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NOTES TO THE FINANCIAL STATEME NTS (Canhnued( LONG-TERM DEBT DEFEASED The Redevelopment Agency issued Certificates of Participation (Parking Facilities Refunding Project) Series 1993A in the amount of$16.875 million with an average interest rate of 5.26 percent to advance refund the $13,990,000 1986 Certificates of Participation Series A with an average interest rate of 7.71 percent. $15.06 million of the net proceeds was transferred to a Bond Retirement Fund held by the escrow agent under an irrevocable trust agreement. Under the escrow agreement, the 1986 Certificates of Participation Series A are considered defeased and the liability for those Certificates has been removed from the General Long-Term Debt Account Group. The Agency advance refunded the 1986 Certificates to reduce its total debt service payments over the next 24 years by $2.61 million and to obtain an economic gain (difference between the present values of the debt service payments on the old and new debt) of$1.32 million. As of June 30, 1993 defeased 1986 Certificates outstanding totaled $13.90 million. LONG-TERM DEBT DEFEASED IN PRIOR YEARS In prior years, the City has defeased various bond issues of which $108,850,000 are outstanding as of June 30, 1993. The investments in U.S. government securities which are held in various escrow funds are sufficient to fully service the defeased bonds until the bonds are called or mature. For financial reporting purposes, the bonds have been considered defeased and therefore removed as a liability from the City's General Long-Term Debt Account Group. Outstanding Balance June 30. 1993 CAPITALIZED LEASE OBLIGATIONS City Hall. In 1966, the Orange County Civic Center Authority (the "Authority") was created under a Joint Powers Agreement between the City and the County of Orange. In 1970, the Authority issued a total of$5,470,000 in bonds to finance construction of a City Hall. The agreement provides that the City will lease the City Hall for 25 years through 1996 at an annual base rental of$464,300. In addition, the City is required to pay all taxes, assessments and other expenses of the Authority which relate to the City Hall. At the expiration of the lease, title to the City Hall will vest with the City. The bonds totaling $3,410,000 maturing from 1986 through 1995 were subject to call and redemption in 1985 from proceeds of$3,500,000 of 1972 Refunding Revenue Bonds also issued by the Authority. Such bonds were called and redeemed on schedule so that as of June 30, 1985, only the refunding issue totaling $3,500,000 were outstanding.