycr.com ❑ Brian P. Forbath, Esq. 2: 949-725-4193 Fax: 949-823-5193 e-mail: bforbathksycr.com Revised: October 13, 2010 Page 1 of 5 FRA Project No. 10123 FRA 11900 Interested Parties List FIELDMAN I RQLAPP & ASSOCIATES CITY OF NEWPORT BEACH 2010 Certificates of Participation INTERESTED PARTIES LIST Disclosure Counsel Hawkins Delafield & Wood LLP 333 South Grand Ave. Los Angeles, CA 90071 ❑ Arto C. Becker, Partner 2: 213-236-9050 Fax: 213-236-9060 e-mail: abeckerkhawkins.com ❑ Diane K. Quan, Partner 2: 213-236-9068 Fax: 213-236-9060 e-mail: dd uannhawkins.com Hawkins Delafield & Wood LLP 601 Thirteenth Street, N.W. Washington, DC 20005 ❑ John M. McNally, Partner 2: 202-682-1495 Fax: 202-682-1486 e-mail: jmcnallykhawkins.com Financial Advisor Fieldman, Rolapp & Associates 19900 MacArthur Boulevard, Suite 1100 Main 2: 949-660-7300 Irvine, CA 92612 Fax: 949-474-8773 ❑ Tom DeMars, Principal 2: 949-660-7316 e-mail: tdemarsgfieldman.com ❑ Robert Porr, Senior Vice President 2: 949-660-7323 e-mail: rporrgfieldman.com ❑ Paul Pender, Assistant Vice President W: 949-660-7319 e-mail: ppender&fieldman.com ❑ Renee Christensen, Associate °01: 949-660-7305 e-mail: rchristensen&fieldman.com Revised: October 13, 2010 Page 2 of 5 FRA Project No. 10123 FRA 11900 Interested Parties List FIELDMAN I RQLAPP & ASSOCIATES CITY OF NEWPORT BEACH 2010 Certificates of Participation INTERESTED PARTIES LIST Senior Managing Underwriter Stone & Youngberg LLC 4350 La Jolla Village Drive, Suite 140 San Diego, CA 92122 ❑ Bill Huck, Managing Director 2:858-795-8701 Fax: 858-452-6131 e-mail: bhuckksyllc.com ❑ Ken Holman, Vice President 9: 858-795-8703 Fax: 858-452-6131 e-mail: kholman(aPsvllc.com ❑ Ben Gubatina, Analyst S: 858-795-8702 Fax: 858-452-6131 Senior Managing Underwriter's Counsel e-mail: bgubatinaAsyllc.com Jones Hall 650 California Street, 18th Floor San Francisco, CA 94108 ❑ Chris Lynch 2: 415-391-5780 x 267 Fax: 415 391-5784 e-mail: clynch(iDjoneshall.com Co -Manager De La Rosa & Co. 2: 415-495-8863 456 Montgomery Street, 19`h Floor Fax: 415-495-8864 San Francisco, CA 94104 ❑ Eric Scriven, Senior Vice President 2 415-217-33936 email: escrivengejdelarosa.com Bank of America Merrill Lynch W: 415-676-3211 101 California Street, Suite 1225 Fax: 415-984-4051 Mail Code: CA5-332-12-00 San Francisco, CA 94111 ❑ Grace Barvin, Director 2 415-676-3211 e-mail: grace.barvinAbaml.com ❑ John Houlberg, Vice President 2 415-676-3219 e-mail: john.houlberg@baml.com Revised: October 13, 2010 Page 3 of 5 FRA Project No. 10123 FRA 11900 Interested Parties List FIELDMAN I RQLAPP & ASSOCIATES CITY OF NEWPORT BEACH 2010 Certificates of Participation INTERESTED PARTIES LIST Co -Manager (Continued) Raymond James 1 Embarcadero Center, Suite 650 San Francisco, CA 94111 Cheryl Hines, Managing Director Trustee The Bank of New York Mellon Trust Company, N.A. 700 S. Flower St., Ste. 500 Los Angeles, CA 90017 ❑ Greg Chenail, Vice President Trustee's Counsel The Bank of New York Mellon Trust Company, N.A. 700 S. Flower St., Ste. 500 Los Angeles, CA 90017 ❑ Rhea L. Murphy, Esq. Senior Counsel Rating Agencies Fitch Ratings 650 California Street, 4th Floor San Francisco, CA 94104 ❑ Scott Monroe, Associate Director ❑ Amy Doppelt, Managing Director Revised: October 13, 2010 FRA Project No. 10123 FRA 11900 Interested Parties List 2: 415-616-8939 Fax: 415-616-8936 e-mail: cheryl.hineskraymondjames.com W: 213-630-6229 Fax: 213-630-6480 e-mail: greg.chenaiWbnymellon.com W: 213-630-6476 Fax: (213) 630-6285 e-mail: rhea.murphy(a,bnymellon.com 2:415-732-5618 e-mail: scott.monroe@fitchratin sg com 2: 415-732-5612 Fax: 415-732-5610 Email: amy.doppeltgfitchratin sg com Page 4 of 5 FIELDMAN I RQLAPP & ASSOCIATES CITY OF NEWPORT BEACH 2010 Certificates of Participation INTERESTED PARTIES LIST Standard & Poor's One Market Street, Steuart Tower, Floor 15 San Francisco, CA 94105 ❑ Bea Chiem, Analyst ❑ Paul Dyson, Director Moody's Investors Service 1 Front Street, Suite 1900 San Francisco, CA 94111 ❑ Michael Wertz, Analyst e-mail distribution: dkiff(aDnewportbeachca. gov; tmccraner(cr�,newportbeachca. gov; dmatusieknewportbeachca. gov; t 2ower(i�newportbeachca.gov; krowenknewportbeachca. gov; lmulvihillknewportbeachca. gov; sbadum(i�newportbeachca.gov; dmcewen(&sycr.com; bforbath(cr�,�sycr.com; abecker(&hawkins.com; dquan(a-)hawkins.com; j mcnal lykhawkins. com; tdemarskfieldman.com; rporr(&fieldman.com; ppenderkfieldman.com; rchristensengfieldman.com; bhuck&syllc.com; kholman(a) syllc. com; bizubatina(2 syllc.com; clynch(aJ oneshall.com; Revised: October 13, 2010 FRA Project No. 10123 FRA 11900 Interested Parties List S: 415-371-5000 9: 415-371-5070 email: bea_ chiem(cr�,standardandpoors.com 2:415-371-5079 Fax: 415-371-5090 email: paul_dysongsandp.com S: 415-274-1722 email: michael.wertzgmood, s escriven(& ei delarosa. com; grace.barvin(cr�,baml. com j ohn.houllbergkbaml. com Cheryl.hines(aDraymondj ames.com gre g. chenailkbnymellon. com; rhea.murphy bnymellon.com; scott.monroe@fitchratin sg com; amy.dop_pelt(cfitchratin sg com; bea_chiem(cr�,standardandpoors.com; paul dyson(&sandp.com; michael.wertz(&moodys.com; Page 5 of 5