HomeMy WebLinkAbout2015-06-23 - AGENDA REPORTS - LEASE TRANSACTION CIVIC CENTER (2)Agenda Item: 15
CITY OF SANTA CLARITA
:) AGENDA REPORT
NEW BUSINESS
CITY MANAGER APPROVAL:
DATE: June 23, 2015
SUBJECT: APPROVAL OF PRIVATE PLACEMENT LEASE TRANSACTION
FOR THE PURPOSE OF REFINANCING THE CITY'S $17,700,000
REFUNDING CERTIFICATES OF PARTICIPATION (PUBLIC
FACILITIES - CIVIC CENTER) 2005 SERIES
DEPARTMENT: Administrative Services
PRESENTER: Cannon Magana
RECOMMENDED ACTION
City Council:
Adopt a resolution authorizing the refinancing of its $17,700,000 Refunding Certificates of
Participation (Public Facilities - Civic Center) 2005 Series by entering into a private placement
lease transaction, and the execution and delivery of a Site Lease, Lease Agreement, Escrow
Agreement, and a Placement Agreement, and the taking of certain actions in connection
therewith.
Public Financing Authority:
Adopt a resolution authorizing approval of certain documents in connection with a private
placement lease transaction.
BACKGROUND
In 1991, the City of Santa Clarita (City) issued a local obligation, the 1991 Certificates of
Participation (1991 COPS), which was purchased by the Santa Clarita Public Financing
Authority (PFA) through the issuance of the PFA's $22,940,000 Local Agency Revenue Bonds
(1991 Bonds). The proceeds of the 1991 COPS were used to fund certain public capital
improvements. The City leased its sewer system to the PFA, which leased it back to the City.
The City advance refunded the 1991 COPS (and the 1991 Bonds) in August 1997 by executing
and delivering its $19,670,000 Refunding Certificates of Participation (1997 COPs). The 1997
COPs were due to mature in 2021 and had interest rates ranging from 4.5% to 5.0%. The City's
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sewer system remained as the leased property under the 1997 COPs just as under the 1991 COPs
The City refunded the 1997 COPS in July 2005 through the execution and delivery of the City's
$17,700,000 Refunding Certificates of Participation (Public Facilities - Civic Center) 2005
Series (2005 COPS). The 2005 COPS mature in 2020 and have a remaining average interest rate
of 3.90%. The City's sewer system remained as the leased property under the 2005 COPS, just
as under the 1991 and 1997 COPS.
The 2005 COPS may be prepaid on October I, 2015, at a prepayment price of 100%. In today's
favorable interest rate climate, City staff and consultants have reviewed the advisability of again
refinancing the 2005 COPS to achieve savings for the City. Bids were solicited from 10 banks
active in this market. In order to meet the requirement of the securities laws, the financial
advisor has been coordinating the bidding through a securities broker dealer named First
Southwest Company, who will not be bidding on the private placement.
It is proposed to refinance the 2005 COPS by executing and delivering the not -to -exceed
$7,200,000 Lease (Public Facilities - Civic Center Refinancing) (2015 Lease). The City will use
the same leased property as before, the City's sewer system, or other appropriate City asset, and
lease such property (Leased Property) to the PFA pursuant to a Site Lease. The PFA will then
leaseback the Leased Property to the City and make lease payments to the PPA. Pursuant to the
Assignment Agreement, the PFA assigns its rights to receive the lease payments to the Bank for
a purchase price. The PFA uses the purchase price to pay to the City as an upfront lease payment
under the Site Lease. The City uses the upfront purchase price to prepay and defease the 2005
COPS.
As before, the City agrees to annually appropriate general funds to make the lease payments.
Each lease payment has a principal and interest component paid semi-annually. The interest rate
on the 2015 Lease is expected to be less than 2%, with a true interest cost including all cost of
issuance of 2.4%. Annual savings, net of all costs, are expected to be $64,000 per year or higher
for a total of $320,000 through 2020. Present value savings are estimated at $270,000.
Tonight's action by the City Council and the City's PFA is to approve documents in connection
with the prepayment of the 2005 COPS and the execution and delivery of the private placement
2015 Lease.
General Summary of Security: The City covenants to annually budget and appropriate for the
lease payments from its general fund and maintain insurance on the Leased Property.
Site Lease: Document in which the City leases the Leased Property to the PFA. It is drafted by
Special Counsel and executed by the City and PFA.
Lease Agreement: Key legal document in which the PFA leases back the Leased Property to the
City for lease payments. Also contains the City's covenants to appropriate and maintain .
insurance and lease payment and prepayment provisions. It is drafted by Special Counsel and
executed by the City and PFA.
Assigmnent Agreement: Document in which the lease payments to the PFA are assigned to the
Bank. It is drafted by Special Counsel and executed by the Bank and PFA.
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Escrow Agreement: Document governing the defeasance of the 2005 COPS and their
prepayment. It is drafted by Special Counsel and executed by the City and Escrow Bank.
Placement Agreement: Document describing the role of First Southwest Company, the
placement agent, in securing a private placement investor for the lease, and describes the term
and purchase price of the lease payments. It is drafted by Special Counsel and executed by the
City, PFA, and the Placement Agent.
The City resolution also appoints various consultants including C.M. de Crinis & Co., as
Financial advisor, First Southwest Company, as placement agent, Norton Rose Fulbright US
LLP, as special counsel, and The Bank of New York Mellon Trust Company, N.A., as escrow
bank and dissemination agent.
ALTERNATIVE ACTIONS
1. The City Council may choose not to refinance the 2005 COPS or may choose not to enter into
the 2015 Lease transaction and opt for a different financing method.
2. Other action as determined by the City Council.
FISCAL IMPACT
The City will be making a lease payment of approximately $1,480,000 each year for five years
from the City's general fund. This reflects a payment reduction of approximately $64,000 per
year from the current payments.
ATTACHMENTS
Resolution - City Council
Resolution - Board
Site Lease
Lease
Assignment Agreement
Placement Agreement
Escrow Agreement
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RESOLUTION NO. 15-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA
CLARITA, CALIFORNIA, AUTHORIZING THE REFINANCING OF THE
$17,700,000 REFUNDING CERTIFICATES OF PARTICIPATION (PUBLIC
FACILITIES - CIVIC CENTER) 2005 SERIES, AUTHORIZING THE
EXECUTION AND DELIVERY OF A SITE LEASE, LEASE, ESCROW
AGREEMENT, AND PLACEMENT AGREEMENT, AND AUTHORIZING
THE TAKING OF CERTAIN ACTIONS IN CONNECTION THEREWITH
WHEREAS, in 2005, the City Council (Council) of the City of Santa Clarita (City)
executed and delivered its $17,700,000 Refunding Certificates of Participation (Public Facilities
—Civic Center) 2005 Series (2005 Certificates) evidencing and representing undivided and
proportionate interests in lease payments to be made by the City to the Santa Clarita Public
Financing Authority (Authority) under a lease -leaseback transaction of certain sewer
improvements of the City's sewer system (Leased Property); and
WHEREAS, in order to take advantage of the favorable interest rates available in the
financial markets, the City proposes to refinance the 2005 Certificates by prepaying the lease
payments and defeasing the 2005 Certificates from proceeds of a private placement lease -
leaseback transaction involving the Leased Property; and
WHEREAS, the City will lease to the Authority its interest in the Leased Property Z
pursuant to a Site Lease, dated as of July I, 2015 (Site Lease), and the Authority, concurrently w
with the execution of the Site Lease, will leaseback the Leased Property to the City pursuant to a
2015 Lease (Public Facilities — Civic Center Refinancing), dated as of July 1, 2015 (Lease), in n
consideration for lease payments, with an assignment to a bank (Assignee) following a
competitively bid solicitation process; and
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WHEREAS, it is in the public interest and for the public benefit that the City authorize °
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and direct execution of the Site Lease and the Lease and certain other financing documents in
connection therewith; and i t
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WHEREAS, the documents below specified have been filed with the City and the
members of the Council, with the aid of its staff, have reviewed said documents. o
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NOW, THEREFORE, the City Council of the City of Santa Clarita does hereby resolve
as follows:
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SECTION 1. The City hereby approves the prepayment of the lease payments with
respect to the 2005 Certificates and the defeasance of the 2005 Certificates through the use of a Q
private placement lease -leaseback financing transaction
SECTION 2. The below enumerated documents (collectively, Transaction Documents)
are hereby approved; and a Responsible Officer (as defined below) is hereby authorized and ' '
directed to execute the Transaction Documents in substantially the forms hereto presented, with
such revisions, amendments, and completions as shall be approved by such Responsible Officer
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with the advice of Special Counsel to the City, such approval to be conclusively evidenced by
the execution and delivery by such Responsible Officer. A Responsible Officer shall include any
member of the City Council, the City Manager, the Deputy City Manager/Director of
Administrative Services, or any officer of the City designated by the Mayor or the City Manager
as a Responsible Officer, and the City Clerk is hereby authorized and directed to attest to such
Responsible Officer's si gnature.
a) the Site Lease, by and between the City, as lessor, and the Authority, as lessee,.
pursuant to which the City will lease the Leased Property to the Authority; and
b) the Lease, by and between the Authority, as lessor, and the City, as lessee,
pursuant to which the Authority will leaseback the Leased Property to the City, so
long as the total principal component of the Lease does not exceed $7.2 million, and
the interest rate payable with respect to the interest component of the Lease does not
exceed 2.5%; and
c) an Escrow Agreement, dated as of July 1, 2015 (Escrow Agreement), by and
between the City and The Bank of New York Mellon Trust Company, N.A., as
escrow bank and trustee for the 2005 Certificates; and
d) a Placement Agreement (Placement Agreement) by and among the Authority, the
City and First Southwest Company, as placement agent.
SECTION 3. The City hereby designates the Lease as "qualified tax-exempt
obligations" within the meaning of section 265(b)(3) of the Internal Revenue Code of 1986, as
amended.
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SECTION 4. The City hereby appoints C.M. de Crinis & Co., Glendale, California, as
financial advisor; First Southwest Company, Santa Monica, California, as placement agent; —
Norton Rose Fulbright US LLP, Los Angeles, California, as special counsel; and The Bank of c
New York Mellon Trust Company, N.A., Los Angeles, California, as escrow bank and
dissemination agent, in connection with the execution and deliveryof the Lease upon such terms >.
and conditions as shall be approved by the Deputy City Manager/Director of Administrative
Services, or his designee.
SECTION 5. Any Responsible Officer of the City, and each of them, is hereby
authorized and directed to execute and deliver any and all other documents and instruments and
to do and cause to be done any and all acts.and things necessary or proper for carrying out the
transactions contemplated by this Resolution.
SECTION 6. This Resolution shall take effect immediately upon its adoption.
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SECTION T The City Clerk shall certify to the adoption of this Resolution.
PASSED, APPROVED, AND ADOPTED this 23`d day of June, 2015.
MAYOR
ATTEST:
CITY CLERK
DATE:
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA )
1, Kevin Tonoian, City Clerk of the City of Santa Clarita, do hereby certify that the
foregoing Resolution was duly adopted by the City Council of the City of Santa Clarita at a
regular meeting thereof, held on the 23`d day of June 2015, by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
CITY CLERK
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RESOLUTION NO. 15-
A RESOLUTION OF THE BOARD OF THE SANTA CLARITA
PUBLIC FINANCING AUTHORITY AUTHORIZING APPROVAL OF
CERTAIN DOCUMENTS IN CONNECTION WITH A PRIVATE
PLACEMENT LEASE TRANSACTION
WHEREAS, the Santa Clarita Public Financing Authority (Authority) is a Joint Powers
Authority (a public body, corporate, and politic) duly created, established, and authorized to
transact business and exercise its powers, all under and pursuant to the Joint Exercise of Powers
Act (Articles 1 through 4 of Chapter 5, Division 7, Title I of the California Government Code),
including the power and authority to lease property from and to another public entity and to
assist the City of Santa Clarita, California (City), with the financing or refinancing of the
acquisition and construction of various public facilities for the use, benefit, and enjoyment of the
public; and
WHEREAS, in 2005, the Authority assisted the City with the execution and delivery of
the City's $17,700,000 Refunding Certificates of Participation (Public Facilities —Civic Center)
2005 Series (2005 Certificates) evidencing and representing undivided and proportionate
interests in lease payments to be made by the City to the Authority under a lease -leaseback
transaction of certain sewer improvements of the City's sewer system (Leased Property); and
WHEREAS, in order to take advantage of the favorable interest rates available in the
financial markets, the City has determined to refinance the 2005 Certificates by prepaying the
lease payments and defeasing the 2005 Certificates from proceeds of a private placement lease -
leaseback transaction involving the Leased Property; and
WHEREAS, the City will lease to the Authority its interest in the Leased Property
pursuant to a Site Lease, dated as of July 1, 2015 (Site Lease), and the Authority, concurrently
with the execution of the Site Lease, will leaseback the Leased Property to the City pursuant to a
2015 Lease (Public Facilities — Civic Center Refinancing), dated as of July 1, 2015 (Lease), in
consideration for lease payments, with an assignment to a bank (Assignee) following a
competitively bid solicitation process; and
WHEREAS, the execution and delivery of the Lease will result in significant public
benefits in the form of demonstrable savings in effective interest rates; and
WHEREAS, it is in the public interest and for the public benefit that the Authority
authorize and direct execution of the Site Lease and the Lease and certain other financing
documents in connection therewith; and
WHEREAS, the documents below specified have been filed with the Authority, and the
members of the Board ofthe Authority, with the aid of its staff, have reviewed said documents.
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NOW, THEREFORE it is hereby resolved by the Board of the Santa Clarita Public
Financing Authority as follows:
SECTION 1. The Authority hereby agrees to assist the City in the refinancing of the
2005 Certificates through participation in the use of a private placement lease -leaseback
financing transaction.
SECTION 2. The below enumerated documents (collectively, Transaction Documents)
are hereby approved, and a Responsible Officer (as defined below) is hereby authorized and
directed to execute the Transaction Documents in substantially the forms hereto presented, with
such revisions, amendments, and completions as shall be approved by such Responsible Officer
with the advice of Special Counsel to the City, such approval to be conclusively evidenced by
the execution and delivery by such Responsible Officer. A Responsible Officer shall include any
member of the Board, the Executive Director, the Treasurer, or any officer of the Authority
designated by the President or the Executive Director as a Responsible Officer, and the Secretary
is hereby authorized and directed to attest to such official's signature.
a) the Site Lease, by and between the City, as lessor, and the Authority, as lessee,
pursuant to which the City will lease the Leased Property to the Authority; and
b) the Lease, by and between the Authority, as lessor, and the City, as lessee,
pursuant to which the Authority will leaseback the Leased Property to the City, so
long as the total principal component of the Lease does not exceed $7.2 million, and
the interest rate payable with respect to the interest component of the Lease does not
exceed 2.5%; and
c) an Assignment Agreement (Assignment Agreement), by and between the
Authority and the Assignee; and
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d) a Placement Agreement (Placement Agreement), by and among the Authority, the
City and First Southwest Company, as placement agent. m°
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SECTION 3. Any Responsible Officer of the Authority, and each of them, is hereby °
authorized and directed to execute and deliver the Transaction Documents and any and all other c
documents and instruments and to do and cause to be done any and all acts and things necessary
or proper for carrying out the transactions contemplated by this Resolution.
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SECTION 4. This Resolution shall take effect from and after the date of its passage and E
adoption.
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SECTION 5. The Secretary shall certify to the adoption of this Resolution.
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PASSED, APPROVED, AND ADOPTED this 23d day of June, 2015.
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
CHAIR
ATTEST:
SECRETARY
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STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA )
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1, Kevin Tonoian, Secretary of the Santa Clarita Public Financing Authority, do hereby Uj
certify that the foregoing Resolution No. 15-_ was duly adopted by the Board of the Santa
Clarita Public Financing Authority, at a regular meeting thereof, held on the 23`d day of June
2015, by the following vote:
AYES: BOARDMEMBERS:
NOES: BOARDMEMBERS:
ABSENT: BOARDMEMBERS:
SECRETARY
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SITE LEASE
by and between
CITY OF SANTA CLARITA,
as Lessor
and
SANTA CLARITA PUBLIC FINANCING AUTHORITY,
as Lessee
Dated as of July 1, 2015
THIS IS A FINANCING DOCUMENT.
NO DOCUMENT TRANSFER TAX IS DUE
PURSUANT TO GOVERNMENT CODE 27383.
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I. Definitions..........................................................................................................................1
2. Site Lease........................................................................................................................... 1
3. Term................................................................................................................................... 1
4. Rental.................................................................................................................................2
5. Purpose...............................................................................................................................2
6.
Owner in Fee......................................................................................................................2
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7.
Substitution of Leased Property
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8.
Release of Leased Property
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9.
Assignments and Subleases...............................................................................................
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Governing Law
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10.
Right of Entry
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11.
Termination........................................................................................................................3
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12.
Default................................................................................................................................3
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13.
Quiet Enjoyment
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14.
Waiver of Personal Liability..............................................................................................
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15.
Taxes..................................................................................................................................
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16.
Eminent Domain
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17.
Partial Invalidity.................................................................................................................4
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18.
Notices
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19.
Amendment..............................................................................................................5
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20.
Section Headings...................................................................
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Governing Law
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22.
Counterparts.......................................................................................................................5
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EXECUTION..................................................................................................................................6
EXHIBIT A - LEASED PROPERTY........................................................................................A-1
EXHIBIT B - AMENDMENT TO SITE LEASE.....................................................................B-1
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SITE LEASE
THIS SITE LEASE, dated as of July 1, 2015, by and between the CITY OF SANTA
CLARITA, a general law municipal corporation duly organized and existing under and by virtue
of the laws of the State of California (the "City"), as lessor, and SANTA CLARITA PUBLIC
FINANCING AUTHORITY, a joint exercise of powers agency duly organized and existing
under and by virtue of the laws of the State of California (the "Authority"), as lessee;
WITNESSETH:
WHEREAS, the City has previously authorized the execution, sale and delivery of the
City of Santa Clarita Refunding Certificates of Participation, (Public Facilities - Civic Center)
2005 Series (the "2005 Certificates"), in the aggregate principal amount of $17,700,000,
evidencing proportionate interests in lease payments (the "2005 Lease Payments") to be made by
the City pursuant to a Lease Agreement, dated as of July 1, 2005 (the "2005 Lease"), between
Authority, as lessor, and the City, as lessee, for the use and occupancy of sewer improvements
owned by the City and used within the City's sewer system, more specifically described in
Exhibit A hereto, as amended from time to time (the "Leased Property");
WHEREAS, the City wishes to refinance the 2005 Certificates and prepay the 2005
Lease Payments with the proceeds of a lease -leaseback transaction (the "Proceeds"); and
WHEREAS, the City now proposes to lease the Leased Property to the Authority
pursuant to this Site Lease, and leaseback the Leased Property from the Authority pursuant to
that certain 2015 Lease (Public Facilities — Civic Center Refinancing), by and between the City
and the Authority, dated as of July 1, 2015 (the "Lease"), for lease payments with respect to
which will be general fund obligations of the City (the "Lease Payments"); and
WHEREAS, in order to facilitate the delivery of the Proceeds for the benefit of the City,
the Authority will assign all its rights to the Leased Property, the Lease Payments, this Site Lease
and the Lease to as assignee of the obligations of the City (the
"Assignee"); and
WHEREAS, a portion of the Proceeds, along with a monetary contribution from the City,
will be deposited with The Bank of New York Mellon Trust Company, N.A., as escrow bank
(the "Escrow Bank") pursuant to an Escrow Agreement, dated as of July 1, 2015 (the "Escrow
Agreement"), by and between the City and the Escrow Bank, for the prepayment of the 2005
Lease Payments and the defeasance of the 2005 Certificates.
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED by the parties as follows:
1. Definitions.
Unless the context otherwise requires, all capitalized terms used in this Site Lease and not
defined herein shall for all purposes of this Site Lease have the meanings specified therefor in the
Lease.
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2. Site Lease.
The City hereby leases to the Authority and the Authority hereby hires from the City, on
the terms and conditions hereinafter set forth, certain sewer improvements of the City's sewer
system located within the boundaries of the City situated in the County of Los Angeles, State of
California, as more particularly described in Exhibit A attached hereto and made a part hereof
(the "Leased Property").
Term.
