HomeMy WebLinkAbout2016-05-10 - AGENDA REPORTS - LEASE REVENUE BONDS 2016B (2)Agenda Item• 13
CITY OF SANTA CLARITA
AGENDA REPORT
NEW BUSINESS
CITY MANAGER APPROVAL: fill
DATE: May 10, 2016
SUBJECT: PUBLIC FINANCING AUTHORITY LEASE REVENUE
REFUNDING BONDS (OSPD) SERIES 2016B
DEPARTMENT: Administrative Services
PRESENTER: Carmen Magana
RECOMMENDED ACTION
City Council:
1. Approve the advance prepayment and defeasance of its $15,525,000 Certificates of
Participation, (Open Space and Parkland Acquisition Program), 2007 Series by approving
the issuance of the Santa Clarita Public Financing Authority Lease Revenue Refunding
Bonds, Series 2016B in the aggregate principal amount not to exceed $16,500,000,
approving the execution and delivery of a Site and Facility Lease, a Lease Agreement, an
Escrow Agreement, a Continuing Disclosure Certificate, a Preliminary Official
Statement, a Final Official Statement and Sale Documents; approving the retention of
certain professional firms; and authorizing the taking of certain actions in connection
therewith.
2. Adopt a resolution approving the advance prepayment of its $15,525,000 Certificates of
Participation (Open Space and Parkland Acquisition Program), 2007 Series by approving
the issuance of the Santa Clarita Public Financing Authority Lease Revenue Refunding
Bonds, Series 2016B in the aggregate principal amount not to exceed $16,500,000,
approving the execution and delivery of a Site and Facility Lease, a Lease Agreement, an
Escrow Agreement, a Continuing Disclosure Certificate, a Preliminary Official
Statement, a Final Official Statement and Sale Documents; approving the retention of
certain professional firms; and authorizing the taking of certain actions in connection
therewith.
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Public Financing Authority:
1. Authorize the issuance of the Santa Clarita Public Financing Authority Lease Revenue
Refunding Bonds, Series 2016E in the aggregate principal amount not to exceed
$16,500,000, approve the execution and delivery of an Indenture, a Site and Facility
Lease, a Lease Agreement, an Escrow Agreement, a Preliminary Official Statement, a
Final Official Statement and Sale Documents; and authorize the taking of certain actions
in connection therewith.
2. Adopt a resolution authorizing the issuance of the Santa Clarita Public Financing
Authority Lease Revenue Refunding Bonds, Series 2016B in the aggregate principal
amount not to exceed $16,500,000, approving the execution and delivery of an Indenture,
a Site and Facility Lease, a Lease Agreement, an Escrow Agreement, a Preliminary
Official Statement, a Final Official Statement and Sale Documents; and authorize the
taking of certain actions in connection therewith.
BACKGROUND
In 2007, the City executed and delivered the City's $15,525,000 Certificates of Participation
(Open Space and Parkland Acquisition Program) 2007 Series (the 2007 COPs). The proceeds of
the 2007 COPS were used to fund certain public capital improvements, including the acquisition
of open space. The City leased its Aquatic Center and Sports Complex to the PFA which leased
it back to the City.
Currently, $15,070,000 in principal amount of the 2007 COPs remain outstanding with a final
maturity date of October 1, 2037. The 2007 COPS are prepayable beginning October 1, 2017,
making the proposed refunding an advanced refunding for IRS purposes.
The 2007 COPS were sold with Ambac bond insurance (then rated AAA, now no rating). The
2007 COPs have a current underlying rating of "AA+" from Standard & Poor's. The Bonds are
expected to be rated by Standard and Poor's Corporation in the "AA+" category based upon the
City's current rating and the City's "AAA" issuer rating. The rating was not available at the time
of this staff report. Due to the current very high ratings, bond insurance will not provide any
benefits to the City at this time. A new bond reserve fund will not be funded. Instead a debt
service fund surety policy will be applied for if a reserve fund is required. The remaining
interest rate on the 2007 COPS being prepaid is 4.69% and the interest rate on the Bonds is
estimated at 2.91 % under current market conditions.
The Bonds will advance refund the 2007 COPs, and the 2007 COPs will be prepaid on the
earliest call date, October 1, 2017. While the City could delay the refunding until October 2017,
there may be significant interest -rate risk in doing so. Current Net Present Value savings are
very attractive at 15.4% of bonds refunded. Most debt policies have minimum net present value
savings targets of 3% with somewhat higher targets for an advance refunding. The refinancing
also removes Ambac as the bond insurer.
Current interest rates will allow the City to lower interest cost. Under current bond market
conditions, present value savings are estimated at $2.33 million net of all expenses. Average
annual savings increase in proportion to the debt service on the bonds beginning at $145,000 and
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reaching $242,000 in 2036. Under the 2007 CON, the existing bond reserve fund would be
applied to the final year's debt service payment on the 2007 COPs in 2037.
It is recommended to issue Santa Clarita Public Financing Authority Lease Revenue Refunding
Bonds (Bonds) by a public competitive sale to advance refitnd the 2007 COPS. The expected
source of repayment for the Bonds is the City's annual open space district assessments. The City
will use the same leased property as in 2007, the City's Aquatics Center and Sports Complex
(Leased Property), and lease such property to the PFA pursuant to a Site and Facility Lease. The
PFA will then leaseback the Leased Property to the City and make base rental payments to the
PFA pursuant to the Lease Agreement. The PFA issues the Bonds secured by the base rental
payments. The underwriter will purchase the Bonds and the PFA uses the purchase price to pay
the City an upfront lease payment under the Site and Facility Lease. The City uses the upfront
lease payment to prepay and defease the 2007 COPs.
As before, the City agrees to annually appropriate the base rental payments from legally
available funds. Assessments from the Open Space and Parkland Assessment District constitute
legally available funds since the proceeds of the 2007 COPS were used to finance open space and
other improvements under the program. The City has additionally pledged these assessments for
the payment of base rental payments. It is anticipated that these assessments will be sufficient to
make base rental payments when due.
Tonight's action by the City Council and the City's PFA is to approve documents in connection
with the prepayment of the 2007 COPS and the issuance of the Bonds.
General Summary of Security: These Bonds are payable from Revenues which consist of the
base rental payments to be made by the City under the Lease. The City covenants to annually
budget and appropriate for the base rental payments from its general fund or other available
funds (assessment revenues) and maintain insurance on the Leased Property.
Site and Facilities Lease: Document in which the City leases the Leased Property to the PFA. It
is drafted by Bond Counsel and executed by the City and PFA and recorded with the County
Recorder.
Lease Agreement: Key legal document in which the PFA leases back the Leased Property to the
City for base rental payments. Also contains the City's covenants to appropriate and maintain
insurance, and base rental payment and prepayment provisions. It is drafted by Bond Counsel
and executed by the City and PFA and recorded with the County Recorder.
Indenture: Another key legal document that Lays out the legal structure and terms of the Bonds.
It specifies payment dates, maturity dates, early redemption provisions; the revenues and
accounts specifically pledged to the repayment of the Bonds; the flow of funds, additional debt
requirements; default and remedy provisions; and defeasance provisions in the event the lease is
prepaid. It is drafted by Bond Counsel and executed by the PFA and Trustee.
Assignment Agreement: Document in which the base rental payments to the PFA are assigned
to the Trustee. It is drafted by Bond Counsel and executed by the Trustee and PFA and recorded
with the County Recorder.
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Escrow Agreement: Document governing the advance refunding and defeasance of the 2007
COPS and their prepayment. It is drafted by Bond Counsel and executed by the City, PFA and
Escrow Bank.
Continuing Disclosure Certificate: Document which will be included as an appendix of the POS
and outlines the updated information that the City will agree to provide to the bond markets.
Disclosure is required annually, and on a timely basis for enumerated material events. This
document is drafted by Bond Counsel and executed by City, as the obligated party.
Official Statement: Document that describes the security and discloses potential risks to
prospective investors. It will generally describe the sources of payment for the Bonds, the City's
financial state, particularly its general fund, economic and demographic characteristics of the
City, and inherent known risk factors associated with the security. It's important that this
document not contain any material misstatements or omissions. The Preliminary Official
Statement (often referred to as the POS) is distributed to prospective investors prior to the sale so
that they can make informed decisions on whether to purchase. The POS should be as close to
final as possible with the actual terms of the pricing (interest rates and principal amounts) left
necessarily blank. The Final Official Statement (FOS) will be prepared shortly after the sale and
must be available in time for closing. The POS and FOS are drafted by Bond Counsel, acting as
disclosure counsel and FOS is executed by the PFA and the City.
Notice of Sale and Bid Form: The Bonds have a term of 21 years and will be sold on a
competitive basis at a true interest rate of not to exceed 3.85%. The sale of the Bonds is
scheduled for late -May 2016 at the offices of C.M. de Crinis Co. at which time the Director of
Administrative Services will award the bonds to the best bidder. The bid form is submitted by
potential underwriters on the day of the bond sale, and specifies the actual principal amounts,
interest rates and prices at which the Bonds will be purchased. In it, the underwriter commits to
purchase the bonds at closing at the agreed upon prices and amounts subject to certain closing
conditions.
More specific details of the financing can be found in the drafts of the documents referenced
above.
The refunding savings are attractive with present value savings at over 15.4% of the 2007 COPS
outstanding and a 3% present value savings rate is considered by many issuers and financial
policies as a net present value savings benchmark. Actual savings will not be determined until
time of sale and could be higher or lower depending on bond market conditions in late May.
The City resolution also appoints various consultants including C.M. de Crinis & Co., as
financial advisor; Norton Rose Fulbright US LLP, as bond and disclosure counsel; and The Bank
of New York Mellon Trust Company, N.A., as trustee and escrow bank.
ALTERNATIVE ACTION
1. The City Council or Board of the PFA may choose not to refinance the 2007 COPs or
approve the issuance and sale of the Bonds and opt for a different financing method.
2. Other action as determined by the City Council.
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FISCAL IMPACT
Under current bond market conditions refunding the 2007 COPS is expected to produce present
value savings of approximately $2.33 million for the City. Final savings may be higher or lower
depending on bond market conditions at time of sale and the final structure used.
ATTACHMENTS
Resolution - City Lease Revenue Bonds Series 2016B
Resolution - Public Financing Authority Lease Revenue Bonds Series 2016E
Site and Facility Lease (available in the City Clerk's Reading File)
Lease Agreement (available in the City Clerk's Reading File)
Indenture (available in the City Clerk's Reading File)
Assignment Agreement (available in the City Clerk's Reading File)
Escrow Agreement (available in the City Clerk's Reading File)
Notice of Sale (available in the City Clerk's Reading File)
Preliminary Official Statement (available in the City Clerk's Reading File)
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13.a
RESOLUTION NO. 16-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA
CLARITA, CALIFORNIA, APPROVING THE ADVANCE PREPAYMENT OF
ITS $15,525,000 CERTIFICATES OF PARTICIPATION, (OPEN SPACE AND
PARKLAND ACQUISITION PROGRAM), 2007 SERIES, APPROVING THE
ISSUANCE OF THE SANTA CLARITA PUBLIC FINANCING AUTHORITY
LEASE REVENUE REFUNDING BONDS, SERIES 2016B IN THE
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $16,500,000,
APPROVING THE EXECUTION AND DELIVERY OF A SITE AND
FACILITY LEASE, A LEASE AGREEMENT, AN ESCROW AGREEMENT, A
CONTINUING DISCLOSURE CERTIFICATE, A PRELIMINARY OFFICIAL
STATEMENT, A FINAL OFFICIAL STATEMENT AND SALE
DOCUMENTS; APPROVING THE RETENTION OF CERTAIN
PROFESSIONAL FIRMS; AND AUTHORIZING THE TAKING OF CERTAIN
ACTIONS IN CONNECTION THEREWITH
WHEREAS, the City of Santa Clarita, California (City) has previously executed and
delivered its Certificates of Participation, (Open Space and Parkland Acquisition Program), 2007
Series (Prior Certificates); and
WHEREAS, the City finds it desirable to exercise its right to prepay the remaining
unpaid base rental payments under the lease relating to the Prior Certificates to realize net present
value savings; and
WHEREAS, pursuant to Articles 1 through 4 (commencing with Section 6500) of
Chapter 5, Division 7, Title 1 of the Government Code of the State of California (Act), the City and
the Santa Clarita Redevelopment Agency have heretofore entered into that certain Joint Exercise of
Powers Agreement, dated as of July 9, 1991, and as amended on May 10, 2016, by and among the
City, the City as successor agency to the Santa Clarita Redevelopment Agency, and the Santa
Clarita Parking Authority, relating to the Santa Clarita Public Financing Authority (Authority), for
the purpose, among other things, of issuing its bonds to be used to provide financing and
refinancing for public capital improvements of the City; and
WHEREAS, the City has requested that the Authority issue its Lease Revenue
Refunding Bonds (Open Space nad Parkland Acquisition Program) Series 2016B (Bonds); and
WHEREAS, the Bonds are to be issued pursuant an Indenture (Indenture), by and
between the Authority and a trustee, and pursuant to the Marks -Roos Local Bond Pooling Act of
1985 (Bond Law), constituting Article 4 (commencing with Section 6584) of the Act); and
WHEREAS, it is proposed that the Bonds be sold on a competitive basis in
accordance with the terms and provisions of an Official Notice Inviting Bids (Official Notice
Inviting Bids), the proposed forms of which has been presented to this City Council; and
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WHEREAS, it is proposed that the City, the Authority and The Bank of New York
Mellon Trust Company, N.A., or such other escrow agent as an Authorized Officer shall designate,
enter into an Escrow Agreement (Escrow Agreement) related to the refunding and defeasance of the
Prior Certificates, the form of which is on file with the City Clerk of the City; and
WHEREAS, it is proposed that the City and the Authority enter into a Site and
Facility Lease (Site Lease) pursuant to which the City will lease the City's Aquatics Center and
Sports Complex (Leased Property) to the Authority; and
WHEREAS, it is proposed that the City and the Authority enter into a Lease
Agreement (Lease) pursuant to which City will lease back the Leased Property from the Authority,
the form of which is on file with the City Clerk of the City; and
WHEREAS, under the Lease, the City will be obligated to make base rental
payments to the Authority which the Authority will use to pay debt service on the Bonds; and
WHEREAS, to fulfill the requirements of Rule 15e2-12 (as defined herein), the City
will enter into a Continuing Disclosure Certificate (Continuing Disclosure Certificate), with respect
to the Bonds, whereby the City will agree to provide disclosure reports and notices of certain
enumerated events pursuant to the Rule; and
WHEREAS, there have been presented to this meeting the proposed forms of the
following documents:
(a) the Site Lease
(b) the Lease
(c) the Escrow Agreement
(d) the Continuing Disclosure Certificate
(e) the Preliminary Official Statement
(f) the Official Notice Inviting Bids
WHEREAS, the City Council has reviewed the documentation related to the
issuance of the Bonds, which documentation is on file with the City Clerk of the City.
NOW, THEREFORE, the City Council of the City of Santa Clarita, California, does
hereby resolve as follows:
SECTION 1. Recitals. All of the above recitals are true and correct and the City
Council so finds.
SECTION 2. Approval of Bonds. The City hereby authorizes the prepayment of the
remaining unpaid base rental payments under the lease relating to the Prior Certificates to realize
net present value savings, approves the advance prepayment and defeasance of all of the Prior
Certificates and approves the issuance by the Authority of the Bonds.
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SECTION 3. Approval of Site Lease. The Site Lease, in substantially the form on
file with the City Clerk of the City and presented to the City Council at this meeting, is hereby
approved. Any one of the Mayor, the City Manager of the City, or the Deputy City
Manager/Director of Administrative Services (each, an Authorized Officer), is hereby authorized
and directed, for and in the name and on behalf of the City, to execute and deliver the Site Lease,
with such insertions and changes as may be approved by the Authorized Officer executing the same,
subject to the provisions of this Resolution, such approval to be conclusively evidenced by such
execution and delivery, and the City Clerk is hereby authorized to attest to such execution.
SECTION 4. Approval of the Lease. The Lease, in substantially the form on file
with the City Clerk of the City and presented to the City Council at this meeting, is hereby
approved. Any Authorized Officer is hereby authorized to execute the Lease in substantially the
form on file, with such revisions, amendments and completions as shall be approved by an
Authorized Officer, such approval to be conclusively evidenced by the execution and delivery
thereof, and the City Clerk is hereby authorized to attest to such execution.
SECTION 5. Approval of the Escrow Agreement. The Escrow Agreement, in
substantially the form on file with the City Clerk of the City and presented to the City Council at
this meeting, is hereby approved. Any Authorized Officer is hereby authorized to execute the
Escrow Agreement in connection with the advance prepayment and defeasance of the Prior
Certificates in substantially the form on file, with such revisions, amendments and completions as
shall be approved by an Authorized Officer, such approval to be conclusively evidenced by the
execution and delivery thereof, and the City Clerk is hereby authorized to attest to such execution.
SECTION 6. Approval of the Preliminary Official Statement and the Official
Statement. The Preliminary Official Statement, in substantially the form on file with the City Clerk
of the City and presented to the City Council at this meeting, is hereby approved with such
revisions, amendments and completions as shall be approved by an Authorized Officer to make the
Preliminary Official Statement final as of its date, except for the omission of certain information, as
permitted by Section 240.15c2 -12(b)(1) of Title 17 of the Code of Federal Regulations ("Rule 15c2-
12"). Any Authorized Officer is authorized to execute a certificate relating to the finality of the
Preliminary Official Statements under Rule 15c2-12. An Authorized Officer is authorized and
directed to execute and deliver the final Official Statement in substantially the form of the
Preliminary Official Statement, with such additions and changes as may be approved by the
Authorized Officer executing the same, such approval to be conclusively evidenced by the
execution and delivery thereof.
SECTION 7. Approval of the Continuing Disclosure Certificate. The Continuing
Disclosure Certificate, in substantially the form on file with the City Clerk of the City and presented
to the City Council at this meeting, are hereby approved. Any Authorized Officer is hereby
authorized to execute the Continuing Disclosure Certificate in substantially the form on file, with
such revisions, amendments and completions as shall be approved by an Authorized Officer, such
approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 8. Approval of Official Notice Inviting Bids. The City hereby authorizes
and directs that the Bonds be sold on a competitive basis. Any Authorized Officer is hereby
authorized to undertake all appropriate steps to implement the sale of the Bonds. The total principal
amount of Bonds shall not exceed $16,500,000 and the true interest cost of the Bonds shall not
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exceed 3.85%. The Official Notice Inviting Bids, in substantially the form on file with the City
Clerk of the City and presented to the City Council at this meeting, is hereby approved. The terms
and conditions of the offering and sale of the Bonds shall be as specified in the Official Notice
Inviting Bids. Bids for the purchase of the Bonds shall be received at the time and place set forth in
the Official Notice Inviting Bids.
SECTION 9. Official Actions. The Authorized Officers, the City Clerk and all other
officers of the City are hereby authorized and directed, for and in the name and on behalf of the
City, to do any and all things and take any and all other actions, including the publication of any
notices necessary or desirable in connection with the sale of the Bonds, procurement of municipal
bond insurance and/or a reserve surety, and execution and delivery of any and all assignments,
certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants,
escrow instructions and other documents, which they, or any of them, deem necessary or advisable
to consummate the lawful issuance and sale of the Bonds and the consummation of the transactions
as described herein.
SECTION 10. Approval of Certain Financing Team Members. The City Council
hereby approves the appointment of (a) Norton Rose Fulbright US LLP, to provide Bond Counsel
and Disclosure Counsel services in connection with the Bonds, (b) C.M. de Crinis & Co. Inc., as
Financial Advisor in connection with the Bonds, (e) The Bank of New York Mellon Trust
Company, N.A., as Trustee and Escrow Bank in connection with the Bonds and the Prior Bonds,
and Causey Demgen & Moore P.C., as verification agent in connection with the Prior Bonds, upon
such terms and conditions as approved by any Authorized Officer.
SECTION 11. Ratification. All actions heretofore taken by any Authorized Officer
or any officer, employee or agent of the City with respect to the issuance, delivery and sale of the
Bonds or in connection with or related to any of the agreements referred to herein, are hereby
approved, confirmed and ratified.
SECTION 12. Effective Date of Resolution. This Resolution shall take effect
immediately upon its adoption.
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PASSED, APPROVED, AND ADOPTED this day of May 2016.
MAYOR
ATTEST:
CITY CLERK
DATE:
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA )
I, 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 day of May 2016, by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
CITY CLERK
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RESOLUTION NO. 16-
A RESOLUTION OF THE BOARD OF THE SANTA CLARITA PUBLIC
FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF THE
SANTA CLARITA PUBLIC FINANCING AUTHORITY LEASE REVENUE
REFUNDING BONDS, SERIES 2016B, IN THE AGGREGATE PRINCIPAL
AMOUNT NOT TO EXCEED $16,500,000, APPROVING THE EXECUTION
AND DELIVERY OF AN INDENTURE, A SITE AND FACILITY LEASE, A
LEASE AGREEMENT, AN ESCROW AGREEMENT, A PRELIMINARY
OFFICIAL STATEMENT, A FINAL OFFICIAL STATEMENT AND SALE
DOCUMENTS; AND AUTHORIZING THE TAKING OF CERTAIN
ACTIONS IN CONNECTION THEREWITH
WHEREAS, pursuant to Articles 1 through 4 (commencing with Section 6500) of
Chapter 5, Division 7, Title 1 of the Government Code of the State of California (Act), the City of
Santa Clarita, California (City), and the Santa Clarita Redevelopment Agency have heretofore
entered into that certain Joint Exercise of Powers Agreement, dated as of July 9, 1991, and as
amended on May 10, 2016, by and among the City, the City as successor agency to the Santa Clarita
Redevelopment Agency, and the Santa Clarita Parking Authority, relating to the Santa Clarita
Public Financing Authority (Authority), for the purpose, among other things, of issuing its bonds to
be used to provide financing and refinancing for public capital improvements of the City; and
WHEREAS, the City has previously executed and delivered its Certificates of
Participation, (Open Space and Parkland Acquisition Program), 2007 Series (Prior Certificates); and
WHEREAS, the City finds it desirable to exercise its right to prepay the remaining
unpaid base rental payments under the lease relating to the Prior Certificates to realize net present
value savings; and
WHEREAS, the City has requested that the Authority issue its Lease Revenue
Refunding Bonds (Golden Valley Road) Series 2016A (Bonds); and
WHEREAS, the Bonds are to be issued pursuant an Indenture (Indenture), by and
between the Authority and a trustee, and pursuant to the Marks -Roos Local Bond Pooling Act of
1985 (Bond Law), constituting Article 4 (commencing with Section 6584) of the Act, the form of
which is on file with the Secretary of the Authority; and
WHEREAS, it is proposed that the Bonds be sold on a competitive basis in
accordance with the terms and provisions of an Official Notice Inviting Bids (Official Notice
Inviting Bids), the proposed form of which has been presented to this Board; and
WHEREAS, it is proposed that the City, the Authority and The Bank of New York
Mellon Trust Company, N.A., or such other escrow agent as an Authorized Officer shall designate,
enter into an Escrow Agreement (Escrow Agreement) related to the prepayment and defeasance of
the Prior Certificates , the form of which is on file with the Secretary of the Authority; and
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WHEREAS, it is proposed that the City and the Authority enter into a Site and
Facility Lease (Site Lease) pursuant to which the City will lease the City's Acquatics Center and
Sports Complex (Leased Property) to the Authority; and
WHEREAS, it is proposed that the City and the Authority enter into a Lease
Agreement (Lease) pursuant to which City will lease back the Leased Property from the Authority,
the form of which is on file with the Secretary of the Authority; and
WHEREAS, under the Lease, the City will be obligated to make base rental
payments to the Authority which the Authority will use to pay debt service on the Bonds; and
WHEREAS, there have been presented to this meeting the proposed forms of the
following documents:
(a) the Indenture
(b) the Site Lease
(c) the Lease
(d) the Assignment
(e) the Escrow Agreement
(f) the Preliminary Official Statement
(g) the Official Notice Inviting Bids
WHEREAS, the Board has reviewed the documentation related to the issuance of the
Bonds, which documentation is on file with the Secretary of the Authority.
NOW, THEREFORE, the Board of Directors of the Santa Clarita Public Financing
Authority, does hereby resolve as follows:
SECTION 1. Recitals. All of the above recitals are true and correct and the
Authority so finds.
SECTION 2. Approval of Bonds. The Authority hereby authorizes the issuance by
the Authority of the Bonds in the principal amount not to exceed $16,500,000.
SECTION 3. Approval of Site Lease. The Site Lease, in substantially the form on
file with the Secretary and presented to the Board at this meeting, is hereby approved. Any one of
the Chair, the Executive Director, or Treasurer of the Authority (each, an Authorized Officer), is
hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and
deliver the Site Lease, with such insertions and changes as may be approved by the Authorized
Officer executing the same, subject to the provisions of this Resolution, such approval to be
conclusively evidenced by such execution and delivery, and the Secretary is hereby authorized to
attest to such execution.
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SECTION 4. Approval of the Lease. The Lease, in substantially the form on file
with the Secretary and presented to the Board at this meeting, is hereby approved. Any Authorized
Officer is hereby authorized to execute the Lease in substantially the form on file, with such
revisions, amendments, and completions as shall be approved by an Authorized Officer, such
approval to be conclusively evidenced by the execution and delivery thereof, and the Secretary is
hereby authorized to attest to such execution.
SECTION 5. Approval of the Assignment Agreement. The Authority hereby
approves the Assignment Agreement in substantially the form on file with the Secretary and
presented to the Board at this meeting. Any Authorized Officer is hereby authorized to execute the
Assignment Agreement in substantially the form on file, with such revisions, amendments, and
completions as shall be approved by an Authorized Officer, such approval to be conclusively
evidenced by the execution and delivery thereof.
SECTION 6. Approval of the Indenture. The Authority hereby approves the
Indenture in substantially the form on file with the Secretary and presented to the Board at this
meeting. Any Authorized Officer is hereby authorized to execute the Indenture in substantially the
form on file, with such revisions, amendments, and completions, as shall be approved by an
Authorized Officer, with the advice of Bond Counsel in consultation with the Counsel to the
Authority, such approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 7. Approval of the Escrow Agreement. The Escrow Agreement, in
substantially the form on file with the Secretary and presented to the Board at this meeting, is
hereby approved. Any Authorized Officer is hereby authorized to execute the Escrow Agreement in
connection with the advance prepayment and defeasance of the Prior Certificates in substantially the
form on file, with such revisions, amendments, and completions as shall be approved by an
Authorized Officer, such approval to be conclusively evidenced by the execution and delivery
thereof, and the Secretary is hereby authorized to attest to such execution.
SECTION 8. Approval of the Preliminary Official Statement and the Official
Statement. The Preliminary Official Statement, in substantially the form on file with the Secretary
and presented to the Board at this meeting, is hereby approved with such revisions, amendments and
completions as shall be approved by an Authorized Officer to make the Preliminary Official
Statement final as of its date, except for the omission of certain information, as permitted by Section
240.15c2 -12(b)(1) of Title 17 of the Code of Federal Regulations ("Rule 15c2-12"). Any
Authorized Officer is authorized to execute a certificate relating to the finality of the Preliminary
Official Statements under Rule 15c2-12. An Authorized Officer is authorized and directed to
execute and deliver the final Official Statement in substantially the form of the Preliminary Official
Statement, with such additions and changes as may be approved by the Authorized Officer
executing the same with the advice of Disclosure Counsel in consultation with the Counsel to the
Authority, such approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 9. Approval of Official Notice Inviting Bids. The Authority hereby
approves the Official Notice Inviting Bids in the form thereof on file with the Secretary, together
with such additions, deletions, or changes therein as shall be approved by an Authorized Officer,
such approval to be conclusively evidenced by the execution and delivery thereof. Each of the
Authorized Officers is hereby authorized to execute the final form of the Official Notice Inviting
Bids, for and in the name and on behalf of the Authority. Sealed proposals shall be received at the
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time and place provided for in the Official Notice Inviting Bids. Each Authorized Officer is hereby
authorized to accept the best bid, or to reject all bids therefor, in accordance with the terms of the
Official Notice Inviting Bids. Any irregularities with respect to such bid may be waived after
consultation with Bond Counsel. The aggregate principal amount of the Bonds shall not exceed
$16,500,000, and the true interest cost of the Bonds shall not exceed 3.85%.
The form of the Notice of Intention to Sell, on file with the Secretary, together with such
additions thereto and changes therein as may be approved by an Authorized Officer, is hereby
approved, and use of the Notice of Intention to Sell in connection with the offering and sale of the
Bonds is hereby authorized and approved. The Authorized Officers are each hereby authorized and
directed, for and in the name and on behalf of the Authority, to cause the Notice of Intention to Sell
to be published in (a) The Bond Buyer (or such other financial publication generally circulated
throughout the State of California or reasonably expected to be disseminated among prospective
bidders for the Bonds as an Authorized Officer shall approve as being in the best interests of the
District) at least five (5) days and (b) a newspaper of general circulation circulated within the
boundaries of the Authority at least ten (10) days, prior to the date set for the opening of bids in the
Official Notice Inviting Bids with such additions thereto and changes therein as an Authorized
Officer may require or approve, such requirement or approval to be conclusively evidenced by such
publishing of the Notice of Intention to Sell. An Authorized Officer may withdraw or modify the
Official Notice Inviting Bids and the Notice of Intention to Sell, or either, at any time by notice
published via Thomson Municipal News or other means determined by such Authorized Officer to
reasonably reach potential bidders for the Bonds. If the Authorized Officer should withdraw the
Official Notice Inviting Bids or the Notice of Intention to Sell at any time before the Bonds are
awarded, and should at a later date determine that it is desirable to receive bids for the Bonds, the
Authorized Officer is hereby authorized to redistribute the Official Notice Inviting Bids and
republish the Notice of Intention to Sell Bonds with such modifications or revisions as are approved
by the Authorized Officer.
SECTION 10. Official Actions. The Authorized Officers, the Secretary and all
other officers of the Authority are hereby authorized and directed, for and in the name and on behalf
of the Authority, to do any and all things and take any and all other actions, including the
publication of any notices necessary or desirable in connection with the sale of the Bonds,
procurement of municipal bond insurance and/or a reserve surety, and execution and delivery of any
and all assignments, certificates, requisitions, agreements, notices, consents, instruments of
conveyance, warrants, escrow instructions and other documents, which they, or any of them, deem
necessary or advisable to consummate the lawful issuance and sale of the Bonds and the
consummation of the transactions as described herein.
SECTION 11. Ratification. All actions heretofore taken by any Authorized Officer
or any officer, employee or agent of the Authority with respect to the issuance, delivery and sale of
the Bonds or in connection with or related to any of the agreements referred to herein, are hereby
approved, confirmed and ratified.
SECTION 12. Effective Date of Resolution. This Resolution shall take effect
immediately upon its adoption.
Packet Pg. 159
PASSED, APPROVED, AND ADOPTED this
ATTEST:
SECRETARY
DATE:
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA )
day of May 2016.
CHAIR
1, Kevin Tonoian, Secretary of the Santa Clarita Public Financing Authority, do hereby
certify that the foregoing Resolution was duly adopted by the Board of the Santa Clarita Public
Financing Authority at a regular meeting thereof, held on the day of May 2016, by the
following vote:
NOES: BOARDMEMBERS:
ABSENT: BOARDMEMBERS:
SECRETARY
Packet Pg. 160
4/22/16
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.
SITE AND FACILITY LEASE
Dated as of June 1, 2016
by and between
CITY OF SANTA CLARITA
and
SANTA CLARITA PUBLIC FINANCING AUTHORITY
Relating to the
$[principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Refunding Bonds
(Open Space and Parkland Acquisition Program)
Series 2016B
THIS IS A FINANCING DOCUMENT.
NO DOCUMENTARY TRANSFER TAX IS DUE PURSUANT
TO REVENUE AND TAXATION CODE SECTION 11922
AND THIS DOCUMENT IS EXEMPT FROM RECORDING FEES
PURSUANT TO GOVERNMENT CODE SECTION 27383.
42206642.1
TABLE OF CONTENTS
Page
SECTION1.
DEFINITIONS................................................................................................. 1
SECTION2.
SITE................................................................................................................ 1
SECTION3.
TERM.............................................................................................................. 1
SECTION4.
RENTAL.......................................................................................................... 2
SECTION5.
TITLE.............................................................................................................. 2
SECTION 6.
DEFAULT....................................................................................................... 2
SECTION7.
EMINENT DOMAIN...................................................................................... 3
SECTION 8.
RIGHT OF ENTRY......................................................................................... 3
SECTION 9.
TERMINATION.............................................................................................. 3
SECTION 10.
QUIET ENJOYMENT BY THE AUTHORITY ............................................. 3
SECTION 11.
ASSIGNMENTS AND SUBLEASES............................................................ 3
SECTION 12.
WAIVER OF PERSONAL LIABILITY......................................................... 3
SECTION13.
TAXES.............................................................................................................4
SECTION 14.
LAW GOVERNING........................................................................................ 4
SECTION 15.
NOTICES......................................................................................................... 4
SECTION 16.
VALIDITY AND SEVERABILITY............................................................... 4
SECTION 17.
PURPOSE OF THE LEASED PROPERTY ................................................... 4
SECTION 18.
WAIVER OF DEFAULT................................................................................ 5
SECTION 19.
SECTION HEADINGS................................................................................... 5
SECTION 20.
AMENDMENTS............................................................................................. 5
SECTION 21.
EXECUTION................................................................................................... 5
EXHIBIT A - DESCRIPTION OF THE LEASED PROPERTY
I
SITE AND FACILITY LEASE
This SITE AND FACILITY LEASE, dated as of June 1, 2016 (this "Site Lease"),
is made by and between the CITY OF SANTA CLARITA, a city duly organized and existing
under the laws of the State of California (the "City"), as lessor, and the SANTA CLARITA
PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority, duly organized and
existing under the laws of the State of California (the "Authority"), as lessee.
RECITALS:
WHEREAS, the City is leasing the property more particularly described in
Exhibit A attached hereto (the "Leased Property") to the Authority; and
WHEREAS, the Authority has determined to issue its Lease Revenue Refunding
Bonds (Open Space and Parkland Acquisition Program), Series 2016B (the "Bonds") and any
Additional Bonds pursuant to an Indenture, dated as of June 1, 2016 (the "Indenture"), by and
between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the
"Trustee"); and
WHEREAS, the Authority, concurrently with the execution of this Site Lease,
will lease the Leased Property to the City pursuant to a Lease Agreement, dated as of June 1,
2016 (the "Lease"), by and between the City and the Authority, in consideration for base rental
payments equal to the principal and interest coming due on the Bonds and Additional Bonds; 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 Site Lease 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 Site Lease;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as
follows:
SECTION 1. DEFINITIONS.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Indenture or the Lease, as applicable.
SECTION 2. SITE LEASE.
The City hereby leases the Leased Property to the Authority and the Authority
hereby leases the Leased Property from the City, on the terms and conditions hereinafter set
forth.
42206642.1
SECTION 3. TERM.
The term of this Site Lease shall commence on June 2016. This Site Lease
shall constitute a lease of the City's interest in the Leased Property.
The term of this Site Lease shall expire on the earliest of (i) the Expiration Date;
(ii) the date the last base rental payment is made under the provisions of the Lease; or (iii) the
date of discharge of the Indenture pursuant to Section 9.03 thereof. Notwithstanding the
foregoing, the term of this Lease shall automatically be extended for a period of ten (10) years,
if, on the Expiration Date, the Indenture has not been fully discharged, and shall terminate on the
date when the Indenture has been fully discharged.
SECTION 4. RENTAL.
The Authority agrees to pay to the Trustee, on the Closing Date, the proceeds of
the Bonds, as advance rental for the use and right to possession of the Leased Property for the
term of this Site Lease. The rental shall be applied by the Trustee as provided in the Indenture.
SECTION 5. TITLE.
Throughout the term of this Site Lease, title to the Leased Property shall remain in
the City.
SECTION 6. DEFAULT.
(a) If the Authority shall fail to keep, observe or perform any term, covenant
or condition contained herein to be kept or performed by the Authority, or (b) if (1) the
Authority's interest in this Site Lease or any part thereof is assigned or transferred without the
written consent of the City, either voluntarily or by operation of law or otherwise, except as
provided in Section 11 hereof, or (2) any proceeding under the United States Bankruptcy Code or
any federal or state bankruptcy, insolvency or similar law or any law providing for the
appointment of a receiver, liquidator, trustee or similar official of the Authority or of all or
substantially all of its assets is instituted by or with the consent of the Authority, or is instituted
without its consent and is not permanently stayed or dismissed within sixty (60) days, or if the
Authority offers to the Authority's creditors to effect a composition or extension of time to pay
the Authority's debts, or asks, seeks or prays for a reorganization or to effect a plan of
reorganization or for readjustment of the Authority's debts, or if the Authority shall make a
general assignment or any assignment for the benefit of the Authority's creditors, then the
Authority shall be deemed to be in default hereunder and it shall be lawful for the City to
exercise any and all rights and remedies available pursuant to law; provided however, that:
(i) no merger of this Site Lease and of the Lease shall be deemed to occur as a result thereof; and
(ii) so long as any Bonds remain outstanding the City shall have no power to terminate this Site
Lease by reason of any default on the part of the Authority if such termination would prejudice
the exercise of the remedies provided in Section 10 (captioned "DEFAULT") of the Lease.
Neither the City nor the Authority shall in any event be in default in the
performance of any of its obligations hereunder or imposed by law unless and until the City or
the Authority (as the case may be) shall have failed to perform such obligations within sixty (60)
42206642.1 2
days after notice by the Authority or the City to the nonperforming party properly specifying
wherein such party has failed to perform any such obligation.
SECTION 7. EMINENT DOMAIN.
If the whole or any part of the Leased Property shall be taken under the power of
eminent domain, the interest of the Authority shall be recognized and is hereby determined to be
the amount of the unpaid principal components of base rental payments due under the Lease, and
all accrued interest thereon, and the amount of the unpaid Additional Rental Payments due under
the Lease, and the balance of the award, if any, shall be paid to the City.
SECTION 8. RIGHT OF ENTRY.
The City and its assignees shall have the right to enter the Leased Property during
reasonable business hours (and in emergencies at all times) (a) to inspect the same, (b) for any
purpose connected with the City's or the Authority's rights or obligations under this Site Lease,
and (c) for all other lawful purposes.
SECTION 9. 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 the
Authority and the City agree 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 be vested in the City.
SECTION 10. QUIET ENJOYMENT BY THE AUTHORITY.
The Authority shall at all times during the term of this Site Lease peaceably and
quietly have, hold and enjoy the Leased Property without suit, trouble or hindrance from the
City, subject to the Authority's compliance with the terms and provisions hereof and of the
Lease.
SECTION ll. ASSIGNMENTS AND SUBLEASES.
The Authority shall not assign, mortgage, hypothecate or otherwise encumber this
Site Lease or any rights hereunder or the leasehold created hereby by trust agreement, indenture
or deed of trust or otherwise or sublet the Leased Property without the written consent of the
City, except as provided by the Lease and as security for the Bonds and any Additional Bonds.
SECTION 12. WAIVER OF PERSONAL LIABILITY.
All liabilities hereunder on the part of the Authority shall be solely liabilities of
the Authority as a separate legal entity, and no member, officer or employee of the Authority
shall at any time or under any circumstances be individually or personally liable hereunder for
anything done or omitted to be done by the Authority hereunder.
42206642.1 3
SECTION 13. TAXES.
The City agrees and covenants 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 Property (including both land and improvements thereon).
SECTION 14. LAW GOVERNING.
This Site Lease shall be governed exclusively by the provisions hereof and by the
laws of the State of California.
SECTION 15. 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 or certified mail, return receipt requested, postage pre -paid,
and,
If to the Authority: Santa Clarita Public Financing Authority
c/o City of Santa Clarita
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: Deputy City Manager/Director of
Administrative Services
If to the City: City of Santa Clarita
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: Deputy City Manager/Director of
Administrative Services
or to such other addresses as the respective parties may from time to time designate by notice in
writing.
SECTION 16. VALIDITY AND SEVERABILITY.
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.
If for any reason this Site Lease shall be held by a court of competent jurisdiction
to be void, voidable, or unenforceable by the City or by the Authority, or if for any reason it is
held by such a court that any of the covenants and conditions of the Authority hereunder is
unenforceable for the full term hereof, then and in such event this Site Lease is and shall be
42206642. I 4
deemed to be a lease from year to year and all of the rental and other terms, provisions and
conditions of this Site Lease, except to the extent that such terms, provisions and conditions are
contrary to or inconsistent with such holding, shall remain in full force and effect.
SECTION 17. PURPOSE OF THE LEASED PROPERTY.
The Authority covenants that during the term of this Site Lease, it shall use the
Leased Property for the purposes described in the Lease and for such other purposes as may be
incidental thereto.
SECTION 18. WAIVER OF DEFAULT.
Failure of the City to take advantage of any default on the part of the Authority
shall not be, or be construed as, a waiver thereof, nor shall any custom or practice which may
grow up between the parties in the course of administering this Site Lease be construed to waive
or to lessen the right of the City to insist upon performance by the Authority of any term,
covenant or condition hereof, or to exercise any rights given the City on account of such default.
A waiver of a particular default shall not be deemed to be a waiver of the same or any
subsequent default. The acceptance of rent hereunder shall not be, nor be construed to be, a
waiver of any term, covenant or condition of this Site Lease.
SECTION 19. SECTION HEADINGS.
All section headings contained are for convenience of reference only and are not
intended to define or limit the scope of any provision of this Site Lease.
SECTION 20. AMENDMENTS.
This Site Lease may be amended in writing as may be mutually agreed by the
Authority and the City.
SECTION 21. EXECUTION.
This Site Lease may be executed in any number of counterparts, each of which
shall be deemed to an original, but all together shall constitute but one and the same Site Lease.
It is also agreed that separate counterparts of this Site Lease may separately be executed by the
City and the Authority, all with the same force and effect as though the same counterpart had
been executed by both the City and the Authority.
42206642.1 5
IN WITNESS WHEREOF, the City and the Authority have caused this Site Lease
to be executed by their respective officers thereunto duly authorized, all as of the day and year
first above written.
ATTEST:
C
ATTEST:
I'
Secretary
City Clerk
42206642.1 6
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
m
Chair
CITY OF SANTA CLARITA
LIM
City Manager
A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE
VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE
DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE
TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.
STATE OF CALIFORNIA )
ss:
COUNTY OF LOS ANGELES )
On before me, (insert name of the
officer), Notary Public, personally appeared , who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
[Seal]
42206642.1
A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE
VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE
DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE
TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.
STATE OF CALIFORNIA )
ss:
COUNTY OF LOS ANGELES )
On before me, (insert name of the
officer), Notary Public, personally appeared , who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
[Seal]
42206642.1 2
ID1:4a1:]1r-�
DESCRIPTION OF THE LEASED PROPERTY
The land, and Aquatic Center and Sports Complex structures and facilities located
thereon, at 20850 Centre Pointe Parkway, City of Santa Clarita, situated on a portion of parcels
of land, being Assessor Parcel No. 2836-018-900, in the City of Santa Clarita, County of Los
Angeles, State of California, described below:
PARCEL I:
LOT 4 IN FRACTIONAL SECTION 19, TOWNSHIP 4 NORTH, RANGE 15 WEST, SAN BERNARDINO
MERIDIAN, IN THE CITY OF SANTA CLARITA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA,
ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT THAT PORTION OF SAID LAND LYING WESTERLY OF THE EASTERLY LINE OF THAT
CERTAIN STRIP OF LAND 305 FEET IN WIDTH, AS DESCRIBED IN THE DEED TO THE CITY OF LOS
ANGELES, RECORDED SEPTEMBER 21, 1967 AS INSTRUMENT NO. 459, IN BOOK D-3774, PAGE 387
OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORD OF SAID COUNTY.
ALSO EXCEPT THE SOUTHERLY 58 FEET OF SAID LOT 4 MEASURED ALONG THE EASTERLY AND
WESTERLY LINES THEREOF.
ALSO EXCEPT THAT PORTION OF SAID LAND BOUNDED BY THE FOLLOWING DESCRIBED LINES:
BEGINNING AT A POINT ON THE EASTERLY LINE OF SAID LOT 4, DISTANT NORTHERLY
THEREON 58.00 FEET FROM THE SOUTHEASTERLY CORNER THEREOF; THENCE ALONG THE
NORTHERLY LINE OF THE SOUTHERLY 58.00 FEET OF SAID LOT 4, MEASURED ALONG THE
EASTERLY AND WESTERLY LINES THEREOF; SOUTH 89° 34' 02" WEST 367.73 FEET; THENCE
NORTH 240 23' 25" WEST 55.06 FEET; THENCE NORTH 54° 09' 22" EAST 42.74 FEET; THENCE
NORTH 070 55' 21" WEST 41.80 FEET; THENCE NORTH 55° 35'37" EAST 43.68 FEET; THENCE
NORTH 340 36' 49" WEST 22.64 FEET; THENCE NORTH 56° 24' 31" EAST 176.60 FEET; THENCE
SOUTH 890 36' 31" EAST 191.08 FEET; THENCE SOUTH 0° 03' 05" EAST 253.51 TO THE POINT OF
BEGINNING.
ALSO EXCEPT ALL MINERALS, OIL, GAS, AND OTHER HYDROCARBON SUBSTANCES LYING
BELOW A DEPTH OF 100 FEET, BUT WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED
BY SAUGUS LIMITED IN THE DEED RECORDED JANUARY 18, 1979 AS INSTRUMENT NO. 79-74632
AND BY NETHERCUTT LABORATORIES IN THE DEED RECORDED MARCH 22, 1983 AS
INSTRUMENT NO. 83-315019, BOTH IN SAID OFFICE OF THE COUNTY RECORDER.
PARCEL2:
A PERMANENT AND EXCLUSIVE EASEMENT, INCLUDING THE EXCLUSIVE RIGHT TO ALL
SURFACE USAGES WITH THE RIGHT TO PRECLUDE THE USE THEREOF BY ANY OTHER PERSON
FIRM OR CORPORATION OVER THAT PORTION OF THE SOUTHWEST 1/4 OF SECTION 19
TOWNSHIP 4 NORTH RANGE 15 WEST SAN BERNARDINO MERIDIAN, IN THE CITY OF SANTA
CLARITA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL
PLAT THEREOF BOUNDED AS FOLLOWS:
BOUNDED SOUTHERLY BY THE SOUTHERLY LINE OF THE LAND DESCRIBED IN THE DEED TO
SOLEDAD LTD, A LIMITED PARTNERSHIP RECORDED ON DECEMBER 23, 1975 AS
INSTRUMENT NO. 2800 IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,
BOUNDED WESTERLY BY THE EASTERLY LINE OF THE 305 FOOT WIDE STRIP OF LAND
42206642.1 A-1
DESCRIBED IN THE DEED TO THE CITY OF LOS ANGELES, RECORDED ON SEPTEMBER 25 1967
AS INSTRUMENT NO. 306 IN BOOK D-3777, PAGE 592 OF OFFICIAL RECORDS OF SAID COUNTY,
BOUNDED NORTHERLY BY A LINE PARALLEL WITH AND DISTANT SOUTHERLY 33.00 FEET
MEASURED AT RIGHT ANGLES AND RADIALLY FROM THAT CERTAIN COURSE AND CURVE
HAVING A LENGTH OF 115.00 FEET AND 521.59 FEET RESPECTIVELY IN THE SOUTHERLY
BOUNDARY OF THE LAND DESCRIBED IN THE DEED TO PATRIC M. MULCAHY ET AL.
RECORDED ON MAY 6 1966 AS INSTRUMENT NO. 233 IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY AND BOUNDED EASTERLY BY A LINE PARALLEL WITH AND
DISTANT NORTHEASTERLY 50.00 FEET MEASURED RADIALLY FROM SOUTHEASTERLY
CONTINUATION OF THAT CERTAIN CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF
1535 FEET A CENTRAL ANGLE OF 280 39' 06" AND AN ARC LENGTH OF 767.60 FEET IN THE
EASTERLY BOUNDARY OF THE LAND DESCRIBED IN SAID DEED TO PATRIC M. MULCAHY ET
AL. ABOVE REFERRED TO.
PARCEL 3:
A NON-EXCLUSIVE EASEMENT FOR UTILITY PURPOSES OVER, UNDER AND ACROSS THAT
PORTION OF LOT 4, IN FRACTIONAL SECTION 19 TOWNSHIP 4 NORTH RANGE 15 WEST SAN
BERNARDINO MERIDIAN, IN THE CITY OF SANTA CLARITA, COUNTY OF LOS ANGELES, STATE
OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, BOUNDED AS FOLLOWS:
BOUNDED SOUTHERLY BY THE NORTHERLY LINE OF THE SOUTHERLY 58.00 FEET OF SAID LOT 4
(MEASURED ALONG THE EASTERLY AND WESTERLY LINES OF SAID LOT 4), BOUNDED
WESTERLY BY THE WESTERLY LINE OF SAID LOT 4, BOUNDED NORTHERLY BY A LINE
PARALLEL WITH AND DISTANT NORTHERLY 10.00 FEET MEASURED AT RIGHT ANGLES FROM
THE NORTHERLY LINE OF SAID SOUTHERLY 58.00 FEET AND BOUNDED EASTERLY BY THE
WESTERLY LINE OF THE 305 FOOT WIDE STRIP OF LAND DESCRIBED IN THE DEED TO THE CITY
OF LOS ANGELES, RECORDED ON SEPTEMBER 21, 1967 AS INSTRUMENT NO. 459 IN BOOK D-3774,
PAGE 387 OF OFFICIAL RECORDS OF SAID COUNTY.
APN: 2836-018-900
42206642.1 A-2
4/22/16
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.
LEASE AGREEMENT
Dated as of June 1, 2016
by and between
SANTA CLARITA PUBLIC FINANCING AUTHORITY
and
CITY OF SANTA CLARITA
Relating to
$[principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Refunding Bonds
(Open Space and Parkland Acquisition Program)
Series 2016B
THIS IS A FINANCING DOCUMENT.
NO DOCUMENTARY TRANSFER TAX IS DUE PURSUANT
TO REVENUE AND TAXATION CODE SECTION 11922
AND THIS DOCUMENT IS EXEMPT FROM RECORDING FEES
PURSUANT TO GOVERNMENT CODE SECTION 27383.
42206644.2
TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS ................................................................................................. I
SECTION2.
TERM .............................................................................................................. 3
SECTION3.
RENTAL ..........................................................................................................
3
SECTION 4.
USE OF PROCEEDS ......................................................................................
5
SECTION 5.
MAINTENANCE, UTILITIES, TAXES AND ASSESSMENTS .................. 5
SECTION 6.
CHANGES TO THE LEASED PROPERTY .................................................. 6
SECTION 7,
SUBSTITUTION AND RELEASE OF PROPERTY ..................................... 6
SECTION8.
INSURANCE ...................................................................................................
8
SECTION 9.
DAMAGE, DESTRUCTION AND CONDEMNATION;
APPLICATION OF NET PROCEEDS .........................................................
10
SECTION 10.
DEFAULT .....................................................................................................
I I
SECTION 11.
PREPAYMENT AND CREDITS ..................................................................
13
SECTION 12.
MECHANICS' LIENS..................................................................................
14
SECTION 13.
QUIET ENJOYMENT ...................................................................................
14
SECTION 14.
INDEMNIFICATION ....................................................................................
14
SECTION 15.
ASSIGNMENT ..............................................................................................
15
SECTION 16.
ABATEMENT OF RENTAL ........................................................................
16
SECTION 17.
COVENANTS OF THE CITY ........................................................... ..........
16
SECTION 18.
CONTINUING DISCLOSURE .....................................................................
21
SECTION19,
WAIVER ........................................................................................................
21
SECTION 20.
NET LEASE ..................................................................................................
21
SECTION 21.
AMENDMENTS ...........................................................................................
21
SECTION 22.
ESSENTIALITY ............................................................................................
22
SECTION 23.
LAW GOVERNING ......................................................................................
22
SECTION 24.
NOTICES .......................................................................................................
22
SECTION 25.
VALIDITY AND SEVERABILITY .............................................................
22
SECTION 26.
SECTION HEADINGS .................................................................................
23
SECTION27.
NO MERGER ................................................................................................
23
SECTION 28.
EXECUTION .................................................................................................
23
EXHIBIT A — DESCRIPTION OF THE LEASED PROPERTY
EXHIBIT B — BASE RENTAL PAYMENT SCHEDULE
42206644.2 1
LEASE AGREEMENT
This Lease Agreement, dated as of June 1, 2016 (this "Lease"), is made by and
between the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint powers authority
duly organized and existing under the laws of the State of California (the "Authority"), as lessor,
and the CITY OF SANTA CLARITA, a city duly organized and existing under the laws of the
State of California (the "City"), as lessee.
RECITALS:
WHEREAS, the City and the Authority have previously entered into a Lease
Agreement, dated as of December 1, 2007 (the "2007 Lease"), whereby the City leased certain
real property and the improvements thereon, more commonly known as the Santa Clarita Sports
Complex, located at 20450 Centre Pointe Parkway, Santa Clarita (the "Leased Property") from
the Authority; and
WHEREAS, the City previously executed and delivered certain certificates of
participation (the "2007 Certificates"), evidencing and representing an undivided and
proportionate interest of the owner thereof in certain lease payments (the "2007 Lease
Payments") to be made by the City under the 2007 Lease to finance certain capital
improvements, including apportion of the costs of the acquisition of open space lands, parks, and
parkland (the "Project"); and
WHEREAS, City has determined to refinance the Project by prepaying its 2007
Lease Payments pursuant to Section 4.3(b)(1) of the 2007 Lease and thereby advance refunding
and defeasing the 2007 Certificates; and
WHEREAS, the Authority has determined to issue its Lease Revenue Refunding
Bonds (Open Space and Parkland Acquisition Program), Series 2016B, in the aggregate principal
amount of $[principal amount] (the "Bonds"), for the purpose of assisting the City with the
prepayment of the 2007 Lease Payments and the advance refunding and defeasance of the
outstanding 2007 Certificates; and
WHEREAS, in connection with such prepayment of the 2007 Lease Payments
and defeasance of the 2007 Certificates, and the issuance of the Bonds and any Additional
Bonds, the City and the Authority have entered into a Site and Facility Lease, dated as of June 1,
2016 (the "Site Lease"), whereby the Authority has agreed to lease the Leased Property from the
City; and
WHEREAS, the Authority, pursuant to this Lease, will sublease the Leased
Property described in Exhibit A to the City, in consideration for base rental payments to be made
by the City pursuant to this Lease, in accordance with the base rental schedule attached hereto as
Exhibit B, that corresponds in amount to the principal and interest coming due with respect to the
Bonds; 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
422066442
entering into of this Lease 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 Lease;
NOW, THEREFORE, in consideration of the above premises and of the mutual
covenants hereinafter contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
Terms used herein and not otherwise defined herein but defined in the Indenture
shall have the meanings ascribed to them in the Indenture. Unless the context otherwise requires,
the terms defined in this Section shall, for all purposes of this Lease, have the meanings herein
specified, the following definitions to be equally applicable to both the singular and plural forms
of any of the terms herein defined:
"Additional Assessment District Obli atm ions" means obligations secured by the
Assessment Revenues.
"Additional Rental Payments" means Additional Rental Payments due under
Section 3(b) hereof.
"Assessment District" means the City of Santa Clarita Open Space Preservation
District.
"Assessment Revenues" means annual assessments levied and collected by the
City from the operation of the Assessment District.
"Base Rental Payments" means Base Rental Payments to be made by the City
hereunder in accordance with the base rental schedule attached hereto as Exhibit B in connection
with the Bonds, and any additional base rental payments made hereunder to support Additional
Bonds issued in accordance with the Indenture.
"Event of Default" means the Events of Default set forth in Section 10.
"Expiration Date" means October 1, 203[6].
"Insurance Consultant" means an individual or firm retained by the City as an
independent insurance consultant, experienced in the field of risk management.
"Interest Component" means the interest component of any Base Rental Payments
as set forth in the exhibit to this Lease relating to such Base Rental Payments.
"Lease" means this Lease.
"Leased Property" means the portion of the Santa Clarita Sports Complex, located
at 20850 Centre Pointe Parkway, in the City, as more fully described on Exhibit A.
42206644.2 2
"Net Proceeds" means proceeds of any casualty or title insurance or
condemnation awards, paid with respect to the Leased Property remaining after payment
therefrom of all expenses in the collection thereof.
"Permitted Encumbrances" means, with respect to the Leased Property, as of any
particular time, (i) the Site Lease; (ii) this Lease, (iii) the Indenture, the Assignment Agreement
and the Trustee's and the Authority's interests in the Leased Property, (iv) liens for taxes and
assessments not then delinquent, (v) utility, access and other easements and rights of way,
restrictions and exceptions that as certified in a Certificate of the City will not interfere with or
impair the use intended to be made of the Leased Property; (vi) encumbrances upon any
additions and improvements to the Leased Property as permitted in this Lease and which do not
materially impair the use intended to be made of the portions of the Leased Property other than
such additions and improvements; (vii) any sublease or use permitted by this Lease,
(viii) covenants, conditions or restrictions or liens of record relating to the Leased Property and
existing on the Closing Date; (ix) such minor defects, irregularities, encumbrances and clouds on
title as normally exist with respect to property similar in character to the Leased Property and as
do not materially impair the use intended to be made of property affected thereby; and (x) any
encumbrances listed in the Preliminary Report issued by Chicago Title Company, dated April 4,
2016.
"Principal Component" means the principal component of any Base Rental
Payments as set forth in an exhibit to this Lease relating to such Base Rental Payments.
SECTION 2. TERM
The Authority hereby leases to the City and the City hereby leases from the
Authority, on the terms and conditions hereinafter set forth, the Leased Property. The term of
this Lease shall commence on June , 2016.
The term of the leasehold interest created hereby shall expire on the later of (i) the
Expiration Date; (ii) the date the last Base Rental Payment is made under the provisions hereof,
or (iii) the date of discharge of all of the Bonds and Additional Bonds pursuant to Section 9.03 of
the Indenture. Notwithstanding the foregoing, the term of this Lease shall automatically be
extended for a period of ten (10) years, if, on the Expiration Date, the Bonds and any Additional
Bonds have not been fully discharged, and shall terminate on the date when the Bonds and any
Additional Bonds have been fully discharged.
SECTION 3. RENTAL
Subject to the provisions of Sections 11 and 16 hereof, the City agrees to pay to
the Authority, its successors or assigns, as rental for the use and possession of the Leased
Property, the following amounts at the following times:
(a) Base Rental Payments• Additional Base Rental Payments. The City shall
pay the Base Rental Payments to the Trustee, as assignee of the Authority, as hereinafter
provided, in accordance with the Base Rental Payment Schedule attached hereto as Exhibit B,
less any amounts credited against the Base Rental Payments pursuant to Section 4.02(d) of the
Indenture. The City shall pay to the Trustee the Base Rental Payments coming due fifteen (15)
42206644.2 3
Business Days prior to the next succeeding April 1 and October 1, respectively, as set forth in
Exhibit B and such payments shall constitute payment in arrears in consideration for the City's
use and possession of the Leased Property for the six-month period preceding the due date of
such Base Rental Payments.
The obligation of the City to pay the Base Rental Payments with respect to the
Bonds shall rank pari passu with the obligation of the City to pay base rental payments with
respect to any Additional Bonds. Upon and after the issuance of any Additional Bonds secured
by base rental payments with respect to the Leased Property, the City shall pay the Base Rental
Payments with respect to such Additional Bonds as provided in the Supplemental Indenture for
such Additional Bonds, in accordance with the additional Base Rental Payment schedule which
shall be attached hereto as an additional exhibit prior to the delivery of such Additional Bonds,
as adjusted for any prepayments.
(b) Additional Rental Payments. The City shall also pay, as "Additional
Rental Payments" hereunder, in addition to the Base Rental Payments and any base rental
payments hereunder made with respect to Additional Bonds, to the Trustee, as assignee of the
Authority, as hereinafter provided, such amounts in each year as shall be required for the
payment of all costs and expenses (not otherwise paid for or provided for out of the proceeds of
sale of the Bonds) incurred by the Authority or the Trustee in connection with the execution,
performance or enforcement of this Lease or the assignment hereof, the Indenture, or the
Authority's or the Trustee's interest in the Leased Property, including, but not limited to, all fees,
costs and expenses, all administrative costs of the Authority relating to the Leased Property
(including, without limiting the generality of the foregoing, salaries and wages of employees,
overhead, insurance premiums, taxes and assessments (if any), expenses, compensation and
indemnification of the Trustee payable by the Authority under the Indenture), fees of auditors,
accountants, attorneys or engineers, all other reasonable and necessary administrative costs of the
Authority or charges required to be paid by it to comply with the terms of the Bonds or of the
Indenture.
Such Additional Rental Payments shall be billed to the City by the Authority or
the Trustee from time to time. Amounts so billed shall be paid by the City within sixty (60) days
after receipt of the bill by the City.
(c) Fair Rental Value. Payments of Base Rental Payments and Additional
Rental Payments for each rental payment period shall constitute the total rental for such rental
payment period, and shall be paid by the City in each rental payment period for and in
consideration of the right of the use and possession of, and the continued quiet use and
enjoyment of, the Leased Property during each such period for which said rental is to be paid.
The City represents and covenants that the useful life of the Leased Property is not shorter than
the final maturity of the Bonds. The parties to the Lease specifically acknowledge that the
annual fair rental value of the Leased Property is in excess of the maximum annual Base Rental
Payments. In making such determination, consideration has been given to other obligations of
the parties under this Lease, 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. The
determination of fair rental value of the Leased Property pursuant to this paragraph shall not be
42206644.2 4
deemed to be controlling in connection with a determination of fair value of the Leased Property
by the parties hereto for any other purpose.
(d) Payment of Base Rental Payments. Each installment of Base Rental
Payments and Additional Rental Payments payable hereunder shall be paid from any source of
legally available funds of the Lessee, including the Assessment Revenues, in lawful money of
the United States of America to the order of the Trustee at the corporate trust office of the
Trustee in Los Angeles, California, or such other place as the Trustee shall designate. All Base
Rental Payments shall be made on a pari passu basis with each other. Notwithstanding any
dispute between the City and the Authority, the City shall make all Base Rental Payments and
Additional Rental Payments when due, without deduction or offset of any kind, and shall not
withhold any Base Rental Payments pending the final resolution of any such dispute. In the
event of a determination that the City was not liable for such Base Rental Payments or any
portion thereof, said Base Rental Payments or excess of payments, as the case may be, shall, at
the option of the City, be credited against subsequent Base Rental Payments due hereunder or be
refunded at the time of such determination.
(e) Increases in Aggregate Base Rental Payments. The City covenants that it
shall not permit an increase in the aggregate Base Rental Payments or permit additional base
rental payments with respect to Additional Bonds without first obtaining an opinion of Bond
Counsel to the effect that the incurring of such increased Base Rental Payments will not (i)
impair the validity and enforceability of this Lease and (ii) in and of itself impair the exclusion of
interest on the Bonds and, to the extent applicable, any Additional Bonds from the gross income
of the owners thereof for federal income tax purposes.
(f) Covenant to Budget and Appropriate. The City covenants to take such
action as may be necessary to include all Base Rental Payments and Additional Rental Payments
due hereunder in its annual budget and to make the necessary annual appropriations for all such
Base Rental Payments and Additional Rental Payments, subject only to abatement as provided in
Section 16 hereof. The City will furnish to the Authority and the Trustee annually, on or
before September 1, a certificate stating that it has complied with the covenant set forth in
this paragraph. 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. The
obligation of the City to make Base Rental Payments or Additional Rental Payments does not
constitute an obligation of the City for which the City is obligated to levy or pledge any form of
taxation or for which the City has levied or pledged any form of taxation. Neither the Bonds and
any Additional Bonds nor the obligation of the City to make Base Rental Payments or Additional
Rental Payments constitutes an indebtedness of the City, the State or any of its political
subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.