The term of this Site Lease shall commence on July , 2015, and shall end on October
1, 2020, unless such term is extended or sooner terminated as hereinafter provided. If on such
October 1, 2020, the aggregate amount of Lease Payments payable under the Lease shall not
have been paid, or provision shall not have been made for their payment, then the term of this
Site Lease shall be automatically extended until such Lease Payments shall be fully paid or
provision shall be made for such payment, but in any event not beyond October 1, 2030. If,
prior to October 1, 2030, all Lease Payments and Additional Payments shall be fully paid or
provision made for such payment, the term of this Site Lease shall end ten (10) days after the
date of such payment or provision for payment.
4. Rental.
The City acknowledges receipt from the Authority as and for rental hereunder the sum of
Dollars ($ ), on or before the date of
delivery of this Site Lease.
5. Purpose.
The Authority shall use the Leased Property solely for the purpose of leasing the Leased
Property to the City pursuant to the Lease, and for such purposes as may be incidental thereto;
provided, that in the event of default by the City under the Lease, the Authority and its assigns
may exercise the remedies provided in the Lease.
6. Owner in Fee.
The City represents that it is the owner in fee of the Leased Property.
Substitution of Leased Property.
From time to time, the City may elect to substitute alternate real property for the Leased
Property or add additional real property to the Leased Property pursuant to the requirements of
the Lease but only by providing the Assignee with a supplement to the Lease. In connection
therewith, the City and the Authority, with the prior written consent of the Assignee, may enter
into a supplement or amendment to this Site Lease substantially in the form attached hereto as
Exhibit B. All costs and expenses incurred in connection with any such substitution or addition
shall be borne by City.
The City shall not substitute alternate real property for the Leased Property without first
fulfilling all requirements for such substitution contained in the Lease, obtaining (i) an opinion of
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Special Counsel to the effect that such substitution or addition shall not, in and of itself, impair
the exclusion from gross income of the Interest Component payable with respect to the Lease
Payments, (ii) a certificate of the City to the same effect as set forth in Section 3.7 of the Lease
and (iii) the prior written consent of the Assignee.
In the event of a Substitution, there shall also be delivered to the Authority and the
Assignee in the event of a partial Removal, evidence that the title insurance, if any, in effect
immediately prior thereto is not or will not be affected.
In the event that the City, with the written consent of the Assignee, effects a Substitution
of all or a portion of the Leased Property hereunder pursuant to the terms hereof and those of the
Lease, all or a designated portion of the Leased Property formerly subjected to this Lease shall
be released from the lien hereof upon receipt by the Assignee of (a) the written request of the
City to that effect, and (b) an opinion of Special Counsel to the effect that such release will have
no material adverse effect upon the Assignee.
After any such substitution, the term "Leased Property" shall be defined, collectively, as
the remaining portion of the previously Leased Property and the substituted real property.
Release of Leased Property.
The City may request release of a portion of the Leased Property at any time during the w
Term hereof, upon its written certification to the effect that (i) the real property to be released is W
located on an identifiable parcel or parcels of land, (ii) following such release, the remaining o
Leased Property, will (a) as evidenced by the delivery of an appraisal by or on behalf of the City, z
have a fair market value in excess of the then remaining aggregate principal components of the v
Lease Payments to be made under the Lease and (b) as evidenced by a certificate executed by an a
authorized representative of the City, have a fair rental value equal to or in excess of the Lease 3
Payments to be made under the Lease. In such event, the City, with the prior written consent of
the Assignee, shall be entitled to a release from the Leased Property of such requested portion.
The City, the Authority and the Assignee shall execute any and all appropriate legal documents, N
instruments and certificates to effect such release. After any such release, the term "Leased
Property" shall be deemed to include only the remaining portion of the Leased Property. In
addition, upon the payment in full, prepayment or defeasance of all of the Lease Payments, the J
Leased Property shall also be released as described in this paragraph.
9. Assignments and Subleases. C
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The Authority may not assign its rights under this Site Lease or sublet the Leased
Property, except as provided in the Lease and the Assignment Agreement, without the prior a
written consent of the City and the Assignee.
10. Right of Entry.
The City reserves the right for any of its duly authorized representatives to enter upon the
Leased Property at any reasonable time to inspect the same or to make any repairs,
improvements or changes necessary for the preservation thereof.
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11. Termination.
The Authority agrees, upon the termination of this Site Lease, to quit and surrender the
Leased Property in the same good order and condition as the same were in at the time of
commencement of the term hereunder, reasonable wear and tear excepted, and agrees that any
permanent improvements and structures existing upon the Leased Property at the time of the
termination of this Site Lease shall remain thereon and title thereto shall vest in the City.
12. Default.
In the event the Authority shall be in default in the performance of any obligation on its
part to be performed under the terms of this Site Lease, which default continues for thirty (30)
days following notice and demand for correction thereof to the Authority, the City may exercise
any and all remedies granted by law, except that no merger of this Site Lease and of the Lease
shall be deemed to occur as a result thereof; provided, however, that so long as any of the Lease
Payments are outstanding and unpaid in accordance with the terms thereof, the Lease Payments
assigned by the Authority to the Assignee under the Assignment Agreement shall continue to be
paid to the Assignee; and provided further, that under no circumstances shall the City have the
right to terminate this Site Lease, or to eject the Authority from the premises, following the
occurrence and during the continuance of an event of default. The City's sole remedy shall be
that of specific performance.
13. Enjoyment.
The Authority at all times during the term of this Site Lease shall peaceably and quietly
have, hold and enjoy all of the Leased Property, subject to the provisions of the Lease.
14. Waiver of Personal Liability.
All liabilities under this Site Lease on the part of the Authority are solely liabilities of the
Authority, and the City hereby releases each and every, member, director and officer of the N
Authority of and from any personal or individual liability under this Site Lease. No member,
director or officer of the Authority shall at any time or under any circumstances be individually N
or personally liable under this Site Lease for anything done or omitted to be done by the
Authority hereunder.
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15. Taxes.
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The City covenants and agrees to pay any and all assessments of any kind or character
and also all taxes, including possessory interest taxes, levied or assessed upon the Leased w
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16. Eminent Domain.
In the event the whole or any part of the Leased Property shall be taken by eminent
domain proceedings, the interest of the Authority shall be recognized and is hereby determined
to be the amount of the then outstanding Lease Payments, and the balance of the award, if any,
shall be paid to the City.
Packet Pg. 243;
15.c
17. Partial Invalidity.
If any one or more of the terms, provisions, covenants or conditions of this Site Lease
shall to any extent be declared invalid, unenforceable, void or voidable for any reason
whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes
final, none of the remaining terms, provisions, covenants and conditions of this Site Lease shall
be affected thereby, and each provision of this Site Lease shall be valid and enforceable to the
fullest extent permitted by law.
18. Notices.
All notices, statements, demands, consents, approvals, authorizations, offers,
designations, requests or other communications hereunder by either party to the other shall be in
writing and shall be sufficiently given and served upon the other party if delivered personally or
if mailed by United States registered mail, return receipt requested, postage prepaid, and, if to the
City, addressed to the City of Santa Clarita, 23920 Valencia Boulevard, Santa Clarita, California
91355, Attention: City Manager; and if to the Authority, addressed to Santa Clarita Public
Financing Authority, 23920 Valencia Boulevard, Santa Clarita, California 91355 Attention:
Executive Director, or to such other addresses as the respective parties may from time to time
designate by notice in writing.
19. Amendment.
This Site Lease may not be altered, modified or amended except in order to (i) permit the
substitution of Leased Property pursuant to Section 3.7 of the Lease and (ii) modify (but only in
accordance with the provisions of Sections 7 or 8 hereof) or correct the description of the Site of
the Leased Property.
20. Section Headings.
All Section headings contained herein are for convenience of reference only and are not N
intended to define or limit the scope of any provision of this Site Lease.
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21. Governing Law.
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This Site Lease shall be governed by and construed in accordance with the laws of the CO
State of California applicable to contracts made and performed in such State.
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22. Counterparts.
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This Site Lease may be executed in any number of counterparts, each of which shall be Q
deemed to be an original but all together shall constitute but one and the same lease.
Packet Pg. 244;
15.c
IN WITNESS WHEREOF, the City and the Authority have caused this Site Lease to be
executed by their respective officers thereunto duly authorized, all on the day and year first
above written.
CITY OF SANTA CLARITA,
as Lessor
IN
Mayor
SANTA CLARITA PUBLIC FINANCING
AUTHORITY, as Lessee
Chair
EXHIBIT A
LEASED PROPERTY DESCRIPTION
THE SEWER IMPROVEMENTS OWNED BY THE CITY OF SANTA CLARITA,
LOS ANGELES COUNTY, CALIFORNIA (THE "CITY") TO PROVIDE FOR SEWAGE
DISPOSAL, INCLUDING ANY LAND, PIPELINES, APPURTENANT FACILITIES,
PUMPING FACILITIES AND OTHER FACILITIES NECESSARY FOR SUCH PURPOSE, N
BUT EXCLUDING HOUSE LATERALS OR COLLECTOR SEWERS NOT OWNED BY
THE CITY, ALL LOCATED WITHIN THE LIMITS OF THE CITY OF SANTA CLARITA,
LOS ANGELES COUNTY, CALIFORNIA, AS SUCH LIMITS OF THE CITY ARE
DESCRIBED AS FOLLOWS:?
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[SEE ATTACHED PAGES]
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EXHIBIT B
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AMENDMENT TO SITE LEASE
There is hereby subjected to the terms of that certain Site Lease, dated as of July 1, 2015
(the "Site Lease"), between Santa Clarita Public Financing Authority ("Authority") and the City
of Santa Clarita ("City") the following described property:
DESCRIPTION
(Check One)
The property described above is hereby deemed to be incorporated into Exhibit A
to the Site Lease and deemed to be added to the definition of Leased Property.
2. I, an Authorized Representative of the City, hereby certify that:
(1) the market value of the above-described property at least equals the market value
of the portion of the Leased Property for which it was substituted; and the fair rental value of the
portion of the Leased Property at least equals the portion of the Leased Property for which it was
substituted;
(2) the above-described property has similar or greater essentiality of use;
(3) the above-described property has a useful life at least equal to the remaining
useful life of the portion of the Leased Property for which it was substituted; and
(4) the above-described property will be used by the City for authorized public
purposes.
I, the Authorized Representative of the City, hereby certify that the new portion of the
Leased Property described herein is and shall be free and clear of all liens or claims of others,
except for the rights of the Authority under the Site Lease, and that the City will not otherwise
encumber title to such property while the Site Lease remains in effect.
CITY OF SANTA CLARITA
Authorized Representative
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15.d
2015 LEASE (PUBLIC FACILITIES - CIVIC CENTER LEASE REFINANCING)
Dated as of July 1, 2015
by and between
SANTA CLARITA PUBLIC FINANCING AUTHORITY,
as Lessor
and
CITY OF SANTA CLARITA,
as Lessee
THIS IS A FINANCING DOCUMENT:
NO DOCUMENT TRANSFER TAX IS DUE
PURSUANT TO GOVERNMENT CODE SECTION 27383
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Packet Pg'. 247
_15.d
ARTICLE I
DEFINITIONS AND EXHIBITS.................................................................... 2
Section 1.1
Definitions and Rules of Construction .................................................
2
Section1.2
Exhibits................................................................................................
6
ARTICLE II
REPRESENTATIONS AND COVENANTS ..................................................
6
Section 2.1
Representations and Covenants of City ...............................................
6
Section 2.2
Representations and Covenants of Authority ...................................... 8
ARTICLE III
DEPOSIT OF MONEYS; PAYMENT OF DELIVERY COSTS;
SUBSTITUTION AND REMOVAL.............................................................. 9
Section 3.1
Deposit and Application of Money ...................................................... 9
Section 3.2
Consideration; Subject Matter of the Lease .......................................
10
Section 3.3
Substitution of Alternate Leased Property and Release of
LeasedProperty.................................................................................
10
ARTICLE IV
AGREEMENT TO LEASE; TERMINATION OF LEASE; LEASE
PAYMENTS; TITLE TO THE LEASED PROPERTY ................................
12
Section4.1
Lease..................................................................................................
12
Section 4.2
Term of Agreement............................................................................
12
Section4.3
Lease Payments..................................................................................
12
Section 4.4
Prepayment From Net Insurance Proceeds ........................................
14
Section 4.5
Quiet Enjoyment................................................................................
15
Section 4.6
Title to the Leased Property...............................................................
15
Section 4.7
Additional Payments..........................................................................
16
ARTICLE V MAINTENANCE; TAXES; INSURANCE; AND OTHER
MATTERS.....................................................................................................
16
Section 5.1
Maintenance, Utilities, Taxes and Assessments ................................
16
Section 5.2
Modification of the Leased Property .................................................
17
Section 5.3
Public Liability and Property Damage and Workers'
Compensation Insurance....................................................................
18
Section 5.4
Fire and Extended Coverage Insurance and Theft Insurance ............
18
Section 5.5
General Insurance Provisions............................................................
19
Section5.6
Liens...................................................................................................
20
Section 5.7
Use of the Leased Property................................................................
20
Section5.8
Cooperation........................................................................................
20
Section5.9
Tax Covenants...................................................................................
20
ARTICLE VI DAMAGE AND DESTRUCTION; USE OF NET INSURANCE
PROCEEDS...................................................................................................
24
Section 6.1
Abatement of Lease Payments in Event of Loss of Use ....................
24
Section 6.2
Application of Net Insurance Proceeds ..............................................
25
Section 6.3
Excess Net Insurance Proceeds..........................................................
25
Section 6.4
Regulations and Laws........................................................................
25
Section 6.5
Repayment of Assignee.....................................................................
26
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15.d
ARTICLE VII
Section 7.1
Section 7.2
Section 7.3
Section 7.4
ARTICLE VIII
Section 8.1
Section 8.2
Section 8.3
DISCLAIMER OF WARRANTIES; ACCESS ............................................. 26
Disclaimer of Warranties................................................................... 26
City's Right to Enforce Warranties.................................................... 26
Access to the Leased Property........................................................... 26
Release and Indemnification Covenants ............................................ 27
ASSIGNMENT, SUBLEASING AND AMENDMENT
Assignment by the Authority ....................................
Assignment and Subleasing by the City ...................
Amendment of Lease ................................................
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES
........... 27
....................... 29
Section 9.1
Events of Default Defined.................................................................
29
Section 9.2
Remedies on Default..........................................................................
30
Section 9.3
No Remedy Exclusive........................................................................
32
Section 9.4
Agreement to Pay Attorneys' Fees and Expenses .............................
32
Section 9.5
No Additional Waiver Implied by One Waiver .................................
32
Section 9.6
Application of the Proceeds from the Sale or Lease of the
Further Assurances and Corrective Instruments ................................
Project or the Leased Property...........................................................
32
Section 9.7
Exercise of Remedies by Assignee ....................................................
32
ARTICLE X PREPAYMENT OF LEASE PAYMENTS AND PURCHASE OF
LEASED PROPERTY................................................................................... 32
Section 10.1 Security Deposit................................................................................. 32
Section 10.2 Mandatory Prepayment From Net Insurance Proceeds ..................... 33
ARTICLE XI MISCELLANEOUS...................................................................................... 33
Section 11.1 Notices---------------------------------------------------------------------------- - '11;
Section 11.2
Binding Effect....................................................................................
34
Section11.3
Severability........................................................................................
34
Section 11.4
Authority Not Liable..........................................................................
34
Section 11.5
Net -Net -Net Lease.............................................................................
34
Section 11.6
Further Assurances and Corrective Instruments ................................
34
Section 11.7
Execution in Counterparts..................................................................
34
Section11.8
Applicable Law..................................................................................
34
EXECUTION............................................................................................................................... 33
EXHIBIT A — DESCRIPTION OF LEASED PROPERTY ................................................... A-1
EXHIBIT B — SCHEDULE OF PRINCIPAL AND INTEREST COMPONENTS
OF LEASE PAYMENTS................................................................................B-1
2015 LEASE (PUBLIC FACILITIES - CIVIC CENTER LEASE REFINANCING)
THIS 2015 LEASE (PUBLIC FACILITIES - CIVIC CENTER LEASE
REFINANCING), dated as of July 1, 2015 (the "Lease"), by and between SANTA CLARITA
PUBLIC FINANCING AUTHORITY, a joint exercise of powers agency duly organized and
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15.d
existing under the laws of the State of California, as lessor, and its successors and assigns (the
"Authority"), and CITY OF SANTA CLARITA, a general law municipal corporation duly
organized and existing under the laws of the State of California, as lessee (the "City");
WITNESSETH:
WHEREAS, the City has previously authorized the execution, sale and delivery of the
City of Santa Clarita Refunding Certificates of Participation, (Public Facilities - Civic Center)
2005 Series (the "2005 Certificates"), in the aggregate principal amount of $17,700,000,
evidencing proportionate interests in lease payments (the "2005 Lease Payments") to be made by
the City pursuant to a Lease Agreement, dated as of July 1, 2005 (the "2005 Lease"), between
Authority, as lessor, and the City, as lessee, for the use and occupancy of sewer improvements
owned by the City and used within the City's sewer system, more specifically described in
Exhibit A hereto, as amended from time to time (the "Leased Property");
WHEREAS, the City wishes to refinance the 2005 Certificates and prepay the 2005
Lease Payments with the proceeds of a lease -leaseback transaction (the "Proceeds"); and
WHEREAS, the City now proposes to lease pursuant to this Lease the Leased Property,
that is the subject matter of that certain Site Lease, by and between the City and the Authority,
dated as of July 1, 2015 (the "Site Lease"), for lease payments with respect to which will be
general fund obligations of the City (the "Lease Payments"); and
WHEREAS, in order to facilitate the delivery of the Proceeds for the benefit of the City,
the Authority will assign all its rights to the Leased Property, the Lease Payments, the Site Lease
and this Lease to , as assignee of the obligations of the City (the
"Assignee") evidenced and represented by the Lease Payments and Additional Payments (as
defined herein); and
WHEREAS, a portion of the Proceeds, along with a monetary contribution from the City, ti
will be deposited with The Bank of New York Mellon Trust Company, N.A., as escrow bank
(the "Escrow Bank") pursuant to an Escrow Agreement, dated as of July 1, 2015 (the "Escrow N
Agreement"), by and between the City and the Escrow Bank, for the prepayment of the 2005
Lease Payments and the defeasance of the 2005 Certificates.
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NOW, THEREFORE, in consideration of the premises and of the commitments made s
hereunder and for the good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows: a
NOW, THEREFORE, in consideration of the above premises and of the mutual
covenants hereinafter contained and for other good and valuable consideration, the parties hereto
agree as follows:
Packet Pg.250
15.d
ARTICLE I
DEFINITIONS AND EXHIBITS
Section 1.1 Definitions and Rules of Construction. Unless the context otherwise
requires, the capitalized terms used herein shall, for all purposes of this Lease, have the meanings
herein specified. Unless the context otherwise indicates, words importing the singular number
shall include the plural number and vice versa. The terms "hereby," "hereof," "hereto,"
"herein," "hereunder" and any similar terms, as used in this Lease, refer to this Lease as a whole.
Whenever reference is made in this Lease to the Site Lease or the Assignment Agreement, such
reference shall, unless the context otherwise requires, be assumed to be made to those
Agreements, which are entered into or relating to the City and this Lease.
"Additional Payments" means those payments due as provided in Section 4.7.
"Assignment Agreement" means the Assignment Agreement, dated as of the date hereof,
by and between the Lessor and , and any duly authorized and executed
amendments or supplements thereto.
"Authorized Representative" means the person or persons designated in a certification
provided by the City at or following the Closing Date to represent the City in connection
herewith.
"Business Day" means any day (other than a Saturday or Sunday) on which banks and
trust companies generally in New York, New York, or Los Angeles, California are not
authorized or required to remain closed and on which the New York Stock Exchange is not
closed.
"Closing Date" means the date upon which the Proceeds are paid by the Assignee to or
upon the order of the City.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Delivery Costs" means all items of expense directly or indirectly payable by or m
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reimbursable to the City, relating to the execution and delivery of this Lease and the Site Lease,
including but not limited to filing and recording costs relating thereto, settlement costs, printing
costs, reproduction and binding costs, financing discounts, charges and expenses, legal fees and
charges, financing and other professional consultant fees, and other charges, expenses and fees in w
connection with the foregoing. Q
"Delivery Costs Fund" means the fund by that name established pursuant to Section 3.2
hereof.
"Escrow Agreement" means the Escrow Agreement, dated as of July 1, 2015, by and
between the City and The Bank of New York Mellon Trust Company, N.A., as escrow bank and
trustee for the 2005 Certificates.
Packet Pg 251;
"Federal Securities" means any of the following:
1. Cash
2. U.S. Treasury Certificates, Notes and Bonds (including State and Local
Government Series — "SLGS").
3. Direct obligations of the Treasury which have been stripped by the
Treasury itself, CATS, TIGRS and similar securities.
4. Resolution Funding Corp. (REFCORP) Only the interest component of
REFCORP strips which have been stripped by request to the Federal _W
Reserve Bank of New York in book entry form are acceptable.
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5. Pre -refunded municipal bonds rated "Aaa" by Moody's and "AAA" by c
S&P. If however, the issue is only rated by S&P (i.e., there is no Moody's
rating), then the pre -refunded bonds must have been pre -refunded with o
cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre 0
refunded municipals to satisfy this condition. 0
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6. Obligations issued by the following agencies which are backed by the full M
faith and credit of the U.S.: W
a. U.S. Export -Import Bank (Eximbank) O
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Direct obligations or fully guaranteed certificates of beneficial v
ownership a
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b. Farmers Home Administration (FmHA) w
Certificates of beneficial ownership N
C. Federal Financing Bank
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Participation certificates
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e. U.S. Maritime Administration
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Guaranteed Title XI financing
f. U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
Packet Pg. 252
15.d
New Communities Debentures — U.S. government guaranteed
debentures
U.S. Public Housing Notes and Bonds — U.S. government
guaranteed public housing notes and bonds
"Interest Component" means the portion of the Lease Payments designated as interest as
shown on Exhibit B hereto.
"Lease Payment" means the total amount of any Lease Payment due hereunder, which
shall include the Principal Component and the Interest Component.
"Leased Property" means that certain sewer improvements which is or will become the
subject of this Lease, and, in the case of real property only, comprising those facilities described
in the Site Lease and Exhibit A hereto, as it may be modified from time to time.
"Net Insurance Proceeds" means any net proceeds of insurance or condemnation
proceeds paid with respect to the affected portion of Leased Property remaining after payment
therefrom of any expenses (including attorneys' fees) incurred in the collection thereof, but shall
not include proceeds of any rental interruption insurance.
"Payment Date" means each April 1 and October 1, commencing April, 2015, as set forth
on Exhibit B hereto.
"Permitted Encumbrances" means, with respect to the Leased Property, as of any
particular time: (i) liens for general ad valorem taxes and assessments, if any, not then
delinquent; (ii) this Lease; (iii) the Site Lease; and (iv) the Assignment Agreement.
"Prepayment" means any payment made by City pursuant to Article X hereof, as a
prepayment of Lease Payments.
"Prepayment Fund" means the fund by that name established and held by the City
pursuant to Section 4.4 hereof.
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"Principal Component" means the portion of the Lease Payments designated as principal J
represented by the Lease Payments.
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"Related Documents" means this Lease, the Assignment Agreement, the Site Lease, the M
Escrow Agreement and any document or instrument related thereto. .a
"Removal" means the release of all or a portion of the Leased Property from the
leasehold hereof and of the Site Lease as provided in Section 3.5 hereof.
"Substitution" means the release of all or a portion of the Leased Property from the
leasehold hereof and of the Site Lease, and the lease of substituted real property and buildings
and other improvements hereunder and under the Site Lease as provided in Section 3.5 hereof.
Packet Pg. 253
15.d
"2005 Certificates" means the $17,700,000 City of Santa Clarita Refunding Certificates
of Participation (Public Facilities — Civic Center) 2005 Series.
Section 1.2 Exhibits. The following Exhibits are attached to, and by this reference
incorporated into and made a part of, this Lease:
Exhibit A: Description of Leased Property.
Exhibit B: Schedule of Principal and Interest Components of Lease Payments.
ARTICLE II
REPRESENTATIONS AND COVENANTS
Section 2.1 Representations and Covenants of City. The City represents and warrants
to the Authority as follows:
(a) Due Organization and Existence. The City is a general law municipal
corporation duly organized and existing under the laws of the State of California and a political
subdivision of the State of California within the meaning of section 103(c) of the Code.
(b) Authorization; Enforceability. The Constitution and the laws of the State
authorize the City to enter into this Lease and the Site Lease (collectively, the "Agreements")
and to enter into the transactions contemplated by and to carry out its obligations under all of the
Agreements, and the City has, concurrently with the execution hereof, duly authorized and
executed all of the Agreements. The Agreements constitute legal, valid and binding obligations
of the City, enforceable in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles affecting the rights of creditors generally.
(c) No Defaults. To the best knowledge of the City, neither the execution and ti
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delivery of the Agreements, nor the fulfillment of or compliance with the terms and conditions
thereof, nor the consummation of the transactions contemplated thereby, conflicts with or results
in a breach of the terms, conditions or provisions of any agreement or instrument to which the
City is now a party or by which the City is bound, or constitutes a default under any of the
foregoing, or results in the creation or imposition of any prohibited lien, charge or encumbrance
upon any of the property or assets of the City.
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(d) Execution and Delivery. The City has taken all actions required to a
authorize and execute this Lease in accordance with the Constitution and laws of the State.
(e) Audited Financial Statements. The City covenants to deliver to the
Assignee copies of its audited annual financial statements no later than 270 days following the
end of each Fiscal Year of the City and copies of its approved annual budgets and any updates
thereof within ten (10) days following the date of approval thereof. Such audited financial
statements shall include a balance sheet, a statement of revenues and expenses and changes in
fund balances, and a cash flow statement, together with the auditor's opinion and any notes or
schedules to the financial statements.
Packet Pg. 254
15.d
(f) Essentiality of Leased Property. The City represents that the Leased
Property is essential to the operations of the City as of the date hereof and as of the Closing Date.
The City further represents that, to the best of its knowledge, there are no liens on the Leased
Property superior to the lien evidenced by the Site Lease and this Lease.
(g) Other Obligations. The City covenants and agrees that, during the term
hereof, it will not issue or cause to be delivered additional obligations secured in whole or in part
by the Leased Property without the prior consent of the Assignee; provided, that certificates of
participation to be delivered for the purpose of refunding the obligations of the City hereunder, in
whole, shall be exempt from the requirement for prior written consent of the Assignee.
(h) Consents and Approvals. No consent, permission, authorization, order or
license of, or filing or registration with, any governmental authority is necessary in connection
with the execution and delivery of the Site Lease and this Lease, or the consummation of any
transaction therein and herein contemplated, except as have been obtained or made and as are in
full force and effect.
(i) No Litigation. There is no action, suit, proceeding, inquiry or v
investigation before or by any court or federal, state, municipal or other governmental authority z
pending or, to the knowledge of the City after reasonable investigation, threatened against or Z
affecting the City or the assets, properties or operations of the City which, if determined IL
adversely to the City or its interests, would have a material and adverse effect upon the W
consummation of the transactions contemplated by or the validity of the Site Lease and this U.
Lease or upon the financial condition, assets, properties or operations of the City, and the City is
not in default with respect to any order or decree of any court or any order, regulation or demand Z
of any federal, state, municipal or other governmental authority, which default might have Q
consequences that would materially and adversely affect the consummation of the transactions z
contemplated by the Site Lease or this Lease, or the financial condition, assets, properties or W
operations of the City.
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(j) Sufficient Funds. The City reasonably believes that sufficient funds will
be available to the City in time and amount sufficient to make all Lease Payments and all other
amounts required to be paid pursuant to this Lease.
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(k) No Defaults. The City has never failed to appropriate nor defaulted in c
any material respect under any of its payment or performance obligations under any financing E
lease of the same general nature as this Lease, or under any of its bonds, notes or other
obligations.. Q
(1) Use of the Leased Property. During the term of this Lease, the Leased
Property will be used by the City only for the purpose of performing one or more governmental
or proprietary functions of the City consistent with the permissible scope of the City's authority.
Section 2.2 Representations and Covenants of Authority. The Authority represents
and covenants to the City as follows:
(a) Due Organization and Existence; Enforceability. The Authority is a joint
exercise of powers agency duly organized and existing under the laws of the State, and has the
Packet Pg. 255
power to enter into this Lease, the Assignment Agreement and the Site Lease; is possessed of full
power to own and hold real and personal property, and to lease and sell the same; and has duly
authorized the execution and delivery of all of the aforesaid Agreements. This Lease, the
Assignment Agreement and the Site Lease constitute the legal, valid and binding obligations of
the Authority, enforceable in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles affecting the rights of creditors generally.
(b) No Encumbrances. The Authority will not pledge or assign the Leased
Property or the Lease Payments or other amounts derived from the Leased Property and from its
other rights under this Lease or subject the Leased Property to any other lease; except that the
Authority may make such assignments or create, assume or suffer to exist Permitted
Encumbrances provided under the terms of this Lease or the Assignment Agreement.
(c) No Violations. Neither the execution and delivery of the Agreements, nor
the fulfillment of or compliance with the terms and conditions thereof, nor the consummation of
the transactions contemplated thereby, conflicts with or results in a breach of the terms,
conditions or provisions of any agreement or instrument to which the Authority is now a party or
by which the Authority is bound, or constitutes a default under any of the foregoing, or results in
the creation or imposition of any prohibited lien, charge or encumbrance whatsoever upon any of
the property or assets of the Authority, or upon the Leased Property.
(d) No Assignment. Except as provided herein and in the Assignment
Agreement, the Authority will not assign this Lease, its right to receive Lease Payments from the
City, or its duties and obligations hereunder to any other person, firm or corporation so as to
impair or violate the representations, covenants and warranties contained in this Section.
ARTICLE III
DEPOSIT OF MONEYS;
PAYMENT OF DELIVERY COSTS; SUBSTITUTION AND REMOVAL
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Section 3.1 Deposit and Application of Money. In order to induce the City to lease c
the Leased Property from the Authority and to assure the City that the moneys needed to
refinance the 2005 Certificates and prepay the lease payments with respect to the 2005
Certificates will be available for such purpose without delay, the Authority shall, on the Closing E
Date, cause moneys to be deposited with the City into the Delivery Costs Fund and the Escrow
Fund as follows: (1) an amount equal to $ shall be deposited into the Q
Delivery Costs Fund for payment of Delivery Costs, and (2) the remainder of the Proceeds shall
be deposited into the Escrow Fund created under the Escrow Agreement and used as provided
therein.
Section 3.2 Establishment and Use of Delivery Costs Fund. The City shall establish a
special trust fund designated as the "City of Santa Clarita 2015 Delivery Costs Fund" (the
"Delivery Costs Fund") shall keep such fund separate and apart from all other funds and moneys
held by it and shall administer such fund as herein provided. The City shall close the Delivery
Costs Fund on the earlier of the day the last amounts are withdrawn therefrom or the day which
Packet Pg. 256
15.d
is 120 days after the Closing Date. Any balance remaining on deposit in the Delivery Costs
Fund on the day which is 120 days after the Closing Date shall be transferred to the Lease
Payment Fund and applied as a credit against the next Lease Payment due from the City. On or
after the Closing Date, the City shall disburse moneys in the Delivery Costs Fund upon receipt of
invoices for Delivery Costs to each person, firm or agency qualified for such payment.
Section 3.3 Consideration; Subject Matter of the Lease. The Leased Property is the
subject of the Site Lease and shall be deemed to be and is subleased under this Lease. The City
has leased the Leased Property to the Authority in consideration, in part, for the Authority's
promise to cause the refinancing of the 2005 Certificates.
Section 3.4 Substitution of Alternate Leased Property and Release of Leased Property.
The City shall, with the prior written consent of the Assignee, have the right to substitute
alternate real property and improvements for the Leased Property or add additional real property
to the Leased Property listed in Exhibit A, but only by providing the Assignee with a supplement
to this Lease substantially in the form attached as Exhibit B to the Site Lease. All costs and
expenses incurred in connection with any such substitution or addition shall be borne by the City.
Notwithstanding any substitution or addition pursuant to this Section, there shall be no reduction
in or abatement of the Lease Payments due from the City hereunder as a result of such
substitution.
In the event of damage or destruction of the Leased Property due to earthquake or other
uninsured casualty for which rental interruption insurance is not available, and the remaining fair
value of the undamaged Leased Property is less than equal to the remaining Lease Payments, the
City shall, to the extent permitted by law, substitute under the Site Lease and this Lease one or
more parcels or improvements of unimpaired and unencumbered real property, the fair rental
value of which, together with the fair value of the undamaged Leased Property, for each
remaining rental period and in the aggregate, shall be at least equal to the remaining Lease
Payments hereunder.
If the City substitutes any alternate real property and improvements for the Leased
Property or adds additional components to the Leased Property ("Substituted Leased Property"),
it must first obtain the written consent of the Assignee. The City shall not substitute alternate
real property for the Leased Property, without first obtaining or delivering (i) an opinion of
Special Counsel to the effect that such substitution or addition shall not, in and of itself, impair
the exclusion from gross income of the Interest Component, and (ii) a certificate of the City (A)
demonstrating that the useful life of the Leased Property after Substitution or Removal equals or
exceeds the remaining term of the obligations of the City, as established by Exhibit B hereto, (B)
stating that the Leased Property after a Substitution or Removal is as essential to the operations
of the City as was the Leased Property immediately prior to such Substitution or Removal, (C)
demonstrating the insured value of the substituted property is at least equal to that released, (D)
certifying that the property that will constitute the Leased Property after the substitution,
addition, or deletion has a fair rental value, for each rental period and in the aggregate, that is at
least equal to the remaining Lease Payments for each rental period and in the aggregate, and (E)
certifying that the property is not subject to an event giving rise to an abatement of Lease
Payments under Article VI hereof. Any Substituted Leased Property shall be subject to the same
insurance coverages as are required hereunder for the Leased Property, except that the City shall
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additionally deliver a policy of title insurance for any Substituted Leased Property constituting a
parcel of land if required by the Assignee and reasonably available to the City.
In the event that the City effects a Substitution of all or a portion of the Leased Property
hereunder, all or a designated portion of the Leased Property formerly subjected to this Lease
shall be released from the lien hereof upon receipt by the Assignee of. (a) the written request of
the City to that effect; (b) an opinion of Special Counsel to the effect that such release will have
no material adverse effect upon the Assignee; and (c) the prior written consent of the Assignee.
ARTICLE IV
AGREEMENT TO LEASE; TERMINATION OF
LEASE; LEASE PAYMENTS; TITLE TO THE LEASED PROPERTY
Section 4.1 Lease. The Authority hereby leases the Leased Property to the City, and
the City hereby leases the Leased Property from the Authority, upon the terms and conditions set
forth in this Lease.
Section 4.2 Term of Agreement. The "Term" of this Lease shall mean the duration of z
Lease Payments due from the City under Exhibit B, which shall commence on the Closing Date, o
and shall continue until the date the last Lease Payment is paid in full, unless earlier terminated LL
in accordance with the following paragraph. The City hereby represents, warrants and covenants w
that the useful life of the Leased Property is at least equal to the Term hereof. If by October 1, U.
2020, the Lease Payments shall not be fully paid, or if the Lease Payments shall have been 0
abated at any time and for any reason, then said Term of this Lease shall be extended until ten Z
(10) days after all Lease Payments shall be fully paid, except that the Term of this Lease shall in z
no event be extended beyond the term of the Site Lease. If all Lease Payments and all z
Additional Payments shall be fully paid, the Term of this Lease shall end ten (10) days thereafter w
or ten (10) days after written notice by the City to the Authority, whichever is earlier; following
the termination of this Lease as aforesaid, the City shall have no further obligation of repayment
as to the Lease or expenses and costs, except that the obligation of the City to pay rebatable
arbitrage in accordance with the requirements of the Tax Certificate shall continue following the
termination of this Lease. If, however, all Lease Payments and all Additional Payments shall not
have been fully paid, the Term of this Lease and the Site Lease shall be extended until such
payments are made in full, but shall in no event extend beyond October 1, 2030.
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The City holds fee title to and has possession of the Leased Property as of the date hereof.
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The Term of this Lease will end upon the earliest of any of the following events: (a) a a
default by the City and the Assignee's subsequent election to terminate this Lease under Section
9.2(b); (b) the payment by the City of all remaining Lease Payments required under Section 4.3
and any Additional Payments required under Section 4.7 hereof; (c) the deposit of moneys or
Federal Securities in amounts sufficient to pay all of the Lease Payments as the same shall
become due, as provided by Section 10.1; or (d) upon the exercise by the City of its option to
purchase the entire interest of the Authority in the Leased Property as provided in Section 4.6(c).
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Section 4.3 Lease Payments. Subject to the provisions of Article VI (regarding loss of
use of the Leased Property) and Article X (regarding prepayment of Lease Payments by the City,
or the exercise by the City of its option to purchase the entire interest of the Authority in the
Leased Property), the City agrees to pay to the Authority, its successors and assigns, as rental for
the use and possession of the Leased Property, the Interest Component computed in accordance
with the further provisions of this Section, to be due and payable prior to each Payment Date.
In addition, the City agrees to pay to the Authority, its successors and assigns, as such
rental, the Principal Component evidenced and represented by the Lease Payments on each
Payment Date specified for the payment of such principal on Exhibit B.
Lease Payments shall be paid from any source of legally available funds of the City, and
so long as the Leased Property, or a suff cient portion of the Leased Property, is available for the
City's use, the City covenants to take such action as may be necessary to include all Lease
Payments due hereunder in its budgets and to make the necessary appropriations for all such
Lease Payments, which covenants of the City shall be deemed to be, and shall be, ministerial
duties imposed by law, and it shall be the duty of each and every public official of the City to
take such action and do such things as are required by law in the performance of the official duty
of such officials to enable the City to carry out and perform the covenants made by the City
hereunder. During the Term hereof, the City will furnish to the Assignee, within thirty (30) days
of the beginning of each Fiscal Year, a certificate of the Authorized Representative to the effect
that the Lease Payments due in that fiscal period have been included in the budget approved by
the City for such fiscal period.
The covenants on the part of the City herein contained shall be deemed to be and shall be
construed to be duties imposed by law and it shall be the duty of each and every public official of
the City to take such action and do such things as are required by law in the performance of the
official duty of such officials to enable the City to carry out and perform the covenants and
agreements in this Lease agreed to be carried out and performed by the City.
(a) Establishment of Prepayment Fund.
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The City shall establish a special trust fund designated as the "City of Santa Clarita M
Prepayment Fund" (the "Prepayment Fund"); shall keep such fund separate and apart from allJ J
other funds and moneys held by it; and shall administer such fund as herein provided. Prior to
any Prepayment, an amount at least equal to the amount necessary to prepay the Lease Payments E
shall be deposited by the City into the Prepayment Fund. Prepayments of the Lease Payments
shall be made from moneys of the City available therefor, including amounts on deposit in the Q
Prepayment Fund. Any such Prepayments in advance of their maturity shall be made on the date
designated for Prepayment.
(b) Terms and Effect of Prepayment and Purchase of the Leased Property.
(1) Terms for Optional Prepayment. The City may prepay Lease
Payments at the times and in the amounts set forth in Exhibit B hereto by providing notice to the
Assignee no later than the thirtieth (30th) day prior to the date scheduled for prepayment.
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(2) In Whole; Exercise of Purchase Option. In the event that the City
exercises its option to purchase the entire interest of the Authority in the Leased Property in
accordance with Section 4.6(c) hereof by prepaying all remaining Lease Payments, either by
irrevocably making a security deposit with the Assignee as provided in Section 10.1 or from Net
Insurance Proceeds as provided in Section 10.2 and paying all amounts owed to the Assignee,
the City's obligations under this Lease shall thereupon cease and terminate, including but not
limited to the City's obligations to continue to pay Lease Payments under this Section.
(3) In Part. In the event the City prepays less than all of the remaining
Principal Components of the Lease Payments from Net Insurance Proceeds pursuant to Section
10.2, the amount of such prepayment shall be applied over the remaining Term in inverse order
of maturity to reduce the Principal Components of Lease Payments. Upon prepayment, the
Assignee shall prepare (or cause to be prepared) a revised schedule of Lease Payments, which
schedule shall take into account such prepayment and shall be and become for all purposes
thereafter the revised and amended Exhibit B attached hereto. The Assignee shall be provided
with written evidence that the revised schedule of Lease Payments are sufficient to pay the
Principal Components and Interest Components as and when due.