(g) Assessment Revenues. Legally available funds of the City to make Base
Rental Payments include, but are not limited to, Assessment Revenues. In consideration of the
Authority assisting the City with the refinancing of the Project, the City covenants to contribute
all or a portion of annual Assessment Revenues collected to pay Base Rental Payments, subject
42206644.2 5
only to abatement as provided in Section 16 hereof. The Base Rental Payments shall constitute
an authorized use of the Assessment Revenues to refinance acquisitions and improvements
authorized by the Assessment District. Upon receipt of the annual Assessment Revenues to the
City, the City shall deposit such amounts in a separate fund established and held by the Deputy
City Manager/Director of Administrative Services known as the "Assessment Revenue Fund,"
until the amount on deposit therein equals the annual Base Rental Payments due for such Bond
Year. Thereafter, Assessment Revenues in excess of such required deposit are released to the
City for any lawful use authorized by the Assessment District. In connection with Section 3(f)
above, the City shall withdraw funds from the Assessment Revenue Fund in the amounts and at
the times needed to make Base Rental Payments. The City hereby covenants to continue to
annually impose, levy, and collect the Assessments Revenues during the duration of this Lease.
Notwithstanding the above, the City may incur Additional Assessment District
Obligations on parity with the covenant above provided the projected Assessment Revenues
equal or exceed the debt service of the Bonds and the Additional Assessment District
Obligations.
SECTION 4. USE OF PROCEEDS
The parties hereto agree that the proceeds of the Bonds will be used to advance
prepay and defease the 2007 Certificates by prepaying the 2007 Lease Payments and for other
purposes set forth in the Indenture.
SECTION 5. MAINTENANCE, UTILITIES, TAXES AND ASSESSMENTS
During such time as the City or any assignee or sublessee thereof is in possession
of the Leased Property, all maintenance and repair, ordinary or extraordinary, of the Leased
Property shall be the responsibility of the City, and the City shall pay for or otherwise arrange for
the payment of (a) all utility services supplied to the Leased Property, (b) the cost of operation of
the Leased Property, and (c) the costs of maintenance of and repair to the Leased Property
resulting from ordinary wear and tear or want of care on the part of the City. The City shall at
the City's sole cost and expense keep and maintain the Leased Property clean and in a safe and
good condition and repair. The Authority shall have no obligation to alter, remodel, improve,
repair, decorate, or paint the Leased Property or any part thereof, and the parties hereto affirm
that the Authority has made no representations or warranties to the City respecting the condition
of the Leased Property.
The City shall comply with all statutes, ordinances, regulations, and other
requirements of all governmental entities that pertain to the occupancy or use of the Leased
Property. The Authority has no responsibility or obligation whatsoever to construct any
improvements, modifications or alterations to the Leased Property.
The City waives the right to make repairs at the Authority's expense under
Subsection 1 of Section 1932 and Section 1942 of the California Civil Code, or any other such
law, statute, or ordinance now or hereafter in effect.
The parties hereto contemplate that the Leased Property will be used for public
purposes by the City and, therefore, that the Leased Property will be exempt from all taxes
42206644.2 6
presently assessed and levied with respect to real and personal property, respectively. In the
event that the use, possession or acquisition by the Authority or the City of the Leased Property
is found to be subject to taxation in any form, the City will pay during the term hereof, as the
same respectively become due, all taxes and governmental charges of any kind whatsoever that
may at any time be lawfully assessed or levied against or with respect to the Leased Property and
any other property acquired by the City in substitution for, as a renewal or replacement of, or a
modification, improvement or addition to the Leased Property; provided, that with respect to any
governmental charges or taxes that may lawfully be paid in installments over a period of years,
the City shall be obligated to pay only such installments as are accrued during such time as this
Lease is in effect.
SECTION 6. CHANGES TO THE LEASED PROPERTY
The City shall have the right during the term of this Lease to acquire and
construct improvements or to attach fixtures, structures or signs to the Leased Property if such
improvements, fixtures, structures or signs are necessary or beneficial for the use of the Leased
Property by the City; provided, however, that no such acquisition or construction shall result in a
material reduction in the value of the Leased Property, reduce the fair rental value thereof or
substantially alter the nature of the Leased Property.
Upon termination of this Lease, the City may remove any fixture, structure or sign
added by the City, but such removal shall be accomplished so as to leave the Leased Property,
except for ordinary wear and tear and damage by casualty, in substantially the same condition as
it was in before the fixture, structure or sign was attached.
SECTION 7. SUBSTITUTION AND RELEASE OF PROPERTY
The parties to the Lease specifically acknowledge that the annual fair rental value
of the Leased Property is in excess of the maximum annual Base Rental Payments. The City
shall have, so long as this Lease is in effect, and is hereby granted, the option at any time and
from time to time, to substitute other real property (the "Substitute Property") for any portion of
the Leased Property (the "Former Property") or release any identifiable real property and/or
improvements currently constituting the Leased Property (in such case, Substitute Property shall
mean the Former Property less any portion released pursuant to this Section); provided, that the
City shall satisfy all of the following requirements, which are conditions precedent to such
substitution:
(a) No default under Section 10 hereof or Event of Default shall have
occurred and be continuing;
(b) The City shall file with the Authority and the Trustee, and cause to be
recorded in the office of the County Recorder, sufficient memorialization of amendments to this
Lease and the Site Lease which replaces Exhibit A hereto and Exhibit A to the Site Lease with a
description of such Substitute Property which deletes therefrom the description of the Former
Property;
(c) The City shall obtain an extended California Land Title Association
("CLTA") policy of title insurance insuring the City's fee or leasehold estate in such Substitute
42206644.2 7
Property, the City's leasehold estate hereunder, and the Authority's leasehold estate under the
Site Lease in such Substitute Property, subject only to Permitted Encumbrances, in an amount
not less than the aggregate principal amount of the Outstanding Bonds; provided, however, that
this requirement shall not apply to Substitute Property that consists only of Former Property less
any released portion;
(d) The City shall provide a Certificate of the City to the Authority and to the
Trustee that such Substitute Property constitutes property which the City is permitted to lease
under the laws of the State of California;
(e) The substitution of the Substitute Property shall not cause the City to
violate any of its covenants, representations and warranties made herein;
(f) The City shall file with the Authority and the Trustee a Certificate of the
City or other evidence which establishes that the annual fair rental value of the Substitute
Property after substitution or release will be at least equal to 100% of the maximum amount of
the Base Rental Payments becoming due in the then current fiscal year or in any subsequent
fiscal year and the useful economic life of the Substitute Property shall be at least equal to the
maximum remaining term of this Lease; and
(g) The City shall furnish to the Trustee an opinion of Bond Counsel
addressed to the Trustee, the City and the Authority to the effect that the substitution or release is
permitted under this Lease and will not in and of itself (i) impair the validity and enforceability
of this Lease or (ii) impair the exclusion of interest on the Bonds and, if applicable, any
Additional Bonds from the gross income of the owners thereof for federal income tax purposes.
Upon the satisfaction of all such conditions precedent, and upon the City
delivering to the Authority and the Trustee a Certificate of the City certifying that the conditions
set forth in subsections (a), (c) and (e) of this Section have been satisfied, the Term of this Lease
shall thereupon end as to the Leased Property and shall thereupon commence as to the Substitute
Property, and all references to the Leased Property shall apply with full force and effect to the
Substitute Property. The City shall not be entitled to any reduction, diminution, extension or
other modification of the Base Rental Payments whatsoever as a result of any substitution or
removal hereunder.
SECTION 8. INSURANCE
(a) The City shall secure and maintain or cause to be secured and maintained
at all times with insurers of recognized responsibility or through a program of self-insurance to
the extent specifically permitted in this Section 8, all coverage on the Leased Property required
by this Section 8.
Such insurance shall consist of.
(1) Comprehensive general liability coverage against claims for
damages including death, personal injury, bodily injury or property damage arising from
operations involving the Leased Property. Such insurance shall afford protection with a
combined single limit of not less than $1,000,000 per occurrence with respect to bodily
42206644.2 8
injury, death or property damage liability, or such greater amount as may from time to
time be recommended by the City's risk management officer or an independent insurance
consultant retained by the City for that purpose, subject to a deductible clause of not to
exceed $400,000. The City's obligations under this clause (1) may be satisfied by self-
insurance;
(2) Casualty insurance against loss or damage to any or all of the
Leased Property by fire and lightning, with extended coverage and vandalism and
malicious mischief insurance, and against loss of Leased Property by theft. Such
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. The insurance required by this paragraph shall be in
an amount equal to the lesser of replacement cost (subject to deductible clauses not in
excess of $400,000 for any one loss) of improvements located or to be located on the
Leased Property and the principal amount of the Bonds then Outstanding. The City's
obligations under this clause (2) may be satisfied by self-insurance;
(3) Workers' compensation insurance issued by a responsible carrier
authorized under the laws of the State to insure employers against liability for
compensation under the Labor Code of the State, or any act enacted as an amendment or
supplement thereto or in lieu thereof, such workers' compensation insurance to cover all
persons employed by the City in connection with the Leased Property and to cover full
liability for compensation under any such act; provided, however, that the City's
obligations under this clause (3) may be satisfied by self-insurance; and
(4) Rental interruption insurance in an amount not less than the
maximum remaining scheduled Base Rental Payments in any twenty-four (24) month
period to insure against loss of use of the Leased Property caused by perils covered by the
insurance required in Section 8(a)(1). Such insurance may be maintained as part of or in
conjunction with any other rental interruption insurance carried by the City and must list
the Authority and the Trustee as an additional insured party. Such insurance shall be in
place as of the Closing Date. The Net Proceeds of such insurance shall be paid to the
Trustee and deposited in the Lease Revenue Fund, and shall be credited toward the
payment of the Base Rental Payments in the order in which such Base Rental Payments
come due and payable.
(5) The City shall, on or before the Closing Date, deliver a CLIA title
insurance policy insuring the leasehold interest in the Leased Property of the City and the
Authority, in an amount not less than the aggregate principal amount of the Outstanding
Bonds.
All policies or certificates issued by the respective insurers for insurance, with the
exception of workers' compensation insurance, shall provide that such policies or certificates
shall not be canceled or materially changed without at least 30 days' prior written notice to the
Authority and the Trustee. Certificates of comprehensive general liability and workers'
compensation insurance shall be furnished by applicable insurers to the City, and, at least ten
42206644.2 9
days prior to the expiration dates of such policies, if any, evidence of renewals shall be deposited
with the Trustee.
If the City elects to provide self-insurance pursuant to clauses (1), (2) and/or (3)
above, the City shall annually cause to be delivered to the Trustee a certificate of an Insurance
Consultant certifying to the adequacy of the City's reserves for such insurance.
All policies or certificates of insurance provided for herein shall name the City as
a named insured and the Trustee as an additional insured. All proceeds of insurance maintained
under clauses (1) and (3) shall be deposited with the City and under clause (2), (4) or (5) shall be
deposited with the Trustee.
Notwithstanding the generality of the foregoing, the City shall not be required to
maintain or cause to be maintained more insurance than is specifically referred to above or any
policies of insurance other than standard policies of insurance with standard deductibles offered
by reputable insurers at a reasonable cost on the open market.
(b) Form of Policies. The City shall deliver to the Trustee on or before the
Closing Date and each anniversary of the Closing Date a Certificate of the City that all insurance
required under this Lease is in full force and effect. In the event that the City obtains insurance
through a pooled insurance program of governmental entities, an annual statement or
memorandum of coverage delivered to the Authority and the Trustee will satisfy the
requirements of this subsection. The Trustee and the Authority shall not be responsible for the
sufficiency of any insurance herein required or payment of premium and shall be fully protected
in accepting payment on account of such insurance or any adjustment, compromise or settlement
of any loss agreed to by the City.
(c) Advances. If the City shall fail to perform any of its obligations under this
Section, then the Authority or the Trustee may, but shall not be obligated to, take such action as
may be necessary to cure such failure, including the advancement of money on behalf of the
City, and the City shall be obligated to repay all such advances as soon as possible.
SECTION 9. DAMAGE, DESTRUCTION AND CONDEMNATION;
APPLICATION OF NET PROCEEDS
If prior to the termination of the term hereof (a) the Leased Property is destroyed
(in whole or in part) or is damaged by fire of other casualty, or (b) title to, or the temporary use
of, any portion of the Leased Property or the estate of the Authority or the City in the Leased
Property or any portion shall be taken under the exercise of the power of eminent domain by any
governmental body or by any person or firm or corporation acting under governmental authority,
then the City and the Authority shall, as expeditiously as possible, continuously and diligently
prosecute or cause to be prosecuted the repair or replacement thereof, unless the City elects not
to repair or replace the Leased Property or portion thereof, in accordance with the provisions of
this Section 9. If Net Proceeds are insufficient to repair or replace the Leased Property or portion
thereof, the City shall, to the extent permitted by law, use its best efforts to fund any deficiency
from any legally available funds, including the Assessment Revenues.
42206644.2 10
If there is an abatement of rental payments pursuant to Section 16 hereof as a
result of such casualty or event, and the City elects pursuant to Section 11(a) hereof to apply
such insurance proceeds and such other sums as are deposited by the City pursuant to such
Section to the prepayment of Base Rental Payments rather than replacing or repairing the
destroyed or damaged portion of the Leased Property, then this Lease shall terminate with
respect to the destroyed or damaged portion of the Leased Property as of the later of the date of
such election by the City or the date the amount required by Section I I (a) hereof is received by
the Trustee.
The provisions of Section 1932, Subdivision 2, and Section 1933, Subdivision 4,
of the California Civil Code, including any amendments thereto and any other law which may
hereinafter be in force during the term of this Lease which authorizes the termination of this
Lease upon the partial or complete destruction of the Leased Property, are hereby waived by the
City.
The City hereby covenants and agrees, to the extent it may lawfully do so, that so
long as any of the Bonds and any Additional Bonds remain outstanding and unpaid, the City will
not exercise the power of condemnation with respect to the Leased Property. The City further
covenants and agrees, to the extent it may lawfully do so, that if for any reason the foregoing
covenant is determined to be unenforceable or if the City should fail or refuse to abide by such
covenant and condemns the Leased Property, the value of the Leased Property shall not be less
than the greater of (i) if Outstanding Bonds are then subject to redemption, the principal and
interest due on the Outstanding Bonds through the date of their redemption, or (ii) if such
Outstanding Bonds are not then subject to redemption, the amount necessary to defease such
Outstanding Bonds to the first available redemption date in accordance with the Indenture.
The City shall deposit any proceeds received from insurance and condemnation
awards with respect to the destruction or partial destruction of Leased Property with the Trustee
for deposit into the: (a) Insurance and Condemnation Fund if the City elects to repair the Leased
Property or (b) the Lease Revenue Fund if the City elects to redeem the Outstanding Bonds. The
City shall have 45 days from the date of any such destruction or partial destruction to determine
whether to repair the Leased Property or use insurance and condemnation award proceeds
received to redeem such bonds. To the extent that the City determines not to repair the Leased
Property and cannot use insurance and condemnation award proceeds to redeem such bonds, the
City shall and hereby covenants to substitute property for such Leased Property of equivalent or
greater value in accordance with the provisions of Section 7 hereof. If the City determines to
repair the Leased Property, disbursements by the Trustee shall only be made upon presentation
of a requisition in a form substantially similar to Exhibit C of the Indenture. If the City
determines to cause the redemption of less than the full amount of the Outstanding Bonds, such
redemption shall only be made to the extent the remaining fair rental value of the Leased
Property is sufficient to support the remaining Base Rental Payments supporting debt service on
the Outstanding Bonds.
SECTION 10. DEFAULT
(a) Each of the following events constitutes an "Event of Default" hereunder:
42206644.2 11
(1) Failure by the City to pay any Base Rental Payment or other
payment (including Additional Rental Payments) required to be paid hereunder at the
time specified herein.
(2) Failure by the City to observe and perform any covenant, condition
or agreement on its part to be observed or performed hereunder, other than as referred to
in the preceding subsection (1), for a period of 30 days after written notice specifying
such failure and requesting that it be remedied has been given to the City by the
Authority. However, if the City notifies the Authority that in its reasonable opinion the
failure stated in the notice can be corrected, but not within such 30 day period, the failure
will not constitute an Event of Default if the City commences to cure the failure within
such 30 day period and thereafter diligently and in good faith cures such failure in a
reasonable period of time; provided, that such cure period shall not extend beyond 60
days.
(3) The filing by the City of a voluntary petition in bankruptcy, or
failure by the City promptly to lift any execution, garnishment or attachment, or
adjudication of the City as a bankrupt, or assignment by the City for the benefit of
creditors, or the entry by the City into an agreement of composition with creditors, or the
approval by a court of competent jurisdiction of a petition applicable to the City in any
proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended,
or under any similar acts which may hereafter be enacted.
The Authority expressly waives the right to receive any amount from the City
pursuant to Section 1951.2(a)(3) of the California Civil Code.
(b) Whenever any Event of Default has happened and is continuing, the
Authority may exercise any and all remedies available under law or granted under this Lease.
Notwithstanding anything herein to the contrary, there shall be no right under any circumstances
to accelerate the Base Rental Payments or otherwise declare any Base Rental Payments not then
in default to be immediately due and payable. Each and every covenant hereof to be kept and
performed by the City is expressly made a condition and upon the breach thereof the Authority
may exercise any and all rights granted hereunder; provided, that no termination of this Lease
will be effected either by operation of law or acts of the parties hereto, except only in the manner
herein expressly provided. Upon the occurrence and during the continuance of any Event of
Default, the Authority may exercise each and every one of the following remedies:
(1) Enforcement of Payments Without Termination. If the Authority
does not elect to terminate this Lease in the manner hereinafter provided for in subsection
(b)(2) of this Section, the City agrees to remain liable for the payment of all Base Rental
Payments and the performance of all conditions herein contained, and the Authority may
take whatever action at law or in equity may appear necessary or desirable, to collect
each Base Rental Payment as it becomes due hereunder. The City will reimburse the
Authority for any deficiency arising out of the re-leasing or sale of the Leased Property or
portion thereof, or, if the Authority is unable to re -lease or sell the Leased Property, then
for the full amount of all Base Rental Payments to the end of the term of this Lease, but
said Base Rental Payments and/or deficiency will be payable only at the same time and in
42206644.2 12
the same manner as hereinabove provided for the payment of Base Rental Payments
hereunder, notwithstanding such entry or re-entry by the Authority or any suit in unlawful
detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry
or obtaining possession of the Leased Property or portion thereof 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 and the shall allow the Trustee to enter upon and re -lease the
Leased Property upon the occurrence and continuation of an Event of Default and to
remove all personal property whatsoever situated upon the Leased Property, to place such
property in storage or other suitable place in the State of California for the account of and
at the expense of the City, and the City hereby agrees to save harmless the Authority
from any costs, loss or damage whatsoever arising or occasioned by any such entry upon
and re-leasing of the Leased Property and the removal and storage of such property by
the Authority or its duly authorized agents in accordance with the provisions herein
contained. The City agrees that the terms of this Lease constitute full and sufficient
notice of the right of the Authority to re -lease the Leased Property in the event of such re-
entry without effecting a surrender of this Lease, and further agrees that no acts of the
Authority in effecting such re-leasing constitute a surrender or termination of this Lease
irrespective of the term for which such re-leasing is made or the terms and conditions of
such re-leasing, or otherwise, but that, on the contrary, in the event of such default by the
City the right to terminate this Lease will vest in the Authority to be effected in the sole
and exclusive manner hereinafter provided for in subsection (2) of this Section. The City
agrees to surrender and quit possession of the Leased Property upon demand of the
Authority for the purpose of enabling the Leased Property to be re -let under this
paragraph. Any rental obtained by the Authority in excess of the unpaid Base Rental
Payments will be applied as a credit against future Base Rental Payments.
(2) Termination of Lease. If an Event of Default occurs and is
continuing hereunder, the Authority at its option may terminate this Lease and re -lease all
or any portion of the Leased Property. If the Authority terminates this Lease at its option
and in the manner hereinafter provided on account of default by the City (and
notwithstanding any re-entry upon the Leased Property by the Authority in any manner
whatsoever or the re-leasing of the Leased Property), the City nevertheless agrees to pay
to the Authority all costs, loss or damages howsoever arising or occurring payable at the
same time and in the same manner as is herein provided in the case of payment of Base
Rental Payments. Any surplus received by the Authority from such re-leasing will be
applied as a credit against future Base Rental Payments. Neither notice to pay rent or to
deliver up possession of the premises given under law nor any proceeding in unlawful
detainer taken by the Authority will of itself operate to terminate this Lease, and no
termination of this Lease on account of default by the City will be or become effective by
operation of law, or otherwise, unless and until the Authority has given written notice to
the City of the election on the part of the Authority to terminate this Lease. The City
agrees that no surrender of the Leased Property, or of the remainder of the term hereof or
any termination of this Lease will be valid in any manner or for any purpose whatsoever
unless stated or accepted by the Authority by such written notice.
42206644.2 13
(3) Proceedings at Law or In Equity. If an Event of Default occurs
and continues hereunder, the Authority may take whatever action at law or in equity may
appear necessary or desirable to collect the amounts then due and thereafter to become
due hereunder or to enforce any other of its rights hereunder.
(4) Remedies under the Site Lease. If an Event of Default occurs and
continues hereunder, the Authority may exercise its rights under the Site Lease.
SECTION 11. PREPAYMENT AND CREDITS
(a) Prepayment From Net Proceeds.
(1) The City may prepay, from Net Proceeds of insurance or a
condemnation award received by it pursuant to Section 9, the Principal Component of
Base Rental Payments then unpaid (and corresponding Interest Component), in whole or
in part on any date, pursuant to Section 9 hereof, at a prepayment price equal to the sum
of the Principal Component prepaid plus accrued interest thereon to the date of
prepayment.
(2) Prepayments made pursuant to this subsection (a) shall be
allocated pro rata among the Principal Components of Base Rental Payments relating to
the Bonds and any Additional Bonds.
(b) Optional Prepayment.
The City may at its option prepay from any source of available moneys for
redemption of Bonds pursuant to Section 2.03 of the Indenture, all or any part (in an integral
multiple of $5,000) of the Principal Component of Base Rental Payments (and corresponding
Interest Component), so that the aggregate annual amounts of Principal Component of Base
Rental Payments which shall be payable after such prepayment shall each be an integral multiple
of $5,000, at a prepayment price equal to the principal amount to be redeemed, plus accrued but
unpaid interest to the prepayment date, without premium.
Before making any prepayment pursuant to this Section, the City shall give
written notice to the Trustee specifying the date on which the prepayment will be made, which
date shall be not less than forty-five (45) days from the date such notice is given unless the
Trustee agrees to a shorter period.
The Authority and the City hereby agree that any prepayment in part under this
Section and the redemption of any Bonds by the Authority pursuant to Section 2.03(b) of the
Indenture shall be credited towards the City's obligations hereunder at the option of the City in
any manner determined in writing delivered to the Trustee by the City. A prepayment made
pursuant to this Section shall not cause a defeasance of any Bonds unless the requirements of
Section 9.03 of the Indenture are satisfied.
In the event of prepayment in full of the Principal Component of all Base Rental
Payments, such that this Lease shall be terminated by its terms as provided in Section 2, all
amounts then on deposit under the Indenture which are to be credited to the City's obligations to
42206644.2 14
make Base Rental Payments shall be credited towards the amounts then required to be so
prepaid. In the event of the prepayment of some but not all of the Principal Components of the
Base Rental Payments, the City shall replace the applicable Base Rental Schedule with a revised
Base Rental Payment Schedule reflecting such prepayment of the Principal Components of such
Base Rental Payments.
SECTION 12. MECHANICS' LIENS
In the event the City shall at any time during the term of this Lease cause any
improvements or other work to be done or performed or materials to be supplied, in or upon the
Leased Property, the City shall pay, when due, all sums of money that may become due for, or
purporting to be for, any labor, services, materials, supplies or equipment furnished or alleged to
have been furnished to or for the City in, upon or about the Leased Property and which may be
secured by any mechanics', materialmen's or other liens against the Leased Property or the
Authority's interest therein, and will cause any such lien to be fully discharged and released at
the time the performance of any obligation secured by any such lien matures or becomes due,
except that, if the City desires to contest any such lien it may do so. If any such Lien shall be
reduced to final judgment and such judgment or such process as may be issued for the
enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the
City shall forthwith pay and discharge said judgment.
SECTION 13. QUIET ENJOYMENT
The parties hereto mutually covenant that the City, so long as it keeps and
performs the covenants and agreements herein contained, shall at all times during the term of this
Lease peaceably and quietly have, hold and enjoy the Leased Property without suit, trouble or
hindrance from the Authority.
SECTION 14. INDEMNIFICATION
The City shall, to the full extent then permitted by law, indemnify, defend, protect
and hold harmless the Authority, the Trustee and their members, officers, directors, agents and
employees from and against any and all liabilities, obligations, losses, claims and damages
whatsoever, regardless of the cause thereof (except for claims arising out of willful misconduct
or negligence on the part of the Authority or the Trustee or their respective members, officers,
directors or employees), and expenses in connection therewith, including, without limitation,
reasonable counsel fees and expenses, penalties and interest arising out of or as the result of the
entering into of this Lease and the Indenture, the payment of the costs of acquiring the Leased
Property or any accident in connection with the operation, use, condition or possession of the
Leased Property or any portion thereof resulting in damage to property or injury to or death to
any person. The indemnification arising under this section shall continue in full force and effect
notwithstanding the full payment of all rent obligations hereunder, the removal or resignation of
the Trustee or the termination hereof for any reason. The City agrees not to withhold or abate
any portion of the payments required pursuant hereto by reason of any defects, malfunctions,
breakdowns or infirmities of the Leased Property. The Authority and the City mutually agree to
promptly give notice to each other of any claim or liability hereby indemnified against following
either party's learning thereof.
42206644.2 15
SECTION 15. ASSIGNMENT
The parties understand that this Lease and the rights of the Authority hereunder,
with certain exceptions, will be assigned to the Trustee as provided in the Indenture and the
Assignment Agreement, to which assignments the City hereby consents.
Neither this Lease nor any interest of the City hereunder shall be mortgaged,
pledged, assigned or transferred by the City by voluntary act or by operation of law or otherwise;
provided, subject to the provisions of Section 17 hereof, that the Leased Property may be
subleased in whole or in part by the City, but only subject to the following conditions, which are
hereby made conditions precedent to any such sublease:
(a) This Lease and the obligation of the City to make all Base Rental
Payments and Additional Rental Payments hereunder shall remain the primary obligation of the
City;
(b) The City shall, within 30 days after the delivery thereof, furnish or cause
to be furnished to the Authority and the Trustee a true and complete copy of such sublease;
(c) No such sublease by the City shall cause the Leased Property to be used
for a primary purpose other than a governmental or proprietary function authorized under the
provisions of the Constitution and laws of the State of California, as evidenced by a Certificate
of the City that is delivered to the Trustee;
(d) Any sublease of the Leased Property by the City shall explicitly provide
that such sublease is subject to all rights of the Authority under this Lease; and
(e) The City shall have filed or caused to be filed with the Authority and the
Trustee an opinion of Bond Counsel to the effect that such sublease will not, in and of itself,
cause the interest on the Bonds and any Additional Bonds (that are intended to be tax-exempt) to
be included in gross income for federal income tax purposes.
SECTION 16. ABATEMENT OF RENTAL
The obligation of the City to pay Base Rental Payments and Additional Rental
Payments shall be abated during any period in which by reason of any damage, destruction,
condemnation or title defect there is substantial interference with the use by the City of the
Leased Property or any portion thereof. Such abatement shall be in an amount such that the
resulting Base Rental Payments in any year during which such interference continues does not
exceed the fair rental value of the portions of the Leased Property as to which such damage,
destruction, taking or title defect does not substantially interfere with the City's use and right of
possession, as evidenced by a Certificate of the City. Such abatement shall continue for the
period commencing with the date of interference resulting from such damage, destruction,
condemnation or title defect and, with respect to damage to or destruction of the Leased
Property, and ending with the substantial completion of the work of repair or replacement of the
Leased Property, or the portion thereof so damaged or destroyed, and the term of this Lease shall
be extended as provided in Section 2 hereof. Notwithstanding the foregoing, to the extent that
moneys are available for the payment of base rental payments in any of the funds and accounts
42206644.2 16
established under the Indenture (other than the Assessment Revenue Fund), such base rental
payments shall not be abated but shall be payable by the City as a special obligation payable
solely from such funds and accounts.
SECTION 17. COVENANTS OF THE CITY
(a) Special Definitions. When used in this Section, the following terms have
the following meanings:
"Computation Date" means, initially, the first day following the conclusion of the fifth
Bond Year (unless on or before such date the Authority has designated a different date as the
Computation Date), and each subsequent Computation Date shall be the fifth anniversary of the
immediately preceding Computation Date (unless, as to any Computation Date, the Authority has
designated an earlier date following such immediately preceding Computation Date as a
Computation Date.
"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 Bonds.
"Investment" has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
"Nongovernmental Output Property" means any property (or interest therein) that prior
to its acquisition by the City was used by (or manufactured for or to the order of or held for the
use by) any Nongovernmental Person (whether actually so used or not) in connection with any
electric and gas generation, transmission, distribution, or related facilities.
"Nongovernmental Person" refers to any person or entity (including the United States or
any agency, department and instrumentality thereof) other than a state or local government, or an
agency or instrumentality acting solely on behalf thereof.
"Nonpurpose Investment" means any investment property, as defined in section 148(b)
of the Code, in which Gross Proceeds of the Bonds are invested and that is not acquired to carry
out the governmental purposes of the Bonds.
"Nonpurpose Investment" means any investment property, as defined in section 148(b)
of the Code, in which Gross Proceeds of the Bonds are invested and that is not acquired to carry
out the governmental purposes of the Bonds.
"Original Issue " refers to the 2007 Certificates.
"Original Facilities " means any property the acquisition, construction or improvement of
which was financed directly or indirectly with Gross Proceeds of an Original Issue.
"Rebate Amount" has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
422066442 17
"Tax Regulations" means the United States Treasury Regulations promulgated
pursuant to sections 103 and 141 through 150 of the Code, or under the provisions of any
predecessor statute corresponding thereto.
"Yield" of
(1) any Investment has the meaning set forth in section 1.148-5 of the Tax
Regulations; and
(2) the Bonds has the meaning set forth in section 1.148-4 of the Tax
Regulations.
(b) Not to Cause Interest to Fail to Be Excluded from Gross Income. The
City covenants that it will not use, permit the use of, or 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,
would cause the interest on any of the Bonds to fail to be excluded pursuant to section 103(x) of
the Code from the gross income, of the owner thereof for federal income tax purposes. Without
limiting the generality of the foregoing, unless and until the City receives a written opinion of
Bond Counsel to the effect that failure to comply with such covenant will not adversely affect the
exemption from federal income tax of the interest on any Bond, the City will comply with each
of the specific covenants in this Section.
(e) No Private Use or Private Pats. Except as would not cause any Bond
to become a "private activity bond" within the meaning of section 141 of the Code and the Tax
Regulations and rulings thereunder, the City covenants that at all times prior to the payment and
cancellation of the last Bond to be paid and canceled:
(1) it will use its best efforts to ensure that the City (or another entity other
than a Nongovernmental Entity) exclusively owns, operates and possesses all of the
Original Facilities that are to be refinanced directly or indirectly with Gross Proceeds of
the Bonds, and that it will not use or permit the use of such Gross Proceeds (including
under any contractual arrangement with terms different than those applicable to the
general public) or any of the Original Facilities in any activity carried on by any
Nongovernmental Person, 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 in respect of the use by any Nongovernmental Person of Gross
Proceeds of the Bonds, other than interest earned on investments acquired with such
Gross Proceeds pending application for their intended purposes, or of any Original
Facility.
Without limiting the foregoing, except as would not cause any Bond to become a "private
activity bond" within the meaning of section 141 of the Code and the Tax Regulations and
rulings thereunder, the City will not: (i) permit any Nongovernmental Person to hold any
ownership, proprietary or possessory interest in any of the Original Facilities; (ii) contract with
any Nongovernmental Person for the provision of operating or other services with respect to any
42206644.2 18
function of an Original Facility (unless either (A) such arrangement requires no payment of fees
to such Nongovernmental Person other than as direct reimbursement of third party costs or
reasonable administrative overhead, or (B) such arrangement conforms to administrative
guidance of the Internal Revenue Service in order to assure that such arrangement does not
create a private business use relationship of the Nongovernmental Person to the Gross Proceeds
of the Bonds or to any Original Facility); or (iii) contract with any Nongovernmental Person for
the sale of output or capacity of an Original Facility that is an output facility, unless such
contract is described either in section 1.141-7(c) of the Treasury Regulations (describing certain
types of output contracts that do not have the effect of transferring the benefits of owning the
property and the burdens of paying debt service on the financing of the property) or in section
1.141-7(f) of the Treasury Regulations (describing certain types of output contracts that while
having the effect of transferring such benefits and burdens but nevertheless may be disregarded
in evaluating private business use). For purposes of the preceding sentence, the City will treat
proceeds of the Bonds as used ratably for the same purposes as were the proceeds of the Original
Issue.
(d) No Private Loan. Except as would not cause any Bond to become a
"private activity bond" within the meaning of section 141 of the Code and the Tax Regulations
and rulings thereunder, the City has not used, and will not use, Gross Proceeds of any Bond to
make or finance loans to any Nongovernmental Person. For purposes of the foregoing covenant,
such Gross Proceeds are considered to be "loaned" to a person or entity if: (1) 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; (2) 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 (3) 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 any Bond 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 maturity of
the Bonds 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 such Bond within the meaning of
said section 148.
(f) Not Federally Guaranteed. The City covenants that, except to the extent
permitted by section 149(b) of the Code and the Tax Regulations and rulings thereunder, it will
not take or omit to take any action that would cause any Bond 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 covenants that it will timely file or cause to
be filed any information required by section 149(e) of the Code with respect to the Bonds with
the Secretary of the Treasury on Form 8038-G or such other form and in such place as the
Secretary may prescribe.
42206644.2 19
(h) Rebate of Arbitrage Profits. Except to the extent otherwise provided in
section 148(f) of the Code and the Tax Regulations and rulings thereunder:
(1) it will account for all Gross Proceeds of the Bonds (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 accounting for at least six years after the day on which the last Bond is
discharged. However, to the extent permitted by law, the City may commingle Gross
Proceeds of the Bonds with its other money, provided that the City separately accounts
for each receipt and expenditure of Gross Proceeds and the obligations acquired
therewith.
(2) not less frequently than each Computation Date, it will calculate or cause
to be calculated the Rebate Amount in accordance with rules set forth in section 148(f) of
the Code and the Tax Regulations and rulings thereunder. The Trustee may rely
conclusively upon the City's determinations, calculations and certifications required by
this Section. The Trustee shall have no responsibility to independently make any
calculation of determination or to review the City's calculations hereunder. The City
covenants that it will maintain a copy of the calculation with its official transcript of
proceedings relating to the issuance of the Bonds until six years after the final
Computation Date;
(3) it will deposit in the Rebate Fund and cause the Trustee to pay to the
United States the amount that when added to the future value of previous rebate payments
made for the Bonds equals (A) 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 (B) in the case of any other Computation Date, ninety percent
(90%) of the Rebate Amount on such a date. In all cases such Rebate payments shall be
made by the City (or by the Trustee at the direction of 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 such payments shall be accompanied by Form 8038-T
executed by the City 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.
(4) it will exercise reasonable diligence to assure that no errors are made in
the calculations and payments required by paragraphs (2) and (3) above, 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. The City covenants that, except to the
extent permitted by section 148 of the Code and the Tax Regulations and rulings thereunder, at
no time prior to the final maturity of the Bonds will it 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
422066442 20
transaction had been at arm's length and had the Yield on the Bonds not been relevant to each
party.
0) Bonds Not Hedge Bonds.
(1) The City represents that the Original Issue was, and covenants that
the Bonds will not be, "hedge bonds" within the meaning of section 149(g) of the Code.
(2) Without limitation of paragraph (1) above, the City warrants as to
the Original Issue that: (I) on each date of issuance of that issue, the City reasonably
expected that at least 85% of the spendable proceeds of that Original Issue would be
expended within the three-year period commencing on such date of issuance, and (II) no
more than 50% of the proceeds of that Original Issue at any time has been invested in
Nonpurpose Investments having a substantially guaranteed yield for a period of four
years or more.
(k) Use of Proceeds; Weighted Average Maturity. The City hereby represents
and covenants that it will apply the proceeds of the Bonds in a manner so that the weighted
average maturity of the Bonds does not exceed 120% of the average reasonably expected
remaining economic life of the facilities refinanced by the Bonds (all determined in accordance
with the provisions of section 147(b) of the Code).
(1) Elections. The City hereby directs and authorizes any Responsible Officer
to make elections permitted or required pursuant to the provisions of the Code or the Tax
Regulations, as such Responsible Officer (after consultation with Bond Counsel) deems
necessary or appropriate in connection with the Bonds, in the Tax Certificate relating to the
Bonds 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 Certificate as to Arbitrage and the Provisions
of Sections 103 and 141-150 of the Internal Revenue Code of 1986, or similar document
containing additional representations and covenants pertaining to the exclusion of the interest on
the Bonds from the gross income of the owners thereof for federal income tax purposes, which
representations and covenants are incorporated as though expressly set forth herein.
SECTION 18. CONTINUING DISCLOSURE
The City will comply with the continuing disclosure requirements applicable to it
promulgated under U.S. Securities and Exchange Commission Rule 15c2-12 and will also
comply with its obligations under the Continuing Disclosure Certificate, dated as of June 1,
2016, delivered by the City relating to the Bonds and under any continuing disclosure certificate
or agreement related to Additional Bonds that are subject to Rule 15c2-12; provided, however,
that the sole remedy hereunder in the event of any failure of the City to comply with this
covenant shall be an action to compel performance and the City's failure to comply with any
continuing disclosure requirement shall not be deemed a default or an Event of Default.
42206644.2 21
SECTION 19. WAIVER
Failure of the Authority to take advantage of any default on the part of the City
shall not be, or be construed as, a waiver thereof, nor shall any custom or practice which may be
established between the parties in the course of administering this Lease be construed to waive or
to lessen the right of the Authority to insist upon performance by the City of any term, covenant
or condition hereof, or to exercise any rights given the Authority on account of such default. A
waiver of a particular default shall not be deemed to be a waiver of the same or any subsequent
default. The acceptance of rent hereunder shall not be, nor be construed to be, a waiver of any
term, covenant or condition of this Lease.
SECTION 20. NET LEASE
Subject to the provisions of Section 16 ("Abatement of Rental"), this Lease shall
be deemed and construed to be a "Triple -Net -Lease" and the City hereby agrees that rental
provided for herein shall be an absolute net return to the Authority, free and clear of any
expenses, taxes, fees, insurance premiums, rebate payments, Leased Property costs, reserve
deposits, charges or setoffs whatsoever.
SECTION 21. AMENDMENTS.
This Lease may be amended in writing as may be mutually agreed by the
Authority and the City; provided, that no such amendment which materially adversely affects the
rights of the Owners shall be effective unless it shall have been consented to by the Owners of
more than a majority in aggregate principal amount of the affected Bonds and any Additional
Bonds then Outstanding, and provided further, that no such amendment shall (a) extend the
payment date of any Base Rental Payment, without the prior written consent of the Owner of
each Bond and any Additional Bond so affected, or (b) reduce the percentage of the Outstanding
Bonds the consent of the Owners of which is required for the execution of any amendment
hereof.
This Lease and the rights and obligations of the Authority and the City hereunder
may also be amended or supplemented at any time by an amendment hereof or supplement
hereto which shall become binding upon execution by the Authority and the City without the
written consents of any Owners, but only to the extent permitted by law and only for any one or
more of the following purposes:
(a) to add to the agreements, conditions, covenants and terms required by the
Authority or the City to be observed or performed herein and other agreements, conditions,
covenants and terms thereafter to be observed or performed by the Authority or the City, or to
surrender any right or power reserved herein to or conferred herein on the Authority or the City,
and which in either case shall not materially adversely affect the interests of the Owners;
(b) to make such provisions for the purpose of curing any ambiguity of
correcting, curing or supplementing any defective provision contained herein or in regard to
questions arising hereunder which the Authority or the City may deem desirable or necessary and
not inconsistent herewith, and which shall not materially adversely affect the interests of the
Owners;
422066442 22
(c) to effect a Substitution or Removal;
(d) to increase the amount of Base Rental Payment payable hereunder for the
purpose of allowing the Authority to add any real property to be acquired and leased hereunder
or for the issuance of Additional Bonds; or
(e) for any other purpose which shall not materially adversely affect the
interests of the Owners.
SECTION 22. ESSENTIALITY
The City covenants and agrees that the Leased Property is essential to the City's
exercise of its govermnental functions.
SECTION 23. LAW GOVERNING
This Lease shall be governed and construed exclusively by the provisions hereof
and by the laws of the State of California.
SECTION 24. NOTICES
All notices, statements, demands, consents, approvals, authorizations, offers,
designations, requests or other communications hereunder by either party to the other shall be
made as provided in the Indenture.
SECTION 25. VALIDITY AND SEVERABILITY
If for any reason this Lease shall be held by a court of competent jurisdiction to be
void, voidable, or unenforceable by the Authority or by the City, or if for any reason it is held by
such a court that any of the covenants of the City hereunder, including the covenant to pay
rentals hereunder, is unenforceable for the full term hereof, then and in such event this Lease is
and shall be deemed to be a lease from year to year under which the rentals are to be paid by the
City semi-annually in consideration of the right of the City to possess, occupy and use the
Leased Property, and all of the rental and other terms, provisions and conditions of this Lease,
except to the extent that such terms, provisions and conditions are contrary to or inconsistent
with such holding, shall remain in full force and effect.
SECTION 26. SECTION HEADINGS
All section headings contained are for convenience of reference only and are not
intended to define or limit the scope of any provision of this Lease.
SECTION 27. NO MERGER
If both the Authority's and the City's estate under this or any other lease relating
to the Leased Property or any portion thereof shall at any time or for any reason become vested
in one owner, this Lease and the estate created hereby shall not be destroyed or terminated by the
doctrine of merger unless the City so elects as evidenced by recording a written declaration so
42206644.2 23
stating, and unless and until the City so elects, the City shall continue to have and enjoy all of its
rights and privileges as to the separate estates.
SECTION 28. EXECUTION
It is agreed that separate counterparts of this Lease may separately be executed by
the Authority and the City, all with the same force and effect as though the same counterpart had
been executed by both the Authority and the City.
42206644.2 24
IN WITNESS WHEREOF, the Authority and the City have caused this Lease to
be executed by their respective officers thereunto duly authorized, all as of the day and year first
above written.
ATTEST:
By
Secretary
City Clerk
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
LIM
42206644.2 25
Chair
CITY OF SANTA CLARITA
IMA
Deputy City Manager/Director of
Administrative Services
A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE
VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE
DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE
TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.
STATE OF CALIFORNIA )
ss:
COUNTY OF LOS ANGELES )
On before me, (insert name of the
officer), Notary Public, personally appeared , who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
[Seal]
42206644.2
A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE
VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE
DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE
TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.
STATE OF CALIFORNIA )
ss:
COUNTY OF LOS ANGELES }
On before me, (insert name of the
officer), Notary Public, personally appeared who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
[Seal]
42206644.2 2
EXHIBIT A
DESCRIPTION OF THE LEASED PROPERTY
The land, and Aquatic Center and Sports Complex structures and facilities located
thereon, at 20850 Centre Pointe Parkway, City of Santa Clarita, situated on a portion of parcels
of land, being Assessor Parcel No. 2836-018-900, in the City of Santa Clarita, County of Los
Angeles, State of California, described below:
PARCEL]:
LOT 4 IN FRACTIONAL SECTION 19, TOWNSHIP 4 NORTH, RANGE 15 WEST, SAN BERNARDINO
MERIDIAN, IN THE CITY OF SANTA CLARITA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA,
ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT THAT PORTION OF SAID LAND LYING WESTERLY OF THE EASTERLY LINE OF THAT
CERTAIN STRIP OF LAND 305 FEET IN WIDTH, AS DESCRIBED IN THE DEED TO THE CITY OF LOS
ANGELES, RECORDED SEPTEMBER 21 1967 AS INSTRUMENT NO. 459, IN BOOK D-3774, PAGE 387
OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORD OF SAID COUNTY.
ALSO EXCEPT THE SOUTHERLY 58 FEET OF SAID LOT 4 MEASURED ALONG THE EASTERLY AND
WESTERLY LINES THEREOF.
ALSO EXCEPT THAT PORTION OF SAID LAND BOUNDED BY THE FOLLOWING DESCRIBED LINES:
BEGINNING AT A POINT ON THE EASTERLY LINE OF SAID LOT 4, DISTANT NORTHERLY
THEREON 58.00 FEET FROM THE SOUTHEASTERLY CORNER THEREOF; THENCE ALONG THE
NORTHERLY LINE OF THE SOUTHERLY 58.00 FEET OF SAID LOT 4, MEASURED ALONG THE
EASTERLY AND WESTERLY LINES THEREOF; SOUTH 89° 34' 02" WEST 367.73 FEET; THENCE
NORTH 240 23' 25" WEST 55.06 FEET; THENCE NORTH 54° 09' 22" EAST 42.74 FEET; THENCE
NORTH 070 55' 21" WEST 41.80 FEET; THENCE NORTH 55° 35'37" EAST 43.68 FEET; THENCE
NORTH 340 36' 49" WEST 22.64 FEET; THENCE NORTH 56° 24' 31" EAST 176.60 FEET; THENCE
SOUTH 890 36' 31" EAST 191.08 FEET; THENCE SOUTH 0° 03' 05" EAST 253.51 TO THE POINT OF
BEGINNING.
ALSO EXCEPT ALL MINERALS, OIL, GAS, AND OTHER HYDROCARBON SUBSTANCES LYING
BELOW A DEPTH OF 100 FEET, BUT WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED
BY SAUGUS LIMITED IN THE DEED RECORDED JANUARY 18, 1979 AS INSTRUMENT NO. 79-74632
AND BY NETHERCUTT LABORATORIES IN THE DEED RECORDED MARCH 22, 1983 AS
INSTRUMENT NO. 83-315019, BOTH IN SAID OFFICE OF THE COUNTY RECORDER.
PARCEL2:
A PERMANENT AND EXCLUSIVE EASEMENT, INCLUDING THE EXCLUSIVE RIGHT TO ALL
SURFACE USAGES WITH THE RIGHT TO PRECLUDE THE USE THEREOF BY ANY OTHER PERSON,
FIRM OR CORPORATION OVER THAT PORTION OF THE SOUTHWEST 1/4 OF SECTION 19
TOWNSHIP 4 NORTH RANGE 15 WEST SAN BERNARDINO MERIDIAN, IN THE CITY OF SANTA
CLARITA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL
PLAT THEREOF BOUNDED AS FOLLOWS:
BOUNDED SOUTHERLY BY THE SOUTHERLY LINE OF THE LAND DESCRIBED IN THE DEED TO
SOLEDAD LTD, A LIMITED PARTNERSHIP RECORDED ON DECEMBER 23, 1975 AS
INSTRUMENT NO. 2800 IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,
42206644.2 A-1
BOUNDED WESTERLY BY THE EASTERLY LINE OF THE 305 FOOT WIDE STRIP OF LAND
DESCRIBED IN THE DEED TO THE CITY OF LOS ANGELES, RECORDED ON SEPTEMBER 25. 1967
AS INSTRUMENT NO. 306 IN BOOK D-3777, PAGE 592 OF OFFICIAL RECORDS OF SAID COUNTY,
BOUNDED NORTHERLY BY A LINE PARALLEL WITH AND DISTANT SOUTHERLY 33.00 FEET
MEASURED AT RIGHT ANGLES AND RADIALLY FROM THAT CERTAIN COURSE AND CURVE
HAVING A LENGTH OF 115.00 FEET AND 521.59 FEET RESPECTIVELY IN THE SOUTHERLY
BOUNDARY OF THE LAND DESCRIBED IN THE DEED TO PATRIC M. MULCAHY ET AL.
RECORDED ON MAY 6 1966 AS INSTRUMENT NO. 233 IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY AND BOUNDED EASTERLY BY A LINE PARALLEL WITH AND
DISTANT NORTHEASTERLY 50.00 FEET MEASURED RADIALLY FROM SOUTHEASTERLY
CONTINUATION OF THAT CERTAIN CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF
1535 FEET A CENTRAL ANGLE OF 280 39' 06" AND AN ARC LENGTH OF 767.60 FEET IN THE
EASTERLY BOUNDARY OF THE LAND DESCRIBED IN SAID DEED TO PATRIC M. MULCAHY ET
AL. ABOVE REFERRED TO.
PARCEL 3:
A NON-EXCLUSIVE EASEMENT FOR UTILITY PURPOSES OVER, UNDER AND ACROSS THAT
PORTION OF LOT 4, IN FRACTIONAL SECTION 19 TOWNSHIP 4 NORTH RANGE 15 WEST SAN
BERNARDINO MERIDIAN, IN THE CITY OF SANTA CLARITA, COUNTY OF LOS ANGELES, STATE
OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, BOUNDED AS FOLLOWS:
BOUNDED SOUTHERLY BY THE NORTHERLY LINE OF THE SOUTHERLY 58.00 FEET OF SAID LOT 4
(MEASURED ALONG THE EASTERLY AND WESTERLY LINES OF SAID LOT 4), BOUNDED
WESTERLY BY THE WESTERLY LINE OF SAID LOT 4, BOUNDED NORTHERLY BY A LINE
PARALLEL WITH AND DISTANT NORTHERLY 10.00 FEET MEASURED AT RIGHT ANGLES FROM
THE NORTHERLY LINE OF SAID SOUTHERLY 58.00 FEET AND BOUNDED EASTERLY BY THE
WESTERLY LINE OF THE 305 FOOT WIDE STRIP OF LAND DESCRIBED IN THE DEED TO THE CITY
OF LOS ANGELES, RECORDED ON SEPTEMBER 21, 1967 AS INSTRUMENT NO. 4.59 IN BOOK D-3774,
PAGE 387 OF OFFICIAL RECORDS OF SAID COUNTY.
APN: 2836-018-900
42206644.2 A-2
s091W911
BASE RENTAL PAYMENT SCHEDULE
Interest Total
Payment Dates(') Principal Interest Debt Service
04/01/2016
10/01/2016
04/01/2017
10/01/2017
04/01/2018
10/01/2018
04/01/2019
10/01/2019
04/01/2020
10/01/2020
04/01/2021
10/01/2021
04/01/2022
10/01/2022
04/01/2023
10/01/2023
04/01/2024
10/01/2024
04/01/2025
10/01/2025
04/01/2026
10/01/2026
04/01/2027
10/01/2027
04/01/2028
10/01/2028
04/01/2029
10/01/2029
04/01/2030
10/01/2030
04/01/2031
10/01/2031
04/01/2032
10/01/2032
04/01/2033
10/01/2033
04/01/2034
10/01/2034
04/01/2035
10/01/2035
04/01/2036
10/01/2036
$[principal
Total amountl.00
(') Base Rental Payments are made not Less than fifteen (15) Business Days prior to each Interest Payment Date.
42206644.2 B-1
INDENTURE
by and between
SANTA CLARITA PUBLIC FINANCING AUTHORITY
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
Dated as of June 1, 2016
Relating to
$ [principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Refunding Bonds
(Open Space and Parkland Acquisition Program)
Series 2016B
42206641.2
4/22/16
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; AUTHORIZATION AND PURPOSE OF
BONDS; EQUAL SECURITY ........................................................................ 2
SECTION 1.01. Definitions ...................................................................................... 2
SECTION 1.02. Rules of Construction .................................................................. 10
SECTION 1.03 ). Authorization and Purpose of Bonds ........................................... 10
SECTION 1.04. Equal Security .............................................................................. 11
ARTICLE 11 ISSUANCE OF BONDS ...............................................................................
SECTION 2.01.
Designation ..................................................................................
11
SECTION 2.02.
Terms of Bonds ............................................................................
11
SECTION 2.03.
Redemption of Bonds ..................................................................
12
SECTION 2.04.
Form of Bonds .............................................................................
14
SECTION 2.05.
Execution of Bonds ......................................................................
14
SECTION 2.06.
Transfer of Bonds ........................................................................
14
SECTION 2.07.
Exchange of Bonds ......................................................................
15
SECTION 2.08.
Temporary Bonds .........................................................................
15
SECTION 2.09.
Registration Books .......................................................................
15
SECTION 2.10.
Bonds Mutilated, Lost, Destroyed or Stolen ................................
15
SECTION 2.11.
Book -Entry System; Limited Obligation .....................................
16
SECTION 2.12.
Representation Letter ...................................................................
17
SECTION 2.13.
Transfers Outside Book -Entry System ........................................
18
SECTION 2.14.
Payments and Notices to the Nominee ........................................
18
SECTION 2.15.
Initial Depository and Nominee ...................................................
18
ARTICLE III DEPOSIT AND APPLICATION OF PROCEEDS ....................................... 18
SECTION 3.01.
Issuance of Bonds ........................................................................
18
SECTION 3.02.
Application of Proceeds of Sale of Bonds ...................................
18
SECTION 3.03.
Costs of Issuance Fund ................................................................
19
SECTION 3.04.
Reserved .......................................................................................
19
SECTION 3.05.
Insurance and Condemnation Fund .............................................
19
SECTION 33.06.
Validity of Bonds .........................................................................
19
SECTION 3.07.
Additional Bonds .........................................................................
20
ARTICLE IV REVENUES; FLOW OF FUNDS ................................................................. 21
SECTION 4.01. Pledge of Revenues; Assignment of Rights ................................. 21
SECTION 4.02. Lease Revenue Fund; Receipt, Deposit and Application of
Revenues...................................................................................... 21
SECTION 4.03. Rebate Fund ................................................................................. 23
SECTION 4.04. Investments .................................................................................. 24
SECTION 4.05. Valuation and Disposition of Investments ................................... 25
422066412 i
TABLE OF CONTENTS
(continued)
Page
ARTICLE V COVENANTS OF THE AUTHORITY ........................................................ 25
SECTION 5.01. Punctual Payment ......................................................................... 25
SECTION 5.02. Extension of Payment of Bonds ................................................... 25
SECTION 5.03. Against Encumbrances ................................................................. 25
SECTION 5.04. Power to Issue Bonds and Make Pledge and Assignment ........... 26
SECTION 5.05. Accounting Records and Financial Statements ............................ 26
SECTION 5.06. Additional Obligations ................................................................. 26
SECTION5.07. Lease ............................................................................................ 26
SECTION 5.08. Tax Covenants ............................................................................. 27
SECTION 5.09. Further Assurances ....................................................................... 31
ARTICLEVI THE TRUSTEE ............................................................................................. 31
SECTION 6.01.
Appointment of Trustee ...............................................................
31
SECTION 6.02.
Acceptance of Trusts ....................................................................
32
SECTION 6.03.
Fees, Charges and Expenses of Trustee .......................................
35
SECTION 6.04.
Notice to Owners of Default ........................................................
35
SECTION 6.05.
Intervention by Trustee ................................................................
35
SECTION 6.06.
Removal of Trustee ......................................................................
35
SECTION 6.07.
Resignation by Trustee ................................................................
35
SECTION 6.08.
Appointment of Successor Trustee ..............................................
35
SECTION 6.09.
Merger or Consolidation ..............................................................
36
SECTION 6.10.
Concerning any Successor Trustee ..............................................
36
SECTION 6.11.
Appointment of Co -Trustee .........................................................
36
SECTION 6.12.
Indemnification; Limited Liability of Trustee .............................
37
ARTICLE VII MODIFICATION AND AMENDMENT OF THE INDENTURE ............... 37
SECTION7.01. Amendment .................................................................................. 37
SECTION 7.02. Effect of Supplemental Indenture ................................................ 38
SECTION 7.03. Endorsement or Replacement of Bonds After Amendment ........ 38
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF OWNERS ........................
39
SECTION 8.01.
Events of Default .........................................................................
39
SECTION 8.02.
Remedies; No Acceleration .........................................................
39
SECTION 8.03.
Application of Revenues and Other Funds After Default............
40
SECTION 8.04.
Power of Trustee to Control Proceedings ....................................
40
SECTION 8.05.
Appointment of Receivers ...........................................................
41
SECTION 8.06.
Non -Waiver ..................................................................................
41
SECTION 8.07.
Rights of Owners .........................................................................
41
SECTION 8.08.
Termination of Proceedings .........................................................
42
42206641.2 ii
'FABLE OF CONTENTS
(continued)
ARTICLE IX MISCELLANEOUS ..............................................................................
SECTION 9.01. Limited Liability of Authority .............................................
SECTION 9.02. Benefits of Indenture Limited to Parties ..............................
SECTION 9.03.
Defeasance; Discharge of Indenture ............................
SECTION 9.04.
Successor is Deemed Included in All References to
Disqualified Bonds .......................................................................
Predecessor ..................................................................
SECTION 9.05.
Content of Certificates and Opinions ...........................
SECTION 9.06.
Reserve Policy Requirements
Page
.... 42
.... 42
.... 43
.... 43
............ 44
............ 44
SECTION 9.07
Execution of Documents by Owners ...........................................
44
SECTION 9.08.
Disqualified Bonds .......................................................................
45
SECTION 9.09.
Waiver of Personal Liability ........................................................
45
SECTION 9.10.
Partial Invalidity ...........................................................................
45
SECTION 9.11.
Destruction of Canceled Bonds ...................................................
45
SECTION 9.12.
Funds and Accounts .....................................................................
45
SECTION 9.13.
Payment on Business Days ..........................................................
46
SECTION 9.14.
Notices .........................................................................................
46
SECTION 9.15.
Unclaimed Moneys ......................................................................
46
SECTION 9.16.
Governing Law ............................................................................
47
EXHIBIT A — FORM OF BOND
EXHIBIT B — FORM OF COSTS OF ISSUANCE REQUISITION
EXHIBIT C — FORM OF NET PROCEEDS REQUISITION
42206641.2 iii
INDENTURE
This INDENTURE is dated as of June 1, 2016, by and between the SANTA CLARITA
PUBLIC FINANCING AUTHORITY, a joint powers authority organized and existing under the
laws of the State of California (the "Authority"), and THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., a national banking association duly organized and existing under the
laws of the United States with a corporate trust office in Los Angeles, California and qualified to
accept and administer the trusts hereby created, as trustee (the "Trustee").
RECITALS:
WHEREAS, the Authority is a joint powers authority duly organized and existing under
and pursuant to that certain Joint Exercise of Powers Agreement, dated as of July 9, 1991, as
amended on May , 2016, by and among the City of.Santa Clarita, California (the "City"), the
City as successor agency to the Santa Clarita Redevelopment Agency, and the Santa Clarita
Parking Authority, and under the provisions of Articles 1 through 4 (commencing with
Section 6500), Chapter 5, Division 7, Title I of the Government Code of the State of California
(the "Act"), and is authorized pursuant to Article 4 of the Act (the `Bond Law") to borrow
money for the purpose of financing and refinancing public capital improvements; and
WHEREAS, the City and the Authority have previously entered into a Lease Agreement,
dated as of December 1, 2007 (the "2007 Lease"), whereby the City leased certain real property
and the improvements thereon, more commonly known as the Santa Clarita Sports Complex,
located at 20850 Centre Pointe Parkway, Santa Clarita (the "Leased Property") from the
Authority; and
WHEREAS, the City previously executed and delivered certain certificates of
participation (the "2007 Certificates"), evidencing and representing an undivided and
proportionate interest of the owner thereof in certain lease payments (the "2007 Lease
Payments") to be made by the City under the 2007 Lease to finance certain capital
improvements, including apportion of the costs of the acquisition of open space lands, parks, and
parkland (the "Project"); and
WHEREAS, City has determined to refinance the Project by prepaying its 2007 Lease
Payments pursuant to Section 4.3(b)(1) of the 2007 Lease and thereby advance refunding and
defeasing the 2007 Certificates; and
WHEREAS, the Authority has determined to issue its Lease Revenue Refunding Bonds
(Open Space and Parkland Acquisition Program), Series 2016B, in the aggregate principal
amount of $[principal amount] (the "Bonds"), for the purpose of assisting the City with the
prepayment of the 2007 Lease Payments and the advance refunding and defeasance of the
outstanding 2007 Certificates; and
WHEREAS, in connection with such prepayment of the 2007 Lease Payments and
defeasance of the 2007 Certificates, and the issuance of the Bonds and any Additional Bonds, the
City and the Authority have entered into a Site and Facility Lease, dated as of June 1, 2016 (the
"Site Lease"), whereby the Authority has agreed to lease the Leased Property from the City; and
42206641.2
WHEREAS, the Authority and the City have entered into a Lease Agreement, dated as of
June 1, 2016 (the "Lease"), whereby the Authority has agreed to lease the Leased Property to the
City; and
WHEREAS, under and pursuant to the Lease, the City is obligated to make Base Rental
Payments (as defined herein) to the Authority for the sublease of the Leased Property; and
WHEREAS, as security for its obligations hereunder, the Authority has assigned to the
Trustee all its rights to receive the Base Rental Payments scheduled to be paid by the City under
and pursuant to the Lease and certain other rights to the Trustee pursuant to this Indenture; and
WHEREAS, the City has determined that the issuance of the Bonds will result in
significant public benefits including demonstrable financing cost savings and more efficient
delivery of services to the community; and
WHEREAS, to provide for the authentication and delivery of the Bonds, to establish and
declare the terms and conditions upon which the Bonds are to be issued and to secure the
payment of the principal thereof, premium, if any, and interest thereon, the Authority has
authorized the execution and delivery of this Indenture; and
WHEREAS, the Authority has determined that all acts and proceedings required by law
necessary to make the Bonds, when executed by the Authority, authenticated and delivered by
the Trustee and duly issued, the valid, binding and legal special obligations of the Authority, and
to constitute this Indenture a valid and binding agreement for the uses and purposes herein set
forth in accordance with its terms, have been done and taken, and the execution and delivery of
the Indenture have been in all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that to secure the
payment of the principal of and the interest and premium (if any) on all Bonds at any time issued
and Outstanding under this Indenture, according to their tenor, and to secure the performance and
observance of all the covenants and conditions therein and herein set forth, and to declare the
terms and conditions upon and subject to which the Bonds are to be issued and received, and in
consideration of the premises and of the mutual covenants herein contained and of the purchase
and acceptance of the Bonds by the Owners thereof, and for other valuable considerations, the
receipt whereof is hereby acknowledged, the Authority does hereby covenant and agree with the
Trustee, for the benefit of the respective Owners from time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS;
EQUAL SECURITY
SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined
in this Section shall for all purposes of this Indenture and of any Supplemental Indenture and of
the Bonds and of any certificate, opinion, request or other document herein mentioned have the
meanings herein specified.
42206641.2 2
"Act" means Articles 1 through 4 (commencing with Section 6500), Chapter 5,
Division 7, Title 1 of the Government Code of the State, as in existence on the Closing Date or
as thereafter amended from time to time.
"Additional Bonds" mean the Bonds of an additional Series authorized by a
Supplemental Indenture that are issued pursuant to this Indenture.
"Additional Rental Payments" means the additional rental payable by the City under
and pursuant to Section 3(b) of the Lease.
"Annual Debt Service" means, for each Bond Year with respect to the Bonds, the sum
of (a) the interest payable on the Outstanding Bonds in such Bond Year, and (b) the principal
amount of the Outstanding Bonds scheduled to be paid in such Bond Year.
"Assignment Agreement" means that certain Assignment Agreement, dated as of
June 1, 2016, by and between the Authority and the Trustee.
"Authority" means the Santa Clarita Public Financing Authority, a joint powers
authority duly organized and existing under the Joint Exercise of Powers Agreement, as
amended, and the laws of the State.
"Authority Board" means the governing body of the Authority.
"Authorized Denominations" means $5,000 or any integral multiple thereof.
"Base Rental Payments" means all Base Rental Payments under the Lease.