(c) Rate of Overdue Payments. If the City should fail to make any of the
payments required in this Section, the payments in default shall continue as obligations of the
City until the amount in default shall have been fully paid, and the City agrees to pay the same
with interest thereon, to the extent permitted by law, from the date such amount was originally
payable at the interest rate represented by the Interest Component, plus 5% per annum.
(d) Fair Rental Value. The Lease Payments shall be paid by the City in
consideration of the right of possession of, and the continued quiet use and enjoyment of, the
Leased Property during each such period for which said payments have been paid. The parties
hereto have agreed and determined that such payments do not exceed the fair rental value of such
Leased Property. In making such determination, consideration has been given to the replacement
cost of the Leased Property and the uses and purposes which may be served by the Leased
Property and the benefits therefrom which will accrue to the City and the general public.
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(e) Assignment. The City understands and agrees that, pursuant to the
Assignment Agreement, the Authority has assigned its right to receive and collect Lease
Payments, Additional Payments and prepayments thereof to the Assignee, and the City assents to
such assignment. The Authority hereby directs the City, and the City hereby agrees to pay to the s
Assignee at such place as the Assignee shall direct in writing, all payments payable by the City
pursuant to this Section, Section 4.7 and Article X. a
(f) Abatement. Lease Payments shall be subject to abatement as provided in
Section 6.1.
Section 4.4 Prepayment From Net Insurance Proceeds. Upon the receipt of Net
Insurance Proceeds, the City shall promptly deposit such moneys into the Net Insurance
Proceeds Fund and shall promptly provide notice thereof to the Assignee. The City shall then
determine whether to retain the Net Insurance Proceeds in the Net Insurance Proceeds Fund to be
used to replace or repair the Leased Property, or to deposit such Net Insurance Proceeds into
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either (i) the Prepayment Fund, or (ii) apply such moneys as a credit against the Lease Payments.
The Lease Payments are subject to prepayment on any Payment Date in whole or in part in an
amount not greater than the amount of Net Insurance Proceeds with respect to the condemned,
damaged or destroyed Leased Property, at a prepayment price equal to the Principal Component
to be prepaid, together with accrued interest to the date fixed for prepayment, without premium.
In the event that Net Insurance Proceeds are sufficient, together with other moneys as
may be provided by the City, to prepay the Lease Payments in full, payments from Net Insurance
Proceeds may be applied to the Prepayment of Lease Payments without the further consent of the
Assignee; if such Net Insurance Proceeds are less than the amount necessary to prepay the Lease
Payments in full, no prepayment may be effected hereunder without the prior written consent of
the Assignee.
In the event the City elects to repair or replace the Leased Premises with Net Insurance
Proceeds and does not receive sufficient Net Insurance Proceeds for that purpose, the City shall
provide sufficient funds, if necessary, in excess of such Net Insurance Proceeds to repair or
replace the Leased Property and to make Lease Payments pursuant to the Lease.
(b) The City shall be permitted to request the replacement or repair of the Leased
Property only if (i) the Net Insurance Proceeds available for such purpose, together with any
other funds supplied by the City for such purpose, are sufficient therefor, (ii) in the event that
damage or destruction results in an abatement of Lease Payments, the Authorized Representative
certifies and covenants to the Assignee that such replacement or repair can be fully completed
within a period not in excess of the period in which rental interruption insurance proceeds will be
available to pay in full all Lease Payments coming due during such period as described in
Section 5.5 of the Lease, or (iii) such requirements are waived by the Assignee.
Section 4.5 Quiet Enjoyment. During the term of this Lease, the Authority shall w
provide the City with quiet use and enjoyment of the Leased Property, and the City shall during
such term peaceably and quietly have and hold and enjoy the Leased Property, without suit,
trouble or hindrance from the Authority, or any person or entity claiming under or through the r
Authority except as expressly set forth in this Lease. The Authority shall, at the request and
expense of the City, join in any legal action in which the City asserts its right to such possession
and enjoyment to the extent the Authority may lawfully do so. Notwithstanding the foregoing, -'
the Authority shall have the right to inspect the Leased Property as provided in Section 7.3.
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Section 4.6 Title to the Leased Property.
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(a) Authority Holds Leasehold Interest During Term. The City represents that a
there are no encumbrances on the Leased Property as of the date hereof. During the term of this
Lease, the Authority shall, pursuant to the Site Lease, hold a leasehold interest in the Leased
Property and any and all additions which comprise repairs, replacements or modifications
thereto. The City shall take any and all actions, including but not limited to executing and filing
any and all documents, reasonably required to maintain and evidence the Authority's interest in
the Leased Property, at all times during the Term of this Lease.
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(b) Title Transferred to City at End of Term. Upon expiration of the Term as
set forth in Section 4.2, unless such expiration occurs pursuant to a default by the City and the
Authority has elected to terminate this Lease under Section 9.2(b), all right, title and interest of
the Authority in and to all of the Leased Property shall be transferred to and vest in the City,
without the necessity of any additional document of transfer, except that the Authority shall
authorize, execute and deliver to the City any documents required to transfer all right title and
interest of the Authority to such real property or equipment to the City.
(c) Option to Purchase. The City may exercise an option to purchase the
entire interest of the Authority in the Leased Property by irrevocably making a security deposit
with the Assignee as provided in Section 10.1 or from Net Insurance Proceeds as provided in
Section 10.3, by paying the purchase price therefor in the form of moneys or Federal Securities,
or a combination thereof, in an aggregate amount sufficient to provide for the payment of all of
the Principal Component and the Interest Component of the total Lease Payments, as and when
due, taking into account investment income to be earned on the deposit of such moneys and
investments whereupon all right, title and interest of the Authority in and to the Leased Property
shall vest in the City without the necessity of any additional document of transfer. In any such
event, if necessary, the Authority shall authorize, execute and deliver to the City any documents
reasonably requested by the City to terminate the lien on the Leased Property under this Lease in
order to confirm such vesting of title in the City.
Section 4.7 Additional Pam. As Additional Payments, the City shall also pay
such amounts as shall be required from time to time for the payment of all administrative costs of
the Authority relating to the Leased Property or the execution and delivery of this Lease,
including, without limitation, all expenses, compensation or other charges and indemnification of
the Assignee payable by the City, taxes of any sort whatsoever payable by the Authority as a
result of its ownership of the Leased Property or its undertaking of the transactions contemplated
herein or, as may be related to this Lease, fees of auditors, accountants, Rebate Consultants,
attorneys or engineers, and all other necessary administrative costs of the Authority or charges
required to be paid by it in order to maintain its existence or to comply with the terms hereof or
to defend the Authority and its members or the Assignee.
Such Additional Payments shall be billed to the City by the Authority or by the Assignee
on behalf of the Authority from time to time, together with a statement certifying that the amount
billed has been paid by the Authority or by the Assignee on behalf of the Authority for one or
more of the items above described, or that such amount is then payable by the Authority or the
Assignee, as designated on the invoice to the City, within fifteen (15) days after receipt of the
invoice by the City.
Additional Payments due under this Section shall be paid by the City directly to the
person or persons to whom such amounts shall be payable. The City shall pay all such amounts
when due or within ten (10) days after notice in writing from the Authority to the City stating the
amount of Additional Payments then due and payable and the purpose thereof.
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ARTICLE V
MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS
Section 5.1 Maintenance Utilities Taxes and Assessments. Throughout the Term of
this Lease, as part of the consideration for the rental of the Leased Property, all repair and
maintenance of such Leased Property shall be the responsibility of the City, and the City shall
pay for or otherwise arrange for the payment of the cost of the repair and replacement of the
Leased Property resulting from ordinary wear and tear or want of care on the part of the City or
any sublessee thereof. In exchange for the Lease Payments herein provided, the Authority agrees
to provide only the Leased Property, as hereinbefore more specifically set forth. The Authority
shall have no responsibility for making improvements and additions to the Leased Property other
than as set forth herein.
The City shall also pay or cause to be paid any and all sales taxes or other taxes, levies,
charges, withholdings, assessments and governmental charges of any nature whatsoever, together
with any additions to taxes, penalties, fines or interest thereon charged against the Leased
Property, as Additional Payments under Section 4.7, including, without limitation, penalties,
fines or interest arising out of any delay or failure by the City to pay any of the foregoing or
failure to file or furnish to the Authority or the Assignee for filing in a timely manner any
returns, hereinafter levied or imposed against the Authority or the Leased Property, the rentals
and other payments required hereunder or any parts thereof or interests in the City or the
Authority or the Assignee therein by any governmental authority.
Section 5.2 Modification of the Leased Property.
(a) The City shall, with the prior written consent of the Assignee, at its own Z
expense, have the right to make additions, modifications, and improvements to the Leased w
Property if such improvements are necessary or beneficial for the use of the Leased Property.
All such additions, modifications and improvements shall thereafter comprise part of the Leased
Property and be subject to the provisions of this Lease. Such additions, modifications and r
improvements shall not in any way damage the Leased Property or cause them to be used for N
purposes other than those authorized under the provisions of State and federal law or in any way
which would impair the tax status of the Interest Components of the Lease Payments; and the —'
Leased Property, upon completion of any additions, modifications and improvements made
pursuant to this Section, shall be of a value in the aggregate which is not less than the value of E
the Leased Property immediately prior to the making of such additions, modifications and
improvements. Q
(b) The City will not permit any mechanic's or other lien to be established or
remain against the Leased Property for labor or materials furnished in connection with any
additions, modifications, remodeling or construction made by the City pursuant to this Section,
except Permitted Encumbrances; provided, that if any such lien is established and the City shall
first notify or cause to be notified the Authority and the Assignee of the City's intention to do so,
the City may in good faith contest any lien filed or established against the Leased Property, and
in such event may permit the liens so contested to remain undischarged and unsatisfied during
the period of such contest and any appeal therefrom and shall provide the Authority and the
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Assignee with full security against any loss or forfeiture which might arise from such
nonpayment with respect to the Leased Property, in form satisfactory to the Authority and the
Assignee. The Authority will cooperate fully in any such contest, upon the request and at the
expense of the City.
Section 5.3 Public Liability and Property Damage, Workers' Compensation and Title
Insurance.
(a) Public Liability and Property Damage. The City shall maintain or cause to
be maintained, throughout the Term of this Lease, a standard comprehensive general public
liability and property damage insurance policy or policies in protection of the City. Said policy
or policies shall provide for indemnification of the City against direct or contingent loss or
liability for damages for bodily and personal injury, death or property damage occasioned by
reason of the use or operation of the Leased Property. The property damage insurance coverage
for the Leased Property shall be in an amount at least equal to the replacement cost of the
buildings and improvements comprising the Leased Property, and shall be issued in the form of a
separate policy for the Leased Property, available to repair or rebuild the Leased Property under
all circumstances after the occurrence of an insured peril. Full payment of Net Insurance
Proceeds under such policy up to the policy dollar limit in connection with damage to the Leased
Property shall, under no circumstances, be contingent upon the degree of damage sustained at
other facilities owned or leased by the City. Such policy shall explicitly waive any co-insurance
penalty.
Said policies may be maintained in the form of insurance through a joint exercise of
powers authority created for such purpose or in the form of self-insurance by the City.
The Net Insurance Proceeds of such liability or property damage insurance shall be
applied toward extinguishment or satisfaction of the liability with respect to which the insurance
proceeds shall have been paid, including, where appropriate, the application of Net Insurance
Proceeds with respect to the prepayment of the Lease Payments.
(b) Workers' Compensation. The City shall also maintain workers' m
compensation insurance issued by a responsible carrier authorized under the laws of the State of d
California to insure against liability for compensation under the Workers' Compensation —J
Insurance and Safety Act now in force in California, or any act hereafter enacted as an d
amendment or supplement thereto or in lieu thereof. Workers' compensation insurance may, to E
the extent provided by law, be maintained in the form of self-insurance.
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Section 5.4 Fire and Extended Coverage Insurance and Theft Insurance. The City Q
shall maintain or cause to be maintained, throughout the term of this Lease as to the real property
described in Exhibit A hereto (excluding pipeline and underground facilities), insurance against
loss or damage to any or all of the Leased Property by fire and lighting, with extended coverage
and vandalism and malicious mischief insurance, and against losses occurring at or on the
Leased Property by theft. Said extended coverage insurance shall, as nearly as practicable, cover
loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other
hazards as are normally covered by such insurance.
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Such insurance shall be in an amount equal to the total Principal Component of Lease
Payments remaining unpaid or, if less, 100% of the replacement cost of the Leased Property (or,
if under separate policies, in an aggregate amount equal to 100% of the replacement cost of the
Leased Property). Such insurance may be maintained as part of or in conjunction with any other
fire and extended coverage insurance carried or required to be carried by the City, and may be
maintained in whole or in part in the form of insurance maintained through a joint exercise of
powers authority created for such purpose. The Net Insurance Proceeds of each policy or
coverage shall be applied as provided in Section 6.2(a) and (c).
Pursuant to these requirements, the existing Leased Property consists only of
underground pipeline and the City does not currently carry casualty insurance with
respect to the Leased Property.
Section 5.5 General Insurance Provisions.
(a) Form of Policies. All policies of insurance obtained under the
requirements of this Lease and any statements of self-insurance shall be in forms certified by an
insurance agent, broker or consultant to the City to comply with the provisions hereof. All
policies shall provide that the Assignee shall be given 30 days' prior written notice of each
expiration, any intended cancellation thereof or reduction of the coverage provided thereby. All
policies of insurance required by Section 5.4 shall provide that all proceeds thereunder shall be
payable to the City, with the Authority and the Assignee as additional loss payees, pursuant to a
lender's loss payable endorsement substantially in accordance with the form approved by the
Insurance Services Office and the California Banker's Association.
(b) Payment of Premiums. The City shall pay or cause to be paid when due
the premiums for all insurance policies required by this Lease to be delivered by the City.
(c) Evidence of Insurance. Upon request, the City shall deliver to the
Assignee a certificate to the effect that the requirements of Sections 5.3, 5.4 and 5.5 have been ti
satisfied, as well as certificates from the insurance carriers evidencing coverage and compliance
with Section 5.5(a). The Assignee may, but is not required to, conclusively rely upon any such
certificates received from the City. Upon request, the City shall provide a schedule, in such
detail as the Assignee may reasonably request, setting forth any insurance policies then in force
described in Sections 5.3 through 5.5 of this Lease, listing the names of the insurers which have
issued the policies, the policy limits thereof and the hazards and risks covered thereby, or the E
certificate of an Insurance Consultant providing similar information.
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(d) Self -Insurance Requirements. If the City chooses to self -insure for any of a
the risks described in Section 5.3 and 5.4 for which self-insurance is permitted, it must on at least
an annual basis in the month of October provide (i) evidence to the Assignee to the effect that the
City has segregated amounts meeting such requirements in a special insurance reserve dedicated
to the Leased Property; or (ii) a certificate of an Insurance Consultant to the Assignee to the
effect that the City's general insurance reserves are adequate to provide the required amount of
coverage. Any self-insurance provided to satisfy the requirements of this Article shall be
comprised of moneys held in a separate trust fund maintained by an independent trustee; in the
event any such self-insurance is, subsequent to the date hereof, discontinued, the actuarial
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soundness of the related claim reserve fund must be maintained, as evidenced by the annual
filings required above. The Assignee may conclusively rely upon such certificate.
Section 5.6 Liens. Except as provided in this Article (including without limitation,
Section 5.2(b)), the City shall not, directly or indirectly, create, incur, assume or suffer to exist
any mortgage, pledge, liens, charges, encumbrances or claims, as applicable, on or with respect
to the Leased Property, or any portion thereof, other than the respective rights of the Authority,
the Assignee and the City as herein provided and Permitted Encumbrances. Except as expressly
provided in this Article, the City shall promptly, at its own expense, take such action as may be
necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or
claim, for which it is responsible, if the same shall arise at any time. The City shall reimburse
the Authority for any expense incurred by it in order to discharge or remove any such mortgage,
pledge, lien, charge, encumbrance or claim.
Section 5.7 Use of the Leased Property. The City represents that it presently has an
immediate need for, and expects to make immediate use of the Leased Property, which need is
not temporary or expected to diminish in the foreseeable future. The City agrees not to give
priority in the appropriation of funds for the construction, acquisition or use of any additional
equipment or facilities, as the case may be, performing functions similar to that performed by the
Leased Property.
Section 5.8 Cooperation. The Authority shall cooperate fully with the City, at the
expense of the City, in filing any proof of loss with respect to any insurance policy maintained
pursuant to this Article.
Section 5.9 Tax Covenants.
(a) Special Definitions. When used in this Section, the following terms have
the following meanings:
"Code " means the Internal Revenue Code of 1986, as amended.
"Computation Date " has the meaning set forth in section 1.148-1(b) of the Tax U)
Regulations.
"Gross Proceeds" means any proceeds as defined in section 1.148-1(b) of the
Tax Regulations (referring to sales, investment and transferred proceeds), and any
replacement proceeds as defined in section 1.148-1(c) of the Tax Regulations, of the
Lease. Q
"Investment" has the meaning set forth in section 1.148-1(b) of the Tax
Regulations.
"Nonpurpose Investment" means any investment property, as defined in section
148(b) of the Code, in which Gross Proceeds of this Lease are invested and that is not
acquired to carry out the governmental purposes of this Lease.
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"Rebate Amount, " with respect to this Lease, has the meaning set forth in section
1.148-1(b) of the Tax Regulations.
"Tax Regulations" means the United States Treasury Regulations promulgated
pursuant to sections 103 and 141 through 150 of the Code.
"Yield"
(1) of any Investment has the meaning set forth in section 1.148-5 of
the Tax Regulations; and
(2) with respect to this Lease, has the meaning set forth in section
1.148-4 of the Tax Regulations.
(b) Lease as Obligation; Not to Cause Interest to Become Taxable. The City
represents and warrants that it intends that for federal income tax purposes and for California
personal income tax purposes this Lease is to be treated as an obligation of the City (the
"Obligations"), that the Interest Component and Principal Component of each Lease Payment are
intended to be treated as the corresponding payment of interest on and principal of such
obligation, respectively, and that the interest on such obligation is intended to be excluded
pursuant to section 103(a) of the Code from the gross income of the Assignee or its assigns. The
City covenants that it shall not use, and shall not permit the use of, and shall not omit to use
Gross Proceeds or any other amounts (or any property the acquisition, construction or
improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner
that if made or omitted, respectively, could cause the interest component of any Lease Payment
to fail to be excluded pursuant to section 103(a) of the Code from the gross income of the
Assignee or its assigns for federal income tax purposes.
(c) Private Use or Private Payments. Except as would not cause this Lease to W
become a "private activity bond" within the meaning of section 141 of the Code and the Tax
Regulations and rulings thereunder, the City shall at all times prior to the final termination of the r
Lease:
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(1) exclusively own, operate and possess all property the acquisition, 0
construction or improvement of which is to be financed or refinanced directly or indirectly with
Gross Proceeds, and not use or permit the use of such Gross Proceeds (including all contractual
arrangements with terms different than those applicable to the general public) or any property
acquired, constructed or improved with such Gross Proceeds in any activity carried on by any Q
person or entity (including the United States or any agency, department and instrumentality
thereof) other than a state or local government, unless such use is solely as a member of the
general public; and
(2) not directly or indirectly impose or accept any charge or other
payment by any person or entity who is treated as using Gross Proceeds or any property the
acquisition, construction or improvement of which is to be financed or refinanced directly or
indirectly with such Gross Proceeds, other than taxes of general application within the
jurisdiction of any of the City or interest earned on investments acquired with such Gross
Proceeds pending application for their intended purposes.
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(d) No Private Loan. Except as would not cause this Lease to become a
"private activity bond" within the meaning of section 141 of the Code and the Tax Regulations
and rulings thereunder, the City shall not use Gross Proceeds to make or finance loans to any
person or entity other than a state or local government. For purposes of the foregoing covenant,
such Gross Proceeds are considered to be "loaned" to a person or entity if: (a) property acquired,
constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a
transaction that creates a debt for federal income tax purposes; (b) capacity in or service from
such property is committed to such person or entity under a take -or -pay, output or similar
contract or arrangement; or (c) indirect benefits of such Gross Proceeds, or burdens and benefits
of ownership of any property acquired, constructed or improved with such Gross Proceeds, are
otherwise transferred in a transaction that is the economic equivalent of a loan.