"Bond Counsel" means (a) Norton Rose Fulbright US LLP, or (b) any other attorney or
firm of attorneys appointed by or acceptable to the Authority of nationally recognized experience
in the area of municipal finance.
"Bond Law" means the Marks -Roos Local Bond Pooling Act of 1985, constituting
Article 4 of the Act, as in existence on the Closing Date or as thereafter amended from time to
time.
"Bond Year" means each twelve-month period extending from October 2 in one
calendar year to October 1 of the succeeding calendar year, both dates inclusive, except that the
first Bond Year shall begin on the Closing Date and shall end on October 1, 2016.
"Bonds" means the means the Santa Clarita Public Financing Authority Lease Revenue
Refunding Bonds (Open Space and Parkland Acquisition Program), Series 2016B, and, where
the context requires, any Additional Bonds.
"Business Day" means a day other than (i) a Saturday or Sunday, (ii) a day on which the
commercial banks in the city in which the Trustee maintains its Trust Office are authorized or
required by law or executive order to close or (iii) a day on which the New York Stock Exchange
is closed.
42206641.2 3
"Certificate of the Authority" means a certificate in writing signed by the President of
the Authority, the Executive Director, Treasurer or by any other officer of the Authority duly
authorized by the President or any other officer of the Authority duly authorized for that purpose,
as evidenced in writing to the Trustee.
"Certificate of the City" means a certificate in writing signed by the Mayor, City
Manager or Deputy City Manager/Director of Administrative Services of the City or by any
other officer of the City duly authorized for that purpose, as evidenced in writing to the Trustee.
"City" means the City of Santa Clarita, California.
"Closing Date" means June , 2016, being the date of delivery of the Bonds to the
Original Purchaser thereof.
"Code" means the Internal Revenue Code of 1986.
"Costs of Issuance" means all expenses incurred in connection with the authorization,
issuance, sale and delivery of the Bonds, including but not limited to all compensation, fees and
expenses (including but not limited to fees and expenses for legal counsel) of the Authority and
the Trustee, compensation to any financial consultants or underwriters, legal fees and expenses
(including fees and expenses of Bond and Disclosure Counsel), filing and recording costs, rating
agency fees, costs of preparation and reproduction of documents, costs of printing and fees and
costs for any guaranty, surety bond, letter of credit or other credit facility.
"Costs of Issuance Fund" means the fund by that name established and held by the
Trustee pursuant to Section 3.03.
"Defeasance Securities" means (1) cash, (2) non -callable direct obligations of the
United States of America ("Treasuries"), (3) evidences of ownership of proportionate interests in
future interest and principal payments on Treasuries held by a bank or trust company as
custodian, under which the owner of the investment is the real party in interest and has the right
to proceed directly and individually against the obligor and the underlying Treasuries are not
available to any person claiming through the custodian or to whom the custodian may be
obligated, (4) pre -refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's,
respectively.
"Depository" means DTC and its successors and assigns or if (a) the then Depository
resigns from its functions as securities depository of the Bonds, or (b) the Authority discontinues
use of the Depository pursuant to Section 2.13 hereof, any other securities depository which
agrees to follow the procedures requested to be followed by a securities depository in connection
with the Bonds and which is selected by the Authority.
"Depository Participant" means a member of, or participant in, the Depository.
"DTC" means The Depository Trust Company, New York, New York, and its successors
and assigns.
"Event of Default" means any of the events described in Section 8.01.
42206641.2 4
"Fair Market Value" means the price at which a willing buyer would purchase the
investment from a willing seller in a bona fide, arm's length transaction (determined as of the
date the contract to purchase or sell the investment becomes binding) if the investment is traded
on an established securities market (within the meaning of section 1273 of the Code) and,
otherwise, the term "fair market value" means the acquisition price in a bona fide arm's length
transaction (as referenced above) if (i) the investment is a certificate of deposit the value of
which is determined in accordance with applicable regulations under the Code, (ii) the
investment is an agreement with specifically negotiated withdrawal or reinvestment provisions
and a specifically negotiated interest rate (for example, a guaranteed investment contract, a
forward supply contract or other investment agreement) the value of which is determined in
accordance with applicable regulations under the Code, (iii) the investment is a United States
Treasury Security -State and Local Government Series that is acquired in accordance with
applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the
Local Agency Investment Fund of the State of California, but only if at all times during which
the investment is held its yield is reasonably expected to be equal to or greater than the yield on a
reasonably comparable direct obligation of the United States.
"Fiscal Year" means any twelve-month period extending from July 1 in one calendar
year to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month
period selected and designated by the Authority as its official fiscal year period.
"Indenture" means this Indenture, dated as of June 1, 2016, as originally executed or as
it may from time to time be amended or supplemented in accordance herewith.
"Independent Certified Public Accountant" means any certified public accountant or
firm of certified public accountants appointed and paid by the Authority, and who, or each of
whom:
(a) is in fact independent and not under domination of the Authority or the City;
(b) does not have any substantial interest, direct or indirect, in the Authority or the
City; and
(c) is not connected with the Authority or the City as an officer or employee of the
Authority or the City but who may be regularly retained to make annual or other audits of the
books of or reports to the Authority or the City.
"Information Services" means the Electronic Municipal Market Access System
(referred to as "EMMA"), a facility of the Municipal Securities Rulemaking Board, at
http: //emma. msrb. org; provided, however, in accordance with then current guidelines of the
Securities and Exchange Commission, Information Services shall mean such other organizations
providing information with respect to called Bonds as the Authority may designate in writing to
the Trustee.
"Insurance and Condemnation Fund" means the fund by that name established and
held by the Trustee pursuant to Section 3.05.
42206641.2 5
"Insurer" means or any successor or assignee thereof, as issuer of
the Reserve Policy.
"Interest Account" means the account by that name established and held by the Trustee
pursuant to Section 4.02(a).
"Interest Payment Date" means April 1 and October 1 of each year, commencing
October 1, 2016.
"Joint Exercise of Powers Agreement" means that certain Joint Exercise of Powers
Agreement, dated as of July 9, 1991, as amended on May , 2016, by and among the City,
the City as successor agency to the Santa Clarita Redevelopment Agency, and the Santa Clarita
Parking Authority, together with any amendments thereof and supplements thereto. Upon
execution of the Amendment to the Joint Exercise of Powers Agreement, the Successor Agency
is no longer a member of the Authority.
"Lease" means that certain Lease Agreement, dated as of June 1, 2016, by and between
the Authority as lessor and the City as lessee, as it may be further amended or modified.
"Lease Revenue Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.02.
"Leased Property" means, collectively, those certain parcels of real property, together
with the improvements thereon, leased by the Authority to the City pursuant to the Lease, as
more fully described in Exhibit A to the Lease, as such Exhibit A may be revised and amended
from time to time pursuant to the terms hereof and of the Lease.
"Maximum Annual Debt Service" in respect of any Bond Year means the largest of the
sums obtained for that or any succeeding Bond Year after totaling the following for each such
Bond Year:
(a) The principal amount of all Outstanding Bonds maturing or required to be
redeemed by mandatory sinking account redemption in such Bond Year; and
(b) The interest that would be due during such Bond Year on the aggregate principal
amount of Bonds which would be Outstanding in such Bond Year if the Bonds Outstanding on
the date of such computation were to mature or be redeemed in accordance with the applicable
maturity or mandatory sinking account redemption schedule. At the time and for the purpose of
making such computation, the amount of Bonds already retired in advance of the above
mentioned schedule or schedules shall be deducted pro rata from the remaining amounts thereon.
"Moody's" means Moody's Investors Service, and its successors and assigns.
"Nominee" means the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant hereto.
"Original Purchaser" means, with respect to the Bonds, the initial purchaser of the
C• •
42206641.2 6
"Outstanding," when used as of any particular time with reference to Bonds and
Additional Bonds, means (subject to the provisions of Section 9.08) all Bonds and Additional
Bonds theretofore executed, issued and delivered by the Authority under this Indenture except:
(a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for
cancellation;
(b) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and
(c) Bonds in lieu of which or in substitution for which other Bonds shall have been
executed, issued and delivered pursuant to this Indenture or any Supplemental Indenture.
"Owner" when used with respect to any Bond, means the person in whose name the
ownership of such Bond shall be registered on the Registration Books.
"Permitted Investments" means any of the following which at the time of investment
are legal investments under the laws of the State for the moneys proposed to be invested therein
(the Trustee is entitled to conclusively rely on a Request of the Authority directing investment in
such Permitted Investment as a certification by the Authority to the Trustee that such Permitted
Investment is a legal investment under the laws of the State), but only to the extent that the same
are acquired at Fair Market Value:
(a) Direct obligations of the United States of America (including obligations issued
or held in book -entry form on the books of the Department of the Treasury of the United States
of America) or obligations the timely payment of the principal of and interest on which are fully
and unconditionally guaranteed by the United States of America, including instruments
evidencing a direct ownership interest in securities described in this clause such as Stripped
Treasury Coupons at the time of purchase rated or assessed in the highest rating category by S&P
and Moody's and held by a custodian for safekeeping on behalf of holders of such securities.
(b) Bonds or notes which are exempt from federal income taxes and for the payment
of which cash or obligations described in clause (a) of this definition in an amount sufficient to
pay the principal of, premium, if any, and interest on when due have been irrevocably deposited
with a trustee or other fiscal depositary and which at the time of purchase are rated the same
rating as direct obligations of the United States of America by S&P and Moody's.
(c) Obligations, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following: Federal Home Loan Bank System, Government National
Mortgage Association, Farmer's Home Administration, Federal Home Loan Mortgage
Corporation or Federal Housing Administration; provided that with respect to the funds and
accounts established under this Indenture, such obligations shall at no time exceed an amount
equal to ten percent (10%) of the aggregate principal amount of the Bonds Outstanding.
(d) Deposit accounts certificates of deposit or savings accounts (i) fully insured by
the Federal Deposit Insurance Corporation or (ii) with banks whose short term obligations are at
the time of purchase rated no lower than A-1 by S&P and P-1 by Moody's including those of the
Trustee and its affiliates.
42206641.2 7
(e) Federal funds or banker's acceptances with a maximum term of one year of any
bank that at the time of purchase has an unsecured, uninsured and unguaranteed obligation rating
of "Prime -I" or "A3" by Moody's and "A-1" or "A" or better by S&P (including the Trustee and
its affiliates).
(f) Repurchase or reverse repurchase obligations (including those of the Trustee or
any of its affiliates) with a term not exceeding 30 days pursuant to a written agreement between
the Trustee and either a primary dealer on the Federal Reserve reporting dealer list which falls
under the jurisdiction of the SIPC or a federally chartered commercial bank whose long-term
debt obligations at the time of purchase are rated A or better by S&P and Moody's, with respect
to any security described in clause (1); provided that the securities which are the subject of such
repurchase obligation (i) must be free and clear of all liens, (ii) in the case of a SIPC dealer, were
not acquired pursuant to a repurchase or reverse repurchase agreement, (iii) must be deposited
with the Trustee and maintained through weekly market valuations in an amount equal to 104%
of the invested funds plus accrued interest; and further provided that the Trustee must have a
valid first perfected security interest in such securities.
(g) Taxable government money market portfolios that at the time of purchase have a
rating by S&P of Am -G or Am or better and rated in one of the three highest rating categories of
Moody's, subject to a maximum permissible limit equal to six months of principal and interest
on the Bonds including portfolios of the Trustee and its affiliates.
(h) Tax-exempt government money market portfolios that at the time of purchase
have a rating by S&P of Am -G or Am or better and rated in one of the three highest rating
categories of Moody's consisting of securities which are rated in the highest Rating Categories
of S&P and Moody's subject to a maximum permissible limit equal to six months of principal
and interest on the Bonds.
(i) Money market funds registered under the Investment Company Act of 1940, the
shares in which are registered under the Securities Act of 1933 and that at the time of purchase
have a rating by S&P of AAAm-G or AAAm and rated in one of the two highest Rating
Categories of Moody's, including those managed or advised by the Trustee or its affiliates.
0) The Local Agency Investment Fund of the State, created pursuant to
Section 16429.1 of the California Government Code, to the extent the Trustee is authorized to
register such investment in its name.
(k) Investment agreements, including guaranteed investment contracts ("GICs")
forward purchase agreements and reserve fund put agreements with banks or other financial
institutions rated, or guaranteed by institutions rated, or with senior unsecured debt rated, at the
time of entrance into such agreement by S&P or Moody's, in one of the three highest rating
categories assigned by such agencies.
(1) Any other investments which meet the criteria established by applicable published
investment guidelines issued by each rating agency then rating the Bonds.
"Principal Account" means the account by that name established and held by the
Trustee pursuant to Section 4.02(b).
42206641.2 8
"Principal Payment Date" means each October 1, commencing October 1, 2016.
"Rebate Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.03.
"Rebate Requirement" means, in respect of an issue of Bonds, obligations imposed
under section 148(f) the Code in respect of such issue.
"Record Date" means, with respect to any Interest Payment Date, the fifteenth (15`h)
calendar day of the month immediately preceding such Interest Payment Date, whether or not
such day is a Business Day.
"Registration Books" means the records maintained by the Trustee pursuant to
Section 2.09 for the registration and transfer of ownership of the Bonds.
"Rental Payments" means, collectively, the Base Rental Payments, any additional base
rental payments made in connection with Additional Bonds and any Additional Rental Payments.
"Request of the Authority" means a request in writing signed by the President,
Executive Director or Treasurer of the Authority or by any other officer of the Authority duly
authorized by the President, Executive Director, Treasurer or by the Authority Board for that
purpose, as evidenced in writing to the Trustee.
"Request of the City" means a request in writing signed by the Mayor, the City
Manager, the Deputy City Manager/Director of Administrative Services or by any other officer
of the City duly authorized for that purpose by the Mayor, the City Manager or by the City
Council, as evidenced in writing to the Trustee.
"Reserve Account" means the account by that name established and held by the Trustee
pursuant to Section 4.02(c).
"Reserve Policy" means the debt service reserve insurance policy issued by the Insurer
and deposited into the Reserve Account.
"Reserve Requirement" means an amount, as of the date of calculation, equal to the
least of (i) ten percent (10%) of the original issue price of the Bonds of a Series; (ii) one hundred
twenty-five percent (125%) of average Annual Debt Service on the Bonds of a Series as of the
delivery date of such Bonds; and (iii) Maximum Annual Debt Service on the Bonds of such
Series; provided, that notwithstanding any provision hereof to the contrary, all or any portion of
the Reserve Requirement may be satisfied by the provision of a policy of insurance, a surety
bond, a letter of credit or other comparable credit facility, or a combination thereof, which,
together with money on deposit in Reserve Account, provide an aggregate amount equal to the
Reserve Requirement; provided further that at the time of issuance of such letter of credit, surety
bond or other comparable credit facility, the long-term credit rating of such commercial bank or
insurance company is "AA" or "Aa2" by S&P or Moody's, respectively, or higher, and, if rated
by A.M. Best & Company, a minimum rating of "A."
42206641.2 9
"Responsible Officer" means any member of the Authority Board or any other person
authorized by resolution of the Authority Board to act on behalf of the Authority under or with
respect to the Lease or this Indenture.
"Revenues" means (i) all Base Rental Payments payable by the City pursuant to the
Lease (including prepayments), (ii) any proceeds of Bonds deposited with the Trustee and all
moneys on deposit in the funds and accounts (other than the Rebate Fund) established hereunder,
(iii) investment income with respect to such moneys held by the Trustee and (iv) any insurance
proceeds or condemnation awards received by or payable to the Trustee relating to the Base
Rental Payments.
"S&P" means Standard & Poor's Financial Services LLC, and its successors and assigns.
"Securities Depositories" means The Depository Trust Company, New York, New York
and its successors and assigns or if (i) the then Securities Depository resigns from its functions as
depository of the Bonds or (ii) the Authority discontinues use of the then Securities Depository
pursuant to Section 2.13, any other securities depository which agrees to follow the procedures
required to be followed by a securities depository in connection with the Bonds and which is
selected by the Authority.
"Series" whenever used in this Indenture with respect to the Bonds or Additional Bonds,
means all of the Bonds designated as being of the same series, authenticated and delivered in a
simultaneous transaction, regardless of variations in maturity, interest rate, redemption and other
provisions, and any Bonds thereafter authenticated and delivered upon transfer or exchange of or
in lieu of or in substitution for (but not to refund) such Bonds as provided herein.
"Site Lease" means that certain Site and Facility Lease, dated as of June 1, 2016, by and
between the City and the Authority, pursuant to which the Authority leases the Leased Property
from the City.
"State" means the State of California.
"Supplemental Indenture" means any agreement supplemental to or amendatory of this
Indenture entered into in accordance with the provisions of Article VII.
"Tax Certificate" means the Tax Certificate dated the date of the original delivery of the
Bonds relating to the requirements of certain provisions of the Code, as such certificate may
from time to time be modified or supplemented in accordance with the terms thereof.
"Term Bonds" mean the Bonds maturing on October 1, 20 and 20_
"Trust Office" means the corporate trust office of the Trustee in Los Angeles, California
or such other offices as may be specified to the Authority by the Trustee in writing or, solely for
purposes of the surrender of the Bonds for payment, transfer or exchange, the corporate trust
operations or agency office designated by the Trustee.
42206641.2 10
"Trustee" means The Bank of New York Mellon Trust Company, N.A., and its
successors and assigns, and any other banking corporation or association that may at any time be
substituted in its place as provided in Article VI hereof.
"Written Request of the Authority" means a request in writing signed by a Responsible
Officer.
112007 Prior Trust Agreement" means the Trust Agreement, dated as of December 1,
2007, by and among the City, the Authority and The Bank of New York Mellon Trust Company,
N.A., as successor to The Bank of New York Trust Company, N.A.
SECTION 1.02. Rules of Construction. All references in this Indenture to "Articles,"
"Sections," and other subdivisions are to the corresponding Articles, Sections or subdivisions of
this Indenture; and the words "herein," "hereof," "hereunder," and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.
SECTION 1.03. Authorization and Purpose of Bonds. The Authority has reviewed
all proceedings heretofore taken relative to the authorization of the Bonds and has found, as a
result of such review, and hereby finds and determines that all things, conditions, and acts
required by law to exist, to happen and to be performed precedent to and in the issuance of the
Bonds do exist, have happened and have been performed in due time, form and manner as
required by law, and the Authority is now authorized under the Joint Exercise of Powers
Agreement and the Bond Law and each and every requirement of law, to issue the Bonds in the
manner and form provided in this Indenture. Accordingly, the Authority hereby authorizes the
issuance of the Bonds pursuant to the Bond Law and this Indenture for the purpose described in
the recitals hereof.
SECTION 1.04. Equal Security. In consideration of the acceptance of the Bonds by
the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract between
the Authority and the Owners from time to time of the Bonds; and the covenants and agreements
herein set forth to be performed on behalf of the Authority shall be for the equal and
proportionate benefit, security and protection of all Owners without preference, priority or
distinction as to security or otherwise of any of the Bonds over any of the others by reason of the
number or date thereof or the time of sale, execution or delivery thereof, or otherwise for any
cause whatsoever, except as expressly provided therein or herein.
ARTICLE II
ISSUANCE OF BONDS
SECTION 2.01. Designation. The Bonds are authorized to be issued by the Authority
under and subject to the Bond Law and the terms of this Indenture and shall be designated,
respectively, as the "Santa Clarita Public Financing Authority Lease Revenue Refunding Bonds
(Open Space and Parkland Acquisition Program), Series 2016B." The Bonds shall be issued in
the original aggregate principal amount of $[principal amount].
42206641.2 11
SECTION 2.02. Terms of Bonds. The Bonds shall be dated the Closing Date, shall
mature on the dates and in the amounts, and shall bear interest (computed on the basis of a 360 -
day year of twelve 30 -day months) at the rates, set forth in the following table:
Maturity Date Principal Interest
(October 1) Amount Rate
The Bonds shall be delivered in fully registered form, numbered from one upwards in
consecutive numerical order (with such alphabetical prefix as the Trustee shall determine). The
Bonds shall be executed and delivered in their respective Authorized Denominations.
Each Bond shall bear interest from the Interest Payment Date next preceding the date of
authentication thereof, unless (i) it is authenticated during the period from the day after the
Record Date for an Interest Payment Date to and including such Interest Payment Date, in which
event it shall accrue interest from such Interest Payment Date, or (ii) it is authenticated on or
prior to the Record Date for the first Interest Payment Date, in which event it shall bear interest
from the Closing Date; provided, however, that if, at the time of authentication of any Bond
interest with respect to such Bond is in default, such Bond shall bear interest from the Interest
Payment Date to which interest has been paid or made available for payment with respect to such
Bond.
Interest with respect to any Bond shall be payable in lawful money of the United States of
America on each Interest Payment Date to the Owner thereof as of the close of business on the
Record Date, such interest to be paid by check of the Trustee, mailed by first class mail no later
than the Interest Payment Date to the Owner at his address as it appears, on such Record Date, on
the Registration Books maintained by the Trustee; provided, however, that at the written request
of the Owner of at least $1,000,000 in aggregate principal amount of Outstanding Bonds filed
42206641.2 12
with the Trustee prior to any Record Date, interest on such Bonds shall be paid to such Owner on
each succeeding Interest Payment Date (unless such request has been revoked in writing) by wire
transfer of immediately available funds to an account in the United States designated in such
written request. Payments of defaulted interest with respect to the Bonds shall be paid by check
or draft to the registered Owners of the Bonds as of a special record date to be fixed by the
Trustee, notice of which special record date shall be given to the registered Owners of the Bonds
not less than ten days prior thereto. The principal of and premium, if any, on the Bonds are
payable by check when due upon surrender thereof at the Trust Office in lawful money of the
United States of America.
SECTION 2.03. Redemption of Bonds.
(a) Extraordinary Redemption. The Bonds are subject to redemption prior to their
respective maturity dates, upon written notice from the Authority to the Trustee at least forty-five
(45) days (or such lesser number of days acceptable to the Trustee, in the sole discretion of the
Trustee), as a whole or in part on a pro rata basis, on any date from prepayments of the
applicable Base Rental Payments made by the City pursuant to the Lease out of funds received
by the City due to a taking of the Leased Property or any portion thereof under the power of
eminent domain or from insurance proceeds received by the City due to damage to or destruction
of the Leased Property or any portion thereof, under the circumstances and upon the conditions
and terms prescribed herein and in the Lease.
Redemption of Bonds pursuant to this subparagraph (a) shall be made at a redemption
price equal to the sum of the principal of the Bonds to be redeemed plus accrued but unpaid
interest thereon to the date fixed for redemption, without premium.
(b) Bonds Optional Redemption from Prepayments of Base Rental Payments. The
Bonds maturing on or after October 1, 2027 are subject to redemption prior to their respective
maturity dates as a whole or in part on any date on or after October 1, 2026, in any order deemed
reasonable by the Authority, and by lot within a maturity, from prepayments of Base Rental
Payments made at the option of the City pursuant to Section 11(b) of the Lease, at a redemption
price equal to the principal amount of the Bonds to be redeemed, plus accrued but unpaid interest
thereon to the date fixed for redemption, without premium.
(c) Mandatory Sinking Account Redemption. The Term Bonds maturing October 1,
are subject to mandatory redemption, in part by lot, from sinking account payments set
forth in the following schedule commencing October 1, 20_, and on October 1 in each year
thereafter to and including October 1, 20_ at a redemption price equal to the principal amount
thereof to be redeemed (without premium), together with interest accrued thereon to the date
fixed for redemption.
Redemption Date Principal Amount
(October 1) To be Redeemed
20 *
Maturity.
42206641.2 13
The Term Bonds maturing October 1, 20 are subject to mandatory redemption, in part
by lot, from sinking account payments set forth in the following schedule commencing
October 1, 20_, and on October 1 in each year thereafter to and including October 1, 20_ at a
redemption price equal to the principal amount thereof to be redeemed (without premium),
together with interest accrued thereon to the date fixed for redemption.
Redemption Date Principal Amount
(October 1) To be Redeemed
20 *
Maturity.
(d) If some but not all of the Term Bonds have been redeemed pursuant to mandatory
or optional redemptions, the total amount of sinking account payments to be made subsequent to
such redemption shall be reduced in an amount equal to the principal amount of the Term Bonds
so redeemed by reducing each such future sinking account payment on a pro rata basis (as nearly
as practicable) in integral multiples of $5,000, as shall be designated pursuant to written notice
filed by Authority with the Trustee. In the event of any reductions in the amount of sinking
account payments due as a result of some but not all of the Bonds being redeemed pursuant to
extraordinary or optional redemptions, the Authority shall provide the Trustee with a revised
schedule reflecting such reductions.
(e) Notice of Redemption. The Trustee on behalf and at the expense of the Authority
shall mail (by first class mail or other means acceptable to the recipient thereof) notice of any
redemption to the respective Owners designated for redemption at their respective addresses
appearing on the Registration Books, to the Securities Depositories and to one or more
Information Services, at least 20 but not more than 60 days prior to the date fixed for
redemption; provided, however, that neither failure to receive any such notice so mailed nor any
defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the
cessation of the accrual of interest thereon. Such notice shall state the date of the notice, the
redemption date, the redemption place and the redemption price and shall designate the CUSIP
numbers, the Bond numbers and the maturity or maturities (in the event of redemption of all of
the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and shall
require that such Bonds be then surrendered at the Trust Office of the Trustee for redemption at
the redemption price, giving notice also that further interest on such Bonds will not accrue from
and after the redemption date. Such notice shall further state, if so determined by the Authority,
that such notice may be rescinded at any time prior to the redemption date.
Neither the Authority nor the Trustee shall have any responsibility for any defect in the
CUSIP number that appears on any Bond or in any redemption notice with respect thereto, and
any such redemption notice may contain a statement to the effect that CUSIP numbers have been
assigned by an independent service for convenience of reference and that neither the Authority
nor the Trustee shall be liable for any inaccuracy in such numbers.
422066412 14
Any notice given pursuant to the preceding paragraph may be conditional and/or
rescinded by written notice given to the Trustee by the Authority and the Trustee shall provide
notice of such rescission as soon thereafter as practicable in the same manner, and to the same
recipients, as notice of such redemption was given pursuant to this Section.
(f) Selection of Bonds for Redemption. Whenever provision is made in this Indenture
for the optional redemption of less than all of the Bonds of a series (other than mandatory
sinking account redemption), the Trustee shall select the Bonds to be redeemed from all Bonds
of such series not previously called for redemption, in such maturities as the Authority shall
designate (and by lot within any maturity). For purposes of such selection, all Bonds shall be
deemed to be comprised of separate $5,000 portions and such portions shall be treated as
separate Bonds, which may be separately redeemed.
(g) Partial Redemption of Bonds. If only a portion of any Bond is called for
redemption, then upon surrender of such Bond the Authority shall execute and the Trustee shall
authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or
Bonds of the same Series, interest rate and maturity date, in aggregate principal amount equal to
the unredeemed portion of the Bond being redeemed.
(h) Effect of Redemption. From and after the date fixed for redemption, if funds
available for the payment of the principal of, premium, if any, and interest on the Bonds so called
for redemption shall have been duly provided, such Bonds so called shall cease to be entitled to
any benefit under this Indenture other than the right to receive payment of the redemption price,
and no interest shall accrue thereon from and after the redemption date. All Bonds redeemed
pursuant to this Section 2.03 shall be canceled by the Trustee. All moneys held by or on behalf
of the Trustee for the payment of principal of or interest or premium on Bonds, whether at
redemption or maturity, shall be held in trust for the account of the Owners thereof and the
Trustee shall not be required to pay Owners any interest on, or be liable to Owners for any
interest earned on, moneys so held.
SECTION 2.04. Form of Bonds. The Bonds, the form of Trustee's certificate of
authentication, and the form of assignment to appear thereon, shall be substantially in the form
set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or
appropriate variations, omissions and insertions, as permitted or required by this Indenture.
SECTION 2.05. Execution of Bonds. The Bonds shall be signed in the name and on
behalf of the Authority with the manual signature of its President, and attested with the manual
signature of its Secretary or any Deputy Secretary duly appointed by the Authority Board, and
shall be delivered to the Trustee for authentication by it. In case any officer of the Authority
who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed
shall have been authenticated or delivered by the Trustee or issued by the Authority, such Bonds
may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery
and issue, shall be as binding upon the Authority as though the individual who signed the same
had continued to be such officer of the Authority. Also, any Bond may be signed on behalf of
the Authority by any individual who on the actual date of the execution of such Bond shall be the
proper officer although on the nominal date of such Bond such individual shall not have been
such officer.
42206641.2 15
Only such of the Bonds as shall bear thereon a certificate of authentication, manually
executed on behalf of the Trustee, shall be valid or obligatory for any purpose or entitled to the
benefits of this Indenture, and such certificate of the Trustee shall be conclusive evidence that the
Bonds so authenticated have been duly authenticated and delivered hereunder and are entitled to
the benefits of this Indenture.
SECTION 2.06. Transfer of Bonds. Any Bond may, in accordance with its terms, be
transferred, upon the Registration Books, by the person in whose name it is registered, in person
or by his duly authorized attorney, upon presentation and surrender of such Bond for
cancellation, accompanied by delivery of a written instrument of transfer in a form approved by
the Trustee, duly executed. Whenever any Bond shall be surrendered for transfer, the Authority
shall execute and the Trustee shall thereupon authenticate and deliver to the transferee a new
Bond or Bonds of like tenor, interest rate, series designation, maturity and aggregate principal
amount in Authorized Denominations. The cost of printing any Bonds and any services rendered
or expenses incurred by the Trustee in connection with any such transfer shall be paid by the
Authority, except that the Trustee shall require the payment by the Owner requesting such
transfer of any tax or other governmental charge required to be paid with respect to such transfer.
The Trustee shall not be required to transfer, pursuant to this Section, (a) any Bond during the
period established by the Trustee for the selection of Bonds for redemption or (b) any Bond
selected for redemption pursuant to Section 2.03(e).
SECTION 2.07. Exchange of Bonds. Bonds may be exchanged at the Trust Office of
the Trustee for the same aggregate principal amount of Bonds of the same tenor, interest rate,
series designation, and maturity and of other Authorized Denominations. The cost of printing
any Bonds and any services rendered or expenses incurred by the Trustee in connection with any
such exchange shall be paid by the Authority, except that the Trustee shall require the payment
by the Owner requesting such exchange of any tax or other governmental charge required to be
paid with respect to such exchange. The Trustee shall not be required to exchange, pursuant to
this Section, (a) any Bond during the period established by the Trustee for the selection of Bonds
for redemption or (b) any Bond selected for redemption pursuant to Section 2.03(e).
SECTION 2.08. Temporary Bonds. The Bonds may be issued initially in temporary
form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be
printed, lithographed or typewritten, shall be of such denominations as may be determined by the
Authority and may contain such reference to any of the provisions of this Indenture as may be
appropriate. Every temporary Bond shall be executed by the Authority and be registered and
authenticated by the Trustee upon the same conditions and in substantially the same manner as
the definitive Bonds. If the Authority issues temporary Bonds, it will execute and furnish
definitive Bonds without delay, and thereupon the temporary Bonds shall be surrendered, for
cancellation, in exchange therefor at the Trust Office of the Trustee, and the Trustee shall
authenticate and deliver in exchange for such temporary Bonds definitive Bonds of like tenor,
series designation, maturity and aggregate principal amount in Authorized Denominations. Until
so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as
definitive Bonds authenticated and delivered hereunder.
SECTION 2.09. Registration Books. The Trustee will keep or cause to be kept at its
Trust Office sufficient records for the registration and transfer of the Bonds, which shall at all
42206641.2 16
times during regular business hours be open to inspection by the Authority with reasonable prior
notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable
regulations as it may prescribe, register or transfer, or cause to be registered or transferred, on
such records, Bonds as herein provided.
SECTION 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall
become mutilated, the Authority, at the expense of the Owner of such Bond, shall execute, and
the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor, series designation,
maturity and aggregate principal amount in an Authorized Denomination in exchange and
substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so
mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it. If any
Bond issued hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or
theft may be submitted to the Trustee and, if such evidence shall be satisfactory to it and
indemnity satisfactory to it shall be given, the Authority, at the expense of the Owner, shall
execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like series and
tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond
shall have matured or shall have been called for redemption, instead of issuing a substitute Bond
the Trustee may pay the same without surrender thereof upon receipt of indemnity satisfactory to
the Trustee). The Authority may require payment of a reasonable fee for each new Bond issued
under this Section and of the expenses that may be incurred by the Authority and the Trustee.
Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost,
destroyed or stolen shall constitute an original contractual obligation on the part of the Authority
whether or not the Bond alleged to be lost, destroyed or stolen shall be at any time enforceable
by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with
all other Bonds secured by this Indenture.
SECTION 2.11. Book -Entry System; Limited Obligation. The Bonds shall be
initially executed, authenticated and delivered in the form of a separate single fully registered
Bond (which may be typewritten) for each of the maturities of each series of Bonds. Upon initial
execution, authentication and delivery, the ownership of each such Bond shall be registered in
the Registration Books in the name of the Nominee as nominee of the Depository. Except as
provided in Section 2.13 hereof, all of the Outstanding Bonds shall be registered in the
Registration Books kept by the Trustee in the name of the Nominee and the Bonds may be
transferred, in whole but not in part, only to the Depository, to a successor Depository or to
another nominee of the Depository or of a successor Depository. Each Bond shall bear a legend
substantially to the following effect: "UNLESS THIS BOND IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AS DEFINED IN THE
INDENTURE) TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN."
42206641.2 17
With respect to Bonds registered in the Registration Books in the name of the Nominee,
the Authority and the Trustee shall have no responsibility or obligation to any Depository
Participant or to any person on behalf of which such a Depository Participant holds a beneficial
interest in the Bonds. Without limiting the immediately preceding sentence, the Authority and
the Trustee shall have no responsibility or obligation with respect to (a) the accuracy of the
records of the Depository, the Nominee or any Depository Participant with respect to any
beneficial ownership interest in the Bonds, (b) the delivery to any Depository Participant,
beneficial owner or any other person, other than the Depository, of any notice with respect to the
Bonds, including any Redemption Notice, (c) the selection by the Depository and the Depository
Participants of the beneficial interests in the Bonds to be redeemed in part, or (d) the payment to
any Depository Participant, beneficial owner or any other person, other than the Depository, of
any amount with respect to principal of, interest on, or premium, if any, of the Bonds. The
Authority and the Trustee may treat and consider the person in whose name each Bond is
registered in the Registration Books as the holder and absolute Owner of such Bond for the
purpose of payment of principal of, premium, if any, and interest on, the Bond, for the purpose of
giving Redemption Notices with respect to the Bonds and other notices with respect to the
Bonds, and for all other purposes whatsoever, including, without limitation, registering transfers
with respect to the Bonds.
The Trustee shall pay all principal of, premium, if any, and interest on, the Bonds only to
or upon the order of the respective Owners, as shown in the Registration Books kept by the
Trustee, or their respective attorneys duly authorized in writing, and all such payments shall be
valid hereunder with respect to payment of principal of, premium, if any, and interest on, the
Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the
Registration Books, shall receive a Bond evidencing the obligation to make payments of
principal of, premium, if any, and interest on, such Bond pursuant to this Indenture. Upon
delivery by the Depository to the Trustee and the Authority of written notice to the effect that the
Depository has determined to substitute a new nominee in place of the Nominee, and subject to
the provisions herein with respect to Record Dates, the word Nominee in this Indenture shall
refer to such new nominee of the Depository.
The Bonds are special obligations of the Authority and, as and to the extent set forth in
the Indenture, are payable solely from and secured by a first lien on and pledge of the Revenues
as provided in the Indenture. All of the Bonds are equally secured by a pledge of, and charge
and lien upon, all of the Revenues (other than deposits to the Rebate Fund created by the
Indenture), and the Revenues (other than deposits to the Rebate Fund created by the Indenture)
constitute a trust fund for the security and payment of the principal of and interest on the Bonds.
The full faith and credit of the Authority are not pledged for the payment of the principal of or
interest or premium (if any) on the Bonds. The Bonds are not secured by a legal or equitable
pledge of, or charge, lien or encumbrance upon, any of the property of the Authority or any of its
income or receipts, except the Revenues and such other moneys and securities as provided in the
Indenture.
SECTION 2.12. Representation Letter. To qualify the Bonds for the Depository's
book -entry system, the Authority has previously authorized executed, countersigned and
delivered to such Depository a letter from the Authority representing such matters as shall be
necessary to so qualify the Bonds (the "Representation Letter"). The execution and delivery of
422066412 18
the Representation Letter shall not in any way limit the provisions of Section 2.11 hereof or in
any other way impose upon the Authority or the City any obligation whatsoever with respect to
persons having beneficial interests in the Bonds other than the Owners, as shown in the
Registration Books kept by the Trustee. In the written acceptance by the Trustee of the
Representation Letter, the Trustee shall agree, and hereby agrees, to take all actions necessary for
all representations of the Trustee in the Representation Letter with respect to the Trustee to at all
times be complied with. In addition to the execution and delivery of the Representation Letter,
the Authority Representative and all other officers of the Authority, and their respective deputies
and designees, each is hereby authorized to take any other actions, not inconsistent with this
Indenture, to qualify the Bonds for the Depository's book -entry program.
SECTION 2.13. Transfers Outside Book -Entry System. If at any time the
Depository notifies the Authority that it is unwilling or unable to continue as Depository with
respect to the Bonds or if at any time the Depository shall no longer be registered or in good
standing under the Securities Exchange Act or other applicable statute or regulation and a
successor Depository is not appointed by the Authority within 90 days after the Authority
receives notice or becomes aware of such condition, as the case may be, Section 2.11 hereof
shall no longer be applicable and the Authority shall execute and the Trustee shall authenticate
and deliver Bonds as provided below. In addition, the Authority may determine at any time that
the Bonds shall no longer be represented by global bonds and that the provisions of Section 2.11
hereof shall no longer apply to the Bonds. In any such event the Authority shall execute and the
Trustee shall authenticate and deliver bonds representing the Bonds as provided below. Bonds
executed, authenticated and delivered in exchange for global bonds pursuant to this Section 2.13
shall be registered in such names and delivered in such Authorized Denominations as the
Depository, pursuant to instructions from the Depository Participants or otherwise, shall instruct
the Authority and the Trustee. The Trustee shall deliver such bonds representing the Bonds to
the persons in whose names such Bonds are so registered.
If the Authority determines to replace the Depository with another qualified securities
depository, the Authority shall prepare or cause to be prepared a new fully -registered global
bond for each of the maturities of the Bonds, registered in the name of such successor or
substitute securities depository or its nominee, or make such other arrangements as are
acceptable to the Authority, the Trustee and such securities depository and not inconsistent with
the terms of this Indenture.
SECTION 214. Payments and Notices to the Nominee. Notwithstanding any other
provision of this Indenture to the contrary, so long as any Bond is registered in the name of the
Nominee, all payments of principal of, premium, if any, and interest on such Bond and all
notices with respect to such Bond shall be made and given, respectively, as provided in the
Representation Letter or as otherwise instructed by the Depository.
SECTION 2.15. Initial Depository and Nominee. The initial Depository under this
Indenture shall be DTC. The initial Nominee shall be Cede & Co., as nominee of DTC.
42206641.2 19
ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS
SECTION 3.01. Issuance of Bonds. Upon the execution and delivery of this
Indenture, the Authority shall execute and deliver the Bonds to the Trustee for authentication,
issuance and delivery to the Original Purchaser thereof upon the Request of the Authority.
SECTION 3.02. Application of Proceeds of Sale of Bonds. Upon the receipt of
payment for the Bonds on the Closing Date, the Trustee shall apply $ of the net
proceeds of the Bonds (which equals the principal amount of the Bonds, less an underwriting
discount of $ , plus/less a net original issue premium/discount of $ ), and
less $ for the premium for the Reserve Policy, which shall be wired directly to the
Insurer by the Original Purchaser on the Closing Date), as follows:
(1) The Trustee shall deposit in the Costs of Issuance Fund the amount of
(2) The Trustee shall deposit the Reserve Policy in the Reserve Account
representing the Reserve Requirement as of the Closing Date.
(3) The Trustee shall transfer to The Bank of New York Mellon Trust
Company, N.A., as escrow agent under Escrow Agreement, dated as of June 1, 2016, for
deposit into the Escrow Fund established under the Escrow Agreement the amount of
$ for the prepayment and defeasance of the 2007 Certificates.
The Trustee may establish such temporary funds, accounts and subaccounts as may be
necessary or desirable to accomplish such deposits.
SECTION 3.03. Costs of Issuance Fund. There is hereby established a fund to be
held by the Trustee known as the "Costs of Issuance Fund," into which shall be deposited a
portion of the proceeds of the sale of the Bonds pursuant to Section 3.02. The moneys in the
Costs of Issuance Fund shall be used to pay Costs of Issuance related to the Bonds from time to
time and shall be disbursed by the Trustee upon delivery to the Trustee of a requisition,
substantially in the form attached hereto as Exhibit B, executed by an officer of the Authority.
On the date that is 180 days following the Closing Date, or upon the earlier receipt by the
Trustee of a Request of the Authority certifying that all Costs of Issuance related to the Bonds
have been paid or provided for, the Trustee shall transfer any remaining amounts in the Costs of
Issuance Fund to the Lease Revenue Fund and the Trustee shall then close the Costs of Issuance
Fund.
SECTION 3.04. Reserved.
SECTION 3.05. Insurance and Condemnation Fund. The Trustee shall establish
and maintain a separate fund to be known as the "Insurance and Condemnation Fund," into
which shall be deposited Net Proceeds required to be deposited therein pursuant to Section 9 of
the Lease. The Trustee shall disburse or transfer all amounts in the Insurance and Condemnation
Fund, as stated in a Request of the City (as described below) for the payment of the cost of the
reconstruction of the Leased Property (including reimbursement to the City for any such costs
42206641.2 20
paid by it). Before any payment of money is made from the Insurance and Condemnation Fund,
the Authority shall file or shall cause the City to file with the Trustee a requisition in
substantially the form set forth as Exhibit C hereto.
SECTION 3.06. Validity of Bonds. The validity of the authorization and issuance of
the Bonds shall not be affected in any way by any proceedings taken with respect to the
application of the proceeds of the Bonds, and the recital contained in the Bonds that the same are
issued pursuant to the Bond Law shall be conclusive evidence of their validity and of the
regularity of their issuance.
SECTION 3.07. Additional Bonds. In addition to the Bonds, the Authority and the
Trustee may by execution of a Supplemental indenture, without the consent of the Owners,
provide for the issuance and delivery of Additional Bonds in one or more series. Upon the
Request of the Authority, the Trustee may authenticate and deliver Additional Bonds in an
aggregate principal amount authorized by such Supplemental Indenture. The proceeds of such
Additional Bonds may be used for any purpose, including for the purpose of refunding
Outstanding Bonds. Such Additional Bonds may only be issued upon compliance by the
Authority with the provisions of the Indenture, and subject to the following specific conditions,
which are made conditions precedent to the issuance of any such Additional Bonds:
(a) The Authority shall not be in default under the Indenture or any Supplemental
Indenture, as evidenced by a Certificate of the Authority, and the City shall not be in default
under the Lease, as evidenced by a Certificate of the City;
(b) A Supplemental Indenture may provide that from such proceeds or other sources
an amount be deposited in a reserve account so that there shall be on deposit in such reserve
account a cumulative amount at least equal to the reserve requirement for the Series of Bonds
issued pursuant to such Supplemental Indenture;
(c) The Additional Bonds shall be payable as to principal on October 1 of each year
in which principal is due and shall be payable as to interest on each Interest Payment Date;
(d) The aggregate principal amount of Bonds issued and at any time Outstanding
under the Indenture or under any Supplemental Indenture shall not exceed any limit imposed by
law, by the Indenture or by any Supplemental Indenture, as evidenced by a Certificate of the
Authority and the City; and
(e) The Lease shall have been amended so as to increase the base rental payments
payable by the City thereunder by an aggregate amount equal to the principal and interest due
and payable on such Additional Bonds, payable at such times and in such manner as may be
necessary to provide for the payment of the principal and interest on such Additional Bonds, as
evidenced by a Certificate of the City; and
(f) The Supplemental Indenture shall prescribe the form or forms of such Additional
Bonds, and subject to the provisions hereof, shall provide for the distinctive designation,
denominations, dates, principal payment dates, interest payment dates, interest rates, provisions
for redemption, and places of payment for principal and interest.
42206641.2 21
Any Additional Bonds shall be on a parity with, and each Owner thereof shall have the
same rights upon an Event of Default as the Owner of, any other Bonds issued and delivered
under the Indenture, except as otherwise provided in the Supplemental Indenture under which
Additional Bonds are issued.
ARTICLE IV
REVENUES; FLOW OF FUNDS
SECTION 4.01. Pledge of Revenues; Assignment of Rights. Subject to the
provisions of Section 6.03, the Bonds shall be secured by a first lien on and pledge (which shall
be effected in the manner and to the extent hereinafter provided) of all of the Revenues,
including all of the moneys in the respective Interest Accounts, the Principal Accounts and the
Reserve Accounts for a Series of Bonds, including all amounts derived from the investment of
such moneys. The Bonds shall be equally secured by a pledge, charge and lien upon the
Revenues and such moneys without priority for number, date of the Bonds, date of execution or
date of delivery; and the payment of the interest on and principal of the Bonds and any premiums
upon the redemption of any portion thereof shall be and are secured by an exclusive pledge,
charge and lien upon the Revenues and such moneys. So long as any of the Bonds are
Outstanding, the Revenues and such moneys shall not be used for any other purpose; except that
out of the Revenues there may be apportioned such sums, for such purposes, as are expressly
permitted by Section 4.02.
The Authority hereby transfers in trust and assigns to the Trustee, for the benefit of the
Owners from time to time of the Bonds, all of the Revenues and all of the right, title and interest
(but none of the obligations) of the Authority in the Lease with respect to the Revenues,
including its rights to receive the Base Rental Payments scheduled to be paid by the City under
and pursuant to the Lease and any and all of the other rights of the Authority under the Lease as
may be necessary to enforce payment of such Base Rental Payments when due or otherwise to
protect the interest of the Owners of the Bonds, including its leasehold title to the Leased
Property leased to the City pursuant to the Lease with respect to the Base Rental Payments. The
Trustee accepts such assignments. The Trustee shall be entitled to and shall receive all of the
Revenues, and any Revenues collected or received by the Authority shall be deemed to be held,
and to have been collected or received, by the Authority as the agent of the Trustee and shall
forthwith be paid by the Authority to the Trustee.
Each of the Authority and the City covenant and agree to take such action as is necessary
from time to time to preserve the priority of the pledge set forth in this Section 4.01 under
applicable law, and at the expense of the Authority or the City and the Trustee shall cooperate
with the Authority and/or the City in taking such action.
This Indenture shall be supplemented pursuant to a Supplemental Indenture to pledge
revenues from additional base rental payments under the Lease for any series of Additional
Bonds.
SECTION 4.02. Lease Revenue Fund; Receipt, Deposit and Application of
Revenues. All Revenues shall be deposited by the Trustee in a special fund designated as the
42206641.2 22
"Lease Revenue Fund," which the Trustee shall establish, maintain and hold in trust hereunder.
If the City pays more than 100% of the Base Rental Payments coming due 15 days prior to any
Interest Payment Date, the Trustee shall deposit into the Lease Revenue Fund only that portion
of the Base Rental Payments which the City is required to make under Section 3(a) of the Lease,
and shall remit any excess to the City.
On or before each Interest Payment Date or Principal Payment Date, as applicable, the
Trustee shall transfer from the Lease Revenue Fund and deposit into the following respective
accounts (each of which the Trustee shall establish and maintain within the Lease Revenue
Fund), the following amounts in the following order of priority, the requirements of each such
account (including the making up of any deficiencies in any such account resulting from lack of
Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied
before any transfer is made to any account subsequent in priority:
(a) Interest Account. The Trustee shall establish and maintain a separate account to
be known as the '`Interest Account." On or before each Interest Payment Date, the Trustee shall
deposit in the Interest Account an amount required to cause the aggregate amount on deposit in
the Interest Account to equal the amount of interest becoming due and payable on such Interest
Payment Date on all respective Outstanding Bonds. No deposit shall be made into the Interest
Account if the amount contained therein is at least equal to the interest becoming due and
payable upon all respective Outstanding Bonds on each succeeding Interest Payment Date within
the then current Bond Year. All moneys in the Interest Account shall be used and withdrawn by
the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and
payable (including accrued interest on any Bonds redeemed prior to maturity).
(b) Principal Account. The Trustee shall establish and maintain a separate account
to be known as the "Principal Account." On or before each Principal Payment Date, the Trustee
shall deposit in the Principal Account an amount required to cause the aggregate amount on
deposit in the Principal Account to equal the principal of the Bonds maturing on such Principal
Payment Date pursuant to Section 2.02 or Section 2.03 or pursuant to a Supplemental Indenture,
as the case may be. All moneys in the Principal Account shall be used and withdrawn by the
Trustee solely for the purpose of paying the principal of the Bonds.
(c) Reserve Account. The Trustee shall establish and maintain a separate account to
be known as the "Reserve Account." On or before each Interest Payment Date, the Trustee shall
deposit in the Reserve Account such amount as may be necessary to maintain a balance therein
equal to the Reserve Requirement, if any, for each Series of Bonds issued hereunder. The Trustee
shall establish a subaccount for each Series within the Reserve Account, if applicable, pursuant
to a Supplemental Indenture. No deposit shall be made in a subaccount of the Reserve Account
so long as there shall be on deposit an amount no less than the Reserve Requirement. All money
in a subaccount of the Reserve Account shall be used and withdrawn by the Trustee solely for
the purpose of replenishing the Interest Account or Principal Account established hereunder or
by Supplemental Indenture in connection with the issuance of Additional Bonds in such order, in
the event of any deficiency at any time in any of such accounts with respect to a Series of Bonds,
or for the purpose of paying the interest on or principal of or redemption premiums, if any, on the
Bonds in the event that no other money of the Authority is lawfully available therefor. Moneys
shall be drawn in the event of a deficiency on a pro rata basis for each Series of Bonds. All
42206641.2 23
moneys in a subaccount of the Reserve Account in excess of the applicable Reserve Requirement
may be applied to the retirement of all Bonds then Outstanding or as a credit against the next
following base rental payment under the Lease as directed in a Request by the City.
(d) Redemption Account. On or before the Business Day on which Bonds are subject
to redemption (other than mandatory sinking fund redemption of term Bonds), the Authority will
transfer or cause there to be transferred to the Trustee for deposit in the Redemption Account an
amount required to pay the principal of and premium, if any, on the Bonds to be so redeemed on
such date. The Trustee will apply amounts in the Redemption Account solely for the purpose of
paying the principal of and premium, if any, on the Bonds upon the redemption thereof, other
than mandatory sinking fund redemption of term Bonds which will be made from amounts in the
Principal Account, on the date set for such redemption.
(e) Surplus. On or before October 1 of each year, the Trustee shall determine the
Revenues, if any, remaining in the Lease Revenue Fund after making the deposits required by
paragraphs (a) through (c) above and the transfers of investment earnings pursuant to
Section 4.03, and shall apply such amount as a credit against the next following Base Rental
Payment. Notwithstanding the foregoing, if directed in a Request of the City, the Trustee shall,
with respect to all or any portion of such amount, pay, or set aside an amount for the payment of,
any Rebate Requirement in accordance with a computation made by the City to the Trustee.
SECTION 4.03. Rebate Fund.
(a) In addition to the other funds and accounts created pursuant hereto, the Trustee
shall establish and maintain a fund separate from any other fund or account established and
maintained hereunder designated the "Rebate Fund" (the ``Rebate Fund") in connection with the
Bonds. Within the Rebate Fund, the Trustee shall maintain such accounts or subaccounts as are
specified in a Written Request of the Authority to the Trustee pursuant to the Tax Certificate.
The Trustee shall deposit moneys in the Rebate Fund pursuant to a Written Request of the
Authority. Subject to the transfer provisions provided in subparagraph (5) below, all money at
any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required
to satisfy the Rebate Requirement, for payment to the federal government of the United States of
America, and none of the Authority, the Trustee or the Owner of any Bond shall have any right
in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be
governed by this Section and by the Tax Certificate (which is incorporated herein by reference).
The Trustee shall be deemed conclusively to have complied with the provisions of this Section
4.03 and the Tax Certificate if it follows the Written Request of the Authority, including
supplying all necessary information in the manner requested by the Authority, and except as
otherwise expressly provided herein, shall not be required to take any actions hereunder in the
absence of written directions by the Authority, and shall have no liability or responsibility to
enforce compliance by the Authority with the terms of the Tax Certificate or this Section. The
Trustee agrees to comply with all Written Requests of the Authority given pursuant to the Tax
Certificate.
(1) Upon a Written Request of the Authority, an amount shall be deposited
into the Rebate Fund by the Trustee from deposits by the Authority, if and to the extent
required, so that the balance of the amount on deposit thereto shall be equal to the
42206641.2 24
Rebate Requirement. Computations of the Rebate Requirement shall be furnished by or
on behalf of the Authority in accordance with the Tax Certificate. The Authority shall
provide the Trustee with a Certificate of the Authority evidencing that the computation
of the Rebate Requirement has been made.
(2) The Trustee shall have no obligation to rebate any amounts required to
be rebated pursuant to this Section, other than from moneys held in the funds and
accounts created hereunder or from other moneys provided to it by the Authority.
(3) The Trustee shall invest all amounts held in the Rebate Fund in
Permitted Investments as directed by a Written Request of the Authority. Money,
including investment earnings, shall not be transferred from the Rebate Fund except as
provided in subparagraph (4) below.
(4) Upon receipt of a Written Request of the Authority, the Trustee shall
remit part or all of the amounts in the Rebate Fund to the United States of America, as
so directed. In addition, if the Authority so directs, the Trustee will deposit moneys
into or transfer moneys out of the Rebate Fund from or into such accounts or fund as
directed by the Written Request of the Authority. Any funds remaining in the Rebate
Fund in excess of the Rebate Requirement as of the end of any Bond Year shall be
transferred to the Interest Account.
Notwithstanding any other provision hereof, including, in particular, Section 9.03, the
obligation to remit the Rebate Requirement to the United States and to comply with all other
requirements of this Section and the Tax Certificate shall survive the defeasance or payment in
full of the Bonds.
SECTION 4.04. Investments. All moneys in any of the funds or accounts established
with the Trustee pursuant to this Indenture shall be invested by the Trustee solely in Permitted
Investments pursuant to the written direction of the Authority given to the Trustee two (2)
Business Days in advance of the making of such investments. In the absence of any such
direction from the Authority, the Trustee shall invest any such moneys in money market funds
described in subsection (i) of the definition of Permitted Investments; provided, however, that
any such investment shall be made by the Trustee only if, prior to the date on which such
investment is to be made, the Trustee shall have received a written direction of the Authority
specifying a specific money market fund that satisfies the requirements of such subsection in
which such investment is to be made and, if no such written direction is so received, the Trustee
shall hold such moneys uninvested. Moneys in the Reserve Account shall not be invested in
investments having maturities extending beyond five (5) years; provided, however, that if such
Permitted Investments may be redeemed at par so as to be available on each Interest Payment
Date, any amount in the Reserve Account may be invested in such redeemable Permitted
Investments maturing on any date on or prior to the final scheduled payment date of the Bonds.
Obligations purchased as an investment of moneys in any fund or account shall be deemed to be
part of such fund or account.
The Trustee shall transfer all investment earnings on amounts in a Principal Account, an
Interest Account and the Reserve Account (to the extent not necessary to replenish the Reserve
42206641.2 25
Account to the Reserve Requirement), to the Lease Revenue Fund. All investment earnings on
amounts in the Insurance and Condemnation Fund shall be retained therein. For purposes of
acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder.
The Trustee, or any of its affiliates, may act as principal or agent in the acquisition of any
investment and may impose its customary charges therefor. The Trustee may act as manager,
sponsor, advisor or depository with respect to any Permitted Investment. The Trustee shall incur
no liability for the selection (other than as provided herein) of investments or losses arising from
any investments made pursuant to this Section. The Authority acknowledges that regulations of
the Comptroller of the Currency grant the Authority the right to receive brokerage confirmations
of security transactions to be effected by the Trustee hereunder as they occur, at no additional
cost. The Authority specifically waives the right to receive such confirmation to the extent
permitted by applicable law and agrees that it will instead receive periodic cash transaction
statements which shall include detail for the investment transactions effected by the Trustee
hereunder; provided, however, that the Authority retains its right to receive brokerage
confirmation on any investment transaction requested by the Authority.
SECTION 4.05. Valuation and Disposition of Investments. Except with respect to
the Reserve Account, for the purpose of determining the amount in any fund or account,
Permitted Investments credited to such fund or account shall be valued at least semiannually on
or before each Interest Payment Date at cost (excluding any brokerage commissions and
excluding any accrued interest) by the Authority. With respect to the Reserve Account,
investments shall be valued by the Authority at Fair Market Value and marked to market, if
applicable, semiannually on or before each Interest Payment Date.
ARTICLE V
COVENANTS OF THE AUTHORITY
SECTION 5.01. Punctual Payment. The Authority shall punctually pay or cause to
be paid the principal, interest and premium (if any) to become due in respect of all the Bonds, in
strict conformity with the terms of the Bonds and of this Indenture, according to the true intent
and meaning thereof, but only out of applicable Revenues and other assets pledged for such
payment as provided in this Indenture.
SECTION 5.02. Extension of Payment of Bonds. The Authority shall not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of
payment of any claims for interest by the purchase of such Bonds or by any other arrangement,
and in case the maturity of any of the Bonds or the time of payment of any such claims for
interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any
default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of
the principal of all of the Bonds then Outstanding and of all claims for interest thereon which
shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the
Authority to issue Additional Bonds, or issue Bonds for the purpose of refunding any
Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity
of the Bonds.
42206641.2 26
SECTION 5.03. Against Encumbrances. The Authority shall not create, or permit
the creation of, any pledge, lien, charge or other encumbrance upon the applicable Revenues and
other assets pledged or assigned under this Indenture while any of the Bonds and Additional
Bonds are Outstanding, except the pledge and assignment created by this Indenture and
Supplemental Indenture. Subject to this limitation, the Authority expressly reserves the right to
enter into one or more other indentures for any of its corporate purposes, including other
programs under the Bond Law, and reserves the right to issue other obligations for such
purposes.
SECTION 5.04. Power to Issue Bonds and Make Pledge and Assignment. The
Authority is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture
and to pledge and assign the Revenues, the Lease and other assets purported to be pledged and
assigned, respectively, under this Indenture in the manner and to the extent provided in this
Indenture. The Bonds and the provisions of this Indenture are and will be the legal, valid and
binding special obligations of the Authority in accordance with their terms, and the Authority
and the Trustee (subject to the provisions of Section 6.02 hereof) shall at all times, to the extent
permitted by law, defend, preserve and protect such pledge and assignment of Revenues and
other assets and all the rights of the Owners under this Indenture against all claims and demands
of all persons whomsoever.
SECTION 5.05. Accounting Records and Financial Statements. The Trustee shall
at all times keep, or cause to be kept, proper books of record and account, prepared in accordance
with corporate trust industry standards, in which complete and accurate entries shall be made of
all transactions by the Trustee relating to the proceeds of Bonds, the Revenues, the Lease and all
funds and accounts established pursuant to this Indenture. Such books of record and account
shall be available for inspection by the Authority and the City during regular business hours with
reasonable prior notice.
SECTION 5.06. Additional Obligations. The Authority covenants that no additional
bonds, notes or indebtedness shall be issued or incurred that are payable out of the Revenues in
whole or in part, other than the Additional Bonds.
SECTION 5.07. Lease. The Trustee, as assignee of the Authority's rights under the
Lease with respect to the Revenues pursuant to Section 4.01 hereof and the Assignment
Agreement(s), shall receive amounts due from the City pursuant to the Lease with respect to the
Revenues.
The Authority will faithfully comply with, keep, observe and perform all the agreements,
conditions, covenants and terms contained in the Lease required to be complied with, kept,
observed and performed by it and, together with the Trustee, will enforce the Lease against the
City in accordance with its terms.
So long as any Bond remain Outstanding, the Authority will not alter, amend or modify
the Lease, except pursuant to Section 21 thereof.
42206641.2 27
SECTION 5.08. Tax Covenants.
(a) Special Definitions. When used in this Section, the following terms have the
following meanings with respect to any Bonds or Additional Bonds that the Authority intends
interest thereon to be excludable from the gross income of the Owners thereof.
"Computation Date" means, initially, the first day following the conclusion of the fifth
Bond Year (unless on or before such date the Authority has designated a different date as the
Computation Date), and each subsequent Computation Date shall be the fifth anniversary of the
immediately preceding Computation Date (unless, as to any Computation Date, the Authority has
designated an earlier date following such immediately preceding Computation Date as a
Computation Date.
"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 Bonds.
"Investment" has the meaning set forth in section 1.148-1(b) of the Tax Regulations.
"Nongovernmental Output Property" means any property (or interest therein) that prior
to its acquisition by the City was used by (or manufactured for or to the order of or held for the
use by) any Nongovernmental Person (whether actually so used or not) in connection with any
electric and gas generation, transmission, distribution, or related facilities.
"Nongovernmental Person" refers to any person or entity (including the United States or
any agency, department and instrumentality thereof) other than a state or local government, or an
agency or instrumentality acting solely on behalf thereof.
"Nonpurpose Investment" means any investment property, as defined in section 148(b)
of the Code, in which Gross Proceeds of the Bonds are invested and that is not acquired to carry
out the governmental purposes of the Bonds.
"Nonpurpose Investment" means any investment property, as defined in section 148(b)
of the Code, in which Gross Proceeds of the Bonds are invested and that is not acquired to carry
out the governmental purposes of the Bonds.
"Original Issue " refers to the 2007 Certificates.
"Original Facilities" means any property the acquisition, construction or improvement of
which was financed directly or indirectly with Gross Proceeds of the Original Issue.
"Rebate Amount" 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, or under the provisions of any predecessor
statute corresponding thereto.
42206641.2 28
"Yield" of
(1) any Investment has the meaning set forth in section 1.148-5 of the Tax
Regulations; and
(2) the Bonds has the meaning set forth in section 1.148-4 of the Tax Regulations.
(b) Not to Cause Interest to Fail to Be Excluded from Gross Income. The Authority
covenants that it will not use, permit the use of, or 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,
would cause the interest on any of the Bonds to fail to be excluded pursuant to section 103(a) of
the Code from the gross income, of the owner thereof for federal income tax purposes. Without
limiting the generality of the foregoing, unless and until the Authority receives a written opinion
of Bond Counsel to the effect that failure to comply with such covenant will not adversely affect
the exemption from federal income tax of the interest on any Bond, the Authority will comply
with each of the specific covenants in this Section.
(c) No Private Use or Private Payments. Except as would not cause any Bond to
become a "private activity bond" within the meaning of section 141 of the Code and the Tax
Regulations and rulings thereunder, the Authority covenants that at all times prior to the payment
and cancellation of the last Bond to be paid and canceled:
(1) it will use its best efforts to ensure that the City (or another entity other
than a Nongovernmental Entity) exclusively owns, operates and possesses all of the
Original Facilities that are to be refinanced directly or indirectly with Gross Proceeds of
the Bonds, and that it will not use or permit the use of such Gross Proceeds (including
under any contractual arrangement with terms different than those applicable to the
general public) or any of the Original Facilities in any activity carried on by any
Nongovernmental Person, 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 in respect of the use by any Nongovernmental Person of Gross
Proceeds of the Bonds, other than interest earned on investments acquired with such
Gross Proceeds pending application for their intended purposes, or of any Original
Facility.