(e) Not to Invest at Higher Yield. Except as would not cause this Lease to
become an "arbitrage bond" within the meaning of section 148 of the Code and the Tax
Regulations and rulings thereunder, the City shall not, at any time prior to the final termination
of this Lease, directly or indirectly invest Gross Proceeds in any Investment, if as a result of such
investment the Yield of any Investment acquired with Gross Proceeds, whether then held or
previously disposed of, would materially exceed the Yield of this Lease within the meaning of
said section 148.
(f) Not Federally Guaranteed. Except to the extent permitted by section
149(b) of the Code and the Tax Regulations and rulings thereunder, the Authority shall not take
or omit to take any action that would cause this Lease to be "federally guaranteed" within the
meaning of section 149(b) of the Code and the Tax Regulations and rulings thereunder.
(g) Information Report. The City shall timely file any information required
by section 149(e) of the Code with respect to this Lease with the Secretary of the Treasury on
Form 8038-G or such other form and in such place as the Secretary may prescribe.
(h) Rebate of Arbitrage Profits. Except to the extent otherwise provided in
section 148(f) of the Code and the Tax Regulations:
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(1) The City shall account for all Gross Proceeds (including all
receipts, expenditures and investments thereof) on its books of account separately and apart from
all other funds (and receipts, expenditures and investments thereof) and shall retain all records of c
accounting for at least six years after the day on which this Lease is terminated. However, to the E
extent permitted by law, the City may commingle Gross Proceeds with its other moneys,
provided that it separately accounts for each receipt and expenditure of Gross Proceeds and the a
obligations acquired therewith.
(2) Not less frequently than each Computation Date, the City shall
calculate the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and
the Tax Regulations and rulings thereunder. The City shall retain the results of such calculation,
including the basis therefor, in sufficient detail and on a timely basis in order to demonstrate
compliance with its covenants herein. The City shall maintain a copy of the calculation with its
official transcript of proceedings relating to the execution and delivery of this Lease until six
years after the final Computation Date.
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(3) In order to assure the excludability of the interest components of
the Lease Payments from the gross income of the Assignee or its assigns for federal income tax
purposes, the City shall deposit into the Excess Earnings Account an amount sufficient to permit
the City timely to pay to the United States the amount that when added to the future value of
previous rebate payments made for the Lease equals (i) in the case of a Final Computation Date
as defined in section 1.148-3(e)(2) of the Tax Regulations, one hundred percent (100%) of the
Rebate Amount on such date; and (ii) in the case of any other Computation Date, ninety percent
(90%) of the Rebate Amount on such date. In all cases, such rebate payments shall be made by
the City at the times and in the amounts as are or may be required by section 148(f) of the Code
and the Tax Regulations and rulings thereunder, and shall be accompanied by Form 8038-T or
such other forms and information as is or may be required by section 148(f) of the Code and the
Tax Regulations and rulings thereunder for execution and filing by the City.
(4) The City shall exercise reasonable diligence to assure that no errors
are made in the calculations and payments required by paragraphs (2) and (3), and if an error is
made, to discover and promptly correct such error within a reasonable amount of time thereafter
(and in all events within one hundred eighty (180) days after discovery of the error), including
payment to the United States of any additional Rebate Amount owed to it, interest thereon, and
any penalty imposed under section 1.148-3(h) or other provision of the Tax Regulations.
(i) Not to Divert Arbitrage Profits. Except to the extent permitted by section
148 of the Code and the Tax Regulations and rulings thereunder, the City shall not, at any time
prior to the final termination of this Lease, enter into any transaction that reduces the amount
required to be paid to the United States pursuant to paragraph (h) of this Section because such
transaction results in a smaller profit or a larger loss than would have resulted if the transaction
had been at arm's length and had the Yield on the Lease not been relevant to either party.
0) Lease Not a Hedge Bond.
(1) The City represents that this Lease will not be a "hedge bond"
within the meaning of section 149(8) of the Code.
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(2) Without limitation of paragraph (1) above: (a) the City reasonably
expects that at least 85% of the spendable Proceeds will be expended within the three-year
period commencing on the Closing Date, and (b) no more than 50% of the proceeds of such c
portion will be invested in Nonpurpose Investments having a substantially guaranteed yield for a E
period of four years or more.
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(k) Use of Proceeds: Weighted Average Maturity. The City hereby represents a
and covenants that it will apply the Proceeds in a manner so that the weighted average maturity
of the Obligations does not exceed 120% of the average reasonably expected economic life (or
remaining economic life) of the facilities financed (or refinanced) by this Lease (all determined
in accordance with the provisions of section 147(b) of the Code).
(1) Elections. The City hereby directs and authorizes any Authorized
Representative to make elections permitted or required pursuant to the provisions of the Code or
the Tax Regulations, as such Authorized Representative (after consultation with Special
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Counsel) deems necessary or appropriate in connection with this Lease, in the Tax Certificate as
to Tax Exemption or similar or other appropriate certificate, form or document.
(m) Closing Certificate. The City agrees to execute and deliver in connection
with the execution and delivery of this Lease a Tax Exemption Certificate, or similar document
containing additional representations and covenants pertaining to the exclusion of the Interest
Component of the Lease Payments from the gross income of the Assignee for federal income tax
purposes, which representations and covenants are incorporated as though expressly set forth
herein.
ARTICLE VI
DAMAGE AND DESTRUCTION;
USE OF NET INSURANCE PROCEEDS
Section 6.1 Abatement of Lease Payments in Event of Loss of Use. A proportional
amount of the Lease Payments shall be abated during any period in which, by reason of
condemnation, damage or destruction, there is substantial interference with the use and
possession of the Leased Property. The amount of such abatement shall be determined by the
City, such that the resulting Lease Payments represent fair consideration for the use and
possession of the portion of the Leased Property not condemned, damaged or destroyed. Such
abatement shall commence on the date of condemnation, damage or destruction and shall end
with the substantial completion of the replacement or work of repair. There shall be no
abatement in Lease Payments as a result of any design defects other than design defects that
result in condemnation, damage or destruction with regard to the Leased Property. Except as
provided herein, in the event of any such condemnation, damage or destruction, this Lease shall
continue in full force and effect and the City waives any right to terminate this Lease by virtue of
any such condemnation, damage or destruction.
Section 6.2 Application of Net Insurance Proceeds. The proceeds of condemnation or
eminent domain proceedings with respect to any portion of the Leased Property shall be r
deposited by the City into the Prepayment Fund and applied to the prepayment of Lease
Payments. d
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(a) Deposit in Net Insurance Proceeds Fund. Net Insurance Proceeds shall be
deposited in the Net Insurance Proceeds Fund by the Assignee promptly upon receipt thereof E
and, if such Net Insurance Proceeds are sufficient to prepay the Lease Payments in full and the
City notifies the Authority in writing of the City's determination that the replacement or repair of Q
the affected portion of the Leased Property is not economically feasible or in the best interests of
the City, or if the City does not meet the conditions of subsection (b) below, then the City shall
promptly transfer such Net Insurance Proceeds to the Prepayment Fund to be applied as provided
in Section 10.2 hereof.
(b) Replacement or Repair of the Leased Property. The City may exercise its
option to replace or repair the affected portion of the Leased Property only if (i) the Net
Insurance Proceeds available for such purpose, together with any other funds supplied by the
City for such purpose, are sufficient to replace or repair the Leased Property to its original fair
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market value and essentiality, or (ii) the Assignee shall have consented, in writing, to the
replacement or repair of the affected portion of the Leased Property.
(c) Requisitions. All Net Insurance Proceeds deposited in the Net Insurance
Proceeds Funds and not so transferred to the Prepayment Fund as provided in paragraph (a)
above shall be applied to the prompt replacement or repair of the affected portion of the Leased
Property by the City.
Section 6.3 Excess Net Insurance Proceeds. After the affected portions of the Leased
Property have been repaired or replaced, or if the Lease Payments due under this Lease have
been prepaid or paid, the City shall then be entitled to apply such proceeds for any lawful
purpose.
Section 6.4 Regulations and Laws. The City agrees to observe and comply with all
rules, regulations and laws applicable to the City with respect to the Leased Property and the
operation thereof. The cost, if any, of such observance and compliance shall be borne by the
City, and the Authority shall not be liable therefor. The City agrees further to place, keep, use,
maintain and operate the Leased Property in such a manner and condition as will provide for the
safety of its agents, employees, invitees, subtenants, licensees and the public.
Section 6.5 Repayment of Assignee. As between the City and the Assignee, in the
event that any portion of the Lease Payments shall be abated under this Section during the Term
hereof, and shall not be paid in full due to the insufficiency of rental interruption insurance as
provided above, then the City shall, following the date upon which the portion of the Leased
Property shall be returned to its substantial use and possession, pay Lease Payments at an
increased level (but not in excess of the then -fair rental value of the total Leased Property) until
such time as the Assignee has been reimbursed in full for shortfalls in Lease Payments during the
period of abatement.
ARTICLE VII
DISCLAIMER OF WARRANTIES; ACCESS
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Section 7.1 Disclaimer of Warranties. THE AUTHORITY AND ITS ASSIGNS
MAKE NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS c
TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY E
PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY v
OF ITS LEASED PROPERTY OR ANY COMPONENT OF SUCH LEASED PROPERTY. a
THE CITY ACKNOWLEDGES THAT NEITHER THE AUTHORITY NOR THE ASSIGNEE
IS A MANUFACTURER OF ANY COMPONENTS OF THE LEASED PROPERTY OR A
DEALER THEREIN, AND THE CITY IS LEASING THE COMPONENTS OF ITS LEASED
PROPERTY "AS -IS," IT IS BEING AGREED THAT ALL OF THE AFOREMENTIONED
RISKS ARE TO BE BORNE BY THE CITY. In no event shall the Authority, the Assignee, or
their assigns be liable for incidental, indirect, special or consequential damages, in connection
with or arising out of this Lease or the Site Lease for the existence, furnishing, functioning or
City's use and possession of the Leased Property. In no event shall the Authority, the Assignee
or their assignees be liable for any incidental, indirect, special or consequential damage in
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connection with or arising out of this Lease or the existence, furnishing, functioning or the City's
use of any item or products provided for in this Lease.
Section 7.2 City's Right to Enforce Warranties. The Authority hereby irrevocably
appoints the City as its agent and attorney-in-fact during the term of this Lease, so long as the
City shall not be in default hereunder, to assert from time to time whatever claims and rights,
including without limitation, warranty claims, claims for indemnification and claims for breach
of any representations, respecting the Leased Property which the Authority may have against any
third party. The City's sole remedy for the breach of any such warranty, indemnification or
representation shall be against such third party with respect thereto, and not against the Authority
or the Assignee, nor shall such matter have any effect whatsoever on the rights and obligations of
the Authority with respect to this Lease, including the right to receive full and timely Lease w
Payments and all other payments due hereunder. The City shall be entitled to retain any and all LU
amounts recovered as a result of the assertion of any such claims and rights. The Authority shall, c
upon the City's request and at the City's expense, do all things and take all such actions as the N
City may request in connection with the assertion of any such claims and rights. a
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Section 7.3 Access to the Leased Property. The City agrees that the Authority, any v
Authority Representative, the Assignee and their respective successors or assigns, shall have the z
right (but no duty) at all reasonable times to enter upon and to examine and inspect the Leased z
Property provided that prior notice has been provided to the City of such entrance and inspection. U.
The City further agrees that the Authority, any Authority Representative, the Assignee and their Ix
respective successors or assigns shall have such rights of access to the Leased Property as may U-
be reasonably necessary to cause the proper maintenance of the Leased Property in the event of c7
failure by the City to perform its obligations hereunder; provided, however, that the Authority, z
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the Assignee or their assigns shall have no duty to cause such proper maintenance. Z
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Section 7.4 Release and Indemnification Covenants. To the extent permitted by law, W
the City shall and hereby agrees to indemnify and save the Authority and the Assignee, and their
successors, assigns, agents, officers, employees and servants harmless from and against all
claims, losses and damages, including legal fees and expenses, arising out of (i) the use,
maintenance, condition or management of, or from any work or thing done on the Leased y
Property by the City, (ii) any breach or default on the part of the City in the performance of any
of its obligations as to Lease Payments or the Leased Property under this Lease, (iii) any act or J
negligence of the City or of any of its agents, contractors, servants, employees or licensees with
respect to the Leased Property, (iv) any act or negligence of any assignee or sublessee of the City .c
with respect to the Leased Property, (v) failure to comply with any applicable environmental
laws, (vi) the presence of any hazardous substance, or (vii) any loss of the federal income tax a
exemption of the interest portion of Lease Payments and any interest or penalties imposed by the
Internal Revenue Service on the Assignee in connection therewith, any such amount with respect
to past Lease Payments to be paid to the Assignee as an Additional Payment upon demand of the
Assignee, and any such amount with respect to future Lease Payments to be paid as an increase
in the Interest Component of Lease Payments such that the after tax yield to the Assignee shall
remain the same following the loss of the federal income tax exemption as it was before such
loss of tax exemption, to the extent permitted by law. Such indemnification under this Section or
elsewhere in this Lease shall not extend to claims, losses or damages, including legal fees and
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expenses, arising out of the willful misconduct or negligence under this Lease on the part of the
Authority and the Assignee, and their officers, agents, employees, successors or assigns.
FW914Nlei 0DKI/III
ASSIGNMENT, SUBLEASING AND AMENDMENT
Section 8.1 Assignment by the Authority. The Authority's rights under this Lease,
including the right to receive and enforce payment of Lease Payments to be made by the City
under this Lease, have been assigned to the Assignee (excepting only its right to indemnification)
pursuant to the Assignment Agreement, to which assignment the City hereby consents. Except
as provided herein and in the Assignment Agreement, the Authority will not otherwise assign
this Lease, its right to receive Lease Payments or its duties and obligations hereunder to any
other person, firm or corporation so as to impair or violate the representations, covenants and
warranties contained in Section 2.2.
Section 8.2 Assignment and Subleasing by the City. The City's rights (but not its
duties) under this Lease may be assigned by the City so long as such assignment does not
adversely affect the exclusion from gross income of the Interest Component of the Lease
Payments, with the prior written consent of the Authority and the Assignee, subject to all of the
following conditions:
(i) This Lease and the obligation of the City to make
Lease Payments and Additional Payments hereunder shall remain obligations of the City;
(ii) The City shall, within thirty (30) days after the
delivery thereof, furnish or cause to be furnished to the Authority and the Assignee a true
and complete copy of such sublease;
No sublease by the City shall cause the Leased
Property to be used for a purpose other than a governmental or proprietary function N
authorized under the provisions of the laws of the State; and
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(iv) The City shall deliver an opinion of counsel to the
effect that the sublease shall not cause the Interest Component of the Lease Payments due
with respect to the Leased Property to become included within gross income for federal
income tax purposes or subject to State of California personal income taxes.
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Section 8.3 Amendment of Lease. a
(a) Release of Site in the Case of Leased Property including Real Estate. The
City shall have, and is hereby granted, the option at any time and from time to time during the
Term of this Lease to release any portion of the Leased Property, provided that the City shall first
satisfy all of the following requirements which are hereby declared to be conditions precedent to
such release:
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(i) The City shall file with the Authority and the
Assignee an amended Site Lease which describes the Leased Property, as revised by such
release;
(ii) The City shall file with the Authority and the
Assignee an amendment substantially in the form appended as Exhibit B to the Site Lease
which describes the Leased Property, as revised by such release;
(iii) The City delivers to the Assignee and the Authority
evidence that the Leased Property, as revised by such release, is of a value at least equal
to the aggregate principal amount of remaining Lease Payments hereunder as of the
scheduled date of release and that the release will not cause the fair rental value of the
Leased Property to be less than the amount necessary to pay principal and interest due
hereunder;
(iv) The City shall deliver an opinion of counsel to the
effect that such release shall not cause the Interest Component of Lease Payments due
with respect to the remaining Leased Property to become included within gross income
for federal income tax purposes or subject to State of California personal income taxes;
(v) Such release shall not cause the City to violate any
of its covenants and representations made in this Lease; and
(vi) The City shall have received the prior written
consent of the Assignee.
Without the prior written consent of the Assignee, the City will not alter, modify or
cancel or agree or consent to alter, modify or cancel this Lease.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1 Events of Default Defined. The following shall be "events of default"
under this Lease and the terms "events of default" and "default" shall mean, whenever they are
used in this Lease, any one or more of the following events:
(i) Failure by the City to pay, or cause to be paid, any
Lease Payment required to be paid hereunder by a Payment Date or any Additional
Payments or any other amounts required to be paid hereunder, when due;
(ii) Failure by the City to observe and perform, or cause
to be observed or performed, any covenant, condition or agreement on its part to be
observed or performed herein or otherwise with respect hereto or in the Assignment
Agreement, other than as referred to in clause (i) of this Section, for a period of thirty
(30) days after written notice specifying such failure and requesting that it be remedied
has been given to the City by the Authority or the Assignee; provided, however, if the
failure stated in the notice cannot be corrected within the applicable period, the Authority
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or the Assignee, as the case may be, shall not unreasonably withhold their consent to an
extension of such time if corrective action is instituted by the City within the applicable
period and diligently pursued until the default is corrected.
(iii) The filing of a voluntary petition in bankruptcy by
the City, or the failure by the City promptly to institute judicial proceedings to lift any
execution, garnishment or attachment of such consequence as will materially impair its
ability to carry on its operations, or the filing of a petition by the City under the Federal
Bankruptcy Code, or any assignment by the City for the benefit of its creditors, or the
application for, or consent to, the appointment of any receiver, trustee, custodian or
similar officer by the City or the entry by the City into an agreement of composition with
its creditors.
The Authority's failure to perform any of its obligations hereunder shall not be an event Ln
permitting the nonpayment of Lease Payments by the City or the termination of this Lease by the N
City. M
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Section 9.2 Remedies on Default. The Authority shall, exercise any and all remedies v
available pursuant to law or in equity, or granted pursuant to this Lease; provided, however, that z
notwithstanding anything herein to the contrary, there shall be no right under any circumstances Z
to accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to
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be immediately due and payable. After the occurrence of an event of default hereunder, (i) at the W
request of the Assignee, all Related Documents not heretofore assigned to the Assignee shall be o
transferred and assigned to the Assignee, and (ii) the City will surrender possession of the Leased a
Property to the Authority, if requested to do so by the Authority, or by the Assignee. z
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(a) No Termination: Repossession and Re -Lease on Behalf of Lessee. In the z
event the Authority does not elect to terminate this Lease in the manner hereinafter provided for w
in subparagraph (b) hereof, the Authority with the consent of the City, which consent is
irrevocably given, may repossess the Leased Property and re -let it for the account of the City, in
which event the City's obligation will continue to accrue from year to year in accordance with
this Lease and the City will continue to receive the value of the use of the Leased Property from a)
year to year in the form of credits against its obligation to pay Lease Payments. The obligations
of the City to pay Lease Payments shall remain the same as prior to such default whether the —'
Authority re -lets or not. The City agrees to and shall remain liable for the payment of all Lease
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Payments and the performance of all conditions contained herein and shall reimburse the E
Authority for any deficiency arising out of the re -letting of the Leased Property, or, in the event
the Authority is unable to re -let the Leased Property, then for the full amount of all Lease a
Payments to the end of the term of this Lease, but said Lease Payments and/or deficiency shall be
payable only at the same time and in the same manner as provided above for the payment of
Lease Payments hereunder, notwithstanding such repossession by the Authority or any suit,
brought by the Authority for the purpose of effecting such repossession of the Leased Property or
the exercise of any other remedy by the Authority.
The City hereby irrevocably appoints the Authority as the agent and attorney-in-fact of
the City to repossess and re -let the Leased Property in the event of a default by the City in the
performance of any covenants contained herein to be performed by or on behalf of the City and
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to remove (any removal to be done with reasonable prudence) all personal property connected to
or made a part of the Leased Property, to place such property in storage or other suitable place in
the County of Los Angeles, for the account of and at the expense of the City, and the City hereby
exempts and agrees to save harmless the Authority from any costs, loss or damage whatsoever
arising or occasioned by any such repossession and re -letting of the Leased Property. The City
hereby waives any and all claims for damages caused or which may be caused by the Authority
in repossessing the Leased Property as provided herein and all claims for damages that may
result from the destruction of or the injury to the Leased Property and all claims for damage to or
loss of any property belonging to the City that may be in or upon the Leased Property.