Without limiting the foregoing, except as would not cause any Bond to become a "private
activity bond" within the meaning of section 141 of the Code and the Tax Regulations and
rulings thereunder, the Authority will not: (i) permit any Nongovernmental Person to hold any
ownership, proprietary or possessory interest in any of the Original Facilities; (ii) contract with
any Nongovernmental Person for the provision of operating or other services with respect to any
function of an Original Facility (unless either (A) such arrangement requires no payment of fees
to such Nongovernmental Person other than as direct reimbursement of third party costs or
reasonable administrative overhead, or (B) such arrangement conforms to administrative
guidance of the Internal Revenue Service in order to assure that such arrangement does not
42206641.2 29
create a private business use relationship of the Nongovernmental Person to the Gross Proceeds
of the Bonds or to any Original Facility); or (iii) contract with any Nongovernmental Person for
the sale of output or capacity of an Original Facility that is an output facility, unless such
contract is described either in section 1.141-7(c) of the Treasury Regulations (describing certain
types of output contracts that do not have the effect of transferring the benefits of owning the
property and the burdens of paying debt service on the financing of the property) or in section
1.141-7(f) of the Treasury Regulations (describing certain types of output contracts that while
having the effect of transferring such benefits and burdens but nevertheless may be disregarded
in evaluating private business use). For purposes of the preceding sentence, the Authority will
treat proceeds of the Bonds as used ratably for the same purposes as were the proceeds of the
Original Issue.
(d) No Private Loan. Except as would not cause any Bond to become a "private
activity bond" within the meaning of section 141 of the Code and the Tax Regulations and
rulings thereunder, the Authority has not used, and will not use, Gross Proceeds of any Bond to
make or finance loans to any Nongovernmental Person. For purposes of the foregoing covenant,
such Gross Proceeds are considered to be "loaned" to a person or entity if: (1) 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; (2) 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 (3) 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 any Bond to become an
"arbitrage bond" within the meaning of section 148 of the Code and the Tax Regulations and
rulings thereunder, the Authority shall not at any time prior to the final maturity of the Bonds
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 such Bond within the meaning of such section
148.
(f) Not Federally Guaranteed. The Authority covenants that, except to the extent
permitted by section 149(b) of the Code and the Tax Regulations and rulings thereunder, it will
not take or omit to take any action that would cause any Bond 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 Authority covenants that it will timely file or cause to be
filed any information required by section 149(e) of the Code with respect to the Bonds with the
Secretary of the Treasury on Form 8038-G or such other form and in such place as the Secretary
of the Treasury may prescribe.
42206641.2 30
(h) Rebate of Arbitrage Profits. Except to the extent otherwise provided in section
148(1) of the Code and the Tax Regulations and rulings thereunder:
(1) it will account for all Gross Proceeds of the Bonds (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 accounting for at least six years after the day on which the last
Bond is discharged. However, to the extent permitted by law, the Authority may
commingle Gross Proceeds of the Bonds with its other money, provided that the
Authority separately accounts for each receipt and expenditure of Gross Proceeds and
the obligations acquired therewith.
(2) not less frequently than each Computation Date, it will calculate or
cause to be calculated the Rebate Amount in accordance with rules set forth in section
148(f) of the Code and the Tax Regulations and rulings thereunder. The Trustee may
rely conclusively upon the Authority's determinations, calculations and certifications
required by this Section. The Trustee shall have no responsibility to independently
make any calculation of determination or to review the Authority's calculations
hereunder. The Authority covenants that it will maintain a copy of the calculation with
its official transcript of proceedings relating to the issuance of the Bonds until six years
after the final Computation Date;
(3) it will deposit in the Rebate Fund and cause the Trustee to pay to the
United States the amount that when added to the future value of previous rebate
payments made for the Bonds equals (A) 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 (B) in the case of any other Computation Date,
ninety percent (90%) of the Rebate Amount on such a date. In all cases such Rebate
payments shall be made by the Authority (or by the Trustee at the direction of the
Authority) 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 such payments shall
be accompanied by Form 8038-T executed by the Authority 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.
(4) it will exercise reasonable diligence to assure that no errors are made in
the calculations and payments required by paragraphs (2) and (3) above, 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. The Authority covenants that, except to the
extent permitted by section 148 of the Code and the Tax Regulations and rulings thereunder, at
no time prior to the final maturity of the Bonds will it enter into any transaction that reduces the
amount required to be paid to the United States pursuant to paragraph (h) of this Section because
42206641.2 31
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 Bonds not been relevant to each
party.
0) Bonds Not Hedge Bonds.
(1) The Authority represents that none of the Original Issue was, and
covenants that the Bonds will not be, "hedge bonds" within the meaning of
section 149(8) of the Code.
(2) Without limitation of paragraph (1) above, the Authority warrants
as to each of its Original Issue that: (I) on each date of issuance of that issue, the
Authority reasonably expected that at least 85% of the spendable proceeds of that
Original Issue would be expended within the three-year period commencing on
such date of issuance, and (II) no more than 50% of the proceeds of that Original
Issue at any time has been invested in Nonpurpose Investments having a
substantially guaranteed yield for a period of four years or more.
(k) Elections. The Authority hereby directs and authorizes any Responsible Officer
to make elections permitted or required pursuant to the provisions of the Code or the Tax
Regulations, as such Responsible Officer (after consultation with Bond Counsel) deems
necessary or appropriate in connection with the Bonds, in the Tax Certificate relating to the
Bonds or similar or other appropriate certificate, form or document.
SECTION 5.09. Further Assurances. The Authority will adopt, make, execute and
deliver any and all such further resolutions, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this Indenture,
and for the better assuring and confirming unto the Owners of the Bonds the rights and benefits
provided in this Indenture.
ARTICLE VI
THE TRUSTEE
SECTION 6.01. Appointment of Trustee. The Bank of New York Mellon Trust
Company, N.A., a national banking association duly organized and existing under and by virtue
of the laws of the United States of America, is hereby appointed Trustee by the Authority for the
purpose of receiving all moneys required to be deposited with the Trustee hereunder and to
allocate, use and apply the same as provided in this Indenture. The Authority agrees that it will
maintain a Trustee which has (or which is a wholly-owned subsidiary of a corporation which
has) a combined capital and surplus of at least $75,000,000,, and which is subject to supervision
or examination by Federal or State authority, so long as any Bonds are Outstanding. If such
bank, national banking association or trust company or such parent corporation publishes a report
of condition at least annually pursuant to law or to the requirements of any supervising or
examining authority above referred to, then for the purpose of this Section 6.01 the combined
capital and surplus of such bank, national banking association or trust company or such parent
corporation shall be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.
42206641.2 32
The Trustee is hereby authorized to pay the principal of and interest and redemption
premium (if any) on the Bonds when duly presented for payment at maturity, or on redemption
prior to maturity, and to cancel all Bonds upon payment thereof. The Trustee shall keep accurate
records of all funds and accounts administered by it and of all Bonds paid and discharged.
SECTION 6.02. Acceptance of Trusts. The Trustee hereby accepts the trusts
imposed upon it by this Indenture, and agrees to perform such trusts, but only upon and subject
to the following express terms and conditions:
(a) The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer of the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts.
(b) Whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon a Certificate of the Authority.
(c) The Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Owners pursuant to this
Indenture, unless such Owners shall have offered to the Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction.
(d) The Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond or other paper or document.
(e) The Trustee, prior to the occurrence of an Event of Default and after the curing or
waiving of all Events of Default that may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no covenants of or against the
Trustee shall be implied in this Indenture. In case an Event of Default hereunder or under the
Lease has occurred (which has not been cured or waived), the Trustee may exercise such of the
rights and powers vested in it by this Indenture and by the Lease, and shall use the same degree
of care and skill in the exercise of such rights and powers as a prudent person would exercise or
use under the circumstances in the conduct of such person's own affairs.
(f) The Trustee may execute any of the trusts or powers hereunder and perform the
duties required of it hereunder either directly or by or through attorneys, receivers or agents,
shall not be liable for the acts or omissions of such attorneys, receivers or agents appointed with
due care, and shall be entitled to advice of counsel concerning all matters of trust and its duties
hereunder. The Trustee may conclusively rely on an opinion of counsel as full and complete
authorization and protection for any action taken, suffered or omitted by it hereunder.
(g) The Trustee shall not be responsible for any recital herein, in the Lease, or in the
Bonds, or for any of the supplements thereto or instruments of further assurance, or for the
sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby and
makes no representation as to the validity or sufficiency of the Bonds, this Indenture or the
42206641.2 33
Lease. The Trustee shall not be bound to ascertain or inquire as to the observance or performance
of any covenants, conditions or agreements on the part of the Authority hereunder or on the part
of the Authority or the City under the Lease. The Trustee shall not be responsible for the
application of the proceeds of the Bonds paid over by it to the Authority in accordance with
Section 9.03 hereof.
(h) The Trustee may become the Owner or pledgee of Bonds secured hereby with the
same rights it would have if not the Trustee; may acquire and dispose of other bonds or
evidences of indebtedness of the Authority with the same rights it would have if it were not the
Trustee; and may act as a depositary for and permit any of its officers or directors to act as a
member of, or in any other capacity with respect to, any committee formed to protect the rights
of Owners of Bonds, whether or not such committee shall represent the Owners of the majority
in aggregate principal amount of the Bonds then Outstanding.
(i) The Trustee may rely and shall be protected in acting or refraining from acting, in
good faith and without negligence, upon any notice, resolution, opinion, report, direction,
request, requisition, consent, certificate, order, affidavit, letter, telegram or other paper or
document believed by it to be genuine and to have been signed or presented by the proper person
or persons. Any action taken or omitted to be taken by the Trustee in good faith and without
negligence pursuant to this Indenture or the Lease upon the request or authority or consent of any
person who at the time of making such request or giving such authority or consent is the Owner
of any Bond, shall be conclusive and binding upon all future Owners of the same Bond and upon
Bonds issued in exchange therefor or in place thereof. The Trustee shall not be bound to
recognize any person as an Owner of any Bond or to take any action at his request unless the
ownership of such Bond by such person shall be reflected on the Registration Books.
0) The permissive right of the Trustee to do things enumerated in this Indenture or in
the Lease shall not be construed as a duty and it shall not be answerable for other than its
negligence or willful misconduct. The immunities and exceptions from liability of the Trustee
shall extend to its officers, directors, employees and agents.
(k) The Trustee shall not be required to take notice or be deemed to have notice of
any Event of Default hereunder or under the Lease except failure by the Authority or the City to
make any of the payments to the Trustee required to be made by the Authority pursuant hereto or
thereto or failure by the Authority or the City to file with the Trustee any document required by
this Indenture or the Lease to be so filed subsequent to the issuance of the Bonds, unless the
Trustee shall be specifically notified in writing of such default by the Authority or by the Owners
of at least 25% in aggregate principal amount of the Bonds then Outstanding and all notices or
other instruments required by this Indenture to be delivered to the Trustee must, to be effective,
be delivered at the Trust Office of the Trustee, and in the absence of such notice so delivered the
Trustee may conclusively assume there is no Event of Default hereunder except as aforesaid.
(1) At any and all reasonable times the Trustee and its duly authorized agents,
attorneys, experts, accountants and representatives, shall have the right but shall not be required
to inspect all books, papers and records of the Authority pertaining to the Bonds, and to make
copies of any of such books, papers and records which are not privileged by statute or by law.
42206641.2 34
(m) The Trustee shall not be required to give any bond or surety in respect of the
execution of the trusts and powers or otherwise in respect of the premises hereof.
(n) Notwithstanding anything elsewhere in this Indenture with respect to the
execution of any Bonds, the withdrawal of any cash, the release of any property, or any action
whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be
required, to demand any showings, certificates, opinions, appraisals or other information, or
corporate action or evidence thereof, as may be deemed desirable for the purpose of establishing
the right of the Authority to the execution of any Bonds, the withdrawal of any cash or the taking
of any other action by the Trustee.
(o) All moneys received by the Trustee shall, until used or applied or invested as
herein provided, be held in trust for the purposes for which they were received but need not be
segregated from other funds except to the extent required by law.
(p) Whether or not expressly provided therein, every provision of this Indenture, the
Site Lease and the Lease relating to the conduct or affecting the liability of the Trustee shall be
subject to the provisions of this Section.
(q) The Trustee shall have no responsibility with respect to any information,
statement, or recital in any official statement, offering memorandum or any other disclosure
material prepared or distributed with respect to the Bonds.
(r) The Trustee is authorized and directed to enter into the Assignment Agreement in
its capacity as Trustee.
(s) The Trustee agrees to accept and act upon instructions or directions pursuant to
this Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured
electronic methods, provided, however, that, the Trustee 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
Authority or the City elects to give the Trustee e-mail or facsimile instructions (or instructions by
a similar electronic method) and the Trustee in its discretion elects to act upon such instructions,
the Trustee's understanding of such instructions shall be deemed controlling. The Trustee shall
not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's
reliance upon and compliance with such instructions notwithstanding such instructions conflict
or are inconsistent with a subsequent written instruction. The Authority and the City agree: (i) to
assume all risks arising out of the use of such electronic methods to submit instructions and
directions to the Trustee, including without limitation the risk of the Trustee acting on
unauthorized instructions, and the risk of interception and misuse by third parties; other than in
the event of the Trustee's own negligence or willful misconduct; (ii) that they are fully informed
of the protections and risks associated with the various methods of transmitting instructions to
the Trustee and that there may be more secure methods of transmitting instructions than the
method(s) selected by the Authority or the City; and (iii) that the security procedures (if any) to
be followed in connection with its transmission of instructions provide to them a commercially
reasonable degree of protection in light of its particular needs and circumstances.
42206641.2 35
SECTION 6.03. Fees, Charges and Expenses of Trustee. The Trustee shall be paid
and reimbursed by the Authority for reasonable fees for its services rendered hereunder and all
advances (with interest on such advances at the maximum rate allowed by law), counsel fees
(including expenses) and other expenses reasonably and necessarily made or incurred by the
Trustee in connection with such services. Upon the occurrence of an Event of Default hereunder,
but only upon an Event of Default, the Trustee shall have a first lien with right of payment prior
to payment of any Bond upon the amounts held hereunder for the foregoing fees, charges and
expenses incurred by it. When the Trustee incurs expenses or renders services after the
occurrence of an Event of Default, such expenses and the compensation for such services are
intended to constitute expenses of administration under any federal or state bankruptcy,
insolvency, arrangement, moratorium, reorganization or other debtor relief law.
SECTION 6.04. Notice to Owners of Default. If an Event of Default hereunder or
under the Lease occurs with respect to any Bonds of which the Trustee has been given or is
deemed to have notice, as provided in Section 6.02(k) hereof, then the Trustee shall, within 30
days of the receipt of such notice, give written notice thereof by first class mail to the Owner of
each such Bond, unless such Event of Default shall have been cured before the giving of such
notice; provided, however, that unless such Event of Default consists of the failure by the
Authority to make any payment when due, the Trustee may elect not to give such notice if and so
long as the Trustee in good faith determines that it is in the best interests of the Owners not to
give such notice.
SECTION 6.05. Intervention by Trustee. In any judicial proceeding to which the
Authority or the City is a party that, in the opinion of the Trustee and its counsel, has a
substantial bearing on the interests of Owners of any of the Bonds, the Trustee may intervene on
behalf of such Owners, and subject to Section 6.02(c), shall do so if requested in writing by the
Owners of at least 25% in aggregate principal amount of such Bonds then Outstanding.
SECTION 6.06. Removal of Trustee. The Trustee may be removed at any time by an
instrument or concurrent instruments in writing, filed with the Trustee and signed by the Owners
of a majority in aggregate principal amount of the Outstanding Bonds. The Authority may also
remove the Trustee at any time upon 30 days' notice, except during the existence of an Event of
Default. The Trustee may be removed at any time for any breach of the Trustee's duties set forth
herein.
SECTION 6.07. Resignation by Trustee. The Trustee and any successor Trustee may
at any time give written notice of its intention to resign as Trustee hereunder, such notice to be
given to the Authority and the City by registered or certified mail. Upon receiving such notice of
resignation, the Authority shall promptly appoint a successor Trustee. Any resignation or
removal of the Trustee and appointment of a successor Trustee shall become effective upon
acceptance of appointment by the successor Trustee. Upon such acceptance, the Authority shall
cause notice thereof to be given by first class mail, postage prepaid, to the Owners at their
respective addresses set forth on the Registration Books.
SECTION 6.08. Appointment of Successor Trustee. In the event of the removal or
resignation of the Trustee pursuant to Sections 6.06 or 6.07, respectively, the Authority shall
promptly appoint a successor Trustee. In the event the Authority shall for any reason whatsoever
42206641.2 36
fail to appoint a successor Trustee within 60 days following the delivery to the Trustee of the
instrument described in Section 6.06 or within 60 days following the receipt of notice by the
Authority pursuant to Section 6.07, the Trustee may, at the expense of the Authority, apply to a
court of competent jurisdiction for the appointment of a successor Trustee meeting the
requirements of Section 6.01. Any such successor Trustee appointed by such court shall become
the successor Trustee hereunder notwithstanding any action by the Authority purporting to
appoint a successor Trustee following the expiration of such 60 -day period.
SECTION 6.09. Merger or Consolidation. Any company into which the Trustee may
be merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the
Trustee may sell or transfer all or substantially all of its corporate trust business, provided that
such company shall meet the requirements set forth in Section 6.01, shall be the successor to the
Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretions,
immunities, privileges and all other matters as was its predecessor, without the execution or
filing of any paper or further act, anything herein to the contrary notwithstanding.
SECTION 6.10. Concerning any Successor Trustee. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the
Authority an instrument in writing accepting such appointment hereunder and thereupon such
successor, without any further act, deed or conveyance, shall become fully vested with all the
estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such
predecessor shall, nevertheless, on the Request of the Authority, or of the Trustee's successor,
execute and deliver an instrument transferring to such successor all the estates, properties, rights,
powers and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all
securities and moneys held by it as the Trustee hereunder to its successor. Should any instrument
in writing from the Authority be required by any successor Trustee for more fully and certainly
vesting in such successor the estate, rights, powers and duties hereby vested or intended to be
vested in the predecessor Trustee, any and all such instruments in writing shall, on request, be
executed, acknowledged and delivered by the Authority.
SECTION 6.11. Appointment of Co -Trustee. It is the purpose of this Indenture that
there shall be no violation of any law of any jurisdiction (including particularly the law of the
State) denying or restricting the right of banking corporations or associations to transact business
as Trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture,
and in particular in case of the enforcement of the rights of the Trustee on default, or in the case
the Trustee deems that by reason of any present or future law of any jurisdiction it may not
exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the
properties, in trust, as herein granted, or take any other action that may be desirable or necessary
in connection therewith, it may be necessary that the Trustee or the Authority appoint an
additional individual or institution as a separate trustee or co -trustee. The following provisions
of this Section are adopted to these ends.
If the Trustee or the Authority appoints an additional individual or institution as a
separate trustee or co -trustee, each and every remedy, power, right, claim, demand, cause of
action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be
exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by
42206641.2 37
and vest in such separate trustee or co -trustee but only to the extent necessary to enable such
separate trustee or co -trustee to exercise such powers, rights and remedies, and every covenant
and obligation necessary to the exercise thereof by such separate trustee or co -trustee shall run to
and be enforceable by either of them.
Should any instrument in writing from the Authority be required by the separate trustee
or co -trustee so appointed by the Trustee for more fully and certainly vesting in and confirming
to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in
writing shall, on request, be executed, acknowledged and delivered by the Authority. In case any
separate trustee or co -trustee, or a successor to either, shall become incapable of acting, shall
resign or shall be removed, all the estates, properties, rights, powers, trusts, duties and
obligations of such separate trustee or co -trustee, so far as permitted by law, shall vest in and be
exercised by the Trustee until the appointment of a new trustee or successor to such separate
trustee or co -trustee.
SECTION 6.12. Indemnification; Limited Liability of Trustee. The Authority
further covenants and agrees, to the extent permitted by law, to indemnify and save the Trustee
and its officers, directors, agents and employees, harmless against any loss, expense, action, suit,
claim, judgment and liabilities arising out of or in the exercise and performance of its powers and
duties hereunder and under the Site Lease and the Lease, including the costs and expenses of
defending against any claim of liability and fees and expenses of its attorneys, but excluding any
and all losses, expenses and liabilities that are due to the negligence or willful misconduct of the
Trustee, its officers, directors or employees. No provision in this Indenture shall require the
Trustee to risk or expend its own funds or otherwise incur any financial liability hereunder. The
Trustee shall not be liable for any action taken or omitted to be taken by it in accordance with the
direction of the Owners of at least 25% in aggregate principal amount of Bonds Outstanding
relating to the time, method and place of conducting any proceeding or remedy available to the
Trustee under this Indenture or exercising any power conferred upon the Trustee under this
Indenture. The obligations of the Authority under this Section shall survive the termination of
this Indenture and the resignation or removal of the Trustee under this Indenture.
ARTICLE VII
MODIFICATION AND AMENDMENT OF THE INDENTURE
SECTION 7.01. Amendment. This Indenture and the rights and obligations of the
Authority, the Owners of Bonds of a Series may be modified or amended at any time by a
Supplemental Indenture, which shall become binding to the extent permitted by law upon
adoption, without consent of any Owner, but only for any one or more of the following purposes:
(a) to issue Additional Bonds in accordance with Section 3.07 hereof;
(b) to add to the covenants and agreements of the Authority in this Indenture
contained, other covenants and agreements thereafter to be observed, or to limit or surrender any
rights or powers herein reserved to or conferred upon the Authority so long as such limitation or
surrender of such rights or powers shall not materially adversely affect the applicable Owners;
42206641.2 38
(c) to make such provisions for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective provision contained in this Indenture, or in any other
respect whatsoever as the Authority may deem necessary or desirable, provided under any
circumstances that such modifications or amendments shall not materially adversely affect the
interests of the applicable Owners in the reasonable judgment of the Authority;
(d) to maintain the exclusion of interest on the Bonds from gross income for federal
income tax purposes under the Code, if applicable; or
(e) for any other purpose that does not materially adversely affect the interests of the
Owners.
Except as set forth in the preceding paragraph of this Section, this Indenture and the
rights and obligations of the Authority and of the Owners may only be modified or amended at
any time by a Supplemental Indenture, which shall become binding when the written consent of
the Owners of a majority in aggregate principal amount of the affected Bonds then Outstanding
are filed with the Trustee. No such modification or amendment shall (a) extend the maturity of
or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the
Authority to pay the principal, interest or redemption premiums (if any) at the time and place and
at the rate and in the currency provided therein of any Bond without the express written consent
of the Owner, (b) reduce the percentage of Bonds required for the written consent to any such
amendment or modification, or (c) modify any of the rights or obligations of the Trustee without
its written consent thereto.
SECTION 7.02. Effect of Supplemental Indenture. From and after the time any
Supplemental Indenture becomes effective pursuant to this Article VII, this Indenture shall be
deemed to be modified and amended in accordance therewith, the respective rights, duties and
obligations of the parties hereto or thereto and all Owners of Outstanding Bonds, as the case may
be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to
such modification and amendment, and all the terms and conditions of any Supplemental
Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
Prior to entering into any Supplemental Indenture pursuant to this Section, the Authority
shall deliver to the Trustee an opinion of Bond Counsel to the effect that such Supplemental
Indenture has been adopted in accordance with the requirements of this Indenture.
SECTION 7.03. Endorsement or Replacement of Bonds After Amendment. After
the effective date of any action taken as hereinabove provided, the Authority may determine that
the Bonds shall bear a notation, by endorsement in form approved by the Authority, as to such
action, and in that case upon demand of the Owner at such effective date and presentation of
such Bond for that purpose at the Trust Office of the Trustee, a suitable notation as to such action
shall be made on such Bond. If the Authority shall so determine, new Bonds so modified as, in
the opinion of the Authority, shall be necessary to conform to such Owners' action shall be
prepared and executed, and in that case upon demand of the Owner at such effective date such
new Bonds shall be exchanged at the Trust Office of the Trustee, without cost to each Owner, for
Bonds then Outstanding, upon surrender of such Outstanding Bonds.
42206641.2 39
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF OWNERS
SECTION 8.01. Events of Default. The following events shall be Events of Default
hereunder:
(a) Default in the due and punctual payment of the principal of or premium on any
Bond when and as the same shall become due and payable, whether at maturity as therein
expressed, or by proceedings for redemption.
(b) Default in the due and punctual payment of any installment of interest on any
Bond when and as such interest installment shall become due and payable.
(c) Any Event of Default (as defined in the Lease) shall have occurred and be
continuing.
(d) Failure by the Authority to observe and perform any of the covenants, agreements
or conditions on its part in this Indenture or in the Bonds contained, other than as referred to in
the preceding clauses (a) and (b), for a period of thirty (30) days after written notice, specifying
such failure and requesting that it be remedied has been given to the Authority by the Trustee, or
to the Authority and the Trustee by the Owners of not less than 50% in aggregate principal
amount of the Outstanding Bonds; provided, that if such default is such that it cannot be
corrected within the applicable period, it shall not constitute an Event of Default if corrective
action is instituted by the Authority within the applicable period and diligently pursued until the
default is corrected, which period shall not be longer than sixty (60) days from the date of written
notice specifying the failure.
(e) The filing by the Authority of a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable law of the United States
of America, or if a court of competent jurisdiction shall approve a petition, filed with or without
the consent of the Authority, seeking reorganization under the Federal bankruptcy laws or any
other applicable law of the United States of America, or if, under the provisions of any other law
for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or
control of the Authority or of the whole or any substantial part of its property.
SECTION 8.02. Remedies; No Acceleration. Upon the occurrence of an Event of
Default the Trustee shall have the right:
(a) by mandamus or other action or proceeding or suit at law or in equity to enforce
its rights against the Authority or any member, officer or employee thereof, to compel the
Authority or any such member, officer or employee to perform and carry out its or his or her
duties under law and the agreements and covenants required to be performed by it or him
contained herein or in the Lease;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate the
rights of the Trustee; or
42206641.2 40
(c) by suit in equity upon the happening of an Event of Default to require the
Authority and its members, officers and employees to account as the trustee of an express trust.
If an Event of Default shall have occurred and be continuing and if requested so to do by
the Owners of a majority in aggregate principal amount of Outstanding Bonds and indemnified
as provided in Section 6.02(c), the Trustee shall be obligated to exercise such one or more of the
rights and powers conferred by this Article VIII, as the Trustee, being advised by counsel, shall
deem most expedient in the interests of the Owners.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to
the Owners) is intended to be exclusive of any other remedy, but each and every such remedy
shall be cumulative and shall be in addition to any other remedy given to the Trustee or the
Owners hereunder or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any Event of Default
shall impair any such right or power or shall be construed to be a waiver or any such Event of
Default or acquiescence therein; such right or power may be exercised from time to time as often
as may be deemed expedient.
The Trustee shall have no right to declare the principal of or interest on the Bonds
to be due and payable immediately.
Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment, or
composition affecting the Bonds or the rights of any Owner thereof, or to authorize the Trustee
to vote in respect of the claim of any Owner in any such proceeding without the approval of the
Owners so affected.
SECTION 8.03. Application of Revenues and Other Funds After Default. All
amounts received by the Trustee pursuant to any right given or action taken by the Trustee under
the provisions of this Indenture shall be applied by the Trustee in the following order of priority:
First, to the payment of the fees, costs and expenses of the Trustee, including
reasonable compensation to its agents, attorneys and counsel;
Second, to the payment of the whole amount of interest on and principal of the
Bonds of the applicable Series then due and unpaid, with interest on overdue installments
of principal and interest to the extent permitted by law at the lesser of 12% per annum or
the maximum rate permitted by law; provided, however, that in the event such amounts
shall be insufficient to pay in full the full amount of such interest and principal, then such
amounts shall be applied to the payment of such principal and interest without preference
or priority of principal over interest, or interest over principal, or of any installment of
interest over any other installment of interest, ratably to the aggregate of such principal
and interest.
SECTION 8.04. Power of Trustee to Control Proceedings. If the Trustee, upon the
happening of an Event of Default, shall have taken any action, by judicial proceedings or
otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request
42206641.2 41
of the Owners of at least a majority in aggregate principal amount of the Bonds then
Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the
Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise,
settlement or other disposal of such action; provided, however, that the Trustee shall not, unless
there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or
otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed
with it a written request signed by the Owners of a majority in aggregate principal amount of the
Outstanding Bonds opposing such discontinuance, withdrawal, compromise, settlement or other
disposal of such litigation and if the Trustee is indemnified as provided in Section 6.02(c). Any
suit, action or proceeding which any Owner shall have the right to bring to enforce any right or
remedy hereunder may be brought by the Trustee for the equal benefit and protection of all
Owners similarly situated and the Trustee is hereby appointed (and the successive respective
Owners issued hereunder by taking and holding the same, shall be conclusively deemed so to
have appointed it) the true and lawful attorney-in-fact of the respective Owners for the purpose
of bringing any such suit, action or proceeding and to do and perform any and all acts and things
for and on behalf of the respective Owners as a class or classes, as may be necessary or advisable
in the opinion of the Trustee as such attorney-in-fact.
SECTION 8.05. Appointment of Receivers. Upon the occurrence of an Event of
Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings
to enforce the rights of the Trustee and of the Owners under this Indenture, the Trustee shall be
entitled, as a matter of right, to the appointment of a receiver or receivers of the Revenues and
other amounts pledged hereunder, pending such proceedings, with such powers as the court
making such appointment shall confer.
SECTION 8.06. Non-Waiver. A waiver of any default or breach of duty or contract
by the Trustee or any Owners shall not affect any subsequent default or breach of duty or
contract, or impair any rights or remedies on any such subsequent default or breach. No delay or
omission of the Trustee or any Owner 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 of any such default or
an acquiescence therein; and every power and remedy conferred upon the Trustee or Owners by
the Bond Law or by this Article VIII may be enforced and exercised from time to time and as
often as shall be deemed expedient by the Trustee or the Owners, as the case may be.
SECTION 8.07. Rights of Owners. No Owner shall have the right to institute any
suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless
(a) such Owner shall have previously given to the Trustee written notice of the occurrence of an
Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds
then Outstanding shall have made written request upon the Trustee to exercise the powers
hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) such
Owners shall have tendered to the Trustee indemnity acceptable to the Trustee against the costs,
expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall
have refused or omitted to comply with such request for a period of 60 days after such written
request shall have been received by, and such tender of indemnity shall have been made to, the
Trustee.
42206641.2 42
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy
hereunder; it being understood and intended that no one or more Owners shall have any right in
any manner whatever by his or their action to enforce any right under this Indenture, except in
the manner herein provided, and that all proceedings at law or in equity to enforce any provision
of this Indenture shall be instituted, had and maintained in the manner herein provided and for
the equal benefit of all Owners.
The right of any Owner to receive payment of the principal of and interest and premium
(if any) on such Bond as herein provided or to institute suit for the enforcement of any such
payment, shall not be impaired or affected without the written consent of such Owner,
notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.
SECTION 8.08. Termination of Proceedings. In case the Trustee shall have
proceeded to enforce any right under this Indenture by the appointment of a receiver or
otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or
shall have been determined adversely, then and in every such case, the Authority, the Trustee and
the Owners shall be restored to their former positions and rights hereunder, respectively, with
regard to the property subject to this Indenture, and all rights, remedies and powers of the
Trustee shall continue as if no such proceedings had been taken.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Limited Liability of Authority. Notwithstanding anything in this
Indenture contained, the Authority shall not be required to advance any moneys derived from
any source of income other than the Revenues for the payment of the principal of or interest on
the Bonds, or any premiums upon the redemption thereof, or for the performance of any
covenants herein contained (except to the extent any such covenants are expressly payable
hereunder from the Revenues or otherwise from amounts payable under the Lease). The
Authority may, however advance funds for any such purpose, provided that such funds are
derived from a source legally available for such purpose and may be used by the Authority for
such purpose without incurring indebtedness.
The Bonds shall be revenue bonds, payable exclusively from the Revenues and other
funds as in this Indenture provided. The general fund of the Authority is not liable, and the full
faith and credit of the Authority is not pledged, for the payment of the interest and premiums (if
any) on or principal of the Bonds. The Bonds are not secured by a legal or equitable pledge of, or
charge, lien or encumbrance upon, any of the property of the Authority or any of its income or
receipts, except the Revenues and such other moneys and securities as provided in this Indenture.
The Owners shall never have the right to compel the forfeiture of any property of the Authority
except the Revenues and other funds pledged to the payment of the Bonds as provided in this
Indenture. The principal of and interest on the Bonds, and any premiums upon the redemption of
any thereof, shall not be a legal or equitable pledge, charge, lien or encumbrance upon any
property of the Authority or upon any of its income, receipts or revenues except the Revenues
42206641.2 43
and other funds (other than amounts on deposit in the Rebate Fund) pledged to the payment
thereof as provided in this Indenture.
SECTION 9.02. Benefits of Indenture Limited to Parties. Nothing in this Indenture,
expressed or implied, is intended to give to any person other than the Authority, the Trustee, the
City and the Owners, any right, remedy or claim under or by reason of this Indenture. Any
covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of
the Authority shall be for the sole and exclusive benefit of the Trustee, the City and the Owners.
SECTION 9.03. Defeasance; Discharge of Indenture. If the Authority shall pay and
discharge any or all of the Outstanding Bonds in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of and interest and
premiums (if any) on such Bonds, as and when the same become due and payable;
(b) by irrevocably depositing with the Trustee, in trust, at or before maturity, money
which, together with the available amounts then on deposit in the funds and accounts established
with the Trustee pursuant to this Indenture, is fully sufficient to pay such Bonds, including all
principal, interest and redemption premiums (if any); or
(c) by irrevocably depositing with the Trustee or an escrow agent, in trust pursuant to
an escrow deposit agreement, Defeasance Securities in such amount as an Independent Certified
Public Accountant shall determine in a written report acceptable to the Authority in form and
substance, and addressed, to the Authority and the Trustee, filed with the Trustee (upon which
report the Trustee may conclusively rely) will, together with the interest to accrue thereon and
available moneys then on deposit in the funds and accounts established with the Trustee pursuant
to this Indenture, be fully sufficient to pay and discharge the indebtedness on such Bonds
(including all principal, interest and redemption premiums) at or before their respective maturity
dates;
and delivering an opinion of Bond Counsel acceptable to the Authority in form and substance,
and addressed, to the Authority and the Trustee to the effect that the Bonds are no longer
Outstanding under the Indenture, and if such Bonds are to be redeemed prior to the maturity
thereof notice of such redemption shall have been mailed pursuant to Section 2.03(d) or
provision satisfactory to the Trustee shall have been made for the mailing of such notice, then, at
the Request of the Authority, and notwithstanding that any of such Bonds shall not have been
surrendered for payment, the pledge of the Revenues and other funds provided for in this
Indenture with respect to such Bonds, and all other pecuniary obligations of the Authority under
this Indenture with respect to all such Bonds, shall cease and terminate, except only the
obligation of the Authority to pay or cause to be paid to the Owners not so surrendered and paid
all sums due thereon from amounts set aside for such purpose as aforesaid, and all amounts due
the Trustee. Any funds held by the Trustee following any payment or discharge of the
Outstanding Bonds pursuant to this Section, which are not required for such purposes, shall after
payment of amounts due the Trustee hereunder be paid over to the Authority for use by the
Authority for any lawful purpose.
42206641.2 44
SECTION 9.04. Successor is Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture the Authority is named or referred to,
such reference shall be deemed to include the successor to the powers, duties and functions, with
respect to the management, administration and control of the affairs of the Authority, that are
presently vested in the Authority, and all the covenants, agreements and provisions contained in
this Indenture by or on behalf of the Authority shall bind and inure to the benefit of its successors
whether so expressed or not.
SECTION 9.05. Content of Certificates and Opinions. Every certificate or opinion
with respect to compliance with a condition or covenant provided for in this Indenture except the
certificate of destruction pursuant to Section 9.10 shall include (a) a statement that the person or
persons making or giving such certificate or opinion have read such covenant or conditions and
the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in such certificate
or opinion are based; (c) a statement that, in the opinion of the signers, they have made or caused
to be made such examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of the signers, such condition or covenant has been
complied with.
Any such certificate made or given by an officer of the Authority may be based, insofar
as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless
such officer knows that the certificate or opinion or representations with respect to the matters
upon which his certificate may be based, as aforesaid, are erroneous, or in the exercise of
reasonable care should have known that the same were erroneous. Any such certificate or
opinion or representation made or given by counsel may be based, insofar as it relates to factual
matters, on information with respect to which is in the possession of the Authority, or upon the
certificate or opinion of or representations by an officer or officers of the Authority, unless such
counsel knows that the certificate or opinion or representations with respect to the matters upon
which his certificate, opinion or representation may be based, as aforesaid, are erroneous, or in
the exercise of reasonable care should have known that the same were erroneous.
SECTION 9.06. [Reserve Policy Requirements. So long as the Reserve Policy is in
effect, the following provisions shall govern, notwithstanding anything to the contrary set forth
in this Indenture:
(a) The Authority shall repay solely from Revenues or amounts received from the
City as Additional Rental Payments any draws under the Reserve Policy and pay all related
reasonable expenses incurred by the Insurer and shall pay interest thereon from the date of
payment by the Insurer at the Late Payment Rate. "Late Payment Rate" means the lesser of (x)
the greater of (i) the per annum rate of interest, publicly announced from time to time by
JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base
lending rate ("Prime Rate") (any change in such Prime Rate to be effective on the date such
change is announced by JPMorgan Chase Bank) plus 3%, and (ii) the then applicable highest rate
of interest on the Bonds and (y) the maximum rate permissible under applicable usury or similar
laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual
number of days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to
42206641.2 45
announce its Prime Rate publicly, Prime Rate shall be the publicly announced prime or base
lending rate of such national bank as the Insurer shall specify. If the interest provisions of this
subparagraph (a) shall result in an effective rate of interest which, for any period, exceeds the
limit of the usury or any other laws applicable to the indebtedness created herein, then all sums
in excess of those lawfully collectible as interest for the period in question shall, without further
agreement or notice between or by any party hereto, be applied as additional interest for any later
periods of time when amounts are outstanding hereunder to the extent that interest otherwise due
hereunder for such periods plus such additional interest would not exceed the limit of the usury
or such other laws, and any excess shall be applied upon principal immediately upon receipt of
such moneys by the Insurer, with the same force and effect as if the Authority or City had
specifically designated such extra sums to be so applied and the Insurer had agreed to accept
such extra payment(s) as additional interest for such later periods. In no event shall any agreed -
to or actual exaction as consideration for the indebtedness created herein exceed the limits
imposed or provided by the law applicable to this transaction for the use or detention of money
or for forbearance in seeking its collection.
Repayment of draws and payment of expenses and accrued interest thereon at the Late
Payment Rate (collectively, "Reserve Policy Costs") from Revenues or Additional Rental
Payments received by the Authority from the City shall commence in the first month following
each draw, and each such monthly payment shall be in an amount at least equal to 1l12 of the
aggregate of Reserve Policy Costs related to such draw.
Amounts in respect of Reserve Policy Costs paid to the Insurer shall be credited first to
interest due, then to the expenses due and then to principal due. As and to the extent that
payments are made to the Insurer on account of principal due, the coverage under the Reserve
Policy will be increased by a like amount, subject to the terms of the Reserve Policy. The
obligation to pay Policy Costs shall be secured by a valid lien on all revenues and other collateral
pledged as security for the Bonds (subject only to the priority of payment provisions set forth
under this Indenture).
All cash and investments in the Reserve Account shall be transferred to the debt service
fund for payment of debt service on Bonds before any drawing may be made on the Reserve
Policy or any other credit facility credited to the Reserve Account in lieu of cash ("Credit
Facility"). Payment of any Reserve Policy Costs shall be made prior to replenishment of any
such cash amounts. Draws on all Credit Facilities (including the Reserve Policy) on which there
is available coverage shall be made on a pro -rata basis (calculated by reference to the coverage
then available thereunder) after applying all available cash and investments in the Reserve
Account. Payment of Reserve Policy Costs and reimbursement of amounts with respect to other
Credit Facilities shall be made on a pro -rata basis prior to replenishment of any cash drawn from
the Reserve Account. For the avoidance of doubt, "available coverage" means the coverage then
available for disbursement pursuant to the terms of the applicable alternative credit instrument
without regard to the legal or financial ability or willingness of the provider of such instrument to
honor a claim or draw thereon or the failure of such provider to honor any such claim or draw.
(b) If the Authority or the City shall fail to pay any Reserve Policy Costs in
accordance with the requirements of subparagraph (a) hereof, the Insurer shall be entitled to
exercise any and all legal and equitable remedies available to it, including those provided under
42206641.2 46
this Indenture other than (i) acceleration of the maturity of the Bonds or (ii) remedies which
would adversely affect owners of the Bonds.
(c) This Indenture shall not be discharged until all Reserve Policy Costs owing to the
Insurer shall have been paid in full. The Authority's obligation to pay such amounts shall
expressly survive payment in full of the Bonds.
(d) This Indenture shall require the Trustee to ascertain the necessity for a claim upon
the Reserve Policy in accordance with the provisions of subparagraph (a) of this Section and to
provide notice to the Insurer in accordance with the terms of the Reserve Policy at least five
business days prior to each date upon which interest or principal is due on the Bonds. Where
deposits are required to be made by the Authority with the Trustee to the debt service fund for
the Bonds more often than semi-annually, the Trustee shall be instructed to give notice to the
Insurer of any failure of the Authority to make timely payment in full of such deposits within
two business days of the date due.]
SECTION 9.07. Execution of Documents by Owners. Any request, consent or other
instrument required by this Indenture to be signed and executed by Owners may be in any
number of concurrent writings of substantially similar tenor and may be signed or executed by
such Owners in person or by their agent or agents duly appointed in writing. Proof of the
execution of any such request, consent or other instrument or of a writing appointing any such
agent, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the
Trustee and of the Authority if made in the manner provided in this Section.
The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the affidavit of a witness of such execution or by the
certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof
to take acknowledgments of deeds, certifying that the person signing such request, consent or
other instrument or writing acknowledged to him the execution thereof.
The ownership of Bonds shall be proved by the Registration Books. Any request,
consent or vote of the Owner shall bind every future Owner with respect to the same Bond and
the Owner with respect to any Bond issued in exchange therefor or in lieu thereof, in respect of
anything done or suffered to be done by the Trustee or the Authority in pursuance of such
request, consent or vote. In lieu of obtaining any demand, request, direction, consent or waiver
in writing, the Trustee may call and hold a meeting of the Owners upon such notice and in
accordance with such rules and obligations as the Trustee considers fair and reasonable for the
purpose of obtaining any such action.
SECTION 9.08. Disqualified Bonds. In determining whether the Owners of the
requisite aggregate principal amount of Bonds have concurred in any demand, request, direction,
consent or waiver under this Indenture, unless all Bonds are then so owned, Bonds that are
owned or held by or for the account of the City or the Authority (but excluding Bonds held in
any employees' retirement fund) shall be disregarded and deemed not to be Outstanding for the
purpose of any such determination; provided, however, that for the purpose of determining
whether the Trustee shall be protected in relying on any such demand, request, direction, consent
or waiver, only Bonds which the Trustee knows to be so owned or held shall be disregarded.
42206641.2 47
SECTION 9.09. Waiver of Personal Liability. No official, officer, agent or
employee of the Authority shall be individually or personally liable for the payment of the
interest on or principal of the Bonds; but nothing herein contained shall relieve any such official,
officer, agent or employee from the performance of any official duty provided by law.
SECTION 9.10. Partial Invalidity. If any one or more of the covenants or
agreements, or portions thereof, provided in this Indenture on the part of the Authority (or of the
Trustee) to be performed should be contrary to law, then such covenant or covenants, such
agreement or agreements, or such portions thereof, shall be null and void and shall be deemed
separable from the remaining covenants and agreements or portions thereof and shall in no way
affect the validity of this Indenture or of the Bonds; but the Owners shall retain all rights and
benefits accorded to them under the Bond Law or any other applicable provisions of law.
SECTION 9.11. Destruction of Canceled Bonds. Whenever in this Indenture
provision is made for the surrender of any Bonds which have been paid or canceled pursuant to
the provisions of this Indenture, the Trustee shall cancel and destroy such Bonds and upon
Request of the Authority furnish to the Authority a certificate of such destruction.
SECTION 9.12. Funds and Accounts. Any fund or account required by this
Indenture to be established and maintained by the Authority or the Trustee may be established
and maintained in the accounting records of the Authority or the Trustee, as the case may be,
either as a fund or an account, and may, for the purpose of such records, any audits thereof and
any reports or statements with respect thereto, be treated either as a fund or as an account. All
such records with respect to all such funds and accounts held by the Authority shall at all times
be maintained in accordance with generally accepted accounting principles and all such records
with respect to all such funds and accounts held by the Trustee shall be at all times maintained in
accordance with corporate trust industry practices; in each case with due regard for the protection
of the security of the Bonds and the rights of every Owner thereof.
SECTION 9.13. Payment on Business Days. Whenever in this Indenture any amount
is required to be paid on a day that is not a Business Day, such payment shall be required to be
made, without accruing additional interest thereby, on the Business Day immediately following
such day.
SECTION 9.14. Notices. All notices, requests and other communications provided for
hereunder shall be in electronic, telephonic or written form and shall be given to the party to
whom sent, addressed to it, at its address or other address or telephone, number telecopier as
such party may hereafter specify for the purpose by notice to the other parties set forth below.
Each such notice, request or communication shall be effective (i) if given by telephone,
telecopier or other electronic means, when such communication is transmitted to the address
specified below and any appropriate answerback or confirmation is received, (ii) if given by
certified or registered mail, return receipt requested, on the date of receipt appearing on the
return postal receipt for notices given by certified or registered mail, (iii) if given by hand
delivery, when delivered at the address specified below:
42206641.2 48
If to the Authority: Santa Clarita Public Financing Authority
c/o City of Santa Clarita
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: Deputy City Manager/Director of
Administrative Services
If to the City: City of Santa Clarita
23920 Valencia Boulevard
Santa Clarita, California 91355
Attention: Deputy City Manager/Director of
Administrative Services
If to the Trustee: The Bank of New York Mellon Trust Company, N.A.
700 South Flower, 5th Floor
Los Angeles, California 90017-4104
Attention: Corporate Trust Department
Reference: City of Santa Clarita 2016B LRB
Insurer Assured Guaranty Municipal Corp.,
31 West 52nd Street
New York, New York 10019, Attention: Managing
Director — Surveillance
Re: Policy No. (specify number),
Telephone: (212) 826 0100
Telecopier: (212) 339 3556
The Authority and the Trustee may designate any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.
SECTION 9.15. Unclaimed Moneys. Anything in this Indenture to the contrary
notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of
the Bonds that remain unclaimed for two years after the date when such Bonds have become due
and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys
were held by the Trustee at such date, or for two years after the date of deposit of such moneys if
deposited with the Trustee after such date when such Bonds become due and payable, shall be
repaid by the Trustee to the Authority, as its absolute property and free from trust, and the
Trustee shall thereupon be released and discharged with respect thereto and the Owners shall
look only to the Authority for the payment of such Bonds; provided, however, that before being
required to make any such payment to the Authority, the Trustee shall, at the written request and
expense of the Authority, cause to be mailed to the Owners, at their respective addresses
appearing on the Registration Books, a notice that such moneys remain unclaimed and that, after
a date named in such notice, which date shall not be less than 30 days after the date of mailing of
such notice, the balance of such moneys then unclaimed will be returned to the Authority.
SECTION 9.16. Governing Law. This Indenture shall be construed and governed in
accordance with the laws of the State of California.
42206641.2 49
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be signed by
their respective officers, all as of the day and year first above written.
ATTEST:
I:
Secretary
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
President
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
Authorized Officer
42206641.2 50
EXHIBIT A
[FORM OF BOND]
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY (AS DEFINED IN THE INDENTURE) TO
THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
No.
SANTA CLARITA PUBLIC FINANCING AUTHORITY
LEASE REVENUE REFUNDING BOND
(OPEN SPACE AND PARKLAND ACQUISITION PROGRAM)
SERIES 2016B
RATE OF INTEREST: MATURITY DATE: DATED DATE: CUSIP:
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
The SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint powers authority
organized and existing under the laws of the State of California (the "Authority"), for value
received, hereby promises to pay (but only out of the Revenues, as defined in the Indenture
hereinafter referred to, and certain other moneys) to the Registered Owner identified above or
registered assigns (the "Registered Owner"), on the Maturity Date identified above or any earlier
redemption date, the Principal Amount identified above in lawful money of the United States of
America; and to pay interest thereon at the Rate of Interest identified above in like money from
the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of
this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the
fifteenth calendar day of the month preceding such Interest Payment Date, in which case it shall
bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to
September 15, 2016, in which event it shall bear interest from the Dated Date identified above;
provided, however, that if, at the time of authentication of this Bond, interest is in default on this
Bond, this Bond shall bear interest from the Interest Payment Date to which interest hereon has
42206641.2 A- I
previously been paid or made available for payment), payable semiannually on April 1 and
October 1 in each year, commencing October 1, 2016 (the "Interest Payment Dates") until
payment of such Principal Amount in full. The Principal Amount hereof is payable by check or
wire upon presentation hereof upon maturity or earlier redemption at the designated corporate
trust office (the "Trust Office") of The Bank of New York Mellon Trust Company, N.A., as
trustee (the "Trustee"). Interest hereon is payable by check of the Trustee mailed by first class
mail on each Interest Payment Date to the Registered Owner hereof at the address of the
Registered Owner as it appears on the registration books of the Trustee as of the fifteenth
calendar day of the month preceding such Interest Payment Date (except that in the case of a
Registered Owner of at least $1,000,000 in aggregate principal amount of Outstanding Bonds,
such payment may, at such Registered Owner's option, be made by wire transfer of immediately
available funds to an account located in the United States in accordance with written instructions
provided by such Registered Owner prior to the fifteenth calendar day of the month preceding
such Interest Payment Date).
This Bond is one of a duly authorized issue of bonds of the Authority designated the
"Santa Clarita Public Financing Authority Lease Revenue Refunding Bonds (Open Space and
Parkland Acquisition Program), Series 201613" (herein, the "Bonds"), in an aggregate principal
amount of $[principal amount] issued under an Indenture, dated as of June 1, 2016 (the
"Indenture"), by and between the Authority and the Trustee. Reference is hereby made to the
Indenture and all indentures supplemental thereto for a description of the rights thereunder of the
owners of the Bonds, of the nature and extent of the Revenues (as that term is defined in the
Indenture), of the rights, duties and immunities of the Trustee and of the rights and obligations of
the Authority thereunder; and all of the terms of the Indenture are hereby incorporated herein and
constitute a contract between the Authority and the Registered Owner hereof, and to all of the
provisions of which Indenture the Registered Owner hereof, by acceptance hereof, assents and
agrees.
The Bonds are authorized to be issued pursuant to the provisions of the Marks -Roos
Local Bond Pooling Act of 1985, constituting Article 4, Chapter 5, Division 7, Title 1 of the
Government Code of the State of California (the "Act"). The Bonds are special obligations of
the Authority and, as and to the extent set forth in the Indenture, are payable solely from and
secured by a first lien on and pledge of the Revenues as provided in the Indenture. All of the
Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues (other
than deposits to the Rebate Fund created by the Indenture), and the Revenues (other than
deposits to the Rebate Fund created by the Indenture) constitute a trust fund for the security and
payment of the principal of and interest on the Bonds. The full faith and credit of the Authority
are not pledged for the payment of the principal of or interest or premium (if any) on the Bonds.
The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance
upon, any of the property of the Authority or any of its income or receipts, except the Revenues
and such other moneys and securities as provided in the Indenture.
The Bonds have been issued for the purpose of refinancing certain capital improvements
for the City. The Authority and the City have entered into a Lease Agreement, dated as of June
1, 2016 (the "Lease"), under which the City is obligated to pay amounts which are anticipated to
be sufficient to enable the Authority to pay the principal of and interest on the Bonds.
42206641.2 A-2
The Bonds are subject to redemption prior to their maturity as provided in the Indenture.
The Bonds are subject to redemption prior to their respective maturity dates, upon notice
as provided in the Indenture, as a whole or in part on any date, from prepayments of Base Rental
Payments made by the City pursuant to the Lease from funds received by the City due to a taking
of the Leased Property or any portion thereof under the power of eminent domain or from
insurance proceeds received by the City due to damage to or destruction of the Leased Property
or any portion thereof, under the circumstances and upon the conditions and terms prescribed in
the Indenture and in the Lease. Redemption of Bonds pursuant to this paragraph shall be made at
a redemption price equal to the sum of the principal of the Bonds to be redeemed plus accrued
interest thereon to the date fixed for redemption, without premium.
The Bonds may be issued in denominations of $5,000 or any integral multiple thereof.
Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, this
Bond may be exchanged at the Trust Office of the Trustee for a like aggregate principal amount,
interest rate and maturity of fully registered Bonds of other authorized denominations.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at the Trust Office of the Trustee, but only in the manner, subject to
the limitations and upon payment of the charges provided in the Indenture, and upon surrender
and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of
Authorized Denomination or Denominations, for the same aggregate principal amount and of the
same maturity will be issued to the transferee in exchange herefor. The Authority and the Trustee
may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the
Authority and the Trustee shall not be affected by any notice to the contrary. The Trustee shall
not be required to register the transfer or exchange of any Bond during the period in which the
Trustee is selecting Bonds for redemption or any Bond selected for redemption.
The Indenture and the rights and obligations of the Authority and of the owners of the
Bonds and of the Trustee may be modified or amended from time to time and at any time in the
manner, to the extent, and upon the terms provided in the Indenture; provided that no such
modification or amendment shall (a) extend the maturity of or reduce the interest rate on any
Bond or otherwise alter or impair the obligation of the Authority to pay the principal, interest or
premiums at the time and place and at the rate and in the currency provided therein of any Bond
without the express written consent of the owner of such Bond, (b) reduce the percentage of
Bonds required for the written consent to any such amendment or modification, or (c) without its
written consent thereto, modify any of the rights or obligations of the Trustee, all as more fully
set forth in the Indenture.
It is hereby certified that all things, conditions and acts required to exist, to have
happened and to have been performed precedent to and in the issuance of this Bond do exist,
have happened and have been performed in due time, form and manner as required by the
Constitution and statutes of the State of California and by the Act (as such term is defined on the
reverse side hereof) and the amount of this Bond, together with all other indebtedness of the
42206641.2 A-3
Authority, does not exceed any limit prescribed by the Constitution or statutes of the State of
California or by the Act.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or
obligatory for any purpose, until the certificate of authentication hereon shall have been
manually signed by the Trustee.
IN WITNESS WHEREOF, the Authority has caused this Bond to be executed in its name
and on its behalf by the manual signatures of its President and Secretary as of the Dated Date
identified above.
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
M
President
ATTEST:
Secretary
42206641.2 A-4
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within -mentioned Indenture and registered on
the Bond Registration Books.
Dated: 120
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
im
Authorized Officer
42206641.2 A-5
ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer unto
, whose tax identification number is ,
mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s)
attorney to transfer the same
the within -
on the books of the Trustee with full power of substitution in the premises.
Dated:
Signature guaranteed:
NOTE: The signature(s) on this Assignment
must correspond with the name(s) as written on
the face of the within Bond in every particular
without alteration or enlargement or any
change whatsoever.
NOTICE: Signature must be guaranteed by a
member of an institution which is a participant
in the Securities Transfer Agent Medallion
Program (STAMP) or other similar program.
42206641.2 A-6
EXHIBIT B
FORM OF COSTS OF ISSUANCE REQUISITION
REQUISITION NO.
with reference to
$ [principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Refunding Bonds
(Open Space and Parkland Acquisition Program)
Series 2016B
I. The Santa Clarita Public Financing Authority (the "Authority") hereby requests
The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), pursuant to that
certain Indenture, dated as of June 1, 2016 (the "Indenture"), by and between the Authority and
the Trustee, under the terms of which the Authority has issued its Lease Revenue Refunding
Bonds (Open Space and Parkland Acquisition Program), Series 2016B, to pay from the moneys
in the Costs of Issuance Fund established pursuant to the Indenture, the amounts shown on
Schedule I attached hereto to the parties indicated in Schedule I.
II. The payees, the purposes for which the costs have been incurred, and the amount
of the disbursements requested are itemized on Schedule I hereto.
III. Each obligation mentioned in Schedule I hereto has been properly incurred and is
a proper charge against the Costs of Issuance Fund. None of the items for which payment is
requested has been reimbursed previously from the Costs of Issuance Fund.
Dated: , 20
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
By_
Title:
42206641.2 B-1
FORM OF NET PROCEEDS REQUISITION
REQUISITION NO. _ (to be numbered sequentially)
with reference to
$[principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Refunding Bonds
(Open Space and Parkland Acquisition Program)
Series 2016B
L The Santa Clarita Public Financing Authority (the "Authority") hereby requests
The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), pursuant to that
certain Indenture, dated as of June 1, 2016 (the "Indenture"), by and between the Authority and
the Trustee, under the terms of which the Authority has issued its Lease Revenue Refunding
Bonds (Open Space and Parkland Acquisition Program), Series 2016B, to pay from the moneys
in the Insurance and Condemnation Fund established pursuant to the Indenture, the amounts
shown on Schedule I attached hereto to the parties indicated in Schedule I.
II. The payees, the purposes for which the costs have been incurred, and the amount
of the disbursements requested are itemized on Schedule I hereto.
III. Each obligation mentioned in Schedule I hereto has been properly incurred and is
a proper charge against the Insurance and Condemnation Fund. None of the items for which
payment is requested has been reimbursed previously from the Insurance and Condemnation
Fund.
IV. There has not been filed with or served upon the City or the Authority a stop
notice or any other notice of any lien, right to lien or attachment upon, or claim affecting the
right to receive payment of, any of the money payable to the person[s] named on Schedule I
hereto which has not been released or will not be released simultaneously with the payment of
such obligation, other than liens accruing by mere operation of law.
Dated: , 20
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
By_
Title:
42206641.2 C-1
4/22/16
AFTER RECORDATION PLEASE RETURN TO:
Norton Rose Fulbright US LLP
555 South Flower Street, Suite 4100
Los Angeles, California 90071
Attention: Maryann L. Goodkind
ASSIGNMENT AGREEMENT
Dated as of June 1, 2016
by and between
SANTA CLARITA PUBLIC FINANCING AUTHORITY
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
Relating to the
$[principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Refunding Bonds
(Open Space and Parkland Acquisition Program)
Series 2016B
THIS IS A FINANCING DOCUMENT.
NO DOCUMENTARY TRANSFER TAX IS DUE PURSUANT TO REVENUE AND
TAXATION CODE SECTION 11922 AND THIS DOCUMENT IS EXEMPT FROM
RECORDING FEES PURSUANT TO GOVERNMENT CODE SECTION 27383.
42206643.1
TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS ................................................................................................. I
SECTION2.
ASSIGNMENT ................................................................................................ I
SECTION 3.
ACCEPTANCE OF ASSIGNMENT .............................................................. 2
SECTION 4.
NO ADDITIONAL RIGHTS OR DUTIES ..................................................... 2
SECTION 5.
FURTHER ASSURANCES ............................................................................ 2
SECTION 6.
COUNTERPARTS .......................................................................................... 2
SECTION 7.
LAW GOVERNING ....................... ................................................................ 2
SECTION 8.
NOTICES ......................................................................................................... 2
SECTION 9.
BINDING EFFECT; SUCCESSORS .............................................................. 2
EXHIBIT A — DESCRIPTION OF THE LEASED PROPERTY
42206643.1 1
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT, dated as of June 1, 2016 (this "Assignment
Agreement"), by and between the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a
joint powers authority duly organized and existing under the laws of the State of California (the
"Authority") 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 and authorized to accept assignments of the nature herein set forth, as trustee (the
"Trustee");
WITNESSETH:
WHEREAS, the Authority has entered into a Site and Facility Lease, dated as of June 1,
2016 (the "Site Lease"), with the City of Santa Clarita, California (the "City"), whereby the
Authority has agreed to lease certain real property located within the City, as described in
Exhibit A attached hereto (the "Leased Property"), from the City; and
WHEREAS, the Authority has entered into a Lease Agreement, dated as of June 1, 2016
(the "Lease"), with the City, whereby the Authority has agreed to lease the Leased Property to
the City; and
WHEREAS, under and pursuant to the Lease, the City is obligated to make base rental
payments, including the Base Rental Payments as defined therein, to the Authority for the lease
of the Leased Property; and
WHEREAS, the Base Rental Payments have been pledged by the Authority as security
for the payment of principal of and interest on its Lease Revenue Refunding Bonds (Open Space
and Parkland Acquisition Program), Series 2016E (the "Bonds"), authorized and issued pursuant
to an Indenture, dated as of June 1, 2016 (the "Indenture"), by and between the Authority and the
Trustee; and
WHEREAS, the Authority desires to assign to the Trustee without recourse certain of its
rights under the Lease and the Site Lease, including all of its rights to receive the Base Rental
Payments scheduled to be paid by the City under and pursuant to the Lease;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
conditions contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms used herein without definition shall
have the meanings given to such terms in the Indenture or the Lease, as appropriate.
Section 2. Assip-nment. The Authority does hereby assign and transfer to the Trustee
all of the Authority's rights, title and interest in and to (but none of its obligations under) the
Lease and the Site Lease (excepting only (i) the Authority's rights to give approvals and consents
thereunder, including, without limitation, to amendments, and the Authority's rights to the
payment of Additional Rental Payments pursuant to Section 3(b) of the Lease and to
42206643.1
indemnification pursuant to Section 14 of the Lease, and (ii) the Authority's rights to receive
lease payments other than the Base Rental Payments), including the Authority's rights to receive
Base Rental Payments, as well as its rights to enforce payment of such Base Rental Payments
when due or otherwise to protect its interests in the event of a default by the City under the
Lease, in accordance with the terms thereof, in trust nonetheless and provided that should the
Authority well and truly perform all of its obligations under the Indenture, this Assignment
Agreement shall terminate and all interest in the Lease and the Site and Facilities Lease shall
revert to the Authority. The Base Rental Payments shall be applied, and the rights of the
Authority assigned hereunder shall be exercised by the Trustee, as provided in the Indenture.
Section 3. Acceptance of Assignment. The Trustee hereby accepts the assignment
and transfer of such of the Authority's rights, title and interest in and to the Lease and the Site
Lease as are assigned and transferred pursuant to the terms of this Assignment Agreement.
Section 4. No Additional Rights or Duties. Excepting only the assignment and
transfer of rights to the Trustee pursuant to Section 2 hereof, this Assignment Agreement shall
not confer any rights nor impose any duties, obligations or responsibilities upon the Trustee
beyond those expressly provided in the Lease, the Site Lease and the Indenture. The Trustee
does not warrant the accuracy of any of the recitals hereto. This Assignment Agreement shall not
impose any duties, obligations or responsibilities upon the Authority or the City beyond those
expressly provided in the Lease, the Site Lease and the Indenture or as otherwise set forth herein.
Section 5. Further Assurances. The Trustee will make, execute and deliver any and
all such further resolutions, instruments and assurances as may be reasonably necessary or proper
to carry out the intention or to facilitate the performance of this Assignment Agreement, and for
the better assuring and confirming to the Trustee the rights and obligations intended to be
conveyed pursuant hereto.
Section 6. Counterparts. This Assignment Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same agreement.
Section 7. Law Governing. This Assignment Agreement is made in the State of
California under the Constitution and laws of the State of California and is to be so construed.
Section 8. Notices. All notices under this Assignment Agreement shall be in
accordance with Section 9.13 of the Indenture.
Section 9. Bindine Effect; Successors. This., Assignment Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their respective successors
and assigns. Whenever in this Assignment Agreement any party is named or referred to, such
reference shall be deemed to include such party's successors and assigns and all covenants and
agreements contained in this Assignment Agreement by or on behalf of any party hereto shall
bind and inure to the benefit of such party's successors and assigns whether so expressed or not.
2
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement as of the date first above written.
ATTEST:
Secretary
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
Chair
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
By
Authorized Officer
A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE
VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE
DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE
TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On
before me
ss:
(insert name of the
officer), Notary Public, personally appeared , who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
[Seal]
42206643.1
A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE
VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE
DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE
TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.
STATE OF CALIFORNIA )
ss:
COUNTY OF LOS ANGELES )
On before me, (insert name of the
officer), Notary Public, personally appeared , who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
2
[Seal]
DESCRIPTION OF THE LEASED PROPERTY
The land, and Aquatic Center and Sports Complex structures and facilities located
thereon, at 20850 Centre Pointe Parkway, City of Santa Clarita, situated on a portion of parcels
of land, being Assessor Parcel No. 2836-018-900, in the City of Santa Clarita, County of Los
Angeles, State of California, described below:
PARCEL]:
LOT 4 IN FRACTIONAL SECTION 19, TOWNSHIP 4 NORTH, RANGE 15 WEST, SAN BERNARDINO
MERIDIAN, IN THE CITY OF SANTA CLARITA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA,
ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT THAT PORTION OF SAID LAND LYING WESTERLY OF THE EASTERLY LINE OF THAT
CERTAIN STRIP OF LAND 305 FEET IN WIDTH, AS DESCRIBED IN THE DEED TO THE CITY OF LOS
ANGELES, RECORDED SEPTEMBER 21 1967 AS INSTRUMENT NO. 459, IN BOOK D-3774, PAGE 387
OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORD OF SAID COUNTY.
ALSO EXCEPT THE SOUTHERLY 58 FEET OF SAID LOT 4 MEASURED ALONG THE EASTERLY AND
WESTERLY LINES THEREOF.
ALSO EXCEPT THAT PORTION OF SAID LAND BOUNDED BY THE FOLLOWING DESCRIBED LINES:
BEGINNING AT A POINT ON THE EASTERLY LINE OF SAID LOT 4, DISTANT NORTHERLY
THEREON 58.00 FEET FROM THE SOUTHEASTERLY CORNER THEREOF; THENCE ALONG THE
NORTHERLY LINE OF THE SOUTHERLY 58.00 FEET OF SAID LOT 4, MEASURED ALONG THE
EASTERLY AND WESTERLY LINES THEREOF; SOUTH 89° 34' 02" WEST 367.73 FEET; THENCE
NORTH 240 23' 25" WEST 55.06 FEET; THENCE NORTH 54° 09' 22" EAST 42.74 FEET; THENCE
NORTH 070 55' 21" WEST 41.80 FEET; THENCE NORTH 55° 35'37" EAST 43.68 FEET: THENCE
NORTH 340 36' 49" WEST 22.64 FEET; THENCE NORTH 56° 24' 31" EAST 176.60 FEET; THENCE
SOUTH 890 36' 31" EAST 191.08 FEET; THENCE SOUTH 0° 03' 05" EAST 253.51 TO THE POINT OF
BEGINNING.
ALSO EXCEPT ALL MINERALS, OIL, GAS, AND OTHER HYDROCARBON SUBSTANCES LYING
BELOW A DEPTH OF 100 FEET, BUT WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED
BY SAUGUS LIMITED IN THE DEED RECORDED JANUARY 18, 1979 AS INSTRUMENT NO. 79-74632
AND BY NETHERCUTT LABORATORIES IN THE DEED RECORDED MARCH 22, 1983 AS
INSTRUMENT NO. 83-315019, BOTH IN SAID OFFICE OF THE COUNTY RECORDER.
PARCEL 2:
A PERMANENT AND EXCLUSIVE EASEMENT, INCLUDING THE EXCLUSIVE RIGHT TO ALL
SURFACE USAGES WITH THE RIGHT TO PRECLUDE THE USE THEREOF BY ANY OTHER PERSON,
FIRM OR CORPORATION OVER THAT PORTION OF THE SOUTHWEST 1/4 OF SECTION 19
TOWNSHIP 4 NORTH RANGE 15 WEST SAN BERNARDINO MERIDIAN, IN THE CITY OF SANTA
CLARITA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL
PLAT THEREOF BOUNDED AS FOLLOWS:
BOUNDED SOUTHERLY BY THE SOUTHERLY LINE OF THE LAND DESCRIBED IN THE DEED TO
SOLEDAD LTD, A LIMITED PARTNERSHIP RECORDED ON DECEMBER 23 1975 AS
INSTRUMENT NO. 2800 IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,
BOUNDED WESTERLY BY THE EASTERLY LINE OF THE 305 FOOT WIDE STRIP OF LAND
A-1
DESCRIBED IN THE DEED TO THE CITY OF LOS ANGELES, RECORDED ON SEPTEMBER 25, 1967
AS INSTRUMENT NO. 306 IN BOOK D-3777, PAGE 592 OF OFFICIAL RECORDS OF SAID COUNTY,
BOUNDED NORTHERLY BY A LINE PARALLEL WITH AND DISTANT SOUTHERLY 33.00 FEET
MEASURED AT RIGHT ANGLES AND RADIALLY FROM THAT CERTAIN COURSE AND CURVE
HAVING A LENGTH OF 115.00 FEET AND 521.59 FEET RESPECTIVELY IN THE SOUTHERLY
BOUNDARY OF THE LAND DESCRIBED IN THE DEED TO PATRIC M. MULCAHY ET AL.
RECORDED ON MAY 6 1966 AS INSTRUMENT NO. 233 IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY AND BOUNDED EASTERLY BY A LINE PARALLEL WITH AND
DISTANT NORTHEASTERLY 50.00 FEET MEASURED RADIALLY FROM SOUTHEASTERLY
CONTINUATION OF THAT CERTAIN CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF
1535 FEET A CENTRAL ANGLE OF 280 39' 06" AND AN ARC LENGTH OF 767.60 FEET IN THE
EASTERLY BOUNDARY OF THE LAND DESCRIBED IN SAID DEED TO PATRIC M. MULCAHY ET
AL. ABOVE REFERRED TO.
PARCEL 3:
A NON-EXCLUSIVE EASEMENT FOR UTILITY PURPOSES OVER, UNDER AND ACROSS THAT
PORTION OF LOT 4, IN FRACTIONAL SECTION 19 TOWNSHIP 4 NORTH RANGE 15 WEST SAN
BERNARDINO MERIDIAN, IN THE CITY OF SANTA CLARITA, COUNTY OF LOS ANGELES, STATE
OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, BOUNDED AS FOLLOWS:
BOUNDED SOUTHERLY BY THE NORTHERLY LINE OF THE SOUTHERLY 58.00 FEET OF SAID LOT 4
(MEASURED ALONG THE EASTERLY AND WESTERLY LINES OF SAID LOT 4), BOUNDED
WESTERLY BY THE WESTERLY LINE OF SAID LOT 4, BOUNDED NORTHERLY BY A LINE
PARALLEL WITH AND DISTANT NORTHERLY 10.00 FEET MEASURED AT RIGHT ANGLES FROM
THE NORTHERLY LINE OF SAID SOUTHERLY 58.00 FEET AND BOUNDED EASTERLY BY THE
WESTERLY LINE OF THE 305 FOOT WIDE STRIP OF LAND DESCRIBED IN THE DEED TO THE CITY
OF LOS ANGELES, RECORDED ON SEPTEMBER 21 1967 AS INSTRUMENT NO. 459 IN BOOK D-3774,
PAGE 387 OF OFFICIAL RECORDS OF SAID COUNTY.
APN: 2836-018-900
FAWN
4/22/16
ESCROW AGREEMENT
by and among the
SANTA CLARITA PUBLIC FINANCING AUTHORITY,
CITY OF SANTA CLARITA, CALIFORNIA
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
Dated as of June 1, 2016
Pertaining to the Defeasance of
All of the Currently Outstanding
City of Santa Clarita
Certificates of Participation
(Open Space and Parkland Acquisition Program)
2007 Series
ESCROW AGREEMENT
This Escrow Agreement (this "Agreement"), made and entered into as of June 1,
2016, by and between the SANTA CLARITA PUBLIC FINANCING AUTHORITY, a joint
exercise of powers agency organized and existing under, and by virtue of the laws of the State of
California (the "Authority"), the CITY OF SANTA CLARITA, CALIFORNIA, a city duly
organized and existing under the laws of the State of California (the "City") 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 and as Prior
Trustee (the "Escrow Bank");
WITNESSETH:
WHEREAS, the City and the Authority have previously entered into a Lease
Agreement, dated as of December 1, 2007 (the "2007 Lease"), whereby the City leased certain
real property and the improvements thereon, more commonly known as the Santa Clarita Sports
Complex, from the Authority; and
WHEREAS, pursuant to a Trust Agreement, dated as of December 1, 2007 (the
"2007 Trust Agreement'), by and among the Authority, the City, and The Bank of New York
Trust Company, N.A., as precedessor-in-interest to The Bank of New York Mellon Trust
Company, N.A. (the "Prior Trustee"), the City previously executed and delivered certain
certificates of participation (the "2007 Certificates"), evidencing and representing an undivided
and proportionate interest of the owner thereof in certain lease payments (the ``2007 Lease
Payments") to be made by the City under the 2007 Lease to finance certain capital
improvements, including apportion of the costs of the acquisition of open space lands, parks, and
parkland; and
WHEREAS, the Authority and the City have approved the issuance by the
Authority of Lease Revenue Refunding Bonds (Open Space and Parkland Acquisition Program),
Series 2016A, in the aggregate principal amount of $[principal amount] (the "Bonds"), pursuant
to an Indenture, dated as of June 1, 2016 (the "Indenture"), between the Authority and The Bank
of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), a portion of the proceeds
of which are to be used, together with other available funds, to prepay and defease all of the 2007
Certificates, currently outstanding in the aggregate principal amount of $ ;
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.
42208685.2 1
"Escrow Deposit" means $ , an amount sufficient, together with
investment proceeds, (i) to pay the principal and interest components of the 2007 Lease
Payments coming due on and prior to the Prepayment Date and (ii) to prepay on the Prepayment
Date the principal component of the 2007 Lease Payments at a prepayment price equal to 100%
of the principal components of the 2007 Lease Payments to be prepaid on the Prepayment Date,
without premium. "Escrow Fund" means the Escrow Fund established and held by the Escrow
Bank pursuant to Section 3 hereof.
"Escrow Securities" means securities authorized by Section 15.1 of the 2007
Trust Agreement and deposited in the Escrow Fund pursuant to Section 5 hereof.
"2007 Trust Agreement" means the Trust Agreement, dated as of December 1,
2007, by and among the Authority, the City, and The Bank of New York Trust Company, N.A.,
as precedessor-in-interest to The Bank of New York Mellon Trust Company, N.A. (the "Prior
Trustee"), pursuant to which the 2007 Certificates were executed and delivered.
"Prepayment Date" means October 1, 2017.
"Verification Agent" means Causey Demgen & Moore P.C.
"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 2007 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 2007 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 Authority shall deposit, or cause 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 Agreement and the 2007 Trust Agreement, the sum of
$ from the proceeds of the Bonds, $ (i.e. $ from
the Reserve Fund, and $ from the Lease Payment Fund) from amounts held under the
2007 Trust Agreement and $ from the Assessment Revenue Fund held by the City,
for a total 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 C hereto, and to deposit such Escrow Securities in
the Escrow Fund and to retain the amount of $ in cash in the Escrow Fund.
42208685.2 2
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 2007 Certificates, in accordance with the terms of the 2007
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.
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 to pay to the Prior
Trustee, on the Prepayment Date, from amounts held in the Escrow Fund, the amount equal to
the prepayment price with respect to the 2007 Certificates called for prepayment on the
Prepayment Date, plus the interest accrued thereon, if any, to the Prepayment Date, as well as the
regularly scheduled debt service payments with respect to the 2007 Certificates through
October 1, 2017 in the amounts set forth in Exhibit B. The City hereby instructs the Escrow
Bank to mail a notice of defeasance of the 2007 Certificates to The Depository Trust Company,
the Insurer, if any, Information Services and the Owners of the 2007 Certificates in the manner
provided in the 2007 Trust Agreement in the form attached hereto as Exhibit C. The City hereby
further instructs the Escrow Bank to mail notice of prepayment of the 2007 Certificates to The
Depository Trust Company, the Insurer, if any, Information Services and the Owners of the 2007
Certificates in the manner provided in the 2007 Trust Agreement substantially in the form
attached hereto as Exhibit D at least 30 but not more than 60 days prior to the Prepayment Date.
SECTION 10. The trust hereby created shall be irrevocable and the holders of
the 2007 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 the
2007 Trust Agreement and for the benefit of the City and the holders from time to time of the
2007 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, the
Authority and the City; provided, however, that the Authority, the City and the Escrow Bank
may, without the consent of, or notice to, such holders enter into such amendments or
42208685.2 3
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 2007 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 Prior 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 2007 Certificates, or that any
instrument executed hereunder complies with the conditions and provisions of this Section.
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 Authority, the City and the Prior 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 2007 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 Authority, the City and the Prior
Trustee and signed by the holders of a majority in principal amount of the 2007 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 in principal amount of the 2007 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
42208685.2 4
appointed by the holders of a majority in principal amount of the 2007 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 2007
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
$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 Authority and the District, 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 Agreement
shall be limited to the moneys and Escrow Securities in the Escrow Fund.
42208685.2 5
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
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 Authority, 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 Authority and 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 defeasance of the 2007 Certificates pursuant to the 2007 Trust Agreement or to
the validity of this Escrow Agreement as to the Authority and 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 Authority or 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
42208685.2 6
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,
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.
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.
The Authority and the City acknowledge that to the extent regulations of the
Comptroller of the Currency or other applicable regulatory entity grant the Authority or the City
the right to receive brokerage confirmations of security transactions as they occur, the Authority
and the City specifically waive receipt of such confirmations to the extent permitted by law. The
Escrow Bank will furnish the Authority and the City periodic cash transaction statements which
include detail for all investment transactions made by the Prior Trustee hereunder.
The Escrow Bank shall have the right to accept and act upon instructions,
including funds transfer instructions ("Instructions") given pursuant to this Escrow Agreement
and delivered using Electronic Means ("Electronic Means" shall mean the following
communications methods: e-mail, facsimile transmission, secure electronic transmission
containing applicable authorization codes, passwords and/or authentication keys issued by the
Escrow Bank, or another method or system specified by the Escrow Bank as available for use in
connection with its services hereunder); provided, however, that the City shall provide to the
Escrow Bank an incumbency certificate listing officers with the authority to provide such
Instructions ("Authorized Officers") and containing specimen signatures of such Authorized
Officers, which incumbency certificate shall be amended by the City whenever a person is to be
added or deleted from the listing. If the City elects to give the Escrow Bank Instructions using
Electronic Means and the Escrow Bank in its discretion elects to act upon such Instructions, the
42208685.2 7
Escrow Bank's understanding of such Instructions shall be deemed controlling. The City
understands and agrees that the Escrow Bank cannot determine the identity of the actual sender
of such Instructions and that the Escrow Bank shall conclusively presume that directions that
purport to have been sent by an Authorized Officer listed on the incumbency certificate provided
to the Escrow Bank have been sent by such Authorized Officer. The City shall be responsible
for ensuring that only Authorized Officers transmit such Instructions to the Escrow Bank and
that the City and all Authorized Officers are solely responsible to safeguard the use and
confidentiality of applicable user and authorization codes, passwords and/or authentication keys
upon receipt by the City. 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 directions conflict or are inconsistent with a subsequent
written instruction. The City agrees: (i) to assume all risks arising out of the use of Electronic
Means to submit Instructions 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; (ii) that it is fully informed of the protections and risks associated with the various
methods of transmitting Instructions to the Escrow Bank and that there may be more secure
methods of transmitting Instructions than the method(s) selected by the City; (iii) that the
security procedures (if any) to be followed in connection with its transmission of Instructions
provide to it a commercially reasonable degree of protection in light of its particular needs and
circumstances; and (iv) to notify the Escrow Bank immediately upon learning of any
compromise or unauthorized use of the security procedures.
SECTION 17. This Escrow Agreement shall terminate upon prepayment of all
2007 Lease Payments 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 Authority, 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 Authority or 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.
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.
42208685.2 8
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.
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
President
CITY OF SANTA CLARITA, CALIFORNIA
By
City Manager
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Escrow Bank and
as Prior Trustee
Authorized Officer
42208685.2 9
Exhibit A
Verification Report
42208685.2
A-1
Exhibit B
2007 Certificates Escrow Schedule
Date Principal Interest Amount Amount
Component Component Prepaid Payable
10/1/2016
4/1/2017 -- --
10/1/2017
42208682
B-1
Exhibit C
Schedule of Escrow Securities
Principal Amount Security Maturity Coupon Purchase Price
Total
42208685.2
C-1
Exhibit D
Form of Notice of Defeasance
NOTICE OF DEFEASANCE TO THE OWNERS OF
CITY OF SANTA CLARITA
CERTIFICATES OF PARTICIPATION
(OPEN SPACE AND PARKLAND ACQUISITION PROGRAM)
2007 SERIES
NOTICE IS HEREBY GIVEN to the owners of the above -captioned certificates that with
respect to such certificates as specified in the table below (the "Certificates") of the City of Santa
Clarita (the `'City"), the City has deposited with The Bank of New York Mellon Trust Company,
N.A., as Escrow Bank (the "Escrow Bank") for the Certificates, cash and/or direct non -callable
obligations of the United States of America, securities fully and unconditionally guaranteed as to
the timely payment of principal and interest by the United States of America, to which direct
obligation or guarantee of the full faith and credit of the United States of America has been
pledged, Refcorp interest strips, CATS, TIGRS, STRPS and/or defeased municipal bonds rated
AAA by S&P or Aaa by Moody's, satisfying the criteria set forth in the Trust Agreement, dated
as of December 1, 2007 (the "Trust Agreement"), by and among the Santa Clarita Public
Financing Authority (the "Authority"), the City and The Bank of New York Trust Company,
N.A., predecessor -in -interest to The Bank of New York Mellon Trust Company, N.A., as trustee
(the "Trustee"), pursuant to which the Certificates were executed and delivered, the principal and
interest components with respect thereto which when due, together with amounts held as cash,
will provide moneys sufficient (i) to pay principal and interest components with respect to the
Certificates through October 1, 2017 and (ii) to pay on October 1, 2017 the prepayment price
(i.e., 100% of the principal amount thereof) with respect to the Certificates maturing on and after
October 1, 2018, together with accrued interest thereon to such prepayment date. In accordance
with the Trust Agreement, all obligations of the Authority, the Trustee and the City with respect
to the Certificates shall cease and terminate, except only the obligation of the Trustee to pay or
cause to be paid all payments of interest and principal components with respect to the
Certificates from moneys on deposit with the Escrow Bank and available as aforesaid.
CUSIPt Number
Maturity Date Principal Base
(October 1) Amount No: )
42208685.2
D-1
DATED: June 1, 2016
42208685.2
CITY OF SANTA CLARITA, CALIFORNIA
By: THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Escrow Bank
Im
Exhibit E
Form of Notice of Optional Prepayment
CITY OF SANTA CLARITA
CERTIFICATES OF PARTICIPATION
(OPEN SPACE AND PARKLAND ACQUISITION PROGRAM)
2007 SERIES
NOTICE IS HEREBY GIVEN to the owners of the above -captioned certificates
that the certificates listed below (the "2007 Certificates"), executed and delivered pursuant to
Trust Agreement, dated as of December 1, 2007 (the "Trust Agreement'), by and among the
Santa Clarita Public Financing Authority (the "Authority"), the City of Santa Clarita (the "City")
and The Bank of New York Trust Company, N.A., predecessor -in -interest to The Bank of New
York Mellon Trust Company, N.A., as trustee (the "Trustee"), have been called for prepayment
on October 1, 2017 (the "Prepayment Date"), pursuant to the provisions of the Trust Agreement.
The 2007 Certificates called for prepayment have the maturity date, principal
component, CUSIP Number and prepayment price as set forth below:
Principal CUSIP
Principal Component Number
Maturity Outstanding to be Prepaid i I
Prepayment
Price
100%
100
100
100
100
100
100
100
Owners of the 2007 Certificates should surrender said 2007 Certificates on the
Prepayment Date at the following address:
By Mail, Hand or Overnight:
The Bank of New York
Corporate Trust Operations
111 Sanders Creek Parkway
East Syracuse, New York 13057
42208685.2
D -I
Any questions may be directed to:
The Bank of New York Mellon Trust Company, N.A.
400 S. Hope Street, Suite 400
Los Angeles, California 90071
Corporate Trust Department
Telephone: (213) 630-6249
IMPORTANT NOTICE. Under the provisions of the Economic Growth and Tax
Relief Reconciliation Act of 2001 (the "Act"), the Trustee may be obligated to withhold 30% of
the prepayment price from any 2007 Certificate holder who has failed to furnish the Trustee with
a valid taxpayer identification number and a certification that such 2007 Certificate holder is not
subject to backup withholding under the Act. 2007 Certificate holders who wish to avoid the
application of these provisions should submit a completed Form W-9 when presenting their 2007
Certificates. If you have any questions, please call The Bank of New York at 1-800-548-5075.
Neither the City or the Trustee 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 2007
Certificates.
Failure to receive this Notice of Optional Prepayment or any immaterial defect
contained herein shall not affect the sufficiency of the prepayment proceedings as provided in the
Trust Agreement.
DATED:
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.
as Trustee
42208685.2
D-2
4/25/16
OFFICIAL NOTICE INVITING BIDS
$12,790,000*
Santa Clarita Public Financing Authority
Lease Revenue Refunding Bonds
(Open Space and Parkland Acquisition Program)
Series 2016B
NOTICE IS HEREBY GIVEN by the Santa Clarita Public Financing Authority (the "Authority")
that electronic bids will be received by the Authority for the purchase of $12,790,000* principal amount
of Santa Clarita Public Financing Authority Lease Revenue Refunding Bonds (Open Space and Parkland
Acquisition Program), Series 2016B (the "Bonds") up to the time specified below. All electronic bids
must be submitted via an electronic bidding service offered through I -Deal LLC BIDCOMP/PARITY°
System ("Parity"). The date and time specified for receipt of bids is as follows:
May , 2016
9:00 a.m., Pacific Standard Time
(or at the election of the Authority, at such time on any day thereafter, specified by notification through
Thomson Municipal News or Bloomberg News Wire at least 24 hours prior to the scheduled date and
time of sale) for the purchase of the Bonds. The Bonds will be issued and sold under the provisions of an
Indenture, dated as of June 1, 2016, between the Authority and The Bank of New York Mellon Trust
Company, N.A., as trustee (the "Trustee"), pursuant to the laws of the State of California. The Bonds are
more particularly described in the proposed form of the Indenture on file with the Secretary of the
Authority and copies thereof will be furnished to the bidder upon request.
BOND RATING
The Bonds are rated "AA+" (Stable Outlook) by Standard & Poor's Ratings Service ("S&P").
DESCRIPTION OF THE BONDS
FORM OF BONDS: The Bonds will be issued and sold in fully registered form in denominations
of $5,000 or authorized integral multiples thereof, to be dated initially as of the date of delivery to the
successful bidder.
MATURITIES—. The Bonds will mature, serially on October 1 in each of the years and in the
amounts, as set forth in the following table. The final aggregate principal amount of the Bonds, and the
final amount of each maturity of the Bonds, shall be subject to increase or reduction as described below
under the heading "Adjustment of Principal Amounts." Each Bidder may specify in its bid whether
consecutive maturities will be aggregated into a term Bond subject to mandatory sinking account
redemption in the applicable principal amount set forth below.
Preliminary, subject to change.
Preliminary, subject to change. See also, "Adjustment of Principal Amounts" herein.
Maturity Date
Principal Maturity Date Principal
October I
Amount October I Amount
2017
2028
2018
2029
2019
2030
2020
2031
2021
2032
2022
2033
2023
2034
2024
2035
2025
2036
2026
2037
2027
PAYMENT PROVISIONS: Interest on the Bonds will be payable semiannually on April 1 and
October I of each year, commencing on October 1, 2016 (each, an "Interest Payment Date"), to the
registered owners by check of the Trustee or, in the case of the owner of Bonds in an aggregate principal
amount of at least $1,000,000, at the written request of such owner by wire transfer to an account in the
United States of America. Principal and premium (if any) of any Bond will be paid upon presentation
and surrender thereof at the corporate trust office of the Trustee in Los Angeles, California, or such other
office as may be designated by the Trustee. The principal and premium (if any) of and interest on the
Bonds are payable in lawful money of the United States of America.
BOOKENTRYONLY: The Bonds will be initially delivered only in book -entry form and will be
registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New
York, New York. DTC will act as securities depository for the Bonds. Individual purchases of the
Bonds will be made in book -entry form only, in denominations of $5,000 or any integral multiple thereof.
Purchasers of Bonds will not receive certificated securities representing their ownership interests in the
Bonds purchased. Principal of and interest on the Bonds are payable directly by the Trustee to DTC
which is obligated in turn to distribute such payments to the beneficial owners of the Bonds, as provided
in the Indenture.
OPTIONAL REDEMPTION. The Bonds maturing on or after October 1, 2027, shall be
subject to redemption prior to maturity, at the option of the City, on or after October 1, 2026,
in whole at any time or in part (by lot within any maturity), on any date, at a redemption price
equal to the principal amount to be redeemed, plus accrued interest to the date fixed for
redemption, without premium.
REDEMPTION FROM NET PROCEEDS OF INSURANCE OR CONDEMNATION AWARDS. The
Bonds are subject to redemption on any date prior to their stated Principal Payment Dates, as a whole, or
in part, from the net proceeds of any insurance or condemnation award with respect to the Leased
Property or portions thereof, at a redemption price equal to the sum of the principal amount evidenced
thereby plus accrued interest evidenced thereby to the date fixed for redemption, without premium.
SINKING ACCOUNT REDEMPTION. Any bidder may, at its option, specify that one or more
maturities of the Bonds will consist of term Bonds which are subject to mandatory sinking account
redemption in consecutive years immediately preceding the maturity thereof, as designated in the bid of
such bidder. In the event that the bid of the successful bidder specifies that any maturity of Bonds will be
termed, such term Bonds will be subject to mandatory sinking account redemption on October 1 in each
applicable year in the principal amount for such year as set forth above under the heading
"MATURITIES," at a redemption price equal to the principal amount thereof to be redeemed together
with accrued interest thereon to the redemption date, without premium.
PURPOSE: The proceeds from the sale of the Bonds will be used to (i) advance refund certain
obligations of the City of Santa Clarita, California (the "City") in connection with the City's Certificates
of Participation (Open Space and Parkland Acquisition Program ) 2007 Series (the "Prior Obligations"),
(ii) fund Reserve Fund Surety Policy for the Bonds, and (iv) pay the costs incurred in connection with the
execution and delivery of the Bonds, all as further described in the Preliminary Official Statement.
SECURITY: Payments of principal of and interest on the Bonds are derived from Revenues
consisting primarily of certain base rental payments (the "Base Rental Payments") made by the City to
the Authority under that certain Lease Agreement dated as of June 1, 2016 (the "Lease"), by and between
the Authority and the City, under which the City shall lease a portion of the City's Aquatics Center and
Sports Complex as described in the Lease (the "Leased Property") from the Authority. The obligation of
the City to make Base Rental Payments is a general fund obligation of the City (subject to abatement of
such Base Rental Payments in the event of the interruption of use of the Leased Property) payable from
legally available funds, but does not constitute an obligation for which the City has levied or pledged any
form of taxation, nor does the obligation of the City to make Base Rental Payments constitute an
indebtedness of the City, the State of California or any of its political subdivisions within the meaning of
any constitutional or statutory debt limitation or restriction. Legally available funds of the City to make
Base Rental Payments include, but are not limited to, Assessment Revenues from the City of Santa
Clarita Open Space Preservation District.
SURETY BOND. • [ I has issued a commitment for a Municipal Bond Debt Service
Reserve Insurance Policy (the "Reserve Policy") relating to the Bonds and the Authority has determined
to purchase the Reserve Policy in satisfaction of the Reserve Requirement. See the discussion in the
Preliminary Official Statement under the heading "SECURITY AND SOURCES OF PAYMENT -
Reserve Account."
TAX-EXEMPT STATUS: In the opinion of Norton Rose Fulbright US LLP, Los Angeles,
California, Bond Counsel, under existing law interest on the Bonds is exempt from personal income taxes
of the State of California and, assuming compliance with the tax covenants herein, interest on the Bonds
is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 from the gross income of the
owners thereof for federal income tax purposes and is not an item of tax preference for purposes of the
alternative minimum income tax imposed on corporations and individuals. Bond Counsel expresses no
opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or
receipt of interest on the Bonds. See the discussion in the Preliminary Official Statement under the
heading "TAX MATTERS."
CONTINUING DISCLOSURE: In order to assist bidders in complying with S.E.C. Rule 15e2 -
12(b)(5) (the "Rule"), the City will undertake, pursuant to a Continuing Disclosure Certificate, to provide
certain annual financial infonnation and notices of the occurrence of certain events, if material. A
description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth
in the final Official Statement relating to the Bonds. Within the last five years, neither the City nor the
Authority has failed to timely comply with their respective prior continuing disclosure obligations under
the Rule in all material respects. Notwithstanding the foregoing, the City has learned
At the request of the City, Digital Assurance Certification, LLC (" DAC") has compiled a
summary statement reflecting the filing due dates applicable under the City's and the Authority's
undertakings under the Rule and, for the last five years, the actual filings dates of audited financial
statements and financial and operating data. That summary statement is attached hereto. The summary
statement is the result of certain limited activities and inquiry and is being provided by the City to
prospective purchasers to assist with their respective responsibilities under certain securities laws. The
scope of those activities performed were inherently limited and do not purport to encompass all activities
that the prospective purchasers or the City may be responsible to undertake, and may not be sufficient for
or appropriate to your (prospective purchaser's) purposes.
LEGAL OPINION: The legal opinion of Norton Rose Fulbright US LLP, Los Angeles, California,
Bond Counsel, concerning the validity of the Bonds, and certain other matters, will be furnished to the
purchaser of the Bonds without cost.
FURTHER INFORMATION- A copy of the Preliminary Official Statement describing the Bonds,
the DAC summary statement and any other information concerning the proposed financing, will be
furnished upon request to the City and to the financial advisor to the City with respect to the Bonds (the
"Financial Advisor"): C.M. de Crinis & Co., Inc., 100 N Brand Boulevard, Suite 605 Glendale CA 91203
California, telephone: (818) 385-4900, e-mail: curt@cmdecrinis.com. Additionally, a copy of the
Preliminary Official Statement, the DAC summary statement and this Official Notice Inviting Bids can
be obtained in electronic format at www.i-dealprospectus.com.
MUNICIPAL BOND INSURANCE — DEBT SERVICE RESERVE INSURANCE POLICY
has issued a commitment for a Municipal Bond Debt
Service Reserve Insurance Policy (the "Reserve Policy") relating to the Bonds. The City has determined
to purchase the Reserve Policy in satisfaction of the Reserve Requirement.
TERMS OF SALE
FORM OF BID; MAXIMUM DISCOUNT: Each bid must be for not less than all of the Bonds
hereby offered for sale. The purchase price to be paid for the Bonds may not be less than 99% of the par
value thereof. Any premium must be paid as part of the purchase price.
ELECTRONIC BIDS: Electronic Bids via Bidcomp/Parity (the "Electronic Bidding System") will
be accepted in accordance with this Official Notice Inviting Bids until 9:00 a.m. Pacific Standard Time,
, May , 2016, but no bid will be received after this time. To the extent any
instructions or directions set forth in Bidcomp/Parity conflict with this Official Notice Inviting Bids, the
terms of this Official Notice Inviting Bids shall control. For further information about Bidcomp/Parity,
potential bidders may contact C.M. de Crinis & Co., Inc., 100 N Brand Boulevard, Suite 605 Glendale
CA 91203 California, telephone (818) 385-4900. curt@cmdecrinis.com.
THE AUTHORITY WILL MAKE ITS BEST EFFORTS TO ACCOMMODATE
ELECTRONIC BIDS; HOWEVER, THE AUTHORITY, THE FINANCIAL ADVISOR AND
BOND COUNSEL ASSUME NO RESPONSIBILITY FOR ANY ERROR CONTAINED IN ANY
BID SUBMITTED ELECTRONICALLY. THE OFFICIAL TIME FOR RECEIPT OF BIDS IS
AS STATED IN THIS OFFICIAL NOTICE INVITING BIDS AND AS DETERMINED
EXCLUSIVELY BY THE FINANCIAL ADVISOR.
DESIGNATION OF INTEREST RATES: Each bidder must specify the rate or rates of interest
which the Bonds shall evidence. The maximum rate bid on any Bonds may not exceed 5.50% per annum
and the maximum true interest rate bid on the Bonds cannot exceed 3.85%. A bidder will be permitted to
bid different rates of interest for each maturity of Bonds; but (i) each interest rate specified must be in a
multiple of one -twentieth or one-eighth of one percent; (ii) no Bond shall evidence more than one rate of
interest; (iii) payments of interest on each Bond shall be computed from the date of original delivery
thereof to its stated maturity (or, in the case of term Bonds, to the respective dates of mandatory sinking
fund redemption thereof as designated in the bid) at the interest rate specified in the proposal, payable on
4
the Interest Payment Date as set forth above; and (iv) all Bonds maturing at any one time shall bear the
same rate of interest.
DETERMINATION OF BEST BID: The Bonds will be awarded to the responsible bidder whose
bid produces the lowest true interest rate on the Bonds. The true interest rate specified in any bid will be
that rate which, when used in computing the present value of all payments of principal of and interest to
be paid on all Bonds from the date of delivery of the Bonds to the successful bidder to their respective
maturity dates produces an amount equal to the purchase price specified in such bid. For purposes of
computing the true interest rate represented by any proposal, the purchase price specified in such
proposal shall be equal to the par amount of the Bonds less any discount specified in such proposal or
plus any premium specified in such proposal, and the true interest rate shall be calculated by the use of a
semiannual interval of compounding interest based on the Interest Payment Date for the Bonds.
ADJUSTMENT OF PRINCIPAL AMOUNTS: The Authority reserves the right to increase or to
decrease the principal amount of any maturity of the Bonds in $5,000 increments as the Authority deems
advisable, based on the actual rates of interest to be borne by the Bonds. Any such increase or decrease
shall be allocated among the various maturities of the Bonds on such basis as the Authority deems
advisable, and shall result in a proportionate increase or decrease (as the case may be) in the amount of
any premium or discount bid. Notice of such increase or decrease shall be given to the successful bidder
as soon as practicable following the notification of award, as described below. No such adjustment will
have the effect of altering the basis upon which the best bid is determined. In no event will the principal
amount of the Bonds exceed $
RIGHT TO REJECT ANY BID: The Authority reserves the right, in its discretion, to reject any
and all proposals and to waive any irregularity or informality in any proposal.
TIME OF AWARD: The Authority has authorized its Executive Director or Treasurer to award the
sale of the Bonds to the bidder whose proposal is the best responsible proposal determined in accordance
herewith. The Authority will take action awarding the Bonds or rejecting all bids not later than 9:00 a.m.
(PST) on May , 2016, provided that the award may be made after the expiration of the specified
time unless the successful bidder provides the Authority with a notice in writing of the withdrawal of
such bid.
DELIVERY AND PAYMENT: Delivery of the definitive Bonds will be made to The Depository
Trust Company to the account of the purchaser upon the delivery thereof, which is expected to occur on
or about June , 2016. Payment for the Bonds must be made by wire transfer of Federal Reserve
Bank funds, which is immediately available to the Trustee on the date of delivery. Any expense in
providing immediately available funds shall be borne by the purchaser.
GOOD FAITH DEPOSIT: To secure the Authority from any loss resulting from the failure of the
successful bidder to comply with the terms of its bid, a good faith deposit in the amount of $200,000 (the
"Good Faith Deposit") must be provided by the successful bidder.
Upon the determination by the Authority of the successful bidder of the Bonds, the Financial
Advisor will notify the successful bidder of the Authority's determination. After notification, the
successful bidder will confirm to the Financial Advisor by telephone (818) 385-4900) that the successful
bidder will wire the Good Faith Deposit as soon as possible and in any event not later than twenty-four
(24) hours after verbal notice of the bid award. The successful bidder will provide the Federal wire
reference number of such Good Faith Deposit to the Financial Advisor. The wire transfer instructions
will be provided to the successful bidder at the time of the bid award.
If the successful bidder does not confirm to the Financial Advisor that the successful bidder will
wire the Good Faith Deposit upon receipt of wiring instructions from the Authority as provided herein,
the Authority may, in its sole discretion, reject the bid of the successful bidder and may award the Bonds
to the responsible bidder that timely submitted a conforming bid that represents the next lowest TIC to
the Authority, which will in turn become and will assume the responsibilities of the successful bidder as
described in this paragraph.
The Good Faith Deposit will immediately upon receipt become the property of the Authority and
will be held and invested for the exclusive benefit of the Authority and the City. No interest will be paid
upon the Good Faith Deposit. The Good Faith Deposit, without interest, will be credited against the
purchase price of the Bonds purchased by the purchaser at the time of delivery of the Bonds.
If the purchase price is not paid in full upon tender of the Bonds by the Authority to the
purchaser, the Authority will retain the Good Faith Deposit and the purchaser will have no right in or to
the Bonds or to the recovery of its Good Faith Deposit, or to any allowance or credit by reason of such
deposit, unless it appears that the Bonds would not be validly delivered if delivered to the purchaser in
the form and manner proposed, except in the case that a successful bidder provides the Authority with a
notice in writing of the withdrawal of such bid. If the purchaser fails to deliver the Good Faith Deposit
in accordance with this Official Notice Inviting Bids or fails to take up and pay for the Bonds, the
Authority reserves any and all rights granted by law to recover the full purchase price of the Bonds and,
in addition, any damages suffered by the Authority or the City.
STATEMENT OF TRUE INTEREST RATE: Each bidder is requested, but not required, to state in
its proposal the percentage true interest rate represented by its proposal, determined as described above,
which shall be considered as informative only and not binding on either the bidder or the Authority or
City.
CERTIFICATION OF REOFFERING PRICE: The successful bidder shall be required, as a
condition to the delivery of the Bonds by the Authority, to deliver to the Authority and the City a
certificate, in form and substance satisfactory to the Authority and the City, stating (i) that, as of the date
of award, the Bonds were expected to be reoffered in a bona fide public offering, (ii) the initial offering
price at which a substantial amount (at least ten percent (10%)) of each maturity of the Bonds were sold
to the public, and (iii) that no Bonds of a single maturity were offered at one price to the general public
and at a discount from that price to institutional or other investors.
NO LITIGATION: There is no litigation pending concerning the validity of the Bonds, the
existence of the City and the Authority or the entitlement of the officers thereof to their respective
offices, and the purchaser will be furnished a no -litigation certificate certifying to the foregoing as of and
at the time of delivery of the Bonds.
CUSIP NUMBERS.- It is anticipated that CUSIP numbers will be printed on the Bonds, but
neither the failure to print such numbers on any Bonds nor any error with respect thereto will constitute
cause for a failure or refusal by the purchaser to accept delivery of and pay for the Bonds in accordance
with the terms hereof. The CUSIP Service Bureau charge for the assignment of said numbers will be the
responsibility of and shall be paid for by the purchaser of the Bonds.
CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION FEES: All fees payable to
the California Debt and Investment Advisory Commission in connection with the execution and delivery
of the Bonds shall be the responsibility of the purchaser of the Bonds.
OFFICIAL STATEMENT: The City and the Authority have each approved the Preliminary
Official Statement relating to the Bonds. Copies of such Preliminary Oficial Statement will be
M
distributed to any bidder, upon request, prior to the sale in a form "deemed final" by the City and the
Authority for purposes of the Rule under the Securities Exchange Act of 1934 (the "Rule"). Within
seven (7) business days from the sale date, the Authority will deliver to the purchaser up to 100 copies of
the Final Official Statement, executed by authorized representatives of the City and the Authority, in
sufficient number to allow the purchaser to comply with paragraph (b)(4) of the Rule and to satisfy the
Municipal Securities Rulemaking Board (the "MSRB") Rule G-32 or any other rules adopted by the
MSRB, which shall include information permitted to be omitted by paragraph (b)(1) of the Rule and such
other amendments or supplements as shall have been approved by the City and the Authority (the "Final
Official Statement"). The purchaser agrees that it will not confirm the sale of any Bonds unless the
confirmation of sale is accompanied or preceded by the delivery of a copy of the Final Official
Statement.
DISCLOSURE COUNSEL OPINION.- The purchaser shall receive an opinion (or a reliance letter
to an opinion addressed to the Authority), dated the closing date, of Norton Rose Fulbright US LLP,
Disclosure Counsel, relating to the contents of the Official Statement.
UNDERWRITING GROUP. The successful bidder will be required to submit a list of all
syndicate members in addition to the managers not later than 24 hours after receiving a verbal award.
Dated: May 12016
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
CITY OF SANTA CLARITA, CALIFORNIA
0
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PRELIMINARY OFFICIAL STATEMENT DATED MAY , 2016
NEW ISSUE - FULL BOOK ENTRY
5/3116
RATING:
S&P: " "
(See "RATING" herein.)
In the opinion of Norton Rose Fulbright US LLP, Bond Counsel, under existing law interest on the Bonds is exempt
from personal income taxes of the State of California and, assuming compliance with the tax covenants herein, interest on the
Bonds is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 from the gross income of the owners thereof
for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum income tax imposed
on corporations and individuals. See "TAX MATTERS" herein.
Dated: Date of Delivery
SANTA CLARITA PUBLIC FINANCING AUTHORITY
Siprincipal amount]*
Lease Revenue Refunding Bonds
(Open Space and Parkland Acquisition Program)
Series 2016B
Due: October 1, as shown on the inside cover
The Santa Clarita Public Financing Authority (the "Authority") is issuing its Lease Revenue Refunding Bonds (Open
Space and Parkland Acquisition Program), Series 2016B (the `Bonds"), to provide funds to (i) prepay and defease all of the
outstanding City of Santa Clarita Certificates of Participation (Open Space and Parkland Acquisition Program), 2007 Series, (ii)
[pay the cost of a bond debt service reserve surety policy], and (iii) pay the costs of issuing the Bonds. See "REFINANCING
PLAN" herein. The Bonds are being issued as fully registered bonds and, when executed and delivered, will be registered in the
name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC" ). The Bonds will be issued
in denominations of $5,000 or any integral multiple thereof. DTC will act as securities depository of the Bonds. Individual
purchases of Bonds will be made in book -entry form only. Payments of principal of and interest on the Bonds are to be made to
purchasers by DTC through DTC Participants. Purchasers will not receive physical delivery of the Bonds purchased by them. See
APPENDIX F — "BOOK -ENTRY SYSTEM." Interest on the Bonds is payable on April 1 and October 1 of each year,
commencing October 1, 2016.
The Bonds are subject to optional, mandatory and extraordinary redemption prior to their stated maturities, as
described herein. See "DESCRIPTION OF THE BONDS — Redemption" herein.
The Bonds are payable from and secured by Revenues pledged under the Indenture, as hereinafter described.
"Revenues" means (i) all Base Rental Payments payable by the City of Santa Clarita (the "City") pursuant to the Lease (including
prepayments), (ii) any proceeds of Bonds deposited with the Trustee and all moneys on deposit in the funds and accounts (other
than the Rebate Fund) established under the Indenture, (iii) investment income with respect to such moneys held by the Trustee
and (iv) any insurance proceeds or condemnation awards received by or payable to the Trustee relating to the Base Rental
Payments. Pursuant to the Lease, the City will lease certain real property described herein (the "Leased Property") from the
Authority. The City is required under the Lease to make Base Rental Payments in each year in consideration for the use of the
Leased Property from any source of legally available funds, in an amount sufficient to pay the annual principal of and interest on
the Bonds. The City's obligation to make Base Rental Payments is subject to abatement in the event of substantial
interference with the use and possession of all or a part of the Leased Property. See "RISK FACTORS — Abatement"
herein. The City has covenanted in the Lease to take such action as may be necessary to include and maintain all Base Rental
Payments in its annual budget and to make the necessary appropriations therefor, subject to such abatement.
The Bonds are special obligations of the Authority and, as and to the extent set forth in the Indenture, are
payable solely from and secured by a first lien on and pledge of the Revenues as provided in the Indenture. All of the
Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues (other than deposits to the Rebate
Fund created by the Indenture), and the Revenues (other than deposits to the Rebate Fund created by the Indenture)
constitute a trust fund for the security and payment of the principal of and interest on the Bonds. The full faith and
credit of the Authority is not pledged for the payment of the principal of or interest or premium (if any) on the Bonds.
The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of
the Authority or any of its income or receipts, except the Revenues and such other moneys and securities as provided in
the Indenture.
This cover page contains certain information for general reference only. It is not intended to be a summary of
the security or terms of this issue. Investors must read the entire Official Statement to obtain information essential to the
making of an informed investment decision. Capitalized terms used and not defined on this cover are defined herein.
The Bonds are offered by competitive sale when, as and if issued and accepted by the Underwriter, subject to the
approving opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel to the Authority. Certain legal
matters will be passed on far the Authority by Norton Rose Fulbright US LLP, Los Angeles, California, Disclosure Counsel and
for the Authority and the City by Burke, Williams and Sorensen, LLP, as City Attorney. It is anticipated that the Bonds will be
available for delivery through the book -entry facilities of DTC on or about May , 2016.
Dated: May 2016
. Preliminary, subject to change.
42221003.6
Maturity Date
(October 1)
MATURITY SCHEDULE
$[principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Refunding Bonds
(Open Space and Parkland Acquisition Program)
Series 2016B
(Base CUSIP' 801687)
Principal Interest
Amount Rate Yield CUSIP'
% Term Bonds due October 1, 20 , Priced to Yield % CUSIP':
. Preliminary, subject to change.
t CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein are provided by CUSIP Global
Services, managed by S&P Capital IQ on behalf of the American Bankers Association. CUSIP numbers have been assigned by
an independent company not affiliated with the Authority, the Underwriter, the Financial Advisor or the City and are included
solely for the convenience of the holders of the Bonds. None of the Authority, the Underwriter, the Financial Advisor or the City
is responsible for the selection or use of these CUSIP numbers and no representation is made as to their correctness on the Bonds
or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the execution and delivery of
the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity
or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is
applicable to all or a portion of the Bonds.
42221003.6
SANTA CLARITA PUBLIC FINANCING AUTHORITY
CITY COUNCIL/BOARD OF DIRECTORS
Robert C. Kellar, Mayor/Chairperson
Dante Acosta, Mayor Pro Tem/Vice Chairperson
Marsha A. McLean, Councilmember/Board Member
TimBen Boydston, Councilmember/Board Member
Laurene F. Weste, Councilmember/Board Member
CITY OFFICIALS
Kenneth W. Striplin, Ed.D., City Manager
Darren Hernandez, Deputy City Manager/Director ofAdministrative Services
Frank Oviedo, Assistant City Manager
Kevin Tonoian, City Clerk
Joseph M. Montes, City Attorney
SPECIAL SERVICES
Financial Advisor
C.M. de Crinis & Co., Inc.
Glendale, California
Bond Counsel and Disclosure Counsel
Norton Rose Fulbright US LLP
Los Angeles, California
Trustee Verification Agent
The Bank of New York Mellon Trust Company, N.A.
Los Angeles, California
42221003.6
Causey Den -igen & Moore P.C.
Denver, Colorado
City of Santa Clarita
"'SANTA CLARITA
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42221003.6
No dealer, broker, salesperson or other person has been authorized by the Santa Clarita Public Financing
Authority (the "Authority"), the City of Santa Clarita, California (the "City") or the Underwriter to give any
information or to make any representations, other than as contained in this Official Statement, and if given or made,
such information or representations must not be relied upon as having been authorized by the Authority, the City or
the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor
shall there be any sale of, the Bonds by any person in any jurisdiction in which it is unlawful for such person to
make such offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements
contained in this Official Statement that involve estimates, forecasts or matters of opinion, whether or not expressly
described herein, are intended solely as such and are not to be construed as representations of fact.
The information set forth herein has been furnished by the Authority and the City and includes information
from sources that are believed to be reliable, but the Authority and the City do not guarantee the completeness or
accuracy of the information from such sources. The information and expressions of opinion contained herein are
subject to change without notice and neither the delivery of this Official Statement nor any sale made shall, under
any circumstances, create any implication that there has been no change in the affairs of the Authority, the City, or
other matters described herein since the date hereof.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The
Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its
responsibilities to investors under the federal securities Laws as applied to the facts and circumstances of this
transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
This Official Statement, including any supplement or amendment hereto, is intended to be deposited with
the Municipal Securities Rulemaking Board through the Electronic Municipal Marketplace Access (EMMA)
website. The City maintains a website. The information presented therein is not part of this Official Statement and
should not be relied on in making investment decisions with respect to the Bonds. Unless otherwise expressly stated,
references to Internet websites in this Official Statement are shown for reference and convenience only, and none of
their content (including any content on the City's website) is incorporated in this Official Statement by reference.
The City and the Authority make no representation regarding the accuracy or completeness of the information
presented on such websites.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVER
ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, 1F COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
CAUTIONARY STATEMENTS REGARDING
FORWARD-LOOKING STATEMENTS IN
THIS OFFICIAL STATEMENT
Certain statements included or incorporated by reference in this Official Statement constitute "forward-
looking statements." Such statements are generally identifiable by the terminology used such as "plan," "project,"
"expect," "anticipate," "intend," "believe," "estimate," "budget" or other similar words. The achievement of certain
results or other expectations contained in such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance or achievements described to be materially
different from any future results, performance or achievements expressed or implied by such forward-looking
statements. Except as otherwise noted, neither the City nor the Authority plan to issue any updates or revisions to
those forward-looking statements if or when its expectations or events, conditions or circumstances on which such
statements are based occur.
42221003.6
TABLE OF CONTENTS
Page
INTRODUCTION........................................................................................................................................1
Purposeof the Bonds......................................................................................................................
I
Securityfor the Bonds.....................................................................................................................
l
LeasedProperty...............................................................................................................................2
AdditionalBonds............................................................................................................................5
ContinuingDisclosure.....................................................................................................................5
DESCRIPTION OF THE BONDS..............................................................................................................5
Redemption.....................................................................................................................................6
Selection of Bonds for Redemption................................................................................................6
Noticeof Redemption.....................................................................................................................7
PartialRedemption of Bonds..........................................................................................................7
Effectof Redemption......................................................................................................................7
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS...........................................................8
General............................................................................................................................................
8
LimitedObligation..........................................................................................................................9
Abatement of Base Rental Payments..............................................................................................9
InsuranceCoverages.......................................................................................................................9
[Reserve Account]...........................................................................................................................9
AssessmentRevenues...................................................................................................................10
TheAssessment District................................................................................................................
l I
AdditionalBonds..........................................................................................................................13
Maintenance, Utilities, Taxes and Assessments............................................................................14
Substitution and Release of Property............................................................................................14
REFINANCINGPLAN.............................................................................................................................16
ESTIMATED SOURCES AND USES OF FUNDS..................................................................................17
DEBT SERVICE REQUIREMENTS........................................................................................................18
THEAUTHORITY....................................................................................................................................19
THECITY..................................................................................................................................................19
General..........................................................................................................................................19
Budget Process and Administration; General Fund......................................................................19
Management Discussion of Financial Performance......................................................................19
GeneralFund.................................................................................................................................20
Budgeted Revenues and Expenditures..........................................................................................23
The 2015/16 General Fund Budget...............................................................................................25
Management Discussion of Financial Performance......................................................................27
Capital Improvement Program......................................................................................................27
AppropriationsLimit.....................................................................................................................27
FinancialStatements.....................................................................................................................27
FiscalPolicies...............................................................................................................................28
Taxation of Property and Assessed Valuation..............................................................................28
LargestTaxpayers.........................................................................................................................30
State Legislative Shift of Property Tax Allocation.. .....................................................................
3 l
OtherLocal Taxes.........................................................................................................................31
Other Sources of Revenue.............................................................................................................32
Employee Relations and Collective Bargaining............................................................................33
TABLE OF CONTENTS
(continued)
Page
RiskManagement.........................................................................................................................33
City Investment Policy and Portfolio............................................................................................33
Outstanding Indebtedness of the City...........................................................................................34
Directand Overlapping Debt........................................................................................................35
Employee Retirement Plans..........................................................................................................37
Deferred Compensation Plan/Defined Contribution Plan.............................................................42
RedevelopmentAgencies..............................................................................................................43
STATE OF CALIFORNIA BUDGET INFORMATION..........................................................................43
StateBudget..................................................................................................................................43
FutureState Budgets.....................................................................................................................45
RISKFACTORS........................................................................................................................................45
Substitutionof Property................................................................................................................45
Base Rental Payments Are Not Debt; Bonds are Limited Obligations.........................................46
Abatement.....................................................................................................................................46
Riskof Uninsured Loss.................................................................................................................47
EminentDomain...........................................................................................................................47
Bankruptcy....................................................................................................................................47
No Liability of Authority to the Owners.......................................................................................48
No Limitation on hlcurring Additional Obligations.....................................................................48
Earthquake and Other Natural Hazards.........................................................................................48
Anderson Dam and Reservoir.......................................................................................................49
HazardousSubstances...................................................................................................................49
Risks Related to Taxation in California........................................................................................52
FutureInitiatives...........................................................................................................................52
Limitationson Remedies...............................................................................................................53
Remedieson Default.....................................................................................................................53
EarlyRedemption Risk.................................................................................................................53
Lossof Tax Exemption.................................................................................................................54
IRSAudit of Tax -Exempt Bonds..................................................................................................54
SecondaryMarket Risk.................................................................................................................54
RATING.....................................................................................................................................................55
UNDERWRITING.....................................................................................................................................55
CONTINUING DISCLOSURE.................................................................................................................55
TAXMATTERS........................................................................................................................................57
TaxExemption..............................................................................................................................57
Tax Accounting Treatment of Bond Premium and Original Issue Discount on Bonds ................58
OtherTax Consequences...............................................................................................................59
LITIGATION.............................................................................................................................................59
VERIFICATION OF MATHEMATICAL COMPUTATIONS................................................................59
FINANCIALSTATEMENTS...................................................................................................................59
APPROVAL OF LEGAL PROCEEDINGS..............................................................................................60
EXECUTIONAND DELIVERY..............................................................................................................60
42221003.6 vii
TABLE OF CONTENTS
(continued)
Page
APPENDIX A — GENERAL INFORMATION ABOUT THE CITY OF SANTA CLARITA .........A-1
APPENDIX B — AUDITED FINANCIAL STATEMENTS OF THE CITY OF
SANTA CLARITA FOR THE FISCAL YEAR ENDED JUNE 30, 2015 .............. B -I
APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL
LEGAL DOCUMENTS........................................................................................... C-1
APPENDIX D — FORM OF CONTINUING DISCLOSURE CERTIFICATE...................................D-I
APPENDIX E — FORM OF OPINION OF BOND COUNSEL.......................................................... E -I
APPENDIX F — BOOK -ENTRY SYSTEM....................................................................................... F-1
42221003.6 viii
OFFICIAL STATEMENT
SANTA CLARITA PUBLIC FINANCING AUTHORITY
$[principal amount]
Lease Revenue Refunding Bonds
(Open Space and Parkland Acquisition Program)
Series 2016B
INTRODUCTION
This Official Statement, which includes the cover page, the inside cover page and attached
appendices, provides certain information in connection with the sale and delivery of the $[principal
amount]* Santa Clarita Public Financing Authority Lease Revenue Refunding Bonds (Open Space and
Parkland Acquisition Program), Series 2016B (the "Bonds"). Capitalized terms used and not otherwise
defined herein shall have the meanings given in the Indenture or the Lease (each as hereinafter defined) or
in APPENDIX C — "SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL
DOCUMENTS."
Purpose of the Bonds
The Bonds are being issued under the provisions of the Marks -Roos Local Bond Pooling Act of
1985, constituting Article 4 of Chapter 5 of Division 7 of Title I (commencing with Section 6584) of the
California Government Code (the `Bond Law"). The Bonds are being issued pursuant to an Indenture,
dated as of June 1, 2016 (the "Indenture"), by and between the Santa Clarita Public Financing Authority
(the "Authority") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee").
The proceeds of the Bonds will be applied to provide funds to (i) prepay and defease all of the
outstanding City of Santa Clarita Certificates of Participation (Open Space and Parkland Acquisition
Program), 2007 Series (the "2007 Certificates"), (ii) [pay the cost of a bond debt service reserve surety
policy,] and (iii) pay the costs of issuing the Bonds. See "ESTIMATED SOURCES AND USES OF
FUNDS" and "REFINANCING PLAN" herein.
Security for the Bonds
Pursuant to a Site and Facility Lease, dated as of June 1, 2016 (the "Site Lease"), by and between
the City and the Authority, the Authority will lease from the City certain real property and improvements,
which consists of the Aquatic Center and Sports Complex, located at 20850 Centre Pointe Parkway in the
City, as further described herein (the "Leased Property"). See "- Leased Property" below. Pursuant to a
Lease Agreement, dated as of June 1, 2016 (the "Lease"), by and between the Authority as lessor, and the
City as lessee, the Authority will lease the Leased Property to the City. Pursuant to the Lease, the City
will pay to the Authority base rental payments (the `Base Rental Payments") in amounts equal to
scheduled debt service on the Bonds.
The Bonds are payable from and secured by Revenues pledged under the Indenture, as hereinafter
described. "Revenues" means (i) all Base Rental Payments payable by the City pursuant to the Lease
(including prepayments), (ii) any proceeds of Bonds deposited with the Trustee and all moneys on deposit
in the funds and accounts (other than the Rebate Fund) established under the Indenture, (iii) investment
. Preliminary.. subject to change.
42221003.6
income with respect to such moneys held by the Trustee and (iv) any insurance proceeds or condemnation
awards received by or payable to the Trustee relating to the Base Rental Payments. See "SECURITY
AND SOURCES OF PAYMENT FOR THE BONDS" herein.
Pursuant to an Assignment Agreement, dated as of June 1, 2016 (the "Assignment Agreement"),
by and between the Authority and the Trustee relating to the Bonds the Authority will assign, as further
security for its obligations to make timely payment of principal of and interest on the Bonds to the
Trustee for the benefit of the Owners certain of the Authority's rights under the Lease, including the right
to receive Base Rental Payments. Under the Lease, in addition to Base Rental Payments, the City has
agreed to pay annual incidental costs and expenses incurred by the Authority or the Trustee relating to the
Lease.
The obligation of the City to make Base Rental Payments under the Lease is an unsecured
obligation of the City, payable from all legally available funds. Pursuant to the Lease, the City has
covenanted to annually budget and appropriate sufficient funds to make all rental payments required to be
made under the Lease, subject only to abatement as provided therein.
[Moneys in the Reserve Account are also available to make Base Rental Payments on behalf of
the City in the event of non-payment by the City for any reason.]
Under the Lease, the City pledges certain assessments deposited into the Assessment Revenue
Fund from the City's Open Space Preservation District (the "Assessment District") to the extent such
assessments are eligible to make Base Rental Payments (the "Assessment Revenues"). See "SOURCE
OF PAYMENT OF AND SECURITY FOR THE BONDS — Assessment Revenues" herein.
The Bonds are special obligations of the Authority and, as and to the extent set forth in the
Indenture, are payable solely from and secured by a first lien on and pledge of the Revenues as provided
in the Indenture. All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the
Revenues (other than deposits to the Rebate Fund created by the Indenture), and the Revenues (other than
deposits to the Rebate Fund created by the Indenture) constitute a trust fund for the security and payment
of the principal of and interest on the Bonds. The full faith and credit of the Authority is not pledged for
the payment of the principal of or interest or premium (if any) on the Bonds. The Bonds are not secured
by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the
Authority or any of its income or receipts, except the Revenues and such other moneys and securities as
provided in the Indenture.
Leased Property
The Leased Property consists of the Santa Clarita Sports Complex located on Assessor Parcel No.
2836-018-900. The Sports Complex one- and two-story facilities, made of masonry block, include an
Aquatics Center, Gymnasium, and Activities Center located in the City of Santa Clarita on an
approximate 19 -acre site at 20880 Centre Pointe Parkway. The 20,400 square foot Activities Center was
constructed in 2002, the 21,800 square foot Gymnasium was constructed in 1998, and the Aquatics
Center, constructed in 2003, includes a 10,800 square foot administration/locker room building, three
swimming pools totaling 24,400 square feet, a 2,700 square foot pool equipment building, and a 1,600
square foot concession building.
The aggregate cost of the Sports Complex was $19,276,865, including land acquisition costs.
The prime features of the Sports Complex include a state -of -the art Olympic size competitive swimming
pool, family recreational pool with water play equipment, 25 meter dive pool, skate park (not included in
the Leased Property), and a multifunctional activities center. The gymnasium includes two full basketball
42221003.6
2
courts which can convert into volleyball courts, as well as enclosed racquetball courts. The Activities
Center includes meeting rooms, a kitchen, classrooms, an arena, and dance studio. The Sports Complex
houses the City's Recreation Division staff who provide oversight of recreation programs including
aquatics, field management, parks maintenance, and youth sports.
The Authority will lease the Leased Property to the City pursuant to the Lease. Under the Lease,
the City is required to maintain the Leased Property in working order.
The City, based upon insurance coverage estimates, values the Sports Complex at $15.4 million.
The City estimates that the total value of the real property comprising Leased Property is at least
equivalent to the principal amount of the Certificates.
The Authority and the City will each acknowledge under the Lease that the annual fair rental
value of the Leased Property is in excess of the maximum annual Base Rental Payments. None of the
Leased Property is located in a 100 year flood plain. The City insures the improvements on the Leased
Property for the estimated replacement value of such improvements.
Pursuant to the Lease, the City has the right to substitute alternate real property or improvements
for the Leased Property, release existing property or add additional real property or improvements to the
Leased Property. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Substitution
and Release of Property" herein.
42221003.6
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42221003.6
4
Additional Bonds
Pursuant to the Indenture and the Lease, the Authority may issue additional bonds (the
"Additional Bonds") payable on a parity with the Bonds so long as certain conditions precedent are
satisfied. In addition, the City may issue or incur other obligations payable from the City's General Fund.
Concurrently with the issuance of the Bonds, the Authority is issuing its Lease Revenue Refunding Bonds
(Golden Valley Road) Series 2016A (the "Series 2016A Bonds") in the principal amount of
$ , secured by base rental payments made by the City under a lease of the City Hall of the City
located at 23920 Valencia Boulevard within the City, which base rental payments are payable from the
City's General Fund due on January 15 and July 15 of each year until January 15, 2036. The Series
2016A Bonds are being issued to reduce annual debt service in each year. See "SECURITY AND
SOURCES OF PAYMENT FOR BONDS — Additional Bonds" herein.
Continuing Disclosure
The Authority has determined that no financial or operating data concerning the Authority is
material to any decision to purchase, hold or sell the Bonds and the Authority will not provide any such
information.
The City has agreed to provide, with respect to the Bonds, or cause to be provided, to the
Municipal Securities Rulemaking Board's Electronic Municipal Market Access system (the "EMMA
System"), certain annual financial information and operating data relating to the City and, in a timely
manner, notice of certain enumerated events. These covenants have been made in order to assist the
Underwriter in complying with Rule 15c2-12, as amended (the "Rule") adopted by the U.S. Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as amended. See
"CONTINUING DISCLOSURE" herein and APPENDIX D — "FORM OF CONTINUING
DISCLOSURE CERTIFICATE" for a description of the annual reports and notices of enumerated events
to be provided by the City.
DESCRIPTION OF THE BONDS
The Bonds will be dated their date of delivery and issued in the aggregate principal amount and
bear interest at the rates per annum and mature on the dates set forth on the inside cover page of this
Official Statement. hlterest on the Bonds will be payable semiannually on April I and October I of each
year (each an "Interest Payment Date"), commencing October 1, 2016. Each Bond will bear interest from
the Interest Payment Date next preceding the date of authentication thereof unless (i) it is executed after
the fifteenth calendar day of the month immediately preceding an Interest Payment Date, in which case
interest will accrue from such Interest Payment Date, or (ii) it is authenticated on or before September 15,
2016, in which event interest will accrue from the date of initial delivery of the Bonds. If, at the date of
authentication of any Bond, interest thereon is in default, such Bond will bear interest from the Interest
Payment Date to which interest has previously been paid or made available for payment on such
outstanding Bond, or if no interest has been paid, from the date of initial delivery of the Bonds. Interest
on the Bonds will be computed on the basis of a 360 -day year of twelve 30 -day months.