The City agrees that the terms of this Lease constitute full and sufficient notice of the
right of the Authority to re -let its Leased Property in the event of such repossession without
effecting a surrender of this Lease, and further agrees that no acts of the Authority in effecting
such re -letting shall constitute a surrender or termination of this Lease irrespective of the term
for which such re -letting is made or the terms and conditions of such re -letting or otherwise, but
that, on the contrary, in the event of such default by the City the right to terminate this Lease as
to the Leased Property shall vest in the Authority to be effected in the sole and exclusive manner
provided for in subparagraph (b) below. The City further waives the right to any rental obtained
by the Authority in excess of the Lease Payments and hereby conveys and releases such excess
to the Authority as compensation to the Authority for its services in re -letting the Leased
Property.
(b) Termination: Repossession and Re -Lease. In the event of the termination -
of this Lease by the Authority at its option and in the manner hereinafter provided on account of 0
default by the City (and notwithstanding any repossession of the Leased Property by the Z
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Authority in any manner whatsoever or the sale or re -letting of the Leased Property), the City Z
nevertheless agrees to pay to the Authority all costs, losses or damages, but not Lease Payments, Z
howsoever arising or occurring payable at the same time and in the same manner as is provided W
herein in the case of payment of Lease Payments. Any proceeds of the re -letting or other
disposition of the Leased Property or the sale of the improvements located on the Leased zt
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Property by the Authority shall be deposited into the Lease Payment Fund and be applied in N
accordance with the provisions of Section 9.6 hereof. Any surplus received by the Authority N
from such sale or re -letting shall be the absolute property of the Authority and the City shall have J
no right thereto, nor shall the City be entitled to any credit in the event of a surplus in the rentals;
received by the Authority for the Leased Property. Neither notice to pay rent or to deliver up a
possession of the Leased Property given pursuant to law nor any proceeding taken by the s
Authority to recover possession of the Leased Property shall by itself operate to terminate this w
Lease, and no termination of this Lease on account of default by the City shall be or become a
effective by operation of law, or otherwise, unless and until the Authority shall have given
written notice to the City of the election on the part of the Authority to terminate this Lease. The
City covenants and agrees that no surrender of the Leased Property or of the remainder of the
term hereof or any termination of this Lease shall be valid in any manner or for any purpose
whatsoever unless stated or accepted by the Authority by such written notice. No such
termination shall be effected whether by operation of law or acts of the parties hereto, except
only in the manner herein expressly provided and upon delivery of an opinion of Special Counsel
as to the authority therefore and the compliance with the provisions of this Lease with respect
thereto.
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Section 9.3 No Remedy Exclusive. No remedy conferred herein upon or reserved to
the Authority is intended to be exclusive and every such remedy shall be cumulative and shall be
in addition to every other remedy given under this Lease or now or hereafter existing at law or in
equity. No delay or omission to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver thereof, but any such right or
power may be exercised from time to time and as often as may be deemed expedient. In order to
entitle the Authority to exercise any remedy reserved to it in this Article it shall not be necessary
to give any notice, other than such notice as may be required in this Article or by law.
Section 9.4 Agreement to Pay Attorneys' Fees and Expenses. In the event the
Authority or the City should materially default under any of the provisions hereof and the
nondefaulting party should employ attorneys or incur other expenses for the collection of
moneys or the enforcement or observance of any obligation or agreement on the part of the
defaulting party contained herein, the defaulting party agrees that it will on demand therefor pay
to the prevailing party the reasonable fees of such attorneys and such other expenses so incurred
by the prevailing party; provided; however, that the Assignee shall not be required to expend its
own funds for any payment described in this Section.
Section 9.5 No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Lease should be breached by either party and thereafter waived by
the other party, such waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder.
Section 9.6 Application of the Proceeds from the Sale or Lease of the Project or the
Leased Property. All amounts received by the Authority under this Article other than as
provided in Section 9.2(b) herein shall be applied to the payment or prepayment of the Lease
Payments.
Section 9.7 Exercise of Remedies by Assignee. The City acknowledges and agrees
that the rights and remedies set forth in this Article IX have been assigned by the Authority to the
Assignee and that all rights and remedies exercisable by the Authority hereunder shall, with the
same force and effect, be exercised solely by the Assignee. In furtherance thereof, the City
hereby irrevocably appoints the Assignee as the agent and attorney-in-fact of the City for the
purposes of exercising any of the remedies hereunder.
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ARTICLE X E
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PREPAYMENT OF LEASE PAYMENTS AND a
PURCHASE OF LEASED PROPERTY
Section 10.1 Security Deposit. Notwithstanding any other provision of this Lease, the
City may on any date exercise its option to purchase the entire interest of the Authority in the
Leased Property by an irrevocable deposit by the City with the Assignee of. (i) an amount of
cash which, together with amounts on deposit in or credited to the Lease Payment Fund, is
sufficient to pay the aggregate remaining unpaid Lease Payments, including the Principal
Component and Interest Component represented thereby, in accordance with the Lease Payment
schedule set forth in Exhibit B; or (ii) Federal Securities together with cash, if required, in such
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amount as will, in the opinion of an independent certified public accountant, together with
interest to accrue thereon, be fully sufficient to pay all of the unpaid Prinicpal Components of the
Lease Payments on the Payment Dates or by prepayment thereof pursuant to Section 10.2, as the
City shall instruct at the time of said deposit. In the event of a deposit pursuant to this Section,
all obligations of the City under this Lease, and all security provided by this Lease for said
obligations, shall cease and terminate, excepting only the obligation of the City to make, or cause
to be made, Lease Payments from the deposit made by the City pursuant to this Section and the
obligation to deposit additional funds in the event of any deficiency in amounts on deposit to pay
all Lease Payments, and title to the Leased Property shall vest in the City on the date of said
deposit automatically and without further action by the City or the Authority (except as provided
herein); provided, that vesting of title to the Leased Property in the City shall be subject to the
subsequent payment of Lease Payments made from said deposit in accordance with the
provisions of this Lease. The Authority shall execute and deliver such further instruments and
take such further action as may reasonably be requested by the City for carrying out the title
transfer of the Leased Property.
Section 10.2 Mandatory PrepUment From Net Insurance Proceeds. The City shall
prepay the Lease Payments from and to the extent of any Net Insurance Proceeds deposited into
the Prepayment Fund. The City and the Authority hereby agree that such Net Insurance
Proceeds shall be credited towards the City's obligations hereunder. Except in the case of
Prepayment of the Lease Payments in whole, such Prepayment shall be credited in inverse order
of the due dates of the Lease Payments.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices. All notices, certificates or other communications hereunder shall
be sufficiently given and shall be deemed to have been received five business days after deposit
in the United States first-class mail, postage prepaid, to the City, the Authority and the Assignee
at the following addresses:
If to the City: CITY OF SANTA CLARITA
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: City Manager .c
If to the Authority: SANTA CLARITA PUBLIC FINANCING AUTHORITY a
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: City Manager
If to the Assignee:
Attn:
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The Authority, the City and the Assignee, by notice given hereunder, may designate different
addresses to which subsequent notices, certificates or other communications will be sent.
Section 11.2 Binding Effect. This Lease shall inure to the benefit of and shall be
binding upon the Authority, the Assignee and the City and their respective successors and
assigns.
Section 11.3 Severability. In the event any provision of this Lease shall be held invalid
or unenforceable by a court of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provisions hereof.
Section 11.4 Authority Not Liable. The Authority and its directors, officers, agents and
employees and the Assignee shall not be liable to the City or to any other party whomsoever for
any death, injury or damage that may result to any person or property by or from any cause
whatsoever in, on or about the Leased Property or any Component thereof.
Section 11.5 Net -Net -Net Lease. This Lease shall be deemed and construed to be a
"net -net -net lease" and the City hereby agrees that the Lease Payments shall be an absolute net
return to the Authority, free and clear of any expenses, charges or set -offs whatsoever, except as
expressly provided herein.
Section 11.6 Further Assurances and Corrective Instruments. The Authority and the
City agree that they will, from time to time, execute, acknowledge and deliver or cause to be
executed, acknowledged and delivered, such supplements hereto and such further instruments as
may reasonably be required for correcting any inadequate or incorrect description of the Leased
Property hereby leased or intended so to be or for carrying out the expressed intention of this
Lease.
Section 11.7 Execution in Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
Section 11.8 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, applicable to contracts made and performed
in such State.
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IN WITNESS WHEREOF, the Authority and the City have caused this Lease to be
executed in their names by their duly authorized officers, on the date first above written.
SANTA CLARITA PUBLIC FINANCING
AUTHORITY, as Lessor
Executive Director
CITY OF SANTA CLARITA,
as Lessee
By:
Mayor
EXHIBIT A
LEASED PROPERTY DESCRIPTION
THE SEWER IMPROVEMENTS OWNED BY THE CITY OF SANTA CLARITA,
LOS ANGELES COUNTY, CALIFORNIA (THE "CITY") TO PROVIDE FOR SEWAGE
DISPOSAL, INCLUDING ANY LAND, PIPELINES, APPURTENANT FACILITIES,
PUMPING FACILITIES AND OTHER FACILITIES NECESSARY FOR SUCH PURPOSE,
BUT EXCLUDING HOUSE LATERALS OR COLLECTOR SEWERS NOT OWNED BY
THE CITY, ALL LOCATED WITHIN THE LIMITS OF THE CITY OF SANTA CLARITA,
LOS ANGELES COUNTY, CALIFORNIA, AS SUCH LIMITS OF THE CITY ARE
DESCRIBED AS FOLLOWS:
[SEE ATTACHED PAGES]
EXHIBIT B
SCHEDULE OF PRINCIPAL AND INTEREST COMPONENTS OF LEASE PAYMENTS
Payment Date Payment Principal Interest Balance
July _, 2015
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April 1, 2016
October 1, 2016
April 1, 2017
October 1, 2017
April 1, 2018
October 1, 2018
April 1, 2019
October 1, 2019
April 1, 2020
October 1, 2020
PREPAYMENT PROVISIONS
The City may, at its option, prepay all, but not less than all, of the Principal Component
of the remaining Lease Payments, plus interest accrued to the date of prepayment, on any
Payment Date on or after October 1, 20_ with thirty (30) days' prior written notice to the
Assignee.
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AFTER RECORDATION PLEASE RETURN TO:
Norton Rose Fulbright US LLP
555 South Flower Street, Suite 4100
Los Angeles, California 90071
Attention: Maryann L. Goodkind, Esq.
ASSIGNMENT AGREEMENT
by and between
SANTA CLARITA PUBLIC FINANCING AUTHORITY
and
[PURCHASER], as Assignee
Dated As of July 1, 2015
THIS IS A FINANCING DOCUMENT.
NO DOCUMENT TRANSFER TAX IS DUE
PURSUANT TO GOVERNMENT CODE 27383.
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ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT, dated as of July 1, 2015, by and between
SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint powers agency duly
organized and existing under the laws of the State of California (the "Authority"), and accepted
by [PURCHASER], as assignee of the Obligations described below (the "Assignee");
WITNESSETH:
WHEREAS, the Authority and the City of Santa Clarita, a municipal corporation
duly organized and existing under the laws of the State of California (the "Lessee"), have
executed and entered into a Site Lease (the "Site Lease") dated the date hereof, and a 2015 Lease
(Public Facilities — Civic Center Refinancing) (the "Lease"), dated the date hereof, under which
the Authority has agreed to lease to the Lessee certain Leased Property as defined therein and
described in Exhibit A hereto; and
WHEREAS, under and pursuant to the Lease, the Lessee is obligated to make
Lease Payments, as defined therein, to the Authority for the use and possession of the Leased
Property; and
WHEREAS, the Authority desires to assign, absolutely without recourse, all its
rights to receive the Lease Payments scheduled to be paid by the Lessee under and pursuant to
the Lease to the Assignee and to assign the Lessee's right, title and interest in the Leased
Property to the Assignee; and
WHEREAS, in consideration of such assignment, the parties hereto intend that
the Assignee be henceforth entitled to receive all of the Lease Payments to be made by the
Lessee pursuant to the Lease (the "Obligations"); and
WHEREAS, all acts, conditions and things required by law to exist, to have
happened and to have been performed precedent to and in connection with the execution and
entering into of this Assignment Agreement do exist, have happened and have been performed in
regular and due time, form and manner as required by law, and the parties hereto are now duly
authorized to execute and enter into this Assignment Agreement;
NOW, THEREFORE, intending to be legally bound hereby, in consideration of
the premises and of the mutual agreements and covenants contained herein and for other valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto do hereby agree as
follows:
SECTION 1. Definitions. Unless the context otherwise requires, all capitalized
terms used in this Assignment Agreement which are not defined herein shall for all purposes of
this Assignment Agreement have the meanings specified therefor in the Lease.
SECTION 2. Assignment. The Authority hereby absolutely transfers, assigns
and sets over to the Assignee all of the Authority's right, title and interest in the Leased Property
and all of the Authority's rights under the Site Lease and the Lease (excepting only the
Authority's rights under Section 7.4 of the Lease), including, without limitation, (1) the right to
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receive and collect all of the Lease Payments and prepayments from the Lessee under the Lease,
(2) the right to receive and collect any proceeds of any insurance maintained thereunder, of any
condemnation award rendered with respect to all or a portion of the Leased Property, or of any
lease or sale of the Leased Property in the event of a default by the Lessee under the Lease, and
(3) the right to exercise such rights and remedies conferred on the Authority pursuant to the
Lease as may be necessary or convenient: (i) to enforce payment of the Lease Payments,
additional payments and prepayments, if any, required to be paid under the Lease; or (ii)
otherwise to protect the interests of the Authority in the event of a default by the Lessee under
the Lease.
SECTION 3. Acceptance. The Assignee hereby accepts the foregoing
assignment in exchange for its payment of the Purchase Price of the Obligations (as set forth in
the Lease).
SECTION 4. Conditions. This Assignment Agreement shall confer no rights and
shall impose no obligations upon the Assignee beyond those expressly provided in the Lease.
SECTION 5. Governing Law. This Assignment Agreement shall be governed by
and construed in accordance with the laws of the State of California applicable to contracts made
and performed in such State.
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IN WITNESS WHEREOF, the parties hereto have executed and entered into this
Assignment Agreement by their respective officers thereunto duly authorized as of the day and
year first above written.
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
LM
Chair
ACCEPTED BY: [PURCHASER], as Assignee
Authorized Officer
EXHIBIT A
THE LEASED PROPERTY
The following properties are the subject matter of the Lease:
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PLACEMENT AGREEMENT
Dated June , 2015
by and among
SANTA CLARITA PUBLIC FINANCING AUTHORITY,
CITY OF SANTA CLARITA
and
FIRST SOUTHWEST COMPANY, as Placement Agent
Relating to
Lease (Public Facilities - Civic Center Refinancing)
Series 2015
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TABLE OF CONTENTS
15.f
Section 1.
Appointment of Placement Agent.......................................................................... 4
Section 2.
Purchase of Interest in Lease................................................................................. 5
Section 3.
Fees and Expenses of Placement Agent..........................................................
Section 4.
Due Diligence Materials; Sophisticated Investors ................................................. 5
Section 5.
Representations and Agreements of the Lessor ..................................................... 6
Section 6.
Representations and Agreements of the City ......................................................... 6
Section7.
Closing Documents................................................................................................ 7
Section8.
Costs of Delivery................................................................................................... 8
Section 9.
Representations and Agreements to Survive......................................................... 8
Section10.
Termination............................................................................................................ 9
Section11.
Governing Law...................................................................................................... 9
Section 12.
Counterparts; Headings.......................................................................................... 9
EXECUTION...............................................................................................
SCHEDULE I — PAYMENT DATES.........................................................
SCHEDULE II — FORM OF PURCHASER LETTER ...............................
............. 10
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PLACEMENT AGREEMENT
THIS PLACEMENT AGREEMENT is dated June , 2015 (this "Agreement"), by
and among the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint exercise of
powers authority (the "Lessor), CITY OF SANTA CLARITA, a general law municipal
corporation duly organized and existing under the laws of the State of California (the "City") and
FIRST SOUTHWEST COMPANY, as Placement Agent for the City (the "Placement Agent') in
connection with the City's Lease described on the cover page hereof (the "Lease") with reference
to the following facts:
WHEREAS, the City has previously authorized the execution, sale and delivery of the
City of Santa Clarita Refunding Certificates of Participation, (Public Facilities - Civic Center)
2005 Series (the "2005 Certificates"), in the aggregate principal amount of $17,700,000,
evidencing proportionate interests in lease payments (the "2005 Lease Payments") to be made by
the City pursuant to a Lease Agreement, dated as of July 1, 2005 (the "2005 Lease"), between
Santa Clarita Public Financing Authority, as lessor (the "Authority"), and the City, as lessee, for
the use and occupancy of sewer improvements owned by the City and used within the City's
sewer system (the "Leased Property");
WHEREAS, the City wishes to refinance the 2005 Certificates by entering into a new
lease transaction and prepaying the 2005 Lease Payments;
WHEREAS, the City will enter into that certain 2015 Lease (Public Facilities — Civic
Center Refinancing), by and between the Authority and the City, dated as of July 1, 2015 (the
"Lease"), providing for the lease of the Leased Property that is the subject matter of that certain
Site Lease, by and between the City and the Authority, dated as of July 1, 2015 (the "Site
Lease");
WHEREAS, the City has requested that the interest of the Authority in the Lease be sold
on a direct placement basis to a purchaser, and the City has determined it is in the best interests
of the City to do so and to utilize the Placement Agent to facilitate such sale, pursuant to the
terms of this Agreement;
WHEREAS, the Authority will assign its right to receive Lease Payments (as defined in
the Lease) to the purchaser and its interest in the Lease pursuant to that certain Assignment
Agreement, dated as of July 1, 2015, by and between the Authority and the Bank (the
"Assignment Agreement");
WHEREAS, a portion of the net proceeds of the purchase price of the interest in the
Lease, along with a monetary contribution from the City, will be deposited with The Bank of
New York Mellon Trust Company, N.A., as escrow bank (the "Escrow Bank") pursuant to an
Escrow Agreement, dated as of July 1, 2015 (the "Escrow Agreement"), by and between the City
and the Escrow Bank, for the prepayment of the 2005 Lease Payments and the defeasance of the
2005 Certificates (and, together with the Lease Agreement, the Site Lease, this Agreement and
the Escrow Agreement, the "Lease Documents").
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NOW, THEREFORE, in consideration of the premises and of the commitments made
hereunder and for the good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
Section 1. Appointment of Placement Agent. The City hereby appoints First
Southwest Company as Placement Agent in connection with the proposed direct placement (the
"Placement") of the interest in the Lease and the assignment of the Lease Payments. On the
basis of the representations and agreements contained herein, but subject to the terms and
conditions set forth herein, the Placement Agent agrees to use its reasonable efforts to solicit and
receive one or more offers to purchase the interest in the Lease and the assignment of the Lease
Payments. Notwithstanding anything to the contrary contained in this Agreement, the Placement
Agent shall have no obligation to purchase the interest in the Lease and the assignment of the
Lease Payments, or have any liability to the City if any prospective purchaser (collectively, the
"Purchaser") fails to consummate a purchase of the interest in the Lease and the assignment of
the Lease Payments. With the City's consent, the Placement Agent has conducted preliminary
discussions with respecting their purchase in whole of the
interest in the Lease and the assignment of the Lease Payments. The City and the Authority
acknowledge and agree that: (i) the transaction contemplated by this Agreement is an arm's-
length, commercial transaction among the City, the Authority and the Placement Agent in which
the Placement Agent is not acting as a municipal advisor, financial advisor or fiduciary to the
City or the Authority; (ii) the Placement Agent has not assumed any advisory or fiduciary
responsibility to the City or the Authority with respect to the transaction contemplated hereby
and the discussions, undertakings and procedures leading thereto (irrespective of whether the
Placement Agent has provided other services or is currently providing other services to the City
or the Authority on other matters); (iii) the only obligations the Placement Agent has to the City
and the Authority with respect to the transaction contemplated hereby expressly are set forth in
this Agreement; and (iv) the City has consulted its own legal, accounting, tax, financial and other
advisors, as applicable, to the extent it has deemed it appropriate to do so.
The Placement Agent acknowledges to the Purchaser that Purchaser is purchasing the
interest in the Lease and the assignment of the Lease Payments solely for its own loan account
and not as a fiduciary for the City or in its capacity of broker, dealer, placement agent, municipal
securities underwriter or municipal advisor; that the Purchaser has not provided, and will not
provide, financial, legal (including securities law), tax, accounting or other advice to or on behalf
of the City or the Placement Agent with respect to the financing; and that the Purchaser has
expressed no view regarding the legal sufficiency of its representations for purposes of
compliance with any legal requirements applicable to any other party, including but limited to
the Placement Agent, or the correctness of any legal interpretation made by counsel to any other
party, including but not limited to counsel to the Placement Agent, with respect to any such
matters.
Section 2. Purchase of Interest in Lease. The Placement Agent shall use its
reasonable efforts to market the interest in the Lease and assignment of the Lease Payments to
the Purchaser at a purchase price equal to the principal amount of $ , maturing on
October 1, 2020, and bearing a true interest cost at % and coupon rate of % per
annum, with payment dates as set forth in Schedule I to this Agreement. The net purchase price
of the interest in the Lease and assignment of the Lease Payments, following a deposit for
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payment of Costs of Delivery as described in Section 8 hereto, shall be delivered by the
Purchaser by wire transfer to the City.
Section 3. Fees and Expenses of Placement Agent. If the Purchaser does purchase
the interest in the Lease and assignment of the Lease Payments on July , 2015 (the "Closing
Date"), the City will pay or cause to be paid to the Placement Agent a placement fee (the
"Placement Fee") of $ in connection with the placement of the interest in the Lease and
assignment of the Lease Payments. The Placement Fee shall be payable by the City in
immediately available funds on the Closing Date. All other fees and expenses associated with
the authorization, execution and delivery of the Lease shall be borne by the City pursuant to
Section 8 hereof. The Placement Agent shall have no obligation for the payment of any Costs of
Delivery.
Section 4. Due Diligence Materials; Sophisticated Investors. No offering
memorandum or official statement will be prepared in connection with the marketing and sale of
the interest in the Lease and assignment of the Lease Payments. The City has made available to
the Purchaser such financial, operating and other information through the course of due diligence
by the Purchaser as the Purchaser has requested. The Purchaser will execute and deliver a form
of Purchaser Letter, substantially in the form appended hereto as Schedule II, evidencing the
status of the Purchaser as a "qualified institutional buyer" pursuant to Rule 144A of the
Securities Act of 1933, as amended (the "Act"), and its ability to sustain the risk of investment in
the Lease Payments.
Section 5. Representations and Agreements of the Authority. The Authority
represents and agrees to the Placement Agent that:
(a) The Authority is a joint exercise of powers authority, duly organized and
existing under the laws of the State of California, with the necessary power and authority to
assist the City through the financing and refinancing of capital facilities and to enter into the
Lease Documents to which it is a party; and
(b) This Agreement has been duly authorized, executed and delivered by the
Authority.
Section 6. Representations and Agreements of the City. The City represents and
agrees to the Placement Agent that:
(a) The City is a municipal corporation, duly organized and existing under the
laws of the State of California, with the power to enter into the Lease Documents to which it is a
party;
(b) The City has duly adopted its resolution authorizing the execution and
delivery of the Lease (the "City Resolution") and the execution of the Lease Documents to which
it is a party, and the City Resolution is in full force and effect as of the date hereof and will be in
full force and effect as of the Closing Date;
(c) This Agreement has been duly authorized, executed and delivered by the
City and will not conflict with or constitute a breach of or default under any law, administrative
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regulation, judgment, decree, statute, indenture, mortgage, deed of trust, bond, note, resolution,
agreement or other instrument to which the City is a party or by which the City is bound;
(d) The representations and agreements of the City contained in this
Agreement will be true and correct as of the Closing Date; and
(e) The City will take all necessary steps to ensure that any offering and sale
of the interest in the Lease and assignment of the Lease Payments is exempt from the registration
requirements of the Act and in compliance with all applicable state securities laws;
(f) The City is not in breach of or default under any applicable law or
administrative regulation of the State of California (the "State"), any department, division,
agency or instrumentality thereof, or of the United States or any applicable judgment or decree or
any loan agreement, note, resolution, certificate, agreement or other instrument to which the City
is a party or is otherwise subject, which breach or default would materially and adversely affect
the City or its ability to perform its duties and obligations under the Lease Documents to which it
is a party; and the execution and delivery of this Agreement, the adoption of the City Resolution,
the execution of the Lease Documents to which it is a party and compliance with the provisions
of each thereof will not conflict materially with or constitute a breach of or default under any
applicable law or administrative regulation of the State or any department, division, agency or
instrumentality thereof or under any certificate, agreement or other instrument to which the City
is a party or is otherwise subject, which breach or default would materially and adversely affect
the City, the Lease Documents or the City's ability to perform its duties and obligations under
the Lease Documents;
(g) All approvals, consents and orders of any governmental authority, board,
agency or commission having jurisdiction that would constitute a condition precedent to the
performance by the City of its obligations hereunder and under the Lease Documents have been,
or prior to the Closing Date will have been, obtained;
(h) No litigation is pending, or, to the knowledge of the City, threatened in
any court in any way affecting the existence of the City or the title of the members of the City
Council of the City (the "City Council") to their respective offices or seeking to restrain or to
enjoin the execution and delivery of the Lease or the payment of the Lease Payments under the
Lease Documents or in any way contesting or affecting the validity or enforceability of the City
Resolution, the Lease Documents or this Agreement, or contesting the powers of the City or the
members of the City Council with respect to the within -described transaction; and
(i) The City has extended and will extend to the prospective Purchaser the
opportunity, prior to the Closing Date, to ask questions of, and receive answers from, the City
concerning financial, accounting, tax and other information regarding the City, the use of the
proceeds of sale of the interest in the Lease and assignment of the Lease Payments, the project to
be refinanced with the proceeds of sale thereof, as well as the structure and terms of the Lease,
and has provided the Purchaser the opportunity to obtain any other information that the
Purchaser may consider necessary in making an informed investment decision, to the extent the
City possesses the same or can acquire it without unreasonable effort or expense.
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Section 7. Closing Documents. On the Closing Date, the Placement Agent shall
receive:
(a) A copy of the City Resolution authorizing the execution and delivery of
the Lease Documents to which it is a party, together with a certification by the City Clerk of the
City to the effect that the City Resolution was duly adopted at a meeting of the City Council
which was called and held pursuant to law and with all public notice required by law, and at
which a quorum was present and acting throughout, and that the City Resolution has not been
modified, amended, rescinded or revoked and is in full force and effect;
(b) A copy of the resolution (the "Authority Resolution") of the Authority
authorizing the execution and delivery of the Lease Documents to which it is a party, together
with a certification by the Secretary of the Board of the Authority (the "Authority Board") to the
effect that the Authority Resolution was duly adopted at a meeting of the Authority Board which
was called and held pursuant to law and with all public notice required by law and at which a
quorum was present and acting throughout and that the Authority Resolution has not been
modified, amended, rescinded or revoked and is in full force and effect on the date hereof;
(c) Copies of the Lease Documents, duly executed by the City, the Authority,
the Escrow Bank and the Placement Agent, as applicable;
(d) An opinion of Norton Rose Fulbright US LLP, as Special Counsel to the
City ("Special Counsel"), dated the Closing Date, concerning the validity and tax-exempt status
of the Lease and the principal components of the Lease Payments;
(e) A supplemental opinion or opinions of Special Counsel addressed to the
Placement Agent, in form and substance acceptable to the Placement Agent, and dated the
Closing Date, stating that the Placement Agent may rely on the opinion of Special Counsel
described in paragraph (d) above as if such opinion were addressed to the Placement Agent to the
effect that the Lease is not subject to the registration requirements of the Act, and the Lease is
exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended;
(f) A defeasance opinion relating to the 2005 Certificates, dated the Closing
Date and addressed to the City and Escrow Bank, of Special Counsel, in form and substance
satisfactory to the Placement Agent;
(g) A tax certificate of the City respecting the Lease;
(h) A certificate of the City certifying that the City's representations contained
herein are true and correct as of the Closing Date;
(i) A certificate of the Authority certifying that the Authority's
representations contained herein are true and correct as of the Closing Date;
0) A copy of the Verification Report prepared by McGladrey LLP and dated
, 2015;
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(k) A Purchaser Letter from the Purchaser substantially in the form of
Schedule II attached hereto, and a reliance letter from the Purchaser to the effect that the
Placement Agent can rely upon such Purchaser Letter; and
(1) Copies of any other documents delivered to at such closing in connection
with the execution and delivery of the Certificates, and such other documents as the Placement
Agent may reasonably request from the City and the Authority in form satisfactory to the
Placement Agent.
Section 8. Costs of Delivery. The City shall pay or cause to be paid the Costs of
Delivery of the Lease, including: (i) the fees and disbursements of Special Counsel, the
Placement Agent, the Financial Advisor, counsel to the Escrow Bank and the Escrow Bank; (ii)
all other fees and expenses incident to the execution and delivery of the Lease. The Purchaser
shall be responsible for the payment of the statutory fee of the California Debt and Investment
Advisory Committee, if any.
Section 9. Representations and Agreements to Survive. The respective
representations and agreements set forth herein will remain in full force and effect regardless of
any investigation made by or on behalf of the Placement Agent, the Purchaser or the City or any
of their respective officers, directors or controlling persons, and will survive delivery of any
payment for the Lease Payments. The provisions of this Section and Sections 3, 5, 6 and 8
hereof shall survive the termination or cancellation of this Agreement.
Section 10. Termination. The Placement Agent's services hereunder may be
terminated with or without cause by either the City or the Placement Agent at any time and
without liability or continuing obligation to the Placement Agent or the City, except for the
Placement Agent's right to fees pursuant to this Agreement for any placement of any securities.
Subject to Section 9 hereof, this Agreement shall terminate after the purchase price for the
interest in the Lease have been delivered to the City on the Closing Date.
Section 11. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California applicable to contracts made and
performed in such State.
Section 12. Counterparts; Headings. This Agreement may be signed in counterparts
with the same effect as if the signatures thereto were on the same instrument. The headings of
the Sections of this Agreement have been inserted for convenience of reference only and shall
not be deemed a part of this Agreement.
IPacket Pg. 293
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IN WITNESS WHEREOF, the City, the Lessor and the Placement Agent have caused
this Placement Agreement to be executed in their respective names as of the date first above
written.
CITY OF SANTA CLARITA
RIM
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
M.
FIRST SOUTHWEST COMPANY, as
Placement Agent
In
ACCEPTED at _ p.m., this day of
June, 2015
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SCHEDULE I
PAYMENT DATES
Payment Date Amount Yield Rate
October 1, 2015
April 1, 2016
October 1, 2016
April 1, 2017
October 1, 2017
April 1, 2018
October 1, 2018
April 1, 2019
October 1, 2019
April 1, 2020
October 1, 2020
Yield calculated to the respective maturity date.
SCHEDULE II
FORM OF PURCHASER LETTER
[LETTERHEAD OF PURCHASER]
June , 2015
City of Santa Clarita
23920 Valencia Boulevard
Santa Clarita, California 91355
Re: 2015 Lease (Public Facilities - Civic Center Refinancing)
Ladies and Gentlemen:
City of Santa Clarita (the "City") has caused the execution and delivery of the above -
referenced Lease (the "Lease"), by and between the Santa Clarita Public Financing Authority, as
lessor (the "Authority") and the City, as lessee. Capitalized terms used in this letter but not
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defined have the meanings given them in the Lease. In connection with our purchase on the date
hereof of the interest in the Lease and assignment of lease payments related thereto ("Lease
Payments") in the aggregate principal component amount of $ the
undersigned (the "Purchaser") hereby represents and agrees as follows:
(a) The Purchaser has such knowledge and experience in financial and business
matters, including the purchase and ownership of municipal bonds and other tax-exempt
obligations similar to the interest in the Lease and assignment of the Lease Payments, that it is
capable of evaluating the merits and risks of an investment in the Lease.
(b) The Purchaser is not purchasing the interest in the Lease and assignment of the
Lease Payments for more than one account or with a view to distributing its interest in the Lease
and assignment of the Lease Payments;
(c) The Purchaser recognizes that an investment in the Lease and the Lease Payments
involves significant risks, that there is no established market for the Lease and the Lease
Payments and that none is likely to develop and, accordingly, that the Purchaser must bear the
economic risk of an investment in the Lease and Lease Payments for an indefinite period of time.
The Purchaser is able to bear the economic risk.
(d) The Purchaser (i) has conducted its own independent inquiry, examination and
analysis with respect to the City and the Lease, (ii) has had an opportunity to ask questions of
and receive answers from First Southwest Company (the "Placement Agent"), and the City
regarding the City, the Lease, the Lease Payments (including the security therefor) and the
matters, transactions and documents relating to the foregoing (iii) has been provided with all
information regarding the City, the Lease, the Lease Payments (including the security therefor)
and the matters, transactions and documents relating to the foregoing that it has requested (the
"Disclosure Information"), and (iv) the Purchaser has been provided with information sufficient
to allow the Purchaser to make an informed decision to purchase the interest in the Lease and
assignment of the Lease Payments.
(e) The Purchaser acknowledges that the obligation of the City to make Lease
Payments under the Lease: (i) are obligations payable solely from the revenues and funds
provided for under the Lease, subject to rental abatement, (ii) does not constitute an obligation of
the City for which the City is obligated to levy or pledge any form or taxation or for which the
City has levied or pledged any form of taxation, and (iii) does not constitute an indebtedness of
the City, the State of California or any political subdivision thereof within the meaning of any
constitutional or statutory debt limitation or restrictions. The Authority shall not be directly or
indirectly or contingently or morally obligated to use any moneys or assets of the Authority for
any or all of the Lease Payments. The Purchaser understands that the Authority is not obligated
for the payment of Lease Payments and that only the general fund of the City may be held liable
therefor.
(f) The Purchaser is fully authorized by its corporate charter, by-laws, internal rules
and regulations and all relevant governing laws, rules and regulations to purchase the interest in
the Lease and assignment of the Lease Payments.
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(g) To the extent that Purchaser has received the Disclosure Information or any other
information relating to the Lease or the City, Purchaser acknowledges that no representation or
agreement, express or implied, is made by the Placement Agent, Norton Rose Fulbright US LLP,
special counsel to the City, or the Authority, nor any of their respective members, governing
bodies or any of their employees, counsel or agents, as to the accuracy or completeness of the
information contained therein, and nothing contained therein is or shall be relied upon as a
promise or representation by any of the foregoing parties. The Purchaser acknowledges that, as
between the Purchaser and all of such parties, the Purchaser has assumed responsibility for
obtaining such information and making such review as the Purchaser deems necessary or
desirable in connection with its decision to purchase the interest in the Lease and assignment of
the Lease Payments.
(h) The Purchaser has made its decision to purchase the interest in the Lease and
assignment of the Lease Payments (including as to the suitability of the interest in the Lease and
assignment of the Lease Payments for purchase by the Purchaser) based upon its own judgment
and upon any advice from such advisors (including accounting, tax and legal counsel) as it has
deemed necessary, and not in reliance upon any view expressed by the City or the Authority, or
any of their respective affiliates, officers, employees, agents, or Placement Agent.
(i) The Purchaser understands and acknowledges (1) that the offering of the interest
in the Lease and assignment of the Lease Payments is not subject to the requirements of Rule
15c2-12 promulgated under the Securities Exchange Act of 1934, and (ii) that the City has not
prepared or caused to be prepared, and is not delivering, an official statement or other disclosure
document with respect to the Lease Payments and has not undertaken to provide to or for the
benefit of assignees of the Lease Payments, financial or operating data or any other information
with respect to the City or the Certificates on an ongoing basis, except as specifically provided in
the Lease Agreement.
0) The Purchaser hereby certifies that the foregoing representations and warranties
of the Purchaser are true and correct as of the date hereof.
(k) The interest in the Lease and assignment of the Lease Payments have been
purchased for the account of the Purchaser for investment and not with a present view to the
distribution, transfer or resale thereof. The Purchaser intends to hold and book the interest in the
Lease and assignment of the Lease Payments as a loan in their loan portfolio. The Purchaser
intends to hold such interest in the Lease and assignment of the Lease Payments for its own
account and for an indefinite period of time and does not intend to dispose of all or any portion
thereof and understands that transfer of such interest is restricted pursuant to the terms of the
Assignment. The Purchaser agrees and acknowledges that the interest in the Lease and Lease
Payments cannot be sold without complying with transfer restrictions set forth in the Lease,
including but not limited to providing for execution and delivery by the proposed transferee of a
letter in substantially the form of this letter, and the Purchaser hereby agrees to assume the
responsibility for disclosure of all material information that may be necessary to comply with all
federal and related state securities laws.
(1) The Purchaser is acting solely for its own loan account and not as a fiduciary for
the City or the Authority or in the capacity of broker, dealer, placement agent, municipal
Packet Pg. 297
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securities underwriter, municipal advisor, or fiduciary. The Purchaser has not provided, and will
not provide, financial, legal (including securities law), tax, accounting, or other advice to or on
behalf of the City or the Authority (including to any financial advisor or any placement agent
engaged by the City or the Authority) with respect to the structuring, execution, or delivery of
the Lease. The Purchaser has no fiduciary duty pursuant to Section 15B of the Securities
Exchange Act of 1934, as amended, to the City or the Authority with respect to the transactions
relating to the structuring, execution or delivery of the Lease and the discussions, undertakings,
and procedures leading thereto. Each of the City, the Authority, their financial advisor(s), and
the Placement Agent has sought and shall seek and obtain financial, legal (including securities
law), tax, accounting, and other advice (including as it relates to structure, timing, terms, and
similar matters and compliance with legal requirements applicable to such parties) with respect
to the Lease from its own financial, legal, tax, and other advisors (and not from the undersigned
or its affiliates) to the extent that the City, the Authority, their financial advisor(s), or the
Placement Agent desires to, should, or needs to obtain such advice. The Purchaser expresses no
view regarding the legal sufficiency of its representations for purposes of compliance with any
legal requirements applicable to any other party, including but not limited to the City's or the
Authority's financial advisor(s) or the Placement Agent, or the correctness of any legal
interpretation made by counsel to any other party, including but not limited to counsel to the
City's or the Authority's financial advisor(s) or the Placement Agent, with respect to any such
matters. The transactions between the City, the Authority, and the Purchaser are arm's-length,
commercial transactions in which the Purchaser is acting and has acted solely as a principal and
for its own interest, and the Purchaser has not made recommendations to the City or the
Authority with respect to the transactions relating to the Lease.
PURC1 ASER
By:
Name;_
Title:
as
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ESCROW AGREEMENT
by and between the
CITY OF SANTA CLARITA
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Escrow Bank and as Trustee
Dated as of July 1, 2015
Relating to the defeasance of
$17,700,000
City of Santa Clarita
Refunding Certificates of Participation (Public Facilities - Civic Center)
2005 Series
15.g
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ESCROW AGREEMENT
This ESCROW AGREEMENT, dated as of July 1, 2015, by and between the
CITY OF SANTA CLARITA (the "City"), a general law municipal corporation organized and
existing under the laws of the State of California, and THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., a national banking association organized and existing under the laws
of the United States of America, as Escrow Bank (the "Escrow Bank") and as trustee for the
2005 Certificates (described below) (the "Trustee");
WITNESSETH:
WHEREAS, the City has previously executed and delivered its $17,700,000
original principal amount of Refunding Certificates of Participation (Public Facilities - Civic
Center) 2005 Series (the "2005 Certificates"), evidencing proportionate interests in lease
payments (the "Lease Payments") to be made by the City pursuant to a Lease Agreement, dated
as of July 1, 2005 (the "Lease"), between Santa Clarita Public Financing Authority, as lessor (the
"Authority"), and the City, as lessee, for the use and occupancy of certain real property of the
City;
WHEREAS, the Certificates were executed and delivered pursuant to a Trust
Agreement, dated as of July 1, 2005 (the "Trust Agreement"), by and among the City, the
Authority and the Escrow Bank, as trustee thereunder (the "Trustee");
WHEREAS, the City and the Authority have approved the execution and
delivery of the 2015 Lease (Public Facilities - Civic Center Refinancing) (the "2015 Lease") and
sale of the interest in the 2015 Lease and assignment of lease payments thereunder, a portion of
the purchase price of which are to be used, together with certain other available funds, to prepay
the Lease Payments and defease all of the 2005 Certificates;
NOW, THEREFORE, in consideration of the mutual premises contained herein
and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
SECTION 1. As used herein, the following terms shall have the following
meanings:
"Escrow Bank" means The Bank of New York Mellon Trust Company, N.A., and
its successors and assigns, and any other corporation or institution that may at any time be
substituted in its place as provided in Section 13 hereof.