The Bonds are being issued as fully registered bonds and, when executed and delivered, will be
registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New
York ("DTC"). The Bonds will be issued in denominations of $5,000 or any integral multiple thereof.
Individual purchases of Bonds will be made in book -entry form only. Payments of principal of and
interest on the Bonds are to be made to purchasers by DTC through DTC Participants. Purchasers will
not receive physical delivery of the Bonds purchased by them. See APPENDIX F — `BOOK -ENTRY
SYSTEM."
4222]003.6
5
Redemption
Optional Redemption. The Bonds maturing on or after October 1, 2027 are subject to
redemption prior to their respective maturity dates as a whole or in part on any date on or after October 1,
2026, in any order deemed reasonable by the Authority, and by lot within a maturity, from prepayments
of Base Rental Payments made at the option of the City pursuant to the Lease, at a redemption price equal
to the principal amount of the Bonds to be redeemed, plus accrued but unpaid interest thereon to the date
fixed for redemption, without premium.
Extraordinary Redemption. The Bonds are subject to redemption prior to their respective
maturity dates, as a whole or in part on a pro rata basis, on any date from prepayments of the Base Rental
Payments made by the City pursuant to the Lease out of funds received by the City due to a taking of the
Leased Property or any portion thereof under the power of eminent domain or from insurance proceeds
received by the City due to damage to or destruction of the Leased Property or any portion thereof, under
the circumstances and upon the conditions and terms prescribed in the Indenture and in the Lease.
Redemption of Bonds pursuant to this paragraph will be made at a redemption price equal to the sum of
the principal of the Bonds to be redeemed plus accrued but unpaid interest thereon to the date fixed for
redemption, without premium. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS —
Insuranee Coverages" herein.
Mandatory Sinking Account Redemption. The Term Bonds maturing October 1, are subject
to mandatory redemption, in part by lot, from sinking account payments set forth in the following
schedule commencing October 1, 20, and on October 1 in each year thereafter to and including
October 1, 20_ at a redemption price equal to the principal amount thereof to be redeemed (without
premium), together with interest accrued thereon to the date fixed for redemption.
Redemption Date Principal Amount
(October 1) To be Redeemed
*Maturity
If some but not all of the Term Bonds have been redeemed pursuant to mandatory or optional
redemptions, tine total amount of sinking account payments to be made subsequent to such redemption
will be reduced in an amount equal to the principal amount of the Term Bonds so redeemed by reducing
each such future sinking account payment on a pro rata basis (as nearly as practicable) in integral
multiples of $5,000, as will be designated pursuant to written notice filed by Authority with the Trustee.
In the event of any reductions in the amount of sinking account payments due as a result of some but not
all of the Bonds being redeemed pursuant to extraordinary or optional redemptions, the Authority will
provide the Trustee with a revised schedule reflecting such reductions.
Selection of Bonds for Redemption
Whenever provision is made in the Indenture for the optional redemption of less than all of the
Bonds of a Series, the Trustee shall select the Bonds of such Series to be redeemed from all Bonds of that
Series not previously called for redemption, in such maturities as the Authority shall designate (and by lot
within any maturity). For purposes of such selection, all Bonds of a Series shall be deemed to be
42221003.6
comprised of separate $5,000 portions and such portions shall be treated as separate Bonds, which may be
separately redeemed.
Notice of Redemption
The Trustee on behalf and at the expense of the Authority will mail (by first class mail or other
means acceptable to the recipient thereof) notice of any redemption to the respective Owners designated
for redemption at their respective addresses appearing on the Registration Books, to the Securities
Depositories and to one or more Information Services, at least twenty (20) but not more than sixty (60)
days prior to the date fixed for redemption; provided, however, that neither failure to receive any such
notice so mailed nor any defect therein shall affect the validity of the proceedings for the redemption of
such Bonds or the cessation of the accrual of interest thereon. Such notice shall state the date of the
notice, the redemption date, the redemption place and the redemption price and shall designate the CUSIP
numbers, the Bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds
of such maturity or maturities in whole) of the Bonds to be redeemed, and shall require that such Bonds
be then surrendered at the Trust Office of the Trustee for redemption at the redemption price, giving
notice also that further interest on such Bonds will not accrue from and after the redemption date. Such
notice shall further state, if so determined by the Authority, that such notice may be rescinded at any time
prior to the redemption date.
Neither the Authority nor the Trustee shall have any responsibility for any defect in the CUSIP
number that appears on any Bond or in any redemption notice with respect thereto, and any such
redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an
independent service for convenience of reference and that neither the Authority nor the Trustee shall be
liable for any inaccuracy in such numbers.
Any notice given pursuant to the preceding paragraph may be conditional and/or rescinded by
written notice given to the Trustee by the Authority and the Trustee shall provide notice of such rescission
as soon thereafter as practicable in the same manner, and to the same recipients, as notice of such
redemption was given pursuant to the Indenture.
Partial Redemption of Bonds
If only a portion of any Bond is called for redemption, then upon surrender of such Bond the
Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense
of the Authority, a new Bond or Bonds of the same Series, interest rate and maturity date, in aggregate
principal amount equal to the unredeemed portion of the Bond being redeemed.
Effect of Redemption
From and after the date fixed for redemption, if funds available for the payment of the principal
of, premium, if any, and interest on the Bonds so called for redemption shall have been duly provided,
such Bonds so called shall cease to be entitled to any benefit under the Indenture other than the right to
receive payment of the redemption price, and no interest shall accrue thereon from and after the
redemption date. All moneys held by or on behalf of the Trustee for the payment of principal of or
interest or premium on Bonds, whether at redemption or maturity, shall be held in trust for the account of
the Owners thereof and the Trustee shall not be required to pay Owners any interest on, or be liable to
Owners for any interest earned on, moneys so held.
42221003.6
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
General
The Bonds will be secured by a first lien on and pledge of all of the Revenues, including all of the
moneys in the Interest Account, the Principal Account [and the Reserve Account].
The Base Rental Payments will be paid by the City in an amount sufficient to pay the principal of
and interest on the Bonds on each Interest Payment Date. Under the Lease, in addition to Base Rental
Payments, the City has agreed to pay Additional Rental payments in such amounts in each year as shall be
required for the payment of all costs and expenses (not otherwise paid for or provided for out of the
proceeds of sale of the Bonds) incurred by the Authority or the Trustee in connection with the execution,
performance or enforcement of the Lease or the assignment thereof, the Indenture, or the Authority's or
the Trustee's interest in the Leased Property, including, but not limited to, all fees, costs and expenses, all
administrative costs of the Authority relating to the Leased Property (including, without limiting the
generality of the foregoing, salaries and wages of employees, overhead, insurance premiums, taxes and
assessments (if any), expenses, compensation and indemnification of the Trustee payable by the Authority
under the Indenture), fees of auditors, accountants, attorneys or engineers, and all other reasonable and
necessary administrative costs of the Authority or charges required to be paid by it to comply with the
terms of the Bonds or of the Indenture.
The City has agreed in the Lease to take such action as may be necessary to include all Base
Rental Payments and Additional Rental due under the Lease in its annual budget and to make the
necessary annual appropriations for all such Base Rental Payments and Additional Rental, subject only to
abatement as provided in the Lease. The covenants on the part of the City contained in the Lease are
duties imposed by law and it will 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 the Lease agreed to be carried
out and performed by the City.
Pursuant to the Assignment Agreement, the Authority will assign, as further security for its
obligations to make timely payment of principal of and interest on the Bonds to the Trustee for the benefit
of the Owners certain of the Authority's rights under the Lease, including the right to receive Base Rental
Payments. Not less than fifteen (15) Business Days preceding each April l and October 1, the City is
required to pay to the Trustee the Base Rental Payments coming due on the next succeeding April l and
October 1, respectively, from any legally available sources.
42221003.6
g
Limited Obligation
The Bonds are special obligations of the Authority and, as and to the extent set forth in the
Indenture, are payable solely from and secured by a first lien on and pledge of the Revenues as provided
in the Indenture. All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the
Revenues (other than deposits to the Rebate Fund created by the Indenture), and the Revenues (other than
deposits to the Rebate Fund created by the Indenture) constitute a trust fund for the security and payment
of the principal of and interest on the Bonds. The full faith and credit of the Authority is not pledged for
the payment of the principal of or interest or premium (if any) on the Bonds. The Bonds are not secured
by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the
Authority or any of its income or receipts, except the Revenues and such other moneys and securities as
provided in the Indenture.
Abatement of Base Rental Payments
The City's obligation to pay Base Rental Payments is subject to abatement during any period in
which by reason of any damage, destruction or condemnation there is substantial interference with the
beneficial use by the City of the Leased Property or any portion thereof. Such abatement may be in an
amount such that the resulting Base Rental Payments in any year during which such interference
continues does not exceed the fair rental value of the portions of the Leased Property as to which such
damage, destruction or taking do not substantially interfere with the City's use and right of possession, as
evidenced by a Certificate of the City. Such abatement shall continue for the period commencing with the
date of such interference and ending with the restoration of the Leased Property to tenantable condition.
Assessment Revenues are not required to be used, and may not be available, to make abated Base Rental
Payments. See "RISK FACTORS — Abatement" herein.
Insurance Coverages
Pursuant to the Lease, the City will obtain one or more California Land Title Association title
policies insuring the City's and Authority's interest in the Leased Property. The Lease requires that the
City maintain rental interruption insurance in an amount not less than the maximum remaining scheduled
Base Rental Payments in any twenty-four (24) month period to insure against loss of use of the Leased
Property caused by perils covered by the required comprehensive general liability coverage against claims
for damages including death, personal injury, bodily injury or property damage arising from operations
involving the Leased Property. The Lease does not require the City to obtain or maintain earthquake
insurance on the Leased Property. For additional information regarding insurance coverages required by
the Lease, see APPENDIX C — "SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL
LEGAL DOCUMENTS — The Lease — Insurance."
[Reserve Account
The Indenture requires the establishment of a Reserve Account in an amount equal to the Reserve
Requirement. The Authority has applied for a bond debt service reserve surety policy and intends to
purchase such a policy. The Reserve Requirement is that amount as of the date of calculation, equal to
the least of (i) ten percent (10%) of the original issue price of the Bonds of a series; (ii) one hundred
twenty-five percent (125%) of average annual debt service on the Bonds of a series as of the delivery date
of such Bonds; and (iii) maximum annual debt service on the Bonds of such series; provided, that
notwithstanding any provision to the contrary, all or any portion of the Reserve Requirement may be
satisfied by the provision of a policy of insurance, a surety bond, a letter of credit or other comparable
credit facility, or a combination thereof, which, together with money on deposit in Reserve Account,
provide an aggregate amount equal to the Reserve Requirement; provided further that at the time of
4222]003.6
issuance of such letter of credit, surety bond or other comparable credit facility, the long-term credit
rating of such commercial bank or insurance company is "AA-" or "Aa3" by S&P or Moody's,
respectively, or higher, and, if rated by A.M. Best & Company, a minimum rating of "A." See
"APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL
DOCUMENTS —Definitions." Application has been made to ("Insurance Provider") for
the issuance of a surety bond (the "Surety Bond") for the purpose of funding the Reserve Account in the
amount of $ *. The Bonds will only be delivered upon the issuance of such Surety Bond.
The premium on the Surety Bond is to be fully paid at or prior to the issuance of the Bonds.
The Surety Bond provides that upon the later of (i) one (l) day after receipt by the Insurance
Provider of a demand for payment executed by the Trustee certifying that provision for the payment of
principal of or interest on the Bonds when due has not been made or (ii) the interest payment date
specified in the Demand for Payment submitted to the Insurance Provider, the Insurance Provider will
promptly deposit funds with the Paying Agent sufficient to enable the Paying Agent to make such
payments due on the Bonds, but in no event exceeding the Surety Bond Coverage, as defined in the
Surety Bond.
Pursuant to the terms of the Surety Bond, the Surety Bond Coverage is automatically reduced to
the extent of each payment made by the Insurance Provider under the terms of the Surety Bond and the
City is required to reimburse the Insurance Provider for any draws under the Surety Bond with interest at
a market rate. Upon such reimbursement, the Surety Bond is reinstated to the extent of each principal
reimbursement up to but not exceeding the Surety Bond Coverage. The reimbursement obligation of the
City is subordinate to the City's obligations with respect to the Base Rental Payments.
In the event the amount on deposit, or credited to the Reserve Account, exceeds the amount of the
Surety Bond, any draw on the Surety Bond shall be made only after all the funds in the Reserve Account
have been expended. In the event that the amount on deposit in, or credited to, the Reserve Account, in
addition to the amount available under the Surety Bond, includes amounts available under a letter of
credit, insurance policy, Surety Bond or other such funding instrument (the "Additional Funding
Instrument"), draws on the Surety Bond and the Additional Funding Instrument shall be made on a pro
rata basis to fund the insufficiency. The Indenture provides that the Reserve Account shall be replenished
in the following priority: (i) principal and interest on the Surety Bond and on the Additional Funding
Instrument shall be paid from first available revenues on a pro rata basis; (ii) after all such amounts are
paid in full, amounts necessary to fund the Reserve Account to the required level, after taking into
account the amounts available under the Surety Bond and the Additional Funding Instrument shall be
deposited from next available revenues.
The Surety Bond does not insure against nonpayment caused by the insolvency or negligence of
the Trustee or the Paying Agent.
In the event that the Insurance Provider were to become insolvent, any claims arising under the
Surety Bond would be excluded from coverage by the California Insurance Guaranty Association,
established pursuant to the laws of the State of California.]
Assessment Revenues
The proceeds of the 2007 Certificates were used to finance a portion of the costs of the
acquisition of open space lands, parks, and parkland, both inside and outside of the City, in accordance
with the City's open space, park, and parkland program (the "Program"). Legally available funds of the
Preliminary, subject to change.
42221003.6
City to make Base Rental Payments include Assessment Revenues since the proceeds of the 2007
Certificates constitute indebtedness for the purposes of the Assessment District. Pursuant to the Lease,
the City covenants to contribute all or a portion of annual Assessment Revenues collected toward Base
Rental Payments and for any Additional Assessment District Obligations (as defined below) as provided
in the Lease. As the County pays the annual Assessment Revenues to the City, the City covenants to hold
such amounts in a separate fund established by the Lease known as the "Assessment Revenue Fund,"
until the amount on deposit therein equals the Base Rental Payments due for such Bond Year and the debt
service on any Additional Assessment District Obligations. Thereafter, Assessment Revenues in excess
of such required deposit are released to the City for any lawful use as authorized by the Assessment
District.
Under the terms of the Lease, the City covenants to continue to annually impose, levy, and collect
the Assessments Revenues as long as there exist Outstanding Bonds subject to the final levy in Fiscal
Year 2036/37.
The City may pledge the Assessment Revenues or incur obligations secured by the Assessment
Revenues on a parity with the pledge of the Assessment Revenues to the Base Rental Payments (the
"Additional Assessment District Obligations") provided the projected Assessment Revenues equal or
exceed the Base Rental Payments and debt service of the Additional Assessment District Obligations.
The Assessment District
The City formed the Assessment District with boundaries congruent to the boundaries of the City
pursuant to the Landscape and Lighting Act of 1972 (Section 22500 et seq.) of the Streets and Highways
Code of the State of California (the "Act") to finance a portion of the Program.
On April 24, 2007, City Council adopted a resolution of intent to form an Open Space
Preservation District. A public hearing was held on July 10, 2007 regarding the proposed formation of
the Open Space Preservation District and levy of the assessments, and to consider all oral and/or written
statements, protests, and communications made or filed by all interested persons. Following the
conclusion of the public hearing, assessment ballots received by the City were tabulated by the City
Clerk. Ballot tabulation was completed on Friday, July 13, 2007 and the results of the property owner
assessment ballot tabulation were $409,974 of assessment (69%) voted "yes" and $182,672 of assessment
(31%) voted "no." The duration of the Assessment District is for thirty (30) years beginning in Fiscal
Year 2007/08 and will terminate with Fiscal Year 2036/37.
The City annually levies and collects assessments on the parcels within the Assessment District
boundaries, which are coterminous with the City boundaries, to fund a portion of the Open Space
Program for the City, consisting of the acquisition, preservation, improvement, servicing, financing and
maintenance of open space lands, parks and parkland and appurtenant equipment and facilities, including
the payment of debt service. Facilities include but are not limited to open space land, parks, parklands,
the Santa Clara River Watershed, trail systems and wildlife corridors both inside and outside the City
limits. Since proceeds of the Bonds will refinance open space and parkland acquisition, certain
assessment collections from the Assessment District have been assigned to the City and are pledged to the
payment of Base Rental Payments to the extent eligible to make Base Rental Payments.
Of the 62,321 parcels in the Assessment District, approximately 91% are designated as residential
properties, and the remaining 9% are designated as business, commercial, industrial, vacant or exempt
properties. The annual assessments for Fiscal Year 2015/16 are calculated at $31.50 per Benefit Unit
(BU) and range from $3.93 a parcel to $7,465.50 a parcel, with single-family residential at $31.50 per
dwelling unit. The maximum annual assessment rate increases each year by $1.00 per BU. The actual
42221003.6
assessments levied in any fiscal year will be as approved by the City Council and may not exceed the
maximum assessment rate without receiving property owner approval for the increase. For Fiscal Year
2015/16, the maximum annual assessment for a single-family parcel is $33.00 compared with the
approved annual assessment of $31.50.
Assuming annual assessment levies at the allowable maximum rates each year (increase of $1.00
per BU/year) and based on current land use, the Assessment Revenues are estimated to provide in excess
of 200% coverage for the proposed escalating Base Rental Payments as structured. Total Base Rental
Payments are estimated to range from approximately $[880,000] in 2016 to approximately $[1,440,000]
in 2037.
The total assessed value for Fiscal Year 2015/16 for all of the non-exempt parcels is
$26,558,898,001. The Assessment District has levied assessments totaling $2,294,410 in the Assessment
District for collection in Fiscal Year 2015/16. The largest assessment payment by a single property
owner in Fiscal Year 2015/16 in the Assessment District is $18,340.87.
TABLE 1
CITY OF SANTA CLARITA
Open Space Preservation District
2015/16 Levy
2015/16
(1) Includes single-family home developed at 1 Benefit Unit (BU) per dwelling unit, single-family home vacant at .25 BU per parcel, Multi-
family (including condo) at .75 BU per dwelling unit and Mobile home park at .5 BU per space
(2) Includes commercial, industrial, government and church uses at 3 BU per acre with a.5 BU per parcel minimum.
(3) Vacant is at .75 BU per acre with a .125 BU per parcel minimum and 3.75 BU per parcel maximum.
(4) Includes areas of streets, avenues, lanes, roads, drives, courts, alleys, and public easements, rights -of -ways, and parkways. Also exempted
are utility rights-of-way, common areas (such as in condominium complexes), landlocked parcels and small parcels vacated by the City. In
addition, parks, greenbelts and open space are exempt from assessment, as are public schools, golf courses, and cemeteries.
Source: FY 2015-16 Applied Report from Willdan Financial Services & FY 2015-16 Engineers Report.
The following tables presents (a) the historical information relating to the Assessment District
since its inception and (b) the top ten property owners with the largest assessment levy within the
Assessment District.
42221003.6
12
No, of
Assessment Range
Type
Parcels
($31.50/13enefit Unit)
Assessed Value
2015/16 Levy
Residential(')
56,663
$7.87 - $7,465.50
$20,943,497,622
$1,927,087
Developed NonResidential (2)
1,983
$15.75 - $6,822.90
5,387,204,511
328,889
Vacant(`)
840
$3.93 — $2,244.37
228,195,868
51,513
Exempt (4)
2,835
$0.00 - So.00
223,021,573
0
TOTAL
62,321
$26,781,919,574
$2,307,89
(1) Includes single-family home developed at 1 Benefit Unit (BU) per dwelling unit, single-family home vacant at .25 BU per parcel, Multi-
family (including condo) at .75 BU per dwelling unit and Mobile home park at .5 BU per space
(2) Includes commercial, industrial, government and church uses at 3 BU per acre with a.5 BU per parcel minimum.
(3) Vacant is at .75 BU per acre with a .125 BU per parcel minimum and 3.75 BU per parcel maximum.
(4) Includes areas of streets, avenues, lanes, roads, drives, courts, alleys, and public easements, rights -of -ways, and parkways. Also exempted
are utility rights-of-way, common areas (such as in condominium complexes), landlocked parcels and small parcels vacated by the City. In
addition, parks, greenbelts and open space are exempt from assessment, as are public schools, golf courses, and cemeteries.
Source: FY 2015-16 Applied Report from Willdan Financial Services & FY 2015-16 Engineers Report.
The following tables presents (a) the historical information relating to the Assessment District
since its inception and (b) the top ten property owners with the largest assessment levy within the
Assessment District.
42221003.6
12
TABLE 2
CITY OF SANTA CLARITA
Open Space Preservation District
Historical Assessment Levy
TABLE 3
CITY OF SANTA CLARITA
Open Space Preservation District
2015/16 Assessment Top Property Owners
Property Owner 2015/16 Assessment Levy
Park Sierra Properties
Maximum
Assessment
No. of
No. of
16,867.17
Solelnint Heights Partnership
Assessment
Rate
Nonexempt
Nonexempt
Total Assessment
Fiscal Year
Rate/BU
Levied/BU
Benefit Units
Parcels
Levy
Rreef American Reit II Corp DD
8,505.00
Source: FY 2015-16 Applied Report, Willdan Financial
Services
2007/08
$25.00
$25.00
62,773.90
51,612
$1,569,348
2008/09
26.00
26.00
64,300.44
51,901
1,671,811
2009/10
27.00
26.00
64,357.46
52,246
11673,294
2010/11
28.00
27.50
64,361.30
52,252
1,802,117
2011/12
29.00
29.00
64,142.30
52,290
1,863,058
2012/13
30.00
30.00
64,488.45
52,752
1,934,654
2013/14
31.00
30.00
72,086.53
58,974
2,162,596
2014/15
32.00
30.00
72,503.54
58,983
2,175,106
2015/16
33.00
31.50
72,838.40
59,094
2,294,410
Source: Willdan Financial Services
— Engineer's Reports
TABLE 3
CITY OF SANTA CLARITA
Open Space Preservation District
2015/16 Assessment Top Property Owners
Property Owner 2015/16 Assessment Levy
Park Sierra Properties
$18,340.87
Saugus Colony Limited
17,766.00
EQR Valencia LLC
16,867.17
Solelnint Heights Partnership
12,474.00
EQR The Oaks LLC
10,727.31
Santa Clarita City
10,358.91
Park Sierra Properties II
10,135.12
Valencia Biomedical Park LLC
9.168.37
Easton Investments II
91072.00
Rreef American Reit II Corp DD
8,505.00
Source: FY 2015-16 Applied Report, Willdan Financial
Services
In accordance with the Program, the City established a five -member Open Space Preservation
District Financial Accountability and Audit Panel which reviews and approves the annual work program
to ensure land acquisition priorities are being adhered to; and reviews and ensures that Assessment
District funds are spent properly.
42221003.6
13
Additional Bonds
The Authority has agreed pursuant to the Indenture that no additional bonds, notes or
indebtedness shall be issued or incurred that are payable out of the Revenues in whole or in part, other
than Additional Bonds as provided in the Indenture. However, the City may issue or incur other
obligations payable from the City's General Fund. See "RISK FACTORS — No Limitation on Incurring
Additional Obligations" herein.
Concurrently with the issuance of the Bonds, the Authority is issuing its Lease Revenue
Refunding Bonds (Golden Valley Road) Series 2016A (the "Series 2016A Bonds") in the principal
amount of $ , secured by base rental payments made by the City under a lease of the City Hall
of the City located at 23920 Valencia Boulevard within the City, which base rental payments are payable
from the City's General Fund due on January 15 and July 15 of each year until January 15, 2036. The
Series 2016A Bonds are being issued to reduce bond debt service in each year.
The Authority and the Trustee may by execution of a Supplemental Indenture, without the
consent of the Owners, provide for the issuance and delivery of Additional Bonds in one or more series.
Upon the Request of the Authority, the Trustee may authenticate and deliver Additional Bonds in an
aggregate principal amount authorized by such Supplemental Indenture. The proceeds of such Additional
Bonds may be used for any purpose, including for the purpose of refunding Outstanding Bonds. Such
Additional Bonds may only be issued upon compliance by the Authority with the provisions of the
Indenture, and subject to the following specific conditions, which are made conditions precedent to the
issuance of any such Additional Bonds:
(a) The Authority shall not be in default under the Indenture or any Supplemental Indenture,
as evidenced by a Certificate of the Authority, and the City shall not be in default under the Lease, as
evidenced by a Certificate of the City;
(b) A Supplemental Indenture may provide for the funding of a debt service reserve for such
Additional Bonds;
(c) The Additional Bonds shall be payable as to principal on October 1 of each year in which
principal is due and shall be payable as to interest on each Interest Payment Date;
(d) The aggregate principal amount of Bonds issued and at any time Outstanding under the
Indenture or under any Supplemental Indenture shall not exceed any limit imposed by law, by the
Indenture or by any Supplemental hidenture, as evidenced by a Certificate of the Authority and the City;
(e) The Lease shall have been amended so as to increase the base rental payments payable by
the City thereunder by an aggregate amount equal to the principal and interest due and payable on such
Additional Bonds, payable at such times and in such manner as may be necessary to provide for the
payment of the principal and interest on such Additional Bonds, as evidenced by a Certificate of the City;
and
(f) The Supplemental Indenture shall prescribe the form or forms of such Additional Bonds,
and subject to the provisions hereof, shall provide for the distinctive designation, denominations, dates,
principal payment dates, interest payment dates, interest rates, provisions for redemption, and places of
payment for principal and interest.
Any Additional Bonds shall be on a parity with, and each Owner thereof shall have the same
rights upon an Event of Default as the Owner of, any other Bonds issued and delivered under the
42221003.6
14
Indenture, except as otherwise provided in the Supplemental Indenture under which Additional Bonds are
issued.
Maintenance, Utilities, Taxes and Assessments
During such time as the City or any assignee or sublessee thereof is in possession of the Leased
Property, all maintenance and repair, ordinary or extraordinary, of the Leased Property shall be the
responsibility of the City, and the City shall pay for or otherwise arrange for the payment of (a) all utility
services supplied to the Leased Property, (b) the cost of operation of the Leased Property, and (c) the
costs of maintenance of and repair to the Leased Property resulting from ordinary wear and tear or want
of care on the part of the City. The City shall, at the City's sole cost and expense, keep and maintain the
Leased Property clean and in a safe and good condition and repair. The Authority has no obligation to
alter, remodel, improve, repair, decorate, or paint the Leased Property or any part thereof.
The City shall comply with all statutes, ordinances, regulations, and other requirements of all
governmental entities that pertain to the occupancy or use of the Leased Property. The Authority has no
responsibility or obligation whatsoever to construct any improvements, modifications or alterations to the
Leased Property.
The Authority and the City contemplate that the Leased Property will be used for public purposes
by the City and, therefore, that the Leased Property will continue to be exempt from all taxes presently
assessed and levied with respect to real and personal property. In the event that the use, possession or
acquisition by the Authority or the City of the Leased Property is found to be subject to taxation in any
form, the City will pay during the term of the Lease, as the same respectively become due, all taxes and
governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against
or with respect to the Leased Property and any other property acquired by the City in substitution for, as a
renewal or replacement of, or a modification, improvement or addition to the Leased Property; provided,
that with respect to any governmental charges or taxes that may lawfully be paid in installments over a
period of years, the City shall be obligated to pay only such installments as are accrued during such time
as the Lease is in effect.
Substitution and Release of Property
The City shall have, so Long as this Lease is in effect, and is hereby granted, the option at any
time and from time to time, to substitute other real property (the "Substitute Property") for any portion of
the Leased Property (the "Former Property") or release any identifiable real property and/or
improvements currently constituting the Leased Property (in such case, Substitute Property shall mean the
Former Property less any portion released pursuant to this Section); provided, that the City shall satisfy all
of the following requirements, which are conditions precedent to such substitution:
(a) No default under the Lease or Event of Default under the Indenture shall have occurred
and be continuing;
(b) The City shall file with the Authority and the Trustee, and cause to be recorded in the
office of the County Recorder, sufficient memorialization of amendments to the Lease and the Site Lease
with a description of such Substitute Property which deletes therefrom the description of the Former
Property;
(c) The City shall obtain an extended California Land Title Association ("CLTA") policy of
title insurance insuring the City's fee or leasehold estate in such Substitute Property, the City's leasehold
estate hereunder, and the Authority's leasehold estate under the Site Lease in such Substitute Property,
42221003.6
15
subject only to Permitted Encumbrances, in an amount not less than the aggregate principal amount of the
Outstanding Bonds; provided, however, that this requirement shall not apply to Substitute Property that
consists only of Former Property less any released portion;
(d) The City shall provide a Certificate of the City to the Authority and to the Trustee that
such Substitute Property constitutes property which the City is permitted to lease under the laws of the
State of California;
(e) The substitution of the Substitute Property shall not cause the City to violate any of its
covenants, representations and warranties made in the Lease;
(f) The City shall file with the Authority and the Trustee a Certificate of the City or other
evidence which establishes that the annual fair rental value of the Substitute Property after substitution or
release will be at least equal to 100% of the maximum amount of the Base Rental Payments becoming
due in the then current fiscal year or in any subsequent fiscal year and the useful economic life of the
Substitute Property shall be at least equal to the maximum remaining term of this Lease; and
(g) The City shall furnish to the Trustee an opinion of Bond Counsel addressed to the
Trustee, the City and the Authority to the effect that the substitution or release is permitted under this
Lease and will not in and of itself (i) impair the validity and enforceability of this Lease or (ii) impair the
exclusion of interest on the Bonds and, if applicable, any Additional Bonds from the gross income of the
owners thereof for federal income tax purposes.
Upon the satisfaction of all such conditions precedent, and upon the City delivering to the
Authority and the Trustee a Certificate of the City certifying that the conditions set forth in subsections
(a), (c) and (e) of this Section have been satisfied, the Term of this Lease shall thereupon end as to the
Leased Property and shall thereupon commence as to the Substitute Property, and all references to the
Leased Property shall apply with full force and effect to the Substitute Property. The City shall not be
entitled to any reduction, diminution, extension or other modification of the Base Rental Payments
whatsoever as a result of any substitution or removal under the Lease.
REFINANCING PLAN
A portion of the proceeds of the Bonds will be used to prepay and defease through advance
refunding all of the 2007 Certificates. Pursuant to an Escrow Agreement, dated as of June 1, 2016 (the
"Escrow Agreement"), by and between the City and The Bank of New York Mellon Trust Company,
N.A., as the escrow agent (the "Escrow Agent"), the Authority will cause to be deposited into an escrow
fund securing the 2007 Certificates (the "Escrow Fund"), proceeds of the Bonds that shall be sufficient,
together with other available funds held under the 2007 Trust Agreement, and together with investment
proceeds, (i) to pay interest with respect to the 2007 Certificates coming due on and prior to the
Prepayment Date and (ii) to prepay on October 1, 2017 (the "Prepayment Date") the 2007 Certificates at a
prepayment price equal to 100% of the principal amount with respect to the 2007 Certificates plus
accrued and unpaid interest with respect thereto to the Prepayment Date, without premium.
The net proceeds of the Bonds held in escrow are expected to be invested in US treasury
obligations, with the remainder held uninvested, and pledged to the payment of the 2007 Certificates to be
prepaid and neither the principal of nor the interest thereon will be available for the payment of the
Bonds. Asa result, the lien of the 2007 Certificates under the 2007 Trust Agreement will be discharged.
Causey Demgen & Moore P.C., independent certified public accountants, will verify, from the
information provided to them, the mathematical accuracy as of the date of delivery of the Bonds of
42221003.6
16
computations relating to the adequacy of the amounts deposited into the Escrow Fund to pay the 2007
Lease Payments and prepayment price of the 2007 Lease Payments through and including the Prepayment
Date. See "VERIFICATION OF MATHEMATICAL COMPUTATIONS" herein.
ESTIMATED SOURCES AND USES OF FUNDS
Tile estimated sources and uses of funds are as follows:
Sources:
Principal amount of Bonds $ [principal amount].00
Net Premium
Release from 2007 Reserve Account
Release from 2007 Lease Payment Fund
Total Sources
Uses:
Deposit to Escrow Fund
Costs of Issuance(l)
Total Uses
Costs of issuance include Legal, trustee, rating agency, and financial advisor fees, verification agent fees,
printing costs, underwriter's discount, [reserve account surety premium] and other costs incurred in
connection with the issuance of the Bonds.
42221003.6
17
DEBT SERVICE REQUIREMENTS
The following table sets forth the debt service requirements for the Bonds.
Bond Year
Ending
October 1 Principal Interest Total
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
rincipa_1
Totals amount *
42221003.6
18
THE AUTHORITY
The Authority was established pursuant to a Joint Exercise of Powers Agreement dated July 9,
1991 (the "Original Authority JPA Agreement"), by and between the City and the now -dissolved
Redevelopment Agency of the City of Santa Clarita (the "Former RDA") in accordance with the
provisions of the Joint Exercise of Powers Act, consisting Articles I through 4 (commencing with Section
6500) of Chapter 5, Division 7, Title 1 of the California Government Code (the "Joint Powers Act"). The
City, the City as Successor Agency to the Redevelopment Agency of the City of Santa Clarita (the
"Successor Agency"), and the Santa Clarita Parking Authority (the "Parking Authority"), which was
established pursuant to the Parking Law of 1949 as codified in Streets and Highways Code Section
32500, et seq., and a resolution adopted by the City Council on April 26, 2016, authorized an Amendment
to the Joint Exercise of Powers Agreement (the "Amendment") by and among the City, Successor Agency
and Parking Authority. Pursuant to the Joint Powers Act, the Original Authority JPA Agreement, as
amended by the Amendment (the "Amended Authority JPA Agreement"), and its formation documents,
the Authority is empowered to act as lessor under the Lease in this financing. The Amended Authority
JPA Agreement provides that the Successor Agency is no longer a member of the Authority, and that the
members of the Authority are the City and Parking Authority. The governing board of the Authority is
the Board of Directors and is comprised of all of the individuals who currently are members of the City
Council of the City. The Authority is qualified to assist in the financing and refinancing of certain public
improvements and to issue the Bonds under the Bond Law. The Authority has no taxing power. The
Authority, the City and the Parking Authority are each separate and distinct legal entities, and their
respective debts and obligations are not debts or obligations of any other entity.
THE CITY
General
The City is located in the County of Los Angeles (the "County"), 35 miles northwest of Los
Angeles and 40 miles east of the Pacific Ocean. The City encompasses an area of approximately 64
square miles and, as of January 1, 2015, had an estimated population of approximately 212,23 1. See
APPENDIX A — "GENERAL INFORMATION ABOUT THE CITY OF SANTA CLARITA." A copy
of the City's audited financial statements for the fiscal year ended June 30, 2015 is attached hereto as
APPENDIX B.
Budgetary Process and Administration
The City uses the following procedures when establishing the budgetary data reflected in its
financial statements:
• The fiscal year of the City begins on the first day of July of each year and ends on the
thirtieth day of June the following year.
• At such date as the City Manager determines, each department head must furnish to the
City Manager an estimate of revenues and expenditures for such department for the ensuing fiscal
year, detailed in such manner as may be prescribed by the City Manager. In preparing the
proposed budget, the City Manager reviews the estimates, holds conferences thereon with the
respective department heads as necessary, and may revise the estimates as he may deem
advisable.
• In June, the City Manager submits to the City Council the proposed budget as prepared
by him. After reviewing and making such revisions as it deems advisable, the City Council
determines the time for the holding of a public hearing thereon and causes to be published a
42221003.6
lL
notice thereof not less than ten days prior to the hearing date. Copies of the proposed budget are
available for inspection by the public in the office of the City Clerk at least ten days prior to the
hearing.
• At the conclusion of the public hearing, the City Council further considers the proposed
budget and makes any revisions thereof that it deems advisable and on or before June 30 it adopts
the budget with revisions, if any, by the affirmative vote of at least a majority of the total
members of the Council.
• From the effective date of the budget, the several amounts stated as proposed
expenditures become appropriated to the several departments, offices and agencies for the objects
and purposes named, provided that the City Manager may transfer funds from one object or
purpose to another within the same fund, department, office or agency. All appropriations lapse
at the end of the budget period to the extent that they have not been expended or lawfully
encumbered. At any public meeting after the adoption of the budget, the City Council may
amend or supplement the budget by motion adopted by the affirmative vote of at least a majority
of the total members of the City Council.
The City Council employs, at the beginning of each fiscal year, an independent certified public
accounting firm which, at such time or times as specified by the City Council, at least annually, at such
other times as such firm shall determine, examines the books, records, inventories and reports of all
officers and employees who receive, control, handle or disburse public funds and of all such other
officers, employees or departments as the City Council may direct. As soon as practicable after the end of
the fiscal year, a report is submitted by such firm to the City Council and a copy of the financial
statements as of the close of the fiscal year is published.
Budgetary control is maintained through a mid -year budget review and an adjustment process.
Budgetary adjustments are considered within the framework of the adopted budget and the City Council
directions, goals and policies. The budget as adopted by the City Council can be amended during the
fiscal year if necessary and proper by action of the City Council.
General Fund
The following tables summarize the audited financial statements for the City's General Fund for
the Fiscal Years ended June 30, 2011 through June 30, 2015. This information should be read in
conjunction with APPENDIX B — "AUDITED FINANCIAL STATEMENTS OF THE CITY OF
SANTA CLARITA FOR FISCAL YEAR ENDED JUNE 30,2015."
Table 2 sets forth the City's General Fund balance sheet based upon audited financial statements
for Fiscal Years ended June 30, 2011 through June 30, 2015. Table 3 sets forth the City's General Fund
revenues, expenditures and changes in fund balances based upon audited financial statements for Fiscal
Years ended June 30, 2011 through June 30, 2015.
42221003.6
K11
Assets
Cash and investments
Accounts receivable
Interest receivable
Taxes receivable
Notes to RDA Successor Agency
Allowance for doubtful accounts
Prepaid costs
Due from other governments
Due from other funds
Advances to other funds
Deposits
Restricted Assets — cash and
investments w/ fiscal agents
Total Assets
Liabilities and Fund Balance
Liabilities:
Accounts payable and accrued liabilities
Deposits payable
Due to other governments
Unearned revenues
Total Liabilities
Deferred inflows of resources
Unavailable (deferred) revenues
Total deferred inflows of resources
TABLE 4
CITY OF SANTA CLARITA
GENERAL FUND BALANCE SHEET
As of June M
2011
2012
2013
2014
2015
$ 64,178,073
$52,818,149
$ 81,956,079
$ 98,311,598$113,799,150
$ 11,910,059
553,813
675,910
573,024
488,495
373,279
349,963
350,921
257,825
253,201
258,503
6,800,671
7,046,661
7,155,637
7,931,715
7,986,753
46,915.238
50,664,338
7,884,071
7,903,770
7,225,964
Total Fund Balance
$ 83.690.219
(7,884,071)
(7,903,770)
$108,891.879
595,875
26,476
84,535
91,630
118,400
344,971
123,469
76801
1,234,746
975,587
8,191,168
1690,254
3,409,279
1274,080
2,040,570
23,249,986
18,875,874
11,825,524
11,427,513
11,036,236
200
200
-
-
-
825.654
825.665
825,698
104.264 720
W07,914
S10618-56438
$122-838,644
&144.640, 140
$ 5,575,314
$ 6,642,866
$ 6,932,748
$ 7,627,130
$ 7,448,001
7,449,698
3,967,163
3,284,184
3,168,883
3,070,803
-
-
-
-
7,700,000
604.335
603.859
598.658
$ 13.026,012
$10.610.029
$ 10.821.267
$ 11.399,872
$ 18.817.462
$ 7.549.489
$ 3.055.862
$ 1.697.870
$ 2.546.893
$ 9320.047
$ 7.549,489
$ 3,055.862
$ 1,697.870
$ 2,546.893
$ 9,320.047
Fund Balance:
Nonspendable
$ 23,845,861
$18,902,350
$ 11,910,059
$ 11,519,143
$ 11,024,338
Committed
12,356,339
66,257
-
-
-
Assigned
572,781
309,078
47,106,536
51,718,096
55336,807
Unassigned
46,915.238
50,664,338
35.320.706
45.654.640
50,141,486
Total Fund Balance
$ 83.690.219
$69.942.023
$ 94.337,301
$108,891.879
$116,502.631
Total Liabilities and Fund Balance
104 264 720
83 607,914
X106 856 438
122 83.8 644
144.640 140
Source City, of Santa Clarna Comprehensive Annual Financial Reports.
42221003.6 21
TABLE 5
CITY OF SANTA CLARITA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
FOR THE YEAR ENDED JUNE 30
2011 2012 2013 2014 2015
Revenues:
Taxes
Licenses and permits
Intergovernmental
Charges for services
Investment income
Fines and forfeitures
Other revenue
Overhead reimbursement
Total Revenues
Expenditures:
Current:
General government
Public safety
Parks, recreation and
community services
Public works
Community development
Capital Outlay
Debt service
Principal retirement
Interest and fiscal charges
Total Expenditures
Excess (Deficiency) of
Revenues Over (Under )
Expenditures
Other Financing Sources (Uses):
Transfers in
Transfers out Ct)
Total Other Financing Sources
(Uses)
Net change in fund balance
$62,853,088
$63,389,240
$68,332,942
$73,832,592
$78,232,263
3,675,424
4,097,709
4,246,957
5,366,972
5,567,280
295,052
487,789
263,093
208,313
1,125,699
6,640,459
6,776,268
7,551,982
8,801,042
9,139,349
2,199,220
1,205,900
1,133,464
1,018,077
1,073,899
499,227
560,384
603,389
545,983
452,052
108,997
234,739
72,009
134,995
14,501
3.398.704
3.496.092
$79.670.171
$80.248.130
$82.203.836
$89.907.974
$95,605.043
11,479,882
$32,145,979
$13,130,441
$14,211,854
$21,366,674
18,384,968
18,286,194
20,081,992
20,419,720
21,069,111
18.928,383
19,254,122
19,602,317
20,319.194
2073,945
12.915,033
13,047,920
10,444,494
11,566.617
12,079,362
5,379,024
3,947,303
5,247,226
5,461,356
5,270,770
-
-
108.664
1.666.884
5,849,555
230,746
-
-
22,422
4.200
$67.322.236
$86.681,522
$68,615.134
$73.645.625
$86.331,839
$12,347,935
(6,433,392)
$13,588,702
$16,262,349
$9,273,204
$13,939,098
9,377,734
3,011,346
$2,647,420
$2,217,935
(20,354,337)
(16,692,538)
(4,384,877)
(4355,191)
(3,880,387)
(6.415.23)
(7.314.804)
(1.373.531)
(1.707.771)
(1,662,452)
$5,932,696
(13,748,196)
$12,215,171
$14,554,578
$7,610,752
Fund Balance, July 1$77,757,523 $83,690,219 $82.122,120t�1 $ 94,337,301 $108,891,879
Fund Balance, .lune 30 $83.690.219S69_942 -Q3 $94,337.301 108 891879 02.631
(1) Includes debt service payments transferred out to the debt service funds.
(2) The $122 million increase in fund balance includes a restatement for the reversal of transfers of $5.2 million from the general fund to the Self -
Insurance Internal Service Fund and the collapse of the Facilities Internal Service Fund with the General Fund in the amount of $141 million. The
restatement also included an allowance for doubtful accounts of $7 million for the loans made by the City from the general fund to the former
redevelopment agency.
Source: City of Santa Clarita Comprehensive Annual Financial Reports.
42221003.6 22
Budgeted Revenues and Expenditures
The following table sets forth the City's General Fund adopted budget and actual results for the
Fiscal Years shown. Throughout the year, budget changes may be authorized by City Council and
therefore variances between the budget and actual expenditures are common.
The City General Fund Budget includes programs which are provided on a largely city-wide
basis. The programs and services are financed primarily by the City's share of sales tax, property tax,
revenues from the State and/or federal government, and charges for services provided.
Comparing the beginning 2014/15 General Fund Budget of $84.8 million with the 2014/15 final
budget of $94.8 million indicates the General Fund had supplemental budgetary appropriations of $10.0
million during the fiscal year. Included in the supplemental appropriations are the results of this year's
budget review. During the mid -year budget review, budgeted general fund revenue had a net increase of
$2,497,247. Included in the net increase are $1 million in development revenue; $500,000 increase in
property tax; $438,134 in 2005 flood federal mitigation funds; $312,703 in transient occupancy tax;
$229,000 in animal licensing; $127,958 in parks and recreation revenue; and $67,500 in real property
transfer tax. Revenue decreases in the General Fund included $225,000 for traffic citations and $124,000
in waste haulers franchise fees. At year-end, the City's actual revenues were $4.8 million more than the
final budgetary estimates. Actual expenditures were less than the final budgetary estimates by $4.5
million.
General Fund sales tax revenue continues to be the largest revenue source to operate general
governmental functions, accounting for 34.8%, or $35.5 million, as projected in the 2015/16 budget. This
is 3.2% higher than 2014/15 receipts. Property tax revenues account for 32.2% of the General Fund
budget, or $32.8 million, in 2015/16. The County Assessor's office makes changes to the City's property
tax roll daily to reflect transfers in ownership, new construction, assessment appeals, parcel splits and
other dynamic changes.
42221003.6 23
TABLE 6
CITY OF SANTA CLARITA
GENERAL FUND COMPARISON OF FINAL ADOPTED BUDGET AND ACTUAL RESULTS FOR FISCAL
YEAR ENDED JUNE 30, 2014, COMPARISON OF FINAL ADOPTED BUDGET
AND ACTUAL RESULTS FOR FISCAL YEAR ENDED JUNE 30, 2015
Final Adopted
Final Adopted
Budget
Actual Results
Budget
Actual Results
2014-15
2013-14
2013-14
2014-15
2014-15
Variance
REVENUES
Taxes
$69,765,855
$73,746,061
$75,376,473$78,232,263
$2,855,790
Licenses and permits
4,340,251
5,366,972
5,389,819
5,567,280
177,461
Intergovernmental
721,794
294,844
782,102
1,125,699
343,597
Charges for services
7,261,325
8,801,042
7,763,229
9,139,349
1,376,120
Investment income
1,027,458
1,018,077
808,366
1,073,899
265,533
Fines and forfeitures
574,000
545,983
551,500
452,052
(99,448)
Other revenue
46,000"
134,995
204,937
14,501
(190,436)
Overhead reimbursement
3.550.200
Total Revenues
$87,286,883
$89.907.974
$90,876.426
$95.605.043
$4.728.617
EXPENDITURES
Current
General government
$17,615,329
$14,211,854
$17,714,271
$21,366,674
(3,652,403)
Public Safety
21,039,429
20,419,720
21,694,942
21,069,111
625,831
Parks, recreation and community
service
21,040,180
20,319,194
21,532,334
20,673.945
858,389
Public works
14,389,118
11,566,617
17,866,754
12,079,362
5,787,392
Community development
5,969.023
5,461,356
6,047,517
5,270,770
776,747
Capital Outlay
1,895,657
1,666,884
6,001,256
5,849,555
151,701
Debt Service
Principal
-
22,422
22,422
-
Interest and fiscal charges
-
-
Total Expenditures
$81,948,736
$73,645,625
$90,879,496
$86,331,839
$4,547,657
Excess (Deficiency) of Revenues
Over (Under) Expenditures
$5,338,147
$16,262,349
$(3,070)
$9.273,204
$9,276,274
OTHER FINANCING SOURCES (USES):
Transfer in
$2,582,196
$2,647,420
$2.113,251
$2,217,935
$104,684
Transfers (out)
(4.355.191
(4.355.191)
(3.880.387)
(3.880.387)
Total Other financing sources (uses)
$(1.772.995)
$(1.707.771)
$(1.767.136)
$(1.662.452)
$104.684
Fund Balance at Beginning of Year
$94,337,301
$108,891,879
Fund Balance at End of Year
$108.,891.879
$116,502,631
Source: City of Santa Clarita Comprehensive Annual Financial Reports.
42221003.6 24
The 2015/16 General Fund Budget
The Original Adopted budgeted General Fund revenues for fiscal year 2015/16 were $101.9
million, and operating and capital expenditures were budgeted at $92.9 million. The 2015/16 General
Fund Adopted Budget reflects an overall decrease of 2.24% when compared to adopted budget for fiscal
year 2014/15 due primarily to a smaller capital improvement program budget. The City has budgeted a
4.3% increase in property taxes and a 4% increase in sales tax.
Budgetary control is maintained through a mid -year budget review and ongoing adjustments.
Table 7 provides information on the Current Budget for fiscal year 2015/16, adjusted in December 2015
for the mid -year review and other adjustments authorized by City Council action. Public safety and
parks, recreation and community services account for the largest shares of the City's 2015/16 General
Fund Operating Budget. Each department maintains a budget of $22.4 million and $21.9 million,
respectively. The General Fund allocates $2.5 million towards the City's Capital Improvement Plan for
2015/16.
The balance of the operating reserve was $14,460,000 for fiscal year 2014/15 and was included in
the unassigned fund balance in the General Fund. The fiscal year 2015/16 budget includes a 19%
operating reserve that totals $15.8 million, a $1.3 million increase from the previous fiscal year. The City
Council provided direction to increase reserves by 1% each year until a 20% operating reserve goal is
reached.
The following table sets forth the City's Current adopted budget for the General Fund for the
Fiscal Year ending June 30, 2016.
[Balance ofpage intentionally left blank.)
25
TABLE NO. 7
CITY OF SANTA CLARITA
GENERAL FUND CURRENT BUDGET FOR
FISCAL YEAR ENDING JUNE 30, 2016
Current Adjusted
Audited 2015/16
2014/15 Actual Budget
Increase/
(Decrease)
% Increase /
(Decrease)
FUNDING SOURCES
Taxes and Fees
Property Taxes Secured
$14,962,039
$15,500,000
$ 537,961
3.60%
Property Tax in Lieu
16,585,572
17,300,000
714,427
4,31
Sales and Use Tax
26,059,424
35,500,000
9,440,576
36.23
Sales and Use Tax in Lieu
8,344,324
0
(8,344,324)
-
Transient Occupancy Tax
3,124,904
3,218,603
93,699
3.00
Real Property Transfer Tax
1,122,596
1,1007000
(22,596)
(2.01)
Satellite Wagering Tax
47,184
18,000
(29,184)
(61.86)
Franchise Fees
7,900,517
7,756,303
(144,214)
(1.83)
Licenses and Permits
5,567,280
5,434,130
(133,150)
(2.31)
Fines and Forfeitures
452,052
420,300
(31,752)
(7.02)
Interest Income
1,073,898
828,834
(245,064)
(22.82)
Vehicle license Fee
85,703
85,000
(703)
(0.82)
Intergovernmental
1,125,699
260,136
(865,563)
(76.89)
Charges for Services
9.139,342
8.898,118
241,224
(2.64)
Subtotal Taxes and Fees
$95,590,534
$96,319,427
$728,893
0.76%
"Transfers & Other Sources
Transfers In
2,217,935
1,400,492
(817,443)
(36.86)%
Miscellaneous Revenues
193.067
159,8003(
3,267)
Total Revenues
$98,001,536
$97,879,716
($121,820)
(0.12)%
EXPENDITURES
City Manager
$ 5,892,696
$ 7,875,968
$1,983,272
33.66%
Community Development
5,297,238
9,723,975
4,426,737
83.57
Administrative Services
7,2957507
7,821,508
526,001
7.21
Public Works
13,482,415
14,8647563
1,382,148
10.25
Parks, Recreation & Community Services
20,908,733
21,932,071
1,023,338
4.89
Public Safety
21,067,557
22,415,128
17347,571
6.40
Non-departmental Administration
13,383,167
3,726,432
(9.656,735)
(72.16)
Retiree Health Benefits
2,377,848
1370,000
(1,007,848)
(42.38)
Contingency
0
739.653
739.653
Subtotal Operating Expenditures
$89,705,161
$90,469,298
$764,137
0.85%
Fund Transfers
$3,880,387$4,376,838
$ 186,413
4.80%
CAFR Adjustment
(3,765,344)
(4,066,800)
(301,456)
(8.00)
Capital Outlay
598.953
2.420.504
1.82 L551
404.12%
Total Expenditures
$90,419,157
$93,199,839
$2,780,682
3.08%
Source: City of Santa Clarna.
42221003.6 26
Management Discussion of Financial Performance
The City management's discussion and analysis of the financial activities of the City for the fiscal
year ended June 30, 2015 is presented in the City's audited financial statements for the fiscal year ended
June 30, 2015 attached hereto as APPENDIX B — "AUDITED FINANCIAL STATEMENTS OF THE
CITY OF SANTA CLARITA FOR THE FISCAL YEAR ENDED JUNE 30,2015."
Capital Improvement Program
The City is considering a number of future capital projects, whose financing sources may include
the City's general fund's fund balances, future lease revenue debt, grants, special taxes or assessment or
lease payments payable from the City's general fund. The City prepares a five-year capital improvement
program (CIP) which includes potential capital projects that reflect the desires of the community, as well
as projects that address operational and maintenance needs of the City. The City's 2016-21 CIP consists
of improvements and projects totaling $31,694,200 for fiscal year 2015/16 and list $221,298,308 of
improvements and projects for fiscal years 2017-21. Unfunded projects previously identified in the 2015-
16 CIP total $403,493,257. Subject to the City's Fiscal Policies, sorne of these improvements and
projects will ultimately be financed by the City's general fund.
Appropriations Limit
Section 7910 of the Government Code of the State requires the City to adopt a formal
appropriations limit for each fiscal year. The City's appropriations limit for Fiscal Year 2014-15 was
$318,178,790. The City's appropriations limit for Fiscal Year 2015-16 is $336,642,584. The
appropriations limit is not expected to have any impact on the ability of the City to budget and appropriate
the Base Rental Payments and Additional Rental as required by the Lease.
Financial Statements
All governmental funds are accounted for using the modified accrual basis of accounting. The
City's revenues are recognized when they become measurable and available as net current assets.
Expenditures are generally recognized under the modified accrual basis of accounting when the related
fund liability is incurred. The exception to this general rule is principal and interest on general long-term
debt, which is recognized when due. Some debts and obligations may be payable from self-supporting
enterprises or revenue sources other than property taxation. Special assessment bonds are not included in
the tabulation; lease revenue obligations payable from the General Fund or equivalent sources are
included. All proprietary funds are accounted for using the accrual basis for accounting. Revenues are
recognized when they are earned, and expenses are recognized when they are incurred. Receivables are
recorded and determined at the time of consumption, and unbilled receivables are not recorded. See
APPENDIX B — "AUDITED FINANCIAL STATEMENTS OF THE CITY OF SANTA CLARITA FOR
THE FISCAL YEAR ENDED JUNE 30,2015."
The City retained the firm of RSM US, LLP, Certified Public Accountants, Irvine, California, to
examine the general purpose financial statements of the City as of and for the year ended June 30, 2015.
The City is the recipient of the GFOA Certificate of Achievement for Excellence in Financial Reporting
for the last five fiscal years. The California Society of Municipal Finance Officers (CSMFO) has
awarded a Certificate of Award for Outstanding Financial Reporting to the City for its comprehensive
annual financial reports for the last five consecutive years. The audited combined financial statements of
the City are available through links obtained at the City's website at -vvw-w.santa-
clarita.com/ci inlcafr.
42221003.6 27
Fiscal Policies
The City has developed a set of fiscal policies (the "Fiscal Policies"), which are reviewed and
adopted annually by the City Council as part of its budgetary approval process, that the City uses to guide
its fiscal decision making. The Fiscal Policies provide guidance relating to the following:
• Cash Management Policy includes an annually adopted investment policy and investment
selection procedures.
• Budget Policies and Procedures is a comprehensive summary of budget and capital
improvement plan responsibilities, preparation, policies and adjustment procedures. In
particular, the current policy states the City's goal is to increase operating reserves to
20% of annual General Fund Expenditures.
• Debt Management Policy sets forth certain debt management objectives for the City, and
establishes overall parameters for issuing and administering the City's debt.
• Post -Issuance Compliance Policy sets forth procedures and guidelines in order to comply
with certain federal tax requirements applicable to tax-exempt bonds and other debt
obligations subsequent to the issuance of such debt, including the monitoring of the use
of bond proceeds, arbitrage yield restrictions and rebate and record retention.
• Continuing Disclosure Procedures Policy sets forth the procedures for compliance with
continuing disclosure undertakings and related filings, including annual report and
material events notices.
• Annual Audit Policy requires an annual audit by a qualified independent accountant of
the books of account, financial records, inventories and reports of all City officers and
employees involved in the handling of financial matters.
• Financial Structure Policy sets forth the accounting system and budgetary controls,
including fund designations and classifications.
• Risk Management Policy describes the risk management program which provides
centralized services to all City departments for risk management, loss control, and safety.
The complete Fiscal Policies can be found within the City's budget for the Fiscal Year ending
June 30, 2016, which can be found on the City's website: www.santa-clarita.comlcit -
hallideparimentslcitmana€ger-s-otiieeleitudget'budget-f-2015-2016. The information presented in
the City's website is not part of this Official Statement and should not be relied on in making investment
decisions with respect to the Bonds.
Taxable Property and Assessed Valuation
Taxes are levied for each fiscal year on taxable real and personal property which is situated in the
City as of the preceding January 1. For assessment and collection purposes, property is classified either
as "secured" or "unsecured," and is listed accordingly on separate parts of the assessment roll. The
"secured roll" is that part of the assessment roll containing State assessed property and real property
having a tax lien which is sufficient, in the opinion of the assessor, to secure payment of the taxes. Other
property is assessed on the "unsecured roll."
Property taxes on the secured roll are due in two installments, on November I and February 1 of
the fiscal year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and
a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect
to which taxes are delinquent is sold to the State on or about June 30 of the fiscal year. Such property
42221003.6 28
may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus a
redemption penalty of P'/z% per month to the time of redemption. If taxes are unpaid for a period of five
years or more, the property is deeded to the State and then is subject to sale by the County Tax Collector.
Property taxes on the unsecured roll are due as of the January t lien date and become delinquent,
if unpaid on August 31. A 10% penalty attaches to delinquent taxes on property on the unsecured roll,
and an additional penalty of P/2% per month begins to accrue on November I of the fiscal year. The City
has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2)
filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment
lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County
Recorder's Office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of
personal property, improvements or possessory interests belonging or assessed to the assessee.
City taxes are assessed and collected by Los Angeles County at the same time and on the same
rolls as are County, school and special district taxes.
State law exempts $7,000 of the full cash value of an owner -occupied dwelling, but this
exemption does not result in any loss of revenue to local agencies, since the State reimburses local
agencies for the value of the exemptions.
The City in fiscal year 2015/16, the City was the fourth largest in assessed valuation within the
County. The following table represents the most recent ten year history of assessed valuation in the City,
including State -reimbursed exemptions:
TABLE 8
CITY OF SANTA CLARITA
Assessed Valuation
(000s)
Fiscal Year
Local Secured
Utility
Unsecured
Total
2006/07
$18,174,521
$10,666
$730,698
$18,915,885
2007/08
20,694,757
8,243
790,597
21,493,597
2008/09
21,537,566
1,846
871,596
22,410,452
2009/10
20,313,270
4,015
944,836
21,262,122
2010/11
20,222,555
4,015
887,372
21,113,942
2011/12
20,317,662
3,696
847,579
21,168,938
2012/13
20,111,075
3,696
870,669
20,985,441
2013/14
23,410,799
3,696
854,976
24,269,472
2014/15
25,220,113
3,696
888,132
26,111,942
2015/16
26,469,080
3,697
853,667
27,326,444
Source: HdL Coren & Cone, Los Angeles County Assessor..
Beginning in 1978/79, Proposition 13 and its implernenting legislation provided for each county
to levy (except for levies to support prior voter -approved indebtedness) and collect all property taxes, and
prescribed how levies on county -wide property values are to be shared with local taxing entities within
each county. The secured property tax levies and year-end delinquencies for 2005/06 through 2014/15
are reflected on the following table:
42221003.6 29
TABLE 9
CITY OF SANTA CLARITA
Secured Tax Charges and Delinquencies
Amount Paid Percent Delinquent
Year Total Current Levv June 30 June 30
2005/06
$11593,852
$11,292,337
2.6%
2006/07
12,804,630
12,317,614
3.8
2007/08
14,483,825
13,754,184
5.0
2008/09
11,925,285
l 1,361,604
4.7
2009/10
14,202,626
13,711,940
3.5
2010/11
14,172,030
13,829,640
2.4
2011/12
14,299,999
13,999,770
2.1
2012/13
18,634,850
18,297,746
1.8
2013/14
21,446,963
21,128,332
1.5
2014/15
23,131,317
22,795,838
1.5
Source: County of Los Angeles, Department of Auditor -Controller
0.37
Largest Taxpayers
The following table lists the major taxpayers in the City in terms of their 2015/16 assessed
valuation.
42221003.6 30
TABLE 10
CITY OF SANTA CLARITA
Principal Property Taxpayers
2015/16
% of Total
No. of
City Assessed
Owner/Taxpayer
Parcels Total Assessed Value
Value
Valencia Town Center
17 $365,763,954
1.37%
Packard Humanities Institute
1 189,986,028
0.71
VTC Business Center LLC
9 138,800,017
0.52
Saugus Colony Limited
19 113,555,804
0.42
EQR Valencia LLC
218 101,042,142
0.38
EQR The Oaks LLC
28 98,709,889
0.37
Valencia Biomedical Park LLC
5 98,405,000
0.37
ARC SLSTCCAOOI LLC
4 96,000,000
0.36
Henry Mayo Newhall Memorial
3 90,142,200
0.34
Hospital
Park Sierra Properties
9 83,436,383
0.31
Subtotal
313 $ 1,375,841,420
5.14%
All] Others
$25,406,078,154
94.86
TOTAL
$26,781,919,574
100.00%
Source: FY 2015-16 Applied Report, Willdan Financial Services.
42221003.6 30
State Legislative Shift of Property Tax Allocation
Beginning in 1992-93, the State has required that local agencies including cities remit a portion of
property taxes received to augment school funding. These funds are deposited in each county's
Educational Revenue Augmentation Fund ("ERAF"). These property taxes are permanently excluded
from the City's property tax revenues. On July 24, 2009, the California legislature approved amendments
to the 2009-10 Budget to close its anticipated $26.3 billion budget shortfall. The approved amendments
include borrowing from local governments by withholding of the equivalent of 8% of Fiscal Year 2008-
09 property related tax revenues from cities' and counties' property tax collections under provisions of
Proposition IA (approved by the voters in 2004), which the State must repay with interest within three
years.
In addition, certain other provisions in the State budget have resulted in a realignment of property
tax revenues. On March 2, 2004, voters approved a bond initiative formally known as the "California
Economic Recovery Act." This act authorized the issuance of $15 billion in bonds to finance the 2002-03
and 2003-04 State budget deficits, to be payable from a fund to be established by the redirection of tax
revenues through the "Triple Flip." Under the "Triple Flip," one-quarter of local governments' 1% share
of the sales tax imposed on taxable transactions within their jurisdiction is redirected to the State. In an
effort to eliminate the adverse impact of the sales tax revenue redirection on local government, the
Legislation provides for property taxes in the ERAF to be redirected to local government. Because the
ERAF moneys were previously earmarked for schools, the legislation provides for schools to receive
other state general fund revenues.
The City receives a portion of Department of Motor Vehicles license fees ("VLF") collected
statewide. Several years ago, the State-wide VLF was reduced by approximately two-thirds. However,
the State continued to remit to cities and counties the same amount that those local agencies would have
received if the VLF had not been reduced, known as the "VLF backfill." A temporary two-year increase
in VLF rates went into effect on May 19, 2009 and expired on July 1, 2011. This increased the funding of
VLF from fees and reduced the State's VLF backfill from the property tax realignment. The temporary
increase was not renewed by the State Legislature.
Other Local Taxes
In addition to ad valorem taxes on real property, the City receives the following local taxes:
Sales and Use Taxes. Sales tax is collected and distributed by the State Board of Equalization.
Each local jurisdiction receives an amount equal to one percent of taxable sales within their jurisdiction.
Franchise Taxes. The City levies a franchise tax on its cable television, trash collection and
utility franchises.
Business License Taxes. The City levies a business license tax based primarily on number of
employees.
Transient Occupancy Taxes. The City levies a 10% transient occupancy tax on hotel and motel
bills. See "LIMITATIONS ON TAX REVENUE — Proposition 62" herein.
Property Transfer Taxes. A documentary stamp tax is assessed for recordation of real property
transfers.
42221003.6 31
The following table shows the tax revenues of the General Fund for the past three fiscal years.
TABLE 11
CITY OF SANTA CLARITA
Tax Revenues By Source
Current Year
End Budget
2012/13 2013/14 2014/15 2015/16
Property Taxes Secured
$13,787,266
$14,243,824
$14,962,039
$15,500,000
Property Tax in Lieu
13,340,372
15,427,326
16,585,572
17,300,000
Sales and Use Tax
24,104,064
24,322,496
26,059,424
35,500,000
Sales and Use Tax in Lieu
7,652,746
8,744,696
8,344,324
0
Transient Occupancy Tax
2,556,774
2,781,527
3,124,904
3,218,603
Real Property Transfer Tax
676,874
910,788
1,122,596
1,100,000
Satellite Wagering Tax
29,306
36,682
47,184
18,000
Total General Fund Tax
$62,147,402
$66,467,339
$70,246,043
$72,636,603
Net of State Legislative shift of
property tax.
Source: City of Santa Ciarita.
Sales and use taxes provide the major source of revenues to the General Fund, comprising
approximately 35% of the City's 2014/15 year-end General Fund revenues and approximately 44% of
such General Fund taxes. A sales tax is imposed on retail sales or consumption of personal property. The
statewide sales tax rate is established by the State Legislature.
In Los Angeles County the sales tax rate is 9.00%. 7.50% is collected and administered by the
State on taxes collected within the City as follows:
State General Fund ....................................
5.00%
Proposition 172 (public safety use) ................
0.50%
Proposition 57 (State financing bond) .............
0.25%
County Health/Welfare.................................
0.50%
County Transportation ................................
0.25%
City.........................................................
1.00%
The 1.00% sales tax revenue is collected by the State and deposited monthly into the City's
General Fund.
The remaining 1.5% Los Angeles sales tax is authorized locally under Propositions A and C for
transportation including bus, rail and some streets and road projects. These funds are collected by the
State but administered by the Los Angeles County Metropolitan Transportation Authority. A portion of
the Proposition A and C funds are returned to the Cities for use on approved projects.
Other Revenue Sources
Licenses and Permits. These City General Fund revenues consist primarily of business license
taxes and building construction permit fees.
Fines, Forfeitures and Penalties. These City General Fund revenues include parking citations,
municipal court fines, asset seizure proceeds and other fines for municipal code violations.
42221003.6 32
Use of Money and Property. These City General Fund revenues consist primarily of investment
earnings.
Charges for Services. The City charges recording fees, booking fees, court filing fees, plan
checking, building inspection, waste collection and other municipal services.
Employee Relations and Collective Bargaining
The City has a collective bargaining agreement with the Service Employees International Union
(SEIU) Local 347. The contract's term is January 1, 2013 through June 30, 2016. A new contract is
currently under negotiation and is expected to be finalized within the next few months.
Risk Management
The City joined the Special Districts Risk Management Authority (SDRMA) in the fall of 2005.
SDRMA is a self insurance risk pool that serves as a not-for-profit public agency to its members.
Through SDRMA, the City currently holds a $500 general liability deductible. All general liability
claims above $500 and up to a limit of $10,000,000 are handled by SDRMA. [Limits for third -party
claims consist of $10 million by SDRMA and $5 million in excess by Evanston Insurance Company.]
The City's workers' compensation coverage is also administered by SDRMA. The City is self-insured
for workers' compensation up to $250,000, but has purchased coverage through SDRMA for individual
claims exceeding $250,000 up to a maximum of $5,000,000. The annual member contribution is
$596,288 for the property/liability program and the workers' compensation program (based on estimated
wages). On June 30, 2015, $260,000 was accrued by the City for general liability claims and $1,733,915
was accrued for workers' compensation claims and judgments. These accruals represent estimates of
amounts to be paid for incurred and reported claims, as well as IBNR claims based on past experience and
modified for current trends and information. Settled claims have not exceeded any of these coverage
amounts in any of the last three fiscal years and there were no reductions in the City's insurance coverage
during the year ended June 30, 2015.
In addition to general liability, the City maintains individual policies for autos, property, flood,
special events, and earthquake damage where appropriate.
City Investment Policy and Portfolio
The City has adopted policies and procedures for the management of the investment of
unexpended funds for the City itself and for other entities of the City, including the Authority, for which
the City provides financial management services. The three basic objectives of the policies and
procedures are: safety of invested funds, maintenance of sufficient liquidity to meet cash flow needs and
attainment of the maximum yield possible consistent with the first two objectives. The most recently
revised Investment Policy for the City was adopted on May 12, 2015. Under the City's Investment Policy
and in accordance with the Government Code, the City may invest in the following types of investments:
bankers acceptances to a maximum term of 180 days; commercial paper to a maximum maturity of 270
days; "A" rated corporate notes; certificates of deposit; obligations of the United States Treasury;
repurchase agreements to a maximum term of 1 year; obligations of the State of California; municipal
bonds; mutual funds; the Local Agency Investment Fund (LAIF) managed by the State Treasurer and the
Los Angeles County Pooled Investment Fund (LACPIF) administered by the Los Angeles County
Treasurer and Tax Collector.
In accordance with the Government Code, the City requires certain collateralization for public
deposits in banks and savings and loans, and has long-established safekeeping and custody procedures.
42221003.6 33
Estimated investments as of March 31, 2016 in all funds of the City had a weighted average
maturity of 656 days and were comprised of the following:
Asset -Backed Securities
Supranationals
U.S. Treasury Securities
Federal Agency Discount
Corporate Bonds
Discount Commercial Paper
Noncallable Agencies
Money Market Funds
LACPIF
LAW
TOTAL
Principal
% of
Amount
Total
$11,509,487
5.44%
3,304,373
1.56
28,871,452
13.65
19,957,628
9.44
36,765,624
17.38
2,090,152
0.99
61,323,706
29.00
4,165,645
1.97
1,520,104
0.72
4],_976.73 7
1985
$211,475,907
100.00%
Source: City of Santa Clarita finance Department.
Outstanding Indebtedness of the City
The City has the following outstanding indebtedness, exclusive of obligations to be paid from
specifically pledged revenues, such as general obligation bonds, revenue bonds, tax allocation bonds and
assessment district bonds. The City has never defaulted on any of its obligations.
TABLE 12
CITY OF SANTA CLARITA
General Fund Outstanding Indebtedness
Category of Original Amount
Indebtedness Issue Outstandii
Private Placement Lease* $ 6,985,000 $ 6,328,411
2007 Certificates of Participation* 15,525,000 15,070,000
Lease Revenue Bonds, Series 2007* 13,785,000 11,260,000
Capital lease payable * 217,615
Loans payable* 200,000
Compensated Absences** 3,313,500
Claims payable** 1,993,915
* As of April 15, 2016.
** As of June 30, 2015.
Source: City of Santa Clarita.
42221003.6 34
Final
Maturity
2020
2037
2037
2020
2018
Indefinite
Direct and Overlapping Debt
Set forth below for the City is a direct and overlapping debt report (the "Debt Report") prepared
by California Municipal Statistics, Inc. The Debt Report is included for general information purposes
only. The City has not reviewed the Debt Report for completeness or accuracy and makes no
representations in connection therewith. The Debt Report generally includes long term obligations sold in
the public credit markets by public agencies whose boundaries overlap the boundaries of the City in
whole or in part. Such long-term obligations generally are not payable from revenues of the City (except
as indicated) nor are they necessarily obligations secured by land within the City. In many cases long-
term obligations issued by a public agency are payable from the general fund or other revenues of such
public agency.
[Remainder of page intentionally left blank.]
42221003.6 35
TABLE 13
CITY OF SANTA CLARITA
Direct and Overlapping Debt Statement
2015-16 Assessed Valuation: $27,330,80077
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
% Applicable (1)
Debt 511/16
Los Angeles County Flood Control District
2.188%
$ 276,344
Santa Clarita Community College District
70.938
133,628,806
William S. Hart Union High School District
70.929
261,532,838
William S. Hart Union High School District Community Facilities District No. 87-1
100.
225,000
William S. Hart Union High School District Community Facilities District No. 90-1
100.
420,000
Castaic Union School District
27.463
3,776,726
Newhall School District
60.152
8,785,200
Newhall School District School Facilities Improvement District No. 2011-1
61.317
34332,832
Saugus Union School District
83.211
27,107,200
Saugus Union School District School Facilities Improvement District No. 2014-1
84.359
16,871,800
Saugus Union School District Community Facilities District No. 2006-2, Improvement Area No. l
100.
71600,000
Saugus Union School District Community Facilities District No. 2006-2, Improvement Area No. 2
100.
8,345,000
Saugus Union School District Community Facilities District No. 2006-2, Improvement Area No. 3
100.
16,445,000
Saugus -Hart Schools Community Facilities District No. 2000-1
100.
11,015,000
Sulphur Springs Union School District
92.153
40,419,284
Sulphur Springs Union School District Community Facilities District No. 2002-1
100.
33,875,000
City of Santa Clarita Open Space and Parkland Assessment District
100.
15,070,000
City of Santa Clarita Community Facilities District No. 2002-1
100.
15,420,000
City of Santa Clarita 1915 Act Bonds
100.
760,000
Los Angeles County Regional Park and Open Space Assessment District
2.145
1.085,585
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
$636,991,615
DIRECT AND OVERLAPPING GENERAL FUND DEBT
Los Angeles County General Fund Obligations
2.145%
$ 43,724,446
Los Angeles County Superintendent of Schools Certificates of Participation
2.145
170,407
Los Angeles County Sanitation District No. 32 Authority
72.726
12,139,830
Santa Clarita Community College District Certificates of Participation
70.938
11,786.1349
William S. Hart Union High School District Certificates of Participation
70.927
4,255,620
Castaic Union School District Certificates of Participation
27.463
1,035,355
Saugus Union School District Certificates of Participation
83.211
21,318,658
Sulphur Springs Union School District Certificates of Participation
92.153
22,367,830
City of Santa Clarita Obligations
100.
17,588,411 (1)
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT
$134,386,906
OVERLAPPING TAX INCREMENT DEBT (Successor Agencv):
100. %
$34,595,000
COMBINED TOTAL DEBT
$805,973,521 (3)
(1) Excludes issue to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non
-bonded capital lease
obligations.
Ratios to 2015-16 Assessed Valuation:
Direct Debt ($15,070,000) 0.06%
Total Overlapping Tax and Assessment Debt 2.33%
Total Direct Debt ($32,658,411) 0.12%
Combined Total Debt 2.95%
Ratios to Redevelopment Successor Agency Incremental Valuation ($362.826.9581:
TOTAL OVERLAPPING TAX INCREMENT DEBT 9.53%
Source: California Municipal Statistics, Inc.
42221003.6 36
Employee Retirement Pian
This sub -caption contains certain information relating to the California Public Employees
Retirement System ("PERS"). Neither the City nor the Authority has independently verified the
information provided by PERS or makes any representations or expresses any opinion as to the accuracy
of the information provided by PERS.
The comprehensive annual financial reports of PERS are available on its Internet website at
www.calpers.ca.gay. The PERS website also contains PERS' most recent actuarial valuation reports and
other information concerning benefits and other matters. Such information is not incorporated by
reference herein. The City cannot guarantee the accuracy of such information. Actuarial assessments are
"forward-looking" statements that reflect the judgment of the fiduciaries of the pension plans, and are
based upon a variety of assumptions, one or more of which may not materialize or may be changed in the
future. Actuarial assessments will change with the future experience of the pension plans.
Defined Pension Benefit Plan. All permanent full-time general and public safety employees of
the City are eligible to participate in the Public Employees' Retirement Fund (the "Fund") of PERS. The
Fund is an agent multiple employer defined benefit plan, cost sharing for safety, which acts as a common
investment and administrative agent for various local and state governmental agencies within the State of
California. The Fund provides retirement, disability, and death benefits based on the employee's years of
service, age and final compensation. Employees vest after five years of service and may receive
retirement benefits at age 50. These benefit provisions and all other requirements are established by State
statutes and City ordinance. Copies of PERS' annual financial report may be obtained from the PERS
Executive Office: 400 P Street, Sacramento, CA 95814.
Funding Policy. During the year ended June 30, 2013, the California Public Employees' Pension
Reform Act of 2013 ("PEPRA") went into effect (see "- Pension Reform Act of 2013 (Assembly Bill
340)").
A classic PERS member or PEPRA safety member becomes eligible for Service Retirement upon
attainment of age 50 with at least 5 years of credited service (total service across all PERS employers, and
with certain other Retirement Systems with which PERS has reciprocity agreements). For employees
hired into a defined benefit pension plan with the 1.5 percent at 65 formula, eligibility for Service
Retirement is age 55 with at least five years of service. PEPRA miscellaneous members become eligible
for Service Retirement upon attainment of age 52 with at least five years of service. Tile Service
Retirement benefit is a monthly allowance equal to the product of the benefit factor, years of service, and
final compensation based on a three-year average. The benefit factor depends on the benefit formula
specified in the agency's contracts. Beginning the second calendar year after the year of retirement,
retirement and survivor allowances may be annually adjusted on a compound basis up to 2 percent.
At June 30, 2013, 846 employees were covered by the benefit terms: (i) 127 inactive employees
or beneficiaries currently receiving benefits; (ii) 335 employees entitled to but not yet receiving benefits,
and (iii) 384 active employees. This information was obtained from the PERS Annual Valuation Report
as of June 30, 2013 and is the most recent information available.
Section 20814(c) of the California Public Employees' Retirement Law (PERL) requires that the
employer contribution rates for all public employers be determined on an annual basis by the actuary and
shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are
determined through PERS' annual actuarial valuation process. The actuarially determined rate is the
estimated amount necessary to finance the costs of benefits earned by employees during the year, with an
additional amount to finance any unfunded accrued liability. The employer is required to contribute the
difference between the actuarially determined rate and the contribution rate of employees. For the year
42221003.6 37
ended June 30, 2015, the average active employee contribution rate is 7.803% of annual pay, and the
employer's contribution rate is 13.738% of annual payroll. Employer contribution rates may change if
plan contracts are amended. It is the responsibility of the employer to make necessary accounting
adjustments to reflect the impact due to any Employer Paid Member Contributions or situations where
members are paying a portion of the employer contribution. The employer contributions as of June 30,
2015, were $3,740,138.
For the measure period ended June 30, 2014 (the measurement date), the total pension liability
was determined by rolling forward the June 30, 2013 total pension liability. The June 30, 2013 and the
June 30, 2014 total pension liabilities were based on the following actuarial methods and assumptions:.
Valuation Date:
Actuarial Cost Method:
Amortization Method:
Asset Valuation Method:
Actuarial Assumptions
Investment Rate of Return:
Projected Salary Increases
hnflation:
Payroll Growth:
June 30, 2013
Entry Age Normal Cost Method
Level Percent of Payroll
Market Value
7.50% of net pension, investment and
administrative expenses, including inflation
3.30% to 14.20% depending on age, service and
type of employment
2.75%
3.00%
Mortality rates were based on the 2014 PERS actuarial experience study, which assumed future
mortality improvements using Society of Actuaries (SOA) Scale BB. The Experience Study report can be
obtained at CalPERS' website under Forms and Publications. On October 8, 2015, the SOA issued an
updated Mortality Improvement Scale MIS -15. The SOA's preliminary estimates suggest that updating to
this recently release scale might reduce a plan's liabilities up to 2 percent or less. Management has not yet
evaluated the impact of this recent update with its actuary and, accordingly, no adjustment has been made
to the plan's obligations as of the June 30, 2013 valuation date.
The Schedule of Changes in the City's Net Pension Liability and Related Ratios during the
measurement period is as follows:
[Remainder of page intentionally left blank.]
42221003.6 38
Measurement Period June 30. 2014
Total Pension Liability
Service Cost
$ 4,462,544
Interest
9,588,693
Changes of Benefit Terms
-
difference between Expected and Actual Experience
-
Changes of Assumptions
-
Benefit Payments, Including Refunds of Employee Contributions
(2,561,655)
Net Change in Total Pension Liability
11,489,582
Total Pension Liability - Beginning
126,898,794
Total Pension Liability - Ending (a)
X138.388 376
Plan Fiduciary Net Position
Contributions — Employer
$ 3,562,246
Contributions — Employee
2,339,435
Net Investment Income
16,243,165
Benefit Payments, Including Refunds of Employee Contributions
(2,561,655)
Other Changes in Fiduciary Net Position
-
Net Change in Fiduciary Net Position
$ 26,876,160
Plan Fiduciary net Position - Beginning
19,583,191
Plan Fiduciary net Position - Ending (b)
S91929.025
Plan Net Pension Liability/(Asset) - Ending (a) -(b) $111,512,216
Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 80.58%
Covered -Employee Payroll $ 26,879,556
Plan Net Pension Liability/(Asset) as a Percentage of Covered -Employee 99.99%
Payroll
The schedule below illustrates the 10 -year trend of City contributions. The actuarial methods and
assumptions used to set the actuarially determined contributions for fiscal year 2013-14 were from
June 30, 2013 public agency valuations.
Measurement
Actuarially
Covered-
Contributions
Period
determined City
City Deficiency
Employee
as a % of
(ending June 30)
Contribution
Contribution (excess)
Payroll
Covered Payroll
2006
$2,007,921
$(2,007,921) -
$20,281,908
9.90%
2007
2,470,285
(2,470,285) -
21,540,546
11.47
2008
2,659,975
(21659,975) -
23,355,540
11.39
2009
2,865,328
(2,865,328) -
26,145,818
10.96
2010
2,919,550
(2,919,550) -
25,336,721
11.52
2011
2,916,852
(2,916,852) -
24,940,516
11.70
2012
3,224,628
(3,224,628) -
2407,314
13.00
2013
3,319,326
(3,319,326) -
25,256,659
13.14
2014
3,562,246
(3,562,246) -
26,879,556
13.25
2015
3,740.138
(3,740338) -
27,234,699
13.73
PERS Actions. On March 14, 2012, the PERS Board voted to reduce its discount rate, which rate
is attributable to its expected price inflation and investment rate of return (net of administrative expenses),
from 7.75% to 7.5%. As a result of such discount rate decrease, among other things, in fiscal year 2012-
13, (i) the amounts of PERS member state and schools employer contributions increased by 1.2 to 1.6%
42221003.6 39
for Miscellaneous plans and 2.2 to 2.4% for Safety plans and (ii) the amounts of PERS member public
agency contributions will increase by I to 2% for Miscellaneous plans and 2 to 3% for Safety plans
beginning in fiscal year 2013-14. More information about the PERS discount rate adjustment and the
resulting impacts can be accessed through PERS's web site at
www.PERS.ca.gov/index.jsp?bc=/about/presslpr-2012/mar/discount-rate.xml. The reference to this
Internet website is shown for reference and convenience only. The information contained within the
website may not be current and has not been reviewed by the City or Authority and is not incorporated in
this Official Statement by reference.
The PERS Board adjustment has been undertaken in order to address underfunding of the PERS
funds, which arose from significant losses incurred as a result of the economic crisis arising in 2008 and
persists due to a slower than anticipated, subsequent economic recovery. The City is unable to predict
what the amount of PERS liabilities will be in the future, or the amount of the PERS contributions that the
City may be required to make.
At its April 17, 2013 meeting, the PERS Board of Administration approved a recommendation to
change the PERS amortization and smoothing policies. Prior to this change, PERS employed an
amortization and smoothing policy that spread investment returns over a 15 -year period with experience
gains and losses paid for over a rolling 30 -year period. After this change, PERS employs an amortization
and smoothing policy that pays for all gains and losses over a fixed 30 -year period with the increases or
decreases in the rate spread directly over a 5 -year period.
On February 18, 2014, the PERS Board approved new demographic actuarial assumptions based
on the 2013 study of recent experience. The largest impact, applying to all benefit groups, is a new 20 -
year mortality projection reflecting longer life expectancies and that longevity will continue to increase.
Because retirement benefits will be paid out for more years, the cost of those benefits will increase as a
result. The PERS Board also assumed earlier retirements for Miscellaneous 2.7%@55 and 3%@60,
which will increase costs for those groups. As a result of these changes, rates will increase beginning in
fiscal year 2016-17 (based on the 6/30/14 valuation) with full impact in fiscal year 2020-21. PERS staff
estimate the local governments could see costs rise up to 5% of payroll for average state employees and
up to 9% of payroll for safety classifications in year five of the phase in.
Pension Reform Act of 2013 (Assembly Bill 340). On September 12, 2012, Governor Brown
signed AB 340, a bili that enacted PEPRA and amended various sections of the California Education and
Government Codes, including the City Employees Retirement Law of 1937. PEPRA (i) increases the
retirement age for new State, school, and city and local agency employees depending on job function, (ii)
caps the annual PERS pension benefit payout, (iii) addresses numerous abuses of the system, and (iv)
requires State, school, and certain city and local agency employees to pay at least 50% of the costs of
their PERS pension benefits. PEPRA will apply to all public employers except the University of
California, charter cities and charter counties (except to the extent they contract with PERS).
The provisions of PEPRA went into effect on January 1, 2013 with respect to State employees
hired on that date and after; local government employee associations, including employee associations of
the City, have a five-year window to negotiate compliance with PEPRA through collective bargaining. If
no deal is reached by January 1, 2018, a city, public agency or school district could force employees to
pay their half of the costs of PERS pension benefits, up to 8% of pay for civil workers and 11% or 12%
for public safety workers.
PERS predicts that the impact of PEPRA on employers, including the City, and employees will
vary, based on each employer's current level of benefits. To the extent that the new formulas lower
retirement benefits, employer contribution rates could decrease over time as current employees retire and
employees subject to the new formulas make up a larger percentage of the workforce. This change
42221003.6 40
would, in some circumstances, result in a lower retirement benefit for employees than they currently earn.
Additionally, PERS notes that changes arising from PEPRA could ultimately have an adverse impact on
public sector recruitment in areas that have historically experienced recruitment challenges due to higher
pay for similar jobs in the private sector.
OPEB. The City has elected through resolution to provide healthcare benefits as a single -
employer defined benefit plan to retirees, spouses, and eligible dependents of the City. "This plan provides
postemployment medical insurance benefits through the PERS Health Plan (the Plan). A separate
financial report is not issued.
Funding Policy. City employees who have a service retirement from the City at age 50 with five
or more years of service are eligible to receive post -employment medical benefits. Employees who have a
disability retirement are also eligible. The benefit for employees hired before January 1, 2008 is up to
$1,016.58 per month. The maximum benefit will be adjusted when the lowest cost employee rate, plus
one, exceeds $1,016.58. No minimum years of service were required for the employees hired before
January 1, 2008 and retired before January 1, 2012 and represented employees hired before January 1,
2008 and retired after January 1, 2012 and before January 1, 2014. The City implemented the following
vesting schedule on January 1, 2012 effective for unrepresented employees hired before January 1, 2008
who retire after January 1, 2012, and for represented employees hired before January 1, 2008 who retire
after January 1, 2014:
Years of Service Vested Percentage
0 to 5 years
0%
5 to 9 years
50%
10 to 14 years
75%
15 years and greater
100%
Employees hired after January 1, 2008 receive the PERS minimum and are not subject to a
vesting schedule. As of the most recent valuation, the total participants in the Plan are 426, with 359
active employees and 67 retirees.
The City pays an allowance toward the healthcare benefits paid to retirees, spouses, and eligible
dependents under a City resolution that can be amended by the City Council. During the year ended
June 30, 2015, the City contributed $2,377,844 to the irrevocable OPEB Trust fund. The City conducted
an actuarial valuation to determine the City's obligation to fund OPEB and detennined that it served the
City's interests to prefund those benefits. In December 2011, the City Council approved Resolution 11-89
adopting the Public Agencies Post -Retirement Health Care Plan Document and Trust Agreement. The
OPEB Trust is a tax -qualified irrevocable trust, organized under Internal Revenue Code (IRC) Section
115, established to pre -fund OPEB as described in GASB Statement No. 45. The Plan Trustee is U.S.
Bank, and Public Agencies Retirement Services (PARS) is the Trust Administrator. The City elected a
discretionary investment approach with a blended investment objective strategy. The primary objective is
to maximize total Plan return, subject to the risk and quality constraints established. The Plan's targeted
rate of return is 6.5 percent. The asset allocation ranges for this objective are 0 percent to 20 percent cash
source, 30 percent to 50 percent fixed income, and 50 percent to 70 percent equity.
For fiscal year 2014-2015, the City contributed, on an individual basis, up to $12,199 for retirees
and up to $14,107 for employees.
42221003.6 41
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend rate. Amounts determined
regarding the funded status of the Plan and the City's Annual Required Contributions ("ARC") are
subject to continual revision, as actual results are compared with past expectations, and new estimates are
made about the future. In the June 30, 2014 actuarial valuation, the entry -age actuarial cost method was
used. The actuarial assumptions include a 6.50% investment rate of return, which is based on the expected
return on funds invested by PARS, and an annual healthcare cost trend rate of 7.70% initially and reduced
by decrements of 0.6% to an ultimate rate of 5.0% thereafter. The actuarial assumption for inflation was
3.00%, and the aggregate payroll increase was 3.25% used in the actuarial valuation. The actuarial value
of assets was determined using techniques that spread the effects of short-term volatility in the market
value of investments over a five-year period. The unfunded actuarial accrued liability ("UAAL") is being
amortized as a level percentage of projected payroll on an open basis. The remaining amortization period
at June 30, 2014 was 19 years.
As of the most recent actuarial valuation date on June 30, 2014, the Plan was 93.6% funded. The
actuarial accrued liability for benefits was $28.9 million, and the actuarial value of assets was $27.0
million, resulting in a UAAL of $1.9 million. The covered payroll (annual payroll of active employees
covered by the Plan) was $27.4 million, and the ratio of UAAL to the covered payroll was 6.73%. The
following schedule of funding progress, presents multi-year trend information that shows whether the
actuarial value of Plan assets is increasing or decreasing over time relative to the actuarial accrued
liabilities for benefits (in thousands).
Actuarial Actuarial Asset
Valuation Date Value
7/1/2010 -
7/1/2012 $19,928
7/1/2014 27,035
Actuarial
UAAL
Accrued
as a % of
Liability
Funded
Covered
Covered
Entry Age
UAAL
Ratio
Payroll
Payroll
$41,425
$(41,425)
0.00%
$257094
-165.08%
30,879
(10,951)
64.543
23,880
-45.86
28,876
(1,841)
93.62
27,368
-6.73
Deferred Compensation Plan/Defined Contribution Plan
The City has established deferred compensation/defined contribution pians for certain
classifications of management under IRC Section 401(a). City participation in contributions to the plans
is mandatory. The City is obligated to contribute amounts ranging from $2,000 to $17,500 per participant
per year (up to $18,000 for fiscal year 2015/16). Employee contributions to certain pians are voluntary.
During the year ended June 30, 2015, there were 713 participants in the plans and the City's contributions
totaled $182,876, while employees' contributions totaled $2,110,412.
42221003.6 42
Redevelopment Agencies
Until February 1, 2012, the California Redevelopment Law (Part I of Division 24 of the Health &
Safety Code of the State) authorized the redevelopment agency of any city or county to receive an
allocation of tax revenues resulting from increases in assessed values of properties within designated
redevelopment project areas (the "incremental value") occurring after the year the project area was
formed. In effect, local taxing authorities, such as the City, realized tax revenues only on the assessed
value of such property at the time the redevelopment project was created for the duration of such
redevelopment project.
The State Legislature approved two bills, AB XI 26 and AB X1 27, during the 2011-12 State
budget process. AB XI 26 contemplated the elimination of redevelopment agencies State-wide, and AB
XI 27 proposed to authorize the continued existence of redevelopment agencies that agreed to remit a
percentage of their "tax increment" to the State's taxing entities. The California Redevelopment
Association and the League of California Cities filed a petition with the California Supreme Court (the
"Court"), requesting the Court to review the constitutionality of AB XI 26 and AB X1 27. On
December 29, 2011, the Court issued its opinion and upheld AB XI 26, but invalidated AB XI 27. As a
result of the decision, all California redevelopment agencies, including the Former Redevelopment
Agency, were dissolved as of February 1, 2012. Certain tax revenues allocable to the Former
Redevelopment Agency will continue to be allocated to the Successor Agency to the Former
Redevelopment Agency, to pay certain financial obligations approved by the Successor Agency's
Oversight Board and State Department of Finance ("DOF"), and some of those revenues may be
redirected to other taxing agencies, such as the County, school districts and the City.
STATE OF CALIFORNIA BUDGET INFORMATION
State Budget
hlformation about the State budget is regularly available at various State -maintained websites.
Text of proposed and adopted budgets may be found at the website of the Department of Finance,
www.dof.ca.gov, under the heading "California Budget." An impartial analysis of the budget is posted by
the Office of the Legislative Analyst (the "LAO") at www.lao.ca.gov. In addition, various State official
statements, many of which contain a summary of the current and past State budgets and the impact of
those budgets on cities in the State, may be found at the website of the State Treasurer,
www.treasurer.ca.gov. The information referred to is prepared by the respective State agency maintaining
each website and not by the City or the Authority, and the City and the Authority can take no
responsibility for the continued accuracy of these internet addresses or for the accuracy, completeness or
timeliness of information posted there, and such information is not incorporated herein by these
references.
Proposition 30. The passage of the Governor's November Tax Initiative ("Proposition 30")
placed on the November, 2012 ballot results in an increase in the State sales tax by a quarter -cent for four
years and, for seven years, raising taxes on individuals after their first $250,000 in income and on couples
after their first $500,000 in earnings. These increased tax rates affect approximately 1 percent of
California personal income tax filers and will be in effect starting in the 2012 tax year, ending at the
conclusion of the 2018 tax year. The LAO estimates that, as a result of Proposition 30, additional state
tax revenues of about $6 billion annually from 2012-13 through 2016-17 will be received by the State
with lesser amounts of additional revenue available in fiscal years 2011-12, 2017-18, and 2018-19.
Proposition 30 also places into the State Constitution certain requirements related to the transfer of certain
42221003.6 43
State program responsibilities to localgovernments, mostly counties, including incarcerating certain adult
offenders, supervising parolees, and providing substance abuse treatment services.
California Public Employees' Pension Reform Act. On September 12, 2012, Governor Brown
signed Assembly Bill 340, creating PEPRA. Among other things, PEPRA creates a new benefit tier for
new employees/members entering public agency employment and public retirement system membership
for the first time on or after January 1, 2013. The new tier has a single general member benefit formula
and three safety member benefit formulas that must be implemented by all public agency employers
unless the formula in existence on December 31, 2012 has both a Lower normal cost and a lower benefit
factor at normal retirement age. PEPRA requires that all new employees/members, hired on or after
January 1, 2013, pay at least 50% of the normal cost contribution. The normal cost contribution is the
contribution set by the retirement system's actuary to cover the cost of a current year of service. The City
believes that the provisions of PEPRA will help to control its pension benefit liabilities in the future.
2015-16 State Budget. On June 24, 2015, Governor Brown signed the Fiscal Year 2015-16 State
Budget (the "2015-16 State Budget") which expands childcare, boosts funding for public schools and
opens the State's public healthcare program to immigrant children who are in the country illegally. The
new spending plan, which includes a $115.4 -billion general fund, takes effect July I and provides for an
estimated 170,000 immigrants 18 and younger to qualify for Medi -Cal. h1 addition, Governor Brown
called special legislative sessions to find sustainable funding for transportation and public healthcare. For
K-12 schools, the 2015-16 Budget increases funding levels by more than $3,000 per student in Fiscal
Year 2015-16 over Fiscal Year 2011-12 levels with implementation of the Local Control Funding
Formula. The 2015-16 Budget includes total funding of $83.2 billion for all K-12 education programs
and also includes Proposition 98 funding of $68.4 billion for fiscal year 2015-16, an increase of $7.6
billion over the previous year. Funding for the University of California and California State University
higher education systems also increased, allowing for tuition for California undergraduate students to
remain flat through fiscal year 2016-17. Components of the 2015-16 State Budget affecting local agencies
include the following:
• Drought Relief. The 2015-16 State Budget includes appropriations from Proposition 1 in
response to the drought, commencing the first of a three-year funding plan to appropriate
$1.8 billion Proposition I funds allocated to storm -water management, contaminated
groundwater cleanup, groundwater management plans, water recycling, public water
system infrastructure, and desalination.
Mandate Repayments. The 2015-16 State Budget provides that as a result of trigger
language included in the 2014-15 State Budget, local agencies are projected to receive an
additional payment of $533 million in mandate repayments owed to local governments
from prior to 2004, building upon the $100 million repayment received by cities, counties
and special districts as part of the 2014-15 State Budget.
Cap -and -Trade. The 2015-16 State Budget also provides continuous funding for 60
percent of Cap -and -Trade auction revenues, with the remaining 40 percent to be used for
annual appropriations reflecting the priorities of the State Legislature and does not make
any changes to the 2014-15 State Budget that provides for continuous appropriations of
60 percent of Cap -and -Trade auction revenues for affordable housing, transportation,
transit, and high speed rail.
Law Enforcement. The 2015-16 State Budget includes $20 million for local law
enforcement grants to city police departments, $6 million to be awarded to local law
4222 r 003.6 44
enforcement agencies in competitive grants for community relations; and $8 million in
competitive grants to local governments to reduce community recidivism rates.
Judicial Branch. The 2015-16 State Budget includes an overall increase of trial court
funding of $180 million, including an increase of $90.1 million to support trial court
operations, $19.8 million to cover reductions in fines and penalty revenues, and the
allocation of $26.9 million for anticipated trial court workload increase due to re-
sentencing petitions related to drug and theft crimes.
• Social Services. The 2015-16 State Budget contains $35 million General Fund for
CalWORKs Housing Support Program services, an increase of $15 million, which
provides additional support to CalWORKs families for whom homelessness is a barrier to
self-sufficiency and $17.7 million General Fund to counties for the purpose of recruiting,
retaining, and supporting foster care parents and relative caregivers.
Workforce Development. The 2015-16 State Budget provides $500 million in Proposition
98 funds for the Adult Education Block Grant as part of the State's workforce
development strategy, including $250 million in one-time funding for each of the next
three years to support a transitional career technical education incentive grant program.
The 2015-16 State Budget may be affected by numerous factors, including but not limited to: (i)
shifts of costs from the federal government to the State, (ii) national, State and international economic
conditions, (ii) litigation risk associated with proposed spending reductions, (iii) rising health care costs
and (iv) other factors, all or any of which could cause the revenue and spending projections made in the
2015-16 State Budget to be unattainable.
Future State Budgets
No prediction can be made by the City as to whether the State will encounter budgetary problems
in future fiscal years, and if it were to do so, it is not clear what measures would be taken by the State to
balance its budget, as required by law. hn addition, the City cannot predict the final outcome of future
State budget negotiations, the impact that such budgets will have on City finances and operations or what
actions will be taken in the future by the State Legislature and the Governor to deal with changing State
revenues and expenditures. There can be no assurance that actions taken by the State to address its
financial condition will not materially adversely affect the financial condition of the City. Current and
future State budgets will be affected by national and State economic conditions and other factors,
including the current economic downturn, over which the City has no control.
RISK FACTORS
Purchase of the Bonds will constitute an investment subject to certain risks, including the risk of
nonpayment of principal and interest. Before purchasing any of the Bonds, prospective investors should
carefully consider, among other things, the risk factors described below. However, the following is not
meant to be an exhaustive listing of all the risks associated with the purchase of the Bonds. Moreover,
the order of presentation of the risk factors does not necessarily reflect the order of their importance.
Substitution of Property
Pursuant to the Lease, the City will have, so long as the Lease is in effect, the option at any time
and from time to time, to substitute other real property and/or improvements for any portion of the Leased
Property or release any identifiable real property and/or improvements constituting the Leased Property,
provided that the City shall satisfy all of the requirements set forth in the Lease. See APPENDIX C —
42221003.6 45
"SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS — The Lease
— Substitution and Release of Property."
Base Rental Payments Are Not Debt; Bonds are Limited Obligations
The obligation of the City to make the Base Rental Payments under the Lease does not constitute
an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for
which the City has levied or pledged any form of taxation. Neither the Bonds nor the obligation of the
City to make Base Rental Payments constitutes a debt of the City, the State or any political subdivision
thereof (other than the Authority) within the meaning of any constitutional or statutory debt limitation or
restriction.
The Bonds are not general obligations of the Authority, but are limited obligations payable solely
from and secured by a pledge of Revenues and amounts held in the funds and accounts created under the
Indenture, consisting primarily of applicable Base Rental Payments. The Authority has no taxing power.
The Bonds are being issued by the Authority pursuant to the Act. The Supreme Court of the State
in its 1998 decision of Rider v. City of San Diego, 18 Cal. 4`h 1035, upheld the validity of a joint powers
agency financing and found that bonds issued pursuant to the Act and payable from lease payments made
pursuant to a lease with the City of San Diego were not subject to the State constitutional provisions that
require two-thirds voter approval of indebtedness incurred by a city, county or school district. No voter
approval of the Bonds or the Lease has been sought.
Although the Lease does not create a pledge, lien or encumbrance upon the funds of the City, the
City is obligated under the Lease to pay the Base Rental Payments from any source of legally available
funds and the City has covenanted in the Lease that, for so long as the Leased Property is available for its
use, it will make the necessary annual appropriations within its budget for the Base Rental Payments. The
City is currently liable and may become liable on other obligations payable from general revenues, some
of which may have a priority over the Base Rental Payments, or which the City, in its discretion, may
determine to pay prior to the Base Rental Payments.
The City has the capacity to enter into other obligations payable from the City's General Fund,
without the consent of or prior notice to the Owners of the Bonds. To the extent that additional
obligations are incurred by the City, the funds available to make Base Rental Payments may be decreased.
In the event the City's revenue sources are less than its total obligations, the City could choose to fund
other activities before making Base Rental Payments and other payments due under the Lease. The same
result could occur if state constitutional expenditure limitations were to prohibit the City from
appropriating and spending all of its otherwise available revenues.
Abatement
In the event of the loss of, damage to or destruction or condemnation of the Leased Property that
causes the City not to have the use and possession of all or a substantial part of such Leased Property, the
City's obligation to make the Base Rental Payments due under the Lease will be abated and,
notwithstanding the provisions of the Lease specifying the extent of such abatement and rental
interruption insurance covering loss of use of the Leased Property in an amount adequate to cover 24
months of Base Rental Payments, the resulting Base Rental Payments (and such other funds) may not be
sufficient to pay all of the remaining principal of and interest on the Bonds. See APPENDIX C —
"SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS — The Lease
— Abatement of Rental."
Risk of Uninsured Loss
42221003.6 46
The City covenants under the Lease to maintain certain insurance policies on the Leased
Property. These insurance policies do not cover all types of risk. The Leased Property could be damaged
or destroyed due to earthquake or other casualty for which the Leased Property is uninsured. The Lease
does not require earthquake insurance. Additionally, the Leased Property could be the subject of an
eminent domain proceeding. Under these circumstances an abatement of Base Rental Payments could
occur and could continue indefinitely. There can be no assurances that amounts received as proceeds
from insurance or from condemnation of the Leased Property will be sufficient to repair the Leased
Property or to redeem the Bonds and any other obligations secured by Base Rental Payments.
Certain of the City's insurance policies provide for deductibles. Should the City be required to
meet such deductible expenses, the availability of General Fund revenues to make Base Rental Payments
may be correspondingly affected.
Self -Insurance
The City may self -insure for all insurance with the exception of rental interruption. Should the
City self -insure, no assurance can be given that such self-insurance at the time of any casualty or loss will
be adequate to cover any claims that may arise. For a discussion of (i) the insurance requirements for the
Leased Property, and (ii) the conditions under which the City is permitted to self -insure, see "SOURCES
OF PAYMENT OF THE BONDS — Insurance by the City." For a general description of the City's
insurance and risk management programs, see "FINANCIAL INFORMATION RELATING TO THE
CITY — Risk Management" and "APPENDIX B — AUDITED FINANCIAL STATEMENTS OF THE
CITY FOR THE FISCAL YEAR ENDED JUNE 30,2015."
Eminent Domain
If the Leased Property is taken permanently under the power of eminent domain or sold to a
government threatening to exercise the power of eminent domain, the term of the Lease will cease as of
the day possession is taken. If less than all of the Leased Property is taken permanently, or if the Leased
Property or any part thereof is taken temporarily, under the power of eminent domain, (a) the Lease will
continue in full force and effect and will not be terminated by virtue of such taking, and (b) there will be a
partial abatement of Base Rental Payments as a result of the application of net proceeds of any eminent
domain award to the prepayment of the Base Rental Payments, in an amount to be agreed upon by the
City and the Authority such that the resulting Base Rental Payments represent fair consideration for the
use and occupancy of the remaining usable portion of the Leased Property. The City covenants in the
Lease to contest any eminent domain award which is insufficient to either: (i) prepay the Base Rental
Payments in whole, if all the Leased Property is condemned; or (ii) prepay a pro rata share of Base Rental
Payments, in the event that less than all of the Leased Property is condemned.
Bankruptcy
The City is a unit of State government and therefore is not subject to the involuntary procedures
of the United States Bankruptcy Code (the "Bankruptcy Code"). However, pursuant to Chapter 9 of the
Bankruptcy Code, the City may seek voluntary protection from its creditors for purposes of adjusting its
debts. If the City were to become a debtor under the Bankruptcy Code, the City would be entitled to all
of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 proceeding. Among the
adverse effects of such a bankruptcy might be: (i) the application of the automatic stay provisions of the
Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the City or
the commencement of any judicial or other action for the purpose of recovering or collecting a claim
against the City; (ii) the avoidance of preferential transfers occurring during the relevant period prior to
the filing of a bankruptcy petition; (iii) the existence of unsecured or court -approved secured debt which
may have a priority of payment superior to that of the Base Rental Payments under the Lease as they
42221003.6 47
relate to Revenues due to Owners of Bonds; and (iv) the possibility of the adoption of a plan for the
adjustment of the City's debt (a "Plan") without the consent of the Trustee or all of the Owners of Bonds,
which Plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the
Bankruptcy Court finds that the Plan is fair and equitable.
In addition, the City could either reject the Lease or assume the Lease despite any provision of the
Lease which makes the bankruptcy or insolvency of the City an event of default thereunder. In the event
the City rejects the Lease, the Trustee, on behalf of the Owners of the Bonds, would have a pre-petition
claim that may be limited under the Bankruptcy Code and treated in a manner under a Plan over the
objections of the Trustee or Owners of the Bonds. Moreover, such rejection would terminate the Lease
and the City's obligations to make payments thereunder.
The Authority is a public agency and, like the City, is not subject to the involuntary procedures of
the Bankruptcy Code. The Authority may also seek voluntary protection under Chapter 9 of the
Bankruptcy Code. In the event the Authority were to become a debtor under the Bankruptcy Code, the
Authority would be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a
Chapter 9 proceeding. Such a bankruptcy could adversely affect the payments under the Indenture.
Among the adverse effects might be: (1) the application of the automatic stay provisions of the
Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the Authority
or the commencement of any judicial or other action for the purpose of recovering or collecting a claim
against the Authority; (ii) the avoidance of preferential transfers occurring during the relevant period prior
to the filing of a bankruptcy petition; (iii) the existence of unsecured or court-approved secured debt
which may have priority of payment superior to that of the Owners of the Bonds; and (iv) the possibility
of the adoption of a plan for the adjustment of the Authority's debt without the consent of the Trustee or
all of the Owners of the Bonds, which plan may restructure, delay, compromise or reduce the amount of
any claim of the Owners if the Bankruptcy Court finds that the Plan is fair and equitable. However, the
bankruptcy of the Authority, and not the City, should not affect the Trustee's rights under the Lease. The
Authority could still challenge the assignment, and the Trustee and/or the Owners of the Bonds could be
required to litigate these issues to protect their interests.
No Liability of Authority to the Owners
Except as expressly provided in the Indenture, the Authority will not have any obligation or
liability to the Owners of the Bonds with respect to the payment when due of the Base Rental Payments
by the City, or with respect to the performance by the City of other agreements and covenants required to
be performed by it contained in the Lease or the Indenture, or with respect to the performance by the
Trustee of any right or obligation required to be performed by it contained in the Indenture.
No Limitation on Incurring Additional Obligations
Neither the Lease nor the Indenture contains any limitations on the ability of the City to enter into
other obligations that may constitute additional claims against its General Fund revenues. To the extent
that the City incurs additional obligations, the funds available to make Base Rental Payments may be
decreased. The City is currently liable on other obligations payable from General Fund revenues.
Earthquake and Other Natural Hazards
The City, like most communities in California, is an area of unpredictable seismic activity, and
therefore, is subject to potentially destructive earthquakes. The City is located in a seismically dynamic
region featuring two active fault systems: the San Andreas System which includes the San Andreas and
the San Gabriel faults; and a system of faults associated with the transverse ranges including the Sierra
Madre and San Fernando faults. As a result of the January 1994 Northridge Earthquake, damage to City
42221003.6 48
facilities included the City Hall which was repaired and retrofitted for approximately $4.5 million. The
City did not have use of the building for approximately 100 days during that time.
The City has adopted a Seismic Safety Element to the City's General Plan and implemented the
Element's recommendation by ordinance. The ordinance specifies development restrictions and
requirements for engineering and geologic reports based on the type of project, intensity of use and
proximity to the identified hazard zones. City development has generally avoided these areas of highest
risk and General Plan policy will prevent development in high risk areas.
Pursuant to the Lease, the City is not required to maintain earthquake or flood insurance.
Depending on its severity, an earthquake could result in abatement of Base Rental Payments under the
Lease. See "RISK FACTORS -- Abatement" above. Should an earthquake, landslide, flood or other
natural hazards occur that results in substantial interference with the use of the Leased Property, under the
abatement provisions of the Lease, the City would not be obligated to make the Base Rental Payments.
The Leased Property may also be at risk from other events of force majeure, such as damaging storms,
fires and explosions, strikes, sabotage, riots and spills of hazardous substances, among other events. The
City cannot predict what force majeure events may occur in the future.
Hazardous Substances
The public works activities of the City may, from time to time, result in the use of hazardous
substances on the facilities owned and operated by the City, including, but not limited, to the Leased
Property. Accordingly, it is possible that spills, discharges or other adverse environmental consequences
of such use in the future could cause an adverse effect on the fair rental value of the Leased Property and
lead, in an extreme case, to abatement, in whole or in part, of Base Rental Payments. See "RISK
FACTORS — Abatement" above.
Risks Related to Taxation in California
Constitutional Amendments Affecting Tax Revenues. Article XIIIA of the California
Constitution limits the amounts of ad valorem tax on real property to 1% of "full cash value" as
determined by the county assessor. Article XIIIA defines "full cash value" to mean "the City Assessor's
valuation of real property as shown on the 1975-76 tax bill under 'full cash value', or thereafter the
appraised value of real property when purchased, newly constructed, or a change in ownership has
occurred after the 1975 assessment period." Furthermore, all real property valuation may be increased to
reflect the inflation rate, as shown by the consumer price index, not to exceed 2% per year, or may be
reduced in the event of declining property values caused by damage, destruction or other factors.
Article XIIIA exempts from the 1% tax limitation any taxes to repay indebtedness approved by
the voters prior to July 1, 1978, and any bonded indebtedness for the acquisition or improvement of real
property approved on or after July 1, 1978 by two-thirds of the voters voting on the proposition approving
such bonds, and requires a vote of two-thirds of the qualified electorate to impose special taxes, while
totally precluding the imposition of any additional ad valorem, sales or transaction tax on real property.
In addition, Article XIIIA requires the approval of two-thirds of all members of the State legislature to
change any State tax law resulting in increased tax revenues.
Article XIIIB of the California Constitution limits the annual appropriations from the proceeds of
taxes of the State and any city, county, school district, authority or other political subdivision of the State
to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living,
population and services rendered by the governmental entity. Article XIIIB includes a requirement that if
an entity's revenues in any year exceed the amount permitted to be spent, the excess would have to be
returned by revising tax or fee schedules over the subsequent two years.
42221003.6 49
On November 5, 1996, California voters approved an initiative to amend the California
Constitution known as the Right to Vote on Taxes Act ("Proposition 218"), which added Article XIIIC
and XIIID to the California Constitution. Among other provisions, Proposition 218 requires majority
voter approval for the imposition, extension or increase of general taxes and two-thirds voter approval for
the imposition, extension or increase of special taxes by a local government, which is defined in
Proposition 218 to include cities. Proposition 218 also provides that any general tax imposed, extended
or increased without voter approval by any local government on or after January 1, 1995 and prior to
November 6, 1996 will continue to be imposed only if approved by a majority vote in an election held
within two years of November 6, 1996. Proposition 218 also provides that the initiative power shall not
be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or
charge. This extension of the initiative power is not limited by the terms of Proposition 218 to
impositions after November 6, 1996 and absent other legal authority, could result in retroactive reduction
in any existing taxes, assessments, fees and charges. In addition, Proposition 218 limits the application of
assessments, fees and charges and requires certain existing, new and increased assessments, fees and
charges to be submitted to property owners for approval or rejection, after notice and public hearing.
Neither the City nor the Authority expects the provisions of Proposition 218 to have any immediate
material effect on the revenues from which Base Rental Payments are expected to be appropriated.
Implementing Legislation. Legislation enacted by the California Legislature to implement
Article XIIIA (Statutes of 1978, Chapter 292, as amended) provides that, notwithstanding any other law,
local agencies may not levy any property tax, except to pay debt service on indebtedness approved by the
voters prior to July 1, 1978, and that each county will levy the maximum tax permitted by Article XIIIA
of $4.00 per $100 assessed valuation (based on the traditional practice of using 25% of full cash value as
the assessed value for tax purposes). The legislation further provided that, for Fiscal Year 1978-79 only,
the tax levied by each county was to be appropriated among all taxing agencies within the county in
proportion to their average share of taxes levied in certain previous years.
Future assessed valuation growth allowed under Article XIIIA (i.e., new construction, change of
ownership, and 2% annual value growth) will be allocated on the basis of "situs" among the jurisdictions
that serve the tax rate area within which the growth occurs. Local agencies and schools will share the
growth of "base" revenue from the tax rate area. Each year's growth allocation becomes part of each
agency's allocation in the following year. The Authority is unable to predict the nature or magnitude of
future revenue sources that may be provided by the State to replace lost property tax revenues. Article
XIIIA effectively prohibits the levying of any other ad valorem property tax above those described above,
even with the approval of the affected voters.
Constitutional Challenges to Property Tax System There have been many challenges to Article
XIIIA of the California Constitution. The United States Supreme Court heard the appeal in Arordlinger v.
Hahn, a challenge relating to residential property. Based upon the facts presented in Nordlinger, the
United States Supreme Court held that the method of property tax assessment under Article XIIIA did not
violate the federal Constitution. Neither the Authority nor the City can predict whether there will be any
future challenges to California's present system of property tax assessment and cannot evaluate the
ultimate effect on the Agency's receipt of tax increment revenues should a future decision hold
unconstitutional the method of assessing property.
Statutory Revenue Limitations -- Proposition 62. Proposition 62 is a statewide statutory
initiative adopted by the voters at the November 4, 1986 general election. It added Sections 53720 to
53730 to the Government Code to require that all new local taxes be approved by the voters. The statute
provides that all local taxes are either general taxes or special taxes. General taxes are imposed for
general governmental purposes. Special taxes are imposed for specific purposes only. General taxes may
not be imposed by local government unless approved by a two-thirds vote of the entire legislative body
and a majority of the voters voting on the proposed general tax. Special taxes may not be imposed by
42221003.6 50
local government unless approved by a majority of the entire legislative body and by two-thirds of the
voters voting on the special tax. Soon after Proposition 62 was adopted by the voters, legal challenges to
taxes adopted contrary to its provisions were filed. In 1991, in the most significant case, City of
Woodlake v. Logan, the California Court of Appeal held that the statutory voter approval requirement for
general taxes was unconstitutional. The California Supreme Court refused to review Woodlake.
On September 28, 1995, the California Supreme Court, on a 5-2 vote, in a decision entitled Santa
Clara County Local Transportation Authority v. Guardino (Case No. S036269), "disapproved" Woodlake
and held that the voter approval requirements of Proposition 62 are valid. On December 14, 1995, the
Supreme Court made minor nonsubstantive changes to its written opinion and denied the petition for
rehearing. The decision provides that the voter approval requirements of Proposition 62 for both general
and special taxes are valid. The Guardino case fails to say (1) whether the decision is retroactively
applicable to general taxes adopted prior to the decision; (2) whether taxpayers have any remedies for
refund of taxes paid under a tax ordinance that was not voter approved; (3) what statute of limitations
applies to taxes adopted without voter approval prior to Guardino; (4) whether Proposition 62 applies
only to new taxes or to tax increases as well.
The Court of Appeals in a December 15, 1997 decision entitled McBearty v. City of Brawley
(Case No. D027877) addressed some of these issues. In Brawley, a taxpayer challenged the city's utility
tax that was passed by the city council in 1991 without a vote of the electorate. The Court of Appeals
held that (i) a three year statute of limitations applies to challenges to a tax ordinance subject to
Proposition 62; and (ii) the statute of limitations did not begin to run until September 1995 when the
Guardino case determined that Proposition 62 was constitutional. The effect of the holding in Brawley is
that any tax ordinances passed between November 1986 and December 1995 that were not approved by
the electorate would be subject to a challenge until December 1998. The court ordered the city to either
cease collecting the tax or seek voter approval to continue levying the tax. However, in Howard Jarvis
Taxpayers Association v. City of La Habra, decided on June 4, 2001, the California Supreme Court
overruled part of McBearty, finding that the three year statute of limitations applicable to such taxes does
not run from the date of the Guardino decision, but rather the continued imposition and collection of such
tax is an ongoing violation, upon which the limitations period begins with each new collection.
Several questions raised by the Guardino decision remain unresolved. Proposition 62 provides
that if a jurisdiction imposes a tax in violation of Proposition 62, the portion of the one percent general ad
valorem tax levy allocated to that jurisdiction is reduced by $1 for every $1 in revenue attributable to the
improperly imposed tax for each year that such tax is collected. The practical applicability of this
provision has not been fully determined. Potential future litigation and legislation may resolve some or
all of the issues raised by the Guardino decision.
Neither the Authority nor the City can predict the outcome of any pending or future litigation
concerning the validity of Proposition 62, nor can either predict the scope of the Guardino or Brawley
decisions discussed above. Proposition 62 could affect the ability of the City to continue the imposition
of, or to retain, certain taxes, and restrict the City's ability to raise revenue.
Proposition M. Proposition I A ("Proposition I A"), proposed by the Legislature in connection
with the 2004-05 Budget Act and approved by the voters in November 2004, restricts State authority to
reduce major local tax revenues such as the tax shifts permitted to take place in Fiscal Years 2004105 and
2005-06. Proposition ]A provides that the State may not reduce any local sales tax rate, limit existing
local government authority to levy a sales tax rate or change the allocation of local sales tax revenues,
subject to certain exceptions. Proposition IA generally prohibits the State from shifting to schools or
community colleges any share of property tax revenues allocated to local governments for any fiscal year,
as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax
revenues among local governments within a county must be approved by two-thirds of both houses of the
42221003.6 51
Legislature. Proposition I provides, however, that beginning in Fiscal Year 2008-09, the State may
shift to schools and community colleges up to 8% of local government property tax revenues, which
amount must be repaid, with interest, within three years, if the Governor proclaims that the shift is needed
due to a severe state financial hardship, the shift is approved by two-thirds of both houses and certain
other conditions are met. Such a shift may not occur more than twice in any ten-year period. The State
may also approve voluntary exchanges of local sales tax and property tax revenues among local
governments within a county.
Proposition IA provides that if the State reduces the vehicle license fee ("VLF'') rate below
0.65% of vehicle value, the State must provide local governments with equal replacement revenues.
Further, Proposition I requires the State to suspend State mandates affecting cities, counties and special
districts, excepting mandates relating to employee rights, schools or community colleges, in any year that
the State does not fully reimburse Local governments for their costs to comply with such mandates.
Proposition 22. On November 2, 2010, voters in the State approved Proposition 22. Proposition
22, known as the "Local Taxpayer, Public Safety, and Transportation Protection Act of 2010," eliminates
or reduces the State's authority to (i) temporarily shift property taxes from cities, counties and special
districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for state -
mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect
property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax
revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of
State fuel tax revenues.
Proposition 26. On November 2, 2010, voters in the State also approved Proposition 26.
Proposition 26 amends Article XMIC of the State Constitution to expand the definition of "tax" to include
"any levy, charge, or exaction of any kind imposed by a local government" except the following: (1) a
charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not
provided to those not charged, and which does not exceed the reasonable costs to the local government of
conferring the benefit or granting the privilege; (2) a charge imposed for a specific government service or
product provided directly to the payor that is not provided to those not charged, and which does not
exceed the reasonable costs to the local government of providing the service or product; (3) a charge
imposed for the reasonable regulatory costs to a local government for issuing licenses and permits,
performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the
administrative enforcement and adjudication thereof; (4) a charge imposed for entrance to or use of local
government property, or the purchase, rental, or lease of local government property; (5) a fine, penalty, or
other monetary charge imposed by the judicial branch of government or a local government, as a result of
a violation of law; (6) a charge imposed as a condition of property development; and (7) assessments and
property -related fees imposed in accordance with the provisions of Article XIIID. Proposition 26
provides that the local government bears the burden of proving by a preponderance of the evidence that a
levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the
reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a
payor bear a fair or reasonable relationship to the payor's burdens on, or benefits received from, the
governmental activity. Neither the City nor the Authority expects provisions of Proposition 26 to
materially impede the City's ability to pay Base Rental Payments when due.
Future Initiatives
From time to time, other initiative measures may be adopted, which may affect the City's
revenues and its ability to expend said revenues. The above-mentioned measures and any future measures
could restrict the City's ability to raise additional funds for its General Fund.
Limitations on Remedies
42221003.6 52
The enforceability of the rights and remedies of the owners of the Bonds and the Trustee, and the
obligations incurred by the Authority and the City, respectively, may be subject to the following, among
others: the limitations on legal remedies against joint powers authorities and cities in California; the
federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect;
principles of equity that may limit the specific enforcement under State law of certain remedies; the
exercise by the United States of America of the powers delegated to it by the U.S. Constitution; and the
reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the
sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate
public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or State government, if
initiated, could subject the owners of the Bonds to judicial discretion and interpretation of their rights in
bankruptcy or otherwise, and consequently may entail risks of delay, limitations or modification of their
rights. See also, "Bankruptcy" above.
Remedies on Default
If the City defaults in the observance or performance of any agreement, condition, covenant or
term contained in the Lease required to be observed or performed by it (including without limitation the
payment of any Base Rental Payments or Additional Rental due under the Lease), subject to the
provisions of the Lease, the Authority may at any time thereafter (with or without notice and demand and
without limiting any other rights or remedies the Authority may have) recover rent and other monetary
charges as they become due under the Lease without terminating the City's right to possession of the
Leased Property, regardless of whether or not the City has abandoned the Leased Property, and the
Authority shall have the right and the City irrevocably appoints the Authority as its agent and attorney-in-
fact for such purpose to attempt to sublet or re -let the Leased Property at such rent, upon such conditions
and for such term and to do all other acts to maintain or preserve the Leased Property, including the
removal of persons or property therefrom or taking possession thereof, as the Authority deems desirable
or necessary; and the City waives any and all claims for any damages that may result to the Leased
Property thereby, provided, that no such actions will be deemed to terminate the Lease and the City shall
continue to remain liable for any deficiency that may arise out of such re -letting taking into account
expenses incurred by the Authority due to such re -letting, payable at the same time and manner as
provided for Base Rental Payments under the Lease. IN THE EVENT OF SUCH DEFAULT, THE
AUTHORITY MUST THEREAFTER MAINTAIN THE LEASE IN FULL FORCE AND EFFECT
AND MAY ONLY RECOVER RENT AND OTHER MONETARY CHARGES AS THEY BECOME
DUE.
Early Redemption Risk
Early redemption of the Base Rental Payments and redemption of the Bonds may occur in whole
or in part without premium, on any date if the Leased Property or a portion thereof is lost, destroyed or
damaged beyond repair or taken by eminent domain and from the proceeds of title insurance, or on any
Interest Payment Date, without a premium, if the City exercises its right to prepay Base Rental Payments
in whole or in part pursuant to the provisions of the Lease and the Indenture.
Investment Risks
The City administers a pooled investment program of moneys in its funds and accounts, including
moneys in the City's General Fund which will be used to make Base Rental Payments. The City has
established an investment policy which it believes to be prudently conservative. Nevertheless, the City's
investments will be subject to market fluctuations and other risks over which the City has no control, and
which could impair the City's ability to make Base Rental Payments.
42221003.6 53
Loss of Tax Exemption
As discussed under the caption "TAX MATTERS," interest on the Bonds could fail to be
excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for purposes
of federal income taxation, in some cases retroactive to the date of execution and delivery of the Bonds,
as a result of future acts or omissions of the Authority or the City in violation of certain covenants
contained in the Indenture or the Lease, respectively. Should such an event of taxability occur, the Bonds
are not subject to special redemption or any increase in interest rate and will remain outstanding until
maturity or until redeemed pursuant to the Indenture.
In addition, Congress has considered in the past and may consider in the future, legislative
proposals, including some that carry retroactive effective dates that, if enacted, would alter or eliminate
the exclusion from gross income for federal income tax purposes of interest on municipal bonds, such as
the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any
pending or proposed federal tax legislation. The City can provide no assurance that federal tax law will
not change while the Bonds are outstanding or that any such changes will not adversely affect the
exclusion of interest on the Bonds from gross income for federal income tax purposes. If the exclusion of
interest on the Bonds from gross income for federal income tax purposes were amended or eliminated, it
is likely that the market price for the Bonds would be adversely impacted.
IRS Audit of Tax -Exempt Bonds
The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt
bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for
audit by the Internal Revenue Service. It is also possible that the market value of the Bonds might be
affected as a result of such an audit of the Bonds (or by an audit of similar bonds).
Secondary Market Risk
There can be no assurance that there will be a secondary market for purchase or sale of the
Bonds, and from time to time there may be no market for them, depending upon prevailing market
conditions, the financial condition or market position of firms who may make the secondary market and
the financial condition of the City.
42221003.6 54
Standard & Poor's Financial Services LLC ("S&P) has assigned a rating of "_" to the Bonds.
Such rating reflects only the view of S&P. Any explanation of the significance of such rating may only
be obtained from S&P at the following website address: www.standardandpoors.com. The information set
forth on such website is not incorporated by reference herein. Generally, a rating agency bases its rating
on the information and materials furnished to it and on investigations, studies and assumptions of its own.
There is no assurance that such rating will continue for any given period of time or that any of them will
not be revised downward or withdrawn entirely by the rating agency, if in the judgment of the rating
agency circumstances so warrant. Any such downward revision or withdrawal of such rating may have
an adverse effect on the market price of the Bonds.
UNDERWRITING
(the "Initial Purchaser") has purchased the Bonds from the
Authority at a competitive sale at an aggregate purchase price of $ (representing the aggregate
principal amount of the Bonds, plus a premium of $ , less a purchaser discount of $ ). The
public offering prices may be changed from time to time by the Initial Purchaser. The Initial Purchaser
may offer and sell Bonds to certain dealers and others at prices lower than the offering prices shown on
the inside cover page hereof.