"Escrow Fund" means the Escrow Fund established and held by the Escrow Bank
pursuant to Section 3 hereof.
"Escrow Securities" means Federal Securities (as defined in the Trust Agreement)
deposited in the Escrow Fund pursuant to Section 5 hereof.
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"Escrow Requirements" means the amount sufficient to pay principal of,
premium, if any, and interest with respect to the 2005 Certificates through and including the
Prepayment Date, in accordance with the terms of the Trust Agreement.
"Prepayment Date" means October 1, 2015, the date on which the 2005
Certificates are to be prepaid.
"Verification Agent" means McGladrey & Pullen LLP.
"Verification Report" means the report prepared by the Verification Agent and
attached hereto as Exhibit A.
SECTION 2. The City hereby appoints The Bank of New York Mellon Trust
Company, N.A. as Escrow Bank under this Escrow Agreement for the benefit of the holders of
the 2005 Certificates. The Escrow Bank hereby accepts the duties and obligations of Escrow
Bank under this Escrow Agreement and agrees that the irrevocable instructions to the Escrow
Bank herein provided are in a form satisfactory to it. Reference herein to, or citation herein of,
any provisions of the Trust Agreement shall be deemed to incorporate the same as a part hereof
in the same manner and with the same effect as if the same were fully set forth herein.
SECTION 3. There is created and established with the Escrow Bank a special
and irrevocable trust fund designated the "Escrow Fund" (the "Escrow Fund"), to be held by the
Escrow Bank separate and apart from all other funds and accounts, and used only for the
purposes and in the manner provided in this Escrow Agreement.
SECTION 4. The City herewith deposits, or causes to be deposited, with the
Escrow Bank into the Escrow Fund, to be held in irrevocable trust by the Escrow Bank and to be
applied solely as provided in this Escrow Agreement, the sum of $
SECTION 5. The Escrow Bank acknowledges receipt of the moneys described
in Section 4. The Escrow Bank agrees immediately to invest $ of such amounts in the
Escrow Securities set forth in Exhibit B hereto, and to deposit such Escrow Securities in the
Escrow Fund and to retain the amount of $ in cash in the Escrow Fund.
The Escrow Bank shall not have the power to sell, transfer, request the
redemption of or otherwise dispose of some or all of the Escrow Securities in the Escrow Fund
or to substitute other Escrow Securities therefor.
SECTION 6. As the principal of the Escrow Securities shall mature and be paid,
and the investment income and earnings thereon are paid, the Escrow Bank shall not reinvest
such moneys, except as may be required pursuant to the Verification Report. Such amounts shall
be applied by the Escrow Bank to the payment of the Escrow Requirements for the equal and
ratable benefit of the holders of the 2005 Certificates, in accordance with the terms of the Trust
Agreement.
SECTION 7. The City has caused schedules to be prepared relating to the
sufficiency of the anticipated receipts from the Escrow Securities listed in Exhibit B to pay the
Escrow Requirements.
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SECTION 8. The City hereby directs and the Escrow Bank hereby agrees that
the Escrow Bank will take all the actions required to be taken by it hereunder, in order to
effectuate this Escrow Agreement. The liability of the Escrow Bank for the payment of the
Escrow Requirements shall be limited to the application, in accordance with this Escrow
Agreement, of the principal amount of the Escrow Securities and the interest earnings thereon
available for such purposes in the Escrow Fund.
SECTION 9. The City irrevocably instructs the Escrow Bank (i) to pay to the
Trustee, from amounts held in the Escrow Fund, such amounts as are required for payment of
principal and interest components with respect to the 2005 Certificates coming due through and
including the Prepayment Date; and (ii) to pay to the Trustee, on the Prepayment Date, from
amounts held in the Escrow Fund, the amount equal to the prepayment price of the remaining
$ aggregate principal components with respect to the 2005 Certificates called for
prepayment on the Prepayment Date, including prepayment premium, if any, plus interest
accrued thereon to the Prepayment Date. The City irrevocably instructs the Trustee under the
Trust Agreement to mail a notice of prepayment of the 2005 Certificates, as provided in Section
4.5 of the Trust Agreement, in the form attached hereto as Exhibit D.
SECTION 10. The trust hereby created shall be irrevocable and the holders of
the 2005 Certificates shall have an express lien limited to all moneys and Escrow Securities in
the Escrow Fund, including the interest earnings thereon, until paid out, used and applied in
accordance with this Escrow Agreement.
SECTION 11. This Agreement is made pursuant to and in furtherance of 2005
Trust Agreement and for the benefit of the City and the holders from time to time of the 2005
Certificates and it shall not be repealed, revoked, altered, amended or supplemented without the
written consent of all such holders and the written consent of the Escrow Bank and the City;
provided, however, that the City and the Escrow Bank may, without the consent of, or notice to,
such holders enter into such amendments or supplements as shall not be inconsistent with the
terms and provisions of this Escrow Agreement, for any one or more of the following purposes:
(a) to cure an ambiguity or formal defect or omission in this Escrow
Agreement;
(b) to grant to, or confer upon, the Escrow Bank for the benefit of the holders
of the 2005 Certificates, any additional rights, remedies, powers or authority that may lawfully
be granted to, or conferred upon, such holders or the Escrow Bank; and
(c) to transfer to the Escrow Bank and make subject to this Escrow
Agreement additional funds, securities or properties.
The Escrow Bank and Trustee shall be entitled to conclusively rely upon the
Verification Report, and upon an unqualified opinion of nationally recognized bond counsel with
respect to compliance with this Section, including the extent, if any, to which any change,
modification or addition affects the rights of the holders of the 2005 Certificates, or that any
instrument executed hereunder complies with the conditions and provisions of this Section.
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SECTION 12. In consideration of the services rendered by the Escrow Bank
under this Escrow Agreement, the City agrees to and shall pay to the Escrow Bank its fees, plus
expenses, including all reasonable expenses, charges, counsel fees and expenses and other
disbursements incurred by it or by its attorneys, agents and employees in and about the
performance of their powers and duties hereunder, and the Escrow Bank shall have no lien
whatsoever upon any of the moneys or Escrow Securities in the Escrow Fund for the payment of
such proper fees and expenses.
SECTION 13. The Escrow Bank at the time acting hereunder may at any time
resign and be discharged from the trusts hereby created by giving not less than 60 days' written
notice to the City and the Trustee, specifying the date when such resignation will take effect in
the same manner as a notice is to be mailed pursuant to Section 9 hereof, but no such resignation
shall take effect unless a successor Escrow Bank shall have been appointed by the holders of the
2005 Certificates or by the City as hereinafter provided and such successor Escrow Bank shall
have accepted such appointment, in which event such resignation shall take effect immediately
upon the appointment and acceptance of a successor Escrow Bank.
The Escrow Bank may be removed at any time by an instrument or concurrent
instruments in writing, delivered to the Escrow Bank and to the City and the Trustee and signed
by the holders of a majority of the principal amount of the 2005 Certificates.
In the event the Escrow Bank hereunder shall resign or be removed, or be
dissolved, or shall be in the course of dissolution or liquidation, or otherwise become incapable
of acting hereunder, or in the case the Escrow Bank shall be taken under the control of any
public officer or officers, or of a receiver appointed by a court, a successor Escrow Bank may be
appointed by the holders of a majority of the principal amount of the 2005 Certificates, by an
instrument or concurrent instruments in writing, signed by such holders, or by their attorneys in
fact, duly authorized in writing; provided, nevertheless, that in any such event, the City shall
appoint a temporary Escrow Bank to fill such vacancy until a successor Escrow Bank shall be
appointed by the holders of a majority of the principal amount of the 2005 Certificates, and any
such temporary Escrow Bank so appointed by the City shall immediately and without further act
be superseded by the Escrow Bank so appointed by such holders.
In the event that no appointment of a successor Escrow Bank or a temporary
successor Escrow Bank shall have been made by such holders or the City pursuant to the
foregoing provisions of this Section within 60 days after written notice of the removal or
resignation of the Escrow Bank has been given to the City, the holder of any of the 2005
Certificates or any retiring Escrow Bank may apply to any court of competent jurisdiction for the
appointment of a successor Escrow Bank, and such court may thereupon, after such notice, if
any, as it shall deem proper, appoint a successor Escrow Bank.
No successor Escrow Bank shall be appointed unless such successor Escrow Bank
shall be a corporation or institution with trust powers organized under the laws of the United
States or any state, and shall have at the time of appointment capital and surplus of not less than
$50,000,000. For purpose of this Section 13, a corporation or institution with trust powers
organized under the laws of the United States or any state shall be deemed to have combined
capital and surplus of at least $50,000,000 if it has a combined capital surplus of at least
Packet Pg 303
$20,000,000 and is a wholly owned subsidiary of a corporation having a combined capital and
surplus of at least $50,000,000.
Every successor Escrow Bank appointed hereunder shall execute, acknowledge
and deliver to its predecessor and to the City, an instrument in writing accepting such
appointment hereunder and thereupon such successor Escrow Bank without any further act, deed
or conveyance, shall become fully vested with all the rights, immunities, powers, trust, duties
and obligations of its predecessor; but such predecessor shall, nevertheless, on the written
request of such successor Escrow Bank or the City execute and deliver an instrument transferring
to such successor Escrow Bank all the estates, properties, rights, powers and trusts of such
predecessor hereunder; and every predecessor Escrow Bank shall deliver all securities and
moneys held by it to its successor. Should any transfer, assignment or instrument in writing from
the City be required by any successor Escrow Bank for more fully and certainly vesting in such
successor Escrow Bank the estates, rights, powers and duties hereby vested or intended to be
vested in the predecessor Escrow Bank, any such transfer, assignment and instrument in writing
shall, on request, be executed, acknowledged and delivered by the City.
Any corporation or association into which the Escrow Bank, or any successor to it
in the trusts created by this Escrow Agreement, may be merged or converted or with which it or
any successor to it may be consolidated, or any corporation or association resulting from any
merger, conversion, consolidation or reorganization to which the Escrow Bank or any successor
to it shall be a party or any successor to a substantial portion of the Escrow Bank's corporate
trust business, shall, if it meets the qualifications set. forth in the fifth paragraph of this Section,
be the successor Escrow Bank under this Escrow Agreement without the execution or filing of
any paper or any other act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The liability of the Escrow Bank to make payments required in the Trust
Agreement shall be limited to the moneys and Escrow Securities in the Escrow Fund.
SECTION 14. The Escrow Bank shall have no power or duty to invest any funds
held under this Escrow Agreement except as provided in Sections 5 and 6 hereof. The Escrow
Bank shall have no power or duty to transfer or otherwise dispose of the moneys held hereunder
except as provided in this Escrow Agreement.
SECTION 15. To the extent permitted by law, the City hereby assumes liability
for, and hereby agrees (whether or not any of the transactions contemplated hereby are
consummated) to indemnify, protect, save and keep harmless the Escrow Bank and its
successors, assigns, officers, directors, agents, employees and servants, from and against any and
all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and
disbursements (including reasonable legal fees and disbursements) of whatsoever kind and
nature which may be imposed on, incurred by, or asserted against, the Escrow Bank at any time
(whether or not also indemnified against the same by the City or any other person under any
other agreement or instrument, but without double indemnity) in any way relating to or arising
out of the execution, delivery and performance of this Escrow Agreement, the establishment
hereunder of the Escrow Fund, the acceptance of the funds and securities deposited therein, the
purchase of any securities to be purchased pursuant thereto, the retention of such securities or the
proceeds thereof and any payment, transfer or other application of moneys or securities by the
Escrow Bank in accordance with the provisions of this Escrow Agreement. The City shall not be
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required to indemnify the Escrow Bank against the Escrow Bank's own negligence or willful
misconduct or the negligence or willful misconduct of the Escrow Bank's successors, assigns,
agents and employees or the material breach by the Escrow Bank of the terms of this Escrow
Agreement. In no event shall the City or the Escrow Bank be liable to any person by reason of
the transactions contemplated hereby other than to each other as set forth in this Section. The
indemnities contained in this Section shall survive the termination of this Escrow Agreement and
the resignation or removal of the Escrow Bank.
SECTION 16. The recitals of fact contained in the "Whereas" clauses herein
shall be taken as the statements of the City, and the Escrow Bank assumes no responsibility for
the correctness thereof. The Escrow Bank makes no representation as to the sufficiency of the
securities to be purchased pursuant hereto and any uninvested moneys to accomplish the
prepayment of the Lease Payments and the defeasance of the 2005 Certificates pursuant to the
Trust Agreement or to the validity of this Escrow Agreement as to the City and, except as
otherwise provided herein, the Escrow Bank shall incur no liability in respect thereof. The
Escrow Bank shall not be liable in connection with the performance of its duties under this
Escrow Agreement except for its own negligence or willful misconduct, and the duties and
obligations of the Escrow Bank shall be determined by the express provisions of this Escrow
Agreement. The Escrow Bank may consult with counsel, who may or may not be counsel to the
City, and in reliance upon the written opinion of such counsel shall have full and complete
authorization and protection in respect of any action taken, suffered or omitted by it in good faith
in accordance therewith. Whenever the Escrow Bank shall deem it necessary or desirable that a
matter be proved or established prior to taking, suffering, or omitting any action under this
Escrow Agreement, such matter (except the matters set forth herein as specifically requiring a
certificate of a nationally recognized firm of independent certified public accountants or an
opinion of nationally recognized bond counsel) may be deemed to be conclusively established by
a written certification of the City. Whenever the Escrow Bank shall deem it necessary or
desirable that a matter specifically requiring a certificate of a nationally recognized firm of
independent certified public accountants or an opinion of nationally recognized bond counsel be
proved or established prior to taking, suffering, or omitting any such action, such matter may be
established only by such a certificate or such an opinion. The Escrow Bank shall incur no
liability for losses arising from any investment made pursuant to this Escrow Agreement.
In the event the Escrow Bank receives an instruction or direction from the City
which is, in the Escrow Bank's opinion, ambiguous or in conflict with this Escrow Agreement,
the Escrow Bank may request clarification from the City and in the event such request causes a
delay in the performance by the Escrow Bank of its duties hereunder, such delay shall not
constitute negligence or willful misconduct by the Escrow Bank.
The Escrow Bank may conclusively rely and shall be fully protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties. The Escrow Bank may
execute any of the trusts or powers hereunder or perform any duties hereunder either directly or
by or through agents, attorneys, custodians or nominees appointed with due care, and shall not be
responsible for any willful misconduct or negligence on the part of any agent, attorney, custodian
or nominee so appointed. Anything in this Escrow Agreement to the contrary notwithstanding,
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in no event shall the Escrow Bank be liable for special, indirect, punitive or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow
Bank has been advised of the likelihood of such loss or damage and regardless of the form of
action.
The Escrow Bank agrees to accept and act upon instructions or directions
pursuant to this Escrow Agreement sent by unsecured e-mail, facsimile transmission or other
similar unsecured electronic methods, provided, however, that, the Escrow Bank shall have
received an incumbency certificate listing persons designated to give such instructions or
directions and containing specimen signatures of such designated persons, which such
incumbency certificate shall be amended and replaced whenever a person is to be added or
deleted from the listing. If the City elects to give the Escrow Bank e-mail or facsimile
instructions (or instructions by a similar electronic method) and the Escrow Bank in its discretion
elects to act upon such instructions, the Escrow Bank's understanding of such instructions shall
be deemed controlling. The Escrow Bank shall not be liable for any losses, costs or expenses
arising directly or indirectly from the Escrow Bank's reliance upon and compliance with such
instructions notwithstanding such instructions conflict or are inconsistent with a subsequent
written instruction. The City agrees to assume all risks arising out of the use of such electronic
methods to submit instructions and directions to the Escrow Bank, including without limitation
the risk of the Escrow Bank acting on unauthorized instructions, and the risk of interception and
misuse by third parties.
No provision of this Escrow Agreement shall require the Escrow Bank to expend
or risk its own funds or otherwise incur any financial liability in the performance or exercise of
any of its duties hereunder, or in the exercise of its rights or powers.
SECTION 17. This Escrow Agreement shall terminate upon payment with
respect to all 2005 Certificates on the Prepayment Date. Upon such termination, all moneys
remaining in the Escrow Fund after payment of all fees and expenses of the Escrow Bank shall
be released to the City.
SECTION 18. This Escrow Agreement is made in the State of California under
the Constitution and laws of the State of California and is to so be construed.
SECTION 19. If any one or more of the covenants or agreements provided in
this Escrow Agreement on the part of the City or the Escrow Bank to be performed should be
determined by a court of competent jurisdiction to be contrary to law, such covenant or
agreement shall be deemed and construed to be severable from the remaining covenants and
agreements herein contained and shall in no way affect the validity of the remaining provisions
of this Escrow Agreement.
All the covenants, promises and agreements in this Escrow Agreement contained
by or on behalf of the City or by or on behalf of the Escrow Bank shall bind and inure to the
benefit of their respective successors and assigns, whether so expressed or not.
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SECTION 20. This Escrow Agreement may be executed in several counterparts,
all or any of which shall be regarded for all purposes as one original and shall constitute and be
but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement
to be executed by their duly authorized officers as of the date first -above written.
Principal Amount
Maturity Date
(October 1)
CITY OF SANTA CLARITA
Mayor
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.,
as Escrow Bank and as Trustee
LIM
Authorized Officer
Exhibit A
Verification Report
Exhibit B
Schedule of Escrow Securities
Security Maturity Date Coupon
Total
Exhibit C
2005 Certificates
Purchase Price
Principal Component Principal Component CUSIP Number
Outstanding to be Prepaid(801685)
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Exhibit D
Form of Notice of Optional Prepayment
CITY OF SANTA CLARITA REFUNDING CERTIFICATES OF PARTICIPATION
(PUBLIC FACILITIES - CIVIC CENTER) 2005 SERIES
NOTICE IS HEREBY GIVEN to the owners of the above -captioned certificates
that all of the outstanding City of Santa Clarita Refunding Certificates of Participation (Public
Facilities - Civic Center) 2005 Series (the "2005 Certificates"), executed and delivered pursuant
to a Trust Agreement, dated as of July 1, 2005 (the "Trust Agreement"), by and among the City
of Santa Clarita (the "City"), the Santa Clarita Public Financing Authority (the "Authority"), and
The Bank of New York Mellon Trust Company, N.A. as trustee (the "Trustee"), have been called
for prepayment on October 1, 2015 (the "Prepayment Date"), pursuant to the provisions of the
Trust Agreement.
The 2005 Certificates called for prepayment have the maturity date, principal
component, CUSIP Number and prepayment price as set forth below:
Maturity (October 1)
Principal
Component
Outstanding
2016
2017
2018
2019
2020
Principal Amount CUSIP Prepayment
to be Prepaid Number Price
80( 1685)
[Owners of the 2005 Certificates should surrender said 2005 Certificates on the
prepayment date at the following address:
Since the 2005 Certificates are held under the book entry system, payment will be made directly
to the registered holder.
By: The Bank of New York Mellon Trust Company, N.A.
as Trustee or Agent
Bondholder Communications: 800-254-2826]
C6]i
Payment of the Prepayment Price on the 2005 Certificates called for prepayment
will be paid only upon presentation and surrender thereof inthe following manner (if delivery is
by mail, registered mail with return receipt request is recommended):
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By Hand: By Registered or Certified By Air Courier:
Mail:
IMPORTANT NOTICE
Under the provisions of the Economic Growth and Tax Relief Reconciliation Act
of 2001 (the "Act"), The Bank of New York Mellon Trust Company, N.A., as paying agent (the
"Paying Agent"), may be obligated to withhold 28%[30%] of the redemption price from any
2005 Certificate holder who has failed to furnish the Paying Agent with a valid taxpayer
identification number and a certification that such Certificate holder is not subject to backup
withholding under the Act. 2005 Certificate holders who wish to avoid the application of these
provisions should submit a completed Form W-9 when presenting their 2005 Certificates. If you
have any questions, please call The Bank of New York Mellon Trust Company, N.A. at
Neither the City, the Authority or the Paying Agent shall be held responsible for
the selection or use of the CUSIP number, nor is any representation made as to its corrections
indicated in this Notice of Optional Prepayment. It is included solely for convenience of the
owners of the 2005 Certificates.
Failure to receive this Notice of Optional Prepayment or any immaterial defect
contained herein shall not affect the sufficiency of the redemption proceedings as provided in the
Trust Agreement.
DATED:
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.
as Trustee
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