CONTINUING DISCLOSURE
The Authority has determined that no financial or operating data concerning the Authority is
material to any decision to purchase, hold or sell the Bonds and the Authority will not provide any such
information.
The City has covenanted for the benefit of the holders and beneficial owners of the Bonds
pursuant to a Continuing Disclosure Certificate, dated the date of issuance of the Bonds (the "Continuing
Disclosure Certificate"), to provide certain financial information and operating data relating to the City
(the "Annual Report") no later than March 1 following the end of each fiscal year, commencing with the
report for Fiscal Year 2015-16, and to provide notices of the occurrence of certain enumerated events
under the Rule through the EMMA System. The specific nature of the information to be contained in the
Annual Report and the enumerated events is set forth in APPENDIX D — "FORM OF CONTINUING
DISCLOSURE CERTIFICATE" herein.
As an obligated parry under the Rule, the City is, or was during the past five years, responsible
for providing continuing disclosure with respect to the following nine bond issues:
$16,485,000 City of Santa Clarita Community Facilities District No. 2002-1 (Valencia
Town Center) Special Tax Bonds, Series 2012, dated October 12, 2012.
2. $8,850,000 City of Santa Clarita Redevelopment Agency Housing Set -Aside Tax
Allocation Bonds, Series 2008, dated June 12, 2008.
3. $29,860,000 City of Santa Clarita Redevelopment Agency Tax Allocation Bonds, Series
2008, dated June 12, 2008.
4. 2007 Certificates.
5. 2007 Bonds.
42221003.6 55
6. $17,700,000 City of Santa Clarita Refunding Certificates of Participation (Public
Facilities — Civic Center), 2005 Series, dated July 12, 2005.
7. $17,370,000 City of Santa Clarita Community Facilities District No. 2002-1 (Valencia
Town Center) Special Tax Bonds, dated October 29, 2002.
In conjunction with the delivery of the Bonds, the City engaged the services of Digital Assurance
Certification LLC ("DAC") to conduct a continuing disclosure compliance review with respect to the
above -referenced bond issues. During the course of DAC's review, it was determined that during the past
five years, there were the following instances of non-compliance by the City with the requirements of
certain undertakings:
I . With respect to the filing of audited financial statements (CAFRs) for the above -bond
issues numbered 1 through 6, the City during 2011-2013 and 2015 failed to file the
unaudited versions of the CAFR when the audited version was unavailable prior to
applicable deadlines, or failed to link the CAFR already filed with EMMA for one issue
to other applicable issues.
2. With respect to the above -listed bond issues numbered 2 and 3, material event notices
were not timely filed for an underlying rating downgrade in 2015.
3. With respect to the above -listed bond issues numbered 4 and 5, material event notices
were not timely filed for underlying rating upgrades in 2012.
4. With respect to the above -listed bond issue numbered 6, material event notices were not
timely filed for bond insurer rating downgrades in 2011 and 2013 and bond insurer
upgrades in 2013 and 2014, or underlying rating upgrade in 2012.
5. With respect to the above -listed bond issues numbered 2 and 3, the Annual Report that
was posted to EMMA failed to include two required items for the years 2011, 2012 and
2013, which information was subsequently provided in 2014.
6. With respect to the above -listed bond issue numbered 1, the Annual Report that was
posted to EMMA failed to include one required item for the year 2013, which
information was subsequently provided in 2014.
7. With respect to the above -listed bond issue numbered 4, the Annual Report that was
posted to EMMA failed to include one required item for the years 2011 and 2013, which
information was subsequently provided in 2014.
As of the date of this Official Statement, the City through DAC has posted the aforementioned
material event notices listed in #2 above to the EMMA System.
The City undertook a review of its adopted Fiscal Policies and has recently revised its Fiscal
Policies to include a more specific continuing disclosure procedure that enhances compliance with
existing and future continuing disclosure undertakings.
42221003.6 56
TAX MATTERS
Tax Exemption
The Internal Revenue Code of 1986 (the "Code") imposes certain requirements that must be met
subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain excluded
pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax
purposes. Noncompliance with such requirements could cause the interest on the Bonds to be included in
the gross income of the owners thereof for federal income tax purposes retroactive to the date of issuance
of the Bonds. The Authority has covenanted in the Indenture, and the City has covenanted in the Lease,
not to take any action or omit to take any action that, if taken or omitted, respectively, would adversely
affect the exclusion of the interest on the Bonds from the gross income of the owners thereof for federal
income tax purposes.
In the opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel, under
existing statutes, regulations, rulings and court decisions, interest on the Bonds is exempt from personal
income taxes of the State and, assuming compliance with the covenants mentioned herein, interest on the
Bonds is excluded pursuant to section 103(a) of the Code from the gross income of the owners thereof for
federal income tax purposes. It is the further opinion of Bond Counsel, under existing statutes,
regulations, rulings and court decisions, that the Bonds are not "specified private activity bonds" within
the meaning of section 57(a)(5) of the Code and, therefore, that interest on the Bonds will not be treated
as an item of tax preference for purposes of computing the alternative minimum tax imposed by section
55 of the Code. Receipt or accrual of interest on Bonds owned by a corporation may affect the
computation of the alternative minimum taxable income. A corporation's alternative minimum taxable
income is the basis on which the alternative minimum tax imposed by section 55 of the Code is
computed.
Pursuant to the Indenture, the Lease and in the Certificate Pertaining to Arbitrage and Certain
Other Matters under Sections 103 and 141-150 of the Internal Revenue Code of 1986 (the "Tax
Certificate"), to be delivered by the Authority and the City in connection with the issuance of the Bonds,
each of the Authority and the City will make representations relevant to the determination of, and will
make certain covenants regarding or affecting, the exclusion of interest on the Bonds from the gross
income of the owners thereof for federal income tax purposes. In reaching its opinion described in the
immediately preceding paragraph, Bond Counsel will assume the accuracy of such representations and the
present and future compliance by each of the Authority and the City with its covenants.
Except as stated in this section above, Bond Counsel will express no opinion as to any federal or
state tax consequence of the receipt of interest on, or the ownership or disposition of, the Bonds.
Furthermore, Bond Counsel will express no opinion as to any federal, state or local tax law consequence
with respect to the Bonds, or the interest thereon, if any action is taken with respect to the Bonds or the
proceeds thereof predicated or permitted upon the advice or approval of other counsel. Bond Counsel has
not undertaken to advise in the future whether any event after the date of issuance of the Bonds may
affect the tax status of interest on the Bonds or the tax consequences of the ownership of the Bonds.
The opinion of Bond Counsel is not a guaranty of result, but represent its legal judgment based
upon their review of existing statutes, regulations, published rulings and court decisions and the
representations and covenants of the Authority described above. No ruling has been sought from the
hnternal Revenue Service (the "Service") with respect to the matters addressed in the opinion of Bond
Counsel, and Bond Counsel's opinion is not binding on the Service. The Service has an ongoing program
of auditing the tax-exempt status of the interest on municipal obligations. If an audit of the Bonds is
commenced, under current procedures the Service is likely to treat the Authority as the "taxpayer," and
the bond owners would have no right to participate in the audit process. In responding to or defending an
42221003.6 57
audit of the tax-exempt status of the interest on the Bonds, the Authority may have different or conflicting
interest from the bond owners. Public awareness of any future audit of the Bonds could adversely affect
the value and liquidity of the Bonds during the pendency of the audit, regardless of its ultimate outcome.
Existing law may change to reduce or eliminate the benefit to bondholders of the exemption of
interest on the Bonds from personal income taxation by the State or of the exclusion of the interest on the
Bonds from the gross income of the owners thereof for federal income tax purposes. Any proposed
legislation or administrative action, whether or not taken, could also affect the value and marketability of
the Bonds. Prospective purchasers of the Bonds should consult with their own tax advisors with respect
to any proposed or future changes in tax law.
A copy of the form of opinion of Bond Counsel relating to the Bonds is included in
APPENDIX E.
Tax Accounting Treatment of Bond Premium and Original Issue Discount on Bonds
To the extent that a purchaser of a Bond acquires that Bond at a price in excess of its "stated
redemption price at maturity" (within the meaning of section 1273(a)(2) of the Code), such excess will
constitute "bond premium" under the Code. Section 171 of the Code, and the Treasury Regulations
promulgated thereunder, provide generally that bond premium on a tax-exempt obligation must be
amortized over the remaining term of the obligation (or a shorter period in the case of certain callable
obligations); the amount of premium so amortized will reduce the owner's basis in such obligation for
federal income tax purposes, but such amortized premium will not be deductible for federal income tax
purposes. Such reduction in basis will increase the amount of any gain (or decrease the amount of any
loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of the
obligation. The amount of premium that is amortizable each year by a purchaser is determined by using
such purchaser's yield to maturity. The rate and timing of the amortization of the bond premium and the
corresponding basis reduction may result in an owner realizing a taxable gain when its Bond is sold or
disposed of for an amount equal to or in some circa nstances even less than the original cost of the Bond
to the owner.
The excess, if any, of the stated redemption price at maturity of Bonds of a maturity over the
initial offering price to the public of the Bonds of that maturity is "original issue discount." Original issue
discount accruing on Bond is treated as interest excluded from the gross income of the owner thereof for
federal income tax purposes and is exempt from California personal income tax to the same extent as
would be stated interest on that Bond. Original issue discount on any Bond purchased at such initial
offering price and pursuant to such initial offering will accrue on a semiannual basis over the term of the
Bond on the basis of a constant yield method and, within each semiannual period, will accrue on a ratable
daily basis. The amount of original issue discount on such a Bond accruing during each period is added
to the adjusted basis of such Bond to determine taxable gain upon disposition (including sale, redemption
or payment on maturity) of such Bond. The Code includes certain provisions relating to the accrual of
original issue discount in the case of purchasers of Bonds who purchase such Bonds other than at the
initial offering price and pursuant to the initial offering.
Persons considering the purchase of Bonds with original issue discount or initial bond premium
should consult with their own tax advisors with respect to the determination of original issue discount or
amortizable bond premium on such Bonds for federal income tax purposes and with respect to the state
and local tax consequences of owning and disposing of such Bonds. Bond Counsel will express no
opinion regarding such tax accounting matters.
42221003.6 58
Other Tax Consequences
Although interest on the Bonds may be exempt from California personal income tax and excluded
from the gross income of the owners thereof for federal income tax purposes, an owner's federal, state or
Local tax liability may be otherwise affected by the ownership or disposition of the Bonds. The nature and
extent of these other tax consequences will depend upon the owner's other items of income or deduction.
Without limiting the generality of the foregoing, prospective purchasers of the Bonds should be aware
that (i) section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to
purchase or carry the Bonds and the Code contains additional limitations on interest deductions applicable
to financial institutions that own tax-exempt obligations (such as the Bonds), (ii) with respect to insurance
companies subject to the tax imposed by section 831 of the Code, section 832(b)(5)(B)(i) reduces the
deduction for loss reserves by 15% of the sum of certain items, including interest on the Bonds,
(iii) interest on the Bonds earned by certain foreign corporations doing business in the United States could
be subject to a branch profits tax imposed by section 884 of the Code, (iv) passive investment income,
including interest on the Bonds, may be subject to federal income taxation under section 1375 of the Code
for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year
if greater than 25% of the gross receipts of such Subchapter S corporation is passive investment income,
(v) section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement
benefits to take into account, in determining the taxability of such benefits, receipts or accruals of interest
on Bonds and (vi) under section 32(1) of the Code, receipt of investment income, including interest on the
Bonds, may disqualify the recipient thereof from obtaining the earned income credit. Bond Counsel will
express no opinion regarding any such other tax consequences.
LITIGATION
There is no controversy of any nature now pending against and notice of which has been received
by the City or the Authority or, to the best knowledge of their respective officers, threatened, seeking to
restrain or enjoin the issuance, sale, execution or delivery of the Bonds or in any way contesting or
affecting the validity of the Bonds or any proceedings of the City or the Authority taken with respect to
the issuance or sale thereof or the pledge or application of any moneys or security provided for the
payment of the Bonds or the use of the Bond proceeds. There are no pending lawsuits that challenge the
validity of the Bonds, the corporate existence of the City or the Authority, or the title of the officers
thereof to their respective offices.
VERIFICATION OF MATHEMATICAL COMPUTATIONS
Causey Demgen & Moore P.C., the Verification Agent, will verify the accuracy of (1)
mathematical computations concerning the adequacy of the maturing principal amounts of and interest
earned on the Defeasance Securities deposited in the Escrow Fund, together with amounts held as cash
therein, to provide for payment of interest on the 2007 Certificates to and including October 1, 2017, and
payment of the prepayment price of the 2007 Certificates on October 1, 2017 and (ii) certain
mathematical computations supporting the conclusion that the Bonds are not "arbitrage bonds" under the
Code, which will be used in part by Bond Counsel to be delivered at the closing of the Bonds in
concluding that interest on the Bonds is excluded from gross income of the holders thereof for federal
income tax purposes under present laws, including applicable provisions of the Code, existing court
rulings, regulations and Internal Revenue Service rulings.
The report of the Verification Agent will include the statement that the scope of its engagement
was limited to verifying the mathematical accuracy of the computations contained in such schedules
provided to it and that the Verification Agent has no obligation to update its report because of events
occurring, or data or information coming to its attention, after the date of its report.
42221003.6 59
FINANCIAL STATEMENTS
The City's financial statements for the Fiscal Year ended June 30, 2015, included in APPENDIX
B hereto, have been audited by RSM US LLP. RSM US LLP was not requested to consent to the
inclusion of its report in APPENDIX B and it has not undertaken to update its report or to take any action
intended or likely to elicit information concerning the accuracy, completeness or fairness of the
statements made in the Official Statement, and no opinion is expressed by Maze & Associates with
respect to any event subsequent to the date of its report.
APPROVAL OF LEGAL PROCEEDINGS
The issuance of the Bonds is subject to the approving opinion of Norton Rose Fulbright US LLP,
Los Angeles, California, Bond Counsel to the Authority, to be delivered in substantially the form set forth
in APPENDIX E herein. Norton Rose Fulbright US LLP in its role as Bond Counsel has undertaken no
responsibility to the owners of the Bonds or any other party for the accuracy, completeness or fairness of
this Official Statement or any other offering material related to the Bonds, and expresses no opinion to the
Owners with respect thereto. Certain legal matters also will be passed upon for the City and the Authority
by the City Attorney.
EXECUTION AND DELIVERY
The execution and delivery of this Official Statement has been authorized by the Authority and
the City.
SANTA CLARITA PUBLIC FINANCING
AUTHORITY
Executive Director
CITY OF SANTA CLARITA
/s/
City Manager
42221003.6 60
APPENDIX A
GENERAL INFORMATION ABOUT THE CITY OF SANTA CLARITA
General Background
The City is located in the Santa Clarita Valley (the "Valley"), which is comprised of the
communities of Canyon Country, Newhall, Saugus, and Valencia, all located in Los Angeles County (the
"County"). The following information specifically relates to the City and generally to the Santa Clarita
Valley.
The first discovery of gold in 1842 was the beginning of a transformation of the area of the City,
where the once -ancient Alliklik Indians, wild horses, Spanish explorers and European colonists lived.
After purchasing Rancho San Francisco (later known as Newhall Ranch) in 1875, Henry Mayo sold a
right-of-way to the Southern Pacific Railroad for $1 and a town site known as Newhall for another $1.
Not only did it become a rail center, but the first commercially producing oil well began operation in Pico
Canyon in 1875, followed by the state's first oil refinery in Railroad Canyon.
The City was officially incorporated on December 15, 1987, after a ballot measure was passed by
the City's residents. The City is a general law city and operates under a Council -Manager form of
government and provides, either directly or under contract with the County, a full range of municipal
services including public safety, public works (including the sewer system), parks and recreation,
community development, etc.
Geography and Climate
Santa Clarita Valley is located 35 miles northwest of Los Angeles and 40 miles east of the Pacific
Ocean. It covers 150 square miles and forms an inverted triangle with the San Gabriel and Santa Susana
mountain ranges, separating it from the San Fernando Valley and the Los Angeles Basin on the south, and
the San Joaquin Valley, Mojave Desert and Angeles National Forest to the north. The Santa Clara River
and its tributaries drain over 490,000 acres of mountains and canyons forming Santa Clarita Valley.
The City of Santa Clarita covers approximately 64 square miles and is located 40 miles from Los
Angeles International Airport, 25 miles from the Burbank Airport; and 50 to 60 miles from the ports of
Los Angeles and Long Beach, respectively. The City is accessible via Highway 126, the Golden State
and the Antelope Valley Freeways. Three Metrolink stations serve rail passengers from the San Fernando
Valley and Downtown Los Angeles.
In general, the climate in the City is sunny, warm and dry in the summer and semi -moist and mild
in the winters. The annual rainfall of 15 to 18 inches occurs primarily between November and March.
Municipal Government
The City provides general government services either with its own employees or through
contracts. The City has a Council Manager form of municipal government. The City Council appoints
the City Manager who is responsible for the day-to-day administration of City business and the
coordination of all departments. The City Council is composed of five members elected biannually at
large to four-year staggered terms. The Mayor is selected by the City Council from among its members.
Beginning in 2016, the City's General Municipal Election will be consolidated with Los Angeles County
General Election to be held on November 8, 2016. As of July 1, 2015, the City had a staff of 375.75
funded equivalent full time positions. The current members of the City Council, term expiration and their
principal occupations are as follows:
42221003.6 A-1
City Council Term Expires Occupation
Robert C. Kellar, Mayor
November 2016
Dante Acosta, Mayor Pro Tem
November 2018
Marsha A. McLean, Councilmember
November 2018
TimBen Boydston, Councilmember
November 2016
Laurene F. Weste, Councilmember
November 2018
Current City Management Staff includes the following:
Retired Police Officer/Realtor
Congressional District Representative
Business Owner
Executive Director
Community Advocate
Mr. Ken Striplin has been the City Manager for the City of Santa Clarita since January 1, 2013.
He has worked for the City since 1995, serving in a leadership capacity in every City department during
his tenure. Previously Mr. Striplin has served Santa Clarita as Assistant City Manager, Assistant to the
City Manager, Technology Services Manager, Management Analyst and Administrative Analyst. In
addition, Mr. Striplin has served as Interim Director of two departments: Field Services and Planning and
Economic Development. He holds Bachelor of Arts and Master of Public Administration degrees from
California State University, Northridge, and a Doctor of Education in Organizational Leadership from
Pepperdine University.
Mr. Darren Herndndez has been the Director of Administrative Services for the City of Santa
Clarita since January 2004 and was named Deputy City Manager in July 2007. In this position he
provides leadership to the Department of Administrative Services and serves the City and Agency as
Chief Financial Officer. Previously Mr. Herndndez has served as the Director of Finance & City
Treasurer of La Habra, California; Village Manager of Walden, New York; Assistant to the City Manager
of Kalamazoo, Michigan; and, Executive Assistant to the Controller of the State of New York. He has a
Bachelor of Arts degree from the State University of New York and studied public administration as a
graduate student at the Maxwell School of Syracuse University.
Mr. Frank Oviedo has been the Assistant City Manager since January 7, 2013. Mr. Oviedo brings
over 15 years of experience in city government. Prior to joining the City, he was the Deputy City
Manager for the City of Elk Grove from 2002-2009 and was the City Manager of Wildomar from 2009-
2012. During Frank's career, he has worked in every city department in three cities, with a steady
progression of management responsibilities in local government. Frank Oviedo earned a Bachelor's
degree from California State University Fresno and a Master's degree in Public Administration from
Arizona State University.
Municipal Services
The City provides park and recreation services, transit services, trash collection, street
maintenance, building inspection and planning services. As a "contract city," the City purchases certain
public services through contracts with other agencies and private companies. Contracting for services
enables the City to accomplish the essential administrative and operational functions of a municipality
with a relatively small workforce and payroll, and a minimum of facilities and equipment. The primary
example of the contract arrangement is the Santa Clarita Police Department, whose sworn and civilian
personnel are provided by the Los Angeles County Sheriffs Department. Fire protection is provided by
the Los Angeles County Fire Protection District. Other regularly contracted services include refuse and
recycling collection, landscaping and public transit services.
42221003.6 A-2
Population
The following table shows the City's and County's population as of January 1, 2011 through
January 1, 2015.
CITY OF SANTA CLARITA AND LOS ANGELES COUNTY
Population
Year Los Angeles County City of Santa Clarita
2011 9,818,605
176,320
2012 9,884,632
177,445
2013 9,958,091
204,951
2014 10,041,797
209,130
2015 10,136,559
212,231
Source: California State Department of Finance, as of January 1.
Residential Value
Housing
As of January 1, 2015, the California Department of Finance reported that there were 42,793
single family detached units in the City, 8,032 single family attached units, 17,946 multifamily housing
units and 2,603 mobile home units. The vacancy rate is approximately 4.4%. In Mach 2016, the median
price within the City of a single family home was $520,000 and of a condominium was $330,000.
Construction Activity
The following table shows the valuation of building permits issued in the City for the last five
calendar years in which the data is available.
Median Household Income
The U.S. Census Bureau American FactFinder reports that the median income of households in
the City for 2014 is $83,178 compared to $61,489 for the nation. Eighty-five percent of the households
received earnings and seventeen percent received retirement income other than Social Security, with over
twenty-four percent of the households receiving Social Security. These income sources are not mutually
exclusive, with some households receiving income from more than one source.
Employment
42221003.6 A-3
CITY OF SANTA CLARITA
Building Permits and
Valuations
Year
Residential Permits
Residential Value
Non -Residential Value
Total
2011
1,370
$ 51,379,263
$133,390,664
$184,769,927
2012
1,645
65,411,571
44,678,839
110,090,410
2013
2,555
151,254,506
81,533,565
232,788,071
2014
2,733
149,911,340
51,329,822
201,241,162
2015
2,896
179,744,814
47,269,711
227,014,525
Source:
City of Santa Clarita Permit System
Median Household Income
The U.S. Census Bureau American FactFinder reports that the median income of households in
the City for 2014 is $83,178 compared to $61,489 for the nation. Eighty-five percent of the households
received earnings and seventeen percent received retirement income other than Social Security, with over
twenty-four percent of the households receiving Social Security. These income sources are not mutually
exclusive, with some households receiving income from more than one source.
Employment
42221003.6 A-3
The following table summarizes the City's employment and unemployment rates for 2011
through 2015 calendar years.
CITY OF SANTA CLARITA
Civilian Labor Force, Employment and Unemployment
Annual Averages
Largest Employers
Major non-governmental employers within the Santa Clarita Valley are as follows:
SANTA CLARITA VALLEY
Major Non -Governmental Employers
Company Product/Service Employees
Six Flags Magic Mountain
Princess Cruises
Henry Mayo Newhall Memorial Hospital
Quest Diagnostics (formerly Specialty Labs)
Boston Scientific
The Master's College
Woodward HRT (formerly H.R. Textron)
Advanced Bionics
California Institute of the Arts
W almart
Amusement Park
2011
2012
2013
20140
2015
Civilian Labor Force
850
Medical Device
780
Education
760
Employment
82,300
82,800
85,200
88,400
89,700
Unemployment
6,800
6,000
5,500
7,200
5,900
Total
891.00
88}800
90,700
95.600
95,600
Unemployment Rate (a)
7.6%
6.7%
6.0%
7.6%
6.1%
0) The unemployment rate is calculated using unrounded data.
Source: California Employment Development Department.
Largest Employers
Major non-governmental employers within the Santa Clarita Valley are as follows:
SANTA CLARITA VALLEY
Major Non -Governmental Employers
Company Product/Service Employees
Six Flags Magic Mountain
Princess Cruises
Henry Mayo Newhall Memorial Hospital
Quest Diagnostics (formerly Specialty Labs)
Boston Scientific
The Master's College
Woodward HRT (formerly H.R. Textron)
Advanced Bionics
California Institute of the Arts
W almart
Amusement Park
3,200
Travel
1,885
Hospital
1,640
Medical R&D
850
Medical Device
780
Education
760
Aerospace
728
Medical Device
700
Education
690
Retail
624
Subtotal
11,857
Other
16,329
Total
28,186
Source: 2015 Santa Clarita Valley - Real Estate and Economic Outlook.
4222 ] 003.6 A-4
Commercial Activity and Sales Tax
The following tables show total taxable transactions and sales tax revenues within the City over
the last five calendar years in which annual data is available.
CITY OF SANTA CLARITA
Taxable Transactions
(Thousands of Dollars)
Year Permits Taxable Transactions
2010 6,025 2,403,176
2011 5,934 2,601,240
2012 6,021 2,764,693
2013 6,012 2,896,147
2014
Source: State Board of Equalization.
The following table shows a breakdown of the taxable sales within the City for 2013 calendar
year (the latest calendar year in which information is available).
CITY OF SANTA CLARITA
Taxable Sales — 2013
Type of Business
Permits
Taxable Transactions
Retail and Food Services
Motor Vehicle and Parts Dealers
156
$ 556,155,000
Home Furnishings and Appliance Stores
244
103,154,000
Bldg. Material and Garden Equip. & Supplies
94
170,519,000
Food and Beverage Stores
123
120,913,000
Gasoline Stations
46
340,368,000
Clothing and Clothing Accessories Stores
413
134,500,000
General Merchandise Stores
125
446,649,000
Food Services and Drinking Places
453
339,789,000
Other Retail Stores
2,444
185,497,000
Retail and Food Total
4,248
$2,397,544,000
All Other Outlets
1,764
490,602,000
Totals All Outlets
6,012
$2,896,147,000
Source: State Board of Equalization.
There is a geographic area within the City known as the "Santa Clarita Enterprise Zone" that
provides tax incentives to business. The Santa Clarita Enterprise Zone covers 97% of all commercial,
business, and industrial zoned land within the City. As of its final designation date on July 1, 2007, the
Santa Clarita Enterprise Zone strengthens the region's local economy by providing significant California
state tax advantages to businesses located within the Zone.
Industry
The City is part of the Los Angeles -Long Beach -Glendale Metropolitan Statistical Area
("MSA"), which is comprised of parts of Los Angeles County.
42221003.6 A-5
LOS ANGELES -LONG BEACH-GLENDALE MSA
Historical Civilian Labor Force
Calendar Years 2011 through 2015
Annual Averages
Wage and Salary Employment: (2) 2011 2012 2013 2014 2015
Agriculture
Mining and Logging
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation, Warehousing, Utilities
Information
Finance and Insurance
Real Estate and Rental and Leasing
Professional and Business Services
Educational and Health Services
Leisure and Hospitality
Other Services
Federal Government
5,600
5,400
5,500
5,200
5,000
4,100
4,300
4,500
4,300
3,900
105,100
109,200
116,200
119,600
126,100
366,900
367,400
368,200
364,100
360,800
205,800
211,900
218,700
222,500
227,000
393,000
400,900
405,600
413,000
420,500
151,800
154,500
157,500
163,400
170,400
192,000
191,500
196,400
198,000
202,700
138,500
140,200
138,300
134,500
134,300
71,600
72,200
74,700
76,700
79,900
542,500
570,100
593,200
599,100
600,300
677,300
699,500
702,100
720,700
742,200
394,700
415,800
440,500
466,600
488,100
137,000
141,700
145,700
150,500
151,700
49,000
48,100
47,200
46,700
47,400
State Government
82,700
83,100
83,600
85,300
87,400
Local Government
433,800
425,600
420,500
424,200
431,600
Total all Industries (1)
3,951,300
4,041,400
4,118,100
4,194,200
4,279,200
`1) Totals may not add due to rounding.
,Source: State of California Employment Development Department.
Effective Buying Income
"Effective Buying Income" is defined as personal income less personal tax and nontax payments,
a number often referred to as "disposable" or "after-tax" income. Personal income is the aggregate of
wages and salaries, other labor -related income (such as employer contributions to private pension funds),
proprietor's income, rental income (which includes imputed rental income of owner -occupants of non-
farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments
(such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and
local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance.
According to U.S. government definitions, the resultant figure is commonly known as "disposable
personal income."
The following table summarizes the total effective buying income for the City, the County, the
State of California and the United States for the period 2010 through 2014.
42221003.6 A-6
CITY OF SANTA CLARITA AND LOS ANGELES COUNTY
Effective Buying Income
As of January 1, 2010 through 2014
Total Effective Median Household
Buying Income Effective
Year Area (000's Omitted) Buvina Income
2010 City of Santa Clarita
Los Angeles County
California 801,393,028 47,177
United States 6,365,020,076 41,368
2011 City of Santa Clarita
Los Angeles County
California 814,578,458 47,062
United States 6,438,704,664 41,253
2012 City of Santa Clarita
Los Angeles County
California 864,088,828 47,307
United States 6,737,867,730 41,358
2013 City of Santa Clarita
Los Angeles County
California 858,676,636 48,340
United States 6,982,757,379 43,715
2014 City of Santa Clarita
Los Angeles County
California 901,189,699 50,072
United States 7,357,153,421 45,448
Source: The Nielsen Company (US), Inc.
Education
The City is served by 48 elementary schools, 6 middle schools, 7 high schools and numerous
private and parochial schools. Three colleges are located in the Santa Clarita Valley, California Institute
of the Arts, The Masters College and College of the Canyons. California State University — Northridge in
the northern part of the San Fernando Valley is nearby and serves as an additional resource for higher-
level education.
Recreational Activities
There are a number of recreational and historical facilities located in the Santa Clarita Valley.
Among them are Six Flags Magic Mountain Amusement Park and Gene Autry's Melody Ranch. For
water enthusiasts there are Castaic Lake, Lake Hughes, Lake Elizabeth, Lake Piru and Lake Pyramid.
The Angeles National Forest, Placerita Canyon Nature Center, Saugus Train Station, Vasquez Rocks
County Park and the City's community parks are also available for hiking and picnicking. William S.
Hart Park features a magnificent Spanish colonial mansion museum. Frazier Park and Mountain High are
within a 40 mile drive for ski enthusiasts. Also located in the City are the Canyon Theatre Guild, Disney
Studios, Santa Clarita Repertory Theater, as well as the Friendly Valley, Valencia Country Club,
42221003.6 A-7
Robinson's Ranch and Vista Valencia golf courses. Santa Clarita residents enjoy the City's distinctive
trail system. There are three libraries located in the valley.
42221003.6 A-8
APPENDIX B
AUDITED FINANCIAL STATEMENTS OF THE CITY OF SANTA CLARITA
FOR THE FISCAL YEAR ENDED JUNE 30, 2015
4222] 003.6 B-1
APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS
42221003.6 C-1
APPENDIX D
FORM OF CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (this "Disclosure Certificate"), dated June , 2016, is
executed and delivered by the City of Santa Clarita, California (the "City"), for the benefit of the Holders
(hereinafter defined) of the Bonds (hereinafter defined) in order to provide certain continuing disclosure
with respect to the Bonds in accordance with Rule 15c2-12 of the United States Securities and Exchange
Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time
(the "Rule").
SECTION 1. Definitions. Capitalized terms not otherwise defined in this Disclosure
Certificate shall have the meaning assigned in the Rule or, to the extent not in conflict with the Rule, in
the Official Statement (hereinafter defined). The capitalized terms shall have the following meanings:
"Annual Report" means an Annual Report described in and consistent with Section 3 of this
Disclosure Certificate.
"Annual Filing Date" means the date, set in Section 2(a) and Section 2(f), by which the Annual
Report is to be filed with the MSRB.
"Annual Financial Information" means annual financial information as such term is used in
paragraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Certificate.
"Audited Financial Statements" means the financial statements (if any) of the City for the prior
fiscal year, certified by an independent auditor as prepared in accordance with generally accepted
accounting principles or otherwise, as such term is used in paragraph (b)(5)(i) of the Rule and
specified in Section 3(b) of this Disclosure Certificate.
"Bonds" means $[principal amount]* Santa Clarita Public Financing Authority Lease Revenue
Refunding Bonds (Open Space and Parkland Acquisition Program), Series 2016B.
"Certification" means a written certification of compliance signed by the Disclosure
Representative stating that the Annual Report, Audited Financial Statements, Notice Event notice,
or Failure to File Event notice delivered to the Disclosure Dissemination Agent is the Annual
Report, Audited Financial Statements, Notice Event notice, or Failure to File Event notice,
required to be submitted to the MSRB under this Disclosure Certificate. A Certification shall
accompany each such document submitted to the Disclosure Dissemination Agent by the City and
include the full name of the Bonds and the 9 -digit CUSIP numbers for all Bonds to which the
document applies.
"Disclosure Representative" means the Deputy City Manager/Director of Administrative Services
of the City or his or her designee, or such other person as the City shall designate in writing to the
Disclosure Dissemination Agent from time to time as the person responsible for providing
Inlformation to the Disclosure Dissemination Agent.
"Disclosure Dissemination Agent" shall mean The Bank of New York Mellon Trust Company,
N.A., or any successor Dissemination Agent designated in writing by the District and which has
filed with the District a written acceptance of such designation.
42221003.6 D-1
"Failure to File Event" means the City's failure to file an Annual Report on or before the Annual
Filing Date.
"Force Majeure Event" means: (i) acts of God, war, or terrorist action; (ii) failure or shut -down of
the Electronic Municipal Market Access system maintained by the MSRB; or (iii) to the extent
beyond the Disclosure Dissemination Agent's reasonable control, interruptions in
telecommunications or utilities services, failure, malfunction or error of any telecommunications,
computer or other electrical, mechanical or technological application, service or system, computer
virus, interruptions in Internet service or telephone service (including due to a virus, electrical
delivery problem or similar occurrence) that affect Internet users generally, or in the local area in
which the Disclosure Dissemination Agent or the MSRB is located, or acts of any government,
regulatory or any other competent authority the effect of which is to prohibit the Disclosure
Dissemination Agent from performance of its obligations under this Disclosure Certificate.
"Holder" means any person (i) having the power, directly or indirectly, to vote or consent with
respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through
nominees, depositories or other intermediaries) or (ii) treated as the owner of any Bonds for
federal income tax purposes.
"Information" means, collectively, the Annual Reports, the Audited Financial Statements (if any),
the Notice Event notices, and the Failure to File Event notices.
"Issuer" means the Santa Clarita Public Financing Authority.
"MSRB" means the Municipal Securities Rulemaking Board established pursuant to
Section 1513(b)(1) of the Securities Exchange Act of 1934 or any other entity designated or
authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule.
Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings
with the MSRB are to be made through the Electronic Municipal Marketplace Access (EMMA)
website of the MSRB, currently located at htip:Ilemma.msrb.org.
"Notice Event" means any of the events enumerated in paragraph (b)(5)(i)(C) of the Rule and
listed in Section 4(a) of this Disclosure Certificate.
"Obligated Person" means any person, including the City, who is either generally or through an
enterprise, fund, or account of such person committed by contract or other arrangement to support
payment of all, or part of the obligations on the Bonds (other than providers of municipal bond
insurance, letters of credit, or other liquidity facilities). With respect to the Bonds, only the City
constitutes the Obligated Person.
"Official Statement" means that Official Statement, dated May _, 2016, prepared by the Issuer
and the City in connection with the Bonds.
"Trustee" means The Bank of New York Mellon Trust Company, N.A., as trustee under the
Indenture, dated as of June 1, 2016, by and between the Issuer and the Trustee, as amended and
supplemented, providing for the issuance of the Bonds.
42221003.6 D-2
SECTION 2. Provision of Annual Resorts and Other Disclosures.
(a) The City shall provide, annually, an electronic copy of the Annual Report and
Certification to the Disclosure Dissemination Agent, together with a copy for the Trustee, not later than
the Annual Filing Date. Promptly upon receipt of an electronic copy of the Annual Report and the
Certification, the Disclosure Dissemination Agent shall provide an Annual Report to the MSRB no later
than March 1 following the end of each fiscal year, commencing with the report for Fiscal Year 2015-16.
Such date and each anniversary thereof is the Annual Filing Date. The Annual Report may be submitted
as a single document or as separate documents comprising a package, and may cross-reference other
information as provided in Section 3 of this Disclosure Certificate.
(b) If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure
Dissemination Agent has not received a copy of the Annual Report and Certification, the Disclosure
Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may
be by e-mail) to remind the City of its undertaking to provide the Annual Report pursuant to Section 2(a).
Upon such reminder, the Disclosure Representative shall either (i) provide the Disclosure Dissemination
Agent with an electronic copy of the Annual Report and the Certification no later than two (2) business
days prior to the Annual Filing Date, or (ii) instruct the Disclosure Dissemination Agent in writing that
the City will not be able to file the Annual Report within the time required under this Disclosure
Certificate, state the date by which the Annual Report for such year will be provided and instruct the
Disclosure Dissemination Agent that a Failure to File Event has occurred and to immediately send a
notice to the MSRB in substantially the form attached as Exhibit A.
(c) If the Disclosure Dissemination Agent has not received an Annual Report and
Certification by 6:00 p.m. Eastern time on the Annual Filing Date (or, if such Annual Filing Date falls on
a Saturday, Sunday or holiday, then the first business day thereafter) for the Annual Report, a Failure to
File Event shall have occurred and the City irrevocably directs the Disclosure Dissemination Agent to
immediately send a notice to the MSRB in substantially the form attached as Exhibit A without reference
to the anticipated filing date for the Annual Report.
(d) If Audited Financial Statements of the City are prepared but not available prior to the
Annual Filing Date, the City shall, when the Audited Financial Statements are available, provide in a
timely manner an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certification,
together with a copy for the Trustee, for filing with the MSRB.
(e) The Disclosure Dissemination Agent shall:
(i) verify the filing specifications of the MSRB each year prior to the Annual Filing
Date,
(ii) upon receipt, promptly file each Annual Report received under Sections 2(a) and
2(b) with the MSRB;
(iii) upon receipt, promptly file each Audited Financial Statement received under
Section 2(d) with the MSRB;
(iv) upon receipt, promptly file the text of each Notice Event received under Sections
4(a) and 4(b)(10 with the MSRB, identifying the Notice Event as instructed by
the City pursuant to Section 4(a) or 4(b)(ii) (being any of the categories set forth
below) when filing pursuant to Section 4(c) of this Disclosure Certificate:
42221003.6 D-3
I . "Principal and interest payment delinquencies;"
2. "Non -Payment related defaults, if material;"
3. "Unscheduled draws on debt service reserves reflecting financial
difficulties;"
4. "Unscheduled draws on credit enhancements reflecting financial
difficulties;"
5. "Substitution of credit or liquidity providers, or their failure to perform;"
6. "Adverse tax opinions, IRS notices or events affecting the tax status of
the security;"
7. "Modifications to rights of securities holders, if material;"
8. "Bond calls, if material;"
9. "Defeasances;"
10. "Release, substitution, or sale of property securing repayment of the
securities, if material;"
11. "Rating changes;"
12. "Tender offers;"
13. `Bankruptcy, insolvency, receivership or similar event of the obligated
person;"
14. "Merger, consolidation, or acquisition of the obligated person, if
material;" and
15. "Appointment of a successor or additional trustee, or the change of name
of a trustee, if material;"
(v) upon receipt (or irrevocable direction pursuant to Section 2(c) of this Disclosure
Certificate, as applicable), promptly file a completed copy of Exhibit A to this
Disclosure Certificate with the MSRB, identifying the filing as "Failure to
provide annual financial information as required" when filing pursuant to Section
2(b)(ii) or Section 2(c) of this Disclosure Certificate;
(f) The City may adjust the Annual Filing Date upon change of its fiscal year by providing
written notice of such change and the new Annual Filing Date to the Disclosure Dissemination Agent,
Trustee (if any) and the MSRB, provided that the period between the existing Annual Filing Date and new
Annual Filing Date shall not exceed one year.
(g) Any Information received by the Disclosure Dissemination Agent before 6:00 p.m.
Eastern time on any business day that it is required to file with the MSRB pursuant to the terms of this
Disclosure Certificate and that is accompanied by a Certification and all other information required by the
terms of this Disclosure Certificate will be filed by the Disclosure Dissemination Agent with the MSRB
42221003.6 D-4
no later than 11:59 p.m. Eastern time on the same business day; provided, however, the Disclosure
Dissemination Agent shall have no liability for any delay in filing with the MSRB if such delay is caused
by a Force Majeure Event provided that the Disclosure Dissemination Agent uses reasonable efforts to
make any such filing as soon as possible.
SECTION 3. Content of Annual Reports.
(a) Each Annual Report shall contain an update of Table 1 of the Official Statement and the
following information with respect to the City's preceding Fiscal Year (to the extent not included in the
audited financial statements described in paragraph (b) below):
(i) Outstanding indebtedness and lease obligations;
(ii) General fund budget and actual results;
(iii) Assessed valuations; and
(iv) Largest local secured taxpayers.
(b) Audited Financial Statements prepared in accordance with generally accepted accounting
principles ("GAAP") as described in the Official Statement will also be included in the Annual Report. If
audited financial statements are not available, then, unaudited financial statements, prepared in
accordance with GAAP as described in the Official Statement will be included in the Annual Report.
Audited Financial Statements (if any) will be provided pursuant to Section 2(d).
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues with respect to which the City is an Obligated Person, which
have been previously filed with the Securities and Exchange Commission or available to the public on the
MSRB Internet website. If the document incorporated by reference is a final official statement, it must be
available from the MSRB. The City will clearly identify each such document so incorporated by
reference.
Any Annual Financial Information containing modified operating data or financial information is
required to explain, in narrative form, the reasons for the modification and the impact of the change in the
type of operating data or financial information being provided.
SECTION 4. Reporting of Notice Events.
(a) The occurrence of any of the following events with respect to the Bonds constitutes a
Notice Event:
Principal and interest payment delinquencies;
2. Non-payment related defaults, if material;
Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
Substitution of credit or liquidity providers, or their failure to perform;
42221003.6 D-5
Adverse tax opinions, the issuance by the Internal Revenue Service of proposed
or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-
TEB) or other material notices or determinations with respect to the tax status of
the Bonds, or other material events affecting the tax status of the Bonds;
Modifications to rights of Bond holders, if material;
8. Bond calls, if material, and tender offers;
9. Defeasances,
10. Release, substitution, or sale of property securing repayment of the Bonds, if
material;
11. Rating changes;
12. Bankruptcy, insolvency, receivership or similar event of the Obligated Person;
Note to subsection (a)(12) of this Section 4: For the purposes of the event
described in subsection (a)(12) of this Section 4, the event is considered to occur
when any of the following occur: the appointment of a receiver, fiscal agent or
similar officer for an Obligated Person in a proceeding under the U.S.
Bankruptcy Code or in any other proceeding under state or federal law in which a
court or governmental authority has assumed jurisdiction over substantially all of
the assets or business of the Obligated Person, or if such jurisdiction has been
assumed by leaving the existing governing body and officials or officers in
possession but subject to the supervision and orders of a court or governmental
authority, or the entry of an order confirming a plan of reorganization,
arrangement or liquidation by a court or governmental authority having
supervision or jurisdiction over substantially all of the assets or business of the
Obligated Person.
13. The consummation of a merger, consolidation, or acquisition involving an
Obligated Person or the sale of all or substantially all of the assets of the
Obligated Person, other than in the ordinary course of business, the entry into a
definitive Certificate to undertake such an action or the termination of a
definitive Certificate relating to any such actions, other than pursuant to its terms,
if material; and
14. Appointment of a successor or additional trustee or the change of name of a
trustee, if material.
The City shall, in a timely manner not in excess of ten business days after its occurrence, notify
the Disclosure Dissemination Agent in writing of the occurrence of a Notice Event. Such notice shall
instruct the Disclosure Dissemination Agent to report the occurrence pursuant to subsection (c) and shall
be accompanied by a Certification. Such notice or Certification shall identify the Notice Event that has
occurred (which shall be any of the categories set forth in Section 2(e)(iv) of this Disclosure Certificate),
include the text of the disclosure that the City desires to make, contain the written authorization of the
City for the Disclosure Dissemination Agent to disseminate such information, and identify the date the
City desires for the Disclosure Dissemination Agent to disseminate the information (provided that such
date is not later than the tenth business day after the occurrence of the Notice Event).
42221003.6 D-6
(b) The Disclosure Dissemination Agent is under no obligation to notify the City or the
Disclosure Representative of an event that may constitute a Notice Event. In the event the Disclosure
Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will within
two business days of receipt of such notice (but in any event not later than the tenth business day after the
occurrence of the Notice Event, if the City determines that a Notice Event has occurred), instruct the
Disclosure Dissemination Agent that (i) a Notice Event has not occurred and no filing is to be made or (ii)
a Notice Event has occurred and the Disclosure Dissemination Agent is to report the occurrence pursuant
to subsection (c) of this Section 4, together with a Certification. Such Certification shall identify the
Notice Event that has occurred (which shall be any of the categories set forth in Section 2(e)(iv) of this
Disclosure Certificate), include the text of the disclosure that the City desires to snake, contain the written
authorization of the City for the Disclosure Dissemination Agent to disseminate such information, and
identify the date the City desires for the Disclosure Dissemination Agent to disseminate the information
(provided that such date is not later than the tenth business day after the occurrence of the Notice Event).
(c) If the Disclosure Dissemination Agent has been instructed by the City as prescribed in
subsection (a) or (b)(ii) of this Section 4 to report the occurrence of a Notice Event, the Disclosure
Dissemination Agent shall promptly file a notice of such occurrence with the MSRB in accordance with
Section 2(e)(iv) hereof.
SECTION 5. CUSIP Numbers. Whenever providing information to the Disclosure
Dissemination Agent, including but not limited to Annual Reports, documents incorporated by reference
to the Annual Reports, Audited Financial Statements, Notice Event notices, and Failure to File Event
notices, the City shall indicate the full name of the Bonds and the 9 -digit CUSIP numbers for the Bonds
as to which the provided information relates.
SECTION 6. Additional Disclosure Obligations. The City acknowledges and understands that
other state and federal laws, including but not limited to the Securities Act of 1933 and Rule lOb-5
promulgated under the Securities Exchange Act of 1934, may apply to the City, and that the failure of the
Disclosure Dissemination Agent to so advise the City shall not constitute a breach by the Disclosure
Dissemination Agent of any of its duties and responsibilities under this Disclosure Certificate. The City
acknowledges and understands that the duties of the Disclosure Dissemination Agent relate exclusively to
execution of the mechanical tasks of disseminating information as described in this Disclosure Certificate.
SECTION 7. Voluntary Filings. Nothing in this Disclosure Certificate shall be deemed to
prevent the City from disseminating any other information through the Disclosure Dissemination Agent
using the means of dissemination set forth in this Disclosure Certificate or including any other
information in any Annual Report, Audited Financial Statements, Notice Event notice, or Failure to File
Event notice, in addition to that required by this Disclosure Certificate. If the City chooses to include any
information in any Annual Report, Audited Financial Statements, Notice Event notice, or Failure to File
Event notice in addition to that which is specifically required by this Disclosure Certificate, the City shall
have no obligation under this Disclosure Certificate to update such information or include it in any future
Annual Report, Audited Financial Statements, Notice Event notice, or Failure to File Event notice.
SECTION 8. Termination of Reporting Obligation. The obligations of the City and the
Disclosure Dissemination Agent under this Disclosure Certificate shall terminate with respect to the
Bonds upon the legal defeasance, prior redemption or payment in full of all of the Bonds, when the City is
no longer an Obligated Person with respect to such Bonds, or upon delivery by the Disclosure
Representative to the Disclosure Dissemination Agent of an opinion of nationally recognized bond
counsel to the effect that continuing disclosure is no longer required with respect to such Bonds.
42221003.6 D-7
SECTION 9. Disclosure Dissemination Agent. The Bank of New York Mesion Trust
Company, N.A. will serve as the initial Disclosure Dissemination Agent under this Disclosure Certificate.
The City may, upon thirty days written notice to the Disclosure Dissemination Agent and the Trustee,
replace or appoint a successor Disclosure Dissemination Agent. Upon termination of the Disclosure
Dissemination Agent, whether by notice of the City or the Disclosure Dissemination Agent, the City
agrees to appoint a successor Disclosure Dissemination Agent or, alternately, agrees to assume all
responsibilities of Disclosure Dissemination Agent under this Disclosure Certificate for the benefit of the
Holders of the Bonds. Notwithstanding any replacement or appointment of a successor, the City shall
remain liable, until payment in full, for any and all sums owed and payable to the Disclosure
Dissemination Agent. The Disclosure Dissemination Agent may resign at any time by providing thirty
days' prior written notice to the City.
SECTION 10. Remedies in Event of Default. In the event of a failure of the City or the
Disclosure Dissemination Agent to comply with any provision of this Disclosure Certificate, the Holders'
rights to enforce the provisions of this Disclosure Certificate shall be limited solely to a right, by action in
manda►nus or for specific performance, to compel performance of the parties' obligation under this
Disclosure Certificate. Any failure by a party to perform in accordance with this Disclosure Certificate
shall not constitute a default on the Bonds or under any other document relating to the Bonds, and all
rights and remedies shall be limited to those expressly stated herein.
SECTION 11. Duties, Immunities and Liabilities of Disclosure Dissemination Agent.
(a) Article VI of the Indenture is hereby made applicable to this Disclosure Certificate as if
this Disclosure Certificate were (solely for this purpose) contained in the Indenture. The Disclosure
Dissemination Agent shall be entitled to the protections and limitations from liability afforded to the
Trustee thereunder. The Disclosure Dissemination Agent shall have only such duties as are specifically
set forth in this Disclosure Certificate. and the City agrees to indemnify and save the Disclosure
Dissemination Agent, the Trustee, their officers, directors, employees and agents, harmless against any
loss, expense and liabilities which it may incur arising out of the disclosure of information pursuant to
this Disclosure Certificate or arising out of or in the exercise or performance of its powers and duties
hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of
liability, but excluding liabilities due to the Disclosure Dissemination Agent's negligence or willful
misconduct. The Disclosure Dissemination Agent's obligation to deliver the information at the times and
with the contents described herein shall be limited to the extent the City has provided such information to
the Disclosure Dissemination Agent as required by this Disclosure Certificate. The Disclosure
Dissemination Agent shall have no duty with respect to the content of any disclosures or notice made
pursuant to the terms hereof. The Disclosure Dissemination Agent shall have no duty or obligation to
review or verify any Information or any other information, disclosures or notices provided to it by the
City and shall not be deemed to be acting in any fiduciary capacity for the City, the Holders of the Bonds
or any other party. The Disclosure Dissemination Agent shall have no responsibility for the City's failure
to report to the Disclosure Dissemination Agent a Notice Event or a duty to determine the materiality
thereof. The Disclosure Dissemination Agent shall have no duty to determine, or liability for failing to
determine, whether the City has complied with this Disclosure Certificate. The Disclosure Dissemination
Agent may conclusively rely upon certifications of the City at all times.
The obligations of the City under this Section shall survive resignation or removal of the
Disclosure Dissemination Agent and defeasance, redemption or payment of the Bonds.
(b) The Disclosure Dissemination Agent may, from time to time, consult with legal counsel
(either in-house or external) of its own choosing in the event of any disagreement or controversy, or
question or doubt as to the construction of any of the provisions hereof or its respective duties hereunder,
42221003.6 D-8
and shall not incur any liability and shall be fully protected in acting in good faith upon the advice of such
legal counsel. The reasonable fees and expenses of such counsel shall be payable by the City.
(c) All documents, reports, notices, statements, information and other materials provided to
the MSRB under this Disclosure Certificate shall be provided in an electronic format and accompanied by
identifying information as prescribed by the MSRB.
SECTION 12. Amendment: Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the City and the Disclosure Dissemination Agent may amend this Disclosure Certificate and
any provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported by
an opinion of counsel expert in federal securities laws acceptable to both the City and the Disclosure
Dissemination Agent to the effect that such amendment or waiver does not materially impair the interests
of Holders of the Bonds and would not, in and of itself, cause the undertakings herein to violate the Rule
if such amendment or waiver had been effective on the date hereof but taking into account any subsequent
change in or official interpretation of the Rule; provided neither the City nor the Disclosure
Dissemination Agent shall be obligated to agree to any amendment modifying their respective duties or
obligations without their consent thereto.
Notwithstanding the preceding paragraph, the Disclosure Dissemination Agent shall have the
right to adopt amendments to this Disclosure Certificate necessary to comply with modifications to and
interpretations of the provisions of the Rule as announced by the Securities and Exchange Commission
from time to time by giving not less than 20 days prior written notice of the intent to do so together with a
copy of the proposed amendment to the City. No such amendment shall become effective if the City
shall, within 10 days following the giving of such notice, send a notice to the Disclosure Dissemination
Agent in writing that it objects to such amendment.
SECTION 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the
City, the Trustee of the Bonds, the Disclosure Dissemination Agent, the participating underwriters (as
defined in the Rule), and the Holders from time to time of the Bonds, and shall create no rights in any
other person or entity.
SECTION 14. Governing Law. This Disclosure Certificate shall be governed by the laws of the
State of California (other than with respect to conflicts of laws).
The City has caused this Disclosure Certificate to be executed, on the date first written above.
CITY OF SANTA CLARITA, as Obligated Person
By: _
Name:
Title:
ACCEPTED AND AGREED TO:
42221003.6 D-9
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Disclosure Dissemination Agent
By:
Name:
Title:
42221003.6 D-10
EXHIBIT A
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Issuer: Santa Clarita Public Financing Authority
Obligated Person: City of Santa Clarita, California
Name of Bond Issue: $[principal amount] Santa Clarita Public Financing Authority Lease
Revenue Refunding Bonds (Open Space and Parkland Acquisition
Program), Series 2016B
Date of Issuance: May 2016
NOTICE IS HEREBY GIVEN that the City of Santa Clarita (the "City") has not provided an
Annual Report with respect to the above-named Bonds as required by the Disclosure Certificate of the
City. The City anticipates that the Annual Report will be filed by
Dated: , 20
The Bank of New York Melton Trust Company, N.A., as
Disclosure Dissemination Agent
D-11
APPENDIX E
FORM OF OPINION OF BOND COUNSEL
On the delivery date of the Bonds, Norton Rose Fulbright US LLP, Los Angeles, California, Bond
Counsel, proposes to render its final approving opinion substantially in the following form:
[Closing Date]
Santa Clarita Public Financing Authority
23920 Valencia Boulevard
Santa Clarita, California 91355
City of Santa Clarita
23920 Valencia Boulevard
Santa Clarita, California 91355
$[principal amount]
Santa Clarita Public Financing Authority
Lease Revenue Refunding Bonds
(Open Space and Parkland Acquisition Program)
Series 2016B
Ladies and Gentlemen:
We have acted as Bond Counsel to the Santa Clarita Public Financing Authority (the "Authority") in
connection with the issuance by the Authority of its $[principal amount] Lease Revenue Refunding Bonds
(Open Space and Parkland Acquisition Program), Series 2016B (the `Bonds"). The Bonds are being
issued under the provisions of the Marks -Roos Local Bond Pooling Act of 1985, constituting Article 4 of
Chapter 5 of Division 7 of Title 1 (commencing with Section 6584) of the California Government Code
(the "Bond Law"), and pursuant to an Indenture, dated as of June 1, 2016 (the "Indenture"), by and
between the Authority and The Bank of New York Melton Trust Company, N.A., as trustee (the
"Trustee").
The Bonds are limited obligations of the Authority secured under the Indenture by a pledge of applicable
Revenues and certain other moneys held under the Indenture. The Revenues consist of (i) Base Rental
Payments made by the City of Santa Clarita, California (the "City") pursuant to a Lease Agreement, dated
as of June I, 2016 (the "Lease"), by and between the Authority, as lessor, and the City, as lessee, (ii) any
proceeds of Bonds originally deposited with the Trustee and all moneys on deposit in the funds and
accounts (other than the Rebate Fund) established under the Indenture, (iii) investment income with
respect to such moneys held by the Trustee and (iv) any insurance proceeds or condemnation awards
received by or payable to the Trustee relating to the applicable Base Rental Payments.
The City has leased certain real property and improvements (the "Leased Property") to the Authority
pursuant to the Site and Facility Lease, dated as of June 1, 2016 (the "Site Lease"), by and between the
City and the Authority. Pursuant to the Assignment Agreement, dated as of June 1, 2016 (the
"Assignment Agreement"), by and between the Authority and the Trustee, the Authority has assigned to
the Trustee, for the benefit of the Owners, certain of the Authority's rights under the Site Lease and the
Lease, including the right to receive Base Rental Payments under the Lease.
42221003.6 E-1
As Bond Counsel, we have reviewed the Indenture, the Site Lease, the Lease, the Assignment Agreement
and certifications of the Authority, the City, the Trustee and others, opinions of counsel to the Authority,
the City and the Trustee, and such other documents, opinions and instruments as we deemed necessary to
render the opinions set forth herein. Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed thereto in the Indenture.
Based upon the foregoing, we are of the opinion that:
The Bonds constitute valid and binding Limited obligations of the Authority as provided in the
Indenture, and are entitled to the benefits of the Indenture.
The Indenture has been duly and validly authorized, executed and delivered by the Authority and,
assuming the enforceability thereof against the Trustee, constitutes the legally valid and binding
obligation of the Authority, enforceable against the Authority in accordance with its terms. The
Indenture creates a valid pledge, to secure the payment of principal of and interest on the Bonds,
of the Revenues and certain other amounts held by the Trustee in certain funds and accounts
established pursuant to the Indenture, subject to the provisions of the Indenture permitting the
application thereof for other purposes and on the terms and conditions set forth therein.
The Lease and Site Lease have been duly and validly authorized, executed and delivered by the
Authority and the City and constitute the legally valid and binding obligations of the Authority
and the City, enforceable against the Authority and the City in accordance with their terms.
4. The Assignment Agreement has been duly and validly authorized, executed and delivered by the
Authority and, assuming the enforceability thereof against the Trustee, constitutes the legally
valid and binding obligation of the Authority, enforceable against the Authority in accordance
with its terms.
Under existing statutes, regulations, rulings and court decisions, interest on the Bonds is exempt
from personal income taxes of the State of California and, assuming compliance with the
covenants mentioned herein, interest on the Bonds is excluded pursuant to section 103(a) of the
Code from the gross income of the owners thereof for federal income tax purposes. It is the
further opinion of Bond Counsel that, under existing statutes, regulations, rulings and court
decisions, the Bonds are not "specified private activity bonds" within the meaning of section
57(a)(5) of the Code and, therefore, that interest on the Bonds will not be treated as an item of tax
preference for purposes of computing the alternative minima n tax imposed by section 55 of the
Code. Receipt or accrual of interest on Bonds owned by a corporation may affect the computation
of the alternative minimum taxable income. A corporation's alternative minimum taxable income
is the basis on which the alternative minimum tax imposed by section 55 of the Code will be
computed.
The Code imposes certain requirements that must be met subsequent to the issuance and delivery
of the Bonds for interest thereon to be and remain excluded pursuant to section 103(a) of the
Code from the gross income of the owners thereof for federal income tax purposes. Non-
compliance with such requirements could cause the interest on the Bonds to fail to be excluded
from the gross income of the owners thereof retroactive to the date of issuance of the Bonds.
Pursuant to the Indenture and in the Tax Certificate Pertaining to Arhitrage and Other Matters
under Sections 103 and 141-150 of the Internal Revenue Code of 1986 being delivered by the
Authority in connection with the issuance of the Bonds, the Authority are making representations
relevant to the determination of, and is undertaking certain covenants regarding or affecting, the
exclusion of interest on the Bonds from the gross income of the owners thereof for federal income
42221003.6 E-2
tax purposes. In reaching our opinions described in the immediately preceding paragraph, we
have assumed the accuracy of such representations and the present and future compliance by the
Authority with such covenants. Further, except as stated in the preceding paragraph, we express
no opinion as to any federal or state tax consequence of the receipt of interest on, or the
ownership or disposition of the Bonds. Furthermore, we express no opinion as to any federal,
state or local tax law consequence with respect to the Bonds, or the interest thereon, if any action
is taken with respect to the Bonds or the proceeds thereof predicated or permitted upon the advice
or approval of other counsel.
The opinions expressed in paragraphs 1, 2, 3 and 4 above are qualified to the extent the enforceability of
the Bonds and the Indenture may be limited by applicable bankruptcy, insolvency, debt adjustment,
reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights
generally or as to the availability of any particular remedy. The enforceability of the Bonds and the
Indenture is subject to the effect of general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, to the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a proceeding in equity or at law, and
to the limitations on Legal remedies against governmental entities in California.
No opinion is expressed herein on the accuracy, completeness or fairness of the Official Statement or
other offering material relating to the Bonds.
Our opinions are based on existing law, which is subject to change. Such opinions are further based on
our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to
reflect any facts or circumstances that may thereafter come to our attention or to reflect any changes in
any law that may thereafter occur or become effective. Moreover, our opinions are not a guarantee of
result and are not binding on the Internal Revenue Service; rather, such opinions represent our legal
judgment based upon our review of existing law that we deem relevant to such opinions and in reliance
upon the representations and covenants referenced above.
Respectfully submitted,
42221003.6 E-3
APPENDIX F
BOOK -ENTRY SYSTEM
The information in this section concerning DTC and DTC's book -entry only system has been
obtained from sources that each of the Authority and the City believes to be reliable, but the Authority
and the City take no responsibility for the completeness or accuracy thereof. The following description of
the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment
of principal, premium, if any, and interest on the Bonds to DTC Participants or Beneficial Owners,
confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions
by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information
provided by DTC.
The Depository Trust Company ("DTC"), New York, New York, will act as securities depository
for the Bonds. The Bonds will be issued as fully -registered securities registered in the name of Cede &
Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative
of DTC. One fully -registered Bond will be issued for each annual maturity of the Bonds, each in the
aggregate principal amount of such maturity, and will be deposited through the facilities of DTC.
DTC, the world's largest securities depository, is a limited -purpose trust company organized
under the New York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over
3.6 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money
market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with
DTC. DTC also facilitates the post trade settlement among Direct Participants of sales and other
securities transactions in deposited securities, through electronic computerized book -entry transfers and
pledges between Direct Participants' accounts. This eliminates the need for physical movement of
securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned
subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company
for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which
are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the
DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers,
banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect Participants"), DTC has a Standard &
Poor's rating of "AA+." The DTC Rules applicable to its Participants are on file with the Securities and
Exchange Commission. More information about DTC can be found at www.dtcc.com. The information
set forth on such website is not incorporated herein by reference.
Purchases of Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual
purchaser of each Bond (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive Bonds representing their ownership
interests in Bonds, except in the event that use of the book -entry system for the Bonds is discontinued.
42221003.6 F- I
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration
in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be
the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain
steps to augment the transmission to them of notices of significant events with respect to the Bonds, such
as prepayments, tenders, defaults, and proposed amendments to the Bond documents. For example,
Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit
has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may
wish to provide their names and addresses to the registrar and request that copies of notices be provided
directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being
prepaid, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such
maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its
usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede &
Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice
is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail
information from the Authority, the City or the Trustee, on payable date in accordance with their
respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case with securities held for the
accounts of customers in bearer form or registered in "street name," and will be the responsibility of such
Participant and not of DTC, the Trustee, the Authority or the City, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and
dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized
representative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such
payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
A Bond Owner shall give notice to elect to have its Bonds purchased or tendered, through its
Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to
transfer the Participant's interest in the Bonds, on DTC's records, to the Trustee. The requirement for
physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed
satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC's records
and followed by a book -entry credit of tendered Bonds to the Trustee's DTC account.
42221003.6 F-2
DTC may discontinue providing its services as depository with respect to the Bonds at any time
by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a
successor depository is not obtained, physical certificates are required to be printed and delivered.
The Authority may decide to discontinue use of the system of book -entry only transfers through
DTC (or a successor securities depository). In that event, Bonds will be printed and delivered to DTC.
THE TRUSTEE, AS LONG AS A BOOK -ENTRY ONLY SYSTEM IS USED FOR THE
BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS
ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY
DTC PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS
CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OF SUFFICIENCY OF THE
PROCEEDINGS RELATING TO THE REDEMPTION OF THE BONDS CALLED FOR
REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.
42221003.6 F-3